WANG LABORATORIES INC, DEF 14A, 1997-10-16

WANG LABORATORIES INC
DEF 14A, 1997-10-16
PREPACKAGED SOFTWARE

Previous: UNITED STATES SURGICAL CORP, SC 14D1/A, 1997-10-16

Next: JOHNSON & JOHNSON, S-8, 1997-10-16

<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]

- - --------------------------------------------------------------------------------

Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

Wang Laboratories, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

- - --------------------------------------------------------------------------------
<PAGE> 2

WANG LABORATORIES, INC.
600 TECHNOLOGY PARK DRIVE
BILLERICA, MASSACHUSETTS 01821

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON TUESDAY, NOVEMBER 25, 1997

The Annual Meeting of Stockholders of Wang Laboratories, Inc. (the
"Company") will be held at The Sheraton Boston Hotel & Towers, 39 Dalton Street,
Boston, Massachusetts on Tuesday, November 25, 1997 at 10:00 a.m., local time,
to consider and act upon the following matters:

1. To elect three Class I Directors, each to serve for a three-year
term.

2. To approve an amendment to the Employees' Stock Incentive Plan of the
Company to increase the number of authorized shares available under
the plan.

3. To approve an amendment to the 1995 Employees' Stock Purchase Plan of
the Company to increase the number of authorized shares available
under the plan.

4. To approve an amendment to the 1995 Director Stock Option Plan of the
Company to increase the number of authorized shares available under
the plan.

5. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.

6. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Stockholders of record at the close of business on October 1, 1997 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.

By Order of the Board of Directors,

ALBERT A. NOTINI
Secretary

Billerica, Massachusetts
October 16, 1997

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
<PAGE> 3

WANG LABORATORIES, INC.
600 TECHNOLOGY PARK DRIVE
BILLERICA, MASSACHUSETTS 01821

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS ON NOVEMBER 25, 1997

INTRODUCTION

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Wang Laboratories, Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held on November 25, 1997, and
at any adjournment of that meeting. All proxies will be voted in accordance with
the stockholders' instructions, and if no choice is specified, the proxies will
be voted in favor of the matters set forth in the accompanying Notice of
Meeting. Any proxy may be revoked by a stockholder at any time before its
exercise by delivery of written revocation or a subsequently dated proxy to the
Secretary of the Company or by voting in person at the Annual Meeting.

The Company's Annual Report for the fiscal year ended June 30, 1997
("Fiscal 1997") was mailed to stockholders, along with these proxy materials, on
or about October 17, 1997.

QUORUM REQUIREMENT

At the close of business on October 1, 1997, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 35,537,175
shares of Common Stock of the Company, 2,875,000 Depositary Shares (the
"Depositary Shares") each representing one one-twentieth (1/20) of a share (or a
total of 143,750 shares) of 6 1/2% Series B Cumulative Convertible Preferred
Stock of the Company ("6 1/2% Preferred Stock") and 90,000 shares of 4 1/2%
Series A Cumulative Convertible Preferred Stock ("4 1/2% Preferred Stock"),
constituting all of the outstanding voting stock of the Company. This total
excludes approximately 2,628,408 shares of Common Stock held for distribution to
creditors by the distribution agent under the Company's reorganization plan
dated September 20, 1993 (the "Reorganization Plan") under Chapter 11 of the
U.S. Bankruptcy Code, as the Reorganization Plan provides that these shares may
not be voted by any party and shall not be considered outstanding for voting
purposes until distributed pursuant to the Reorganization Plan. Holders of
Common Stock, the 6 1/2% Preferred Stock and the 4 1/2% Preferred Stock are
entitled to one vote per share. Each holder of Depositary Shares is entitled to
exercise the voting rights relating to the number of shares of 6 1/2% Preferred
Stock represented by such Depositary Shares.

The holders of shares representing a majority of the votes represented by
the shares of Common Stock, 6 1/2% Preferred Stock and 4 1/2% Preferred Stock
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Shares of Common Stock,
6 1/2% Preferred Stock and 4 1/2% Preferred Stock represented in person or by
proxy (including shares which abstain or otherwise do not vote with respect to
one or more of the matters presented for stockholder approval) will be counted
for purposes of determining whether a quorum is present at the Annual Meeting.

VOTES REQUIRED

The affirmative vote of the holders of shares representing a plurality of
the votes cast by the holders of the Common Stock, 6 1/2% Preferred Stock and
4 1/2% Preferred Stock is required for the election of Directors. The
<PAGE> 4

affirmative vote of the holders of shares representing a majority of the votes
represented by the shares of Common Stock, 6 1/2% Preferred Stock and 4 1/2%
Preferred Stock present and entitled to vote at the meeting on the matter is
required for the approval of the amendment to the Company's Employees' Stock
Incentive Plan, the amendment to the Company's 1995 Employees' Stock Purchase
Plan, the amendment to the Company's 1995 Director Stock Option Plan and the
ratification of the selection of Ernst & Young LLP as the Company's independent
auditors for the current fiscal year.

Shares which abstain from voting as to a particular matter will not be
counted as votes in favor of such matter, but will be counted as shares
represented and entitled to vote on such matter. Accordingly, an abstention from
voting on a matter has the same effect as a vote against the matter (except with
respect to the election of directors as to which abstentions have no effect).
Shares held in street name by brokers and nominees who indicate on their proxy
that they do not have discretionary authority to vote such shares as to a
particular matter will not be counted as votes in favor of such matter and also
will not be counted as shares represented and entitled to vote on such matter.
Accordingly, a "broker non-vote" on a matter that requires the affirmative vote
of the holders of shares representing a certain percentage of the votes
represented by the shares present and entitled to vote on a matter, such as the
matters presented at this Annual Meeting, has no effect on the voting on such
matter.

BENEFICIAL OWNERSHIP OF VOTING STOCK

The following table sets forth the beneficial ownership of the Company's
Common Stock, 6 1/2% Preferred Stock and 4 1/2% Preferred Stock as of August 31,
1997 (i) by each person who is known by the Company to beneficially own more
than 5% of the outstanding shares of either the common or any preferred class of
the Company's stock, (ii) by each Director and nominee for Director, (iii) by
each of the executive officers named in the Summary Compensation Table set forth
under the caption "Executive Compensation" below (the "Named Executives"), and
(iv) by all current Directors and executive officers as a group.

<TABLE>
<CAPTION>
6 1/2% PREFERRED STOCK 4 1/2% PREFERRED STOCK
COMMON STOCK ---------------------------- -----------------------------
---------------------------- PERCENTAGE OF PERCENTAGE OF
NUMBER OF PERCENTAGE OF NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
SHARES OUTSTANDING SHARES 6 1/2% SHARES 4 1/2%
BENEFICIALLY COMMON BENEFICIALLY PREFERRED BENEFICIALLY PREFERRED
BENEFICIAL OWNER OWNED(1) STOCK(2) OWNED(1)(3) STOCK(3) OWNED(1) STOCK
- - ------------------------------ ------------ ------------- ----------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
5% STOCKHOLDERS
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, California 94403... 3,502,481 9.2% -- -- -- --

Iridian Asset Management LLC
276 Post Road West
Westport, CT 06880............ 2,246,600 5.9% -- -- -- --

FMR Corp.(4)
82 Devonshire Street
Boston, Massachusetts 02109... 2,163,913 5.6% 53,720 37% -- --

Janus Capital Corporation
100 Fillmore Street
Denver, Colorado 80206........ 2,125,000 5.5% -- -- -- --
Lipper & Company, Inc.
101 Park Avenue, 6th Floor
New York, NY 10178............ -- -- 27,134 18.9% -- --
</TABLE>

2
<PAGE> 5

Microsoft Corporation
Microsoft Way
Redmond, WA 98052............. -- -- -- -- 90,000 100%

DIRECTORS/NOMINEES
David A. Boucher(5)........... 20,920 * -- -- -- --
Michael W. Brown.............. -- -- -- -- -- --
Marcia J. Hooper(6)........... 4,420 * -- -- -- --
Joseph J. Kroger(7)........... 8,065 * -- -- -- --
Raymond C. Kurzweil(8)........ 6,565 * -- -- -- --
Axel J. Leblois(8)............ 6,565 * -- -- -- --
Joseph M. Tucci(9)............ 760,592 1.9% -- -- -- --
Frederick A. Wang(10)......... 63,286 * -- -- -- --

OTHER NAMED EXECUTIVES
Franklyn A. Caine(11)......... 368,263 * -- -- -- --
Albert A. Notini(12).......... 136,375 * -- -- -- --
David I. Goulden(13).......... 138,985
Jeremiah J.J. van
Vuuren(14).................. 184,345 * -- -- -- --
All Directors, nominees for
Director and executive
officers as a group (20
persons)(15)................ 2,281,572 5.7% -- -- -- --
</TABLE>

- - ---------------
* Less than 1%

(1) Each person has sole investment and voting power with respect to the shares
indicated as beneficially owned, except as otherwise noted. The inclusion
herein of any shares as beneficially owned does not constitute an admission
of beneficial ownership. The reported beneficial ownership of Common Stock
or preferred stock by each 5% stockholder is based on a Schedule 13G filed
by each such holder or on the records of the Company's transfer agent. In
accordance with Securities and Exchange Commission rules, each person
listed is deemed to beneficially own any shares issuable upon the exercise
of stock options or warrants held by him or her that are currently
exercisable or exercisable within 60 days after August 31, 1997; and any
reference in these footnotes to options or warrants refers only to such
options or warrants.

(2) Number of shares deemed outstanding includes 38,068,224 shares outstanding
as of August 31, 1997, plus any shares subject to outstanding stock options
or warrants held by the person or entity in question.

(3) Represents the number of shares of 6 1/2% Preferred Stock deemed
beneficially owned and outstanding as represented by Depositary Shares as
of August 31, 1997.

