<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 March 31, 1996
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 (March 31, 1996):
Common stock, par value $0.01 per share 36,161,941 shares
<PAGE> 2
2
WANG LABORATORIES, INC. AND SUBSIDIARIES
INDEX
Part I. FINANCIAL INFORMATION PAGE NO.
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet - 3
March 31, 1996 and June 30, 1995
Condensed Consolidated Statement of Operations - 5
Three and nine months ended March 31, 1996 and 1995
Condensed Consolidated Statement of Cash Flows - 6
Three and nine months ended March 31, 1996 and 1995
Notes to Condensed Consolidated Financial Statements - 7
March 31, 1996
Item 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 25
<PAGE> 3
3
WANG LABORATORIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
March 31, June 30,
1996 1995
--------- --------
(Dollars in millions)
ASSETS
- ------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $210.1 $182.4
Accounts receivable, net of allowances of
$13.4 million at March 31, 1996 and
$10.8 million at June 30, 1995 212.3 182.5
Inventories 24.0 24.4
Other current assets 39.0 37.2
------ ------
Total current assets 485.4 426.5
Depreciable assets, net of accumulated
depreciation of $101.2 million at
March 31, 1996 and $61.3 million
at June 30, 1995 114.7 134.4
Intangible assets, net 257.4 274.0
Other 28.9 25.8
------ ------
Total assets $886.4 $860.7
====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 4
4
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET - (Continued)
(UNAUDITED)
<CAPTION>
March 31, June 30,
1996 1995
--------- --------
(Dollars in millions)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Borrowings due within one year $ 22.0 $ 3.0
Accounts payable, accrued expenses and other 253.6 276.4
Income taxes 10.2 10.1
Deferred service revenue 91.6 93.3
------ ------
Total current liabilities 377.4 382.8
LONG-TERM LIABILITIES
Debt -- 23.0
Other liabilities 86.3 89.8
------ ------
Total long-term liabilities 86.3 112.8
4 1/2% Series A cumulative convertible
preferred stock, $0.01 par value, 90,000
shares issued at March 31, 1996 and
June 30, 1995; redemption and liquidation
preference of $90.0 million 84.6 84.1
11% Exchangeable preferred stock, $0.01
par value, 3,660,000 shares authorized,
2,836,326 issued at June 30, 1995 -- 61.5
STOCKHOLDERS' EQUITY
6 1/2% Series B cumulative convertible
preferred stock (represented by depositary
shares), $0.01 par value, 143,750 shares
authorized and issued at March 31, 1996;
redemption and liquidation preference
of $143.8 million, net of issuance costs 138.3 --
Common stock, $0.01 par value, 100,000,000
shares authorized; outstanding shares:
36,161,941 at March 31, 1996 and
35,698,730 at June 30, 1995 0.3 0.3
Capital in excess of par value 271.4 281.1
Cumulative translation adjustment (1.7) (0.5)
Accumulated deficit (70.2) (61.4)
------ ------
Total stockholders' equity 338.1 219.5
------ ------
Total liabilities and stockholders' equity $886.4 $860.7
====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 5
5
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Product sales $ 95.1 $ 92.5 $287.7 $270.5
Service and other 169.9 160.8 534.0 391.7
------ ------ ------ ------
265.0 253.3 821.7 662.2
COSTS AND EXPENSES
Cost of product sales 59.8 65.5 187.1 190.8
Cost of service and other 118.4 119.6 364.7 267.1
Research and development 7.2 8.4 25.5 23.4
Selling, general and
administrative 62.3 64.9 188.8 164.3
Amortization of intangibles -
acquisition and fresh-start 10.7 8.9 32.1 22.1
Acquisition-related charges -- 64.2 27.2 64.2
------ ------ ------ ------
Total costs and expenses 258.4 331.5 825.4 731.9
------ ------ ------ ------
OPERATING INCOME (LOSS) 6.6 (78.2) (3.7) (69.7)
OTHER (INCOME) EXPENSE
Interest expense 1.3 1.1 3.5 2.7
Other income - net (3.1) (2.4) (9.0) (9.0)
------ ------ ------ ------
INCOME (LOSS) BEFORE INCOME TAXES 8.4 (76.9) 1.8 (63.4)
Provision (benefit) for income taxes 3.4 (3.6) 10.6 3.6
------ ------ ------ ------
NET INCOME (LOSS) 5.0 (73.3) (8.8) (67.0)
Dividends and accretion on
preferred stock (3.4) (2.1) (10.2) (6.2)
Special dividend (8.8) -- (8.8) --
------ ------ ------ ------
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS $ (7.2) $(75.4) $(27.8) $(73.2)
====== ====== ====== ======
Weighted average shares and common
share equivalents outstanding
(in millions) 36.1 34.7 35.9 33.9
NET LOSS PER SHARE $(0.20) $(2.17) $(0.78) $(2.16)
====== ====== ====== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 6
6
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1996 1995 1996 1995
------ ----- ------ -------
(Dollars in millions)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 5.0 $ (73.3) $ (8.8) $ (67.0)
Depreciation 13.7 12.8 41.7 26.5
Amortization 11.7 10.3 35.9 25.7
Non-cash provision for income taxes 3.1 (3.5) 9.9 3.4
Provision for acquisition-related charges -- 64.2 27.2 64.2
Payments of acquisition-related charges (8.0) (4.9) (25.6) (4.9)
CHANGES IN OTHER ACCOUNTS AFFECTING OPERATIONS
Accounts receivable 17.2 49.3 (23.5) 32.3
Inventories 2.1 1.3 4.4 5.1
Other current assets (1.6) (3.3) (2.8) 2.1
Accounts payable and other current liabilities (6.5) (17.3) (20.0) (22.2)
Other 0.6 (0.4) -- (2.4)
------ ------- ------ -------
Net changes in other accounts affecting
operations 11.8 29.6 (41.9) 14.9
------ ------- ------ -------
Net cash provided by operations before
restructuring payments and reorganization-
related items 37.3 35.2 38.4 62.8
Restructuring payments and reorganization-
related items (5.2) (13.8) (13.3) (46.0)
------ ------- ------ -------
Net cash provided by operations 32.1 21.4 25.1 16.8
------ ------- ------ -------
INVESTING ACTIVITIES
Investment in depreciable assets (10.4) (9.7) (34.2) (19.1)
Investment in capitalized software (1.1) (1.1) (2.5) (4.1)
Proceeds from asset sales 4.0 14.4 4.0 14.4
Business acquisitions, net of cash acquired -- (102.5) (15.8) (106.2)
Other (5.1) (3.1) (8.7) (5.6)
------ ------- ------ -------
Net cash used in investing activities (12.6) (102.0) (57.2) (120.6)
------ ------- ------ -------
FINANCING ACTIVITIES
Payments of long-term debt (3.4) -- (3.8) (0.6)
Increase (decrease) in short-term borrowings (1.8) (3.5) (2.5) (0.4)
Dividends paid on preferred stock (1.3) -- (3.3) --
Retirement of exchangeable preferred stock (72.9) -- (72.9) --
Proceeds from sale of convertible preferred stock 143.8 -- 143.8 --
Convertible preferred stock issuance costs (5.5) -- (5.5) --
Other 1.7 0.4 3.9 5.0
------ ------- ------ -------
Net cash provided by (used in) financing
activities 60.6 (3.1) 59.7 4.0
------ ------- ------ -------
Effect of changes in foreign exchange rates
on cash -- 1.2 0.1 3.9
------ ------- ------ -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 80.1 (82.5) 27.7 (95.9)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 130.0 176.2 182.4 189.6
------ ------- ------ -------
CASH AND EQUIVALENTS AT END OF PERIOD $210.1 $ 93.7 $210.1 $ 93.7
====== ======= ====== =======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 7
7
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
NOTE A - BASIS OF PRESENTATION
- ------------------------------
During interim periods, Wang Laboratories, Inc. (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 the Company 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 C, prior period financial statements have been restated to
include the financial results of Avail.
Certain amounts in previously issued financial statements have been reclassified
to conform to current presentations.
NOTE B - PREFERRED STOCK
- ------------------------
On February 27, 1996, the Company completed a private placement of 2,875,000
Depositary Shares, each representing a 1/20 interest in a share of 6 1/2% Series
B Cumulative Convertible Preferred Stock, for $138.3 million, net of issuance
costs. Each Depositary Share is convertible at the option of the holder into
Common Stock of the Company at a conversion price of $26.5625 per share of
Common Stock subject to adjustment for dividends payable in common stock, the
issuance of rights or warrants to purchase common stock, the subdivision,
combination or reclassification of common stock and the distribution of other
assets to all the holders of common stock. The Series B Preferred Stock may not
be redeemed before March 1, 1999. Thereafter, the Series B Preferred Stock may
be redeemed at the option of the Company, in whole or in part, at specified
redemption prices plus accrued and unpaid dividends. Each Depositary Share
entitles the holder to 1/20th of one vote per Depositary Share. Dividends will
be cumulative at the rate per annum of $3.25 per Depositary Share. Dividends
shall be payable in cash quarterly in arrears commencing on May 1, 1996,
provided that no dividends shall be paid until the holders of the Company's 4
1/2% Preferred Stock have received accrued and unpaid dividends. On April 1,
1996 all accrued and unpaid dividends on the Company's 4 1/2% Preferred Stock
were paid.
<PAGE> 8
8
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
NOTE B (Continued)
- ------
The Company's 11% Exchangeable Preferred Stock was repurchased at the
liquidation preference value and retired using $72.9 million of the proceeds
from the sale of the Depositary Shares. The retirement of the 11% Exchangeable
Preferred Stock resulted in a one-time special dividend of $8.8 million,
reflecting the difference between the repurchase value and the carrying value
of the 11% Exchangeable Preferred Stock. The remainder of the proceeds are
being used for general corporate purposes, including possible business
acquisitions.
NOTE C - 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. Cash
payments of $9.0 million and $6.0 million were made on July 21, 1995 and
February 15, 1996, respectively. The common stock will be distributed to former
Sigma stockholders on January 3, 1997. The common stock portion of the purchase
price is recorded as capital in excess of par value. 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.
<TABLE>
Acquisition-related charges related to the Sigma acquisition consist of the
following:
<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.
<PAGE> 9
9
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
MARCH 31, 1996
NOTE C (Continued)
- ------
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, 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. 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.
<PAGE> 10
10
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
MARCH 31, 1996
NOTE D - OTHER BALANCE SHEET INFORMATION
- ----------------------------------------
<TABLE>
Components of selected captions in the Condensed Consolidated Balance Sheet
follow (in millions):
<CAPTION>
March 31, June 30,
1996 1995
--------- --------
<S> <C> <C>
Inventories
Finished products $ 10.0 $ 14.5
Raw materials and work-in-process 9.9 8.7
Service parts and supplies 4.1 1.2
------ ------
$ 24.0 $ 24.4
====== ======
Intangible assets
Trademarks and patents $ 23.7 $ 21.3
Computer software 36.3 42.2
Installed base - service 128.7 123.5
License agreements 29.9 29.9
Assembled workforce 16.1 11.7
Goodwill 40.1 18.9
Reorganization value in excess of amounts
allocated to identifiable assets 76.4 86.6
------ ------
351.2 334.1
Less accumulated amortization 93.8 60.1
------ ------
$257.4 $274.0
====== ======
Accounts payable, accrued expenses and other
Accounts payable $ 59.0 $ 62.3
Accrued expenses 89.3 93.1
Compensation and benefits 54.6 50.1
Restructuring and acquisition-
related accruals 34.9 56.6
Acquisitions 3.5 --
Other 12.3 14.3
------ ------
$253.6 $276.4
====== ======
Other long-term liabilities
Postretirement benefits accrual $ 17.7 $ 18.5
Pension liability 8.3 8.2
Bull facilities accrual 15.7 16.5
Restructuring and reorganization-
related accruals 13.4 17.4
Insurance accruals 6.6 6.5
Other 24.6 22.7
------ ------
$ 86.3 $ 89.8
====== ======
</TABLE>
<PAGE> 11
11
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
MARCH 31, 1996
NOTE E - 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 1997.
The Company has previously reported as a contingency 59 "repetitive stress
injury" ("RSI") cases, of which 56 were filed in the context of the Company's
Chapter 11 proceeding, and will therefore be resolved as general unsecured
claims in that proceeding. Only three of the cases currently pending were filed
after the Confirmation of the Company's Reorganization Plan, and the Company
believes, even as to these three, that any liability will be found to have been
discharged by the Chapter 11 filing. The Company no longer believes that the
ultimate resolution of these cases will have a material impact on the Company's
financial position or results of operations.
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 confirmation
of the Company's reorganization under Chapter 11 are being extinguished and, to
the extent allowed, have been provided for under the 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.
