<PAGE> 1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---- to ----
Commission file number 1-5677
WANG LABORATORIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-2192707
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
600 Technology Park Drive
Billerica, Massachusetts 01821-4130
------------------------ ----------
(Address of principal executive offices) (Zip Code)
(508) 967-5000
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of l934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date (March 31, 1997):
Common stock, par value $0.01 per share 36,915,718 shares
<PAGE> 2
2
WANG LABORATORIES, INC. AND SUBSIDIARIES
INDEX
Part I. FINANCIAL INFORMATION PAGE NO.
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - 3
March 31, 1997 and June 30, 1996
Condensed Consolidated Statements of Operations - 4
Three and nine months ended March 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows - 5
Nine months ended March 31, 1997 and 1996
Notes to Condensed Consolidated Financial Statements - 6
March 31, 1997
Item 2. Management's Discussion and Analysis of Financial 14
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 25
SIGNATURE 30
<PAGE> 3
3
PART I - FINANCIAL INFORMATION
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
March 31, June 30,
1997 1996
-------- --------
(Dollars in millions)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 211.6 $175.3
Accounts receivable, net 260.9 194.1
Inventories 18.1 19.9
Other current assets 44.6 48.7
-------- ------
Total current assets 535.2 438.0
Depreciable assets, net 124.8 137.3
Intangible assets, net 323.0 211.2
Other 43.0 77.6
-------- ------
Total assets $1,026.0 $864.1
======== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Borrowings due within one year $ 62.3 $ 21.9
Accounts payable, accrued expenses and other 306.6 257.6
Deferred service revenue 76.2 75.7
-------- ------
Total current liabilities 445.1 355.2
Long-term liabilities 82.6 77.4
Series A preferred stock 85.3 84.8
STOCKHOLDERS' EQUITY
Series B preferred stock, $0.01 par value,
143,750 shares authorized and outstanding,
liquidation preference of $143.8 million 138.3 138.3
Common stock, $0.01 par value, 100,000,000
shares authorized; outstanding shares:
36,915,718 at March 31, 1997 and 36,302,737
at June 30, 1996 0.4 0.4
Capital in excess of par value 280.2 268.6
Cumulative translation adjustment (3.6) (0.8)
Accumulated deficit (2.3) (59.8)
-------- ------
Total stockholders' equity 413.0 346.7
-------- ------
Total liabilities and stockholders' equity $1,026.0 $864.1
======== ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 4
4
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
------ ------ ------ -------
(Dollars in millions, except per share data)
<S> <C> <C> <C> <C>
REVENUES
Services $246.8 $165.6 $698.1 $ 516.9
Product sales 68.3 82.7 232.1 248.9
------ ------ ------ -------
315.1 248.3 930.2 765.8
COSTS AND EXPENSES
Cost of services 193.4 114.9 529.0 352.7
Cost of product sales 49.5 54.8 171.0 169.8
Research and development 0.9 0.4 2.8 3.1
Selling, general and administrative 80.3 46.9 182.1 143.3
Amortization of intangibles -
acquisition and fresh-start 22.7 8.6 42.2 25.9
Integration-related costs and other charges 8.6 -- 36.0 --
------ ------ ------ -------
Total costs and expenses 355.4 225.6 963.1 694.8
------ ------ ------ -------
OPERATING INCOME (LOSS) (40.3) 22.7 (32.9) 71.0
OTHER (INCOME) EXPENSE
Interest expense 3.9 1.3 8.8 3.5
Other income - net (1.2) (3.2) (4.5) (9.5)
------ ------ ------ -------
Total other (income) expense 2.7 (1.9) 4.3 (6.0)
------ ------ ------ -------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (43.0) 24.6 (37.2) 77.0
Provision (benefit) for income taxes (21.1) 7.3 (18.1) 28.5
------ ------ ------ -------
INCOME (LOSS) FROM CONTINUING OPERATIONS (21.9) 17.3 (19.1) 48.5
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES 101.3 (12.3) 76.6 (57.3)
------ ------ ------ -------
NET INCOME (LOSS) 79.4 5.0 57.5 (8.8)
Dividends and accretion on
preferred stock (3.6) (12.2) (10.6) (19.0)
------ ------ ------ -------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS
$ 75.8 $ (7.2) $ 46.9 $ (27.8)
====== ====== ====== =======
PER SHARE AMOUNTS
Primary
From continuing operations $(0.52) $ 0.14 $(0.54) $ 0.82
From discontinued operations 2.33 (0.34) 1.77 (1.60)
------ ------ ------ -------
Net income (loss) per share $ 1.81 $(0.20) $ 1.23 $ (0.78)
====== ====== ====== =======
Fully diluted
From continuing operations $(0.37) $ 0.14 $(0.42) $ 0.82
From discontinued operations 1.92 (0.34) 1.62 (1.60)
------ ------ ------ -------
Net income (loss) per share $ 1.55 $(0.20) $ 1.20 $ (0.78)
====== ====== ====== =======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 5
5
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended March 31,
1997 1996
---- ----
(Dollars in millions)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) from continuing operations $ (19.1) $ 48.5
Depreciation 50.3 40.5
Amortization 44.3 27.4
Non-cash provision (benefit) for income taxes (21.9) 9.9
Non-cash compensation expense 5.5 --
Provision for integration-related costs and other charges 36.0 --
Payments of integration-related costs, restructuring and other charges (23.5) (37.5)
CHANGES IN OTHER ACCOUNTS AFFECTING OPERATIONS
Accounts receivable (5.5) (19.0)
Inventories 4.1 4.4
Other current assets 1.0 (3.1)
Accounts payable and other current liabilities (43.2) (11.6)
Other 2.9 --
------- ------
Net changes in other accounts affecting operations (40.7) (29.3)
------- ------
Net cash provided by continuing operations 30.9 59.5
Net proceeds from sale of discontinued
operations 250.5 --
Cash used in discontinued operations (35.8) (48.6)
------- ------
Net cash provided by (used in)
discontinued operations 214.7 (48.6)
------- ------
Net cash provided by operations 245.6 10.9
------- ------
INVESTING ACTIVITIES
Investment in depreciable assets (34.2) (32.3)
Investment in capitalized software -- (0.4)
Proceeds from asset sales 5.6 4.0
Business acquisitions, net of cash acquired (169.9) (7.9)
Other (4.0) (6.5)
------- ------
Net cash used in investing activities (202.5) (43.1)
------- ------
FINANCING ACTIVITIES
Payments of long-term debt -- (3.7)
Net decrease in short-term borrowings (0.3) (2.5)
Proceeds from sale of common stock 5.2 3.9
Retirement of redeemable preferred stock -- (72.9)
Proceeds from sale of convertible preferred stock, net of issuance costs -- 138.3
Dividends paid on preferred stock (10.1) (3.3)
------- ------
Net cash provided by (used in) financing activities (5.2) 59.8
------- ------
Effect of changes in foreign exchange rates on cash (1.6) 0.1
------- ------
.
INCREASE IN CASH AND EQUIVALENTS 36.3 27.7
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 175.3 182.4
------- ------
CASH AND EQUIVALENTS AT END OF PERIOD $ 211.6 $210.1
======= ======
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE> 6
6
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE A - BASIS OF PRESENTATION
- ------------------------------
During interim periods, the Company follows the accounting policies set forth in
its most recent Annual Report on Form 10-K, filed with the Securities and
Exchange Commission. Users of financial information produced for interim periods
are encouraged to refer to the footnotes contained in the most recent Annual
Report on Form 10-K when reviewing interim financial statements.
The results of operations for the periods reported are not necessarily
indicative of those that may be expected for the full year. However, in the
opinion of management, the accompanying interim financial statements contain all
material adjustments, consisting principally of normal recurring adjustments,
necessary to present fairly the financial condition, the results of operations
and cash flows of Wang Laboratories, Inc. and its consolidated subsidiaries for
the interim periods presented.
Earnings per share for fiscal 1997 is calculated using the Modified Treasury
Stock Method. Earnings per share for fiscal 1996 is based on the weighted
average number of common shares outstanding, including those yet to be
distributed by the Disbursing Agent appointed under the Company's Reorganization
Plan, and the effect, when dilutive, of stock options and warrants. Net
income(loss) from continuing operations, for purposes of calculating earnings
per share, has been reduced by cumulative dividends and accretion related to the
Company's preferred stock.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share", which is required to be adopted on December 31, 1997.
At that time, the Company will be required to change the method currently used
to compute earnings per share. Under the new requirements for calculating
diluted EPS, the modified treasury stock method would not be permitted. Under
the new standard, diluted earnings (loss) per share would be $2.05 and $(0.19)
for the three month periods and $1.28 and $(0.63) for the nine month periods
ended March 31, 1997 and 1996, respectively. Basic earnings (loss) per share
would be $2.05 and $(0.20) for the three month periods and $1.28 and $0.78 for
the nine month periods ended March 31, 1997 and 1996, respectively.
The Company completed the sale of its software business unit to Eastman Kodak
Company ("Kodak") on March 17, 1997. The historical results of the software
business have been reclassified to discontinued operations in the Company's
Statements of Operations and Statements of Cash Flows for all periods presented.
The gain on the sale of the software business unit has also been reported as
discontinued operations for both the three and nine month periods ended March
31, 1997.
<PAGE> 7
7
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE A (Continued)
- ------
During the current fiscal year, the Company made two acquisitions. I-NET, Inc.
("I-NET") was acquired on August 29, 1996 and Advanced Paradigms, Inc. ("API")
was acquired on November 13, 1996. The Company's Statements of Operations and
Statements of Cash Flows for the nine month period ended March 31, 1997 include
the results of the acquired businesses since acquisition.
Certain amounts in previously issued financial statements were reclassified to
conform to current presentations.
NOTE B - DISCONTINUED OPERATIONS
- --------------------------------
On March 17, 1997, the Company completed the sale of its software business unit
to Kodak for $260.0 million in cash. The business sold to Kodak included Wang's
software business unit management, employees, products, technology, customers
and partners, as well as its sales, marketing and research and development
organizations worldwide. As a result of the sale, the operations of the software
business unit for all periods presented have been reclassified to discontinued
operations in the Statements of Operations and Statements of Cash Flows.
Revenues, related income (loss) and income tax benefits associated with the
software business unit for the three and nine month periods ended March 31, 1997
and 1996 were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 7.7 $ 16.7 $ 47.0 $ 55.9
====== ====== ====== ======
Operating loss, net of applicable tax benefits of
$7.6 million and $3.9 million for the three
month periods and $9.3 million and $17.9 million
for the nine month periods ended March 31, 1997
and 1996, respectively $(11.5) $(12.3) $(36.2) $(57.3)
Gain on sale of discontinued operation, net of income
tax expense of $75.1 million 112.8 $ -- 112.8 --
------ ------ ------ ------
Income (loss) from discontinued operations $101.3 $(12.3) $ 76.6 $(57.3)
====== ====== ====== ======
</TABLE>
<PAGE> 8
8
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE C - BUSINESS ACQUISITIONS AND INTEGRATION-RELATED COSTS AND OTHER CHARGES
- ------------------------------------------------------------------------------
Advanced Paradigms Acquisition
On November 13, 1996, the Company acquired API, a privately-held Virginia-based
provider of enterprise-wide Microsoft-specific LAN/WAN solutions, for
approximately $6 million in cash and notes, plus assumed liabilities. API's
Microsoft-centric expertise complements the Company's network and desktop
services business, and enhances its position as a Microsoft Authorized Support
Center.
The acquisition was accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16"). Under APB 16, purchase price allocations were made to
the assets acquired and the liabilities assumed based on their respective fair
values. The excess of the purchase price over the net liabilities assumed of
$6.2 million has been recorded based on these preliminary purchase price
allocations.
I-NET Acquisition
On August 29, 1996, the Company acquired all of the outstanding shares of I-NET,
pursuant to the Stock Purchase Agreement between the Company and the other
stockholders of I-NET dated as of July 24, 1996, as amended on August 29, 1996.
I-NET, previously privately held, is a vendor-independent provider of outsourced
network and desktop management services. These services include enterprise
network integration and operations, network management, client/server
technologies, local area network and wide area network communications and IT
outsourcing. In consideration for the shares of I-NET the Company paid the
stockholders of I-NET $100.2 million in cash and issued a $64.5 million
one-year, interest-free note. The Company has discounted the note payable at
8.0%, to $59.7 million, for accounting purposes and will increase the principal
balance through charges to interest expense to the maturity date. The final
settlement of the note issued to the selling stockholders is subject to a
reduction should the Company incur indemnified costs as defined by the Stock
Purchase Agreement. The Company has the option to pay, at maturity, up to fifty
percent of the principal amount of the note in Common Stock of the Company based
on an agreed-upon formula.
The Company paid $44.2 million of existing I-NET debt and incurred $7.9 million
in transaction fees. The Company also assumed certain other liabilities. The
Company converted existing I-NET options to Wang options and canceled vested
I-NET stock options valued at $4.9 million which were recorded as part of the
purchase price. The Company had previously purchased a minority interest in
I-NET for $12.4 million.
In connection with the acquisition, the Company entered into an Amended and
Restated Revolving Credit Facility (the "Revolving Credit Facility") with
Bankers Trust Company ("BT") and certain other financial institutions. The
three-year reducing facility provides for borrowings of up to $225.0 million,
<PAGE> 9
9
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE C (Continued)
- ------
including up to $70.0 million of letters of credit, limited to the lesser of the
facility maximum or a formula based on the Company's accounts receivable and a
supplemental amount. The Revolving Credit Facility reduces to $200.0 million on
March 31, 1998, $175.0 million on September 30, 1998 and $150.0 million on March
31, 1999. Interest on any borrowings is based on the BT's prime rate plus 0.25%
to 1.25% or the LIBOR rate plus 1.25% to 2.25%. The Revolving Credit Facility
contains various financial covenants, including covenants relating to the
Company's operating results, working capital, net worth, and indebtedness.
Besides providing financing for the acquisition, the Revolving Credit Facility
is being used for general corporate purposes. As of March 31, 1997, the Company
had no outstanding borrowings under the Revolving Credit Facility. Letters of
credit aggregating $11.6 million were outstanding under the Revolving Credit
Facility at March 31, 1997. Although financial accounting rules require the
amounts due under the Revolving Credit Facility to be classified as a current
liability, the terms of the Revolving Credit Facility do not require the Company
to pay the amounts due within the next twelve months.
The acquisition was accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16"). Under APB 16, purchase price allocations were made to
the assets acquired and the liabilities assumed based on their respective fair
values. The excess of the purchase price over the net liabilities assumed of
$210.2 million has been recorded based on these preliminary purchase price
allocations which have been updated quarterly. Finalization of the allocation of
the purchase price to assets acquired and liabilities assumed, is subject to
final appraisals, evaluations and other studies of the fair values of I-NET's
assets and liabilities which the Company expects to complete in the fourth
quarter. The excess of purchase price over the net liabilities assumed will be
amortized using the straight line method over a period of twenty-five years.
<TABLE>
A summary of the acquisition follows (in millions):
<S> <C>
Cash $100.2
Note to selling stockholders 59.7
Original investment in I-NET 12.4
Transaction costs 7.9
Stock options 4.9
------
Consideration, excluding assumed liabilities 185.1
Estimated fair value of net liabilities assumed 25.1
------
Excess of purchase price over net liabilities assumed $210.2
======
</TABLE>
<PAGE> 10
10
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE C (Continued)
- ------
<TABLE>
The following pro forma results of operations have been prepared as though the
I-NET acquisition had occurred as of the beginning of the periods presented. The
pro forma information does not purport to be indicative of the results of
operations that would have been attained had the combination been in effect on
the dates indicated, nor of future results of operations of the Company (in
millions, except per share data).
<CAPTION>
Nine Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Revenues $987.6 $1,026.1
Net income (loss) from continuing operations $(26.5) $ 16.4
Net income (loss) per share from continuing
operations $(1.00) $ (0.07)
Net income (loss) applicable to
common stockholders $ 39.5 $ (60.0)
Net income (loss) per share applicable
to common stockholders $ 0.78 $ (1.67)
</TABLE>
Bull Acquisition
The Company and Compagnie des Machines Bull ("Bull") negotiated a settlement of
the objection proceedings which the Company initiated to challenge the net asset
value of the assets it had acquired from Bull on January 31, 1995. As a result,
the Company recorded in the financial statements for the quarter ended September
30, 1996, a reduction to Borrowings due within one year of $5.4 million, with a
corresponding reduction to Goodwill. The remaining obligation, totaling $16.5
million, plus accrued interest of $2.8 million, was paid to Bull on December 30,
1996.
Integration-Related Costs and Other Charges
<TABLE>
The Company recorded a charge to operations of $27.4 million in the quarter
ended September 30, 1996, of which $12.3 million reflects the costs associated
with combining the operations of the Company and I-NET. An additional $5.7
million was recorded as a purchase accounting adjustment related to the cost of
integrating I-NET with the Company. Integration-related costs and other cost
reduction initiatives consist of the following (in millions):
<S> <C>
Workforce-related $12.4
Depreciable assets and other 7.5
Facilities 7.5
-----
Total $27.4
=====
</TABLE>
<PAGE> 11
11
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE C (Continued)
- ------
The formal plan was recorded as of September 30, 1996 based upon the best
information available at the time. Workforce-related reserves, consisting
principally of severance costs, were established based on specific
identification of the number of employees to be terminated, their job
classifications or functions and their locations. As a result of the acquisition
and other cost reduction initiatives, certain sales, technical support and
administrative functions are being combined and reduced. The Company plans to
release approximately 500 employees as part of these initiatives. The
facilities-related reserves were established to recognize the lower of the
amount of the remaining lease obligations, net of any sublease rentals, or the
expected lease settlement costs. These reserves will be utilized only when the
excess space has been vacated and there are no plans to utilize the facility in
the future. Depreciable assets-related reserves were established to recognize,
at net realizable value, the write-down and disposal value of existing assets,
including information systems, leasehold improvements and other productive
assets no longer required.
<TABLE>
During the quarter ended March 31, 1997, the Company recorded a charge to
operations of $8.6 million which primarily reflects the additional costs
associated with integrating its recent acquisitions and for the writedown of
legacy information systems being replaced. These charges consist of the
following (in millions):
<S> <C>
Workforce-related $5.9
Depreciable assets and other 2.6
Facilities 0.1
----
$8.6
====
</TABLE>
The formal plan was recorded as of March 31, 1997 based upon the best
information available at the time. Workforce-related reserves, consisting
principally of severance costs, were established based on specific
identification of the number of employees to be terminated, their job
classifications or functions and their locations. The Company plans to release
approximately 200 employees as part of this initiative.
Cash outlays to complete these and earlier initiatives recorded as a charge to
operations are estimated to approximate $16 million for the remainder of fiscal
1997 and $21 million thereafter. Cash outlays to complete the initiatives
recorded as part of purchase accounting are estimated to approximate $10 million
for the remainder of fiscal 1997 and $13 million thereafter. As of March 31,
1997, approximately 600 employees had been released in the current fiscal year
relative to these and previously recorded initiatives.
<PAGE> 12
12
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE D - OTHER BALANCE SHEET INFORMATION
- ----------------------------------------
<TABLE>
Components of selected captions in the Condensed Consolidated Balance Sheet
follow (in millions):
<CAPTION>
March 31, June 30,
1997 1996
---- ----
<S> <C> <C>
Accounts receivable $275.4 $204.9
Less allowances 14.5 10.8
------ ------
$260.9 $194.1
====== ======
Inventories
Finished products $ 6.4 $ 9.5
Raw materials and work-in-process 9.3 8.8
Service parts and supplies 2.4 1.6
------ ------
$ 18.1 $ 19.9
====== ======
Depreciable assets
Land $ 6.2 $ 5.4
Buildings and improvements 20.8 19.7
Machinery and equipment 81.2 62.9
Spare parts 141.4 140.9
------ ------
249.6 228.9
Less accumulated depreciation 124.8 91.6
------ ------
$124.8 $137.3
====== ======
Intangible assets
Trademarks and patents $ 15.4 $ 24.8
Computer software 0.6 37.1
Installed base - service 120.5 128.5
License agreements 24.9 29.9
Assembled workforce 14.0 16.2
Goodwill 259.1 50.7
Reorganization value in excess of amounts
allocated to identifiable assets -- 30.6
------ ------
434.5 317.8
Less accumulated amortization 111.5 106.6
------ ------
$323.0 $211.2
====== ======
Accounts payable, accrued expenses and other
Accounts payable $ 56.9 $ 54.3
Accrued expenses 124.9 98.7
Compensation and benefits 63.6 49.1
Restructuring, reorganization and integration-related 42.8 33.9
Other 18.4 21.6
------ ------
$306.6 $257.6
====== ======
Long-term liabilities
Postretirement $ 17.0 $ 17.3
Pension 7.3 8.0
Facilities 9.9 15.0
Restructuring, reorganization and integration-related 12.6 5.2
Insurance 5.5 7.4
Other 30.3 24.5
------ ------
$ 82.6 $ 77.4
====== ======
</TABLE>
<PAGE> 13
13
WANG LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE E - IMPAIRMENT LOSSES ON LONG-LIVED ASSETS
- -----------------------------------------------
In the first quarter of fiscal year 1997, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and of Long-Lived Assets to be Disposed of" ("SFAS 121"). SFAS
121 requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. In accordance with SFAS 121, the Company
periodically evaluates the carrying value of long-lived assets in relation to
the operating performance and future undiscounted cash flows of the underlying
business.
