<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Lanier Worldwide, Inc.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 59-2606737
- -------------------------------------------- ----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2300 Parklake Drive, Atlanta, Georgia 30345
- -------------------------------------------- ----------------------------------
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code (770) 621-1588
--------------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, par value $0.01 per share New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
EXPLANATORY NOTE
This Registration Statement has been prepared on a prospective basis on
the assumption that, among other things, the Distribution (as defined in the
Information Statement which is a part of this Registration Statement) and the
related transactions contemplated to occur prior to or contemporaneously with
the Distribution will be consummated as contemplated by the Information
Statement. There can be no assurance, however, that any or all of such
transactions will occur or will occur as so contemplated. Any significant
modifications or variations in the transactions contemplated will be reflected
in an amendment or supplement to this Registration Statement.
<PAGE> 2
CROSS REFERENCE
LANIER WORLDWIDE, INC.
I. INFORMATION INCLUDED IN INFORMATION STATEMENT AND INCORPORATED IN FORM
10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
Item
No. Item Caption Location in Information Statement
<S> <C> <C>
1. Business "SUMMARY;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS;" and "LANIER'S BUSINESS."
2. Financial Information "SUMMARY - LANIER WORLDWIDE, INC. AND
SUBSIDIARIES SUMMARY HISTORICAL AND
PRO FORMA CONSOLIDATED FINANCIAL DATA;"
"LANIER WORLDWIDE, INC. AND
SUBSIDIARIES HISTORICAL AND PRO
FORMA CONSOLIDATED CAPITALIZATION;"
"LANIER WORLDWIDE, INC. PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS;"
"LANIER WORLDWIDE, INC. SELECTED
FINANCIAL DATA;" "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS;"
and "LANIER WORLDWIDE, INC. AND
SUBSIDIARIES CONSOLIDATED FINANCIAL
STATEMENTS."
3. Properties "LANIER'S BUSINESS - Properties"
4. Security Ownership of Certain "SECURITY OWNERSHIP OF CERTAIN
Beneficial Owners and BENEFICIAL OWNERS."
Management
5. Directors and Executive "LANIER'S MANAGEMENT."
Officers
6. Executive Compensation "LANIER'S MANAGEMENT."
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
7. Certain Relationships and "SUMMARY;" "THE DISTRIBUTION -
Related Transactions Relationship Between Harris And
Lanier Following The Distribution."
8. Legal Proceedings "LANIER'S BUSINESS - Legal Proceedings."
9. Market Price of and Dividends "SUMMARY;" and "THE DISTRIBUTION -
on the Registrant's Common Listing and Trading of the Lanier
Equity and Related Stockholder Shares" and "DIVIDEND POLICIES."
Matters
11. Description of Registrant's "DESCRIPTION OF LANIER'S CAPITAL
Securities to be Registered STOCK."
12. Indemnification of Officers and "LIABILITY AND INDEMNIFICATION OF
Directors DIRECTORS AND OFFICERS."
13. Financial Statements and "SUMMARY;" "LANIER WORLDWIDE, INC.
Supplementary Data PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS," "LANIER WORLDWIDE, INC.
SELECTED FINANCIAL DATA;" and "LANIER
WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS."
</TABLE>
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
Item 10. Recent Sales of Unregistered Securities.
None.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
(a) List of Financial Statements. The following financial statements are
included in the Information statement:
Report of Independent Certified Public Accountants.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Balance Sheets as of July
3, 1998, June 27, 1997 and April 2, 1999.
<PAGE> 4
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Income for
the Three Quarters ended April 2, 1999 and April 3, 1998 and the Fiscal Years
ended July 3, 1998, June 27, 1997 and June 30, 1996.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Cash Flows
for the Three Quarters ended April 2, 1999 and April 3, 1998 and the Fiscal
Years ended July 3, 1998, June 27, 1997 and June 30, 1996.
Lanier Worldwide, Inc. and Subsidiaries Consolidated Statements of Changes in
Shareholder Equity for the Three Quarters ended April 2, 1999 and April 3, 1998
and the Fiscal Years ended July 3, 1998, June 27, 1997 and June 30, 1996.
(b) Exhibits The following documents are filed as exhibits hereto:
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.*
3.1 Form of Amended and Restated Certificate of Incorporation of Lanier
Worldwide, Inc.
3.2 Form of By-Laws of Lanier Worldwide, Inc.
4.1 Form of Stockholder Protection Rights Agreement.
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.
10.1 Form of Tax Disaffiliation Agreement.*
10.2 Form of Credit Agreement.*
10.3 Form of Transition Services Agreement.*
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).
10.5 Form of Employee Benefits Compensation and Allocation Agreement.*
10.6 Form of Registration Rights Agreement
10.7 Form of Stock Incentive Plan.*
12.1 Computation of Ratios of Earnings to Fixed Charges.
21.1 List of Subsidiaries.*
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule
- ------------
* To be filed by amendment
<PAGE> 5
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
LANIER WORLDWIDE, INC.
By /s/ Wesley E. Cantrell
-----------------------
Name: Wesley E. Cantrell
Title: President and Chief
Executive Officer
<PAGE> 6
[HARRIS LOGO]
HARRIS CORPORATION
1025 West NASA Boulevard
Melbourne, Florida 32919
-, 1999
Dear Fellow Stockholder:
I am pleased to inform you that the Board of Directors of Harris
Corporation has approved a pro rata distribution to Harris stockholders of
approximately 90% of the outstanding shares of common stock of Lanier Worldwide,
Inc., one of the world's leading independent providers of office products and
document management solutions, which is currently a subsidiary of Harris. Harris
will retain approximately 10% of the Lanier shares.
The distribution will take place on -, 1999. Each Harris stockholder as of
- -, 1999 will receive one Lanier share for every Harris share held on that date.
Lanier has submitted an application to list the Lanier shares on the New York
Stock Exchange under the symbol "LR."
We believe that the distribution will meaningfully enhance value for Harris
stockholders and will give Lanier the financial and operational flexibility to
take advantage of significant growth opportunities in the office products and
document management solutions business. We believe that separating the two
companies will enhance the ability of each of Lanier and Harris to focus on
strategic initiatives and new business opportunities, as well as to improve cost
structures and operating efficiencies and to design equity-based compensation
programs targeted to its own performance. In addition, we expect that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to better measure Lanier's performance relative to its peers.
The enclosed Information Statement describes the distribution and provides
important financial and other information about Lanier. Please read it
carefully.
You do not have to take any action to receive your Lanier shares. You will
not be required to pay anything or to surrender your Harris shares. Account
statements reflecting your ownership of Lanier shares will be mailed to record
holders of Harris stock shortly after -, 1999. If you are a participant in
Harris' dividend reinvestment program and are entitled to receive a fractional
Lanier share, you will receive a check for its cash value. If you are not a
record holder of Harris stock, your Lanier shares should be credited to your
account with your stockbroker or nominee on or about -, 1999. Following the
distribution, you may also request physical stock certificates if you wish.
Information for making that request will be furnished with your account
statement.
Sincerely,
/s/ Phillip W. Farmer
Phillip W. Farmer
Chairman and Chief Executive Officer
<PAGE> 7
LOGO
Lanier Worldwide, Inc.
2300 Parklake Drive,
N.E.
Atlanta, Georgia
30345-2979
770/496-9500
-, 1999
Dear Stockholder:
We are very pleased that you will soon be a stockholder of Lanier
Worldwide, Inc. We are one of the world's leading independent providers of
office products and document management solutions, together with related service
and support. Lanier is truly a global company. In fact, we have over 1,600 sales
and service centers in over 100 countries around the world, through which we
continually seek to provide "best of breed" products to our customers.
As a subsidiary of Harris Corporation, Lanier has been known for its
customer focused strategy. As an independent company, our highest priority will
continue to be customer satisfaction. We continually train our sales people and
service force on new products, technologies and techniques, and we believe that
this training, coupled with our commitment to viewing business interactions
through the eyes of our customers, will allow us to maintain our coveted
reputation in our industry.
We believe that the separation of our business from the businesses of our
corporate parent, Harris Corporation, will enhance our ability to grow our
businesses aggressively, both internally and through selective acquisitions. For
the first time, we will have the ability to offer our employees incentive
opportunities linked to Lanier's performance as a stand-alone company, which we
believe will aid our efforts to enhance employee performance.