<PAGE> 12
12
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
MARCH 31, 1996
NOTE F - SUBSEQUENT EVENTS
- --------------------------
On May 3, 1996, the Company acquired Dataserv Computer Maintenance, Inc.
(Dataserv) from BellSouth Corporation for $28.5 million in cash. Dataserv
provides customers with computer maintenance and support services for
industry-standard servers, desktop products, point-of-sale retail scanners and
registers, as well as application helpdesk and network integration services.
Dataserv services companies in the banking and financial services, insurance,
retail and manufacturing industries. The acquisition will be accounted for
using the purchase method of accounting in accordance with APB 16, as a result,
the results of operations of the Company will include the results of Dataserv
only from and after the date of acquisition.
<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 $265.0 million for the third quarter, a 4.6%
increase compared to revenues of $253.3 million for the same period of the prior
year. Revenues for the nine months ended March 31, 1996 increased by 24.1% to
$821.7 million. The prior year periods include two months of results of the Bull
HN Information Systems, Inc. ("Bull") businesses acquired in January 1995. The
Company reported operating income of $6.6 million after amortization of
fresh-start and acquired intangible assets of $10.7 million for the third
quarter. This compares to an operating loss of $78.2 million after amortization
of fresh-start and acquired intangible assets of $8.9 million and
acquisition-related charges of $64.2 million for the comparable prior year
period. For the nine month period ended March 31, 1996, the Company reported an
operating loss of $3.7 million after acquisition-related charges of $27.2
million relating to Sigma and $32.1 million of amortization of fresh-start and
acquired intangible assets. This compares to an operating loss of $69.7 million
for the comparable prior year period, which included $22.1 million of
amortization of fresh-start intangible assets and $64.2 million of
acquisition-related charges.
The Company expects the decline in revenues from traditional sources, including
the acquired Bull proprietary product and service revenue streams (i.e., sales
and service of proprietary VS and GCOS products) to continue. The addition of
the Bull service business added 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, including the recent
acquisition of Dataserv. 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")
more than tripled to $33.2 million for the third quarter, compared to $10.0
million for the comparable prior year period. EBITDA for the nine months ended
March 31, 1996 more than doubled to $103.4 million, compared to $50.2 million
for the comparable prior year period. EBITDA, which some investors believe to be
meaningful in terms of assessing a company's ability to meet its cash
requirements, is determined by excluding from the net income(loss):
acquisition-related charges; income taxes; interest expense; interest income;
depreciation and amortization.
<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)
- ---------------------
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 process applications. These products provide customers the
scaleable, enterprise-wide processing power required for high-volume,
image-enabled transaction processing applications. Sigma's products 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.
On May 3, 1996, the Company acquired Dataserv from BellSouth Corporation for
$28.5 million in cash. Dataserv provides customers with computer maintenance and
support services for point-of-sale retail scanners and registers and popular
industry-standard servers and desktop products, as well as application helpdesk
and network integration services. Dataserv services companies in the banking and
financial services, insurance, retail and manufacturing industries.
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. On April 2, 1996, the Company
and Microsoft announced the availability of the specification and sample code
for the Messaging Application Programming Interface ("MAPI")-Workflow Framework
which defines the standards which enable interoperability between production
workflow systems and electronic messaging systems.
<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)
- ---------------------
Product revenues for the third quarter increased by 17.5% to $43.1 million in
the United States, while international product revenues decreased by 6.9% to
$52.0 million from the same prior year period. Product revenues for the nine
months ended March 31, 1996 increased by 17.1% to $144.7 million in the United
States, while international product revenues decreased 2.7% to $143.0 million,
compared to the same prior year period. Proprietary product sales totaled $20.3
million in the third quarter compared to $17.5 million for the same prior year
period. For the nine months ended March 31, 1996 and 1995, proprietary product
sales were $57.6 million and $54.0 million, respectively. Network product and
other product sales totaled $63.3 million in the third quarter, compared to
$70.3 million for the same prior year period. Network product and other
product sales were $198.9 million and $203.4 million for the nine months ended
March 31, 1996 and 1995, respectively. Open software product revenues for the
third quarter more than doubled to $11.5 million from $4.7 million for the
comparable prior year period. For the nine months ended March 31, 1996, open
software revenues increased by $18.1 million, or 138%, to $31.2 million,
compared to the same period of the prior year.
Service and other revenues in the United States for the third quarter increased
by 7.7% to $92.5 million compared to the same prior year period. Service and
other revenues in the United States for the nine months ended March 31, 1996
increased by 59.8% to $295.4 million from the same period of the prior year.
International service and other revenues increased by 3.4% to $77.4 million for
the third quarter, compared to the same period of the prior year. International
service and other revenues for the nine months ended March 31, 1996 were $238.6
million, an increase of 15.4% from the comparable prior year period. Increased
service and other revenues for the nine months ended March 31, 1996 are mainly
due to the acquisition of the Bull businesses in January of 1995. Proprietary
services decreased $10.4 million in the third quarter as a result of a decrease
in the Wang proprietary product services revenue, which was partially offset by
an increase in Bull proprietary product services revenue. For the nine months
ended March 31, 1996, proprietary services increased due to an increase in Bull
proprietary product services revenue net of a decrease in the Wang proprietary
product services revenue. Proprietary revenues continue to decline at an
annualized rate which is at the high end of the range of recent historical
experience and management expectations. In addition, the Company expects that
as proprietary revenues continue to decline going forward, individual customer
losses may have a significant effect on the rate of decline in any given
quarter.
Network services revenue increased $18.4 million and $118.4 million for the
three and nine months ended March 31, 1996, compared to the same periods of the
prior year. This increase was mainly due to increased third party maintenance
contracts acquired from Bull. Open software services (i.e. revenue from
software maintenance agreements) totaled $1.4 million and $3.4 million for the
three and nine months ended March 31, 1996.
<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)
- ---------------------
Product gross margin for the third quarter increased to 37.1% from 29.2% in the
comparable prior year period. For the nine months ended March 31, 1996, product
gross margin increased to 35.0% from 29.5% in the comparable prior year period.
These increases were 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 third quarter increased to
30.3% from 25.6% in the comparable period of the prior year. The increase in
margins was principally the result of cost reductions attained from the
integration-related efforts related to the acquired Bull businesses. For the
nine months ended March 31, 1996, gross margin for service and other revenues
decreased slightly to 31.7% from 31.8% 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.
Research and development costs in the third quarter decreased by $1.2 million,
or 14.3%, over the comparable prior year period, representing 2.7% and 3.3% of
revenues, respectively. The decrease for the third quarter is due to the
reduction of research and development efforts acquired from Bull. For the nine
months ended March 31, 1996, research and development costs increased $2.1
million, or 9.0%, over the prior year period, representing 3.1% and 3.5% of
revenues for the nine months ended March 31, 1996 and 1995, respectively. The
increase is due to the Company's 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 for the third quarter decreased
$2.6 million, or 4.0%, compared to the same period of the prior year.
Acquisition-related initiatives and restructuring programs contributed
significantly to the elimination of unnecessary or redundant programs,
personnel, support costs and other related expenses for the quarter and more
than offset the impact from business acquisitions. Selling, general and
administrative expenses increased $24.5 million, or 14.9%, for the nine months
ended March 31, 1996. The increased expenses are mainly due to business
acquisitions. Offsetting these increases were acquisition-related initiatives
and restructuring programs. Selling, general and administrative expenses
represented 23.5% and 25.6% of revenues for the three months ended March 31,
1996 and 1995, respectively, and 23.0% and 24.8% for the nine months ended March
31, 1996 and 1995, respectively.
Amortization of fresh-start and acquired intangible assets totaled $10.7 million
and $32.1 million for the three and nine months ended March 31, 1996,
respectively. Amortization for the third quarter includes $6.4 million related
to fresh-start reporting and $4.3 million for intangible assets established in
connection with business acquisitions. For the nine months ended March 31, 1996,
amortization of
<PAGE> 17
17
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
$19.2 million was recorded relating to fresh-start reporting and $12.9 million
was recorded for business acquisitions. Amortization of $8.9 million and $22.1
million for the three and nine months ended March 31, 1995, respectively,
included $2.3 million of amortization relating to the Bull acquisition, with the
remainder related to fresh-start reporting.
Interest expense increased to $1.3 million and $3.5 million for the three and
nine months ended March 31, 1996, respectively, from $1.1 million and $2.7
million for the comparable prior year periods. 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 $2.0 million and $1.5
million for the three months ended March 31, 1996 and 1995, respectively, and
$6.8 million and $5.5 million for the nine months ended March 31, 1996 and 1995,
respectively.
The provision for income taxes totaled $3.4 million for the third quarter and
included a non-cash expense of $3.1 million relating to utilization of the
Company's net operating loss carryforwards. The income tax benefit of $3.6
million for the prior year third quarter reflects the effect of the loss for the
period. For the nine month periods ended March 31, 1996 and 1995, the tax
provision totaled $10.6 million and $3.6 million and included non-cash expense
of $9.9 million and $3.4 million, respectively. Realization of these net
operating loss carryforwards is being recognized as a reduction of
Reorganization value in excess of amounts allocated to identifiable intangible
assets.
At March 31, 1996, the Company employed approximately 7,000 people, compared to
7,800 at March 31, 1995.
Liquidity and Sources of Capital
- --------------------------------
On February 27, 1996, the Company received $138.3 million, net of issuance
costs, from the private placement of 2,875,000 Depositary Shares, each
representing 1/20th interest in a share of 6 1/2% Series B Cumulative
Convertible Preferred Stock (the "Series B Preferred Stock"). Dividends on the
Series B Preferred Stock are cumulative at the rate per annum of $65 per share
and are payable in cash quarterly in arrears commencing on May 1, 1996, provided
that no dividends shall be paid until the holders of the Company's 4 1/2%
Preferred Stock have received accrued and unpaid dividends. On April 1, 1996 all
accrued and unpaid dividends on the Company's 4 1/2% Preferred Stock were paid.
The Company's 11% Exchangeable Preferred Stock was repurchased at the
liquidation preference value and retired using $72.9 million of the proceeds
from the sale of the Depositary Shares. The retirement of the 11% Exchangeable
Preferred Stock resulted in a one-time special dividend of $8.8 million
reflecting the difference between the repurchase value and the carrying value
of the securities. The remainder of the proceeds are being used for general
corporate purposes, including possible business acquisitions.
<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)
- --------------------------------
Cash and equivalents increased $80.1 million to $210.1 million between December
31, 1995 and March 31, 1996, primarily due to the proceeds from the issuance of
the Depositary Shares, net of the cash used to retire the 11% Exchangeable
Preferred Stock, along with cash provided by operations. This compares to an
$82.5 million decrease in the same period of the prior year, primarily due to
the Bull acquisition.
Cash provided by operations before restructuring and reorganization-related
items of $37.3 million, less cash used for restructuring and
reorganization-related items of $5.2 million, resulted in net cash provided by
operations of $32.1 million for the third quarter. This compares to cash
provided by operations before restructuring and reorganization-related items of
$35.2 million, less cash used for restructuring and reorganization-related items
of $13.8 million, resulting in net cash provided by operations of $21.4 million
for the same period of the prior year. Cash provided by operations before
restructuring payments and reorganization-related items for the third quarter
includes $8.0 million for payments of acquisition-related charges, compared to
$4.9 million for the same period of the prior year. Lower levels of receivables
provided $17.2 million of cash in the third quarter, compared to $49.3 million
of cash provided in the same period of the prior year. Lower accounts payable
and other current liabilities resulted in reductions of $6.5 million and $17.3
million for the three months ended March 31, 1996 and 1995, respectively.
Receivable days sales outstanding increased to 69 days at March 31, 1996,
compared to 48 days at March 31, 1995, 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 10.0 times and 8.4
times at March 31, 1996 and 1995, respectively.
Net cash used in investing activities totaled $12.6 million for the third
quarter, compared to $102.0 million for the same period of the prior year.
Business acquisitions, net of cash acquired, totaled $102.5 million for the
same period of the prior year and relates to the Bull acquisition. Investment
in depreciable assets was $10.4 million for the third quarter, an increase of
$0.7 million from the same period of the prior year.
Net cash provided by financing activities totaled $60.6 million for the third
quarter, compared to net cash used of $3.1 million in the same period of the
prior year. Net cash proceeds of $138.3 million received from the issuance of
the Depositary Shares was offset by the cash payment of $72.9 million to retire
the 11% Exchangeable Preferred Stock. Cash dividends of $1.3 million were paid
on the 11% Exchangeable Preferred Stock in the third quarter.
Cash and equivalents increased $27.7 million to $210.1 million between June 30,
1995 and March 31, 1996, primarily due to the proceeds from the issuance of the
Depositary Shares, net of the cash used to retire the 11% Exchangeable Preferred
Stock, offset by restructuring, reorganization and acquisition-related items and
cash used for the Sigma and BISS acquisitions. This compares to a $95.9 million
decrease in the same period of the prior year, primarily due to the Bull
acquisition.