(4) Includes 1,733,651 shares of Common Stock and 49,085 shares of 6 1/2%
Preferred Stock beneficially owned by Fidelity Management and Research
Company as result of its serving as investment advisor to various
investment companies; and 430,262 shares of Common Stock, 4,635 shares of
6 1/2% Preferred Stock and 62 shares of Common Stock subject to outstanding
stock warrants beneficially owned by Fidelity Management Trust Company as a
result of its serving as trustee or managing agent for various private
investment accounts. Based upon information provided to the Company by the
stockholder as of August 26, 1997.

(5) Consists of 20,920 shares subject to outstanding stock options.

(6) Consists of 4,420 shares subject to outstanding stock option.

3
<PAGE> 6

(7) Consists of 6,565 shares subject to outstanding stock options and 1,500
shares held outright.

(8) Consists of 6,565 shares subject to outstanding stock options.

(9) Consists of 490,330 shares subject to outstanding stock options, 230,000
shares of restricted stock, 37,762 shares owned outright and 2,500 shares
subject to outstanding stock warrants.

(10) Consists of 20,920 shares subject to outstanding stock options and 42,366
shares subject to outstanding stock warrants.

(11) Consists of 353,180 shares subject to outstanding stock options, 15,000
shares of restricted stock and 83 shares subject to outstanding stock
warrants.

(12) Includes 121,375 shares subject to outstanding stock options and 15,000
shares of restricted stock.

(13) Includes 123,935 shares subject to outstanding stock options and 15,000
shares of restricted stock and 50 shares held outright.

(14) Includes 159,295 shares subject to outstanding stock options, 25,000 shares
of restricted stock and 50 shares held outright.

(15) Includes 1,882,076 shares subject to outstanding stock options, 350,000
shares of restricted stock, 47,210 shares held outright and 51,786 shares
subject to outstanding stock warrants.

ELECTION OF DIRECTORS

The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. There are
currently three Class I Directors, whose terms expire at this Annual Meeting,
two Class II Directors, whose terms expire at the Annual Meeting of Stockholders
for Fiscal 1998, and three Class III Directors, whose terms expire at the Annual
Meeting of Stockholders for Fiscal 1999 (in all cases subject to the election
and qualification of their successors or to their earlier death, resignation or
removal).

The persons named in the enclosed proxy will vote to elect Joseph M. Tucci,
Raymond C. Kurzweil and Frederick A. Wang as Class I Directors, unless authority
to vote for the election of any or all of the nominees is withheld by marking
the proxy to that effect. Messrs. Tucci, Kurzweil and Wang are currently Class I
Directors of the Company. All of the nominees have indicated their willingness
to serve, if elected, but if any should be unable or unwilling to stand for
election, proxies may be voted for a substitute nominee designated by the Board
of Directors.

DIRECTORS OF THE COMPANY

Set forth below are the names and certain information with respect to each
Director of the Company, including the three nominees for Class I Directors.

Class I Directors (nominated for terms expiring at the Annual Meeting for Fiscal
2000):

JOSEPH M. TUCCI DIRECTOR SINCE OCTOBER 1993; AGE 50

Mr. Tucci joined the Company in August 1990 as Executive Vice President,
Operations, was elected President and Chief Executive Officer in January 1993,
and Chairman of the Board and Chief Executive Officer in October 1993.
Previously, he had served as an executive with Unisys Corporation, a computer
company, from 1983 to August 1990, most recently as President, U.S. Information
Systems.

4
<PAGE> 7

RAYMOND C. KURZWEIL DIRECTOR SINCE OCTOBER 1993; AGE 49

Mr. Kurzweil is founder and Chief Technology Officer of Kurzweil Applied
Intelligence, Inc. which, since June, 1997 is a subsidiary of Lernout & Hauspie,
a speech recognition company. He is also founder and Chief Executive Officer of
Kurzweil Educational Systems, Inc., an educational software company. He was the
principal developer of the first omnifont optical character recognition
technology in 1976, the first print-to-speech reading machine for the blind in
1976, and the first commercially-marketed large vocabulary speech recognition
technology in 1987. He is a director of Medical Manager Corp.

FREDERICK A. WANG DIRECTOR SINCE OCTOBER 1981; AGE 47

Mr. Wang is President and Chief Executive Officer of The athink Group, a
start-up company involved with internet web publishing and from 1996 to 1997 was
President and Chief Executive Officer of Archive Technologies Corporation, Inc.,
the predecessor company of The athink Group. Mr. Wang was a private business
consultant from 1990 to 1996 and served as President of the Company from 1986 to
1989 and Chief Operating Officer from 1987 to 1989. He had been employed by the
Company from 1972 to 1989 and had also served as Treasurer, Chief Development
Officer and Executive Vice President of Manufacturing.

Class II Directors (holding terms expiring at the Annual Meeting for Fiscal
1998):

MARCIA J. HOOPER DIRECTOR SINCE NOVEMBER 1995; AGE 43

Ms. Hooper is currently a Partner of Advent International Corporation, a
private equity management company. From 1994 through April 1996 she served as
General Partner of Viking Capital Limited Partnership, a venture capital firm.
From January through July 1994 she served as President of Claybrook Capital.
From 1985 to 1993 Ms. Hooper served as a General Partner of three venture
capital funds of Ampersand Ventures. She is a director of PolyMedica Industries,
Inc.

JOSEPH J. KROGER DIRECTOR SINCE JUNE 1995; AGE 63

Mr. Kroger, formerly Vice Chairman of the Board of Unisys Corporation, has
been a private business consultant since 1993. From 1990 until 1993 he served as
President and Chief Executive Officer of Decision Data Corporation, a computer
services company. He is currently a director of Astea International Corp.

Class III Directors (holding terms expiring at the Annual Meeting for Fiscal
1999)

DAVID A. BOUCHER DIRECTOR SINCE OCTOBER 1993; AGE 47

Mr. Boucher has been Managing Director and General Partner of Applied
Technology, a venture capital firm specializing in early-stage information
industry companies, since 1993. From September 1992 to June 1994 he was
President and Chief Executive Officer of Ticker Research, Inc., a development
stage medical technology company engaged in research in nuclear magnetic
resonance imaging. From 1981 to 1991 Mr. Boucher was President and Chief
Executive Officer of Interleaf, Inc., a software company. He is currently a
Director of Interleaf, Inc., Pervasive Software, Inc., and several privately
held companies.

MICHAEL W. BROWN DIRECTOR SINCE APRIL 1996; AGE 51

Mr. Brown, until his retirement in July 1997, served as Chief Financial
Officer of Microsoft Corporation, a computer software corporation. He joined
Microsoft in 1989 as treasurer and was appointed to Chief Financial Officer in
1994. Prior to joining Microsoft, Mr. Brown was a managing partner of Deloitte &
Touche LLP, a public accounting firm. Mr. Brown is currently a director of The
Nasdaq Stock Market, Inc.

5
<PAGE> 8

AXEL J. LEBLOIS DIRECTOR SINCE JANUARY 1995; AGE 49

Mr. Leblois has been Chairman of World Times, Inc., a publishing firm,
since 1995. From 1991 to 1995 he was President and Chief Executive Officer of
Bull HN Information Systems, Inc., a worldwide information technology company
providing integrated computer services and solutions. From 1983 to 1991 Mr.
Leblois held various positions with International Data Group, a worldwide
supplier of information technology, including Vice Chairman of the Executive
Committee, and Chairman and Chief Executive Officer of its affiliate,
International Data Corporation. He is a director of Peritus Software Services,
Inc. and Boston Private Bank.

BOARD AND COMMITTEE MEETINGS

The Company has a standing Finance and Audit Committee of the Board of
Directors, which reviews the Company's financial condition and operating
results, cash position, financing arrangements and financing strategies,
recommends the engagement of the Company's independent auditors and reviews the
arrangements for the scope of the annual audit. In addition, the Finance and
Audit Committee reviews the activities and recommendations of the Company's
audit group, reviews comments made by the independent auditors with respect to
internal controls and management's response, reviews internal accounting
procedures and controls with the Company's finance and accounting staff and
monitors the Company's compliance programs. The members of the Finance and Audit
Committee are David A. Boucher (Chairman), Marcia J. Hooper, Frederick A. Wang
and Michael W. Brown and, with respect to financial but not audit matters,
Joseph M. Tucci. The Finance and Audit Committee met seven times during Fiscal
1997.

The Company has a standing Organization, Compensation and Nominating
Committee of the Board of Directors, which reviews and approves proposals by
management concerning compensation, bonuses, benefits, stock options and stock
grants under plans for Directors, corporate officers and employees of the
Company. This Committee also oversees administration of the Company's incentive
plans as they affect officers, Directors and certain key employees, and advises
the Board on management resources and organization, executive selection and
development and succession planning. This Committee also recommends to the Board
of Directors nominees to be acted upon at stockholder meetings, and reviews the
qualifications of, and makes recommendations to the Board concerning, candidates
to fill Board vacancies that may occur during the year. The Committee considers
suggestions from stockholders and other sources regarding possible candidates
for directors. Such suggestions, together with appropriate biographical
information, should be submitted to the Secretary of the Company. The Committee
is also responsible for overseeing Company policies on issues of public
significance, including charitable contributions and community relations. The
members of the Organization, Compensation and Nominating Committee are Joseph J.
Kroger (Chairman) and Marcia J. Hooper. Frederick A. Wang served on the
Committee until he resigned in November 1996. Paul E. Tsongas served as chairman
of the Committee until his death in January 1997. The Organization, Compensation
and Nominating Committee met nine times during Fiscal 1997.

The Company has a standing Strategy and Technology Committee of the Board
of Directors, which addresses the Company's strategy for maximizing the value of
its patents and other intellectual property assets, as well as technology
acquisitions and long-term technology plans. The members of the Strategy and
Technology Committee are Raymond C. Kurzweil (Chairman), David A. Boucher,
Marcia J. Hooper, Joseph J. Kroger, Axel J. Leblois and Joseph M. Tucci. The
Strategy and Technology Committee held one separate meeting during Fiscal 1997
and otherwise conducted its business as part of the regularly scheduled Board of
Directors' meetings.