As an independent company, we can more effectively focus on our objectives,
support the capital needs of our company and thus bring value to you as a
stockholder.
Lanier has applied for listing of its shares on the New York Stock Exchange
under the symbol "LR."
Our board, management and employees are excited about our future as an
independent company and we look forward to your support and participation in our
success.
Sincerely,
/s/ Wesley E. Cantrell
Wesley E. Cantrell
President and Chief Executive Officer
<PAGE> 8
SUBJECT TO COMPLETION, DATED JULY 2, 1999
INFORMATION STATEMENT RELATING TO THE SPINOFF OF
LANIER WORLDWIDE, INC.
FROM HARRIS CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
Harris Corporation is sending you this information statement to describe
the pro rata distribution to Harris stockholders of approximately 90% of the
outstanding common stock of Lanier Worldwide, Inc. In this distribution, you
will receive one share of Lanier common stock, together with an associated
preferred stock purchase right, for every share of Harris common stock that you
hold at the close of business on -, 1999. Harris will retain approximately 10%
of Lanier's common stock. See "The Distribution" beginning on page 14.
Lanier is currently a wholly owned subsidiary of Harris and is one of the
world's largest independent providers of office products and document management
solutions, related services and support, with over 1,600 sales and service
centers in over 100 countries around the world. See "Lanier's Business"
beginning on page 38.
The distribution of Lanier shares will be effected at 11:59 p.m., Eastern
Daylight Time, on -, 1999. You do not have to take any action to receive your
Lanier shares. You will not be required to pay anything or to surrender your
Harris shares. Harris intends to distribute the Lanier shares by book entry. The
number of Harris shares that you own will not change as a result of the
distribution.
There is no current public trading market for the Lanier shares, although a
"when-issued" trading market may develop prior to completion of the
distribution. Lanier has filed an application to list the Lanier shares on the
New York Stock Exchange under the symbol "LR." See "The Distribution -- Listing
and Trading of the Lanier Shares" beginning on page 16.
------------------------
NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION. WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY OR
YOUR SHARE CERTIFICATES.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED IN THIS
INFORMATION STATEMENT BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS
INFORMATION STATEMENT OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS INFORMATION STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES.
THE DATE OF THIS INFORMATION STATEMENT IS -, 1999.
<PAGE> 9
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION
The following section answers various questions that you may have with
respect to the pro rata distribution to Harris stockholders of approximately 90%
of the outstanding shares of Lanier common stock. We refer to this distribution
in this document as the "Distribution."
Q: WHY IS HARRIS EFFECTING THE DISTRIBUTION?
A: Harris' board of directors and management believe that the Distribution is
in the best interests of Harris, Lanier and Harris stockholders. Harris' board
of directors and management believe that separating Lanier from the rest of
Harris' businesses will allow both Lanier and Harris to focus on their
respective businesses and provide them with the flexibility to pursue different
strategies and react quickly to changing market environments. Lanier's business
is a distinct business with significant differences from Harris' other
operations with respect to its markets, products, capital needs and plans for
growth. Harris' board of directors and management believe that the Distribution
will enhance the ability of each of Lanier and Harris to focus on strategic
initiatives and new business opportunities, improve cost structures and
operating efficiencies and design equity-based compensation programs targeted to
its own performance. In addition, Harris' board of directors expects that the
transition to an independent company will heighten Lanier management's focus,
provide Lanier with greater access to capital, and allow the investment
community to measure Lanier's performance relative to its peers. For a more
detailed discussion of the reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on page 14.
Q: WHY IS HARRIS RETAINING APPROXIMATELY 10% OF THE LANIER SHARES?
A: Harris will retain approximately 10% of the Lanier shares because the
contemplated future sale of these shares will provide Harris with a source of
cash following the Distribution. Harris intends to use this cash to make
acquisitions in the telecommunications equipment industry and for general
working capital purposes. See "The Distribution -- Reasons for Harris' Retention
of Lanier Shares" on page 15.
Q: WHEN WILL THE DISTRIBUTION OCCUR?
A: We currently anticipate completing the Distribution on -, 1999.
Q: WHAT BUSINESS WILL LANIER CONDUCT FOLLOWING THE DISTRIBUTION?
A: After the Distribution, Lanier will continue operating its current business.
See "Summary -- Lanier's Business" on page 1, "The Distribution -- Results of
the Distribution" beginning on page 15 and "Lanier's Business" beginning on page
38.
Q: WHAT WILL I RECEIVE AS A RESULT OF THE DISTRIBUTION?
A: For every share of Harris common stock that you own of record on -, 1999,
you will receive one share of Lanier common stock. For example, if you own 123
shares of Harris common stock on -, you will receive 123 shares of Lanier common
stock.
Harris currently intends to distribute the Lanier shares by book entry. If
you are a record holder of Harris stock, instead of physical stock certificates,
you will receive from Lanier's transfer agent shortly after -, 1999 a statement
of your book entry account for the Lanier shares distributed to you. Following
the Distribution, you may request physical stock certificates if you wish, and
instructions for making that request will be furnished with your account
statement. If you are a participant in Harris' dividend reinvestment plan and
are entitled to receive a fractional Lanier share, you will receive a check for
the cash value of the fractional Lanier share, which may be taxable to you. If
you are not a record holder of Harris stock because such shares are held on your
behalf by your stockbroker or other nominee, your Lanier shares should be
credited to your account with your stockbroker or nominee on or about -, 1999.
Associated with every share of Lanier common stock that you receive will be
one preferred stock purchase right. These rights are similar to the rights
associated with your existing shares of Harris common stock and may have certain
anti-takeover effects similar to Harris' current preferred stock purchase
rights. See "The Distribution -- Manner of Effecting the Distribution" on page
15, "Risk Factors -- Certain Provisions of Lanier's Restated Certificate of
Incorporation and Bylaws and Rights Plan and the Tax Disaffiliaton Agreement May
ii
<PAGE> 10
Discourage Takeovers" beginning on page 11 and "Certain Anti-Takeover Provisions
of Lanier's Certificate of Incorporation, Bylaws and Rights Agreement and
Delaware Law" beginning on page 58.
Q: WHAT DO I HAVE TO DO TO RECEIVE MY LANIER SHARES?
A: Nothing. Your Lanier shares will be either reflected in an account statement
that Lanier's transfer agent will send to you shortly after -, 1999 or credited
to your account with your broker or nominee on or about -, 1999.
Q: WHEN WILL I RECEIVE MY LANIER SHARES?
A: If you hold your Harris shares in your own name, your account statement will
be mailed to you on or about -, 1999. You should allow several days for the mail
to reach you.
If you hold your Harris shares through your stockbroker, bank or other
nominee, you are probably not a stockholder of record and your receipt of Lanier
shares depends on your arrangements with the nominee that holds your Harris
shares for you. Harris anticipates that stockbrokers and banks generally will
credit their customers' accounts with Lanier shares on or about -, 1999, but you
should check with your stockbroker, bank or other nominee. See "The
Distribution -- Manner of Effecting the Distribution" on page 15.
Q: HOW WILL THE DISTRIBUTION AFFECT THE MARKET PRICE OF MY HARRIS SHARES?
A: Following the Distribution, Harris shares will continue to be listed and
traded on the New York Stock Exchange under the symbol "HRS." As a result of the
Distribution, the trading price of Harris shares immediately following the
Distribution will likely be lower than immediately prior to the Distribution.
Until the market has fully analyzed the operations of Harris without the
operations of Lanier, the price of Harris shares may fluctuate significantly.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Q: WHERE WILL MY LANIER SHARES BE TRADED?
A: Lanier has submitted an application to list the Lanier shares on the New
York Stock Exchange under the symbol "LR." Trading of the Lanier shares may
commence on a when-issued basis after the record date. See "The
Distribution -- Listing and Trading of the Lanier Shares" beginning on page 16.
Q: HOW WILL THE CASH PAYMENT FOR FRACTIONAL SHARES BE DETERMINED AND PAID?
A: If your account with Harris' dividend reinvestment plan is credited with a
fractional share of Harris stock as of -, 1999, you will receive cash in lieu of
the fractional Lanier share that you are entitled to receive. Your fractional
Lanier share will be aggregated with the fractional Lanier shares of other
stockholders and sold in the open market by Harris' distribution agent. You will
receive a check for your share of the net proceeds of such sale. See "The
Distribution -- Manner of Effecting the Distribution" on page 15.