Due to accelerated conversion by a major client to other systems which became
evident in February 1997, the Company evaluated the ongoing value of certain
software licenses and the related goodwill that were the result of the Bull
acquisition on January 31, 1995. Based on this evaluation, the Company
determined that assets with a carrying amount of $21.3 million were impaired and
wrote them down by $14.4 million to their estimated fair value of $6.9 million.
In order to determine the fair value of these assets, the Company relied upon
the present value of estimated future cash flows. The writedown of these assets
is included in the line entitled "Amortization of intangibles - acquisition and
fresh-start" in the consolidated statement of operations for the three and nine
month periods ended March 31, 1997.
The Company's analysis indicates that assets associated with the sales and
service of proprietary GCOS products are not currently impaired. The Company's
current estimate of undiscounted cash flows indicated that the carrying amount
of these assets is expected to be recovered. Nonetheless, it is reasonably
possible that the estimate of undiscounted cash flows may change in the near
term should there be an accelerated revenue decline from these sources or the
loss of a single major customer, resulting in the need to write down those
assets to fair value.
NOTE F - CONTINGENCIES
- ----------------------
Prior to its filing for Chapter 11 protection in August of 1992, from which it
successfully emerged in September of 1993, the Company was a defendant in a
number of other lawsuits arising from the conduct of its business. Substantially
all such suits were stayed while the Company operated under Chapter 11. Claims
in such suits relating to periods prior to the Company's filing under Chapter 11
are being extinguished and, to the extent allowed, have been provided for under
the Reorganization Plan. Although the Company is not in a position to predict
accurately the results of specific matters, the Company does not currently
believe that its liability, if any, for all litigation will be material to the
Company's consolidated financial position or its results of operations.
<PAGE> 14
14
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
On March 17, 1997, the Company completed the sale of its software business unit
to Eastman Kodak Company ("Kodak") for $260.0 million in cash. The business sold
to Kodak included Wang's software business unit management, employees, products,
technology, customers and partners, as well as its sales, marketing and research
and development organizations worldwide. Cash proceeds, net of transaction costs
paid to date, were $250.5 million. Approximately $19 million of cash is
estimated to be required in the future for payment of transaction costs and
guarantees. As a result of the sale, the operations of the software business
unit for all periods presented have been reclassified to discontinued operations
in the accompanying Statements of Operations and Statements of Cash Flows.
Additionally, the gain on the sale has been reported as discontinued operations
in the three and nine month periods ended March 31, 1997. The following
discussion will therefore address the results of the Company excluding both the
historical results of the software business unit and the gain on its sale to
Kodak.
The Company reported revenues of $315.1 million for the three months ended March
31, 1997, a 26.9% increase compared to revenues of $248.3 million in the same
period of the prior year. Revenues for the nine months ended March 31, 1997
increased by 21.5%, to $930.2 million, compared to $765.8 million in the same
prior year period. Substantially all of the increase in revenues is attributable
to acquisitions and internal growth.
In connection with the sale of the software business, the Company has organized
its ongoing services business around four global service delivery units. The
nonrecurring costs associated with these changes were provided for in the three
months ended March 31, 1997 and amounted to $52.5 million. Of that total, $13.3
million resulted from the sale of the software business, $15.2 million is for
organizational realignment and reductions in the G&A infrastructure, $19.0
million is related to reductions in the carrying value of certain assets
(including $14.4 million of intangible assets determined to be impaired) and
$5.0 million is for other charges. The writedown of the impaired intangible
assets is included in the $22.7 million of amortization of acquired and
fresh-start intangible assets reported in the Statement of Operations for the
three months ended March 31, 1997.
The Company reported an operating loss of $40.3 million for the three months
ended March 31, 1997 after charges of $52.5 million for these nonrecurring costs
(including $8.6 million of integration-related costs and other charges) and
amortization of fresh-start and acquired intangible assets. This compares to
operating income of $22.7 million after amortization of fresh-start and acquired
intangible assets for the three months ended March 31, 1996. The Company
reported an operating loss of $32.9 million for the nine months ended
March 31, 1997, after integration-related costs and other
<PAGE> 15
15
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
charges of $27.4 million recorded prior to the quarter ended March 31, 1997, the
nonrecurring costs of $52.5 million recorded in the third quarter, and
amortization of fresh-start and acquired intangible assets. This compares to
operating income of $71.0 million for the same prior year period, after
amortization of fresh-start and acquired intangible assets.
EBITDA (earnings before interest, income taxes, depreciation and amortization),
which some investors believe to be a meaningful measure for assessing a
company's ability to meet its cash requirements, is determined by excluding from
the net income (loss): integration-related and other nonrecurring charges;
income taxes; interest expense; interest income; depreciation and amortization.
EBITDA was $36.2 million for the three months ended March 31, 1997, compared to
$46.1 million in the same period of the prior year. EBITDA was $122.7 million
and $142.1 million for the nine months ended March 31, 1997 and 1996,
respectively
On November 13, 1996, the Company acquired Advanced Paradigms, Inc. ("API"), a
privately-held Virginia-based provider of enterprise-wide Microsoft-specific
LAN/WAN solutions, for approximately $6 million in cash and notes, plus assumed
liabilities. API's Microsoft-centric expertise complements the Company's network
and desktop services business, and enhances its position as a Microsoft
Authorized Support Center. The acquisition was accounted for using the purchase
method of accounting. Accordingly, the results of operations of the Company in
the accompanying financial statements include API's results of operations from
the date of acquisition.
On August 29, 1996, the Company completed the acquisition of I-NET, for
approximately $165 million in cash and notes, plus assumed liabilities. Prior to
the transaction, the Company had an investment in I-NET of approximately $12
million. I-NET, previously privately-held, is a vendor-independent provider of
outsourced network and desktop management services. These services include
enterprise network integration and operations, network management, client/server
technologies, LAN/WAN communications, and IT outsourcing. The Company is
integrating I-NET into its existing business. The acquisition was accounted for
using the purchase method of accounting. Accordingly, the results of operations
of the Company in the accompanying financial statements include I-NET's results
of operations from the date of acquisition.
For the time periods presented, the focus of the Company's continuing operations
was on providing services to the office productivity segment of the information
processing industry, a market where the Company has name recognition and
established technological, professional and marketing expertise. The addition of
the Compagnie des Machines Bull ("Bull") and Dataserv service businesses added a
significant portion of multi-vendor service ("MVS") contracts to the Company's
existing MVS revenues. The Company has directed additional resources to the
MVS business with the goal of continuing to increase this revenue stream in the
<PAGE> 16
16
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
future. In addition, the recent acquisition of I-NET positions the Company in
one of the fastest growing areas of the information technology services market.
The sale of the Company's software business unit to Kodak will enable the
Company to focus all of its resources on its network and desktop integration and
services business.
The Company expects the decline in revenues from traditional sources, including
the acquired Bull proprietary product and service revenue streams (i.e., sales
and service of proprietary VS and GCOS products) to continue during the current
fiscal year at approximately 25%. As the Company's proprietary revenues decline,
the loss of individual customers will have an increasingly significant effect on
the rate of decline for any particular measurement period. These changes in
business mix are expected to result in increased volatility of quarterly
revenues and net income.
Services revenues during the three months ended March 31, 1997 increased by
96.4%, to $178.1 million in the United States, partially offset by an 8.3%
decline, to $68.7 million, outside the United States. Services revenues in the
United States during the nine months ended March 31, 1997 were $485.3 million,
an increase of 72.3%. This increase was partially offset by a 9.6% decrease, to
$212.8 million, in services revenues outside the United States. The increases in
services revenues in the United States were primarily attributable to the
acquisitions of Dataserv in May, 1996 and I-NET in August, 1996. Proprietary
services revenues in the three months ended March 31, 1997 decreased by 28.9%,
to $58.1 million. Proprietary services revenues in the nine month period ended
March 31, 1997, declined by 27.3%, to $190.7 million. Network services revenues
increased by 124.9%, to $188.7 million, in the three months ended March 31,
1997. Network services revenues in the nine months ended March 31, 1997 doubled
to $507.4 million, compared to $254.5 million in the same prior year period.
These increases were primarily due to the acquisitions of I-NET, Dataserv and
BISS Limited ("BISS").
Product revenues during the three months ended March 31, 1997, increased by
9.2%, to $38.1 million in the United States. This increase, however, was more
than offset by a decrease in product revenues outside the United States of
36.8%, to $30.2 million. Product revenues for the nine months ended March 31,
1997 increased by 19.3%, to $144.1 million in the United States, offset by a
31.3% decrease in product revenues outside the United States, to $88.0 million.
Proprietary product sales totaled $13.1 million in the three month period ended
March 31, 1997, a decline of 35.5%. Proprietary product sales in the nine month
periods ended March 31, 1997 and 1996 were $42.9 million and $57.6 million,
respectively, a decline of 25.5%, which is consistent with the Company's
expectations. Network product and other product sales were $55.2 million and
$62.4 million in the three month periods ended March 31, 1997 and 1996,
respectively. Network product and other product sales remained stable at $189.2
million and $191.3 million in the nine month periods ended March 31, 1997 and
1996, respectively.
<PAGE> 17
17
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
Services revenues gross margin for the three months ended March 31, 1997
decreased to 21.6%, from 30.6% for the same prior year period. Gross margin for
service and other revenues for the nine months ended March 31, 1997 decreased to
24.2%, from 31.8% for the same period of the prior year. Margins were negatively
affected by the increase in maintenance revenues from lower-margin MVS products,
the acquisition of I-NET (which has historically lower margins than the
Company's existing business) and the nonrecurring costs recorded in the three
months ended March 31, 1997. Excluding the portion of these nonrecurring costs
included in cost of services, services gross margins would have been 23.0% and
24.7%, respectively, for the three and nine month periods ended March 31, 1997.
The services gross margin continues to be adversely affected by consolidation in
the industry, resulting in competitive and technological pressures. Pressure
will continue to be exerted on the Company's services gross margin as a result
of increased lower-margin MVS maintenance revenues, coupled with the inclusion
of I-NET's lower gross margin structure going forward. It is expected that these
margin reductions will be partially offset by the implementation of integration
initiatives in subsequent periods.
Product gross margin was 27.5% for the three months ended March 31, 1997,
compared to 33.7% for the same period of the prior year. Product gross margin
for the nine months ended March 31, 1997 was 26.3%, compared to 31.8% for the
same prior year period. The decrease in gross margin is primarily a result of
the I-NET acquisition, which has historically lower margins than the Company as
well as the nonrecurring costs recorded in the three months ended March 31,
1997. Excluding the portion of these nonrecurring costs included in cost of
product sales, product gross margins would have been 30.3% and 27.2%,
respectively, for the three and nine month periods ended March 31, 1997.
Research and development costs for the three months ended March 31, 1997,
increased to $0.9 million, compared to $0.4 million for the same period of the
prior year. Research and development costs for the nine months ended March 31,
1997 decreased by 9.7%, to $2.8 million, compared to $3.1 million in the same
prior year period. The decrease is due to a combination of reductions in the
support of the Company's proprietary VS and secured systems products and a more
tightly-focused research and development scope. The Company's modest development
efforts have been focused on continuing support of its proprietary VS products.
Selling, general and administrative expenses for the three months ended March
31, 1997 increased by 71.2%, or $33.4 million, to $80.3 million, compared to the
same prior year period. This increase includes nonrecurring costs of $23.1
million. Excluding these nonrecurring costs, selling, general and
administrative expenses for the three months ended March 31, 1997 would have
been $57.2 million, an increase of 22.0% compared to the
<PAGE> 18
18
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
same prior year period. Selling, general and administrative expenses as a
percentage of total revenues increased to 25.5%, from 18.9% in the comparable
prior year period. This increase is primarily due to the acquisitions of
Dataserv and I-NET, offset by cost reductions at the Company's Federal
subsidiary which are a result of the integration initiative recorded for I-NET,
and in Europe. Excluding the $23.1 million of nonrecurring costs, selling,
general and administrative expenses recorded in the three months ended March 31,
1997 were 18.1% of total revenues. Selling, general and administrative expenses
for the nine months ended March 31, 1997 increased by 27.1%, to $182.1 million,
compared to the same prior year period. Excluding the third quarter nonrecurring
costs, selling, general and administrative expenses increased 10.9% from the
comparable prior year period, a modest increase in light of the addition of
Dataserv and I-NET expenses. Selling, general and administrative expenses as a
percentage of total revenues for the nine months ended March 31, 1997 increased
to 19.6%, compared to 18.7% in the same period of the prior year. Excluding the
third quarter nonrecurring costs, selling, general and administrative expenses
decreased as a percentage of total revenues to 17.1% compared to the same prior
year period. Selling, general and administrative expenses were reduced as a
result of integration activities initiated in relation to the acquisitions.
Continued integration activities should contribute significantly to the
elimination of unnecessary or redundant programs, personnel, support costs and
other related expenses going forward.
Amortization of fresh-start and acquired intangible assets totaled $22.7 million
and $42.2 million for the three and nine month periods ended March 31, 1997,
respectively. Amortization for the three months ended March 31, 1997, includes
$2.2 million related to the implementation of fresh-start reporting, $6.1
million for intangible assets established in connection with business
acquisitions and $14.4 million for the writedown of impaired acquired intangible
assets. Amortization of $9.5 million related to fresh-start reporting and $18.3
million for business acquisition intangible assets, as well as $14.4 million for
the writedown of impaired acquired intangible assets was recorded during the
nine months ended March 31, 1997. Amortization of $8.6 million and $25.9 million
was recorded during the three and nine month periods ended March 31, 1996. Of
these amounts, amortization of $4.8 million and $14.3 million related to
fresh-start reporting and amortization of $3.8 million and $11.6 million was
recorded for acquisition-related intangible assets, during these respective
periods.
Interest expense for the three and nine month periods ended March 31, 1997,
increased to $3.9 million and $8.8 million, respectively, compared to $1.3
million and $3.5 million, respectively, for the same prior year periods. The
increase in interest expense is principally the result of amounts outstanding
under the Revolving Credit Facility with Bankers Trust Company and interest on
the note issued to the selling stockholders of I-NET. Interest income was $1.3
million and $2.0 million for the three months ended March 31, 1997 and 1996,
<PAGE> 19
19
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
- ---------------------
respectively. Interest income for the nine months ended March 31, 1997 and 1996
was $3.9 million and $6.8 million, respectively. The reductions in interest
income are primarily due to the decrease in cash available for investing as a
result of the cash paid to acquire I-NET.
The continuing operations benefit for income taxes was $21.1 million and $18.1
million for the three and nine month periods ended March 31, 1997, respectively.
This was more than offset by the provision for discontinued operations of $67.5
million and $65.9 million for these respective periods. The net provision of
$46.4 million and $47.8 million for the three and nine month periods ended March
31, 1997, respectively, included $44.5 million and $45.6 million of non-cash
expense relating to the utilization of the Company's net operating loss
carryforwards. The continuing operations provision for income taxes of $7.3
million and $28.5 million for the three and nine month periods ended March 31,
1996, respectively, included $3.1 million and $9.9 million of non-cash expense.
At March 31, 1997, the Company employed approximately 9,800 people in continuing
operations, compared to 6,400 at March 31, 1996. The increase in employees as a
result of acquisitions was partially offset by integration activities.
Liquidity and Sources of Capital
- --------------------------------
Cash and equivalents increased by $36.3 million, to $211.6 million, during the
nine months ended March 31, 1997, primarily due to cash received for the sale
of the software business unit to Kodak, offset by payments related to the
acquisition of I-NET. This compares to a $27.7 million increase in the same
period of the prior year.
Cash provided by operations totaled $245.6 million, including $250.5 million of
net proceeds from the sale of the software business to Kodak, offset by cash
used in discontinued operations of $35.8 million, for the nine months ended
March 31, 1997. This compares to cash provided by operations of $10.9 million,
including cash used in discontinued operations of $48.6 million, for the same
prior year period. Higher levels of receivables utilized $5.5 million of cash in
the current period, compared to $19.0 million in the same period of the prior
year. The Company's continuing focus on cash collections, including systems
improvements, is primarily responsible for this improved performance, especially
in light of the Company's higher revenue base this year as a result of
acquisitions. Lower accounts payable and other current liabilities resulted in
reductions in cash of $43.2 million and $11.6 million for the nine month periods
ended March 31, 1997 and 1996, respectively. The liability reductions primarily
relate to the timing of vendor payments, acquisition of I-NET and a shift from a
more product-related business to a more service-related business.
Net cash used in investing activities totaled $202.5 million for the nine months
ended March 31, 1997, compared to $43.1 million for the same period of the prior
year. The $169.9 million of cash paid for business acquisitions
<PAGE> 20
20
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Sources of Capital (Continued)
- --------------------------------
during the nine months ended March 31, 1997, includes payments of $153.4 million
related to the I-NET acquisition and $16.5 million to Bull in payment of the
outstanding note payable. Cash payments of $7.9 million for the prior year
comparable period relate to the BISS acquisition. Investment in depreciable
assets was $34.2 million for the nine months ended March 31, 1997, compared to
$32.3 million for the same period of the prior year. Cash proceeds of $5.6
million for the nine months ended March 31, 1997 reflect the receipt of payment
for the June 1996 sale of two-thirds of the Company's remaining 30% equity
investment in its New Zealand subsidiary. Cash proceeds of $4.0 million for the
prior year comparable period resulted from the sale of the Company's Culembourg
facility in the Netherlands.
Net cash used in financing activities totaled $5.2 million for the period,
compared to $59.8 million of cash provided by financing activities in the same
period of the prior year. Net payment of short-term borrowings used $0.3 million
of cash for the nine months ended March 31, 1997, compared to $2.5 million in
the same prior year period. Cash dividends of $10.1 million were paid on the
Company's preferred stock during the nine months ended March 31, 1997, compared
to $3.3 million in dividends paid during the same prior year period. The
increase in cash dividends is attributable to the dividends on the 6 1/2% Series
B Cumulative Convertible Preferred Stock (the "Series B Preferred Stock") which
was issued in February 1996, coupled with the commencement of cash dividend
payments on the 4 1/2% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"), partially offset by the elimination of the
dividend payments on the Exchangeable Preferred Stock redeemed on
February 27, 1996.
In connection with the acquisition of I-NET, the Company entered into an Amended
and Restated Revolving Credit Facility (the "Revolving Credit Facility") with
Bankers Trust Company and certain other financial institutions. The three-year
reducing facility provides for borrowings of up to $225.0 million, including up
to $70.0 million of letters of credit, limited to the lesser of the facility
maximum or a formula based on the Company's accounts receivable and a
supplemental amount. At March 31, 1997, in addition to the cash balance on hand,
the Company had available to it the unused portions of the Revolving Credit
Facility, providing for additional borrowings and/or the issuance of additional
letters of credit of up to $213.4 million. Although financial accounting rules
require the amounts due under the Revolving Credit Facility to be classified as
a current liability, the terms of the Revolving Credit Facility do not require
the Company to pay the amounts due within the next twelve months.
In addition to normal operating activities, expected cash requirements over the
next twelve months include approximately $53 million for both new and
previously recorded integration-related, purchase accounting and business
realignment initiatives, as well as approximately $15 million for the
construction of the Company's new Corporate headquarters in Billerica,
Massachusetts, scheduled for completion in the summer of 1998.
<PAGE> 21
21
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Sources of Capital (Continued)
- --------------------------------
The Company believes that existing cash balances, cash generated from
operations, and borrowing availability under the Revolving Credit Facility, will
be sufficient to meet the Company's cash requirements for operations for the
next twelve months, and to complete the planned integration-related and business
realignment activities. As part of furthering its business strategy, the Company
continually explores the acquisition of or the opportunity for strategic
relationships with other businesses. One or more of these opportunities could
have an impact on the Company's liquidity through the use of cash or the
issuance of debt, or result in the issuance of additional equity securities of
the Company.