Cash provided by operations before restructuring and reorganization-related
items of $38.4 million, less cash used for restructuring and
reorganization-related items of $13.3 million, resulted in net cash provided by
operations of $25.1 million for the nine months ended March 31, 1996. This
compares to cash provided by operations before restructuring and
reorganization-related items of $62.8 million, less cash used for restructuring
and reorganization-related items of $46.0 million, resulting in net cash
provided by operations of $16.8 million for the nine months ended March 31,
1995. Cash provided by operations before restructuring payments and
reorganization-related items for the nine months ended March 31, 1996 includes
<PAGE> 19
19
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Sources of Capital (Continued)
- --------------------------------
$25.6 million for payments of acquisition-related costs and other charges.
Higher levels of receivables utilized $23.5 million of cash in the nine months
ended March 31, 1996, compared to $32.3 million cash provided in the same period
of the prior year. Lower accounts payable and other current liabilities resulted
in reductions of $20.0 million and $22.2 million for the nine months ended March
31, 1996 and 1995, respectively.
Net cash used in investing activities totaled $57.2 million for the nine months
ended March 31, 1996, compared to $120.6 million for the same period of the
prior year. Business acquisitions, net of cash acquired, totaled $15.8 million
and $106.2 million for the nine months ended March 31, 1996 and 1995,
respectively, and relate to the acquisitions of Sigma and BISS in the current
year and Bull in the prior year. Investment in depreciable assets increased by
$15.1 million, primarily due to the acquisition of the Bull businesses.
Net cash provided by financing activities totaled $59.7 million for the nine
months ended March 31, 1996, compared to net cash provided of $4.0 million in
the same period of the prior year. Net cash proceeds of $138.3 million were
received from the issuance of the Depositary Shares, offset by the cash payment
of $72.9 million to retire the 11% Exchangeable Preferred Stock. Cash dividends
of $3.3 million were paid on the 11% Exchangeable Preferred Stock for the nine
months ended March 31, 1996.
At March 31, 1996, in addition to the cash on hand, the 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 $77.1 million. In addition to normal operating activities,
expected cash requirements over the next twelve months include approximately $28
million for costs and other charges related to prior acquisitions and previously
recorded restructuring and reorganization-related items.
Accrued and unpaid cash dividends of the Company's outstanding 4 1/2% Series A
Cumulative Convertible Preferred Stock and 6 1/2% Series B Preferred Stock
amounted to $4.2 million at March 31, 1996. Cash dividends of $12.1 million were
paid on the 11% Exchangeable Preferred Stock for the nine months ended March 31,
1996, including a one-time special dividend of $8.8 million representing the
difference between the repurchase value and the carrying value of the 11%
Exchangeable Preferred Stock.
The Company believes that existing cash balances, cash generated from
operations, and borrowing availability under the BTCC facility will be
sufficient to meet the Company's 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.
<PAGE> 20
20
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities
On February 27, 1996, the Company filed a Certificate
of Designations designating 143,750 shares of its authorized
and unissued Preferred Stock as 6 1/2% Cumulative Convertible
Preferred Stock, all of which shares are issued and
outstanding. The terms of the 6 1/2% Cumulative Convertible
Preferred Stock are set forth in Exchibit 3.8 to this
Quarterly Report on Form 10-Q.
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
Exhibit No. Description
- ----------- -------------------------------------------------
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(15) ByLaws of the Registrant, As Amended
3.7 Certificate of Elimination of the Registrant's
11% Exchangeable Preferred Stock
3.8 Certificate of Stock Designation with respect to
the 6 1/2% Series B Cumulative Convertible
Preferred Stock
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
<PAGE> 21
21
PART II - OTHER INFORMATION
(continued)
Exhibit No. Description
- ----------- -------------------------------------------------
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
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
<PAGE> 22
22
PART II - OTHER INFORMATION
(continued)
Exhibit No. Description
- ----------- -------------------------------------------------
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
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(15) Non-Negotiable Secured Promissory Note, as
Amended from Joseph M. Tucci to the Registrant
10.34(15) Non-Negotiable Promissory Note, as Amended from
Donald P. Casey to the Registrant
10.35(15) Pledge Agreement, as Amended, from Joseph M.
Tucci to the Registrant
10.36(15) Pledge Agreement, as Amended, from Donald P.
Casey to the Registrant
<PAGE> 23
23
PART II - OTHER INFORMATION
(continued)
Exhibit No. Description
- ----------- -------------------------------------------------
10.37(15) 1994 Employee's Stock Incentive Plan, as Amended
10.38(15) Employment Agreement with Robert K. Weiler
10.39(15) Contingent Severance Compensation Agreement with
Robert K. Weiler
10.40(15) Form of Amendment to Employment Letter Agreement
for David I. Goulden, William P. Ferry, Albert A.
Notini and Franklyn A. Caine
10.41(15) Employment Agreement of Joseph M. Tucci, as
amended
10.42 Form of Non-Qualified Long Term Incentive Option
to Purchase Shares of Common Stock for Messrs.
Tucci, Caine, Casey, Cuneo, Ferry, Goulden,
Hogan, Jerritts, Notini, and Van Vuuren
10.43 Registration Rights Agreement 6 1/2% Cumulative
Convertible Preferred Stock
10.44 Employment Agreement of Jean M. Edwards
10.45 Contingent Severance Compensation Agreement with
Jean M. Edwards
11.1 Statement of Computation of Earnings per Share
12.1 Statement of Computation of Earnings to Fixed
Charges
(b) During the quarter ended March 31, 1996, the Registrant filed a
current report on Form 8-K dated January 23, 1996 relating to an
agreement to repurchase and retire all of the outstanding shares
of its 11% Exchangeable Preferred Stock, a current report on
Form 8-K dated February 28, 1996 relating to the completion of
$143,750,000 offering of 6 1/2% Series B Cumulative Convertible
Preferred Stock and the completion of the repurchase and
retirement of all its 11% Exchangeable Preferred Stock, a
current report on Form 8-K dated April 4, 1996 containing the
audited financial statements of the Company as of and for the six
months ended December 31, 1995, and a current report on Form 8-K
dated May 3, 1996 containing the Stock Purchase Agreement
with respect to the Registrant's acquisition of Dataserv
Computer Maintenance, Inc. from Dataserv, Inc., an indirect
wholly owned subsidiary of BellSouth Corporation.
<PAGE> 24
24
PART II - OTHER INFORMATION
(continued)
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form 8-A
(File No. 0-22470), filed on September 27, 1993.
(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.
(15) Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended December 31, 1995.
<PAGE> 25
25
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: May 15, 1996
WANG LABORATORIES, INC.
/s/ Franklyn A. Caine
----------------------------
Franklyn A. Caine,
Executive Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 3.7
WANG LABORATORIES, INC.
Certificate of Elimination
of
11% Exchangeable Preferred Stock
- -------------------------------------------------------------------------------
Wang Laboratories, Inc., a Delaware corporation (the "Corporation),
pursuant to authority conferred upon the Board of Directors of the Corporation
by the Corporation's Certificate of Incorporation, as amended (the "Certificate
of Incorporation"), and in accordance with the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware (the "Delaware Corporation
Law"), certifies that the Board of Directors of the Corporation, by action at a
meeting duly called and held on January 31, 1996 in accordance with Section
141(b) of the Delaware Corporation Law, duly adopted the following resolution:
RESOLVED: That contemporaneously with the closing of the transactions
contemplated by the Purchase Agreement dated as of February 21,
1996 among the Corporation, Lehman Brothers Inc., BT Securities
Corporation and Salomon Brothers Inc., the Corporation be and
hereby is authorized to repurchase all of the outstanding shares
of the Corporation's 11% Exchangeable Preferred Stock (the "11%
Preferred Stock"); that immediately following such closing and
repurchase, no shares of the 11% Preferred Stock will be
outstanding and no shares of 11% Preferred Stock will be issued
pursuant to the Amended and Restated Certificate of Designation
previously filed with respect to such 11% Preferred Stock (the
"11% Certificate of Designation"); and that following such
closing, the proper officers of the Corporation be and hereby are
authorized and directed in the name and on behalf of the
Corporation to execute and file a certificate with the Secretary
of State of the State of Delaware pursuant to Section 151(g) of
the Delaware Corporation law (the "Certificate of Elimination")
setting forth the text of this resolution; and that upon the
filing and effectiveness of such Certificate of Elimination all
matters set forth in the 11% Certificate of Designation shall be
deemed to have been eliminated from the Certificate of
Incorporation, and 3,660,000 shares of 11% Preferred Stock
previously designated as 11% Preferred Stock shall resume their
status as undesignated shares of Preferred Stock, $0.01 par value
per share, of the Corporation, available for future issuance by
the
<PAGE> 2
Corporation in accordance with the Certificate of Incorporation and
the Delaware Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate to be signed by its Vice President and
Treasurer this 27th day of February, 1996.
WANG LABORATORIES, INC.
By:/s/ Richard L. Buckingham
--------------------------------
Richard L. Buckingham
Vice President and Treasurer
<PAGE> 1
Exhibit 3.8
CERTIFICATE OF DESIGNATIONS
of
6 1/2% SERIES B CUMULATIVE CONVERTIBLE
PREFERRED STOCK
of
WANG LABORATORIES, INC.
(Pursuant to Section 151 of the General
Corporation Law of the State of Delaware)
WANG LABORATORIES, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies that the
following resolution was duly adopted by the Board of Directors of the
Corporation.
RESOLVED, that, pursuant to the authority expressly vested in the Board of
Directors of this Corporation (the "Board of Directors") in accordance with the
provisions of its Certificate of Incorporation, a series of Preferred Stock, par
value $0.01 per share, of the Corporation be and it hereby is, created and
classified, and that the designation and number of shares thereof, the voting
powers, preferences and relative participating, optional or other special rights
thereof, and the qualifications, limitations or restrictions thereof are as
follows:
SECTION 1. Designation and Number of Shares.
---------------------------------
The designation of such series of Preferred Stock shall be 6 1/2% Series B
Cumulative Convertible Preferred Stock (the "Series B Preferred Stock") and the
number of shares constituting the Series B Preferred Stock shall be 143,750.
SECTION 2. Definitions.
------------
For purposes of the Series B Preferred Stock, the following terms shall
have the meanings indicated:
<PAGE> 2
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions are obligated or authorized to be closed in New York,
New York or in Boston, Massachusetts.
"Common Stock" shall mean the common stock of the Corporation, par value
$0.01 per share.
"Constituent Person" shall have the meaning set forth in paragraph (E) of
Section 7 hereof.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which the Series B Preferred Stock is convertible, as such Conversion
Price may be adjusted pursuant to Section 7. The initial conversion price will
be $26.5625.
"Current Market Price" of publicly traded shares of Common Stock or any
other class of capital stock or other security of the Corporation or any other
issuer for any day shall mean the last reported sales price, regular way on such
day, or, if no sale takes place on such day, the average of the reported closing
bid and asked prices on such day, regular way, in either case as reported on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market System of the National
Association of Securities Dealers, or, if such security is not quoted on such
Nasdaq National Market, the average of the closing bid and asked prices on such
day in the over-the-counter market as reported by Nasdaq or, if bid and asked
prices for such security on such day shall not have been reported through
Nasdaq, the average of the bid and asked prices on such day as furnished by any
New York Stock Exchange member firm regularly making a market in such security
selected for such purpose by the Board of Directors.
"Dividend Payment Date" shall mean May 1, August 1, November 1 and February
1 in each year, commencing on May 1, 1996; PROVIDED, HOWEVER, that if any
Dividend Payment Date falls on any day other than a Business Day, the dividend
payment due on such Dividend Payment Date shall be paid on the Business Day
immediately following such Dividend Payment Date.
2
<PAGE> 3
"Dividend Periods" shall mean quarterly dividend periods commencing on May
1, August 1, November 1 and February 1 of each year and ending on and including
the day preceding the first day of the next succeeding Dividend Period (other
than the initial Dividend Period, which shall commence on the earliest date of
original issue of any shares of Series B Preferred Stock and end on and include
April 30, 1996.)
"Fair Market Value" shall mean the average of the daily Current Market
Prices of a share of Common Stock during the ten (10) consecutive Trading Days
immediately prior to the earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any issuance or
distribution, means the first day on which the Common Stock trades regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determined that day's Current Market
Price.
"Junior Dividend Stock" shall mean the Common Stock and any other class or
series of stock of the Corporation over which the Series B Preferred Stock has
preference or priority as to the payment of dividends.
"Junior Liquidating Stock" shall mean the Common Stock or any other class
or series of stock of the Corporation over which the Series B Preferred Stock
has preference or priority as to the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Liquidation Preference" shall have the meaning set forth in paragraph (A)
of Section 4 hereof.