Q: WHAT IF I WANT TO SELL MY HARRIS SHARES OR MY LANIER SHARES?
A: You should consult with your own financial advisors, such as your
stockbroker, bank or tax advisor. Harris does not make recommendations on the
purchase, retention or sale of Harris shares or Lanier shares.
If you do decide to sell any shares, you should make sure your stockbroker,
bank or other nominee understands whether you want to sell your Harris shares or
your Lanier shares, or both. The following information may be helpful in
discussions with your stockbroker, bank or other nominee.
Beginning about -, 1999 and continuing until -, 1999, New York Stock
Exchange practices should generally allow you to sell your Harris shares either
together with the right to receive the Lanier shares in the Distribution or
without the right to receive the Lanier shares. If you sell your Harris shares
with the right to receive the Lanier shares, you (or your broker or bank) will
be required to deliver to the buyer the Lanier shares you receive in the
Distribution. You should also be able to sell your right to receive the Lanier
shares without selling your Harris shares.
Sales of Harris shares with the right to receive the Lanier shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier shares and sales of the Lanier
shares without Harris shares are expected to settle four business days following
the date account statements for
iii
<PAGE> 11
the Lanier shares are mailed. Check with your stockbroker, bank or other
nominee. Beginning about -, 1999, you may only sell your Harris shares and
Lanier shares separately. Once again, check with your stockbroker, bank or other
nominee. See "The Distribution -- Listing and Trading of the Lanier Shares"
beginning on Page 16.
Q: HOW WILL THE DISTRIBUTION AFFECT THE DIVIDENDS I CURRENTLY RECEIVE ON MY
HARRIS SHARES?
A: Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate expected to be substantially below Harris' current annual
dividend rate of $.96 per share. No determination has been made by Harris' board
of directors with respect to the initial dividend rate that will be paid
following the Distribution. The declaration and payment of dividends is at the
discretion of Harris' board of directors and will be subject to Harris'
financial results and the availability of surplus funds to pay dividends. The
declaration of dividends and the amount thereof will depend on a number of
factors, including Harris' financial condition, capital requirements, results of
operations, future business prospects and other factors Harris' board of
directors may deem relevant. No assurance can be given that Harris will pay any
dividends. See "Dividend Policies" on page 23.
Q: WILL LANIER PAY DIVIDENDS?
A: Lanier intends to pay quarterly cash dividends, although the declaration and
payment of dividends is at the discretion of Lanier's board of directors and
will be subject to Lanier's financial results and the availability of surplus
funds to pay dividends. The amount of quarterly cash dividends will depend on a
number of factors, including Lanier's financial condition, capital requirements,
results of operations, future business prospects and other factors Lanier's
board of directors may deem relevant. No assurance can be given that Lanier will
pay any dividends. See "Risk Factors -- Uncertainty of Dividends" on page 11 and
"Dividend Policies" on page 23. Certain covenants set forth in the revolving
credit facility that Lanier will enter into in connection with the Distribution
may limit Lanier's ability to declare and pay dividends on the Lanier Shares.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Credit Facility" on page 35.
Q: WILL LANIER HAVE A DIVIDEND REINVESTMENT OR STOCK PURCHASE PLAN?
A: Lanier intends to establish a direct stock purchase and dividend
reinvestment plan that will enable holders to purchase additional Lanier shares
and to reinvest dividends into additional Lanier shares. See "Dividend Policies"
on page 23.
Q: WILL I HAVE TO PAY TAXES ON THE LANIER SHARES THAT I RECEIVE?
A: Based upon the opinion of Sullivan & Cromwell, special counsel to Harris,
Harris anticipates that the Distribution will be tax-free to Harris stockholders
for U.S. federal income tax purposes, except for any tax payable because of any
cash stockholders may receive in lieu of fractional Lanier shares. (You will be
entitled to receive cash in lieu of a fractional Lanier share only if you are a
participant in Harris' dividend reinvestment plan and your account with such
plan is credited with a fractional share of Harris common stock as of -, 1999).
In addition, you may have to pay taxes if you sell your Lanier shares. If you
have any questions, please consult your tax advisor. See "Risk
Factors -- Failure to Qualify as a Tax Free Transaction Could Result in
Substantial Liability" beginning on page 8 and "The Distribution -- Federal
Income Tax Consequences of the Distribution" beginning on page 17.
Q: WILL THERE BE ANY CHANGE IN THE UNITED STATES FEDERAL TAX BASIS OF MY HARRIS
SHARES AS A RESULT OF THE DISTRIBUTION?
A: Yes, your tax basis in your Harris shares will be reduced. If you are the
record holder of your Harris shares, you will receive information with your
account statement that will help you calculate the adjusted tax basis for your
Harris shares, as well as the tax basis for your Lanier shares. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17.
iv
<PAGE> 12
Q: WHERE CAN I GET MORE INFORMATION?
A: If you have any questions relating to the mechanics of the Distribution and
the delivery of account statements or the trading of Harris or Lanier shares
prior to the Distribution, you can contact the Distribution Agent:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
(201) 296-4040
For other questions related to the Distribution, Harris or Lanier, please
contact:
Georgeson Shareholder Communications, Inc.
17 State Street
New York, New York 10004
(800) 223-2064
After the Distribution, Lanier stockholders with inquiries relating to the
Distribution or their investment in Lanier should contact:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: Corporate Secretary
(770) 621-1588
After the Distribution, Harris stockholders with inquiries relating to the
Distribution or their investment in Harris should contact:
Harris Corporation
1025 West NASA Boulevard
Melbourne, Florida 32919
Attention: Corporate Secretary
(407) 727-9100
v
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION................ ii
SUMMARY..................................................... 1
RISK FACTORS................................................ 7
INTRODUCTION................................................ 14
THE DISTRIBUTION............................................ 14
RELATIONSHIP BETWEEN HARRIS AND LANIER FOLLOWING THE
DISTRIBUTION.............................................. 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES HISTORICAL AND PRO
FORMA CONSOLIDATED CAPITALIZATION......................... 22
DIVIDEND POLICIES........................................... 23
LANIER WORLDWIDE, INC. PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS................................................ 24
LANIER WORLDWIDE, INC. SELECTED FINANCIAL DATA.............. 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 30
LANIER'S BUSINESS........................................... 38
LANIER'S MANAGEMENT......................................... 45
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 56
BENEFICIAL OWNERSHIP OF MANAGEMENT.......................... 57
DESCRIPTION OF LANIER'S CAPITAL STOCK....................... 57
CERTAIN ANTI-TAKEOVER PROVISIONS OF LANIER'S CERTIFICATE OF
INCORPORATION, BYLAWS AND RIGHTS AGREEMENT AND DELAWARE
LAW....................................................... 58
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS..... 64
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................... 65
ADDITIONAL INFORMATION...................................... 65
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......... F-1
LANIER WORLDWIDE, INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS...................................... F-2
</TABLE>
vi
<PAGE> 14
SUMMARY
This summary highlights selected information contained elsewhere in this
document. It is not complete and may not contain all of the information that is
important to you. To better understand the Distribution and Lanier, you should
read this entire document carefully, including the risks described beginning on
page 7 and the financial statements and the notes pertaining thereto beginning
on page F-1.
WHY WE SENT THIS DOCUMENT TO YOU
Harris Corporation ("Harris") sent you this document because you were an
owner of Harris common stock on -, 1999. This entitles you to receive a pro rata
distribution of one share of common stock of Lanier Worldwide, Inc. ("Lanier"),
which is currently a wholly owned subsidiary of Harris, for every Harris share
you owned on that date. We refer to this distribution in this document as the
"Distribution." No action is required on your part to participate in the
Distribution and you do not have to pay cash or other consideration to receive
your Lanier shares.
This document describes Lanier's business, the relationship between Harris
and Lanier, and how this transaction benefits Harris and its stockholders, and
provides other information to assist you in evaluating the benefits and risks of
holding or disposing of the Lanier shares that you will receive in the
Distribution. You should be aware of certain risks relating to the Distribution
and Lanier's business, which are described in this document beginning on page 7.