Risks and Uncertainties
- -----------------------
Except for historical matters, the matters discussed in this Form 10-Q
are forward-looking statements that involve risks and uncertainties. Such
forward-looking statements relate to the Company's business, acquisitions,
products, services, software, expenses, effective tax rate and operating and
capital requirements. In addition, forward-looking statements may be included in
various Company documents to be issued in the future and in various oral
statements by Company representatives to security analysts, investors and others
from time to time. There are a number of important factors that could cause the
Company's actual results of operations and financial condition in the future to
vary from that indicated by such forward-looking statements. Such factors
included, without limitation, the following:
IMPLEMENTATION OF BUSINESS STRATEGY. The Company's business strategy is
to increase the revenues and margins it realizes from providing network services
to customers and clients and to build upon that growth through appropriate
strategic alliances and acquisitions designed to complement Wang's core
competencies. The Company's ability to implement this strategy fully over the
long term, and the ultimate success of this strategy, are subject to a broad
range of uncertainties and contingencies, many of which are beyond the Company's
control. The Company may not be able to achieve the revenue growth it is seeking
as a result of an inability to obtain new customer contracts or the inability to
deliver the required services in a timely manner under such contracts. In
addition, there can be no assurance that the Company will be able to implement
strategic relationships or acquisitions, or, if entered into, that such
strategic relationships or acquisitions will in fact further the implementation
of the Company's business strategy. The Company's existing strategic
relationships with Microsoft Corporation ("Microsoft") and Cisco Systems, Inc.
("CISCO") are subject to a variety of uncertainties, including possible
evolutions in technology, business relationships or strategic plans of the
parties which may, in the future, result in the termination of, or a change in
the nature of or in the expectations with respect to, such strategic
relationships. The Company's relationship with Microsoft also includes certain
contractual obligations, which, if not satisfied, could allow Microsoft to
terminate all or a portion of the relationship. In addition, there can be no
assurance that any of the Company's acquisitions or strategic alliances will
result in long-term benefits to the Company, or that the Company and its
management will be able to effectively assimilate and manage the business of any
acquired companies. The Company evaluates such transactions regularly, and one
or more such transactions could occur at any time.
<PAGE> 22
22
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Risks and Uncertainties (Continued)
- -----------------------------------
Currently, a significant portion of the Company's revenues and gross
margins are attributable to the servicing, upgrading and enhancement of its
installed base of VS and other traditional proprietary systems. The Company
expects the decline in revenues from traditional sources, including the
acquired Bull proprietary product and service revenue streams (i.e., sales and
service of proprietary VS and GCOS products) to continue during the current
fiscal year at approximately 25%. As the Company's proprietary revenues
decline, the loss of individual customers will have an increasingly significant
effect on the rate of decline for any particular measurement period. The
Company's continued growth is predicated on the business strategy described
above (including the acquisition of new customer service and network
integration businesses) more than offsetting the decline in revenues from
traditional proprietary sources. To the extent that there are delays and
difficulties in the implementation of the Company's strategy, or that the
decline in revenues from proprietary sources is more rapid than anticipated,
the Company's results of operations and the price of its equity securities
could be adversely affected.
DEPENDENCE ON KEY PERSONNEL. The Company depends to a significant
extent on key management and technical personnel. The Company's growth and
future success will depend in large part on its ability to attract, motivate and
retain highly qualified personnel, particularly, trained and experienced
technical professionals capable of providing sophisticated network and
outsourcing services. Competition for such personnel is intense and there can be
no assurances that the Company will be successful in hiring, motivating or
retaining such qualified personnel. The loss of key personnel or the inability
to hire or retain qualified personnel could have a material adverse effect on
the Company's business, financial condition or results of operations.
COMPETITION. The information technology ("IT") services industry,
including the network and outsourcing service and support markets, is intensely
competitive and undergoing rapid change. Worldwide competition is vigorous in
all of the markets in which the Company does business. The Company's competitors
are numerous and vary widely in market position, size and resources. Competitors
differ significantly depending upon the market, customer and geographic area
involved. In many of the Company's markets, traditional computer hardware
manufacturing , communications and consulting companies provide the most
significant competition. The Company must also compete, particularly in the
network services market, with other IT services businesses with more limited
resources, but which have, in a number of cases, been able to develop a strong
local or regional customer base. Many of the Company's competitors have
substantially greater resources, including larger research and engineering
staffs and larger marketing organizations, than those of the Company. There can
be no assurance that the Company will be able to compete successfully against
other companies that provide IT services.
YEAR 2000 LIABILITY. The Company supplies computer systems to large
organizations in the commercial and government markets, which include federal,
state and local customers. Any failure of the Company's products to perform,
including system malfunctions due to the onset of the calendar year 2000 (caused
by a data structure problem that will prevent software from properly recognizing
dates after the year 1999), could result in claims against the Company. Although
the Company maintains computer software and services, errors and omissions
insurance, a claim brought against the Company could have a material adverse
effect on the Company's business, financial condition or results of operations.
Moreover, an increasing number of the Company's installed base of VS and other
traditional proprietary systems could chose to convert to other calendar year
2000 compliant systems in order to avoid such malfunctions.
<PAGE> 23
23
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Risks and Uncertainties (Continued)
- -----------------------------------
An increasing rate of conversion would result in an increasing rate of decline
of revenue associated with such proprietary systems, and could have a material
adverse effect on the Company's business, financial condition or results of
operations.
POSSIBLE VOLATILITY OF PRICE OF COMMON STOCK. The market price of the
Company's Common Stock has fluctuated significantly in the past and may continue
to fluctuate in the future. Factors such as announcements of technological
innovations or other developments concerning the Company, its competitors or
other third parties, quarterly variations in the Company's results of
operations, and changes in overall industry and economic conditions may all
affect the market prices of the Common Stock and cause it to fluctuate
significantly. Moreover, the Company's expense levels are based in part on
expectations of future revenue levels, and a shortfall in expected revenue could
therefore have a disproportionate adverse effect on the Company's net income.
Furthermore, the market price of the stocks of many high technology companies
have experienced wide fluctuations that have not necessarily been related to the
operating performance of the individual companies.
DEPENDENCE ON GOVERNMENT REVENUE. In fiscal 1996 the Company derived
approximately 22% of its revenues from branches or agencies of the United States
government, and derived significant additional revenues from agencies of various
foreign governments. A significant portion of the Company's United States
federal government revenues comes from orders under government contract or
subcontract awards, which involves the risk that the failure to obtain an award,
or a delay on the part of the government agency in making the award or of
ordering or paying for products or services under an awarded contract, could
have a material adverse effect on the financial performance of the Company for
the period in question. Other risks involved in government sales are the larger
discounts (and thus lower margins) often involved in government sales, the
unpredictability of funding for various government programs, and the ability of
the government agency to unilaterally terminate the contract. Revenues from the
United States government and government agencies are received under a number of
different contracts and from a number of different government agencies and
departments.
INTERNATIONAL OPERATIONS. International revenues in recent years have
accounted for a substantial portion of the Company's total revenues. The
Company's international operations are subject to all of the risks normally
associated with international sales, including changes in regulatory compliance
requirements, compliance costs associated with International Standards
Organization (ISO) 9000 quality control standards, special standards
requirements, exposure to currency fluctuations, exchange rates, tariffs and
other barriers, difficulties in staffing and managing international subsidiary
operations, potentially adverse tax consequences and country-specific product
requirements. While the Company attempts to reduce its currency exposure, there
can be no assurance that it will not experience significant losses on
international currency fluctuations. In addition, effective intellectual
property protection may not be available in every foreign country in which the
Company distributes its own and other products and the loss of such protection
could have a material adverse effect on the business of the Company.
<PAGE> 24
24
WANG LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Risks and Uncertainties (Continued)
- -----------------------------------
NATURE OF CONTRACTS. Many of the Company's commercial contracts are for
a fixed price and are long-term in duration, which subjects the Company to
substantial risks relating to unexpected cost increases and other factors
outside the control of the Company. Revenues and profits on such contracts are
recognized using estimates and actual results, when known, may differ materially
from such estimates. In addition, IT outsourcing contracts in particular, often
contain provisions that allow for termination for convenience, Service Level
Agreement ("SLA") compliance, penalties and the competitive procurement process.
Such contracts often require high expenditures and long lead times with no
assurance of success.
SUPERIOR RIGHTS OF PREFERRED STOCK. The Board of Directors of the
Company is authorized under the Company's Certificate of Incorporation, without
stockholder approval, to issue from time to time up to an aggregate of 5,000,000
shares of preferred stock, $0.01 par value per share (the "Preferred Stock"), in
one or more series. Of the 5,000,000 authorized shares of Preferred Stock,
90,000 shares have been designated as 4 1/2% Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Stock"), all of which shares have been
issued, and 143,750 shares have been designated as 6 1/2% Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock"), all of which shares
have been issued. The rights of holders of Common Stock are subject to, and may
be adversely affected by, the rights of holders of the Series A Preferred Stock
and the Series B Preferred Stock and any other series of Preferred Stock that
the Company may designate and issue in the future. In particular, before any
payment or distribution is made to holders of Common Stock upon the liquidation,
dissolution or winding-up of the Company, holders of both the Series A Preferred
Stock and the Series B Preferred Stock are entitled to receive a liquidation
preference of $1,000.00 per share, plus accrued and unpaid dividends. The
holders of the Series A Preferred Stock and the Series B Preferred Stock also
have various rights, preferences and privileges with respect to dividends,
redemption, voting, conversion and registration under the Securities Act.
ANTI-TAKEOVER PROVISIONS. The Company's Certificate of Incorporation
and By-Laws and the Delaware General Corporation Law contain certain provisions
which could have the effect of delaying or preventing transactions that might
result in a change in control of the Company, including transactions in which
stockholders might otherwise receive a premium for their shares over the
then-current market price, and may limit the ability of stockholders to approve
transactions that they deem to be in their best interests.
<PAGE> 25
25
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 10-Q
<TABLE>
(a) The following exhibits are included herein:
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1(1) The Amended and Restated Reorganization Plan of Wang Laboratories, Inc.
and Official Committee of Unsecured Creditors dated September 30, 1993
3.1(2) Certificate of Incorporation
3.2(8) Certificate of Incorporation, as Amended
3.3(11) Certificate of Stock Designation with respect to the 4 1/2% Series A
Cumulative Convertible Preferred Stock
3.4(14) Certificate of Elimination of the Registrant's 11% Exchangeable Preferred
Stock
3.5(14) Certificate of Stock Designation with respect to the 6 1/2% Series B
Cumulative Convertible Preferred Stock
3.6(13) ByLaws of the Registrant
10.1(3) 1993 Directors' Stock Option Plan
10.2(4) Form of Contingent Severance Compensation Agreements with Donald P.
Casey, J.J. Van Vuuren, Albert A. Notini, William P. Ferry, David I.
Goulden, Bruce A. Ryan and James J. Hogan, each an executive officer of
the Company
10.3(5) Contingent Severance Compensation Agreement with Joseph M. Tucci
10.4(6) Employment Agreement with William P. Ferry
10.5(6) Employment Agreement with James J. Hogan
10.6(3) Consulting Agreement of Raymond C. Kurzweil
10.7(5) Employee Retention Agreement with William P. Ferry
10.8(5) Employee Retention Agreement with James J. Hogan
10.9(5) Employment Agreement with Bruce A. Ryan
10.10(7) Stock Incentive Plan, as Amended
</TABLE>
<PAGE> 26
26
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.11(8) Contingent Severance Compensation, as Amended with Franklyn A. Caine
(Employment Agreement)
10.12(8) Employees' Stock Incentive Plan
10.13(8) 1995 Director Stock Option Plan
10.14(9) The Asset and Stock Purchase Agreement among Wang
Laboratories, Inc., Bull HN Information Systems, Inc.,
Bull S.A. and, for certain purposes, Compagnie de
Machines Bull dated as of December 30, 1994 and a Credit
Agreement among Wang Laboratories, Inc., HFS, Inc. and
certain lenders and agents named therein and Banker's
Trust Company dated January 30, 1995
10.15(10) Employment Agreement with Ronald A. Cuneo
10.16(11) Employment Agreement with Donald P. Casey, as Amended
10.17(11) Employment Agreement with Stephen G. Jerritts
10.18(12) Form of Contingent Severance Compensation Agreements with Stephen G.
Jerritts and Ronald E. Cuneo
10.19(12) Form of Amendment to Contingent Severance Compensation Agreements with
Joseph M. Tucci, Donald P. Casey, Albert A. Notini, William P. Ferry, David
I. Goulden, James J. Hogan, Stephen G. Jerritts and Franklyn A. Caine, each
an executive officer of the Company
10.20(13) Non-Negotiable Secured Promissory Note, as Amended from Joseph M. Tucci to
the Registrant
10.21(13) Pledge Agreement, as Amended, from Joseph M. Tucci to the Registrant
10.22(13) 1994 Employee's Stock Incentive Plan, as Amended
10.23(13) Employment Agreement with Robert K. Weiler
10.24(13) Contingent Severance Compensation Agreement with Robert K. Weiler
10.25(13) Form of Amendment to Employment Letter Agreement for David I. Goulden,
William P. Ferry, Albert A. Notini and Franklyn A. Caine
10.26(14) Form of Non-Qualified Long Term Incentive Option
to Purchase Shares of Common Stock for Messrs. Tucci, Caine, Casey, Cuneo,
Ferry, Goulden, Hogan, Jerritts, Notini, and Van Vuuren
</TABLE>
<PAGE> 27
27
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.27(14) Registration Rights Agreement 6 1/2% Cumulative Convertible Preferred
Stock
10.28(14) Employment Agreement of Jean M. Edwards
10.29(14) Contingent Severance Compensation Agreement with Jean M. Edwards
10.30(15) Stock Purchase Agreement with respect to the Registrant's acquisition of
Dataserv Computer Maintenance, Inc. from Dataserv, Inc., an indirect
wholly-owned subsidiary of BellSouth Corporation
10.31(16) Stock Purchase Agreement with respect to the Registrant's acquisition of
I-NET, Inc.
10.32(16) Amended and Restated Credit Agreement among the Registrant, Wang Federal,
Inc., Wang Canada Limited, I-NET, Inc., Dataserv Computer Maintenance,
Inc., certain Lenders, Co-Agents and a Collateral Agent named therein,
and Bankers Trust Company as Agent and Issuing Bank dated as of August
29, 1996
10.33(17) Non-Qualified Option Agreement to Purchase Shares of Common Stock for
Robert K. Weiler
10.34(17) Employment Agreement of Joseph M. Tucci, as Amended
10.35(17) Employment Agreement of Lucy A. Flynn
10.36(18) 1995 Employees Stock Purchase Plan, as Amended
10.37(18) Employees' Stock Incentive Plan, as Amended
10.38(18) 1995 Director Stock Option Plan, as Amended
10.39(18) Employment Agreement of Joseph M. Tucci, as Amended
10.40(19) Asset Purchase Agreement, as amended, with respect to the Registrant's
sale of its software business unit to Eastman Kodak Company
10.41 Amended and Restated Employment Agreement of Joseph M. Tucci
10.42 Restricted Stock Agreement of Joseph M. Tucci
10.43 Non Qualified Long Term Incentive Stock Option Agreement of Joseph M.
Tucci
10.44 Second Amendment to the Change of Control Severance Agreement of Joseph
M. Tucci
</TABLE>
<PAGE> 28
28
Exhibit No. Description
- ----------- -----------
10.45 Form of Non Qualified Long Term Incentive Stock Option Agreement with
Messrs. Caine, Goulden and Notini, each an executive officer of the
Registrant
10.46 Form of Restricted Stock Agreement with Messrs. Caine, Goulden and
Notini, each an executive officer of the Registrant
10.47 Amended and Restated Employment Agreement of Ken S. Bajaj
10.48 Letter Agreement of Employment of Jose Ofman
10.49 Amendment Number 1 to Letter Agreement of Employment of Jose Ofman
10.50 Non Qualified Long Term Incentive Stock Option Agreement with
Jeremiah J. J. Van Vuuren
10.51 Letter Agreement for Special Bonus of Franklyn A. Caine
10.52 Change in Control Severance Agreement, as amended of Franklyn A.
Caine
10.53 Letter Agreement for Special Bonus of Albert A. Notini
10.54 Change in Control Severance Agreement, as amended of Albert A. Notini
10.55 Letter Agreement for Special Bonus of David I. Goulden
10.56 Change in Control Severance Agreement, as amended of David I. Goulden
10.57 Amendment Number 1 to the 1993 Directors' Stock Option Plan
10.58 Amendment Number 2 to the Stock Incentive Plan
10.59 Amendment Number 3 to the Employees' Stock Incentive Plan
10.60 Letter Agreement for 1996 Bonus for Ken S. Bajaj
11.1 Statements re Computation of Per Share Earnings
12.1 Calculation of Ratio of Earnings to Fixed Charges
27.1 Financial Data Schedule
27.2 Financial Data Schedule Restated
1 Filed as an Exhibit to the Registrant's Registration Statement on Form 8-A
(File No. 0-22470), filed on September 27, 1993.
2 Filed as an Exhibit to the Registrant's Registration Statement on Form S-8
(File No. 33-73210), filed on December 21, 1993.
3 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended December 31, 1993.
4 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q for
the quarter ended March 31, 1994.
5 Filed as an Exhibit to the Registrant's Registration Statement on Form
S-1, as amended (File No. 33-81526) filed September 13, 1994.
<PAGE> 29
29
6 Filed as an Exhibit to the Registrant's annual report on Form 10-K for
the fiscal year ended June 30, 1994.
7 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended September 30, 1994.
8 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended December 31, 1995.
9 Filed as an Exhibit to the Registrant's Current Report on Form 8-K
dated January 31, 1995.
10 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended March 31, 1995.
11 Filed as an Exhibit to the Registrant's annual report on Form 10-K for
the fiscal year ending June 30, 1995.
12 Filed as an Exhibit to the Registrant's report on Form 10-Q/A for the
quarter ended September 30, 1995.
13 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended December 31, 1995.
14 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended March 31, 1996.
15 Filed as an Exhibit to the Registrant's Current Report on Form 8-K
dated May 3, 1996.
16 Filed as an Exhibit to the Registrant's Current Report on Form 8-K
dated August 29, 1996.
17 Filed as an Exhibit to the Registrant's annual report on Form 10-K for
the fiscal year ended June 30, 1996.
18 Filed as an Exhibit to the Registrant's quarterly report on Form 10-Q
for the quarter ended December 31, 1996.
19 Filed as an Exhibit to the Registrant's Current Report on Form 8-K
dated March 17, 1997.
(b) During the quarter ended March 31, 1997, the Registrant filed a Current
Report on Form 8-K dated January 29, 1997 containing the press release
announcing the sale of Wang's software business unit to Eastman Kodak Company
and a press release announcing the earnings for the quarter ended December 31,
1996 and a Current Report on Form 8-K dated March 17, 1997 containing (i)
unaudited pro forma condensed financial statements as of December 31, 1996 as if
the sale of the Registrant's software business unit to Eastman Kodak Company had
been consummated on December 31, 1996; (ii) the Asset Purchase Agreement between
the Registrant and Eastman Kodak Company; (iii) a press release announcing the
completion of the sale of the software business unit to Eastman Kodak Company;
and (iv) a press release outlining certain of the Registrant's organizational
changes.
<PAGE> 30
30
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: May 15, 1997
WANG LABORATORIES, INC.
/s/ Franklyn A. Caine
----------------------------
Franklyn A. Caine,
Executive Vice President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.41
Wang Laboratories, Inc.
600 Technology Park Drive
Billerica, Massachusetts 01821
March 26, 1997
Mr. Joseph M. Tucci
10 Mountain Laurel Boulevard, #604
Nashua, New Hampshire 03060
Dear Joe:
Wang Laboratories, Inc. ("WLI") is pleased to offer you continued
employment as its Chairman of the Board of Directors and Chief Executive Officer
under the terms and conditions set forth below.
1. TERM
The Term of this amended and restated employment agreement (this
"Agreement") will begin on February 18, 1997 (the "Effective Date").
2. ANNUAL COMPENSATION
(a) Commencing with the Effective Date, you will receive
compensation for Fiscal Year 1997 as follows:
(i) Base salary at an annual rate of $750,000.
(ii) A bonus to be determined by the Board of Directors,
based upon your performance, to be targeted at 100%
of your annual base salary, provided that your bonus
payment for Fiscal Year 1997 shall be at least
$500,000.
(iii) A special bonus payment of $4,000,000 on or about
March 24, 1997. By your acceptance of this special
bonus payment, you agree that if your employment with
WLI is terminated prior to March 24, 1998, you will
promptly repay to WLI the full amount of this special
<PAGE> 2
Mr. Joseph M. Tucci
March 26, 1997
Page 2
bonus payment, unless such termination is (A) by
reason of your death or disability, (B) by you prior
to the occurrence of a Change in Control (as defined
below) by reason of an Involuntary Resignation (as
defined below), (C) by you following the occurrence
of a Change in Control with Good Reason (as defined
below) or (D) by WLI other than for Section 7(b)
Reasons (as defined below).
(iv) Effective as of the Effective Date, WLI hereby
forgives all amounts under that certain
Non-Negotiable Secured Promissory Note dated as of
June 21, 1994, between you and WLI, as amended, in
the original principal amount of $355,071.01, and
releases to you all shares of WLI's common stock, par
value $.01 per share ("Common Stock") held as
collateral for the loan evidenced by such note
pursuant to that certain Pledge Agreement dated as of
June 21, 1994, between you and WLI, as amended.