"non-electing share" shall have the meaning set forth in paragraph (E) of
Section 7 hereof.
"Parity Dividend Stock" shall mean any class or series of stock of the
Corporation ranking on a parity as to the payment of dividends with the Series B
Preferred Stock.
"Parity Liquidating Stock" shall mean any class or series of stock of the
Corporation ranking on a parity
3
<PAGE> 4
as to the distribution of assets upon any liquidation, dissolution or winding up
of the Corporation with the Series B Preferred Stock.
"Person" shall mean any individual, firm, partnership, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Redemption Date" shall have the meaning set forth in paragraph (C) of
Section 5 hereof.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of February 27, 1996 between the Corporation and Lehman
Brothers Inc., BT Securities Corporation and Salomon Brothers Inc.
"Securities" shall have the meaning set forth in paragraph (D)(iii) of
Section 7 hereof.
"Senior Dividend Stock" shall mean any class or series of stock of the
Corporation (including without limitation the Corporation's 4 1/2% Series A
Cumulative Convertible Preferred Stock) which has preference or priority over
the Series B Preferred Stock as to the payment of dividends.
"Senior Liquidating Stock" shall mean any class or series of stock of the
Corporation (including without limitation the Corporation's 4 1/2% Series A
Cumulative Convertible Preferred Stock) which has preference or priority over
the Series B Preferred Stock as to the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
"Series B Preferred Stock" shall have the meaning set forth in Section 1
hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Directors, the
allocation of funds to be so paid on any series or class of capital stock of the
Corporation; PROVIDED, HOWEVER, that if any funds for any class or series of
Junior Dividend Stock or any class or series of Parity Dividend Stock are placed
in a sepa-
4
<PAGE> 5
rate account of the Corporation or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the Series B
Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Stated Value" shall have the meaning set forth in paragraph (A) of Section
4 hereof.
"Trading Day" shall mean any day on which the securities in question are
traded on the principal national securities exchange on which such securities
are listed or admitted, or if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market System of the National
Association of Securities Dealers, or if such securities are not quoted on such
Nasdaq National Market, in the applicable securities market in which the
securities are traded.
"Transaction" shall have the meaning set forth in paragraph (E) of Section
7 hereof.
"Transfer Agent" means American Stock Transfer & Trust Company or such
other agent or agents of the Corporation as may be designated by the Board of
Directors as the transfer agent for the Series B Preferred Stock.
SECTION 3. Dividends.
----------
(A) Subject to the rights of the holders of Senior Dividend Stock, the
holders of shares of the Series B Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of assets legally
available for that purpose, dividends payable in cash at the rate per annum of
$65 per share of Series B Preferred Stock. Dividends on shares of Series B
Preferred Stock shall be cumulative from the date of issuance of such shares,
whether or not in any Dividend Period or Periods there shall be assets of the
Corporation legally available for the payment of such dividends, and shall be
payable quarterly, when, as and if declared by the Board of Directors, in
arrears on Dividend Payment Dates, commencing on May 1, 1996. Each such dividend
shall be payable in arrears to the holders of record of shares of the Series B
Preferred Stock, as they appear on
5
<PAGE> 6
the stock records of the Corporation at the close of business on such record
dates, which shall not be more than 60 days nor less than 10 days preceding the
payment dates thereof, as shall be fixed by the Board of Directors or a duly
authorized committee thereof. Accrued and unpaid dividends for any past Dividend
Periods may be declared and paid at any time, without reference to any Dividend
Payment Date, to holders of record on such date, not exceeding 45 days preceding
the payment date thereof, as may be fixed by the Board of Directors.
(B) The amount of dividends payable for each full Dividend Period for the
Series B Preferred Stock shall be computed by dividing the annual dividend rate
by four. The amount of dividends payable for the initial Dividend Period, or any
other period shorter or longer than a full Dividend Period, on the Series B
Preferred Stock shall be computed on the basis of twelve 30-day months and a
360-day year. Holders of shares of Series B Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of cumulative dividends, as herein provided, on the Series B Preferred Stock. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series B Preferred Stock that may be in
arrears.
(C) So long as any shares of the Series B Preferred Stock are outstanding,
no dividends, except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on any Parity Dividend Stock for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series B Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of the dividend on such class or
series of Parity Dividend Stock. When dividends are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all dividends
declared upon shares of the Series B Preferred Stock and all dividends declared
upon any other Parity Dividend Stock shall be declared ratably in proportion to
the respective amounts of dividends accumulated and unpaid on the Series B
Preferred Stock and accumulated and unpaid on such Parity Dividend Stock.
6
<PAGE> 7
(D) So long as any shares of the Series B Preferred Stock are outstanding,
no dividends (other than dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Junior
Dividend Stock) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Dividend Stock, nor shall any Junior
Dividend Stock or any Parity Dividend Stock be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares of
Common Stock made for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary) for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for Junior Dividend Stock), unless in each case the full
cumulative dividends on all outstanding shares of the Series B Preferred Stock
and any Parity Dividend Stock shall have been paid or set apart for payment for
all past Dividend Periods with respect to the Series B Preferred Stock and all
past dividend periods with respect to such Parity Dividend Stock, PROVIDED,
HOWEVER, that, notwithstanding the foregoing, the Corporation may redeem,
purchase or otherwise acquire Common Stock (i) in amounts sufficient to allow
employees to obtain cash to meet tax obligations arising upon exercise of stock
options to purchase Common Stock or upon the termination of restrictions on
restricted Common Stock and (ii) as the payment of the exercise price under
stock options to purchase Common Stock.
SECTION 4. Payments upon Liquidation.
--------------------------
(A) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, subject to the rights of the holders of any
Senior Liquidating Stock and before any payment or distribution of the assets of
the Corporation (whether capital or surplus) shall be made to or set apart for
the holders of any Junior Liquidating Stock, the holders of the shares of Series
B Preferred Stock shall be entitled to receive, out of the assets of the
Corporation legally available for distribution to its stockholders, One Thousand
Dollars ($1,000) per share of Series B Preferred Stock (the "Stated Value") plus
an amount equal to all dividends (whether or not declared) accrued and unpaid
7
<PAGE> 8
thereon to the date of final distribution to such holders (the "Liquidation
Preference"); but such holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
shares of Series B Preferred Stock shall be insufficient to pay in full the
Liquidation Preference and the liquidation preference on all Parity Liquidating
Stock, then such assets, or the proceeds thereof, shall be distributed ratably
among the holders of shares of Series B Preferred Stock and any such Parity
Liquidating Stock in accordance with the respective amounts that would be
payable on such shares of Series B Preferred Stock and any such Parity
Liquidating Stock if all amounts payable thereon were paid in full. For the
purposes of this Section 4, (i) a consolidation or merger of the Corporation
with or into one or more corporations, or (ii) a sale or transfer of all or
substantially all of the Corporation's assets, shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
(B) Subject to the rights of the holders of shares of any Senior Dividend
Stock, Senior Liquidating Stock, Parity Dividend Stock or Parity Liquidating
Stock, after payment shall have been made to the holders of the Series B
Preferred Stock, as and to the fullest extent provided in this Section 4, any
other series or class or classes of Junior Liquidating Stock shall, subject to
the respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series B Preferred Stock shall not be entitled to share therein.
No interest shall accrue on any payment upon liquidation after the due date
thereof.
SECTION 5. Redemption at the Option of the Corporation.
--------------------------------------------
(A) The shares of Series B Preferred Stock will be redeemable at the option
of the Corporation by resolution of its Board of Directors, in whole, or, from
time to time, in part, at any time on or after March 1, 1999, at the following
redemption prices per share, if redeemed during the twelve-month period
beginning March 1 of the year indicated below, plus, in each case, all
8
<PAGE> 9
<TABLE>
dividends accrued and unpaid on the shares of Series B Preferred Stock up to the
date fixed for the redemption, upon giving notice as provided herein below:
<CAPTION>
Year Price
- ---- -----
<S> <C>
1999........................................................ $1030.00
2000........................................................ $1020.00
2001........................................................ $1010.00
2002 and thereafter......................................... $1000.00
</TABLE>
(B) If fewer than all of the outstanding shares of Series B Preferred Stock
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall be determined pro
rata or by lot or in such other manner and subject to such regulations as the
Board of Directors in its sole discretion shall prescribe.
(C) At least 15 days, but not more than 30 days, prior to the date fixed
for the redemption of shares of Series B Preferred Stock, a written notice shall
be mailed in a postage prepaid envelope to each holder of record of the shares
of Series B Preferred Stock to be redeemed, addressed to such holder at his post
office address as shown on the records of the Corporation, notifying such holder
of the election of the Corporation to redeem such shares, stating the date fixed
for redemption thereof (the "Redemption Date"), and calling upon such holder to
surrender to the Corporation, on the Redemption Date at the place designated in
such notice, his certificate or certificates representing the number of shares
specified in such notice of redemption. On or after the Redemption Date, each
holder of shares of Series B Preferred Stock to be redeemed shall present and
surrender his certificate or certificates for such shares to the Corporation
(together with transfer instruments sufficient to transfer such shares to the
Corporation free of any adverse interest) at the place designated in such notice
and thereupon the redemption price of such shares shall be paid to or on the
order of the person whose name appears on such certificate or certificates as
the owner thereof and each surrendered certificate shall be cancelled. In case
less than all the shares repre
9
<PAGE> 10
sented by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
Any notice that is mailed as herein provided shall be conclusively presumed
to have been duly given, whether or not the holder of the Series B Preferred
Stock receives such notice; and failure to give such notice by mail, or any
defect in such notice to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series B Preferred Stock.
From and after the Redemption Date (unless default shall be made by the
Corporation in payment of the redemption price), all dividends on the shares of
Series B Preferred Stock designated for redemption in such notice shall cease to
accrue, and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price of such shares
(including all accrued and unpaid dividends up to the Redemption Date) upon the
surrender of certificates representing the same, shall cease and terminate and
such shares shall not thereafter be transferred (except with the consent of the
Corporation) on the books of the Corporation, and such shares shall not be
deemed to be outstanding for any purpose whatsoever. No interest shall accrue on
the redemption price of any shares of Series B Preferred Stock after the date of
redemption of such shares. At its election, the Corporation, prior to the
Redemption Date, may deposit the redemption price (including all accrued and
unpaid dividends up to the Redemption Date) of shares of Series B Preferred
Stock so called for redemption in trust for the holders thereof with a bank or
trust company (having a capital surplus and undivided profits aggregating not
less than $50,000,000) in the Borough of Manhattan, City and State of New York,
or in any other city in which the Corporation at the time shall maintain a
transfer agency with respect to such shares, in which case the aforesaid notice
to holders of shares of Series B Preferred Stock to be redeemed shall state the
date of such deposit, shall specify the office of such bank or trust company as
the place of payment of the redemption price, and shall call upon such holders
to surrender the certificates representing such shares at such place on or after
the date fixed in such redemption notice (which shall not be
10
<PAGE> 11
later than the Redemption Date) against payment of the redemption price
(including all accrued and unpaid dividends up to the Redemption Date). Any
interest accrued on such funds shall be paid to the Corporation from time to
time. Any moneys so deposited which shall remain unclaimed by the holders of
such shares of Series B Preferred Stock at the end of two years after the
Redemption Date shall be returned by such bank or trust company to the
Corporation.
If a notice of redemption has been given pursuant to this Section 5 and any
holder of shares of Series B Preferred Stock shall, prior to the close of
business on the day preceding the Redemption Date, give written notice to the
Corporation pursuant to Section 7 below of the conversion of any or all of the
shares to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Corporation, and
any necessary transfer tax payment, as required by Section 7 below), then such
redemption shall not become effective as to such shares to be converted, such
conversion shall become effective as provided in Section 7 below, and any moneys
set aside by the Corporation for the redemption of such shares of converted
Series B Preferred Stock shall revert to the general funds of the Corporation.
SECTION 6. Shares to Be Retired.
---------------------
All shares of Series B Preferred Stock which shall have been issued and
reacquired in any manner by the Corporation (excluding, until the Corporation
elects to retire them, shares which are held as treasury shares) shall be
restored to the status of authorized but unissued shares of Preferred Stock,
without designation as to series.
SECTION 7. Conversion.
-----------
Holders of shares of Series B Preferred Stock shall have the right to
convert all or a portion of such shares into shares of Common Stock, as follows:
(A) Subject to and upon compliance with the provisions of this Section 7, a
holder of shares of Series B Preferred Stock shall have the right, at his or her
option, at any time after 90 days following the
11
<PAGE> 12
latest date of original issue of any shares of Series B Preferred Stock, to
convert such shares into the number of fully paid and nonassessable shares of
Common Stock obtained by dividing the aggregate Stated Value of such shares by
the Conversion Price (as in effect on the date provided for in the last
paragraph of paragraph (B) of this Section 7) by surrendering such shares to be
converted, such surrender to be made in the manner provided in paragraph (B) of
this Section 7; PROVIDED, HOWEVER, that the right to convert shares called for
redemption pursuant to Section 5 shall terminate at the close of business on the
day preceding the Redemption Date, unless the Corporation shall default in
making payment of the cash payable upon such redemption under Section 5 hereof.