LANIER'S BUSINESS
Lanier and its subsidiaries form one of the world's largest independent
suppliers of copiers, facsimiles and other related automated office imaging
equipment. With over 1,600 sales and service locations in more than 100
countries, Lanier markets these products and related services, parts and
supplies to customers both on a direct sales basis and through a worldwide
network of independent dealers. Lanier provides customers with a wide array of
customized document management solutions including black and white digital and
analog copiers, color copiers, facsimile machines, multifunction devices,
dictation equipment, computer based health care information management systems,
associated parts and supplies, and a variety of related outsourcing services,
including legal support services. Lanier sources substantially all of these
products from a variety of manufacturers, seeking out the "best-of-breed."
Selected products undergo rigorous testing by Lanier, and upgrades are often
recommended to the manufacturers in order to meet Lanier's demanding standards.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national customers include Abbott Laboratories,
Corning, Inc., CountryWide Home Loans, Federal Express, Merck & Company, Inc.,
Minnesota Mining & Manufacturing Co. and the National Aeronautics & Space
Administration (NASA).
Lanier's goal is to become the leading global provider of document
management solutions and related services and support. In order to accomplish
this goal, Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its high caliber employees; and
- continue to add revenue and operating income through selective
acquisitions.
1
<PAGE> 15
\THE DISTRIBUTION
DISTRIBUTING COMPANY....... Harris Corporation, a Delaware corporation.
DISTRIBUTED COMPANY........ Lanier Worldwide, Inc., a Delaware corporation.
PRIMARY PURPOSES OF
DISTRIBUTION............. Harris' board of directors believes that separating
Lanier from the rest of Harris' businesses will
allow both Lanier and Harris to focus on their
respective businesses and provide them with the
flexibility to pursue different strategies and
react quickly to changing market environments.
Lanier's business is a distinct business with
significant differences from Harris' other
operations with respect to its markets, products,
capital needs and plans for growth. Harris' board
of directors believes that separating the two
companies will enhance the ability of each of
Lanier and Harris to focus on strategic initiatives
and new business opportunities, improve cost
structures and operating efficiencies and design
equity-based compensation programs targeted to its
own performance. In addition, Harris' board of
directors believes that Lanier will have greater
access to capital as an independent company and
that the investment community will be better able
to measure Lanier's performance relative to its
peers. For a more detailed discussion of the
reasons for the Distribution, see "The
Distribution -- Reasons for the Distribution" on
page 14 and "-- Reasons for Harris' Retention of
Lanier Shares" on page 15.
LANIER SHARES TO BE
DISTRIBUTED.............. We will distribute to Harris stockholders
approximately - Lanier shares, par value $.01 per
share (together with the associated preferred stock
purchase rights, the "Lanier Shares"), based on
approximately - Harris shares outstanding on -,
1999. The Lanier Shares to be distributed will
constitute approximately 90% of the Lanier Shares
outstanding after the Distribution.
LANIER SHARES TO BE
RETAINED BY HARRIS....... Harris will retain approximately 10% of the Lanier
Shares and Lanier will grant Harris certain rights
to cause Lanier to register these Lanier Shares for
sale under the securities laws. Harris will retain
such Lanier Shares because the contemplated future
sale of these shares will provide Harris with a
source of cash following the Distribution. Harris
has agreed not to sell its Lanier Shares for six
months following the Distribution, but intends to
sell its Lanier Shares within two years following
the Distribution. In addition, Harris has agreed to
vote its Lanier Shares in proportion to votes cast
by other Lanier stockholders. See "Risk
Factors -- The Possibility of Substantial Sales May
Have an Adverse Impact on the Trading Price of the
Lanier Shares" on page 8, "The
Distribution -- Reasons for Harris' Retention of
Lanier Shares" on page 15 and "The
Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
TRADING MARKET AND
SYMBOL................... There is no current trading market for the Lanier
Shares, although a when-issued market may develop
prior to completion of the Distribution. Lanier has
filed an application to list the Lanier Shares on
the New York Stock Exchange under the symbol "LR."
RECORD DATE................ If you owned Harris shares at the close of business
on -, 1999 (the "Record Date"), then you will
receive Lanier Shares in the Distribution.
2
<PAGE> 16
DISTRIBUTION DATE.......... The Distribution will occur at 11:59 p.m., Eastern
Daylight Time, on -, 1999 (the "Distribution
Date"). If you are a record holder of Harris stock,
instead of physical stock certificates you will
receive from Lanier's transfer agent shortly after
-, 1999 a statement of your book entry account for
the Lanier Shares distributed to you. Following the
Distribution, you may request physical stock
certificates if you wish, and instructions for
making that request will be furnished with your
account statement. If you are not a record holder
of Harris stock because such shares are held on
your behalf by your stockbroker or other nominee,
your Lanier Shares should be credited to your
account with your stockbroker or other nominee on
or about -, 1999.
DISTRIBUTION RATIO......... You will receive one Lanier Share for every Harris
share you held on the Record Date.
DISTRIBUTION AGENT......... ChaseMellon Shareholder Services, L.L.C.
TRANSFER AGENT AND
REGISTRAR FOR THE LANIER
SHARES................... ChaseMellon Shareholder Services, L.L.C.
FRACTIONAL SHARE
INTERESTS.................. Fractional Lanier Shares will not be issued. You
will be entitled to receive a fractional Lanier
Share only if you are a participant in Harris'
dividend reinvestment plan and your account with
such plan is credited with a fractional share of
Harris common stock as of the Record Date. Your
fractional Lanier Share will be aggregated with the
fractional Lanier Shares of other stockholders and
sold in the open market by Harris' Distribution
Agent. You will receive a check for your pro rata
share of the net proceeds of such sale. See "The
Distribution -- Manner of Effecting the
Distribution" on page 15.
TAX CONSEQUENCES........... Sullivan & Cromwell, special counsel to Harris,
expects to render an opinion to Harris that the
Distribution will be tax-free to you for U.S.
federal income tax purposes except to the extent of
any cash you receive in lieu of fractional Lanier
Shares. See "Risk Factors -- Failure to Qualify as
a Tax Free Transaction Could Result in Substantial
Liability" beginning on page 8 and "The
Distribution -- Federal Income Tax Consequences of
the Distribution" beginning on page 17.
RELATIONSHIP WITH HARRIS
AFTER THE DISTRIBUTION..... Immediately prior to the Distribution Date, Harris
and Lanier will enter into agreements to transfer
to Lanier selected assets and liabilities of Harris
related to Lanier's business, to transfer to Harris
selected assets and liabilities of Lanier related
to Harris' business, to arrange for the continued
provision of certain services by each company to
the other, to make arrangements for the
Distribution and to define the ongoing
relationships between Harris and Lanier. In
addition, Lanier will grant Harris registration
rights with respect to the Lanier Shares which
Harris will continue to own. Harris and Lanier will
also enter into an agreement providing for the
sharing of taxes incurred by them prior to the
Distribution and providing certain indemnification
rights with respect to tax matters. After the
Distribution, Harris and Lanier will not have any
other material contracts or other arrangements
between them other than arrangements made on an
arm's length basis. See "Relationship Between
Harris and Lanier Following the Distribution"
beginning on page 19.
3
<PAGE> 17
BOARD OF DIRECTORS OF
LANIER..................... After the Distribution, Lanier will have an initial
board of nine directors, classified into three
classes of three directors each. Directors of each
class will serve three-year terms. See "Lanier's
Management" beginning on page 45.
MANAGEMENT OF LANIER....... Lanier's current executive officers will continue
to serve as executive officers of Lanier after the
Distribution. See "Lanier's Management" beginning
on page 45.
CREDIT FACILITY............ Prior to the Distribution, Lanier will incur debt
under a credit facility to be entered into with
certain major financial institutions (the "Credit
Facility") in connection with the payment of a
dividend by Lanier to Harris immediately prior to
the Distribution. As a result of this incurrence of
debt and the assumption by Lanier of certain of
Harris' indebtedness relating to Lanier's business,
Lanier will have approximately $700 million of
indebtedness net of cash on the Distribution Date.
The terms of the Credit Facility will include
customary affirmative and negative covenants that
will, among other things, require Lanier to satisfy
certain financial tests and maintain certain
financial ratios, and will limit Lanier's ability
to declare and pay dividends on the Lanier Shares.
Lanier may also incur additional indebtedness from
time to time, for general corporate purposes,
including working capital requirements, capital
expenditures and future acquisitions. See
"Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit
Facility" on page 35.