(v) As soon as practicable after the Effective Date and
in lieu of the grant of restricted stock referred to
in that certain letter dated February 19, 1997 from
WLI to you regarding the restated terms of your
employment (the "Initial Letter"), WLI will issue to
you 230,000 shares of restricted Common Stock
pursuant to a Restricted Stock Agreement
substantially in the form of Exhibit A hereto.
<PAGE> 3
Mr. Joseph M. Tucci
March 26, 1997
Page 3
(vi) As soon as practicable after the Effective Date and
in lieu of the long-term incentive referred to in the
Initial Letter, WLI will grant to you an option to
purchase 365,000 shares of Common Stock pursuant to a
Non-Qualified Long Term Incentive Option grant
substantially in the form of Exhibit B hereto.
(b) Your compensation for Fiscal Year 1998 and the fiscal years
thereafter shall consist of:
(i) A $750,000 annual base salary, subject to upward
adjustment in the discretion of the Board of
Directors.
(ii) A bonus to be determined by the Board of Directors,
based upon your performance, to be targeted at 100%
of your annual base salary.
3. RETIREMENT
You will continue to be entitled to such retirement program as is
available to WLI employees generally.
4. AUTOMOBILE
You will continue to be provided with an automobile by WLI in
accordance with the WLI policy covering the same.
5. SEVERANCE
For the purpose of this Section 5, your Anticipated Annual Compensation
shall be $1,500,000. If your employment is terminated by WLI other than
for Section 7(b) Reasons, or if you cease to be the Chief Executive
Officer and Chairman of the Board of WLI, or, without your consent,
there is an adverse change in your compensation (other than a change in
benefits generally applicable to all officers under Section 3, 4 or 6
herein) and you choose to resign (your resignation after any such event
being referred to herein as an "Involuntary Resignation"), WLI shall
pay or provide to you, as liquidated damages in full settlement of all
of your rights under this Agreement (except as specifically provided in
<PAGE> 4
Mr. Joseph M. Tucci
March 26, 1997
Page 4
Section 2(a)(iii), (iv), (v) or (vi) herein):
(a) immediately upon termination or resignation, a lump sum
payment equal to your Anticipated Annual Compensation
($1,500,000), plus
(b) commencing one month after termination or resignation and
ending 12 months thereafter, 12 equal monthly payments of
$250,000 each (consisting of one-twelfth (1/12) of twice your
Anticipated Annual Compensation), plus
(c) for the one-year period commencing upon termination or
resignation, health and dental insurance coverage on
substantially the same basis as provided to you prior to such
period, at no cost to you.
6. OTHER BENEFITS
WLI will make health and dental coverage available to you in accordance
with existing WLI plans available to all employees. WLI will also
provide term life insurance to you, based on your insurability, in the
amount of five (5) times your base salary. In addition to the matters
described above, you shall be employed and entitled to benefits on at
least the same terms as those applicable to WLI's employees generally
relative to your position and responsibility. All amounts of
compensation re ferred to in this Agreement are subject to withholding
as required by law.
7. MISCELLANEOUS
(a) In connection herewith, WLI and you are entering into a second
amendment, in the form attached as Exhibit C hereto, to the
Agreement, dated as of February 23, 1994 (as amended on August
21, 1995 and on the date hereof, the "Change in Control
Agreement"), between you and WLI. The terms Change in Control
and Good Reason used herein shall have the meanings ascribed
to them in the Change in Control Agreement.
(b) The term Section 7(b) Reasons used herein shall mean the
willful and continued failure by you
<PAGE> 5
Mr. Joseph M. Tucci
March 26, 1997
Page 5
to substantially perform your duties with WLI, a substantial,
and not DE MINIMUS, violation by you of the WLI's Standard of
Ethics and Business Conduct or its Rules of Employee Conduct
(and any successor documents, however titled), as the same are
in effect from time to time, or your conviction of a felony.
(c) This Agreement (including the exhibits hereto) sets forth the
entire agreement and understanding with respect to the subject
matter hereof and supersedes your existing employment
agreement, dated March 9, 1993, as amended through the date
hereof, and the Initial Letter. The Change in Control
Agreement shall remain in full force and effect.
WANG LABORATORIES, INC.
By: /s/ Joseph J. Kroger
------------------------
Joseph J. Kroger
Chairman, Organization,
Compensation and
Nominating Committee of
Board of Directors
AGREED TO:
/s/ Joseph M. Tucci
- --------------------
JOSEPH M. TUCCI
<PAGE> 1
EXHIBIT 10.42
RESTRICTED STOCK AGREEMENT
WANG LABORATORIES, INC.
EMPLOYEES' STOCK INCENTIVE PLAN
Name of Grantee: Joseph M. Tucci
No. of Shares: 230,000
Grant Date: March 26, 1997
Purchase Price: $.01 per share
Pursuant to the Wang Laboratories, Inc. Employees' Stock Incentive Plan
(the "Plan") as amended through the date hereof, Wang Laboratories, Inc. (the
"Company") hereby grants a Restricted Stock Award (an "Award") to the Grantee
named above. Upon acceptance of this Award, the Grantee shall receive the number
of shares of Common Stock, par value $0.01 per share (the "Stock"), of the
Company specified above, subject to the restrictions and conditions set forth
herein and in the Plan.
1. ACCEPTANCE OF AWARD. The Grantee shall have no rights with respect
to this Award unless he or she shall have accepted this Award by signing and
delivering to the Company a copy of this Agreement. Upon acceptance of this
Award by the Grantee, and payment of the Purchase Price as specified herein,
certificates evidencing the Stock so accepted shall be issued and delivered to
the Company to be held for the Grantee, and the Grantee's name shall be entered
as the stockholder of record on the books of the Company. Thereupon, the Grantee
shall have all the rights of a shareholder with respect to such Stock, including
voting and dividend rights, subject, however, to the restrictions and conditions
specified in Section 2 below.
2. RESTRICTIONS AND CONDITIONS.
(a) Certificates evidencing the Restricted Stock granted
hereby shall bear an appropriate legend, as set forth in the Plan.
(b) Restricted Stock granted hereby may not be sold,
exchanged, transferred, assigned, pledged or otherwise encumbered or disposed of
by the Grantee prior to vesting.
(c) Subject to Section 3(b) below, if the Grantee ceases to be
an employee of the Company or any of its subsidiaries prior to the expiration or
other termination of the applicable restrictions, any Restricted Stock granted
to the Grantee which is still subject to
1
<PAGE> 2
restriction shall (i) if no purchase price had been paid for such Restricted
Stock, be forfeited and all rights of the Grantee to such Restricted Stock shall
terminate without further obligation on the part of the Company; or (ii) if a
purchase price had been paid for such Restricted Stock, be deemed to be offered
for sale by the Grantee to the Company for a period of thirty (30) days after
the date of such cessation of employment at a price (the "Option Price") equal
to the lesser of (x) the fair market price of the stock at such time or (y) the
purchase price set forth on the first page of this agreement (the "Purchase
Option").
3. VESTING OF RESTRICTED STOCK.
(a) The restrictions and conditions in Section 2 above shall
terminate as to the percentage of the total number of shares of Restricted Stock
subject hereto on the dates respectively indicated below (each a "Vesting
Date"):
Percent of Total Shares Vested Vesting Date
50% March 26, 1998
50% March 26, 1999
Subsequent to a Vesting Date, the shares of Restricted Stock on which such
restrictions and conditions terminated on such date shall no longer be
Restricted Stock. The Organization, Compensation and Nominating Committee of the
Company's Board of Directors (the "Committee") may accelerate the vesting
schedule specified in this Section 3(a) in accordance with the terms of the
Plan.
(b) If, prior to any Vesting Date, (i) the Grantee ceases to
be an employee of the Company or any of its subsidiaries by reason of death,
Permanent Disability or Retirement, (ii) the Grantee terminates his employment
with the Company by reason of an Involuntary Termination (as defined in amended
and restated employment agreement, dated March 26, 1997, by and between the
Company and the Grantee), (iii) the Company terminates the Grantee's employment
other than for cause (as defined below) or (iv) a Change in Control occurs, all
restrictions and conditions set forth herein shall terminate as to all of the
shares of Restricted Stock subject hereto. For the purpose of this Agreement,
the term "cause" shall mean willful misconduct by the Grantee or willful failure
to perform his or her responsibilities in the best interests of the Company
(including, without limitation the breach of any provision of the Company's
Standards of Ethics and Business Conduct Guide, or breach by the Grantee of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Grantee and the Company),
as determined by the Company, which determination shall be conclusive.
2
<PAGE> 3
4. EXERCISE OF PURCHASE OPTION AND CLOSING.
(a) The Company may exercise the Purchase Option by delivering
or mailing to the Grantee (or his estate), in accordance with notice provisions
of Section 11, within 30 days after the cessation of the employment of the
Grantee, a written notice of exercise of the Purchase Option. Such notice shall
specify the number of Shares to be purchased. If and to the extent the Purchase
Option is not so exercised by the giving of such a notice within such 30-day
period, the Purchase Option shall automatically expire and terminate effective
upon the expiration of such 30-day period.
(b) After the time the Company exercises the Purchase Option,
the Company shall not pay any dividend to the Grantee on account of such Shares
(other than any dividend the record date for which is prior to such exercise) or
permit the Grantee to exercise any of the privileges or rights of a stockholder
with respect to such Shares, but shall, in so far as permitted by law, treat the
Company as the owner of such Shares.
(c) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding indebtedness of
the Grantee to the Company or in cash (by check) or both.
(d) The Company shall not purchase any fraction of a Share
upon exercise of the Purchase Option, and any fraction of a share resulting from
a computation made pursuant to Section 3 of this Agreement shall be rounded to
the nearest whole Share (with any one-half Share being rounded upward).
5. EFFECT OF PROHIBITED TRANSFER. The Company shall not be required to
(a) transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Agreement,
or (b) treat as owner of such Shares or pay dividends to any transferee to whom
any such Shares shall have been sold or transferred.
6. DIVIDENDS AND VOTING RIGHTS. During the Restricted Period, the
Grantee shall have the right to receive all dividends payable with respect to
the Restricted Shares and to exercise the voting rights attaching to the
Restricted Shares.
7. INCORPORATION OF PLAN. Notwithstanding anything herein to the
contrary, this Agreement shall be subject to and governed by all the terms and
conditions of the Plan. In the event of any inconsistency between the provisions
of the Plan and this instrument, the terms of the Plan shall prevail.
Capitalized terms in this Agreement shall have the meaning specified in the
Plan, unless a different meaning is specified herein.
8. TRANSFERABILITY. This Agreement is personal to the Grantee, is
non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will or the laws of descent and distribution. The name
or names of the Grantee's beneficiary or beneficiaries, to receive, in the event
of the Grantee's death, any right to which the Grantee would be entitled under
the Plan, is (are) set forth at the end of this Agreement.
3
<PAGE> 4
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The shares of stock
subject to this Award are shares of Common Stock of the Company. If the shares
of the Company's Common Stock as a whole are increased or decreased, changed
into, or exchanged for a different number or kind of share or securities of the
Company, whether through merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or the like, an
appropriate and proportionate adjustment shall be made in the number and kind of
shares, and the Purchase Price per share, if any, of shares subject to this
Award. Adjustments under this Section 9 shall be made by the Committee, whose
determination as to what adjustment shall be made, and the extent thereof, shall
be conclusive.
10. TAX WITHHOLDING. The Grantee shall, not later than the date as of
which the receipt of this Award becomes a taxable event for Federal income tax
purposes, pay to the Company or make arrangements satisfactory to the Committee
for payment of any Federal, state, and local taxes required by law to be
withheld on account of such taxable event. The Grantee may elect to (i) tender
back to the Company vested shares of Stock received pursuant to a grant, (ii)
deliver to the Company previously acquired Stock, or (iii) reimburse the Company
in cash, in order to satisfy part or all of the obligation for any taxes
required to be withheld or otherwise deducted and paid by the Company or any
such subsidiary in respect of the Stock subject to this Award. If the Grantee
fails to make an election fully satisfying the Grantee's obligations, the
Grantee shall be deemed to have made an election pursuant to clause (i) of the
immediately preceding sentence to the extent of such unsatisfied obligation.
11. MISCELLANEOUS.
(a) Notice hereunder shall be given to the Company at its
principal place of business, and shall be given to the Grantee at the address
set forth below, or in either case at such other address as one party may
subsequently furnish to the other party in writing.
(b) This Agreement does not confer upon the Grantee any rights
with respect to continuance of employment by the Company or any subsidiary.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
(d) Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Committee.
(e) This Agreement shall be binding upon and inure to the
benefit of the Company and the Grantee and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Section 3 of this Agreement.
4
<PAGE> 5
(f) Whenever the context may require, any pronouns used in
this Agreement shall include all corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) This Agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
(h) This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Grantee.
(i) This Agreement shall be construed, interpreted and
enforced in accordance with the law of the Commonwealth of Massachusetts.
WANG LABORATORIES, INC.
By: /s/ Joseph J. Kroger
---------------------------------
Joseph J. Kroger
Chairman, Organization,
Compensation and Nominating
Committee of Board of Directors
the foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.
Date: March 26, 1997 /s/ Joseph M. Tucci
---------------- -------------------
Grantee's Signature
Grantee's Name and Address:
Joseph M. Tucci
10 Mountain Laurel Boulevard, #604
Nashua, New Hampshire 03060
Name of Grantee's Beneficiary: Beneficiary's Address:
- --------------------------- ---------------------------
---------------------------
5
<PAGE> 6
WANG LABORATORIES, INC. RESTRICTED STOCK PLAN
TAX WITHHOLDING PROCEDURES
Name
Address
On [____________________], you were granted a Restricted Stock Award
under the Wang Laboratories, Inc. Employees Stock Incentive Plan. The
restrictions and conditions with respect to xxxx of shares of Restricted Stock
will lapse on [________________], and the value of such shares, based upon the
closing price of the Stock on [__________________]will be taxable to you in
[___]. As described in Section 10 of the Restricted Stock Agreement, applicable
Federal, state and local tax withholding requirements will be satisfied by
withholding vested shares of Stock otherwise issuable under your grant unless
you elect to (i) deliver to the Company previously acquired shares, or (ii)
reimburse the Company in cash or by check.
The exact dollar amount of required tax withholding cannot be
calculated until after [_____________], when the value of the shares issuable
under your Award becomes determinable. If you elect to pay the withholding taxes
in cash or by check, or by delivery of shares of Stock you already own, Benefits
Administration will advise you by letter in [_________]of the exact dollar
amount due. Otherwise, the Company will use [xxxx] vested shares of Stock held
by the Company in satisfaction of tax withholding requirements based upon
applicable Social Security (FICA) tax and Federal, state, and local income tax
withholding tables.
- ------------------------------------------------------------------------------
_____ I elect to pay withholding taxes on the shares in cash or by check.
_____ I elect to sell to the Company shares of Stock I already own. (Share
certificates must be delivered to Benefits Administration by
[________________].)
_____ Please pay withholding taxes with vested shares held by the Company
under my grant. (If you are electing this option, it is not necessary
to return this election form.)
- ------------------------------ ---------------
Employee Signature Date
<PAGE> 1
EXHIBIT 10.43
NON-QUALIFIED LONG TERM INCENTIVE
OPTION TO PURCHASE SHARES OF COMMON STOCK
IN WITNESS OF the following stock option grant, the undersigned duly
authorized officer of Wang Laboratories, Inc. has hereunto set his hand in the
name and on behalf of said Corporation as of the date specified below.
WANG LABORATORIES, INC. DATE OF GRANT: March 26, 1997
(a Delaware Corporation) INSTRUMENT NUMBER:
EMPLOYEE NAME: Joseph M. Tucci
EMPLOYEE NUMBER:
By: /s/ Joseph J. Kroger Date signed: March 26, 1997
----------------------------- -------------------------
Joseph J. Kroger, Chairman,
Organization, Compensation
and Nominating Committee of
Board of Directors
Wang Laboratories, Inc. (the "Corporation") hereby grants to you (the
"Employee"), an Option to purchase all or any exercisable part of 365,000 shares
of Common Stock, par value $.01 per share, of the Corporation at a price of
$18.25 per share, on and after the dates it becomes exercisable pursuant to
paragraph 1 below, subject to the terms and conditions herein. Unless this
Option is terminated earlier pursuant to the provisions of this instrument, this
Option will expire on March 26, 2007 (the "Expiration Date"), and anything to
the contrary herein notwithstanding, this Option shall not be exercisable in any
part after such date (or, if such date is not a business day at the headquarters
of the Corporation, after the first such business day thereafter). This Option
is not intended to qualify as an "Incentive Stock Option" under applicable tax
laws. By the Employee's acceptance hereof, the Employee irrevocably and
unconditionally agrees that all the Employee's rights in connection with this
Option shall be governed in accordance with the terms of this Option instrument.
This Option is granted under the Employees' Stock Incentive Plan (the "Plan") of
the Corporation. In the event of any inconsistency between the provisions of the
Plan and this instrument, the terms of the Plan shall prevail. Notices and
communications hereunder shall be delivered by the Employee to the Corporation
at its principal place of business, and shall be mailed by the Corporation to
the Employee at the address in its records as the most recent home address of
the Employee. Notwithstanding anything to the contrary herein, this Option may
not be exercised at any time that the Employee would be barred from acquiring
the shares subject hereto under the provisions of the Corporation's Certificate
of Incorporation, or otherwise by law.
1. EXERCISE SCHEDULE: If the average of the daily closing price of the
Common Stock on the Nasdaq National Market System of the National Association of
Securities Dealers (or, if the Common Stock is not quoted on such Nasdaq
National Market, the principal national securities exchange on which the Common
Stock is listed or admitted for trading), as reported in the Wall Street
Journal, for any period of twenty consecutive trading days ending on or prior to
the date set forth in the first column of the table below equals or exceeds the
price set forth opposite such date in the second column
<PAGE> 2
of the table below, this Option shall become exercisable as to the percentage of
the total number of shares subject hereto set forth opposite such price in the
third column of the table below on the last trading day of the first such period
of twenty consecutive trading days.
Date Price Percentage
---- ----- ----------
September 26, 1998 $27 50%
March 26, 2000 28 10%
March 26, 2000 29 10%
March 26, 2000 30 10%
March 26, 2000 31 10%
March 26, 2000 32 10%
If this Option shall not have become exercisable with respect to all of the
shares subject hereto on or prior to March 26, 2002, then this Option shall as
of such date become exercisable as to all of the shares subject hereto with
respect to which this Option is not then exercisable.
2. METHOD OF EXERCISE: This Option may be exercised by the Employee
only as specified herein. From time to time while any part of this Option is
exercisable, the Employee may deliver to the Corporation a written subscription,
signed by the Employee, stating the number of shares being purchased. This shall
be accompanied by (a) payment for such shares in certified check, money order or
other payment acceptable to the Corporation at such time, (b) payment for all
taxes, charges and all withholding amounts payable in connection with the
exercise and issuance and (c) such statement or other evidence as the
Corporation may require to ensure that the shares will not be transferred by the
Employee in violation of federal securities laws. Certificates for the shares so
purchased will be issued to the Employee upon the completion by the Corporation
of any steps required in connection therewith.
3. TERMS AND CONDITIONS:
(A) Unless otherwise terminated as provided herein, this Option will
terminate at the close of business on the 90th day (or, if such date is not a
business day at the headquarters of the Corporation, on the first such business
day thereafter) after the date the Employee ceases to be an employee of the
Corporation or one of its subsidiaries for any reason other than death,
retirement or permanent disability within the meaning of the Plan or an
Involuntary Resignation (within the meaning of the amended and restated
employment agreement, dated March 26, 1997 (the "Employment Agreement"), by and
between the Corporation and the Employee). In case of dismissal for cause, the
Corporation may revoke all rights of the Employee to purchase all shares subject
hereto as have not been issued to the Employee prior to the time of such
revocation.
For the purpose of this Option, the term "cause" shall mean willful
misconduct by the Employee or willful failure by the Employee to perform his or
her responsibilities in the best interests of the Corporation (including,
without limitation the breach of any provision of the Corporation's Standards of
Ethics and Business Conduct Guide, or breach by the Employee of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Employee and the Corporation),
2
<PAGE> 3
as determined by the Corporation, which determination shall be conclusive.
(B) Except as otherwise provided in this paragraph (B), this Option and
all rights granted hereunder may not be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except by will or by
the laws of descent and distribution, and during the lifetime of the Employee,
this Option may be exercised only by the Employee or his or her legal
representative. The Employee may transfer this Option and the rights granted
hereunder, without consideration therefor, to a member or members of his or her
immediate family, including, without limitation, to his or her children,
grandchildren or spouse, a trust or trusts the only beneficiaries of which are
members of his or her immediate family or a partnership the only partners of
which are members of his or her immediate family, provided that the Employee
gives written notice of such transfer to the Corporation's General Counsel not
less than 15 days prior to such transfer. The terms of this Option shall be
binding upon the Employee's heirs, beneficiaries, executors, administrators and
permitted transferees. This Option shall not be subject to execution, attachment
or other process.