The Board of Directors met nine times during Fiscal 1997. Each current
Director attended at least 75% of the meetings of the Board and the committees
on which he or she then served.

6
<PAGE> 9

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Frederick A. Wang served on the Company's Organization, Compensation and
Nominating Committee through the meeting in November 1996 at which time he
resigned from the Committee. He served as President of the Company from 1986 to
1989 and Chief Operating Officer from 1987 to 1989. He had been employed by the
Company since 1972 and had also served as Treasurer, Chief Development Officer
and Executive Vice President of Manufacturing.

COMPENSATION OF DIRECTORS

The director who is employed by the Company is not paid director fees.
Directors who are not employed by the Company, except for Michael W. Brown,
receive an annual fee of $20,000 plus a fee of $1,000 for each meeting attended.
The members of each Committee receive an annual fee of $1,500, plus a fee of
$1,000 for each Committee meeting attended. Mr. Brown has waived the receipt of
all director fees and option grants pursuant to the policies of Microsoft
Corporation.

In September 1996, under the Company's 1995 Director Stock Option Plan,
each of the then current directors of the Company, other than Messrs. Tucci and
Brown, received an option to purchase 6,500 shares of Common Stock. These
options have an exercise price of $18.093 per share and become exercisable as to
34%, 33% and 33% of the shares covered thereby on September 30, 1997, September
30, 1998 and September 30, 1999, respectively, provided the optionee continues
to serve as a director of the Company.

Raymond C. Kurzweil had been retained as a technical advisor by the
Official Committee of Unsecured Creditors in the Company's Chapter 11 proceeding
and, in that capacity, had reviewed the technology and intellectual property of
the Company. Through this review the Company's patent portfolio was identified
as one of the Company's important assets. After joining the Company's Board of
Directors in October 1993, Mr. Kurzweil agreed to continue his work with the
Company's patent portfolio and entered into a technical consulting agreement
with the Company effective October 1993. This agreement currently provides for
compensation at the rate of $375.00 per hour, not to exceed an average of
$15,000 per month, plus the reimbursement of expenses. The agreement was
approved by the Board of Directors and is subject to the Board's periodic
review. The agreement is terminable upon 30 days' notice by either party.

In July 1994, the Board of Directors adopted a policy prohibiting
non-employee Directors from receiving compensation from the Company other than
in their capacity as Directors, absent extraordinary circumstances. The Board
has determined that extraordinary circumstances warrant the continuation of the
arrangement with Mr. Kurzweil upon the terms described above.

7
<PAGE> 10

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers during Fiscal 1997 (the "Named Executives").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) ----------------------------------
------------------------------ SECURITIES
FISCAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK AWARDS(#)(2) OPTIONS(#)(3) COMPENSATION($)
- - ------------------------------ ------ --------- --------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Tucci............... 1997 652,030 4,693,750(4) 230,000 465,000 443,783(5)
Chairman of the Board and 1996 551,250 400,000 148,500 49,773
Chief Executive Officer 1995 510,000 360,000 190,000 83,421
Franklyn A. Caine............. 1997 331,618 565,000(6) 15,000 75,000 96,797(7)
Executive Vice President and 1996 325,000 198,000 81,000 30,885
Chief Financial Officer 1995 285,625(8) 185,000 300,000 14,177
Albert A. Notini.............. 1997 270,833 475,000(9) 15,000 75,000 17,156(10)
Senior Vice President, Law 1996 224,166 130,000 60,750 13,374
and Human Resources, General 1995 215,000 83,875 40,000 11,981
Counsel and Secretary
David I. Goulden.............. 1997 270,833 425,000(11) 15,000 75,000 27,335(12)
Senior Vice President, 1996 223,333 130,000 60,750 11,434
Marketing and Business 1995 214,375 83,875 40,000 15,677
Development
Jeremiah J.J. van
Vuuren(13).................. 1997 371,963 196,247(14) 25,000 160,000 41,261(15)
President and Chief 1996 263,075 210,000 87,750 34,265
Operating Officer, 1995 273,105 172,000 65,000 30,429
International
</TABLE>

- - ---------------
(1) Other compensation in the form of perquisites and other personal benefits
has been omitted, in accordance with the rules of the Securities and
Exchange Commission, as the aggregate amount of such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonus for each executive officer in each fiscal
year covered.

(2) Restricted Stock awards of 230,000, 15,000, 15,000, 15,000 and 25,000
shares were granted to Messrs. Tucci, Caine, Notini, Goulden and van
Vuuren, respectively. Based on the closing price of the Common Stock on
June 30, 1997, less the applicable purchase price, the restricted stock
award to Mr. Tucci had a value of $4,901,875, the restricted stock award to
each of Messrs. Caine, Notini and Goulden had a value of $319,687 and the
restricted stock award to Mr. van Vuuren had a value of $532,812.

(3) Includes long-term incentive options granted under the Company's Employees'
Stock Incentive Plan.

(4) Fiscal 1997 bonus includes a $4,000,000 special retention bonus and
$693,750 paid under the Company's executive bonus program. Fiscal 1996
bonus consists of $400,000 paid under the Company's executive bonus
program. Fiscal 1995 bonus consists of $360,000 paid under the Company's
executive bonus program.

(5) All other compensation for Fiscal 1997 consists of (i) $47,014 in
contributions by the Company under its retirement savings plans, (ii)
$9,256 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. Tucci and (iii) $387,513 relating to the
waiver by the Company of both the principal and accrued interest under Mr.
Tucci's 3% promissory note. See "Employment

8
<PAGE> 11

Contracts and Change-in-Control Arrangements" and "Certain Transactions."
All other compensation for Fiscal 1996 consists of (i) $33,900 in
contributions by the Company under its retirement savings plans, (ii)
$8,402 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. Tucci, and (iii) $7,471 consisting of imputed
income as a result of the 3% promissory note from Mr. Tucci. All other
compensation for Fiscal 1995 consists of (i) $21,373 in contributions by
the Company under its retirement savings plans, (ii) $5,226 in premiums
paid by the Company on a group term life insurance policy for the benefit
of Mr. Tucci, (iii) $17,122 consisting of imputed income as a result of the
3% promissory note from Mr. Tucci to the Company, and (iv) $39,700, which
represents the fair market value, as of the date of confirmation of the
Reorganization Plan (the date on which he became contractually entitled to
receive the shares), of the shares of Common Stock and warrants issued to
Mr. Tucci in December 1994.

(6) Fiscal 1997 bonus consists of a special retention bonus of $400,000 and
$165,000 paid under the Company's executive bonus program. Fiscal 1996
bonus consists of $198,000 paid under the Company's executive bonus
program. Fiscal 1995 bonus consists of $102,500 paid under the Company's
executive bonus program and $82,500 paid in accordance with the
requirements of Mr. Caine's employment agreement.

(7) All other compensation for Fiscal 1997 consists of (i) $20,271 in
contributions by the Company under its retirement savings plans and (ii)
$76,526 in relocation costs. All other compensation for Fiscal 1996
consists of (i) $18,225 in contributions by the Company under its
retirement savings plans, (ii) $6,367 in premiums paid by the Company to
Mr. Caine in lieu of payments on a group term life insurance policy for the
benefit of Mr. Caine and (iii) $6,293 in relocation costs. All other
compensation for Fiscal 1995 consists of (i) $11,283 in contributions by
the Company under its retirement savings plans and (ii) $2,894 in premiums
paid by the Company to Mr. Caine in lieu of payments on a group term life
insurance policy for the benefit of Mr. Caine.

(8) Mr. Caine joined the Company on August 15, 1994 and, therefore, did not
receive compensation for all of Fiscal 1995.

(9) Fiscal 1997 bonus consists of $350,000 paid as a special retention bonus
and $125,000 paid under the Company's executive bonus program. Fiscal 1996
bonus consists of $130,000 paid under the Company's executive bonus
program. Fiscal 1995 bonus consists of $83,875 paid under the Company's
executive bonus program.

(10) All other compensation for Fiscal 1997 consists of (i) $15,578 in
contributions by the Company under its retirement savings plans and (ii)
$1,578 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. Notini. All other compensation for Fiscal
1996 consists of (i) $11,841 in contributions by the Company under its
retirement savings plans and (ii) $1,533 in premiums paid by the Company on
a group term life insurance policy for the benefit of Mr. Notini. All other
compensation for Fiscal 1995 consists of (i) $10,539 in contributions by
the Company under its retirement savings plans and (ii) $1,442 in premiums
paid by the Company on a group term life insurance policy for the benefit
of Mr. Notini.

(11) Fiscal 1997 bonus consists of $300,000 paid as a special retention bonus
and $125,000 paid under the Company's executive bonus program. Fiscal 1996
bonus consists of $130,000 paid under the Company's executive bonus
program. Fiscal 1995 bonus consists of $83,875 paid under the Company's
executive bonus program.

(12) All other compensation for Fiscal 1997 consists of (i) $15,567 in
contributions by the Company under its retirement savings plans (ii) $1,332
in premiums paid by the Company on a group term life insurance policy for
the benefit of Mr. Goulden. All other compensation for Fiscal 1996 consists
of (i) $10,139 in contributions by the Company under its retirement savings
plans and (ii) $1,295 in premiums paid by the Company on a group term life
insurance policy for the benefit of Mr. Goulden. All other compensation for
Fiscal 1995 consists of (i) $14,414 in contributions by the Company under
its

9
<PAGE> 12

retirement savings plans and (ii) $1,263 in premiums paid by the Company on
a group term life insurance policy for the benefit of Mr. Goulden.