POST-DISTRIBUTION DIVIDEND
POLICIES................. Lanier. Following the Distribution, Lanier's
dividend policy will be set by Lanier's board of
directors. Lanier intends to pay quarterly cash
dividends, although the declaration and payment of
dividends is at the discretion of the Lanier Board
and will be subject to Lanier's financial results
and the availability of surplus funds to pay
dividends. The amount of quarterly cash dividends
will depend on a number of factors, including
Lanier's financial condition, capital requirements,
results of operations, future business prospects
and other factors Lanier's board of directors may
deem relevant. No assurance can be given that
Lanier will pay any dividends. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and
"Dividend Policies" on page 23. Certain covenants
set forth in the Credit Facility will limit
Lanier's ability to declare and pay dividends and
distributions on the Lanier Shares. See
"Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Credit
Facility" on page 35.
Harris. Following the Distribution, Harris intends
to pay quarterly dividends at an initial annual
rate expected to be substantially below Harris'
current annual dividend rate of $.96 per share. No
determination has been made by Harris' board of
directors with respect to the initial dividend rate
that will be paid following the Distribution. The
payment and level of dividends is at the discretion
of Harris' board of directors and will be subject
to Harris' financial results and the availability
of surplus funds to pay dividends. The declaration
of dividends and the amount thereof will depend on
a number of factors, including Harris' financial
condition, capital requirements, results of
operations, future business prospects and other
factors Harris' board of directors may deem
relevant. No assurance can be given that Harris
will pay any dividends. See "Dividend Policies" on
page 23.
4
<PAGE> 18
CERTAIN ANTI-TAKEOVER
EFFECTS.................. Certain provisions of Lanier's restated certificate
of incorporation and bylaws may have the effect of
making the acquisition of control of Lanier in a
transaction not approved by Lanier's board of
directors more difficult. The stockholder
protection rights agreement that Lanier expects to
enter into in connection with the Distribution also
would make such a transaction more difficult.
Moreover, certain provisions of the Tax
Disaffiliation Agreement that Lanier expects to
enter into in connection with the Distribution
could discourage potential acquisition proposals.
See "Risk Factors -- Certain Provisions of Lanier's
Certificate of Incorporation and Bylaws and Rights
Plan and the Tax Disaffiliation Agreement May
Discourage Takeovers" beginning on page 11 and
"Certain Anti-Takeover Provisions of Lanier's
Certificate of Incorporation, Bylaws and Rights
Agreement and Delaware Law" beginning on page 58.
RISK FACTORS............... You should review the risks relating to the
Distribution and Lanier's business described in
"Risk Factors" beginning on page 7.
5
<PAGE> 19
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The summary historical and pro forma consolidated financial data of Lanier
set forth below is qualified in its entirety by, and should be read in
conjunction with, the Consolidated Financial Statements of Lanier, including the
Notes thereto, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this document. The income
statement data for each of the three fiscal years ended July 3, 1998 and the
balance sheet data as of July 3, 1998 and June 27, 1997 are derived from, and
are qualified by reference to, the consolidated financial statements included
elsewhere in this document that have been audited by Ernst & Young LLP, Lanier's
independent certified public accountants. The income statement data for the
three quarters ended April 2, 1999 and April 3, 1998 and the balance sheet data
as of April 2, 1999 are derived from Lanier's unaudited consolidated financial
statements. In the opinion of management of Lanier, all adjustments (consisting
of normal recurring adjustments) necessary to fairly present the data for such
periods are included. Data for the three quarters ended April 2, 1999 is not
necessarily indicative of future results.
The summary pro forma consolidated financial data reflect adjustments to
the historical consolidated balance sheet and the historical consolidated income
statement of Lanier, as if the Distribution had occurred on June 28, 1997. The
historical and pro forma consolidated financial statements of Lanier do not
necessarily reflect the results of operations or financial position that Lanier
would have had if Lanier had been a separate, independent company for the
periods indicated.
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------------
FISCAL YEAR ENDED
----------------------------------------------------------------
JULY 3, JUNE 27, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1996 1995 1994
---------- ---------- ---------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue from sales,
rentals and
services.............. $1,254,777 $1,170,014 $1,115,962 $1,023,544 $943,151
Gross margin............ 495,908 488,267 448,075 414,101 386,404
Income before income
taxes................. 99,401 101,907 90,603 82,747 61,377
Income taxes............ 36,604 38,208 33,331 30,454 24,750
Net income.............. 62,797 63,699 57,272 52,293 36,627
PRO FORMA INCOME PER
SHARE...................
BALANCE SHEET DATA (END
OF PERIOD):
Total assets............ $1,182,032 $1,151,881 $1,056,814 $1,011,404 $872,671
Long-term debt.......... 3,660 3,990 4,103 4,192 2,066
Shareholder equity...... 803,657 750,157 689,240 635,113 577,849
<CAPTION>
HISTORICAL PRO FORMA (A)
------------------------- -------------------------
THREE THREE THREE FISCAL
QUARTERS QUARTERS QUARTERS YEAR
ENDED ENDED ENDED ENDED
APRIL 2, APRIL 3, APRIL 2, JULY 3,
1999 1998 1999 1998
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue from sales,
rentals and
services.............. $1,048,489 $930,497 $1,048,489 $1,254,777
Gross margin............ 402,948 371,758 402,948 495,908
Income before income
taxes................. 82,086 76,550 73,675 72,823
Income taxes............ 29,384 28,452 26,085 26,179
Net income.............. 52,702 48,098 47,590 46,644
PRO FORMA INCOME PER
SHARE................... $ 0.54(B) $ 0.52(C)
BALANCE SHEET DATA (END
OF PERIOD):
Total assets............ $1,409,803 $1,319,635
Long-term debt.......... 10,101 607,880
Shareholder equity...... 864,576 149,346
</TABLE>
- ---------------
(A) The pro forma consolidated financial data reflect the elimination of a
corporate expense allocation by Harris, the addition of administrative and
general expenses that Lanier expects to incur as an independent public
company, the allocation of additional debt and related interest expense, pro
forma income adjustments, settlement of intercompany loans and a dividend to
be paid by Lanier to Harris immediately prior to the Distribution. The
aggregate amount of such dividend will be the sum of: (i) $700 million; plus
(ii) any cash retained by Lanier on the Distribution Date; less (iii) the
amount of debt retained or assumed by Lanier; and less (iv) amounts owed by
Lanier under Lanier's European asset securitization facility. See "Lanier
Worldwide, Inc. Pro Forma Consolidated Financial Statements" beginning on
page 24 and the Notes thereto.
(B) Pro forma income per share for the three quarters ended April 2, 1999 is
computed based on 88,766,000 shares, which represents the approximate number
of Lanier Shares expected to be distributed in the Distribution based on the
number of Harris shares outstanding as of April 2, 1999, the retention of
Lanier Shares by Harris and conversion of performance share awards.
(C) Pro forma income per share for the fiscal year ended July 3, 1998 is
computed based on 89,063,000 shares, which represents the approximate number
of Lanier Shares expected to be distributed in the Distribution based on the
number of Harris shares outstanding on July 3, 1998, the retention of Lanier
Shares by Harris and conversion of performance share awards.
6
<PAGE> 20
RISK FACTORS
This document contains forward-looking statements that reflect Lanier's
current assumptions and estimates of future performance and economic conditions.
Such statements are made in reliance upon the safe harbor provisions of Section
27A of the Securities Act of 1933, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Harris and Lanier may make these statements directly in this document or
incorporate such statements into this document by reference to other documents.
Harris and Lanier may also include statements pertaining to periods following
the Distribution. You can find many of these statements by looking for words
such as "believes," "expects," "anticipates," "estimates" or similar
expressions. Any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends to differ
materially from those projected, stated, or implied by the forward-looking
statements.
Lanier's results and the accuracy of the forward-looking statements could
be affected by, among other things, general economic conditions in the markets
in which Lanier operates; economic developments that have a particularly adverse
effect on one or more of the markets served by Lanier; the ability to execute
management's internal operating plans; stability of key markets for office
products and document management solutions; fluctuation in foreign currency
exchange rates and the effectiveness of Lanier's currency hedging program;
worldwide demand and product and service pricing for office products and
document management solutions; and the other risk factors discussed below.