(C) Upon the retirement of the Employee within the meaning of the Plan,
there will be no change in the exercise schedule or other terms hereof. If the
Employee should die or become permanently disabled within the meaning of the
Plan or the Employee shall terminate his or her employment by reason of an
Involuntary Resignation within the meaning of the Employment Agreement, this
Option shall become immediately exercisable as to all of the shares subject
hereto, and the Employee (in case of disability or Involuntary Resignation) or
his or her legal representative (in the case of disability or death) may
exercise this Option at any time within one year from the date of the Employee's
death, the Corporation's determination of the Employee's permanent disability or
the Employee's Involuntary Resignation, as the case may be, but in no event
later than the Expiration Date. Nothing with respect to the terms of this
instrument guarantees continued employment for any specific period of time.
(D) If a Change in Control (within the meaning of the Plan) occurs,
prior notice thereof shall be given to the Employee in accordance with the Plan
and this Option, as adjusted in accordance with the Plan's provisions regarding
adjustments due to capital changes, will remain in effect as to any shares with
respect to which this Option was exercisable prior to such Change in Control,
but not exercised prior to such Change in Control, and any shares with respect
to which this Option was not exercisable prior to such Change in Control.
(E) Any claim or dispute that may arise under or as a result of, or
pursuant to, this Option shall be submitted to and determined by the
Corporation, in its sole judgment, and any decision made by it shall be final
and conclusive for all purposes, and binding on the Employee and any other
parties claiming an interest herein.
4. ADJUSTMENT OF NUMBER OF SHARES COVERED BY OPTION: If the Corporation
shall effect a consolidation of shares, a stock dividend, or other increase or
reduction of the number of shares of Common Stock outstanding, and the
Corporation shall determine that an equitable adjustment is required hereto as a
result, then the Corporation shall make such equitable adjustment in the terms
of
3
<PAGE> 4
this Option (for example a proportionate increase or decrease in the number
of shares remaining subject to this Option and a corresponding decrease or
increase in the exercise price) as the Corporation determines to be appropriate.
The Corporation shall determine when and in what measures such adjustments will
be made, and may exclude adjustments it determines to be DE MINIMUS.
Agreed and accepted as of the
date of grant appearing above:
/s/ Joseph M. Tucci
-------------------
Name: Joseph M. Tucci
4
<PAGE> 1
EXHIBIT 10.44
EXHIBIT C
SECOND AMENDMENT TO CHANGE OF CONTROL SEVERANCE AGREEMENT
Reference is made to that certain Agreement, dated as of February 23,
1994 (the "Original Agreement"), between the undersigned, Joseph M. Tucci, as
"Executive" and Wang Laboratories, Inc., as the "Company", as amended by a First
Amendment executed by the Executive and the Company on August 21, 1995 (the
"First Amendment" and the Original Agreement as amended by the First Amendment,
the "Agreement").
Based on good and valid consideration, the receipt and sufficiency of
which is hereby acknowledged, and with the intent to be bound hereby, the
parties agree that the date referred to in the first paragraph of the First
Amendment as the date of the Original Agreement should be February 23, 1994
rather than April 26, 1995 and further agree as follows:
(1) The last sentence of Section 2 of the Agreement is hereby amended by
(a) inserting the words "(other than the Non-Qualified Long Term
Incentive Option granted March 26, 1997) or restricted shares of the
Company's common stock" between the words "stock" and "awarded" in
clause (ii) thereof, (b) inserting the words "or all restrictions
thereon shall terminate, as the case may be," between the words
"exercisable" and "upon" in clause (ii) thereof and (c) inserting the
words "or restricted shares" between the words "option" and "or" in
clause (ii) thereof.
(2) Section 16(K)(i) of the Agreement is hereby amended by adding the
following at the end thereof after the word "Control" and before the
semicolon:
", including, but not limited to, the Executive's removal by
the Company as Chairman of the Board or Chief Executive
Officer of the Company"
1
<PAGE> 2
The parties hereby ratify the Agreement as amended hereby without further
changes. This Second Amendment to the Agreement is executed as a document under
seal this 26th day of March 1997.
WANG LABORATORIES, INC.
AGREED: By: /s/ Joseph J. Kroger
----------------------
Joseph J. Kroger
Chairman, Organization,
Compensation and Nominating
/s/ Joseph M. Tucci Committee of Board
- ------------------- of Directors
Joseph M. Tucci
2
<PAGE> 1
EXHIBIT 10.45
FORM OF
NON-QUALIFIED LONG TERM INCENTIVE
OPTION TO PURCHASE SHARES OF COMMON STOCK
IN WITNESS OF the following stock option grant, the undersigned duly
authorized officer of Wang Laboratories, Inc. has hereunto set his hand in the
name and on behalf of said Corporation as of the date specified below.
WANG LABORATORIES, INC. DATE OF GRANT:
(a Delaware Corporation) INSTRUMENT NUMBER:
EMPLOYEE NAME:
EMPLOYEE NUMBER:
By: Date signed:
--------------------------------------- ------------
Albert A. Notini
Senior Vice President, General Counsel
and Secretary
Wang Laboratories, Inc. (the "Corporation") hereby grants to you (the
"Employee"), an Option to purchase all or any exercisable part of xxxxxx shares
of Common Stock, par value $.01 per share, of the Corporation at a price of
$xx.xx per share, on and after the dates it becomes exercisable pursuant to
paragraph 1 below, subject to the terms and conditions herein. Unless this
Option is terminated earlier pursuant to the provisions of this instrument, this
Option will expire on xxxxx xx, xxxx (the "Expiration Date"), and anything to
the contrary herein notwithstanding, this Option shall not be exercisable in any
part after such date (or, if such date is not a business day at the headquarters
of the Corporation, after the first such business day thereafter). This Option
is not intended to qualify as an "Incentive Stock Option" under applicable tax
laws. By the Employee's acceptance hereof, the Employee irrevocably and
unconditionally agrees that all the Employee's rights in connection with this
Option shall be governed in accordance with the terms of this Option instrument.
This Option is granted under the Employees' Stock Incentive Plan (the "Plan") of
the Corporation. In the event of any inconsistency between the provisions of the
Plan and this instrument, the terms of the Plan shall prevail. Notices and
communications hereunder shall be delivered by the Employee to the Corporation
at its principal place of business, and shall be mailed by the Corporation to
the Employee at the address in its records as the most recent home address of
the Employee. Notwithstanding anything to the contrary herein, this Option may
not be exercised at any time that the Employee would be barred from acquiring
the shares subject hereto under the provisions of the Corporation's Certificate
of Incorporation, or otherwise by law.
1. EXERCISE SCHEDULE: If the average of the daily closing price of the
Common Stock on the Nasdaq National Market System of the National Association of
Securities Dealers (or, if the Common Stock is not quoted on such Nasdaq
National Market, the principal national securities exchange on which the Common
Stock is listed or admitted for trading), as reported in the Wall Street
Journal, for any period of twenty consecutive trading days ending on or prior to
the date set forth in the first column of the table below equals or exceeds the
price set forth opposite such date in the second column of the table below, this
Option shall become exercisable as to the percentage of the total number of
shares subject hereto set forth opposite such price in the third column of the
table below on the last trading day of the first such period of twenty
consecutive trading days.
1
<PAGE> 2
Price Percentage
----- ----------
If this Option shall not have become exercisable with respect to all of the
shares subject hereto on or prior to xxxxx xx, 20xx, then this Option shall as
of such date become exercisable as to all of the shares subject hereto with
respect to which this Option is not then exercisable.
2. METHOD OF EXERCISE: This Option may be exercised by the Employee
only as specified herein. From time to time while any part of this Option is
exercisable, the Employee may deliver to the Corporation a written subscription,
signed by the Employee, stating the number of shares being purchased. This shall
be accompanied by (a) payment for such shares in certified check, money order or
other payment acceptable to the Corporation at such time, (b) payment for all
taxes, charges and all withholding amounts payable in connection with the
exercise and issuance and (c) such statement or other evidence as the
Corporation may require to ensure that the shares will not be transferred by the
Employee in violation of federal securities laws. Certificates for the shares so
purchased will be issued to the Employee upon the completion by the Corporation
of any steps required in connection therewith.
3. TERMS AND CONDITIONS:
(A) Unless otherwise terminated as provided herein, this Option will
terminate at the close of business on the 90th day (or, if such date is not a
business day at the headquarters of the Corporation, on the first such business
day thereafter) after the date the Employee ceases to be an employee of the
Corporation or one of its subsidiaries for any reason other than death,
retirement or permanent disability within the meaning of the Plan or an
Involuntary Resignation (within the meaning of the amended and restated
employment agreement, dated xxxx xx, xxxx (the "Employment Agreement"), by and
between the Corporation and the Employee). In case of dismissal for cause, the
Corporation may revoke all rights of the Employee to purchase all shares subject
hereto as have not been issued to the Employee prior to the time of such
revocation.
For the purpose of this Option, the term "cause" shall mean willful
misconduct by the Employee or willful failure by the Employee to perform his or
her responsibilities in the best interests of the Corporation (including,
without limitation the breach of any provision of the Corporation's Standards of
Ethics and Business Conduct Guide, or breach by the Employee of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Employee and the Corporation), as determined by
the Corporation, which determination shall be conclusive.
(B) Except as otherwise provided in this paragraph (B), this Option and
all rights granted hereunder may not be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except by will or by
the laws of descent and distribution, and during the lifetime of the Employee,
this Option may be exercised only by the Employee or his or her legal
representative. The Employee may transfer this Option and the rights granted
hereunder, without consideration
2
<PAGE> 3
therefor, to a member or members of his or her immediate family, including,
without limitation, to his or her children, grandchildren or spouse, a trust or
trusts the only beneficiaries of which are members of his or her immediate
family or a partnership the only partners of which are members of his or her
immediate family, provided that the Employee gives written notice of such
transfer to the Corporation's General Counsel not less than 15 days prior to
such transfer. The terms of this Option shall be binding upon the Employee's
heirs, beneficiaries, executors, administrators and permitted transferees. This
Option shall not be subject to execution, attachment or other process.
(C) Upon the retirement of the Employee within the meaning of the Plan,
there will be no change in the exercise schedule or other terms hereof. If the
Employee should die or become permanently disabled within the meaning of the
Plan or the Employee shall terminate his or her employment by reason of an
Involuntary Resignation within the meaning of the Employment Agreement, this
Option shall become immediately exercisable as to all of the shares subject
hereto, and the Employee (in case of disability or Involuntary Resignation) or
his or her legal representative (in the case of disability or death) may
exercise this Option at any time within one year from the date of the Employee's
death, the Corporation's determination of the Employee's permanent disability or
the Employee's Involuntary Resignation, as the case may be, but in no event
later than the Expiration Date. Nothing with respect to the terms of this
instrument guarantees continued employment for any specific period of time.
(D) If a Change in Control (within the meaning of the Plan) occurs,
prior notice thereof shall be given to the Employee in accordance with the Plan
and this Option, as adjusted in accordance with the Plan's provisions regarding
adjustments due to capital changes, will remain in effect as to any shares with
respect to which this Option was exercisable prior to such Change in Control,
but not exercised prior to such Change in Control, and any shares with respect
to which this Option was not exercisable prior to such Change in Control.
(E) Any claim or dispute that may arise under or as a result of, or
pursuant to, this Option shall be submitted to and determined by the
Corporation, in its sole judgment, and any decision made by it shall be final
and conclusive for all purposes, and binding on the Employee and any other
parties claiming an interest herein.
4. ADJUSTMENT OF NUMBER OF SHARES COVERED BY OPTION: If the Corporation
shall effect a consolidation of shares, a stock dividend, or other increase or
reduction of the number of shares of Common Stock outstanding, and the
Corporation shall determine that an equitable adjustment is required hereto as a
result, then the Corporation shall make such equitable adjustment in the terms
of this Option (for example a proportionate increase or decrease in the number
of shares remaining subject to this Option and a corresponding decrease or
increase in the exercise price) as the Corporation determines to be appropriate.
The Corporation shall determine when and in what measures such adjustments will
be made, and may exclude adjustments it determines to be DE MINIMUS.
Agreed and accepted as of the
date of grant appearing above:
- --------------------------------
Name:
3
<PAGE> 1
EXHIBIT 10.46
FORM OF
RESTRICTED STOCK AGREEMENT
WANG LABORATORIES, INC.
EMPLOYEES' STOCK INCENTIVE PLAN
Name of Grantee: _______________
No. of Shares: ______________
Grant Date: xxxxxxx, xx, 1997
Purchase Price: $xx.xx per share
Pursuant to the Wang Laboratories, Inc. Employees' Stock Incentive Plan
(the "Plan") as amended through the date hereof, Wang Laboratories, Inc. (the
"Company") hereby grants a Restricted Stock Award (an "Award") to the Grantee
named above. Upon acceptance of this Award, the Grantee shall receive the number
of shares of Common Stock, par value $0.01 per share (the "Stock"), of the
Company specified above, subject to the restrictions and conditions set forth
herein and in the Plan.
1. ACCEPTANCE OF AWARD. The Grantee shall have no rights with respect
to this Award unless he or she shall have accepted this Award by signing and
delivering to the Company a copy of this Agreement. Upon acceptance of this
Award by the Grantee, and payment of the Purchase Price as specified herein,
certificates evidencing the Stock so accepted shall be issued and delivered to
the Company to be held for the Grantee, and the Grantee's name shall be entered
as the stockholder of record on the books of the Company. Thereupon, the Grantee
shall have all the rights of a shareholder with respect to such Stock, including
voting and dividend rights, subject, however, to the restrictions and conditions
specified in Section 2 below.
2. RESTRICTIONS AND CONDITIONS.
(a) Certificates evidencing the Restricted Stock granted
hereby shall bear an appropriate legend, as set forth in the Plan.
(b) Subject to Section 3(b) below, if the Grantee ceases to be
an employee of the Company or any of its subsidiaries prior to the expiration or
other termination of the applicable restrictions, any Restricted Stock granted
to the Grantee which is still subject to restriction shall (i) if no purchase
price had been paid for such Restricted Stock, be forfeited and all rights of
the Grantee to such Restricted Stock shall terminate without further obligation
on the part of the Company; or (ii) if a purchase price had been paid for such
Restricted Stock, be deemed to be offered for sale by the Grantee to the Company
for a period of thirty (30) days after the date of such cessation of employment
<PAGE> 2
at a price (the "Option Price") equal to the lesser of (x) the fair market price
of the stock at such time or (y) the purchase price set forth on the first page
of this agreement (the "Purchase Option").
3. VESTING OF RESTRICTED SHARES.
(a) The restrictions and conditions in Section 2 of this
Agreement shall lapse on the Vesting Date or Dates specified in the following
schedule. If a series of Vesting Dates is specified, then the restrictions and
conditions in Section 2 shall lapse only with respect to the number of Shares of
Restricted Stock specified as vested on such date.
Number of Shares Vested Vesting Date
----------------------- ------------
________ March 26, 1999
Subsequent to such Vesting Date or Dates, the Restricted Stock on which all
restrictions and conditions have lapsed shall no longer be deemed Restricted
Stock. The Organization, Compensation and Nominating Committee of the Company's
Board of Directors (the "Committee") may accelerate the vesting schedule
specified in this Section 3(a) in accordance with the terms of the Plan.
(b) If, prior to any Vesting Date, (i) the Grantee ceases to
be an employee of the Company or any of its subsidiaries prior to the expiration
of the applicable Restricted Period by reason of death, Permanent Disability or
Retirement, or (ii) the Company terminates the Grantee's employment other than
for cause (as defined below), all restrictions set forth herein shall terminate
as to any Restricted Stock subject hereto. For the purpose of this Agreement,
the term "cause" shall mean willful misconduct by the Grantee or willful failure
to perform his or her responsibilities in the best interests of the Company
(including, without limitation the breach of any provision of the Company's
Standards of Ethics and Business Conduct Guide, or breach by the Grantee of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the grantee and the Company),
as determined by the Company, which determination shall be conclusive.
In the event of a Change in Control (as defined in the Plan or in any
agreement between the Grantee and the Corporation)("Change in Control"),
occurring prior to the first anniversary of the Grant Date, 50% of the shares of
Restricted Stock shall vest immediately. In the event of a Change in Control
occurring on or after the first anniversary of the Grant Date, all of the
Restricted Stock shall vest immediately.
4. EXERCISE OF PURCHASE OPTION AND CLOSING.
(a) The Company may exercise the Purchase Option by delivering
or mailing to the Grantee (or his predetermined transferees), in accordance with
notice provisions of Section 11, within 30 days after the cessation of the
employment of the Grantee, a written notice of exercise of the Purchase Option.
Such notice shall specify the
2
<PAGE> 3
number of shares of Restricted Stock to be purchased. If and to the extent the
Purchase Option is not so exercised by the giving of such a notice within such
30-day period, the Purchase Option shall automatically expire and terminate
effective upon the expiration of such 30-day period.
(b) After the time the Company exercises the Purchase Option,
the Company shall not pay any dividend to the Grantee on account of such shares
of Restricted Stock or permit the Grantee to exercise any of the privileges or
rights of a stockholder with respect to such shares of Restricted Stock, but
shall, in so far as permitted by law, treat the Company as the owner of such
shares of Restricted Stock.
(c) The Option Price may be payable, at the option of the
Company, in cancellation of all or a portion of any outstanding indebtedness of
the Grantee to the Company or in cash (by check) or both.
(d) The Company shall not purchase any fraction of a share of
Restricted Stock upon exercise of the Purchase Option, and any fraction of a
share resulting from a computation made pursuant to Section 3 of this Agreement
shall be rounded to the nearest whole share (with any one-half share being
rounded upward).
5. EFFECT OF PROHIBITED TRANSFER. The Company shall not be required to
(a) transfer on its books any of the shares of Restricted Stock which shall have
been sold or transferred in violation of any of the provisions set forth in this
Agreement, or (b) treat as owner of such shares of Restricted Stock or pay
dividends to any transferee to whom any such shares of Restricted Stock shall
have been sold or transferred in violation of any of the provisions of this
Agreement.
6. DIVIDENDS AND VOTING RIGHTS. During the Restricted Period, the
Grantee shall have the right to receive all dividends payable with respect to
the Restricted Stock and to exercise the voting rights attaching to the
Restricted Stock.
7. INCORPORATION OF PLAN. Notwithstanding anything herein to the
contrary, this Agreement shall be subject to and governed by all the terms and
conditions of the Plan. In the event of any inconsistency between the provisions
of the Plan and this instrument, the terms of the Plan shall prevail.
Capitalized terms in this Agreement shall have the meaning specified in the
Plan, unless a different meaning is specified herein.
8. TRANSFERABILITY. Except as otherwise provided in this Section 8, the
Restricted Stock and this Agreement and all rights granted hereunder may not be
transferred, assigned, pledged or hypothecated (whether by operation of law or
otherwise), except by will or by the laws of descent and distribution. The
Grantee may name one or more beneficiaries, to receive, in the event of the
Grantee's death, any right to which the Grantee would be entitled under the
Plan, by setting forth their names and addresses at the end of this Agreement.
In addition, the Grantee may transfer the Restricted Stock and this Agreement
and the rights granted hereunder, without consideration therefor, to a member or
members of his or her immediate family, including, without limitation, to his or
her
3
<PAGE> 4
children, grandchildren or spouse, a trust or trusts the only beneficiaries
of which are members of his or her immediate family or a partnership the only
partners of which are members of his or her immediate family, provided that the
Grantee gives written notice of such transfer to the Company's General Counsel
not less than fifteen (15) days prior to such transfer. The Restricted Stock
shall not be subject to execution, attachment or other process.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. The shares of Stock
subject to this Award are shares of Common Stock par value $.01 per share of the
Company. If the shares of the Company's Common Stock as a whole are increased or
decreased, changed into, or exchanged for a different number or kind of share or
securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure or the
like, an appropriate and proportionate adjustment shall be made in the number
and kind of shares, and the Purchase Price per share, if any, of shares subject
to this Award. Adjustments under this Section 9 shall be made by the Committee,
whose determination as to what adjustment shall be made, and the extent thereof,
shall be conclusive.
10. TAX WITHHOLDING. The Grantee shall, not later than the date as of
which the receipt of this Award becomes a taxable event for Federal income tax
purposes, pay to the Company or make arrangements satisfactory to the Committee
for payment of any Federal, state, and local taxes required by law to be
withheld on account of such taxable event. The Grantee may elect to (i) tender
back to the Company vested shares of Stock received pursuant to a grant, (ii)
deliver to the Company previously acquired Stock, or (iii) reimburse the Company
in cash, in order to satisfy part or all of the obligation for any taxes
required to be withheld or otherwise deducted and paid by the Company or any
such subsidiary in respect of the Stock subject to this Award. If the Grantee
fails to make an election fully satisfying the Grantee's obligations, the
Grantee shall be deemed to have made an election pursuant to clause (i) of the
immediately preceding sentence to the extent of such unsatisfied obligation.