Certificates will be issued for the remaining shares of Series B Preferred Stock
in any case in which fewer than all of the shares of Series B Preferred Stock
represented by a certificate are converted.
(B) In order to exercise the conversion right, the holder of shares of
Series B Preferred Stock to be converted shall surrender the certificate or
certificates representing such shares, duly endorsed or assigned to the
Corporation or in blank, at the office of the Transfer Agent in the Borough of
Manhattan, City of New York, accompanied by written notice to the Corporation
that the holder thereof elects to convert Series B Preferred Stock. Unless the
shares issuable on conversion are to be issued in the same name as the name in
which such share of Series B Preferred Stock is registered, each share
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney and an amount sufficient to pay any transfer
or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
Any share of Series B Preferred Stock surrendered for conversion during the
period from the close of business on a dividend payment record date for any
Dividend Payment Date through the close of business on the day next preceding
such Dividend Payment Date shall (unless such share of Series B Preferred Stock
being converted shall have been called for redemption on a Redemption Date in
such period) be accompanied by payment of an amount equal to the dividend
payable on such share
12
<PAGE> 13
on such Dividend Payment Date. An amount equal to such payment shall be paid by
the Corporation on such Dividend Payment Date to the record holder of such share
of Series B Preferred Stock at the close of business on such dividend payment
record date. Except as provided above, the Corporation shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of Common Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for shares
of Series B Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 7, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in paragraph (C)
of this Section 7.
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which the certificates for shares of Series
B Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend payable on such shares)
received by the Corporation as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date, unless the stock transfer books of the Corporation shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date upon which such shares shall have
been surrendered and such notice received by the Corporation.
(C) No fractional shares or scrip representing fractions of shares of
Common Stock shall be
13
<PAGE> 14
issued upon conversion of the Series B Preferred Stock. Instead of any
fractional interest in a share of Common Stock that would otherwise be
deliverable upon the conversion of a share of Series B Preferred Stock, the
Corporation shall pay to the holder of such share an amount in cash based upon
the Current Market Price of Common Stock on the date of conversion or if such
date of conversion is not a Trading Day then on the Trading Day immediately
preceding such date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series B Preferred Stock so surrendered.
(D) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Corporation shall after the earliest date of original
issue of any shares of Series B Preferred Stock (A) pay a dividend or
make a distribution on its capital stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock into a greater
number of shares, (C) combine its outstanding Common Stock into a
smaller number of shares or (D) issue any shares of capital stock by
reclassification of its Common Stock, the Conversion Price in effect
at the opening of business on the day next following the date fixed
for the determination of stockholders entitled to receive such
dividend or distribution or at the opening of business on the day
next following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be
adjusted so that the holder of any share of Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock that such holder would have owned or
have been entitled to receive after the happening of any of the events
described above had such share been converted immediately prior to the
record date in the case of a dividend or distribution or the effective
date in the case of a subdivision, combination or reclassification.
An
14
<PAGE> 15
adjustment made pursuant to this subparagraph (i) shall become
effective immediately after the opening of business on the day next
following the record date (except as provided in paragraph (H) below)
in the case of a dividend or distribution and shall become effective
immediately after the opening of business on the day next following
the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Corporation shall issue after the earliest date of
original issue of any shares of Series B Preferred Stock rights or
warrants to all holders of Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than
the Fair Market Value per share of Common Stock on the record date for
the determination of stockholders entitled to receive such rights or
warrants, then the Conversion Price in effect at the opening of
business on the day next following such record date shall be adjusted
to equal the price determined by multiplying (I) the Conversion Price
in effect immediately prior to the opening of business on the day next
following the date fixed for such determination by (II) a fraction,
the numerator of which shall be the sum of (A) the number of shares of
Common Stock outstanding on the close of business on the date fixed
for such determination and (B) the number of shares that the aggregate
proceeds to the Corporation from the exercise of such rights or
warrants for Common Stock would purchase at such Fair Market Value,
and the denominator of which shall be the sum of (A) the number of
shares of Common Stock outstanding on the close of business on the
date fixed for such determination and (B) the number of additional
shares of Common Stock offered for subscription or purchase pursuant
to such rights or warrants. Such adjustment shall become effective
immediately after the opening of business on the day next following
such record date (except as provided in paragraph
15
<PAGE> 16
(H) below). In determining whether any rights or warrants entitle the
holders of Common Stock to subscribe for or purchase shares of Common
Stock at less than such Fair Market Value, there shall be taken into
account any consideration received by the Corporation upon issuance
and upon exercise of such rights or warrants, the value of such
consideration, if other than cash, to be determined by the Board of
Directors.
(iii) If the Corporation, after the earliest date of original
issue of any shares of Series B Preferred Stock, shall distribute to
all holders of its Common Stock any shares of capital stock of the
Corporation (other than Common Stock), assets (excluding cash
dividends or distributions paid from profits or surplus of the
Corporation, other than Extraordinary Cash Distributions (as defined
herein)), evidence of its indebtedness or rights or warrants to
subscribe for or purchase any of its securities (excluding those
rights and warrants issued to all holders of Common Stock entitling
them for a period expiring within 45 days after the record date
referred to in subparagraph (ii) above to subscribe for or purchase
Common Stock, which rights and warrants are referred to in and treated
under subparagraph (ii) above) (any of the foregoing being hereinafter
in this subparagraph (iii) called the "Securities"), then in each such
case the Conversion Price shall be adjusted so that it shall equal the
price determined by multiplying (I) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by
(II) a fraction, the numerator of which shall be the Fair Market Value
per share of the Common Stock on the record date mentioned below less
the then fair market value (as determined by the Board of Directors,
whose determination shall be conclusive) of the portion of such
capital stock, assets, evidence of its indebtedness or rights or
warrants so distributed per share of Common Stock, and the denominator
of
16
<PAGE> 17
which shall be the Fair Market Value per share of the Common Stock on
the record date mentioned below. Such adjustment shall become
effective immediately at the opening of business on the Business Day
next following (except as provided in paragraph (H) below) the record
date for the determination of shareholders entitled to receive such
distribution. For the purposes of this clause (iii), the distribution
of a Security, which is distributed not only to the holders of the
Common Stock on the date fixed for the determination of stockholders
entitled to such distribution of such Security, but also is
distributed with each share of Common Stock delivered to a Person
converting a share of Series B Preferred Stock after such
determination date, shall not require an adjustment of the Conversion
Price pursuant to this clause (iii); PROVIDED that on the date, if
any, on which a Person converting a share of Series B Preferred Stock
would no longer be entitled to receive such Security with a share of
Common Stock (other than as a result of the termination of all such
Securities), a distribution of such Securities shall be deemed to have
occurred and the Conversion Price shall be adjusted as provided in
this clause (iii) (and such day shall be deemed to be "the date fixed
for the determination of the stockholders entitled to receive such
distribution" and "the record date" within the meaning of the two
preceding sentences). "Extraordinary Cash Distribution" means the
portion of any cash dividend or cash distribution on the Common Stock
that, when added to all other cash dividends and cash distributions on
the Common Stock made during the immediately preceding 12-month
period (other than cash dividends and cash distributions for which a
prior adjustment to the Conversion Price was previously made),
exceeds, on a per share of Common Stock basis, ten percent (10%) of
the average daily Current Market Price of the Common Stock over such
12-month period.
(iv) No adjustment in the Conversion Price shall be required
unless such
17
<PAGE> 18
adjustment would require a cumulative increase or decrease of at least
1% in such price; PROVIDED, HOWEVER, that any adjustments that by
reason of this subparagraph (iv) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment
until made; and PROVIDED, FURTHER, that any adjustment shall be
required and made in accordance with the provisions of this Section 7
(other than this subparagraph (iv)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to
the holders of shares of Common Stock. Notwithstanding any other
provisions of this Section 7, the Corporation shall not be required to
make any adjustment of the Conversion Price for the issuance of any
shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends on securities of the Corporation or any
employee stock purchase plan (including without limitation the
Corporation's 1995 Employees' Stock Purchase Plan) approved by the
stockholders of the Corporation. All calculations under this Section 7
shall be made to the nearest cent (with $.005 being rounded upward) or
to the nearest 1/10 of a share (with .05 of a share being rounded
upward), as the case may be. Anything in this paragraph (D) to the
contrary notwithstanding, the Corporation shall be entitled, to the
extent permitted by law, to make such reductions in the Conversion
Price, in addition to those required by this paragraph (D), as it in
its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, reclassification or combination of
shares, distribution of rights or warrants to purchase stock or
securities, or a distribution of other assets (other than cash
dividends) hereafter made by the Corporation to its stockholders shall
not be taxable.
(v) To the extent permitted by applicable law, the Corporation
from time to time may reduce the Conversion Price by any amount for
any period of time if the period is at least 20 days, the reduction is
irrevocable
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<PAGE> 19
during the period and the Board shall have made a determination that
such reduction would be in the best interests of the Corporation,
which determination shall be conclusive. Whenever the Conversion Price
is reduced pursuant to the preceding sentence, the Corporation shall
mail to holders of record of the Series B Preferred Stock a notice of
the reduction at least 15 days prior to the date the reduced
Conversion Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect. Any such
reduction of the Conversion Price does not change or adjust the
Conversion Price otherwise in effect for this Section 7(D).
(E) If the Corporation, after the earliest date of original issue of any
shares of Series B Preferred Stock, shall be a party to any transaction
(including without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets or recapitalization or
reclassification of the Common Stock and excluding any transaction as to which
subparagraph (D)(i) of this Section 7 applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which shares
of Common Stock shall be converted into the right to receive stock, securities
or other property (including cash or any combination thereof), each share of
Series B Preferred Stock which is not converted into the right to receive stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares of stock and other
securities and property receivable (including cash or any combination thereof)
upon the consummation of such Transaction by a holder of that number of shares
or fraction thereof of Common Stock into which one share of Series B Preferred
Stock was convertible immediately prior to such Transaction, assuming such
holder of Common Stock (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of stock,
securities or other property (including cash or any combination thereof)
receivable upon
19
<PAGE> 20
such Transaction (provided that if the kind or amount of stock, securities or
other property (including cash or any combination thereof) receivable upon such
Transaction is not the same for each share of Common Stock held immediately
prior to such Transaction by other than a Constituent Person or an affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this paragraph (E) the
kind and amount of stock, securities or other property (including cash or any
combination thereof) receivable upon such Transaction by each non-electing share
shall be deemed to be the kind and amount so receivable per share by the
plurality of the non-electing shares). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (E) and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series B Preferred Stock that will contain
provisions enabling the holders of the Series B Preferred Stock that remains
outstanding after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (E) shall similarly apply to
successive Transactions.
(F) If:
(i) the Corporation shall de- clare a dividend (or any other
distribution) on the Common Stock (other than in cash out of profits
or surplus, other than Extraordinary Cash Distributions); or
(ii) the Corporation shall authorize the granting to the holders
of the Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or any other rights or warrants which,
pursuant to the terms of this Section 7, would require an adjustment
in the Conversion Price; or
(iii) there shall be any re- classification of the Common Stock
(other than an event to which subparagraph (D)(i) of this
20
<PAGE> 21
Section 7 applies) or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
the Corporation is required, or the sale or transfer of all or
substantially all of the assets of the Corporation as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation,then the Corporation
shall cause to be filed with the Transfer Agent and shall cause to be
mailed to the holders of shares of the Series B Preferred Stock at
their addresses as shown on the stock records of the Corporation, as
promptly as possible, but at least 15 days prior to the applicable
date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution
or rights or warrants, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such
dividend, distribution or rights or warrants are to be determined or
(B) the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is expected to
become effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares
of Common Stock for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up. Failure to give or receive
such notice or any defect therein shall not affect the legality or
validity of the proceedings described in this Section 7.
(G) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly file with the Transfer Agent an officer's certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment which certificate shall
be prima facie evidence of the correctness of such adjustment. Promptly after
delivery of such certificate,
21
<PAGE> 22
the Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the effective date of such
adjustment and shall mail such notice of such adjustment of the Conversion Price
of the holder of each share of Series B Preferred Stock at such holder's last
address as shown on the stock records of the Corporation.
(H) In any case in which paragraph (D) of this Section 7 provides that an
adjustment shall become effective on the day next following a record date for an
event, the Corporation may defer until the occurrence of such event (A) issuing
to the holder of any share of Series B Preferred Stock converted after such
record date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (B) paying to such holder any amount
in cash in lieu of any fraction pursuant to paragraph (C) of this Section 7.