Lanier disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise.
In addition to the information contained elsewhere in this document, you
should carefully read the following risk factors related to the Distribution.
RISKS RELATING TO THE DISTRIBUTION
THERE HAS NOT BEEN ANY PRIOR TRADING MARKET FOR THE LANIER SHARES
There is no current trading market for the Lanier Shares, although a
when-issued trading market may develop prior to completion of the Distribution.
Lanier has filed an application to list the Lanier Shares on the New York Stock
Exchange under the symbol "LR." See "The Distribution -- Listing and Trading of
the Lanier Shares" beginning on page 16.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which the Lanier Shares will trade. Some of the
Harris stockholders who receive Lanier Shares may decide that they do not want
shares in an office products and document management solutions company, and may
sell their Lanier Shares following the Distribution. This may delay the
development of an orderly trading market in the Lanier Shares for a period of
time following the Distribution. Until the Lanier Shares are fully distributed
and an orderly market develops, the prices at which the Lanier Shares trade may
fluctuate significantly and may be lower or higher than the price that would be
expected for a fully distributed issue. Prices for Lanier Shares will be
determined in the marketplace and may be influenced by many factors, including
the depth and liquidity of the market for the shares, Lanier's results of
operations, what investors think of Lanier and the office products and document
management solutions industry, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
industry and general economic and market conditions. In addition, the stock
market often experiences significant price fluctuations that are unrelated to
the operating performance of the specific companies whose stock is traded.
Market fluctuations could have a material adverse impact on the trading price of
the Lanier Shares. See "The Distribution -- Listing and Trading of the Lanier
Shares" beginning on page 16.
THE DISTRIBUTION MAY CAUSE FLUCTUATIONS IN TRADING PRICES OF HARRIS COMMON
STOCK
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock
7
<PAGE> 21
immediately prior to the Distribution. The combined trading prices of Harris
common stock and the Lanier Shares after the Distribution may be less than,
equal to or greater than the trading prices of Harris common stock immediately
prior to the Distribution. Until the market has fully analyzed the operations of
Harris without the operations of Lanier, the prices at which Harris common stock
trades may fluctuate significantly. In addition, the stock market often
experiences significant price fluctuations that are unrelated to the operating
performance of the specific companies whose stock is traded. Market fluctuations
could have a material adverse effect on the trading price of Harris common
stock. See "The Distribution -- Listing and Trading of the Lanier Shares"
beginning on page 16.
THE POSSIBILITY OF SUBSTANTIAL SALES MAY HAVE AN ADVERSE IMPACT ON THE TRADING
PRICE OF THE LANIER SHARES
Based on the number of shares of Harris common stock outstanding on the
Record Date, Harris will distribute to its stockholders a total of approximately
- - million Lanier Shares. Under the United States federal securities laws, almost
all of these shares may be resold immediately in the public market, except for
Lanier Shares held by affiliates of Lanier. Lanier cannot predict whether
stockholders will resell large numbers of Lanier Shares in the public market
following the Distribution or how quickly they may resell these Lanier Shares.
See "The Distribution -- Listing and Trading of the Lanier Shares" beginning on
page 16.
Harris will retain approximately 10% of the Lanier Shares and Lanier will
grant Harris certain rights entitling Harris to cause Lanier to register its
Lanier Shares under the securities laws. Harris has agreed not to sell its
Lanier Shares for six months following the Distribution, but intends to sell
these shares within two years after the Distribution. If Harris or Lanier
stockholders sell large numbers of Lanier Shares over a short period of time, or
if investors anticipate large sales of Lanier Shares over a short period of
time, this could adversely affect the trading price of the Lanier Shares. See
"The Distribution -- Listing and Trading of the Lanier Shares" beginning on page
16.
FAILURE TO QUALIFY AS A TAX-FREE TRANSACTION COULD RESULT IN SUBSTANTIAL
LIABILITY
Harris and Lanier intend for the Distribution generally to be tax-free for
federal income tax purposes. In connection with the Distribution, Sullivan &
Cromwell, special counsel to Harris, expects to render an opinion that the
Distribution will be tax-free to you for federal income tax purposes except to
the extent of any cash you receive in lieu of fractional Lanier Shares. This
opinion of counsel will not be binding on the Internal Revenue Service and, as a
result, we cannot assure you that the Distribution will qualify as a tax-free
transaction. Additionally, even though the Distribution is tax-free to Harris
stockholders, it is possible that the Distribution could be rendered taxable to
Harris as a result of a subsequent acquisition of Harris or Lanier.
If the Distribution were not to qualify for tax-free treatment, then, in
general, a substantial corporate tax would be payable by the consolidated group
of which Harris is the common parent based upon the difference between (1) the
aggregate fair market value of the Lanier Shares distributed in the Distribution
and (2) Harris' adjusted basis in the Lanier Shares. The corporate level tax
would be payable by Harris. However, under certain circumstances, Lanier has
agreed to indemnify Harris for all or a portion of this tax liability. See
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" beginning on page 20. This indemnification obligation,
if triggered, would have a material adverse effect on the results of operations
and financial position of Lanier. In addition, under the consolidated return
regulations, each member of Harris' consolidated group (including Lanier) is
severally liable for such tax liability. See "The Distribution -- Federal Income
Tax Consequences of the Distribution" beginning on page 17.
Furthermore, if the Internal Revenue Service determines that the
Distribution does not qualify as tax-free for any reason other than a
post-Distribution acquisition of Harris or Lanier, each Harris stockholder who
receives Lanier Shares in the Distribution would generally be taxed as if he or
she received a dividend equal to the fair market value of his or her Lanier
Shares. See "The Distribution -- Federal Income Tax Consequences of the
Distribution" beginning on page 17.
Harris would also incur a substantial corporate tax liability under Section
355(e) of the Internal Revenue Code of 1986, as amended (the "Code"), if Harris
were to be acquired by a third party within two years after the
8
<PAGE> 22
Distribution and Harris fails to prove that the subsequent acquisition of Harris
and the Distribution were not made pursuant to a plan or a series of related
transactions. Similarly, if Lanier is acquired by a third party within two years
after the Distribution and Harris fails to prove that the subsequent acquisition
of Lanier and the Distribution were not made pursuant to a plan or a series of
related transactions, Harris may incur this substantial corporate tax liability
under Section 355(e) of the Code. Lanier would be obligated to indemnify Harris
for all or a portion of this substantial corporate tax liability under the Tax
Disaffiliation Agreement under certain circumstances. This indemnification
obligation would have a material adverse effect on the results of operations and
financial position of Lanier. However, Harris stockholders would not recognize
gain or loss under Section 355(e) of the Code solely because either Harris or
Lanier is acquired by a third party after the Distribution. See "The
Distribution -- Federal Income Tax Consequences of the Distribution" beginning
on page 17 and "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" beginning on page 20.
RISKS RELATING TO LANIER
LANIER HAS NO RECENT OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY
Lanier does not have a recent operating history as an independent public
company and since 1983 has relied on Harris for various financial,
administrative and managerial expertise in conducting its operations. Following
the Distribution, Lanier will maintain its own credit and banking relationships
and perform its own financial and investor relations functions. While Lanier has
been profitable as a subsidiary of Harris, there can be no assurance that as an
independent company profits will continue at the same level, if at all.
Additionally, there can be no assurance that Lanier will be able to put in place
successfully the financial, administrative and managerial structure necessary to
operate as an independent public company, or that the development of such
structure will not require a significant amount of management's time and other
resources.
HISTORICAL FINANCIAL INFORMATION MAY BE OF LIMITED RELEVANCE
The historical financial information included in this document does not
reflect the results of operations, financial position and cash flows of Lanier
in the future or the results of operations, financial position and cash flows of
Lanier operated as a separate stand-alone entity during the periods presented.
The financial information included herein does not reflect any changes that may
occur in the funding and operations of Lanier as a result of the Distribution.
LANIER'S CREDIT FACILITY AND OTHER INDEBTEDNESS MAY RESTRICT CERTAIN
ACTIVITIES
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with the payment of a dividend by Lanier to Harris immediately
prior to the Distribution and for general working capital purposes. As a result
of this incurrence of debt and the assumption by Lanier of certain of Harris'
indebtedness relating to Lanier's business, Lanier will have approximately $700
million of indebtedness net of cash on the Distribution Date. The terms of the
Credit Facility will include customary affirmative and negative covenants that
will, among other things, require Lanier to satisfy certain financial tests and
maintain certain financial ratios, and will limit Lanier's ability to declare
and pay dividends on the Lanier Shares. Lanier may also incur additional
indebtedness from time to time for general corporate purposes, including working
capital requirements, capital expenditures and future acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Credit Facility" on page 35.