11. MISCELLANEOUS.
(a) Notice hereunder shall be given to the Company at its
principal place of business, and shall be given to the Grantee at the address
set forth below, or in either case at such other address as one party may
subsequently furnish to the other party in writing.
(b) This Agreement does not confer upon the Grantee any rights
with respect to continuance of employment by the Company or any subsidiary.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
4
<PAGE> 5
(d) Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Committee in writing.
(e) This Agreement shall be binding upon and inure to the
benefit of the Company and the Grantee and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Section 2 of this Agreement.
(f) Whenever the context may require, any pronouns used in
this Agreement shall include all corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) This Agreement constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
(h) This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Grantee.
(i) This Agreement shall be construed, interpreted and
enforced in accordance with the law of the Commonwealth of Massachusetts without
regard to such Commonwealth's choice of law provisions.
WANG LABORATORIES, INC.
By:
----------------------------
The foregoing Agreement is hereby accepted and the terms and conditions thereof
hereby agreed to by the undersigned.
Date:
--------------------- ----------------------------
Grantee's Signature
Grantee's Name and Address:
----------------------------
----------------------------
Name of Grantee's Beneficiary: Beneficiary's Address:
- --------------------------- ----------------------------
----------------------------
5
<PAGE> 6
WANG LABORATORIES, INC. RESTRICTED STOCK PLAN
TAX WITHHOLDING PROCEDURES
Name
Address
On [____________________], you were granted a Restricted Stock Award
under the Wang Laboratories, Inc. Employees Stock Incentive Plan. The
restrictions and conditions with respect to xxxx of shares of Restricted Stock
will lapse on [________________], and the value of such shares, based upon the
closing price of the Stock on [__________________]will be taxable to you in
[___]. As described in Section 10 of the Restricted Stock Agreement, applicable
Federal, state and local tax withholding requirements will be satisfied by
withholding vested shares of Stock otherwise issuable under your grant unless
you elect to (i) deliver to the Company previously acquired shares, or (ii)
reimburse the Company in cash or by check.
The exact dollar amount of required tax withholding cannot be
calculated until after [_____________], when the value of the shares issuable
under your Award becomes determinable. If you elect to pay the withholding taxes
in cash or by check, or by delivery of shares of Stock you already own, Benefits
Administration will advise you by letter in [_________]of the exact dollar
amount due. Otherwise, the Company will use [xxxx] vested shares of Stock held
by the Company in satisfaction of tax withholding requirements based upon
applicable Social Security (FICA) tax and Federal, state, and local income tax
withholding tables.
- -------------------------------------------------------------------------------
_____ I elect to pay withholding taxes on the shares in cash or by check.
_____ I elect to sell to the Company shares of Stock I already own. (Share
certificates must be delivered to Benefits Administration by
[________________].)
_____ Please pay withholding taxes with vested shares held by the Company
under my grant. (If you are electing this option, it is not necessary
to return this election form.)
- ------------------------------ ---------------
Employee Signature Date
6
<PAGE> 1
EXHIBIT 10.47
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
--------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of
the 8th day of April, 1997 (this "Agreement"), is entered into by and among Wang
Laboratories, Inc., a Delaware corporation ("WLI"), I-NET, Inc., a Maryland
corporation (the "Company"), and Ken S. Bajaj ("you" or the "Employee").
WHEREAS, WLI, the Company and the Employee are parties to an
Employment Agreement, dated as of July 24, 1996 (the "Employment Agreement"),
entered into simultaneously with WLI entering into an agreement to acquire all
outstanding capital stock of the Company (the "Acquisition Transaction");
WHEREAS, WLI's obligation to consummate the Acquisition
Transaction was subject to the Employee being employed by the Company pursuant
to the Employment Agreement as of the consummation of the Acquisition
Transaction;
WHEREAS, to induce the Employee to enter in the Employment
Agreement and to be employed by the Company pursuant thereto as of the
consummation of the Acquisition Transaction, WLI agreed to provide the Employee
with options to acquire equity securities of the Company, as then contemplated
to be combined with other subsidiaries or businesses of WLI; and
WHEREAS, as it is no longer contemplated that the Company will
be so combined with other subsidiaries or businesses of WLI, WLI, the Company
and the Employee desire to amend and restate the Employment Agreement to
generally provide for these changed circumstances and to specifically provide
the Employee with options to acquire equity securities of WLI in lieu of the
options to acquire equity securities of the Company provided for in the
Employment Agreement.
NOW, THEREFORE, for good and valid consideration, the receipt
and sufficiency of which are hereby acknowledged, and with the specific intent
to be bound by the terms hereof, the parties hereto agree as follows:
1. POSITION. You will serve as President of the Company and Vice
Chairman of WLI and shall perform the duties incident to both of these offices
as directed by the Chairman of WLI. You agree to devote your full-time and best
efforts to the performance and discharge of your duties hereunder. You will
report to the Chairman of WLI. You will also serve as a member of the Board of
Directors of the Company (the "Board").
<PAGE> 2
In consideration of your employment by either the Company or WLI
(hereinafter, collectively, the "Employer"), any and all inventions,
improvements, discoveries, processes, programs, or systems developed or
discovered by you, from the date of your original employment with the Company
and during the term of your employment with the Company and WLI, shall be fully
disclosed by you to the Chairman of WLI or his designee and the same shall be
the sole and absolute property of the Employer and of its subsidiaries and such
entities' successors and assigns and, upon request of the Employer, you shall
execute, acknowledge and deliver such assignments, classifications and other
documents as the Employer may consider necessary or appropriate to properly vest
all rights, title and interests therein to the Employer.
2. TERM. The term Effective Date as used in this Agreement shall mean
August 29, 1996. This Amended and Restated Agreement will be effective as of the
date hereof and, absent an earlier termination hereunder, will continue until
the third anniversary of the Effective Date (the "Term"); provided, however,
that your rights and obligations with respect to any of the options granted
pursuant to Section 3.(b) shall be governed by the terms of the option
agreements providing therefor and shall not terminate or lapse, as the case may
be, upon the expiration of the Term or any termination hereunder (except as
specifically provided in the option agreements providing therefor).
3. Compensation and Benefits.
-------------------------
a. ANNUAL SALARY AND BONUS. Commencing with the Effective
Date, your annual base salary shall be three hundred and seventy five thousand
dollars ($375,000.00) for the term of this Agreement (the "Base Salary"),
subject to possible annual performance-based upward adjustments in the sole
discretion, as the case may be, of either the Board or the Board of Directors of
WLI. Your salary will be payable semi-monthly and you shall be eligible to
participate in a yearly cash bonus plan targeted at 60% of your then base salary
for on plan performance. The performance criteria will be (i) set forth in a
written incentive bonus plan for you which will, in part, provide that the
payment of such bonus shall be made in accordance with the percentage
performance bonus thresholds set forth in Exhibit 1 hereto, and (ii) mutually
determined within 60 days of the date of this Agreement.
2
<PAGE> 3
b. Equity Incentives.
-----------------
(i) As soon as practicable after the date of this
Agreement, the unvested options held by the Employee immediately prior to the
Effective Date to purchase 25,000 shares of Class E Common Stock, par value
$.0002 per share, of the Company ("Common Stock") granted to the Employee under
the Company's 1996 Stock Incentive Plan (the "Unvested 1996 Options"), will be
canceled in exchange for new options ("Company A Options") to purchase shares of
common stock, par value of $.01 per share, of WLI ("WLI Common Stock"). The
Company A Options will (i) be exercisable for that number of shares of WLI
Common Stock equal to the number of shares of Common Stock covered by the
Unvested 1996 Options multiplied by the Exchange Ratio (as defined in that
certain Stock Purchase Agreement by and among WLI and the other stockholders
signatories thereto dated on or about July 24, 1996) rounded to the nearest
whole share, (ii) have an exercise price per share equal to the exercise price
per share of the Unvested 1996 Options divided by the Exchange Ratio rounded to
the nearest whole cent, and (iii) be granted in the form attached hereto as
Exhibit 2.
(ii) As soon as practicable after the date of this
Agreement, the unvested options held by the Employee immediately prior to the
Effective Date to purchase 10,000 shares of Common Stock granted to the Employee
under the Company's Key Employee Stock Incentive Plan (the "Unvested KESOP
Options"), will be canceled in exchange for new options ("Company B Options") to
purchase shares of WLI Common Stock. The Company B Options will (i) be
exercisable for that number of shares of WLI Common Stock equal to the number of
shares of Common Stock covered by the Unvested KESOP Options multiplied by the
Exchange Ratio rounded to the nearest whole share, (ii) have an exercise price
per share equal to the exercise price per share of the Unvested KESOP Options
divided by the Exchange Ratio rounded to the nearest whole cent, and (iii) be
granted in the form attached hereto as Exhibit 3.
(iii) As soon as practicable after the date of this
Agreement, the vested options held by the Employee immediately prior to the
Effective Date to purchase 10,000 shares of Common Stock granted to the Employee
under the Company's Key Employee Stock Incentive Plan (the "Vested KESOP
Options"), will be canceled in exchange for new options ("Company C Options") to
purchase shares of WLI Common Stock. The Company C Options will (i) be
exercisable for that number of shares of WLI Common Stock equal to the number of
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<PAGE> 4
shares of Common Stock covered by the Vested KESOP Options multiplied by the
Exchange Ratio rounded to the nearest whole share, (ii) have an exercise price
per share equal to the exercise price per share of the Vested KESOP Options
divided by the Exchange Ratio rounded to the nearest whole cent, and (iii) be
granted in the form attached hereto as Exhibit 4.
(iv) As soon as practicable after the date of this
Agreement, WLI will grant to the Employee options to purchase 155,993 shares of
WLI Common Stock (the "Company D Options") at an exercise price of $18.47 per
share. Subject to this Agreement, the Company D Options will be (i) granted
under an employee stock incentive plan adopted by the Organization, Compensation
and Nominating Committee of WLI, (ii) registered with the Securities and
Exchange Commission under an S-8, and (iii) in the form attached hereto as
Exhibit 5.
c. OTHER BENEFITS. During the term of your employment, you
will be entitled to participate in and enjoy the benefit of the employee benefit
plans made available to senior officers of the Employer, including, without
limitation, an automobile allowance.
4. Termination of Employment.
-------------------------
a. If the Employee terminates his employment with the Employer
without Good Reason (as defined in Exhibit 6 hereto) (a "Voluntary Termination")
prior to the second anniversary of the Effective Date, the Employer shall not be
obligated to pay any amount of Base Salary or target bonus or to continue the
Employee's benefits.
b. If the Employee's employment with the Employer is
terminated at any time during the Term (i) by the Employee with Good Reason (as
defined in Exhibit 6 hereto), (ii) by the Employer without Cause (as defined in
Exhibit 6 hereto), or (iii) by reason of Disability (as defined in Exhibit 6
hereto) (an "Involuntary Termination"):
(i) all of the Employee's Company A Options and
Company B Options shall vest and be exercisable for 90 days after such
Involuntary Termination;
(ii) if an Involuntary Termination occurs after the
first anniversary of the Effective
4
<PAGE> 5
Date and prior to the second anniversary of the Effective Date, 50% of the
Company D Options shall vest and be exercisable for 30 days after such
Involuntary Termination;
(iii) the Employer shall pay the Employee (or the
Employee's executor(s), administrator(s) or heirs) an amount equal to the total
of the Employee's then Base Salary and target bonus through the later of (x) the
full term of this Agreement (irrespective of termination) or (y) two years
following the date of any such Involuntary Termination (the "Termination
Payment"). Twenty-five percent (25%) of the Termination Payment will be paid to
the Employee in a lump sum as soon as administratively practicable after the
Employee's termination; seventy-five percent (75%)of the Termination Payment
will be paid to the Employee in equal monthly portions over an 18 month period
commencing thirty days from the payment to the Employee of the 25% lump sum
payment; and
(iv) during the period that the Employee is receiving
the Termination Payment, the Employee shall continue to receive the benefits
available to the Employee prior to such Involuntary Termination, to the extent
that such benefit plans allow and subject to such plan-wide modifications as may
occur.
c. Notwithstanding any other provision in Section 4.(a) and/or
4.(b) above, in the event that your employment with the Employer is terminated
by the Employer for Cause (as defined in Exhibit 6 hereto) during the Term, you
will be entitled to receive payments over twelve months totaling your Base
Salary and bonus for the fiscal year in which your employment is so terminated
and you shall continue to receive the benefits available to you prior to such
termination, subject to plan-wide modifications as may occur, during such twelve
month period.
5. NON-COMPETITION AGREEMENT. The Employee shall comply with the terms
and conditions set forth in the Non-Competition Agreement attached hereto as
Exhibit 7.
6. NO CONFLICTS OF INTEREST. By signing this Agreement, you represent
that you are not subject to any restrictions, particularly, without limitation,
in connection with any previous employment, which prevent you from entering into
and performing your obligations under this Agreement or which materially and
adversely affect (or may, in the future, so far as you can reasonable foresee,
materially and adversely affect), your right to participate in the affairs of
the Employer.
5
<PAGE> 6
7. PROOF OF CITIZENSHIP AND ABILITY TO WORK. If not already provided
and documented in your personnel file, this Agreement is contingent on your (i)
providing the Employer with proof of U.S. citizenship or alien work permission,
as required by federal law, and (ii) signing and returning to the Employer the
enclosed Department of Defense forms.
8. STANDARDS OF ETHICS AND BUSINESS CONDUCT. You will be required to
comply with WLI's Standards of Ethics and Business Conduct.
9. ADVICE. The Employee represents to the Employer that he has had
adequate legal advice and representation in accepting and agreeing to the terms
of this Agreement.
10. WAIVER OF CERTAIN RIGHTS. Employee hereby waives any and all of his
rights under (i) that certain Severance Protection Agreement dated April 15,
1996 between the Company and the Employee, and (ii) the Employment Agreement.
11. CONFIDENTIALITY. You agree to treat the details of this Agreement
with utmost confidentiality and will not disclose them to any third parties
except your immediate family, and your financial and/or legal advisors and
except in the enforcement of your rights hereunder.
12. WLI OBLIGATION. WLI agrees to cause the Company to comply with its
obligations hereunder and agrees to the provisions of this Agreement.
13. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE. The parties
hereto agree to comply with the procedures set forth in Exhibit 8 hereto.
14. NO MITIGATION. The Employer agrees that, in the event of an
Involuntary Termination during the Term, the Employee is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Employee by the Employer pursuant to this Agreement. Further, the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation (by whatever name called) earned by the Employee as a result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Employee to the Employer, or otherwise.
15. SUCCESSORS. In addition to any obligations imposed by law upon any
successor to either the Company or WLI, the Company and/or WLI will require any
6
<PAGE> 7
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company and/or WLI, as the case may be, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company and
WLI would be required to perform it if no such succession had taken place.
Failure of the Company and/or WLI to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Employee to compensation from the Company in the same
amount and on the same terms as the Employee would be entitled to hereunder if
the Employee were to terminate the Employee's employment for Good Reason, except
that, for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
16. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by recognized overnight
courier (such as Federal Express or UPS) or by United States registered mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth below, or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:
To the Company at:
------------------
I-NET, Inc.
6700 Rockledge Drive
Bethesda, Maryland 20817-1804
Attention: Chairman
Copy to: General Counsel
To WLI at:
----------
Wang Laboratories, Inc.
600 Technology Park Drive
Billerica, Massachusetts 01821
Attention: General Counsel
7
<PAGE> 8
To the Employee at:
-------------------
Ken S. Bajaj
10201 Norton Road
Potomac, Maryland 20854
with a copy to:
---------------
Tucker, Flyer & Lewis
1615 L Street, N.W.
Suite 400
Washington, DC 20036
Attention: Stefan F. Tucker
17. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Employee, WLI and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by any party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Maryland. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Employee has agreed. Except for employment
and the Employer's obligations under Section 4 herein (other than the Employer's
obligations regarding payments and benefits, if any, under such section), the
obligations of WLI, the Company and the Employee shall survive the expiration of
the Term. Headings are for informational purposes only and have no substantive
meaning.
18. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
8
<PAGE> 9
19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
20. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted before a panel of three arbitrators in the District of Columbia in
accordance with the commercial rules of the American Arbitration Association
("AAA") then in effect. Unless the panel of arbitrators shall have been selected
by agreement of the parties within thirty (30) days of the initiation of
arbitration proceedings, each party shall be entitled to select one arbitrator
within ten (10) business days of the lapse of such thirty (30) day period and
the third arbitrator shall be selected by agreement of the two arbitrators so
selected within seven (7) business days after the selection of the two
arbitrators. In the event that either party does not timely designate an
arbitrator or that the two arbitrators do not timely select a third arbitrator
in accordance with the preceding sentence, then upon application of either party
to the District of Columbia office of the AAA, the AAA shall designate such
arbitrator. Judgment may be entered on the arbitrators' award in any court
having jurisdiction, provided, however, that the Employee shall be entitled to
seek specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement. The Employer shall bear the reasonable fees, costs and
expenses of the parties to this Agreement.
21. DEFINITIONS. The definitions set forth Exhibit 6 hereto apply to
this Agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date and year first above written.
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
-------------------
Name:
Title:
I-NET, INC.
By: /s/ Joseph M. Tucci
-------------------
Name:
Title:
EMPLOYEE
/s/ Ken S. Bajaj
----------------
Ken S. Bajaj
Attachments:
10
<PAGE> 1
EXHIBIT 10.48
March 6, 1997
Mr. Jose Ofman
17620 Harbord Oaks Circle
Dallas, TX 75252
Dear Jose:
This letter sets forth the details of your offer of employment from
Wang Laboratories, Inc. ("Wang" or the "Company"). The Company agrees to employ
you, and you agree to remain in the employ of the Company, upon the following
terms and conditions.
1. POSITION
--------
You are to be employed as a President of Wang and Chief Operating
Officer, Americas.
2. TERM
----
The terms and conditions of this offer letter will cover a three
(3)-year period beginning as of the date you accept this offer of employment
letter in the space provided below (the "Effective Date").
3. COMPENSATION AND BENEFITS; EMPLOYMENT STATUS
---------------------------------------------
(a) YEARLY PAYMENTS
---------------
Your initial yearly base salary will be $375,000 (payable
semi-monthly) and you will be eligible to participate in a yearly bonus plan
targeted at 60% of your base salary for 100% performance against your financial
and other goals. You will also have an over-achievement opportunity of up to an
additional 40% of your base salary for exceeding such performance targets, at
the discretion of the Board of Directors of the Company.
(b) STOCK INCENTIVES
----------------
As of the Effective Date, you will be granted 50,000
restricted shares of Wang common stock (the "Restricted Shares") and 300,000
options to purchase common stock of Wang at a strike price equal to the closing
price on NASDAQ of Wang's common stock on the last trading day prior to the
Effective Date (the "Options"). 16,667 of the Restricted Shares will vest on the
second anniversary of the Effective Date, 16,667 of the Restricted Shares will
vest on
<PAGE> 2
Mr. Jose Ofman
March 6, 1997
Page 2
the third anniversary of the Effective Date and the remainder of the Restricted
Shares will vest on the fourth anniversary of the Effective Date. 75,000 of the
Options will vest on each anniversary of the Effective Date, commencing with the
first anniversary thereof. The Restricted Shares and the Options will be issued
pursuant to the Company Employees' Stock Incentive Plan (the "Plan"), subject to
final approval of Wang's Board of Directors. In addition, 16,667 of the
Restricted Shares shall vest and 75,000 of the unvested Options shall become
fully exercisable immediately upon a Change of Control, as defined in the Plan,
occurring prior to the first anniversary of the Effective Date; a total of
33,333 of the Restricted Shares shall vest and 75,000 of the unvested Options
shall become fully exercisable immediately upon such a Change of Control
occurring after the first anniversary and prior to the second anniversary of the
Effective Date and all of the Restricted Shares shall vest and the then unvested
Options will become fully exercisable upon such a Change of Control occurring
after the second anniversary of the Effective Date.
(c) LONG-TERM INCENTIVE
-------------------
As a further long-term incentive, and in addition to such
other compensation to which you may be entitled hereunder, Wang shall make lump
sum payments to you of four hundred thousand dollars ($400,000) each when, and
only if, the Average Trading Value, as defined herein, of Wang's Common Stock
reaches thirty-four ($34), thirty-nine ($39) and forty-four ($44) dollars per
share, respectively, during the term of this agreement, for a total maximum
payout potential of one million two hundred thousand dollars ($1,200,000).
Average Trading Price means the average closing price of Wang Common Stock over
twenty (20) consecutive trading days on NASDAQ, or such national exchange on
which it may later be listed and traded.