(13) All compensation paid to Mr. van Vuuren is reported in US Dollars although
it is paid in UK (pound sterling). The currency conversion rate used was
$1.665 per UK (pound sterling), $1.5475 per UK (pound sterling), $1.6065
per UK (pound sterling) and for Fiscal 1997, 1996 and 1995, respectively.
The conversion rates used were those rates published by Reuters News
Service on the last day of June of each year.

(14) Fiscal 1997 bonus consists of $196,247 paid under the Company's executive
bonus program. Fiscal 1996 bonus consists of $210,000 paid under the
Company's executive bonus program. Fiscal 1995 bonus consists of $172,000
paid under the Company's executive bonus program.

(15) All other compensation for Fiscal 1997 consists of (i) $23,351 in
contributions by the Company under its retirement savings plans and (ii)
$17,910 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. van Vuuren. All other compensation for Fiscal
1996 consists of (i) $19,474 in contributions by the Company under its
retirement savings plans and (ii) $14,791 in premiums paid by the Company
on a group term life insurance life insurance policy for the benefit of Mr.
van Vuuren. All other compensation for Fiscal 1995 consists of (i) $18,343
in contributions by the Company under its retirement savings plans and (ii)
$12,086 in premiums paid by the Company on a group term life insurance
policy for the benefit of Mr. van Vuuren.

OPTION GRANTS

The following table sets forth certain information concerning grants of
stock options during Fiscal 1997 to each of the Named Executives.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
------------------------------------------------------------ ASSUMED ANNUAL RATES OF
PERCENT OF STOCK PRICE APPRECIATION
NUMBER OF TOTAL FOR
SECURITIES OPTIONS GRANTED EXERCISE OPTION TERMS(2)
UNDERLYING TO EMPLOYEES PRICE EXPIRATION -------------------------
NAME OPTIONS GRANTED(#) IN FISCAL YEAR ($)(1) DATE 5%($) 10%($)
- - ------------------------ ------------------ --------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph M. Tucci......... 100,000(3) 4% 18.94 9/25/06 1,191,126 3,018,548
365,000(4) 73% 18.25 3/26/07 4,189,224 10,616,317
Franklyn A. Caine....... 50,000(3) 2% 18.94 9/25/06 595,563 1,509,274
25,000(4) 5% 18.25 3/26/07 286,933 727,145
Albert A. Notini........ 50,000(3) 2% 18.94 9/25/06 595,563 1,509,274
25,000(4) 5% 18.25 3/26/07 286,933 727,145
David I. Goulden........ 50,000(3) 2% 18.94 9/25/06 595,563 1,509,274
25,000(4) 5% 18.25 3/26/07 286,933 727,145
Jeremiah J.J. van
Vuuren................ 100,000(3) 4% 18.94 9/25/06 1,191,126 3,018,548
60,000(4) 12% 18.25 3/26/07 688,640 1,745,148
</TABLE>

- - ---------------
(1) The exercise price per share of each option is equal to the fair market
value per share of Common Stock on the date of grant.

(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise of the option or the sale of the underlying shares. The actual
gains, if any, on

10
<PAGE> 13

the stock option exercises will depend on the future performance of the
Common Stock, the optionholder's continued employment through the option
period, and the date on which the options are exercised and the underlying
shares are sold.

(3) Each option (i) became exercisable as to 34% of the underlying shares on
October 1, 1997, and becomes exercisable as to 33% of the underlying shares
on October 1, 1998 and as to 33% of the underlying shares on October 1, 1999
and (ii) generally terminates 30 days after the termination of the
optionee's employment with the Company (but in no event after the expiration
date).

(4) Represents a Long-Term Incentive Option ("LTI Option") which provides that
(i) 50% of the shares subject to such LTI Option will vest on the first day
following the date of grant that the Nasdaq National Market (or other
national exchange where the Common Stock is listed) daily closing price of
the Common Stock averages $27.00 per share for twenty (20) consecutive
trading days, provided that such average price is attained within 18 months
of the grant date and (ii) additional 10% increments of the shares subject
to such LTI Option will vest on each day which is the first day following
the date of grant that the Nasdaq National Market (or other national
exchange where the Common Stock is listed) daily closing price of the Common
Stock averages $28.00 per share, $29.00 per share, $30.00 per share, $31.00
per share and $32.00 per share, respectively, for twenty (20) consecutive
trading days, provided that such average price is attained within 36 months
of the grant date; and further provided that, in the case of Messrs. Caine,
Notini and Goulden, he must, unless an earlier change in control has
occurred, continue to be an employee through March 26, 1999 and, in the case
of Mr. Van Vuuren he must, unless an earlier change in control has occurred,
continue to be an employee through December 31, 1999, to be able to exercise
any such LTI Options which have vested in accordance with the schedule
above. All unvested LTI Options shall vest on March 26, 2002.

OPTION EXERCISES AND HOLDINGS

The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executives on June
30, 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR END(#) AT FISCAL YEAR END($)(2)
SHARES ACQUIRED VALUE ---------------------- ----------------------
NAME ON EXERCISE(#) REALIZED(1)($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ------------------- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Joseph M. Tucci.... -- -- 360,960/642,540 4,174,548/2,656,046
Franklyn A.
Caine............ -- -- 278,760/177,240 3,367,822/954,427
Albert A. Notini... -- -- 77,810/135,180 853,112/613,023
David I. Goulden... -- -- 80,370/135,180 888,855/613,023
Jeremiah J. J. van
Vuuren........... 25,000 347,500 98,140/209,310 1,010,170/951,538
</TABLE>

- - ---------------
(1) Based on the fair market value of the Common Stock on the date of exercise
less the option exercise price.

(2) Based on the fair market value of the Common Stock on June 30, 1997
($21.3125), less the option exercise price.

11
<PAGE> 14

EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS

In March 1993, the Company entered into an employment agreement with Mr.
Tucci. The agreement, as amended in April 1995, November 1995 and May 1996,
provided for a base salary of $510,000 for Fiscal 1995 and $555,000 for Fiscal
1996 and thereafter, subject to further annual adjustment by the Board of
Directors. The agreement also provided for annual performance-based bonuses to
be determined by the Board of Directors targeted at 60% of annual base salary
for achieving 100% of his performance goals and 80% of his annual base salary
for achieving 120% of performance goals. In February 1997, Mr. Tucci was
presented with an unsolicited employment opportunity with another company which
would have afforded him a salary and other financial incentives substantially
greater than those then provided by the Company. This opportunity arose shortly
after the Company's decision to sell its software business unit and while the
Company was in the midst of several organizational initiatives. In view of Mr.
Tucci's critical role in the success of the Company since its emergence from
Chapter 11 and the continued business and strategic transitions then facing the
Company, the Board of Directors of the Company concluded that retaining the
services of Mr. Tucci was in the best interests of the Company and its
stockholders. Accordingly, with the concurrence of the Board of Directors of the
Company, representatives of the Organization, Compensation and Nominating
Committee negotiated revised employment terms with Mr. Tucci which ultimately
resulted in an amended and restated employment agreement ("Restated Agreement").
The Restated Agreement provides for an annual base salary of $750,000 and an
annual performance bonus targeted at 100% of the base salary with a bonus
payment of at least $500,000 for Fiscal 1997. The Restated Agreement also
provided for a special retention payment of $4,000,000 on or about March 24,
1997, which must be repaid to the Company by Mr. Tucci if he voluntarily
terminates employment with the Company prior to March 24, 1998. The Restated
Agreement provided for Mr. Tucci to be granted a restricted stock award of
230,000 shares of Common Stock and an LTI Option of 365,000 shares of Common
Stock. The Restated Agreement forgives all amounts due to the Company under that
certain Non-Negotiable Secured Promissory Note dated as of June 21, 1994
delivered by Mr. Tucci to the Company as amended, in the original principal
amount of $355,071 and releases to Mr. Tucci all shares of the Company's Common
Stock held as collateral for such loan. Finally, the Restated Agreement provides
for the payment of a severance benefit of $4,500,000, payable in a lump sum
equal to $1,500,000 and the balance over a 12-month period, payable under
certain enumerated circumstances (including employment termination by the
Company, an adverse change in job responsibilities, an adverse change in
compensation or the resignation of the executive following a significant
relocation).

In June 1994, the Company entered into an employment agreement with Mr.
Caine pursuant to which the Company agreed to employ him as Executive Vice
President and Chief Financial Officer of the Company. Mr. Caine's agreement, as
amended in November 1995, May 1996 and March 1997, extends through December
1998. Under the agreement, the Company agreed to pay Mr. Caine an annual base
salary of $325,000 for Fiscal 1996 and $350,000 for Fiscal 1997, subject to
further annual adjustment by the Board of Directors. Mr. Caine is also eligible
to participate in a yearly bonus plan targeted at 50% of his annual base salary
based upon on his performance against goals specified in the bonus plan. Under
his employment agreement Mr. Caine will receive severance compensation in an
amount equal to 18 months of base salary plus bonus, with an amount equal to six
months salary and target bonus payable in a lump sum and the balance payable
over a 12-month period, if Mr. Caine's employment is involuntarily terminated
other than for cause or if Mr. Caine resigns under certain specified
circumstances. Severance payments would be offset by the compensation Mr. Caine
received from a new employer during such 12-month period. In March 1997, Mr.
Caine received a restricted stock award of 15,000 shares of Common Stock, an LTI
Option of 25,000 shares of Common Stock and a special retention bonus payment
from the Company in the amount of $400,000. This bonus is repayable in full to
the Company in cash if Mr. Caine voluntarily terminates his employment with the
Company for convenience prior to September 26, 1998.