ADVERSE ECONOMIC CONDITIONS COULD AFFECT LANIER'S ABILITY TO SERVICE DEBT
Lanier's ability to service its indebtedness will depend on its future
operating performance, which will be affected by prevailing economic conditions
and financial and other factors, certain of which Lanier cannot control. While
Lanier believes that future operating cash flow, together with financing
arrangements, will be sufficient to finance current operating requirements,
Lanier's leverage and debt service requirements may make Lanier more vulnerable
to economic downturns. If Lanier could not service its indebtedness, it would be
forced to pursue one or more alternative strategies such as reducing its capital
expenditures, selling assets, restructuring or
9
<PAGE> 23
refinancing its indebtedness or seeking additional equity capital (which may
substantially dilute the ownership interest of holders of Lanier Shares). There
can be no assurance that Lanier can effect any of these strategies on
satisfactory terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" beginning on page 34.
CHANGES IN LANIER'S CREDIT STANDING COULD REDUCE LANIER'S ABILITY TO FINANCE
CUSTOMER PURCHASES
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which in turn depend upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make Lanier's financing less
attractive to customers. Lanier cannot be certain that it can maintain credit
standing sufficient to realize profits on the portion of revenues derived from
financing arrangements.
LANIER OPERATES IN HIGHLY COMPETITIVE MARKETS
Lanier's competitors include the distribution units of large office
equipment manufacturers and independent distributors, as well as office
superstores and consumer electronics chains. As digital and other new technology
develops, Lanier may find itself competing with new distribution channels,
including computer distributors and value added resellers, for products
containing new technology. While Lanier is a significant distributor in the
office products and document management solutions market, certain competitors,
principally the distribution units of large office equipment manufacturers, may
have greater total financial, purchasing and/or sourcing power than Lanier.
Lanier believes that the principal competitive factors in the office products
and document management solutions market are price and product capabilities;
quality and speed of post-sales service support; availability of equipment,
parts and supplies; speed of delivery; financing terms; and availability of
financing, leasing or rental programs. See "Lanier's Business -- Lanier Products
and Services" beginning on page 39 and "-- Competition" on page 43.
LANIER'S SUCCESS WILL DEPEND ON ITS ABILITY TO RESPOND TO TECHNOLOGICAL
DEVELOPMENTS
The document imaging and management industry is undergoing an evolution in
product, moving toward digital technology in a multi-functional office
environment. Lanier's success will partly depend on its ability to respond to
this rapidly changing environment. There can be no assurance that Lanier will be
able to anticipate which products or technologies will gain market acceptance or
that, even if Lanier does correctly anticipate market demand, Lanier's suppliers
will be willing or able to supply such products to Lanier at competitive prices.
Further, there can be no assurance that Lanier will be able to obtain any
manufacturer's authorization necessary to market any newly developed equipment.
Additionally, new products containing new technology may be sold through other
channels of distribution. While it is possible that technological advancements,
including the lowered per unit cost that often accompanies technological
improvements, may enhance unit sales, this trend may reduce Lanier's sales
revenues, and reliability improvements may result in reduced service revenues.
Lanier will also incur increased expenses for the training of its sales and
service personnel to familiarize them with such new technologies. See "Lanier's
Business -- Industry Overview" beginning on page 38.
LANIER IS DEPENDENT ON OUTSIDE SUPPLIERS
Lanier relies on outside suppliers to manufacture the products that it
distributes, including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier
has long-term relationships with its suppliers, there can be no assurance that
products from Lanier's suppliers will continue to be available in the future.
Although Lanier has no reason to believe that access to current sources of
products will become restricted, loss of such access could have a material
adverse effect on Lanier's business, financial condition and results of
operations. See "Lanier's Business -- Suppliers" on page 43.
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LANIER IS DEPENDENT ON CERTAIN KEY PERSONNEL
Lanier's success depends to a significant extent on the continued service
of certain key management personnel. The loss or interruption of the services of
Lanier's senior management personnel or the inability to attract and retain
other qualified management, sales, marketing and technical employees could also
have an adverse effect on Lanier. Lanier intends to use a variety of incentive
plans to attract and retain key management personnel, including a stock
incentive plan, annual bonus plans, a pension plan and a 401(k) plan. See
"Lanier's Management" beginning on page 45.
LANIER IS SUBJECT TO RISKS RELATED TO INTERNATIONAL OPERATIONS
Lanier operates a multinational business and, accordingly, is subject to
risks inherent in international operations. Non-U.S. operations generated
approximately 29.2% of Lanier's fiscal year 1998 revenues and approximately
40.6% of Lanier's revenues in the first nine months of fiscal year 1999. Due to
the significant amount of non-U.S. revenues, fluctuations in the value of
foreign currencies relative to the U.S. dollar could increase the volatility of
Lanier's U.S. dollar-denominated operating results. Lanier's non-U.S. operations
are also subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Market Risk" beginning on page
35.
LANIER IS SUBJECT TO RISKS RELATED TO FOREIGN CURRENCIES
Lanier purchases and sells a significant portion of its products using
currencies other than U.S. dollars. Approximately 28.4% of Lanier's fiscal year
1998 cost of goods sold was denominated in foreign currencies. Approximately
25.8% of Lanier's fiscal year 1998 revenues was denominated in foreign
currencies. Due to the significant portion of products purchased and sold by
Lanier in foreign currencies, fluctuations in the value of foreign currencies
relative to the U.S. dollar could have a material adverse effect on Lanier's
U.S. dollar-denominated operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Foreign
Exchange" on page 35.
UNCERTAINTY OF DIVIDENDS
The payment of dividends is at the discretion of Lanier's board of
directors and will be subject to Lanier's financial results and the availability
of surplus funds to pay dividends. No assurance can be given that Lanier will
pay any dividends. See "Dividend Policies" on page 23.
CERTAIN PROVISIONS OF LANIER'S RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
AND RIGHTS PLAN AND THE TAX DISAFFILIATION AGREEMENT MAY DISCOURAGE TAKEOVERS
Lanier's restated certificate of incorporation and bylaws contain
provisions that may make more difficult or expensive or that may discourage a
tender offer, change in control or takeover attempt that is opposed by Lanier's
board of directors. In particular, Lanier's restated certificate of
incorporation and bylaws:
(1) classify Lanier's board of directors into three groups, so that
stockholders elect only one-third of the board each year;
(2) permit stockholders to remove directors only for cause and only by
the affirmative vote of at least 80% of Lanier's voting shares;
(3) permit a special stockholders' meeting to be called only by a
majority of the board of directors;
(4) do not permit stockholders to take action except at an annual or
special meeting of stockholders;
(5) require stockholders to give Lanier advance notice to nominate
candidates for election to Lanier's board of directors or to make
stockholder proposals at a stockholders' meeting;
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(6) permit Lanier's board of directors to issue, without stockholder
approval, preferred stock with such terms as the board may determine; and
(7) require the vote of the holders of at least 80% of Lanier's voting
shares for stockholder amendments to Lanier's bylaws.
The preferred stock purchase rights attached to the Lanier Shares would, in
effect, prevent a person or group from acquiring more than 15% of the Lanier
Shares without approval from Lanier's board of directors. In addition, Delaware
law generally restricts mergers and other business combinations between Lanier
and any holder of 15% or more of the Lanier Shares, unless the transaction or
the 15% acquisition is approved in advance by Lanier's board of directors. See
"Description of Lanier's Capital Stock" beginning on page 57 and "Certain
Anti-Takeover Provisions of Lanier's Certificate of Incorporation, Bylaws and
Rights Agreement and Delaware Law" beginning on page 58.
These provisions of Lanier's restated certificate of incorporation and
bylaws, Delaware law and the preferred stock purchase rights could discourage
potential acquisition proposals and could delay or prevent a change in control
of Lanier, even though a majority of Lanier's stockholders may consider such
proposals, if effected, desirable. Such provisions could also make it more
difficult for third parties to remove and replace the members of Lanier's board
of directors. Moreover, these provisions could diminish the opportunities for
stockholders to participate in certain tender offers, including tender offers at
prices above the then-current market value of the Lanier Shares, and may also
inhibit increases in the trading price of the Lanier Shares that could result
from takeover attempts or speculation.