(d) OTHER PROVISIONS
----------------
(i) The Company will provide health and dental coverage to you
in accordance with existing Company plans available to all employees generally.
The Company will also provide term life insurance to you based on your
insurability in the amount of five (5) times your base salary. You will also
receive the Company's standard sick time and personal holiday benefits and up to
four weeks vacation per year. You will participate in the Company's retirement
savings plan and SERP and all such other similar plans as are available to
senior officers of the Company.
(ii) On the Effective Date, you will be granted a contingent
severance agreement applicable in the event of a change of control of the
Company, incorporating the vesting parameters referred to in paragraph 3(b)
above.
<PAGE> 3
Mr. Jose Ofman
March 6, 1997
Page 3
(iii) The Company will provide you with relocation benefits
and temporary housing consistent with applicable Company policy, such temporary
housing cost to be paid for by the Company for up to six months until the situs
of your employment is determined by the Company.
(iv) During your employment, the Company will pay you a
monthly automobile allowance of five hundred eighty five dollars ($585) per
month and provide insurance for one automobile consistent with Company policy.
(v) During your employment, the Company will also reimburse
you, at regular intervals and in accordance with Company policy, for all
business travel, telephone and out-of-pocket expenses incurred by you in the
performance of your duties as an officer of the Company.
(vi) Prior to the third anniversary of the Effective Date the
Company will engage in negotiations with you regarding an extension of this
agreement. In the event that an extension of this agreement, or a new agreement,
is not entered, at the end of the three-year term of this offer letter
agreement, your employment status will be at-will. Therefore, the terms and
conditions contained in the first two paragraphs of section 4 of this letter
agreement will expire at the end of this three (3)-year period and the original,
unmodified terms of paragraph 6 of the enclosed, presently modified standard
Wang Employment Agreement, will be in full force and effect. All other terms and
conditions of this offer letter will remain in effect after the three (3)-year
period, subject to Wang's right to review them and make adjustments as
appropriate.
4. TERMINATION/SEVERANCE COMPENSATION AND BENEFITS
-----------------------------------------------
In the event that your employment with the Company is involuntarily
terminated other than for cause (a term which includes but is not limited to a
material violation of the standards set forth in Wang's "Standards of Ethics and
Business Conduct" booklet) or is terminated because of your death or substantial
inability to work or if your position, referred to in paragraph 1 hereof, is
reduced without your consent, other than a mere change in title, Wang will pay
to you over a period of eighteen (18) months, thirty-six (36) salary
continuation payments, two each month, each of which shall be equal to one
twenty-fourth of your then base salary plus the target bonus at 100% performance
as set forth in your then applicable bonus plan. During this salary continuance
period, Wang will also continue to make available health and dental (but no
other) benefits to you at no cost.
In the event you become employed at any time during the eighteen
(18)-month salary continuance period, all remaining salary continuation payments
(and health and dental insurance coverage premium payments) shall terminate as
of your date of hire by your new employer, except to the extent that the total
annual compensation for your new employment is less than the
<PAGE> 4
Mr. Jose Ofman
March 6, 1997
Page 4
total of your remaining salary continuation payments and, in such event, the
Company shall only pay that amount equal to the difference.
During the eighteen-month period (i) following a voluntary termination
by you of your employment with the Company, or (ii) in the event of an
involuntary termination by the Company of your employment with the Company, you
agree that you will not, without the prior written consent of the Company,
directly or indirectly engage in any business or activity, whether as an
employee, consultant, shareholder, partner or otherwise, or render services or
advice to any person, entity or business that competes in the United States in
any material manner with any service or product offered, in development or sold
by that portion or those portions of the Company, including I-NET and all of the
Company's other subsidiaries or affiliates or solicit, or assist others in
recruiting or hiring, employees of the Company or of its subsidiaries or
affiliates for employment or hire elsewhere. Nothing herein shall be construed
as preventing the Employee from purchasing and/or holding less than five percent
(5%) of the shares of any company.
5. NO CONFLICTS OF INTEREST
------------------------
By signing this offer letter, you represent that you are not subject to
any restrictions, particularly, but without limitation, in connection with any
previous employment, which prevent you from entering into and performing your
obligations under this offer letter or which materially and adversely affect (or
may in the future, so far as you can reasonably foresee, materially and
adversely affect), your right to participate in the affairs of the Company.
6. PROOF OF CITIZENSHIP AND ABILITY TO WORK
----------------------------------------
This offer is contingent on your providing Wang with proof of U.S.
citizenship or alien work permission, as required by federal law, within the
first three days of the Effective Date. This offer is also contingent on your
signing and returning to Wang the enclosed Department of Defense forms.
7. STANDARDS OF ETHICS AND BUSINESS CONDUCT AND
--------------------------------------------
STANDARD EMPLOYMENT AGREEMENT
-----------------------------
Upon joining Wang, you will be required to comply with Wang's Standards
of Ethics and Business Conduct and sign Wang's Standard Employment Agreement as
presently modified (copy enclosed).
8. CONFIDENTIALITY
---------------
<PAGE> 5
Mr. Jose Ofman
March 6, 1997
Page 5
By our signatures below, we agree to treat the details of this Offer
Letter with utmost confidentiality and that we will not disclose them to any
third parties except your immediate family, our respective financial and/or
legal advisors, and such Wang personnel and/or agents as have a need to know
this information for business purposes.
Jose, on a more personal note, it is my pleasure to welcome you to
Wang. I look forward to working closely with you as together we accelerate the
profitable growth of Wang.
Sincerely,
/s/ Joseph M. Tucci
Joseph M. Tucci
Enclosures: Standard Employment Agreement
(as presently modified)
Department of Defense Forms
Accepted and Agreed to:
/s/ Jose Ofman
- ------------------- ---------------------
Jose Ofman Date
<PAGE> 1
Exhibit 10.49
April 2, 1997
Mr. Jose Ofman
17620 Harbord Oaks Circle
Dallas, TX 75252
Re: Amendment of Letter Agreement
Effective March 7, 1997
--------------------------------
Dear Jose:
This letter amends paragraph 3(b) of the employment letter agreement
effective March 7, 1997 between Wang Laboratories, Inc. ("Wang") and you
relative to your employment (the "Employment Letter") to provide that the
strike price of the options to purchase Wang common stock referred to therein
will be $18.25 per share, the closing price on NASDAQ of Wang's common stock on
March 26, 1997, the date they were granted to you.
The Employment Letter is hereby ratified and confirmed, except as expressly
modified herein.
WANG LABORATORIES, INC.
/s/ Albert A. Notini
-----------------------------
Albert A. Notini
Agreed to:
/s/ Jose Ofman
- ----------------------
Jose Ofman
<PAGE> 1
EXHIBIT 10.50
NON-QUALIFIED LONG TERM INCENTIVE
OPTION TO PURCHASE SHARES OF COMMON STOCK
IN WITNESS OF the following stock option grant, the undersigned duly
authorized officer of Wang Laboratories, Inc. has hereunto set his hand in the
name and on behalf of said Corporation as of the date specified below.
WANG LABORATORIES, INC. DATE OF GRANT: March 26, 1997
(a Delaware Corporation) INSTRUMENT NUMBER:
EMPLOYEE NAME: Jeremiah J. J. van Vuuren
EMPLOYEE NUMBER:
By: /s/ Joseph M. Tucci Date signed:
------------------------------------
Joseph M. Tucci
Chairman and Chief Executive Officer
Wang Laboratories, Inc. (the "Corporation") hereby grants to you (the
"Employee"), an Option to purchase all or any exercisable part of 60,000 shares
of Common Stock, par value $.01 per share, of the Corporation at a price of
$18.25 per share, on and after the dates it becomes exercisable pursuant to
paragraph 1 below, subject to the terms and conditions herein. Unless this
Option is terminated earlier pursuant to the provisions of this instrument, this
Option will expire on March 26, 2007 (the "Expiration Date"), and anything to
the contrary herein notwithstanding, this Option shall not be exercisable in any
part after such date (or, if such date is not a business day at the headquarters
of the Corporation, after the first such business day thereafter). This Option
is not intended to qualify as an "Incentive Stock Option" under applicable tax
laws. By the Employee's acceptance hereof, the Employee irrevocably and
unconditionally agrees that all the Employee's rights in connection with this
Option shall be governed in accordance with the terms of this Option instrument.
This Option is granted under the Employees' Stock Incentive Plan (the "Plan") of
the Corporation. In the event of any inconsistency between the provisions of the
Plan and this instrument, the terms of the Plan shall prevail. Notices and
communications hereunder shall be delivered by the Employee to the Corporation
at its principal place of business, and shall be mailed by the Corporation to
the Employee at the address in its records as the most recent home address of
the Employee. Notwithstanding anything to the contrary herein, this Option may
not be exercised at any time that the Employee would be barred from acquiring
the shares subject hereto under the provisions of the Corporation's Certificate
of Incorporation, or otherwise by law.
1. EXERCISE SCHEDULE: If the average of the daily closing price of the
Common Stock on the Nasdaq National Market System of
<PAGE> 2
the National Association of Securities Dealers (or, if the Common Stock is not
quoted on such Nasdaq National Market, the principal national securities
exchange on which the Common Stock is listed or admitted for trading), as
reported in the Wall Street Journal, for any period of twenty consecutive
trading days ending on or prior to the date set forth in the first column of the
table below equals or exceeds the price set forth opposite such date in the
second column of7 the table below, this Option shall become exercisable as to
the percentage of the total number of shares subject hereto set forth opposite
such price in the third column of the table below on the later of (a) the last
trading day of the first such period of twenty consecutive trading days or (b)
the earlier of (i) the date of which a Change in Control (within the meaning of
the Plan) occurs or (ii) December 31, 1998.
<TABLE>
<CAPTION>
Date Price Percentage
---- ----- ----------
<S> <C> <C>
September 26, 1998 $27 50%
March 26, 2000 28 10%
March 26, 2000 29 10%
March 26, 2000 30 10%
March 26, 2000 31 10%
March 26, 2000 32 10%
</TABLE>
If this Option shall not have become exercisable with respect to all of the
shares subject hereto on or prior to March 26, 2002, then this Option shall as
of such date become exercisable as to all of the shares subject hereto with
respect to which this Option is not then exercisable.
2. METHOD OF EXERCISE: This Option may be exercised by the Employee only
as specified herein. From time to time while any part of this Option is
exercisable, the Employee may deliver to the Corporation a written subscription,
signed by the Employee, stating the number of shares being purchased. This shall
be accompanied by (a) payment for such shares in certified check, money order or
other payment acceptable to the Corporation at such time, (b) payment for all
taxes, charges and all withholding amounts payable in connection with the
exercise and issuance and (c) such statement or other evidence as the
Corporation may require to ensure that the shares will not be transferred by the
Employee in violation of federal securities laws. Certificates for the shares so
purchased will be issued to the Employee upon the completion by the Corporation
of any steps required in connection therewith.
3. TERMS AND CONDITIONS:
(A) Unless otherwise terminated as provided herein, this Option will
terminate at the close of business on the 90th day (or, if such date is not a
business day at the headquarters of the Corporation, on the first such business
day thereafter) after the
2
<PAGE> 3
date the Employee ceases to be an employee of the Corporation or one of its
subsidiaries for any reason other than death, retirement or permanent disability
within the meaning of the Plan. In case of dismissal for cause, the Corporation
may revoke all rights of the Employee to purchase all shares subject hereto as
have not been issued to the Employee prior to the time of such revocation.
For the purpose of this Option, the term "cause" shall mean willful
misconduct by the Employee or willful failure by the Employee to perform his or
her responsibilities in the best interests of the Corporation (including,
without limitation the breach of any provision of the Corporation's Standards of
Ethics and Business Conduct Guide, or breach by the Employee of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Employee and the Corporation), as determined by
the Corporation, which determination shall be conclusive.
(B) Except as otherwise provided in this paragraph (B), this Option and
all rights granted hereunder may not be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except by will or by
the laws of descent and distribution, and during the lifetime of the Employee,
this Option may be exercised only by the Employee or his or her legal
representative. The Employee may transfer this Option and the rights granted
hereunder, without consideration therefor, to a member or members of his or her
immediate family, including, without limitation, to his or her children,
grandchildren or spouse, a trust or trusts the only beneficiaries of which are
members of his or her immediate family or a partnership the only partners of
which are members of his or her immediate family, provided that the Employee
gives written notice of such transfer to the Corporation's General Counsel not
less than 15 days prior to such transfer. The terms of this Option shall be
binding upon the Employee's heirs, beneficiaries, executors, administrators and
permitted transferees. This Option shall not be subject to execution, attachment
or other process.
(C) Upon the retirement of the Employee within the meaning of the Plan,
there will be no change in the exercise schedule or other terms hereof. If the
Employee should die or become permanently disabled within the meaning of the
Plan, this Option shall become immediately exercisable as to all of the shares
subject hereto, and the Employee (in case of disability) or his or her legal
representative (in the case of disability or death) may exercise this Option at
any time within one year from the date of the Employee's death or the
Corporation's determination of the Employee's permanent disability, but in no
event later than the Expiration Date. Nothing with respect to the terms of this
instrument guarantees continued employment for any specific period of time.
3
<PAGE> 4
(D) If a Change in Control (within the meaning of the Plan) occurs, prior
notice thereof shall be given to the Employee in accordance with the Plan and
this Option, as adjusted in accordance with the Plan's provisions regarding
adjustments due to capital changes, will remain in effect as to any shares with
respect to which this Option was exercisable prior to such Change in Control,
but not exercised prior to such Change in Control, and any shares with respect
to which this Option was not exercisable prior to such Change in Control.
(E) Any claim or dispute that may arise under or as a result of, or
pursuant to, this Option shall be submitted to and determined by the
Corporation, in its sole judgment, and any decision made by it shall be final
and conclusive for all purposes, and binding on the Employee and any other
parties claiming an interest herein.
4. ADJUSTMENT OF NUMBER OF SHARES COVERED BY OPTION: If the Corporation
shall effect a consolidation of shares, a stock dividend, or other increase or
reduction of the number of shares of Common Stock outstanding, and the
Corporation shall determine that an equitable adjustment is required hereto as a
result, then the Corporation shall make such equitable adjustment in the terms
of this Option (for example a proportionate increase or decrease in the number
of shares remaining subject to this Option and a corresponding decrease or
increase in the exercise price) as the Corporation determines to be appropriate.
The Corporation shall determine when and in what measures such adjustments will
be made, and may exclude adjustments it determines to be DE MINIMUS.
Agreed and accepted as of the
date of grant appearing above:
/s/ Jeremiah J.J. van Vuuren
- --------------------------------------
Name: Jeremiah J.J. van Vuuren
4
<PAGE> 1
EXHIBIT 10.51
March 27, 1997
Franklyn A. Caine
60 Cherry Brook Road
Weston, MA 02193
Dear Frank:
In connection with and as an incentive to your continuing employment with
Wang Laboratories, Inc. ("WLI"), I am pleased on Wang's behalf to offer you the
following.
(1) WLI hereby offers you a special bonus payment of four hundred thousand
($400,000) dollars (the "Bonus") on the following terms. WLI will pay the Bonus,
less applicable withholding, to you in cash promptly upon your agreeing to the
terms hereof by signing this letter in the space provided for that purpose below
and returning it to WLI. By your acceptance of the Bonus, you agree that you
will promptly repay to WLI the full amount of the Bonus in cash if: (a) you
voluntarily terminate your employment with WLI for convenience prior to
September 26, 1998, unless such termination is (i) by reason of your death or
disability, (ii) by you prior to the occurrence of a Change in Control (as
defined below) by reason of any action by WLI inconsistent with the terms of
your employment agreement or (iii) by you following the occurrence of a Change
of Control with Good Reason (as defined below); or (b) WLI terminates your
employment with WLI prior to September 26, 1998 for a Paragraph 3 Reason (as
defined below).
(2) In connection herewith, WLI and you are entering into a second
amendment, in the form attached as Exhibit A hereto, to the Agreement, dated as
of May 31, 1994 (as amended in October 19, 1995 and the date hereof, the "Change
in Control Agreement"), between you and WLI.
(3) The terms Change in Control and Good Reason used in the first
paragraph of this letter shall have the meanings ascribed to them in the Change
in Control Agreement. The term Paragraph 3 Reason used in the first paragraph of
this letter shall mean the willful, documented and continued failure by you to
perform duties reasonably assigned to you by WLI,
<PAGE> 2
Franklyn A. Caine
March 27, 1997
Page 2
a substantial, and not de minimis, violation by you of the WLI's Standards of
Ethics and Business Conduct or its Rules of Employee Conduct (and any successor
documents, however titled), as the same are in effect from time to time, or your
conviction of a felony.
If you wish to accept the Bonus and agree to the repayment obligation on
the terms set forth above, please so indicate in the space provided for that
purpose below.
Very truly yours,
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
------------------------------
Joseph M. Tucci
Accepted and Agreed:
By: /s/ Franklyn A. Caine
------------------------------------
Franklyn A. Caine
<PAGE> 1
EXHIBIT 10.52
SECOND AMENDMENT TO CHANGE OF CONTROL SEVERANCE AGREEMENT
Reference is made to that certain Agreement dated May 31, 1994 and amended
as of October 19, 1995 (as so amended, the "Agreement"), between the
undersigned, Franklyn A. Caine, as "Executive" and Wang Laboratories, Inc. as
the "Company."
Based on good and valid consideration, the receipt and sufficiency of
which is hereby acknowledged, and with the intent to be bound hereby, the
parties agree that:
(1) The second sentence of Section 2 of the Agreement is hereby amended to
insert in subpart (ii) of such sentence:
(a) immediately after the words "any option to acquire shares of the
Company's Common Stock" and immediately before the word "awarded"
the following: "(other than the Non-Qualified Long-Term Incentive
granted March 26, 1997) or any restricted shares of the Company's
Common Stock";
(b) immediately after the word "option" and before the word "or," the
following: ", or restricted shares"; and
(c) immediately after the words "fully exercisable" and before the words
"upon the occurrence," the following: "or all restrictions thereon
shall terminate, as the case may be,".
(2) The following sentence shall be added as the third and last sentence in
Section 2 of the Agreement:
"Notwithstanding the immediately preceding sentence of this Section
2, in the event of a Change of Control occurring prior to March 27,
1998, the restrictions shall terminate on only seven thousand five
hundred (7,500) restricted shares of the Company's common stock
granted to the Executive pursuant to that certain Restricted Stock
Agreement, dated as of March 26, 1997, upon the occurrence such
Change of Control."
The parties hereby ratify the Agreement as amended hereby without further
changes. This Second Amendment to the Agreement is executed as a document under
seal this 27th day of March 1997.
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
--------------------------------
Joseph M. Tucci
Chairman of the Board and
Chief Executive Officer
AGREED:
By: /s/ Franklyn A. Caine
----------------------------
Franklyn A. Caine
<PAGE> 1
EXHIBIT 10.53
March 27, 1997
Albert A. Notini
6 Pomeroy Road
Andover, MA 01810
Dear Bert:
In connection with and as an incentive to your continuing employment with
Wang Laboratories, Inc. ("WLI"), I am pleased on Wang's behalf to offer you the
following:
(1) WLI hereby offers you a special bonus and retention payment of three
hundred and fifty thousand ($350,000) dollars (the "Bonus") on the following
terms. WLI will pay the Bonus, less applicable withholding, to you in cash
promptly upon your agreeing to the terms hereof by signing this letter in the
space provided for that purpose below and returning it to WLI. By your
acceptance of the Bonus, you agree that you will promptly repay to WLI the full
amount of the Bonus in cash if: (a) you voluntarily terminate your employment
with WLI for convenience prior to September 26, 1998, unless such termination is
(i) by reason of your death or disability, (ii) by you prior to the occurrence
of a Change in Control (as defined below) by reason of any action by WLI
inconsistent with the terms of your employment agreement or (iii) by you
following the occurrence of a Change of Control with Good Reason (as defined
below); or (b) WLI terminates your employment with WLI prior to September 26,
1998 for a Paragraph 3 Reason (as defined below).
(2) In connection herewith, WLI and you are entering into a second
amendment, in the form attached as Exhibit A hereto, to the Agreement, dated as
of February 23, 1994 (as amended in October 18, 1995 and the date hereof, the
"Change in Control Agreement"), between you and WLI.
(3) The terms Change in Control and Good Reason used in the first
paragraph of this letter shall have the meanings ascribed to them in the Change
in Control Agreement. The term Paragraph 3 Reason used in the first paragraph of
this letter shall mean the willful, documented and continued failure by you to
perform duties reasonably assigned to you by WLI, a substantial, and not DE
MINIMIS, violation by you of the WLI's Standards of Ethics and
<PAGE> 2
Albert A. Notini
March 27, 1997
Page 2
Business Conduct or its Rules of Employee Conduct (and any successor documents,
however titled), as the same are in effect from time to time, or your conviction
of a felony.