12
<PAGE> 15

The Company entered into an employment agreement with Mr. Notini in January
1994 pursuant to which the Company agreed to employ Mr. Notini as Senior Vice
President, General Counsel and Secretary of the Company. The agreement, as
amended in November 1995, extends through December 1998. Under the terms of the
agreement, Mr. Notini's base salary for Fiscal 1997 was $275,000 and he was
eligible to receive a target annual bonus of 40% of his annual base salary based
upon his performance against goals specified in the bonus plan. Under his
employment agreement, Mr. Notini will receive severance compensation equal to
his annual base salary and target bonus payable over a 12-month period, if his
employment is involuntarily terminated other than for cause, death or
disability, or if he resigns under certain specified circumstances. Severance
payments would be offset by compensation received from a new employer during
such 12-month period. In March 1997, Mr. Notini received a restricted stock
award of 15,000 shares of Common Stock, an LTI Option of 25,000 shares of Common
Stock and a special retention bonus payment from the Company in the amount of
$350,000. This bonus is repayable in full to the Company in cash if Mr. Notini
voluntarily terminates his employment with the Company for convenience prior to
September 26, 1998.

The Company entered into an employment agreement with Mr. Goulden in
January 1994 pursuant to which the Company agreed to employ Mr. Goulden
initially as a Vice President and officer of the Company. The agreement, as
amended in November 1995, extends through December 1998. Under the terms of the
agreement Mr. Goulden's base salary for Fiscal 1997 was $275,000 and he was
eligible to receive a target annual bonus of 45% of his annual base salary based
upon his performance against goals specified in the bonus plan. Under his
employment agreement, Mr. Goulden will receive severance compensation equal to
his annual base salary and target bonus payable over a twelve month period, if
his employment is involuntarily terminated other than for cause, death or
disability, or if he resigns under certain specified circumstances. Severance
payments would be offset by compensation received from a new employer during
such 12-month period. In March 1997, Mr. Goulden received a restricted stock
award of 15,000 shares of Common Stock, an LTI Option of 25,000 shares of Common
Stock and a special retention bonus payment from the Company in the amount of
$300,000. This bonus is repayable in full to the Company in cash if Mr. Goulden
voluntarily terminates his employment with the Company for convenience prior to
September 26, 1998.

The Company entered into an employment agreement with Mr. van Vuuren in May
1993 pursuant to which the Company agreed to employ him as a Senior Vice
President of the Company and General Manager of the Company's European
Operations. The agreement, as amended in March 1997, specifies Mr. van Vuuren's
position as President and Chief Operating Officer, International Operations.
Under the terms of the agreement, as amended, Mr. van Vuuren's base salary for
Fiscal 1997 was $325,000 plus a supplemental amount of $50,000 subject to
deferral at the option of Mr. van Vuuren. Mr. van Vuuren is also eligible to
participate in a yearly bonus plan targeted at 60% of his base salary based on
his performance against goals specified in the bonus plan. He will also receive
payments in the amount of $400,000 each, if and when the market price of the
Company's Common Stock averages $34.00, $39.00 and $44.00 per share respectively
over twenty consecutive trading days. The agreement provides that, if he is
dismissed for any reason, other than for gross misconduct or violation of the
Company's Employee Code of Conduct, Mr. van Vuuren will receive severance
compensation equal to 18 months of base and supplemental salary to be paid over
an 18-month period. Severance payments would be offset by compensation received
from a new employer during such 18-month period. In March 1997, Mr. van Vuuren
received a restricted stock grant for 25,000 shares of Common Stock and an LTI
Option grant in the amount of 60,000 shares of Common Stock.

The Company is a party to contingent severance compensation agreements
("Severance Agreements") with nine executive officers (including Messrs. Tucci,
Caine, Notini, Goulden and van Vuuren) which would become operative following a
"change in control" of the Company, as defined in the Severance Agreements. The
Company believes that these agreements will better ensure the retention of those
officers and enable them to devote their full attention and energies to the
Company's business without the distractions that might arise

13
<PAGE> 16

in the circumstances addressed in the agreements. The Severance Agreements
continue in effect while the executive is employed by the Company for a period
of three years, automatically renew for additional one year terms and remain in
effect for 36 months after the month in which a change in control occurs. If the
executive's employment is terminated following a change in control, the
executive would become entitled to various benefits under the Severance
Agreement, including (in lieu of a payment under any other severance plan or
agreement) a lump sum severance payment equal to 2.99 times the average annual
compensation received by the executive for the two previous years, unless the
executive's employment were terminated (i) because of death or disability, (ii)
by the Company for cause, or (iii) by the executive without "good reason," as
defined in the Severance Agreements.

The Severance Agreements for each of Messrs. Tucci, Caine, Notini, and
Goulden provide that in the event the total payments to the executive under the
agreement are subject in whole or in part to the excise tax (the "Excise Tax")
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company will pay the executive an additional amount in the form of
a gross-up payment such that the net amount retained by the executive after
payment of the Excise Tax on the total payments and any federal, state and local
income taxes on the gross-up payment equals the total payments the executive
would have received absent the Excise Tax. The Severance Agreement for Mr. van
Vuuren provides that the lump sum payment would be subject to reduction to the
extent that any payment (whether under the Severance Agreement or otherwise) to
Mr. van Vuuren was subject to the Excise Tax imposed under Section 4999 of the
Code if such reduction would result in a greater after-tax payment to Mr. van
Vuuren.

CERTAIN TRANSACTIONS

On June 20, 1994, Mr. Tucci recognized income, for tax purposes, in the
amount of $777,624 as a result of his receipt of (i) 54,422 shares of Common
Stock pursuant to the terms of the Reorganization Plan and his employment
agreement and (ii) additional shares of Common Stock as part of the distribution
to creditors under the Reorganization Plan. Mr. Tucci incurred an estimated tax
liability of $355,071, most of which was payable on June 21, 1994 under federal
and Massachusetts income tax withholding rules. All of this income recognized by
Mr. Tucci was received by him in the form of Common Stock (rather than cash)
and, due to federal securities law restrictions, Mr. Tucci was restricted from
selling any of such Common Stock in order to satisfy his tax liability.
Accordingly, on June 21, 1994 the Company made a loan to Mr. Tucci in the amount
of $355,071. This loan (i) was scheduled to be paid in two equal principal
installments (together with accrued interest) on June 21, 1995 and June 21,
1996, (ii) bears interest at an annual rate of 3.0% from and after December 1,
1994 (which date was chosen on the assumption that Mr. Tucci would have an
opportunity to sell some of his Common Stock by such date), (iii) was initially
secured by a pledge of 37,500 Common Stock of the Company having a value as of
the date of the loan of 133% of the loan amount, (iv) was originally scheduled
to be repaid with the proceeds of any sale by Mr. Tucci of the pledged shares
and (v) was a non-recourse obligation of Mr. Tucci.

At the meeting of the Organization, Compensation and Nominating Committee
on September 27, 1995, the Committee (i) reduced the number of shares of Common
Stock subject to the pledge to 33,592 shares, which shares had a value as of
September 27, 1995 of at least 133% of the loan amount, and (ii) modified the
schedule for payments to be made by Mr. Tucci under his promissory note to four
equal principal installments (together with accrued interest) on February 28,
1996, August 31, 1996, February 28, 1997 and June 30, 1997.

At the meeting of the Organization, Compensation and Nominating Committee
in February 1996, the Committee reviewed the repayment terms of Mr. Tucci's
promissory note and Mr. Tucci's desire to repay the loan installment which
matured in February 1996 through the sale of a portion of the Common Stock which
is collateral for the obligation. The Company respectfully declined Mr. Tucci's
offer on the grounds that the Company was engaged in the private placement of
the 6 1/2% Preferred Stock, and according to the advice of its

14
<PAGE> 17

financial advisors, a sale of shares by Mr. Tucci at such time might have a
negative impact on such placement. In recognition of its refusal to accept Mr.
Tucci's offer of payment, the Committee at its meeting on April 24, 1996 reduced
the collateral securing the payment on the loan that matured in February 1996 to
the number of shares which, when valued at the closing price of the Company's
Common Stock on February 27, 1996 ($23.875), would have been sufficient to make
the February installment payment, including accrued interest, and agreed to
permit Mr. Tucci to deliver such shares to the Company in satisfaction of such
payment at the next "window period" (i.e., a period in which executives of the
Company are not prohibited from buying or selling Company securities). With
respect to future installment payments, in order to balance (i) the interests of
the Company's stockholders by safeguarding the Company's ability to participate
successfully in the equity markets in connection with any future acquisitions or
financings and (ii) the rights of Mr. Tucci, the Committee agreed to review Mr.
Tucci's repayment obligations on a payment by payment basis. The review of Mr.
Tucci's August 1996 payment was deferred until such time as the Company had
completed the acquisition of I-NET, Inc. In March 1997, in conjunction with the
execution of an amended and restated employment agreement with Mr. Tucci, the
Committee agreed to waive the repayment of both principal and accrued interest
of Mr. Tucci's loan.

Since April 1995, the Company and Microsoft Corporation ("Microsoft") have
maintained a worldwide technical, service and marketing alliance pursuant to
which the Company acts as an authorized provider of end-user support services
for Microsoft products. Since April 1996, Michael W. Brown, the Chief Financial
Officer of Microsoft until July 1997, has been a director of the Company.

As part of the Reorganization Plan, the previous obligations of the Company
to indemnify its former Directors, officers and employees pursuant to its
corporate charter, by-laws and policy of providing employee indemnification, and
applicable state law and agreements in respect of claims based on acts or
omissions related to such persons' service with, for or on behalf of the Company
have been retained and remain unaffected by the Chapter 11 case. Consequently,
the Company is obliged to indemnify each current or former Director or executive
officer in the various legal proceedings relating to the Company's predecessor
Massachusetts corporation.

REPORT OF ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE ON EXECUTIVE
COMPENSATION

The Company's executive compensation program is administered by the
Organization, Compensation and Nominating Committee of the Board of Directors
(the "Committee"), which was established in October 1993. The Committee is
comprised entirely of non-employee Directors.