(I) For purposes of this Section 7, the number of shares of Common Stock at
any time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Corporation. The Corporation shall not pay a
dividend or make any distribution on shares of Common Stock held in the treasury
of the Corporation.
(J) There shall be no adjustment of the Conversion Price in case of the
issuance of any stock of the Corporation in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 7. If
any action or transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 7, only one adjustment shall
be made and such adjustment shall be the amount of adjustment that has the
highest absolute value.
(K) If the Corporation shall take any action affecting the Common Stock,
other than action described in this Section 7, that in the opinion of the Board
of Directors would materially adversely affect the conversion rights of the
holders of the shares of Series B Preferred Stock, the Conversion Price for the
Series B Preferred Stock may be adjusted, to the extent permitted
22
<PAGE> 23
by law, in such manner, if any, and at such time, as the Board of Directors may
determine to be equitable in the circumstances.
(L) The Corporation covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversion of the Series B
Preferred Stock, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series B Preferred Stock not theretofore
converted. For purposes of this paragraph (L), the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series B Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Series B Preferred Stock shall be validly issued, fully paid
and non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the shares of Common
Stock deliverable upon conversion of the Series B Preferred Stock, the
Corporation will take any corporate action that, in the opinion of its counsel,
may be necessary in order that the Corporation may validly and legally issue
fully-paid and nonassessable shares of Common Stock at such adjusted Conversion
Price.
The Corporation shall endeavor to list the shares of Common Stock required
to be delivered upon conversion of the Series B Preferred Stock, prior to such
delivery, upon each national securities exchange or market, if any, upon which
the outstanding Common Stock is listed at the time of such delivery.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series B Preferred Stock (and
subject to the provisions of the Registration Rights Agreement), the Corporation
shall endeavor to comply with all federal and state laws and regulations
thereunder requiring the registration of such securities with, or any approval
of
23
<PAGE> 24
or consent to the delivery thereof by, any governmental authority.
(M) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock or other securities or property on conversion of the Series B
Preferred Stock pursuant hereto; PROVIDED, HOWEVER, that the Corporation shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the Series B Preferred
Stock to be converted and no such issue or delivery shall be made unless and
until the person requesting any issue or delivery has paid to the Corporation
the amount of any such tax or established, to the reasonable satisfaction of the
Corporation, that such tax has been paid.
SECTION 8. Ranking.
--------
Any class or series of stock of the Corporation shall be deemed to rank:
(A) prior to the Series B Preferred Stock, as to the payment of dividends
or as to distributions of assets upon liquidation, dissolution or winding up, as
the case may be, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series B Preferred Stock;
(B) on a parity with the Series B Pre- ferred Stock, as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, as the case may be, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be different
from those of the Series B Preferred Stock if the holders of such class of stock
or series and the Series B Preferred Stock shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or winding
up, as the case may be, in proportion to their respective amounts of accrued and
unpaid dividends per
24
<PAGE> 25
share or liquidation preferences, without preference or priority one over the
other; and
(C) junior to the Series B Preferred Stock, as to the payment of dividends
or as to the distribution of assets upon liquidation, dissolution or winding up,
as the case may be, if such stock or series shall be Common Stock or if the
holders of Series B Preferred Stock shall be entitled to receipt of dividends or
of amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of shares of such stock or
series.
SECTION 9. Voting.
-------
(A) Each share of Series B Preferred Stock shall entitle the holder thereof
to one (1) vote on all matters submitted to a vote of the stockholders of the
Corporation. Except as otherwise required by applicable law or as set forth in
the Certificate of Incorporation or herein, the holders of shares of Series B
Preferred Stock and the holders of shares of Common Stock and any other class or
series of stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(B) Unless the affirmative vote or con- sent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series B Preferred Stock and
all other affected Parity Dividend Stock or Parity Liquidating Stock upon which
like voting rights have been conferred and are exercisable, given in person or
by proxy, either in writing or by a vote at a meeting called for the purpose, at
which the holders of shares of Series B Preferred Stock and such Parity Dividend
Stock and Parity Liquidating Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting or validating
the amendment, alteration or repeal of any of the provisions of the Certificate
of Incorporation or of any certificate amendatory thereof or supplemental
thereto (including any certificate of designations or any similar document
relating to any series of Preferred Stock) which would materially adversely
affect the preferences, rights,
25
<PAGE> 26
powers or privileges of the Series B Preferred Stock; PROVIDED, HOWEVER, that
the amendment of the provisions of the Certificate of Incorporation or of any
certificate amendatory thereof or supplemental thereto so as to authorize or
create, or to increase the authorized amount of, any Junior Dividend Stock,
Junior Liquidating Stock, Parity Dividend Stock or Parity Liquidating Stock
shall not be deemed to materially adversely affect the preferences, rights,
powers or privileges of the Series B Preferred Stock.
(C) Unless the affirmative vote or con- sent of the holders of a greater
number of shares shall then be required by law, the consent of the holders of at
least 66-2/3% of all of the outstanding shares of Series B Preferred Stock and
all Parity Dividend Stock or Parity Liquidating Stock upon which like voting
rights have been conferred and are exercisable, given in person or by proxy,
either in writing or by a vote at a meeting called for the purpose at which the
holders of shares of Series B Preferred Stock and such Parity Dividend Stock and
Parity Liquidating Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class of stock of the
Corporation ranking prior to the Series B Preferred Stock as to dividends or
upon liquidation, dissolution or winding up, or the reclassification of any
authorized stock of the Corporation into any such prior shares, or the creation,
authorization or issuance of any obligation or security convertible into or
evidencing the right to purchase any such prior shares.
(D) If at the time of any annual meeting of stockholders for the election
of directors a default in preference dividends (as defined below) on the Series
B Preferred Stock shall exist, the number of directors constituting the Board of
Directors shall be increased by two, and the holders of the Series B Preferred
Stock and any Parity Dividend Stock upon which like voting rights have been
conferred and are exercisable shall have the right at such meeting, voting
together as a single class without regard to series, to the exclusion of the
holders of Common Stock, to elect two directors (the "Series B Preferred
Directors") of the Corporation to fill such newly created directorships. Such
right shall continue until there are no dividends in arrears upon the Series B
26
<PAGE> 27
Preferred Stock or any such Parity Dividend Stock. Any Series B Preferred
Director may be removed by, and shall not be removed except by, the vote of the
holders of record of the outstanding shares of Series B Preferred Stock and any
Parity Dividend Stock upon which like voting rights have been conferred and are
exercisable, voting together as a single class without regard to series, at a
meeting of the stockholders, or of such holders, called for the purpose. So long
as a default in any preference dividends on the Series B Preferred Stock or any
such Parity Dividend Stock shall exist, (a) any vacancy in the office of a
Series B Preferred Director may be filled (except as provided in the following
clause (b)) by an instrument in writing signed by the remaining Series B
Preferred Director and filed with the Corporation and (b) in the case of the
removal of any Series B Preferred Director, the vacancy may be filled by the
vote of the holders of the outstanding shares of Series B Preferred Stock and
any Parity Dividend Stock upon which like voting rights have been conferred and
are exercisable, voting together as a single class without regard to series, at
the same meeting at which such removal shall be voted. Each director appointed
as aforesaid by the remaining Series B Preferred Director shall be deemed, for
all purposes hereof, to be a Series B Preferred Director. Whenever a default in
preference dividends shall no longer exist, the term of office of each Series B
Preferred Director shall terminate and the number of directors constituting the
Board of Directors shall be reduced by two and the rights of the holders of the
shares of the Series B Preferred Stock to vote as provided in this Section 9(D)
shall cease, and the holders of shares of the Series B Preferred Stock shall
have only the voting rights elsewhere herein set forth, until such time as a
default in preference dividends on the Series B Preferred Stock recurs in which
case the special voting rights set forth in this Section 9(D) shall apply. For
the purposes hereof, a "default in preference dividends" on the Series B
Preferred Stock shall be deemed to exist whenever the equivalent of six
quarterly dividends have not been declared and paid or set apart for payment,
whether or not consecutive, and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all accrued dividends on all
shares of Series B Preferred Stock shall have been declared and paid or set
apart for payment to the end of the last preceding dividend period.
27
<PAGE> 28
For purposes of the foregoing provisions of this Section 9, each share of
Series B Preferred Stock shall have one (1) vote per share. Except as otherwise
required by applicable law or as set forth herein, the shares of Series B
Preferred Stock shall not have any voting rights and the consent of the holders
thereof shall not be required for the taking of any corporate action. Any shares
of Series B Preferred Stock held by the Corporation or any entity controlled by
the Corporation shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.
SECTION 10. Record Holders.
---------------
The Corporation and the Transfer Agent may deem and treat the record holder
of any shares of Series B Preferred Stock as the true and lawful owner thereof
for all purposes, and neither the Corporation nor the Transfer Agent shall be
affected by any notice to the contrary.
28
<PAGE> 29
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by Richard L. Buckingham, its Vice President &
Treasurer, on this 27th day of February, 1996.
WANG LABORATORIES, INC.
By: /s/ Richard L. Buckingham
----------------------------
Name: Richard L. Buckingham
Title: Vice President &
Treasurer
29
<PAGE> 1
Exhibit 10.42
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:
(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.
(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
<PAGE> 2
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 or on September 27, 2000, whichever occurs first
(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
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
2
<PAGE> 3
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.
exbt1042
3
<PAGE> 1
Exhibit 10.43
WANG LABORATORIES, INC.
Depositary Shares each Representing a 1/20 Interest
in a Share of 6 1/2% Series B Cumulative
Convertible Preferred Stock
REGISTRATION RIGHTS AGREEMENT
February 27, 1996
TO: LEHMAN BROTHERS INC.
BT SECURITIES CORPORATION
SALOMON BROTHERS INC
As Purchasers,
c/o Lehman Brothers Inc.
3 World Financial Center
17th Floor
New York, New York 10285
Dear Sirs:
Wang Laboratories, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell (the "Initial Placement") to you (each a
"Purchaser" and together the "Purchasers"), upon the terms set forth in a
Purchase Agreement, dated February 21, 1996 (the "Purchase Agreement"), the
Depositary Shares (as defined below), each representing a 1/20 interest in a
share of its Preferred Stock (as defined below). As an inducement to you to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you (i) for your benefit and
(ii) for the benefit of the holders (including you) from time to time (each of
the foregoing a "Holder" and together the "Holders") of the Depositary Shares or
the Underlying Securities (each as defined below) as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this
<PAGE> 2
Agreement, the following capitalized defined terms shall have the following
meanings:
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether through
ownership of voting securities or by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning set forth in the Purchase
Agreement.
"Company" has the meaning set forth in the preamble hereto.
"Depositary Shares" has the meaning set forth in the Purchase
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Holder" and "Holders" have the meanings set forth in the
preamble hereto.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Losses" has the meaning set forth in Section 5(d).
"Majority Holders" means the Holders of (i) a majority of the
Depositary Shares registered or to be registered under the Shelf Registration
Statement, (ii) a majority of the Preferred Stock registered or to be registered
under the Shelf Registration Statement and
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<PAGE> 3
(iii) a majority of the Common Stock registered or to be registered under the
Shelf Registration Statement.
"Preferred Stock" has the meaning set forth in the Purchase
Agreement.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the securities covered by the Shelf
Registration Statement, and all amendments and supplements to such prospectus,
including post-effective amendments.
"Purchase Agreement" has the meaning set forth in the preamble
hereto.
"Purchaser" and "Purchasers" have the meanings set forth in
the preamble hereto.
"Requesting Holder" has the meaning set forth in Section
3(a)(1).
"Second Closing Date" has the meaning set forth in the
Purchase Agreement.
"Securities" has the meaning set forth in the Purchase
Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Shelf Registration Period" has the meaning set forth in
Section 2(b).
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 2 which covers
the Depositary Shares and the Underlying Securities, on an appropriate form
under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission, all amendments and supplements to such registration state-
3
<PAGE> 4
ment, including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Underlying Securities" means the shares of Preferred Stock
represented by the Depositary Shares and the shares of Common Stock issuable
upon conversion of the Preferred Stock.
2. Shelf Registration.
(a) The Company shall prepare and, not later than 180 days
following the Closing Date, shall file with the Commission a Shelf Registration
Statement relating to the offer and sale by the Holders (subject to the Holders'
right to elect, pursuant to Section 3(a)(2), not to be included by name as a
"selling security holder" in the Shelf Registration Statement) of the Depositary
Shares and the Underlying Securities from time to time in accordance with the
methods of distribution (other than an underwritten public offering) elected by
the Holders and set forth in the Shelf Registration Statement, and thereafter
shall use its best efforts to cause such Shelf Registration Statement to be
declared effective under the Securities Act as promptly as is practicable;
provided, however, that no Holder shall be entitled to have the Depositary
Shares or the Underlying Securities held by it covered by such Shelf
Registration Statement if such Holder fails to furnish the Company required
information in accordance with Section 3(l) hereof.