If you wish to accept the Bonus and agree to the repayment obligation on
the terms set forth above, please so indicate in the space provided for that
purpose below.
Very truly yours,
WANG LABORATORIES, INC.
By: /s/ Joseph M .Tucci
------------------------------
Joseph M. Tucci
Accepted and Agreed:
By: /s/ Albert A. Notini
---------------------------------
Albert A. Notini
<PAGE> 1
EXHIBIT 10.54
SECOND AMENDMENT TO CHANGE OF CONTROL SEVERANCE AGREEMENT
Reference is made to that certain Agreement dated February 23, 1994 and
amended as of October 18, 1995 (as so amended, the "Agreement"), between the
undersigned, Albert A. Notini, as "Executive" and Wang Laboratories, Inc. as the
"Company."
Based on good and valid consideration, the receipt and sufficiency of
which is hereby acknowledged, and with the intent to be bound hereby, the
parties agree that:
(1) The second sentence of Section 2 of the Agreement is hereby amended to
insert in subpart (ii) of such sentence:
(a) immediately after the words "any option to acquire shares of the
Company's Common Stock" and immediately before the word "awarded"
the following: "(other than the Non-Qualified Long-Term Incentive
granted March 26, 1997) or any restricted shares of the Company's
Common Stock";
(b) immediately after the word "option" and before the word "or," the
following: ", or restricted shares"; and
(c) immediately after the words "fully exercisable" and before the words
"upon the occurrence," the following: "or all restrictions thereon
shall terminate, as the case may be,".
(2) The following sentence shall be added as the third and last sentence in
Section 2 of the Agreement:
"Notwithstanding the immediately preceding sentence of this Section
2, in the event of a Change of Control occurring prior to March 27,
1998, the restrictions shall terminate on only seven thousand five
hundred (7,500) restricted shares of the Company's common stock
granted to the Executive pursuant to that certain Restricted Stock
Agreement, dated as of March 26, 1997, upon the occurrence such
Change of Control."
(3) The reference to "January 18, 1994" to the first sentence of the October
18, 1995 Amendment to the Agreement is hereby deleted and "February 23,
1994" is substituted.
The parties hereby ratify the Agreement as amended hereby without further
changes. This Second Amendment to the Agreement is executed as a document under
seal this 27th day of March 1997.
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
-------------------------------------
Joseph M. Tucci
Chairman of the Board and
Chief Executive Officer
AGREED:
By: /s/ Albert A. Notini
--------------------------
Albert A. Notini
<PAGE> 1
EXHIBIT 10.55
March 27, 1997
David I. Goulden
73 Caterina Heights
Concord, MA 01742
Dear David:
In connection with and as an incentive to your continuing employment with
Wang Laboratories, Inc. ("WLI"), I am pleased on Wang's behalf to offer you the
following:
(1) WLI hereby offers you a special bonus and retention payment of three
hundred thousand ($300,000) dollars (the "Bonus") on the following terms. WLI
will pay the Bonus to you, less applicable withholding, in cash promptly upon
your agreeing to the terms hereof by signing this letter in the space provided
for that purpose below and returning it to WLI. By your acceptance of the Bonus,
you agree that you will promptly repay to WLI the full amount of the Bonus in
cash if: (a) you voluntarily terminate your employment with WLI for convenience
prior to September 26, 1998, unless such termination is (i) by reason of your
death or disability, (ii) by you prior to the occurrence of a Change in Control
(as defined below) by reason of any action by WLI inconsistent with the terms of
your employment agreement or (iii) by you following the occurrence of a Change
of Control with Good Reason (as defined below); or (b) WLI terminates your
employment with WLI prior to September 26, 1998 for a Paragraph 3 Reason (as
defined below).
(2) In connection herewith, WLI and you are entering into a second
amendment, in the form attached as Exhibit A hereto, to the Agreement, dated as
of May 10, 1994 (as amended in October 12, 1995 and the date hereof, the "Change
in Control Agreement"), between you and WLI.
(3) The terms Change in Control and Good Reason used in the first
paragraph of this letter shall have the meanings ascribed to them in the Change
in Control Agreement. The term Paragraph 3 Reason used in this letter shall mean
the willful, documented and continued failure by you to perform duties
reasonably assigned to you by WLI, a substantial, and not de minimis, violation
by you of the WLI's Standards of Ethics and Business Conduct or its Rules of
Employee Conduct (and any successor documents, however titled), as the same are
in effect from time to time, or your conviction of a felony.
<PAGE> 2
(4) Reference is made to that certain Agreement between you and WLI
which you executed on June 13, 1996 (the "Tax Equalization Agreement"). Your
obligation to make the payments under the Tax Equalization Agreement totaling
$38,777 shall be waived effective as of September 26, 1998 on the condition that
you continue to be an employee of WLI on a continuous basis through such date;
provided, however, that if your employment with WLI is terminated for a reason
specified in subclause (i), (ii) or (iii) of clause (a) of paragraph (1) of this
letter or by WLI other than for a Paragraph 3 Reason, then your obligation to
make such repayments shall be waived effective as of the termination of your
employment with WLI.
If you wish to accept the Bonus and agree to the repayment obligation on
the terms set forth above, please so indicate in the space provided for that
purpose below.
Very truly yours,
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
-------------------------------
Joseph M. Tucci
Accepted and Agreed:
By: /s/ David I. Goulden
----------------------------
David I. Goulden
<PAGE> 1
EXHIBIT 10.56
SECOND AMENDMENT TO CHANGE OF CONTROL SEVERANCE AGREEMENT
Reference is made to that certain Agreement dated May 10, 1994 and amended
as of October 12, 1995 (as so amended, the "Agreement"), between the
undersigned, David I. Goulden, as "Executive" and Wang Laboratories, Inc. as
the "Company."
Based on good and valid consideration, the receipt and sufficiency of
which is hereby acknowledged, and with the intent to be bound hereby, the
parties agree that:
(1) The second sentence of Section 2 of the Agreement is hereby amended to
insert in subpart (ii) of such sentence:
(a) immediately after the words "any option to acquire shares of the
Company's Common Stock" and immediately before the word "awarded"
the following: "(other than the Non-Qualified Long-Term Incentive
granted March 26, 1997) or any restricted shares of the Company's
Common Stock";
(b) immediately after the word "option" and before the word "or," the
following: ", or restricted shares"; and
(c) immediately after the words "fully exercisable" and before the words
"upon the occurrence," the following: "or all restrictions thereon
shall terminate, as the case may be,".
(2) The following sentence shall be added as the third and last sentence in
Section 2 of the Agreement:
"Notwithstanding the immediately preceding sentence of this Section
2, in the event of a Change of Control occurring prior to March 27,
1998, the restrictions shall terminate on only seven thousand five
hundred (7,500) restricted shares of the Company's common stock
granted to the Executive pursuant to that certain Restricted Stock
Agreement, dated as of March 26, 1997, upon the occurrence such
Change of Control."
The parties hereby ratify the Agreement as amended hereby without further
changes. This Second Amendment to the Agreement is executed as a document under
seal this 27th day of March 1997.
WANG LABORATORIES, INC.
By: /s/ Joseph M. Tucci
---------------------------------
Joseph M. Tucci
Chairman of the Board and
Chief Executive Officer
AGREED:
By: /s/ David I. Goulden
----------------------------
David I. Goulden
<PAGE> 1
EXHIBIT 10.57
WANG LABORATORIES, INC.
(a Delaware Corporation)
AMENDMENT NO. 1 TO
1993 DIRECTORS' STOCK OPTION PLAN (the "Plan")
Pursuant to a vote of the Board of Directors of Wang Laboratories, Inc.
(the "Company") on March 26, 1997, the Plan has been amended as follows:
1. Section 4(d) is amended by deleting the first sentence of the
paragraph.
2. Section 5 "Amendments" is amended and restated in its entirety as
follows:
"5. AMENDMENTS. The Board of Directors may suspend or discontinue the
Plan or amend it in any respect whatsoever; provided, however, that without
approval of the stockholders of the Company, no amendment may increase the
number of shares subject to the Plan."
<PAGE> 1
EXHIBIT 10.58
WANG LABORATORIES, INC.
(A Delaware Corporation)
AMENDMENT NO. 2 TO
STOCK INCENTIVE PLAN ("the Plan")
Pursuant to a vote of the Board of Directors of Wang Laboratories, Inc.
on March 26, 1997, the Plan has been amended as follows:
1. Article 3.1 "Administration by the Committee" is amended and restated
in its entirety as follows:
"3.1 ADMINISTRATION BY THE COMMITTEE. This Plan shall be administered
by the Committee. Unless otherwise required by law or rules it may establish,
the Committee may act through written consent of all of its members, or vote of
a majority comprised of at least two of its members, and may hold telephonic
meetings where all participating members can hear each other. A majority
comprised of at least two members shall constitute a quorum of the Committee.
2. Article 4.4 "Non-Transferability of Awards" is deleted in its entirety.
3. Article 9.1 "Amendment of Plan" is amended and restated in its entirety
as follows:
"9.1 AMENDMENT OF PLAN. "The Committee or the Board may amend, suspend
or terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if (i) such approval is
necessary to comply with any applicable tax or regulatory requirements,
including any securities laws, stock exchange or stock market rules, or (ii)
such amendment increases the number of shares of Common Stock available under
the Plan pursuant to Article 4.3, other than such increases authorized under
Article 10.1. Amendments requiring stockholder approval shall become effective
when adopted by the Board, but no Award granted after the date of such amendment
shall be come exercisable or vested (to the extent that such amendment to the
Plan was required to grant such Award to a particular Plan participant) unless
and until such amendment shall have been approved by the Company's stockholders.
If such stockholder approval is not obtained within twelve months of the Board's
<PAGE> 2
adoption of such amendment, any Award granted on or after the date of such
amendment shall terminate to the extent that such amendment to the Plan was
required to enable the Company to grant such Award to a particular Plan
participant."
<PAGE> 1
EXHIBIT 10.59
WANG LABORATORIES, INC.
(A Delaware Corporation)
AMENDMENT NO. 3 TO
EMPLOYEES' STOCK INCENTIVE PLAN ("the Plan")
Pursuant to a vote of the Board of Directors of Wang Laboratories, Inc.
on March 26, 1997, the Plan has been amended as follows:
1. Article 6.3 "Particular Circumstances' Effect on Options" is amended by
deleting the last sentence and restating it in its entirety as follows:
"Unless otherwise provided in the instrument evidencing the grant of
any such Options, if a Change in Control occurs, all Options outstanding shall
become immediately exercisable for the full number of shares subject thereto
regardless of any vesting or exercise schedule otherwise specified in such
Options, and optionees shall be entitled to at least 20 days' prior notice and
the opportunity to exercise such rights before any transaction in connection
with the Change in Control may defeat or nullify the economic benefit thereof."
2. Article 7.7 "Particular Circumstances" is amended by deleting the first
sentence and inserting the following two sentences in place thereof as
follows:
"If any grantee ceases to be an Employee of the Corporation or any
Subsidiary prior to the expiration of an applicable Restricted Period by reason
of death, Permanent Disability or Retirement, all restrictions on the Restricted
Stock granted to such grantee shall terminate, and certificates for the
appropriate number of shares of Stock, free of the restrictions of the Plan and
any Restricted Stock Agreement relating thereto, shall be delivered to the
grantee or his or her beneficiary or estate, as the case may be. Unless
otherwise provided in the Restricted Stock Agreement evidencing the grant of any
such Restricted Stock, if a Change in Control occurs, all restrictions on all
outstanding Restricted Stock shall terminate, and certificates for the
appropriate number of shares of Stock, free of the restrictions of the Plan and
any Restricted Stock Agreement relating thereto, shall be delivered to the
grantees."
<PAGE> 1
Exhibit 10.60
April 16, 1997
Mr. Ken Bajaj
10201 Norton Road
Potomac, Maryland 20854
Re: Amended and Restated Employment Agreement (the "Agreement")
Dear Ken:
As we discussed and in addition to the compensation and benefits set
forth in the Agreement, Wang Laboratories, Inc. ("Wang") hereby agrees to
pay you an interim, one time, bonus for your performance with respect to
I-NET, Inc. for the fiscal year ending December 31, 1996 in the before tax
amount of $54,250.00 (the "1996 Bonus").
The 1996 Bonus will be paid to you in shares of Wang's Common Stock as
soon as practicable following the filing of a registration statement
regarding these shares with the Securities and Exchange Commission. The
number of shares that will be issued to you will be determined by dividing
the 1996 Bonus amount, as adjusted for all applicable taxes, by the per
share closing price of $18.50 of Wang's Common Stock on April 8, 1997.
I look forward to working with you in your new position as President
of I-NET and Vice Chairman of Wang.
Best Regards,
/s/ Joseph M. Tucci
---------------------------
Joseph M. Tucci
Accepted and Agreed to:
By: /s/ Ken Bajaj
--------------------
Ken Bajaj
<PAGE> 1
Wang Laboratories, Inc. and Subsidiaries
<TABLE>
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 (A) March 31, 1996
------------------------ ---------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Average shares of Common Stock
outstanding 36,993 36,993 36,076 36,076
Common equivalent shares for stock options -- -- -- --
Net shares issuable under Modified Treasury Stock Method 6,395 6,395
Incremental shares from 4 1/2 % and 6 1/2% Convertible
Preferred stock -- 9,325 -- --
------------------------ ------------------------
43,388 52,713 36,076 36,076
======================== ========================
Net Income $ 79,363 $ 79,363 $ 5,007 $ 5,007
Accretion and dividends of Preferred Stock (3,525) -- (12,223) (12,223)
Interest Savings and Investment Income as a
result of Modified Treasury Stock Method 2,595 2,595 -- --
------------------------ ------------------------
Net income applicable to Common
Stockholders $ 78,433 $ 81,958 $ (7,216) $ (7,216)
======================== ========================
Per Share Amounts:
From Continuing Operations $ (0.52) $ (0.37) $ 0.14 $ 0.14
From Discontinued Operations 2.33 1.92 (0.34) (0.34)
------------------------ ------------------------
Net income (loss) per share $ 1.81 $ 1.55 $ (0.20) $ (0.20)
======================== ========================
<CAPTION>
Nine Months Ended Nine Months Ended
March 31, 1997 (A) March 31, 1996
------------------------ ---------------------------
Primary Fully Diluted Primary Fully Diluted
------- ------------- ------- -------------
(In thousands except per share data)
<S> <C> <C> <C> <C>
Average shares of Common Stock
outstanding 36,791 36,791 35,918 35,918
Common equivalent shares for stock options -- -- -- --
Net shares issuable under Modified Treasury Stock Method 6,395 6,395
Incremental shares from 4 1/2% Convertible
Preferred stock -- 3,913 -- --
------------------------ ------------------------
43,186 47,099 35,918 35,918
======================== ========================
Net Income $ 57,506 $ 57,506 $ (8,805) $ (8,805)
Accretion and dividends of Preferred Stock (10,573) (7,008) (19,046) (19,046)
Interest Savings and Investment Income as a
result of Modified Treasury Stock Method 6,254 6,254 -- --
------------------------ ------------------------
Net income applicable to Common
Stockholders $ 53,187 $ 56,752 $(27,851) $(27,851)
======================== ========================
Per Share Amounts:
From Continuing Operations $ (0.54) $ (0.42) $ 0.82 $ 0.82
From Discontinued Operations 1.77 1.62 (1.60) (1.60)
------------------------ ------------------------
Net income (loss) per share $ 1.23 $ 1.20 $ (0.78) $ (0.78)
======================== ========================
</TABLE>
(A) Calculated using the Modified Treasury Stock method
<PAGE> 1
WANG LABORATORIES, INC. AND SUBSIDIARIES
<TABLE>
EXHIBIT 12.1 - CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions except ratios)
<CAPTION>
Nine months Year Year Nine months
ended March 31, ended June 30, ended June 30, ended June 30,
1997 1996 1995 1994
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
FIXED CHARGES
Interest expense $ 8.8 $ 5.1 $ 3.7 $ 3.5
Portion of rent expense
representative of interest 7.5 9.4 5.9 5.6
------ ------ ------ -------
16.3 14.5 9.6 9.1
Preferred dividend requirement 17.7 37.7 14.5 8.7
------ ------ ------ -------
Combined fixed charges and
preferred dividend $ 34.0 $ 52.2 $ 24.1 $ 17.8
====== ====== ====== =======
EARNINGS
Income (loss) from continuing
operations before income
taxes, discontinued operations,
fresh-start reporting adjustment
and extraordinary item $(37.2)(1) $ 96.2 $ 13.7(2) 20.4
Fixed charges per above 16.3 14.5 9.6 9.1
------ ------ ------ -------
$(20.9) $110.7 $ 23.3 $ 29.5
====== ====== ====== =======
Ratio of earnings to combined
fixed charges and preferred dividends -- 2.1 1.0 1.7
====== ====== ====== =======
Coverage deficiency $(20.9) $ -- $ -- --
====== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Predecessor Company
---------------------------------------------------------
Three months For the year ended June 30,
ended September 30, ---------------------------
1993 1993 1992
------------------- ----------------------------
<S> <C> <C> <C>
FIXED CHARGES
Interest expense $ 1.2 $ 15.0 $ 44.6
Portion of rent expense
representative of interest 2.7 9.7 19.1
-------- ------- -------
3.9 24.7 63.7
Preferred dividend requirement -- -- --
-------- ------- -------
Combined fixed charges and
preferred dividend $ 3.9 $ 24.7 $ 63.7
======== ======= =======
EARNINGS
Income (loss) from continuing
operations before income
taxes, discontinued operations,
fresh-start reporting adjustment
and extraordinary item (22.6) $(197.2) $(346.5)
Fixed charges per above 3.9 24.7 63.7
-------- ------- -------
$ (18.7) $(172.5) $(282.8)
======== ======= =======
Ratio of earnings to combined
fixed charges and preferred dividends -- -- --
======== ======= =======
Coverage deficiency $ (18.7) $(172.5) $(282.8)
======== ======= =======
</TABLE>
(1) Includes $36.0 million of integration-related costs and other charges.
(2) Includes $55.6 million of integration-related costs and other charges.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND NOTE D-OTHER BALANCE SHEET INFORMATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR THE PERIOD ENDED MARCH 31,
1997.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 211,600
<SECURITIES> 0
<RECEIVABLES> 275,400
<ALLOWANCES> 14,500
<INVENTORY> 18,100
<CURRENT-ASSETS> 535,200
<PP&E> 249,600<F1>
<DEPRECIATION> 124,800<F1>
<TOTAL-ASSETS> 1,026,000
<CURRENT-LIABILITIES> 445,100
<BONDS> 0
85,300
138,300
<COMMON> 400
<OTHER-SE> 274,300
<TOTAL-LIABILITY-AND-EQUITY> 1,026,000
<SALES> 232,100
<TOTAL-REVENUES> 930,200
<CGS> 171,000
<TOTAL-COSTS> 700,000
<OTHER-EXPENSES> 81,000<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,800
<INCOME-PRETAX> (37,200)
<INCOME-TAX> (18,100)
<INCOME-CONTINUING> (19,100)
<DISCONTINUED> 76,600
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,500
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.20
<FN>
<F1>PP&E COST AND ACCUMULATED DEPRECIATION INCLUDE CAPITALIZED NON-CONSUMABLE
SPARES INVENTORY.
<F2>OTHER COSTS AND EXPENSES INCLUDE $36.0 MILLION OF INTEGRATION-RELATED COSTS
AND OTHER CHARGES.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORMS 10-Q FOR THE PERIODS ENDED MARCH
31, 1996 AND MARCH 31, 1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 210,100
<SECURITIES> 0
<RECEIVABLES> 225,700
<ALLOWANCES> 13,400
<INVENTORY> 24,000
<CURRENT-ASSETS> 485,400
<PP&E> 215,900<F1>
<DEPRECIATION> 101,200<F1>
<TOTAL-ASSETS> 886,400
<CURRENT-LIABILITIES> 377,400
<BONDS> 22,000<F2>
84,600
138,300
<COMMON> 300
<OTHER-SE> 199,500
<TOTAL-LIABILITY-AND-EQUITY> 886,400
<SALES> 248,900
<TOTAL-REVENUES> 765,800
<CGS> 169,800
<TOTAL-COSTS> 522,500
<OTHER-EXPENSES> 25,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,500
<INCOME-PRETAX> 77,000
<INCOME-TAX> 28,500
<INCOME-CONTINUING> 48,500
<DISCONTINUED> (57,300)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,800)
<EPS-PRIMARY> (0.78)
<EPS-DILUTED> (0.78)
<FN>
<F1>PP&E COST AND ACCUMULATED DEPRECIATION INCLUDE CAPITALIZED NON-CONSUMABLE
SPARES INVENTORY.
<F2>BONDS IS COMPRISED OF BORROWINGS DUE WITHIN ONE YEAR AND LONG TERM DEBT.
</FN>
</TABLE>