The Committee seeks to achieve two broad goals in determining executive
compensation and establishing executive compensation programs. First, the
Committee seeks to compensate executives in a manner that enables the Company to
attract and retain executives whose services are critical to the success of the
Company. Second, the Committee seeks to provide incentives for, and reward, the
attainment of objectives that inure to the benefit of the Company and its
stockholders. The Company's Fiscal 1997 executive compensation consisted of four
principal elements: salary, bonuses, stock option grants and restricted stock
awards.

In establishing base salaries for executive officers, the Committee
considers the salaries of executives at other companies whose business and/or
financial situation is similar to that of the Company, the cost to replace the
executive, the particular executive's level of achievement and responsibility
and the executive's historic salary levels. Many of the executive officers
(including each of the Named Executives) of the Company are parties to
employment agreements that fix the executive's annual base salary during the
term of the agreement. The Committee believes that the execution of these
employment agreements was necessary to help retain and motivate those key
executives whose continued services are critical to the Company's future

15
<PAGE> 18

success. The Committee believes that the salary levels established for the
executives are appropriate, based on the factors described above.

The Committee's philosophy is to tie a significant portion of the
compensation of executive officers to the attainment of corporate and individual
goals, thus aligning the objectives and rewards of Company executives with those
of the stockholders of the Company. For Fiscal 1997, bonuses paid to executives
consisted of certain special retention bonus payments to Messrs. Tucci, Caine,
Notini and Goulden which were made to insure the retention of these key
executives and thereby continuity of management at a time when several key
organizational initiatives were underway at the Company. Payments made under the
Company's executive bonus program provided for the payment of bonuses to
executives based on a combination of individual, business unit and corporate
performance. Under this program, each executive was assigned a target bonus and
a set of corporate, business unit and individual objectives. Each executive was
paid a percentage of his target bonus based upon the degree to which established
objectives were attained. The target bonus for the Company's executive officers
ranged from 30% to 100% of the executive's base salary, and in some cases was
established by the terms of the executive's employment agreement. In the case of
each of Mr. Tucci and Mr. Caine, 30% of his bonus was based upon the attainment
by the Company of its consolidated operating profit objective, 20% was based
upon the attainment by the Company of its consolidated cashflow from operations
objective, 10% was based upon the attainment by the Company of its worldwide
software revenue objective, 10% was based upon the attainment by the Company of
its worldwide client server services revenue objective, and 30% was based upon
the achievement of certain goals relating to individual performance and
responsibility. In the case of Mr. Notini, 30% of his bonus was based upon the
attainment by the Company of its consolidated operating profit objective, 20%
was based upon the attainment by the Company of its consolidated cashflow from
operations objective, 10% was based upon the attainment by the Company of its
worldwide software revenue objective, 10% was based upon the achievement by his
business unit of certain other financial performance objectives and 30% was
based upon the attainment of certain goals relating to individual performance
and responsibility. In the case of Mr. Goulden, 25% of his bonus was based upon
the attainment by the Company of its consolidated operating profit objective and
its consolidated cashflow from operations objective, 20% was based upon the
attainment by the Company of its worldwide software revenue objective and 30%
was based upon the achievement by his business unit of certain other financial
performance objectives and 25% based on achievement of certain goals relating to
individual performance and responsibility. In the case of Mr. van Vuuren, 25% of
his bonus was based upon the attainment by the Company of its consolidated
operating profit and cash flow from operations objective, 10% was based upon the
attainment by the Company of its international software revenue objective, 10%
was based on the attainment by the Company of its international services revenue
objective, 15% was based upon the attainment by the Company of its international
operating profit objective, 15% was based upon the attainment by the Company of
its cash flow from international operations objective and 25% was based upon the
achievement of certain goals relating to individual performance and
responsibility. The actual bonuses paid to the executive officers under the
executive bonus program ranged from 50% to 114% of their target bonus. The
$693,750 bonus paid to Mr. Tucci represented 92.5% of his target bonus.

The Committee uses stock options and LTI Options as a significant element
of the compensation package of the executive officers because they provide an
incentive to executives to maximize stockholder value. Stock options reward the
executives only to the extent that stockholders also benefit, and the vesting of
the options (options generally become exercisable in installments over three-
and four-year periods); serves as a means of retaining these executives. LTI
Options do not become exercisable until five years after the date of grant
unless certain stock price targets are met prior to such time. The size of stock
option grants and LTI Options to executive officers depend upon a number of
factors, including new hires of executives, the executive's contribution to the
Company, the executives' current stock and option holdings and such other
factors as the Committee deems relevant.

16
<PAGE> 19

In Fiscal 1997, the Committee also used a limited number of restricted
stock grants to retain and motivate certain key executives. Restricted stock
awards were granted to six executive officers (including Messrs. Tucci, Caine,
Notini, Goulden and van Vuuren).

Under Section 162(m) of the Code, certain executive compensation in excess
of $1 million paid to the five most highly-paid executives of the Company is not
deductible by the Company for federal income tax purposes unless the
compensation is awarded under a performance-based plan approved by the
stockholders of the Company. The Committee intends to continue to structure the
award of stock options to executive officers so that they comply with the
performance-based requirements of Section 162(m), and may in the future decide
to submit other executive compensation plans for stockholder approval.

Organization, Compensation and
Nominating Committee

Joseph J. Kroger, Chairman
Marcia J. Hooper

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from December 16, 1993 (the date the Common Stock of
the reorganized Company commenced public trading) through June 30, 1997 with the
cumulative total return during this period of (i) Standard & Poor's 500
Composite Index and (ii) the High Technology Composite Index. This graph assumes
the investment of $100 on December 16, 1993 in the Company's Common Stock, the
Standard & Poor's 500 Composite Index and the High Technology Composite Index
and assumes dividends are reinvested.

[STOCK PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/16/93 6/30/94 6/30/95 6/30/96 6/30/97
<S> <C> <C> <C> <C> <C>
Wang Laboratories, Inc. $100 $ 75.83 $108.26 $124.79 $140.91
S&P 500 Composite $100 $ 95.88 $117.57 $144.74 $191.03
HI Tech Composite $100 $100.47 $158.11 $185.02 $286.48
</TABLE>

17
<PAGE> 20

PROPOSAL TO AMEND THE EMPLOYEES' STOCK INCENTIVE PLAN

The Board of Directors believes that a critical factor in the Company's
growth and profitability is its ability to attract, retain, compensate
competitively and motivate its workforce. The Board of Directors also believes
it is necessary for the Company to have available stock options to be issued to
employees of acquired companies. In light of these considerations on July 23,
1997, the Board of Directors of the Company adopted, subject to stockholder
approval, an amendment to the Employees' Stock Incentive Plan increasing the
number of shares available under the plan by 3,650,000 shares, to a total of
8,467,153 shares plus those shares that were covered by option grants under the
prior Stock Incentive Plan which have or will expire or be forfeited
unexercised. Significantly, in adopting this recommendation, the Board of
Directors resolved that at least 50% of the options issued during each annual
grant under the Employees' Stock Incentive Plan be made to employees who are at
the level of program manager and below. The objective of this requirement is to
distribute options throughout the workforce and particularly to those employees
working directly with the Company's customers.

THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE AMENDMENT TO THE
EMPLOYEES' STOCK INCENTIVE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.

SUMMARY OF THE PLAN

The Employees' Stock Incentive Plan authorizes the Company to grant stock
options for the purchase of, or make restricted stock awards (i.e., grants of
shares of Common Stock subject to certain restrictions) covering, up to an
aggregate of 4,817,153 shares of Common Stock (prior to giving effect of the
proposed amendment) plus such number of shares that were covered by option
grants under the Company's prior Stock Incentive Plan which have expired, been
forfeited or terminated unexercised since October 26, 1994 (the date that the
Board adopted the Employees' Stock Incentive Plan). Any shares subject to
options granted pursuant to the Employees' Stock Incentive Plan which terminate
or expire unexercised are available for future grants under such Plan. In
addition, any restricted stock awarded under the Plan which is repurchased by
the Company will be available for subsequent option grants or restricted stock
awards under the Plan. The maximum number of shares for which options or
restricted stock awards may be granted to any one employee during any year is
1,000,000 shares. As of August 31, 1997 only 157,000 shares remained available
for future option grants or restricted stock awards under the Employees' Stock
Incentive Plan.

All employees of the Company or a subsidiary of the Company are eligible to
receive stock options or restricted stock awards under the Employees' Stock
Incentive Plan, but options and awards are granted only to those employees
selected or approved by the Organization, Compensation and Nominating Committee
of the Board of Directors (the "Committee"), which has been charged with
administration of the Employees' Stock Incentive Plan. The number and identity
of individuals receiving stock options varies from year to year depending on
various factors such as the Company's hiring needs during the year, significant
promotions and individual and Company performance. Because of the uncertainty of
these factors, and because of the discretionary nature of the grant of stock
options and restricted stock awards, the Company cannot now determine the number
of options or restricted stock awards to be granted to any particular executive
officer, executive officers as a group, or non-executive officer employees as a
group. As of August 31, 1997, the Company and its subsidiaries had approximately
9,700 employees.

The Employees' Stock Incentive Plan is administered by the Committee, which
is authorized to implement and interpret the Employees' Stock Incentive Plan and
to determine, subject to the provisions of the Employees' Stock Incentive Plan
and the Committee's charter, the employees of the Company or its subsidiaries to
whom, and the time or times at which, options and restricted stock awards are
granted; the

18
<PAGE> 21

number of shares subject to each option or restricted stock award granted; the
designation of a stock option as either an incentive stock option or a
non-statutory stock option; the exercise price of a stock option (which may be
less than, equal to or greater than the fair market value of the Common Stock on
the date of grant); the time period over which a stock option becomes
exercisable (options granted to date generally vest ratably over a three-year or
four-year period); the purchase price (if any) to be paid for the shares subject
to a restricted stock award (which may be less than, equal to or greater than
the fair market value of the Common Stock on the date of grant); the
restrictions imposed on a restricted stock award (which would generally include
a repurchase right in favor of the Company in the event of the termination of
the recipient's employment and restrictions on transfer); and the period of time
over which such restrictions lapse; and whether a change in control of the
Company would cause the acceleration of the vesting of the options.