(b) Subject to any notice or advice by the Company in
accordance with Section 3(c)(2) hereof of the existence of any fact or event of
the kind described in Section 3(c)(2)(iii) hereof, the Company shall use all
reasonable efforts to keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be usable by
the Holders for a period of three years from the later of the Closing Date and
the Second Closing Date, if any, or such shorter period that will terminate when
all the Depositary Shares and Underlying Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf Registration
Period").
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<PAGE> 5
(c) The Shelf Registration Statement will not be deemed to
have become effective unless it has been declared effective by the Commission;
provided, however, that if, after it has been declared effective, the offering
of Depositary Shares and Underlying Securities pursuant to the Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the Commission or any other governmental agency,
authority or court, or by any notice or advice from the Company of the existence
of any fact or event of the kind described in Section 3(c)(2)(iii) the Shelf
Registration Statement will be deemed not to have been effective during the
period of such interference until the offering of the securities registered
thereunder may legally resume.
3. Registration Procedures. In connection with the Shelf
Registration Statement, the following provisions shall apply:
(a)(1) The Company shall furnish to the Purchasers and to each
Holder that so requests (a "Requesting Holder"), prior to the filing
thereof with the Commission, a copy of the Shelf Registration
Statement, and each amendment thereof and each amendment or supplement,
if any, to the Prospectus included therein and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as any Purchaser or Requesting Holder
reasonably may propose.
(2) Each Holder shall have the right to elect, prior to the
time the Shelf Registration Statement is declared effective, not to be
included in the Shelf Registration as a "selling security holder";
provided, that, notwithstanding any such election, any subsequent
Holder that is a direct or indirect transferee of Depositary Shares or
Underlying Securities of such an original Holder so electing not be
included as a "selling security holder" shall have the right to elect
to be included in the Shelf Registration Statement as a "selling
security holder". Any original Holder so electing not to be included as
a "selling security holder" shall notify the Company of such election
within three business days of being advised, pursuant to Section
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<PAGE> 6
3(c)(1)(i), that the Shelf Registration Statement has been filed with
the Commission.
(3) The Company shall amend and supplement the Shelf
Registration Statement and the Prospectus forming part thereof if
requested in writing to do so by any subsequent Holder to the extent
necessary to list such Holder as a "selling security holder"
pursuant to Section 3(a)(2).
(b) The Company shall ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto (and each report or
other document incorporated therein by reference in each case) complies
in all material respects with the Securities Act and the Exchange Act,
(ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Shelf Registration Statement,
and any amendment or supplement to such Prospectus, does not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c)(1) The Company shall advise the Purchasers and, in the
case of clause (i), the Holders and, if requested by the Purchasers or
any Holder, confirm such advice in writing:
(i) when the Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
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<PAGE> 7
(2) Promptly upon becoming aware of such events, the Company
shall advise the Purchasers and the Holders and, if requested by the
Purchasers or any Holder, confirm such advice in writing:
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included therein for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iii) of the existence of any fact or the happening
of any event (including without limitation pending
negotiations relating to, or the consummation of, a
transaction or the occurrence of any event which would require
additional disclosure of material, non-public information by
the Company in the Shelf Registration Statement as to which
the Company has a bona fide business purpose for preserving
confidentiality or which renders the Company unable to comply
with Commission requirements) that requires the making of any
changes in the Shelf Registration Statement or the Prospectus
so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading
(which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes
have been made).
(d) The Company shall use its best efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of the Shelf Registration Statement at the
earliest possible time.
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<PAGE> 8
(e) The Company shall furnish to each Holder, without charge,
at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if any Holder so requests in writing, all exhibits
(including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale
of the securities covered by the Prospectus or any amendment or
supplement thereto.
(g) Prior to any offering of securities pursuant to the Shelf
Registration Statement, the Company shall register or qualify or
cooperate with the Holders of securities included therein and their
respective counsel in connection with the registration or qualification
of such securities for offer and sale under the securities or blue sky
laws of such jurisdictions as any such Holders reasonably request in
writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the securities
covered by the Shelf Registration Statement; provided, however, that
the Company will not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(h) The Company shall cooperate with the Holders to facilitate
the timely preparation and delivery of Depositary Receipts representing
Depositary Shares and certificates representing Underlying Securities
to be sold pursuant to the Shelf Registration Statement free of any
restrictive legends and registered in such names as the Holders may
8
<PAGE> 9
request in connection with sales of securities pursuant to the Shelf
Registration Statement.
(i) As soon as reasonably practicable after the occurrence of
any fact or event contemplated by Section 3(c)(2)(iii), the Company
shall prepare a post-effective amendment to the Shelf Registration
Statement or an amendment or supplement to the related Prospectus or
file any other required document so that, as thereafter delivered to
purchasers of the securities included therein, the Prospectus will not
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, provided,
however, that notwithstanding anything to the contrary herein, the
Company shall not be required to prepare and file such a supplement or
post-effective amendment or document if the fact no longer exists; and
provided further, however, that, in the event of a material business
transaction (including without limitation pending negotiations relating
to such a transaction) which, based upon the advice of outside counsel
reasonably acceptable to the Purchasers, would require disclosure by
the Company in the Shelf Registration Statement of material, non-public
information which the Company has a bona fide business purpose for not
disclosing, then for so long as such circumstances and such business
purpose continue to exist, the Company shall not be required to prepare
and file a supplement or post-effective amendment hereunder.
(j) Not later than the effective date of the Shelf
Registration Statement hereunder, the Company shall provide a CUSIP
number for the Depositary Shares and the Underlying Securities
registered under such Shelf Registration Statement, and provide the
applicable transfer agent with printed certificates for such
securities, in a form eligible for deposit with The Depository Trust
Company.
(k) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make
generally available to its security holders as soon as practicable
after the effective date of the Shelf Registration State-
9
<PAGE> 10
ment an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act.
(l) The Company may require each Holder of securities to be
sold pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding such Holder and the distribution of
such securities as the Company may from time to time reasonably require
for inclusion in the Shelf Registration Statement and the Company may
exclude from such Shelf Registration Statement the securities of any
Holder that fails to furnish such information within 20 business days
after receiving such request.
(m) The Company shall (i) make reasonably available for
inspection by any Purchaser and any attorney, accountant or other agent
retained by any Purchaser all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
any Purchaser in connection with the Shelf Registration Statement as is
customary for similar due diligence examinations; provided, however,
that any information that is designated in writing by the Company, in
good faith, as confidential at the time of delivery of such
information, including, without limitation, all material non-public
information, shall be kept confidential by any such persons, unless
such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality; (iii) make such representations and warranties to
the Purchasers in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Purchasers) addressed to the
Purchasers, covering such matters as are customarily covered in
opinions requested in underwritten offer-
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<PAGE> 11
ings and such other matters as may be reasonably requested by the
Purchasers; (v) obtain "comfort" letters (or, in the case of any person
that does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures letter") and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Shelf Registration Statement), addressed to the Purchasers, in
customary form and covering matters of the type then customarily
covered in "cold comfort" letters in connection with primary
underwritten offerings; and (vi) deliver such other documents and
certificates as may be reasonably requested by the Purchasers,
including those to evidence compliance with Section 3(i). The foregoing
actions set forth in Section 3(o)(iii), (iv), (v) and (vi) shall be
performed at the effectiveness of the Shelf Registration Statement and
each post-effective amendment thereto.
(n) The Company may offer securities of the Company, other
than the Depositary Shares and the Underlying Securities, under the
Shelf Registration Statement.
(o) Each Holder agrees by acquisition of any Depositary Shares
or Underlying Securities that, upon receipt of any notice or advice
from the Company of the existence of any fact or event of the kind
described in Section 3(c)(2)(iii) hereof, such Holder will forthwith
discontinue disposition of Depositary Shares and Underlying Securities
pursuant to the applicable Shelf Registration Statement until such
Holder's receipt of the copies of a supplemented or amended Prospectus
as contemplated by Section 3(i) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the
Company, each Holder will deliver to the Company (at the expense of the
Company) all copies, other than
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<PAGE> 12
permanent file copies then in such Holder's possession, of the
Prospectus covering such Depositary Shares and/or Underlying Securities
that was current at the time of receipt of such notice or advice.
4. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 2 and 3.
5. Indemnification and Contribution. (a) In connection with
any Shelf Registration Statement, the Company agrees to indemnify and hold
harmless the Purchasers, each Holder of securities covered thereby (in-
cluding, without limitation, the Purchasers), the directors, officers,
employees and agents of the Purchasers or any such Holder and each person who
controls the Purchasers or any such Holder within the meaning of either the
Securities Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, or actions in respect thereof, to which they
or any of them may become subject under the Securities Act, the Exchange Act or
other Federal or state statutory laws or regulations, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or actions arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement as originally filed
or in any amendment thereof, or in any preliminary Prospectus or Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and agrees to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein and (ii) such indemnity with respect to any
preliminary prospectus relating to a Shelf Registration
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<PAGE> 13
Statement shall not inure to the benefit of any Holder (or any director,
officer, employee or agent of such Holder or any person controlling such Holder)
from whom the person asserting any such loss, claim, damage or liability
purchased the Depositary Shares or Underlying Securities, as the case may be,
which are the subject thereof if such person did not receive a copy of the final
prospectus (or the final prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
Depositary Shares or Underlying Securities, as the case may be, in any case
where such delivery is required by the Securities Act and the untrue statement
or omission of a material fact contained in such preliminary prospectus was
corrected in such final prospectus (or final prospectus as supplemented). This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Holder of securities covered by a Shelf Registration
Statement (including, without limitation, the Purchasers) severally agrees to
indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Shelf Registration Statement and (iv) each
person who controls the Company within the meaning of either the Securities Act
or the Exchange Act to the same extent as the foregoing indemnity from the
Company to each Holder, but only with reference to written information relating
to such Holder furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 5 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 5, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 5 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not
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<PAGE> 14
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 5. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel (and local counsel), if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it or any other indemnified party
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle, compromise or consent
to the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in Section 5(a)
or (b) is unavailable to or insufficient
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<PAGE> 15
to hold harmless an indemnified party for any reason, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall have a
joint and several obligation to contribute to the aggregate losses, claims,
damages and liabilities (including legal and other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which such indemnified party may be subject in such proportion as is appropriate
to reflect the relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from the Initial Placement
and the Shelf Registration Statement; provided, however, that in no case shall
any Purchaser or any subsequent Holders be responsible, in the aggregate, for
any amount in excess of the purchase discount or commission applicable to the
Securities, purchased by such Purchaser in the Initial Placement or being sold
by such Holder pursuant to the Shelf Registration Statement, in the Initial
Placement. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such indemnifying party, on the
one hand, and such indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the Initial Placement (before
deducting expenses). Benefits received by the Purchasers shall be deemed to be
equal to the purchase discount and commission in the Initial Placement, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Depositary Shares and Underlying Securities registered under the
Securities Act. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 5(d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be
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<PAGE> 16
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person who controls a
Purchaser or a Holder within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of a Purchaser or a
Holder shall have the same rights to contribution as such Purchaser or Holder,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act, each officer of the Company who shall have
signed the Shelf Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this Section 5(d).
(e) The provisions of this Section 5 will remain in full force
and effect, regardless of any investigation made by or on behalf of any
Purchaser, Holder or the Company or any of the officers, directors or
controlling persons referred to in this Section 5, and will survive the sale by
any Purchaser or Holder of Depositary Shares or Underlying Securities.
6. Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction. Any remedy under this Section 6 is subject to certain equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
7. Miscellaneous. (a) No Inconsistent Agreements. The
Company has not, as of the date hereof, entered into, nor shall it, on or after
the date hereof, enter into, any agreement with respect to its securities or
otherwise that is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sen-
16
<PAGE> 17
tence, may not be amended, qualified, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of the Majority Holders; provided,
that, with respect to any matter that directly or indirectly affects the rights
of the any of the Purchasers, the Company shall obtain the written consent of
the Purchaser against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
securities are being sold pursuant to the Shelf Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be given
by the Majority Holders, determined on the basis of securities being sold rather
than registered under the Shelf Registration Statement.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the
address of such Holder maintained by the registrar for the Depositary
Shares or Underlying Securities, as the case may be, with a copy in
like manner to the Purchasers;
(ii) if to any of the Purchasers, initially at the address set
forth in the Purchase Agreement; and
(iii) if to the Company, initially at its address set forth
in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received. The Purchasers or the Company by notice to the
other may designate additional or different addresses for subsequent notices or
communications.
17
<PAGE> 18
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including, without the need for an express assignment or any consent by
the Company thereto, all current and future Holders. The Company hereby agrees
to extend the benefits of this Agreement to any Holder and any Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO CONFLICTS OF LAW RULES).