The Committee or the Board of Directors may amend the Employees' Stock
Incentive Plan from time to time, except that amendments to the Plan must be
approved by stockholders of the Company to the extent required by Section 16(b)
of the Securities Exchange Act of 1934 (or the rules promulgated thereunder).

This summary of the Employees' Stock Incentive Plan is qualified in all
respects by reference to the full text of the Employees' Stock Incentive Plan,
copies of which are available upon request to the Secretary of the Company.

As of August 31, 1997 restricted stock awards in the amount of 354,515
shares of Common Stock had been granted and options to purchase a total of
6,110,294 shares of Common Stock had been granted under the Employees' Stock
Incentive Plan. Included among such options are stock options, including LTI
Options, granted to Messrs. Tucci, Caine, Notini, Goulden and van Vuuren for
803,500, 276,000, 175,750, 175,750 and 272,750 shares of Common Stock,
respectively, at exercise prices ranging from $12.125 to $18.94 per share;
Restricted Stock awards of 230,000, 15,000, 15,000, 15,000 and 25,000 shares
have been awarded to Messrs. Tucci, Caine, Notini, Goulden and van Vuuren,
respectively; stock options for a total of 2,296,250 shares of Common Stock, at
a weighted average exercise price of $15.65 per share, have been granted to all
current executive officers as a group.

On August 31, 1997 the last reported sale price of the Company's Common
Stock on the Nasdaq Stock Market was $19.50 per share.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under the
Employees' Stock Incentive Plan and with respect to the sale of Common Stock
acquired under the Employees' Stock Incentive Plan.

Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.

Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize capital gain in an amount equal to the excess of the sale price
of the ISO Stock over the exercise price. The capital gain recognized will be
long term capital gain if the participant has owned the ISO Stock for at least
eighteen months. If the

19
<PAGE> 22

participant has owned the ISO Stock for more than one year but less than
eighteen months, mid-term gain is recognized.

If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
eighteen months prior to the date of sale. It would be mid-term capital gain if
the participant has held the ISO Stock for more than one year but less than
eighteen months, and short-term gain if held for less than twelve months.

If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
eighteen months prior to the date of sale.

Nonstatutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.

With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the excess of the sale price of the NSO Stock over
the participant's tax basis in the NSO Stock. This capital gain or loss will be
a long-term gain or loss if the participant has held the NSO Stock for more than
eighteen months prior to the date of the sale and a mid-term capital gain or
loss if the participant has held the NSO stock for more than twelve months but
less than eighteen months.

Restricted Stock Awards. A participant will not recognize taxable income
upon the grant of a restricted stock Award, unless the participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize ordinary income, for the year in
which the Award is granted, in an amount equal to the difference between the
fair market value of the Common Stock at the time the Award is granted and the
purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, the participant will recognize ordinary income, at the time that the
forfeiture provisions or restrictions on transfer lapse, in an amount equal to
the difference between the fair market value of the Common Stock at the time of
such lapse and the original purchase price paid for the Common Stock. The
participant will have a basis in the Common Stock acquired equal to the sum of
the price paid and the amount of ordinary compensation income recognized.

Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's
basis in the Common Stock. The gain or loss will be a long-term gain or loss if
the shares are held for more than eighteen months and a midterm gain or loss if
held for more than twelve months but less than eighteen months. For this
purpose, the holding period shall begin just after the date on which the
forfeiture provisions or restrictions lapse if a Section 83(b) Election is not
made, or just after the Award is granted if a Section 83(b) Election is made.

20
<PAGE> 23

Tax Consequences to the Company. The grant of an Award under the
Employees' Stock Incentive Plan will have no tax consequences to the Company.
Moreover, in general, neither the exercise of an incentive stock option nor the
sale of any Common Stock acquired under the Employees' Stock Incentive Plan will
have any tax consequences to the Company. The Company generally will be entitled
to a business-expense deduction, however, with respect to any ordinary
compensation income recognized by a participant under the Employees' Stock
Incentive Plan, including as a result of the exercise of a nonstatutory stock
option, a Disqualifying Disposition, or a Section 83(b) Election. Any such
deduction will be subject to the limitations of Section 162(m) of the Code. The
Company will have a withholding obligation with respect to any ordinary
compensation income recognized under the Employees' Stock Incentive Plan (other
than income recognized as a result of a Disqualifying Disposition) by
participants who are employees or are otherwise subject to withholding.

PROPOSAL TO AMEND THE 1995 EMPLOYEES' STOCK PURCHASE PLAN

The 1995 Employees' Stock Purchase Plan (the "1995 Purchase Plan") provides
a means for employees of the Company to acquire equity in the Company on
favorable terms, and thereby helps the Company in attracting and retaining
competent personnel. On July 23, 1997, the Board of Directors of the Company
adopted, subject to stockholder approval, an amendment to the 1995 Purchase Plan
that increased the number of shares of Common Stock available for purchase under
the 1995 Purchase Plan by 200,000 shares to a total of 809,807.

THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE AMENDMENT OF THE
1995 PURCHASE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.

SUMMARY OF THE PLAN

The 1995 Purchase Plan provides for the issuance of up to 609,607 shares of
Common Stock. Pursuant to the terms of the 1995 Purchase Plan and the rules
adopted by the Committee (which has been charged with administration of the
Purchase Plan), shares will be offered under the 1995 Purchase Plan in a series
of six-month offerings, the first of which commenced on May 1, 1995; subsequent
offerings commence on each November 1 and May 1 until all of the shares covered
by the 1995 Purchase Plan have been issued or the 1995 Purchase Plan has been
otherwise terminated. All employees of the Company, and of those subsidiaries of
the Company designated from time to time by the Committee as participating
subsidiaries, who have been employed by the Company (or such a subsidiary) for
at least six consecutive months (excluding any officer with the rank of Vice
President or above) are eligible to participate in the 1995 Purchase Plan.
Because only employees who are not officers with the rank of Vice President or
above are eligible to participate in the 1995 Purchase Plan, all shares of
Common Stock to be issued under the plan will be issued to non-executive officer
employees. As of August 31, 1997, approximately 9,700 employees were eligible to
participate. Approximately 264,600 shares have been purchased under the 1995
Purchase Plan through August 31, 1997. As of August 31, 1997, 345,007 shares
remained available for future issuance under the 1995 Purchase Plan.

The price at which a participating employee may purchase shares of Common
Stock in an offering is 85% of the fair market value of the Common Stock on the
day the offering commences or on the day that the offering terminates, whichever
is lower. An employee may elect to have up to 10% of his or her "total
compensation" (as defined in the rules governing the 1995 Purchase Plan)
withheld for the purpose of purchasing shares in an offering under the 1995
Purchase Plan. On the date an offering commences, each participating employee is
deemed to be granted an option to purchase up to the number of shares determined
by dividing 10% of such employee's total compensation by 85% of the fair market
value of the Common Stock on the date the offering commences. Unless the
participant elects to withdraw from the offering, each participant who continues
to be employed by the Company on the date such offering terminates is deemed to

21
<PAGE> 24

have exercised the option and purchased on such date such number of shares
(subject to the maximum number covered by his option) as may be purchased with
the amount of his or her payroll deductions at the offering price. If employees
subscribe to purchase more than the number of shares of Common Stock available
during any offering, the available shares are allocated on a pro rata basis to
subscribing employees. The Board of Directors of the Company may at any time
terminate or amend the 1995 Purchase Plan.

This summary of the 1995 Purchase Plan is qualified in all respects by
reference to the full text of the 1995 Purchase Plan, copies of which are
available upon request to the Secretary of the Company.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to participation in the 1995
Purchase Plan and with respect to the sale of Common Stock acquired under the
1995 Purchase Plan. The 1995 Purchase Plan is intended to qualify as an
"Employee Stock Purchase Plan" within the meaning of Section 423 of the Code.

Tax Consequences to Participants. In general, a participant will not
recognize taxable income upon enrolling in the 1995 Purchase Plan or upon
purchasing shares of Common Stock at the end of an Offering. Instead, if a
participant sells Common Stock acquired under the 1995 Purchase Plan at a sale
price that exceeds the price at which the participant purchased the Common
Stock, then the participant will recognize taxable income. A portion of that
taxable income will be ordinary income, and a portion may be capital gain.

If the participant sells the Common Stock more than one year after
acquiring it and more than two years after the date on which the Offering
commenced (the "Grant Date"), then the participant will be taxed as follows. If
the sale price of the Common Stock is higher than the price at which the
participant purchased the Common Stock, then the participant will recognize
ordinary compensation income in an amount equal to the lesser of (i) the excess
of the fair market value of the Common Stock on the Grant Date over the price at
which the participant purchased the Common Stock and (ii) the excess of the sale
price of the Common Stock over the price at which the participant purchased the
Common Stock.

Any further income will be capital gain. The capital gain recognized will
be long term capital gain if the participant has owned the Common Stock for at
least eighteen months. If the participant has owned the Common Stock for more
than one year but less than eighteen months, mid-term gain is recognized, and if
the Common Stock is owned for less than one year short-term gain is recognized.
If the sale price of the Common Stock is less than the price at which the
participant purchased the Common Stock, then the participant will recognize
long-term, mid-term or short term capital loss, as the case may be, in an amount
equal to the excess of the price at which the participant purchased the Common
Stock over the sale price of the Common Stock.