(h) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent
or approval of the Majority Holders is required hereunder, securities held by
the Company or its Affiliates (other than Holders deemed to be Affiliates of the
Company solely by reason of their holdings of Depositary Shares or Underlying
Securities) shall not be counted in determining whether such consent or approval
was given by the Majority Holders.
18
<PAGE> 19
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you by confirming and accepting this Agreement
as set forth below.
Very truly yours,
WANG LABORATORIES, INC.
By: /s/ Franklyn A. Caine
--------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By: /s/ Lew Godlis
-------------------------------
Name:
Title:
BT SECURITIES CORPORATION
By: /s/ Jeff L. Ott
-------------------------------
Name:
Title:
SALOMON BROTHERS INC
By: /s/ Adam N. Perrett
-------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.44
January 31, 1996
Ms. Jean M. Edwards
15 Country Road
Holliston, MA 01746
Dear Jean:
This letter sets forth the details of your employment with Wang
Laboratories, Inc.("Wang" or the "Company") and supersedes and cancels any
prior employment agreements and/or arrangements you may have entered into 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 will continue to be employed as a Senior Vice President, Human
Resources, of Wang, effective as of December 18, 1995 ("Hire Date").
2. TERM
----
The terms and conditions of this letter will cover a one (1)-year period
beginning as of the Hire Date, unless otherwise terminated as provided in
paragraph 4, below, in which case you shall be entitled to the benefits
described in paragraph 4.
3. COMPENSATION AND BENEFITS; EMPLOYMENT STATUS
---------------------------------------------
(a) YEARLY PAYMENTS
---------------
Your initial yearly base salary will be $160,000 (payable semi-monthly)
and you will be eligible to participate in an annualized fiscal year bonus plan
targeted at 40% of your base salary, depending on your performance against the
objectives specified in the plan. For FY 1996, your bonus will be prorated from
your Hire Date to June 30, 1996. Your salary and bonus will be reviewed yearly
for possible upward adjustments at the discretion of the Company.
(b) STOCK INCENTIVES
----------------
Subject to final approval by the Organization, Compensation and Nominating
Committee (the "Committee") of the Board of Directors of Wang, you will be
eligible to participate in the Company's Employees Stock Incentive Plan
initially with a grant of 28,000 options for Wang Common Stock, which options
shall vest in equal installments over a three (3)-year period, the first
installment vesting on the one (1)-year anniversary of the grant date or your
Hire Date, whichever is later, and the second and third installments on each
anniversary year thereafter. The exercise price for such
<PAGE> 2
options will be based on the fair market value on the day the grant is approved
by the Committee or on your Hire Date, whichever is later. On an ongoing basis
you will be eligible to participate in the Company's stock incentive plan at a
level consistent with your position, the program's terms and conditions and your
performance, subject to the approval of the Committee.
(c) OTHER PROVISIONS
----------------
(i) The Company will provide health, dental and disability coverage to you
in accordance with existing Company plans available to all employees generally.
You are eligible to participate in Wang's Retirement Savings Plan effective as
of your Hire Date. You are also eligible to participate in Wang's Supplemental
Executive Retirement Plan. The Company will provide term life insurance to you
based on your insurability in the amount of five times your base salary plus
target bonus (40% of base salary) compensation. You will also receive the
Company's standard vacation, sick time and personal holiday benefits.
(ii) Your eligibility for future salary increases, bonuses and stock
incentives, and initial and future benefits shall be pursuant to the same terms
and conditions as those applicable to other similarly situated employees of the
Company. You will also be eligible for all other perquisites that are or may be
made available to other similarly situated employees of the Company from time to
time.
(iii) During your employment, the Company will pay you a monthly
automobile allowance of $585 per month. Additionally, the Company will pay the
automobile insurance premium for one automobile if the automobile is leased
through a Wang automobile lease program. 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 employee of the Company.
(iv) At the end of the one (1)-year period described in this 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 you or the Company. Therefore, unless this
Agreement is extended in writing, the terms and conditions contained in
paragraph 4 of this offer letter will expire at the end of this one (1)-year
period and the original, unmodified terms of paragraph 6 of the enclosed,
presently modified standard Wang Employment Agreement, will be in full force and
effect. All other terms and conditions of this offer letter will remain in
effect after the one (1)-year period, subject to Wang's right to review them and
make adjustments as appropriate.
2
<PAGE> 3
4. TERMINATION/SEVERANCE COMPENSATION AND BENEFITS
-----------------------------------------------
In the event that your employment with the Company is involuntarily
terminated other than "for cause" (a term which includes but is not limited to
the standards set forth in Wang's Standards of Ethics and Business Conduct
booklet) or because of your death or substantial inability to work, Wang will
pay you, semi-monthly, a twelve (12)-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 health and dental
(but no other) benefits to you at no cost.
In the event you become employed at any time during the twelve (12)-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 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 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 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. STANDARDS OF ETHICS AND BUSINESS CONDUCT AND
--------------------------------------------
STANDARD EMPLOYMENT AGREEMENT
-----------------------------
You will continue to be required to comply with Wang's Standards of Ethics
and Business Conduct and you will be required to sign Wang's Standard Employment
Agreement as presently modified (copy enclosed).
3
<PAGE> 4
7. CONFIDENTIALITY
---------------
By our signatures below, we agree to treat the details of this 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,
and such Wang personnel and/or agents as have a need to know this information
for business purposes and as may otherwise be required by law.
Sincerely,
Joseph M. Tucci
Chairman and Chief Executive Officer
Enclosure: Standard Employment Agreement (as presently modified)
ACCEPTED AND AGREED TO:
- -------------------------------- -------------------------------
Name: Date
EOL:st.dr
AKM:ege
4
<PAGE> 1
Exhibit 10.45
AGREEMENT
---------
THIS AGREEMENT dated as of February 9, 1996 is made by and between
Wang Laboratories, Inc., a Delaware corporation (the "Company"), and Jean M.
Edwards (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 February
9, 1996 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 6.02 hereof, the Company shall pay the
Executive the payment described in this Section 6.01 (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 Notwithstanding any other provisions of this Agreement, in the
event that 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 with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person (all
such payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments"), would be subject (in whole or part), to the excise tax
imposed under section 4999 of the Code (the "Excise Tax"), then the Severance
Payments shall be reduced to the extent necessary so that no portion of the
Total Payments is subject to the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement) if (A) the net amount of such
Total Payments, as so reduced, (and after deduction of the net amount of
federal, state and local income tax on such reduced Total Payments) is greater
than (B) the excess of (i) the net amount of such Total Payments, without
reduction (but after deduction of the net amount of federal, state and local
income tax on such Total Payments), over (ii) the amount of Excise Tax to which
the Executive would be subject in respect of such Total Payments. 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. Prior to the payment date set forth in Section 6.3 hereof, the
Company shall provide the Executive with its calculation of the amounts referred
to in this Section and such supporting materials as are reasonably necessary for
the Executive to evaluate the Company's calculations.
4
<PAGE> 5
6.3 The payment provided for in Section 6.01 hereof shall be made
not later than the fifth day following the Date of Termination, provided,
however, that if the amount of such payment, and the limitation on such payment
set forth in Section 6.02 hereof, 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 payment
to which the Executive is clearly entitled and shall pay the remainder of such
payment (together with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payment exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section, the Company shall
provide the Executive with a written statement setting forth the manner in which
such payments were calculated and the basis for such 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 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
5
<PAGE> 6
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 7.03), the party receiving such Notice
of Termination notifies the other party in writing that a dispute exists
concerning the termination, the 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
6
<PAGE> 7
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 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:
7
<PAGE> 8
To the Company:
---------------
Wang Laboratories, Inc.
600 Technology Park Drive
Billerica, Massachusetts 01821
Attention: Chief Executive Officer
Copy to: General Counsel
To the Executive:
-----------------
Jean M. Edwards
15 Country Road
Holliston, MA 01746
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
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.
8
<PAGE> 9
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 compensation 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.
9
<PAGE> 10
(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 Agreement),
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,
10
<PAGE> 11
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).
(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.
11
<PAGE> 12
(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 officer 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 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;
12
<PAGE> 13
(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, 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:
13
<PAGE> 14
(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.
(Q) "Total Payment" shall mean those payments described in Section
6.2 hereof.
WANG LABORATORIES, INC.
By:
-----------------------------
Joseph M. Tucci
Chairman of the Board and
Chief Executive Officer
AGREED:
- -------------------------
Jean M. Edwards
14
<PAGE> 1
Exhibit 11.1
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
COMPUTATION OF EARNINGS PER SHARE
(In millions except per share data)
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1996 March 31, 1995 (2)
------------------------ ------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
<S> <C> <C> <C> <C>
Average shares of common
stock outstanding 36.1(1) 36.1(1) 34.7(1) 34.7(1)
Common equivalent shares for
stock options and warrants -- -- -- --
------ ------ ------ ------
36.1 36.1 34.7 34.7
====== ====== ====== ======
Net income(loss) $ 5.0 $ 5.0 $(73.3) $(73.3)
Accretion and dividends on
preferred stock (12.2) (12.2) (2.1) (2.1)
------ ------ ------ ------
Net loss applicable
to common stockholders $ (7.2) $ (7.2) $(75.4) $(75.4)
====== ====== ====== ======
Net loss per share $(0.20) $(0.20) $(2.17) $(2.17)
====== ====== ====== ======
<CAPTION>
Nine Months Ended Nine Months Ended
March 31, 1996 March 31, 1995 (2)
------------------------ ------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
Average shares of common
stock outstanding 35.9(1) 35.9(1) 33.9(1) 33.9(1)
Common equivalent shares for
stock options and warrants -- -- -- --
------ ------ ------ ------
35.9 35.9 33.9 33.9
====== ====== ====== ======
Net loss $ (8.8) $ (8.8) $(67.0) $(67.0)
Accretion and dividends on
preferred stock (19.0) (19.0) (6.2) (6.2)
------ ------ ------ ------
Net loss applicable
to common stockholders $(27.8) $(27.8) $(73.2) $(73.2)
====== ====== ====== ======
Net loss per share $(0.78) $(0.78) $(2.16) $(2.16)
====== ====== ====== ======
</TABLE>
[FN]
(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
Exhibit 12.1
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions except ratios)
Reorganized Company
----------------------------------------------------
Nine months Year Nine months
ended March 31, ended June 30, ended June 30,
1996 1995 1994
--------------- -------------- --------------
<S> <C> <C> <C>
FIXED CHARGES
Interest expense $ 3.5 $ 3.7 $ 3.5
Portion of rent expense
representative of interest 5.8 5.9 5.6
--------------- -------------- --------------
9.3 9.6 9.1
Preferred dividend requirement 20.3 14.5 8.7
--------------- -------------- --------------
Combined fixed charges and
preferred dividend $29.6 $24.1 $17.8
=============== ============== ==============
EARNINGS
Income (loss) from continuing
operations before income
taxes, discontinued operations,
fresh-start reporting adjustment
and extraordinary item $ 1.8(1) $(57.7)(2) $ 20.4
Fixed charges per above 9.3 9.6 9.1
--------------- -------------- --------------
$11.1 $(48.1) $ 29.5
=============== ============== ==============
Ratio of earnings to combined
fixed charges and preferred
dividends 0.4 -- 1.7
=============== ============== ==============
Coverage deficiency -- $(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> <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>
[FN]
(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 pooling of interests.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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 March 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 210,100
<SECURITIES> 0
<RECEIVABLES> 225,700
<ALLOWANCES> 13,400
<INVENTORY> 24,000
<CURRENT-ASSETS> 485,400
<PP&E> 215,900<F1>
<DEPRECIATION> 101,200<F1>
<TOTAL-ASSETS> 886,400
<CURRENT-LIABILITIES> 377,400
<BONDS> 22,000<F2>
<COMMON> 300
84,600
138,300
<OTHER-SE> 199,500
<TOTAL-LIABILITY-AND-EQUITY> 886,400
<SALES> 287,700
<TOTAL-REVENUES> 821,700
<CGS> 187,100
<TOTAL-COSTS> 551,800
<OTHER-EXPENSES> 273,600<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,500
<INCOME-PRETAX> 1,800
<INCOME-TAX> 10,600
<INCOME-CONTINUING> (8,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,800)
<EPS-PRIMARY> (0.78)
<EPS-DILUTED> (0.78)
<FN>
<FN1>
PP&E Cost and Accumulated Depreciation include capitalized non-consumable
spares inventory.
<FN2>
Bonds is comprised of borrowings due within one year
and long-term debt.
<FN3>
Other expenses includes $27.2 million of acquisition-related charges
pertaining to the July 21, 1995 acquisition of Sigma Imaging Systems, Inc.
</FN>
</TABLE>