If the participant sells the Common Stock within one year after acquiring
it or within two years after the Grant Date (a "Disqualifying Disposition"),
then the participant will recognize ordinary compensation income in an amount
equal to the excess of the fair market value of the Common Stock on the date
that it was purchased over the price at which the participant purchased the
Common Stock. The participant will also recognize capital gain in an amount
equal to the excess of the sale price of the Common Stock over the fair market
value of the Common Stock on the date that it was purchased, or capital loss in
an amount equal to the excess of the fair market value of the Common Stock on
the date that it was purchased over the sale price of the Common Stock. This
capital gain or loss will be a long-term capital gain or loss if the participant
has held the Common Stock for more than eighteen months prior to the date of the
sale. It will be a mid-term capital gain or loss if held between twelve and
eighteen months and short-term capital gain or loss if the participant has held
the Common Stock for a shorter period.

22
<PAGE> 25

Tax Consequences to the Company. The offering of Common Stock under the
1995 Purchase Plan will have no tax consequences to the Company. Moreover, in
general, neither the purchase nor the sale of Common Stock acquired under the
1995 Purchase Plan will have any tax consequences to the Company except that the
Company will be entitled to a business expense deduction with respect to any
ordinary compensation income recognized by a participant upon making a
Disqualifying Disposition. Any such deduction will be subject to the limitations
of Section 162(m) of the Code.

PROPOSAL TO AMEND THE 1995 DIRECTOR STOCK OPTION PLAN

The purpose of the 1995 Director Stock Option Plan (the "1995 Director
Plan") is to encourage ownership of stock of the Company by Directors, whose
continued services are essential to the Company's future progress, and to
provide them with an incentive to continue as Directors of the Company. The
Board of Directors of the Company believes that the 1995 Director Plan will
enhance the ability of the Company to attract and retain qualified Directors and
will provide further incentive to Directors as a result of their equity interest
in the Company. On July 23, 1997, the Board of Directors adopted, subject to
stockholder approval, an amendment to the Company's 1995 Director Plan
increasing by 60,000 the number of shares of Common Stock available under such
plan to a total of 240,000 shares.

THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE APPROVAL OF THE
AMENDMENT TO THE 1995 DIRECTOR PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND
ITS STOCKHOLDERS AND RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.

SUMMARY OF PLAN

A total of up to 180,000 shares of Common Stock may be issued upon the
exercise of options granted under the 1995 Director Plan. Any shares subject to
options granted pursuant to the 1995 Director Plan which terminate or expire
unexercised will be available for future grants under the 1995 Director Plan.
Only Directors of the Company who are not employees of the Company or any
subsidiary ("outside Directors") will be eligible to receive options under the
1995 Director Plan. The Company currently has seven outside Directors (which
number may change in the future). All options granted under the 1995 Plan are
non-statutory stock options not entitled to special tax treatment under Section
422 of the Code. Through August 31, 1997, stock options in the amount of 143,000
shares have been granted under the 1995 Director Plan and 63,000 shares were
available for future grants.

The 1995 Director Plan provides for the automatic grant of an option for
6,500 shares of Common Stock under the following circumstances: (i) an option
was automatically granted to each outside Director on the date the 1995 Director
Plan was approved by the stockholders of the Company; (ii) an option is
automatically granted to each outside Director who is initially elected to the
Board of Directors after January 25, 1995 by the stockholders of the Company,
upon his or her initial election to the Board of Directors and (iii) on
September 30 of each year (beginning September 30, 1995), an option is
automatically granted to each outside Director who attended in the fiscal year
ending the preceding June 30 at least 75% of the aggregate of the number of
Board of Directors meetings held and the number of meetings held by committees
of the Board on which he or she then served. The exercise price of each option
granted under the 1995 Director Plan is equal to the fair market value of the
Common Stock on the date of grant (which, assuming the Common Stock continues to
be listed on the Nasdaq National Market, is determined based upon the average
closing price of the Common Stock over the 30 business day period beginning 45
business days before the grant of the option).

Each option becomes exercisable (or "vests"), as to 34%, 33% and 33% of the
shares covered thereby on the first, second, and third anniversaries of the date
of grant, respectively, provided the optionee continues to

23
<PAGE> 26

serve as a Director on such dates. In the event a "change in control" of the
Company (as defined in the 1995 Director Plan) occurs, all outstanding options
will become vested in full. In general, an optionee may exercise his or her
options, to the extent vested, only while he or she is a Director of the Company
and for up to 30 days thereafter. Unexercised options expire ten years after the
date of grant.

The Board of Directors may suspend, discontinue or amend the 1995 Director
Plan, provided, however, no amendment may increase the number of shares subject
to the 1995 Director Plan without approval of the stockholders of the Company.

FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the United States federal income tax
consequences that generally will arise with respect to the grant and exercise of
stock options under the 1995 Director Plan and with respect to the sale of
Common Stock acquired under the 1995 Director Plan.

Tax Consequences to Participants. A participant will not recognize taxable
income upon the grant of an option under the 1995 Director Plan. However, a
participant will recognize ordinary compensation income upon the exercise of the
option in an amount equal to the excess of the fair market value of the Common
Stock acquired through the exercise of the option (the "Option Stock") on the
exercise date over the exercise price.

A participant will have a tax basis for any Option Stock equal to the
exercise price plus any income recognized with respect to the option. Upon
selling Option Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the Option
Stock and the participant's tax basis in the Option Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
Option Stock for more than eighteen months prior to the date of the sale. It
will be a mid-term capital gain or loss if stock is held between twelve and
eighteen months, and a short-term capital gain or loss if the participant has
held the Option Stock for a shorter period.

Tax Consequences to the Company. The grant of a stock option under the
1995 Director Plan will have no tax consequences to the Company except that the
Company generally will be entitled to a business-expense deduction with respect
to any ordinary compensation income recognized by a participant under the Plan.

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected the firm of Ernst & Young LLP as the
Company's independent auditors for the current fiscal year. Ernst & Young LLP
has served as the independent auditors for the Company (or its predecessor
Massachusetts corporation) since 1980. Although stockholder approval of the
Board of Directors' selection of Ernst & Young LLP is not required by law, the
Board of Directors believes that it is advisable to give stockholders an
opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors may reconsider its selection.

Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.

24
<PAGE> 27

OTHER MATTERS

MATTERS TO BE CONSIDERED AT THE MEETING

The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters. Stockholders should be aware that the Company's By-laws (a copy
of which is available upon request to the Secretary of the Company) contain
provisions requiring certain advance notice from a stockholder who wishes to
bring business before the Annual Meeting.

SOLICITATION OF PROXIES

All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Kissel-Blake Inc. has been engaged by the
Company to solicit proxies on behalf of the Company. For these services, the
Company will pay Kissel-Blake a fee of $6,000.00 plus reimbursement of
out-of-pocket expenses. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and the Company will reimburse them for their out-of-pocket expenses in this
connection.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders for Fiscal 1998 must be received by the Company at its principal
office not later than June 18, 1998 for inclusion in the proxy statement for
that meeting.

SECTION 16(a) Beneficial Ownership Reporting Compliance

Based solely on its review of reports filed by "reporting persons" of the
Company under Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), the Company believes that during Fiscal 1997 all filings
required to be made by reporting persons were timely made in accordance with the
requirements of Section 16(a).

By Order of the Board of Directors,

ALBERT A. NOTINI,
Secretary

October 16, 1997

THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.

25
<PAGE> 28
WANG LABORATORIES, INC.

ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 25, 1997

The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s)
Albert A. Notini and John A. Burgess, and each of them (with full power of
substitution), as proxies of the undersigned to attend the Annual Meeting of
Stockholders of Wang Laboratories, Inc. (the "Company") to be held on Tuesday,
November 25, 1997 and any adjourned sessions thereof, and there to vote and act
upon the following matters in respect of all shares of capital stock of the
Company which the undersigned would be entitled to vote or act upon, with all
powers the undersigned would possess if personally present.

Attendance of the undersigned at the meeting or at any adjourned
session thereof will not be deemed to revoke this proxy unless the undersigned
shall affirmatively indicate thereat the intention of the undersigned to vote
said shares in person. If the undersigned hold(s) any of the shares of the
Company in a fiduciary, custodial or joint capacity or capacities, this proxy is
signed by the undersigned in every such capacity as well as individually.

IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY ADJOURNMENT
THEREOF.

1. To elect the following individuals as Class I Directors:

JOSEPH M. TUCCI / / FOR / / WITHHOLD AUTHORITY

RAYMOND C. KURZWEIL / / FOR / / WITHHOLD AUTHORITY

FREDERICK A. WANG / / FOR / / WITHHOLD AUTHORITY

2. To approve an amendment to the Employees' Stock Incentive Plan of the
Company to increase the number of authorized shares available under the
plan.

/ / FOR / / AGAINST / / ABSTAIN

3. To approve an amendment to the 1995 Employees' Stock Purchase Plan of
the Company to increase the number of authorized shares available under
the plan.

/ / FOR / / AGAINST / / ABSTAIN

(Continued on other side)

<PAGE> 29
(Continued from other side)

4. To approve an amendment to the 1995 Director Stock Option Plan of the
Company to increase the number of authorized shares available under the
plan.

/ / FOR / / AGAINST / / ABSTAIN

5. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.

/ / FOR / / AGAINST / / ABSTAIN

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL SPECIFIED ABOVE, THIS PROXY WILL BE VOTED FOR SUCH ELECTION TO OFFICE
OR PROPOSAL.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY.

DATED: _____________________________, 1997

__________________________________________
SIGNATURE(S)

PLEASE SIGN NAME(S) EXACTLY AS APPEARING
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR OR OTHER FIDUCIARY, PLEASE
GIVE YOUR FULL TITLE AS SUCH. JOINT OWNERS
SHOULD EACH SIGN PERSONALLY. IF A
CORPORATION, SIGN IN FULL CORPORATE NAME, BY
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE
SIGN IN PARTNERSHIP NAME, BY AUTHORIZED
PERSON.