In connection with the Distribution, Lanier has agreed to indemnify Harris
for all taxes and liabilities incurred solely because (1) Lanier breaches a
representation or covenant given to Sullivan & Cromwell in connection with
rendering its tax opinion, which contributes to an Internal Revenue Service
determination that the Distribution was not tax-free or (2) Lanier or an
affiliate's post-Distribution action or omission contributes to an Internal
Revenue Service determination that the Distribution was not tax-free. Unless
Harris effectively rebuts the presumption that a change in control transaction
involving Lanier or disposition of Lanier occurring prior to the second
anniversary of the Distribution Date is pursuant to the same plan or series of
related transactions as the Distribution, the Internal Revenue Service might
determine that the Distribution was not tax-free, giving rise to Lanier's
indemnification obligation. These provisions of the Tax Disaffiliation Agreement
may have the effect of discouraging or preventing an acquisition of Lanier or a
disposition of Lanier's businesses, which may in turn depress the market price
for the Lanier Shares. See "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" beginning on page 20.
LANIER IS SUBJECT TO RISKS OF SIGNIFICANT EXPENSE AND BUSINESS DISRUPTION DUE
TO YEAR 2000 PROBLEMS
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, prior to January 1, 2000, computer systems
and/or software used by many companies (including Lanier) will need to be
upgraded to comply with such "Year 2000" requirements. Significant uncertainty
exists in the software industry concerning the potential consequences of the
Year 2000 problem. Although Lanier has determined that it needs to replace or
modify several of its software systems and is in the process of replacing or
outsourcing many of its time sensitive software systems, there can be no
assurance that the costs of these programs will not be significantly greater
than expected, that compliance will be achieved in a timely manner, or that
Lanier's suppliers, customers or other third parties will bring their systems
into Year 2000 compliance in a timely manner. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Impact of Year
2000" beginning on page 36.
EURO CONVERSION COULD ADVERSELY IMPACT LANIER'S SYSTEMS
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the Euro. For a three-year
transition period, both the Euro and the individual countries' currencies will
remain in circulation. After January 1, 2002, the Euro will represent the sole
legal
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tender for EMU countries. The adoption of the Euro affects a multitude of
financial systems and business applications, as EMU countries begin to conduct
commerce in the Euro and in their existing national currencies.
For the nine months ended April 2, 1999, Lanier derived 21.3% of its
revenues from EMU countries. Lanier is currently addressing Euro-related issues
and their impact on Lanier's information systems, currency exchange rate risk,
taxation, contracts, competition and pricing. Action plans being implemented are
expected to result in compliance with all applicable laws and regulations.
However, there can be no certainty that Lanier's plans to address Euro-related
issues are adequate or that they will be successfully implemented or that
external factors will not have a material adverse effect upon Lanier's
operations or business in the EMU or elsewhere. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Euro Conversion" on
page 37.
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INTRODUCTION
On -, 1999, Harris' board of directors declared a pro rata distribution
payable to the holders of record of Harris common stock at the close of business
on -, 1999 (the "Record Date"), of one share of common stock (the "Lanier Common
Stock") of Lanier, together with the associated preferred stock purchase right
(the shares of Lanier Common Stock and the associated preferred stock purchase
rights collectively, the "Lanier Shares"), for every share of Harris common
stock outstanding on the Record Date. The Distribution will be effected at 11:59
p.m., Eastern Daylight Time, on -, 1999 (the "Distribution Date"). As a result
of the Distribution, approximately 90% of the outstanding Lanier Shares will be
distributed to Harris stockholders, and Harris will retain ownership of
approximately 10% of the outstanding Lanier Shares. Harris intends to distribute
the Lanier Shares by book entry. Instead of stock certificates, each Harris
stockholder that is a record holder of Harris shares will receive a statement of
such stockholder's book entry account for the Lanier Shares distributed to such
stockholder. Account statements reflecting ownership of the Lanier Shares will
be mailed shortly after the Distribution Date. Lanier Shares should be credited
to accounts with stockbrokers, banks or nominees of Harris stockholders that are
not record holders on or about -, 1999.
Lanier was incorporated in 1985 as the successor to a business established
in 1935 and acquired by Harris in 1983. Lanier's principal executive offices are
located at 2300 Parklake Drive, N.E., Atlanta, Georgia 30345, and its telephone
number is (770) 496-9500.
The business of Lanier constitutes a significant part of the business of
Harris. Following the Distribution, which was first announced on April 13, 1999,
and following the unrelated sale of Harris' semiconductor business, which was
first announced on June 3, 1999, Harris will be a more focused organization with
five divisions, all focusing on communications. Harris will provide
communications equipment, systems and support services -- concentrating on the
wireless, broadcast, government systems and network support markets.
THE DISTRIBUTION
REASONS FOR THE DISTRIBUTION
The board of directors and management of Harris believe that the
Distribution is in the best interests of Harris, Lanier and Harris stockholders.
Harris believes that the Distribution will meaningfully enhance value for Harris
stockholders and give Lanier the financial and operational flexibility to take
advantage of significant growth opportunities in the office products and
document management solutions business. Lanier's business is a distinct business
with significant differences from Harris' other operations with respect to its
markets, products, capital needs and plans for growth. Harris' board of
directors and management believe that the Distribution will enhance the ability
of each of Lanier and Harris to focus on strategic initiatives and new business
opportunities, improve cost structures and operating efficiencies and design
equity-based compensation programs targeted to its own performance. In addition,
Harris' board of directors expects that the transition to an independent company
will heighten Lanier management's focus, provide Lanier with greater access to
capital, and allow the investment community to measure Lanier's performance
relative to its peers.
In addition, the Distribution will give Lanier direct access to capital
markets. As part of Harris, Lanier competed with Harris' other core business
groups for capital to finance expansion and growth opportunities. As a separate
entity, Lanier will be free of Harris' capital structure restrictions and should
be in a better position to fund the implementation of its business strategy. The
Distribution will also enable Lanier to provide its management and employees
incentive compensation in the form of equity ownership in Lanier, enhancing
Lanier's ability to attract, retain and motivate key employees.
The separation will also enable Harris management to concentrate its
attention on the remaining Harris businesses. Harris management strongly
believes that these businesses may be expanded more effectively if Lanier is no
longer controlled by Harris.
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REASONS FOR HARRIS' RETENTION OF LANIER SHARES
Harris will retain approximately 10% of the Lanier Shares because the
contemplated future sale of these Lanier Shares will provide Harris with a
source of cash following the Distribution. Harris intends to use this cash to
make acquisitions in the telecommunications equipment industry and for general
working capital purposes.
MANNER OF EFFECTING THE DISTRIBUTION
The general terms and conditions relating to the Distribution will be set
forth in an Agreement and Plan of Distribution (the "Distribution Agreement")
between Harris and Lanier. See "Relationship between Harris and Lanier Following
the Distribution -- Distribution Agreement" beginning on page 19.
The Distribution will be made on the basis of one Lanier Share for every
share of Harris common stock outstanding on the Record Date. The actual total
number of Lanier Shares to be distributed will depend on the number of Harris
shares outstanding on the Record Date. Based upon the number of Harris shares
outstanding on -, 1999, approximately - Lanier Shares will be distributed to
Harris stockholders. The Lanier Shares to be distributed will constitute
approximately 90% of the outstanding Lanier Shares. Harris will retain
approximately 10% of the outstanding Lanier Shares. Options to purchase Harris
shares ("Harris Options") held by Lanier employees or Harris employees who will
become Lanier employees will be replaced by options to purchase Lanier Shares
("Lanier Options"). The option price and number of shares subject to each option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
See "Relationship Between Harris and Lanier Following the
Distribution -- Employee Benefits and Compensation Allocation Agreement" on page
21. Performance share awards of Harris shares previously granted to Lanier
employees under the Harris Stock Incentive Plan will be canceled and replaced by
Lanier performance shares granted under the Lanier Stock Incentive Plan (the
"Lanier Stock Plan"). The Lanier Shares will be fully paid and non-assessable
and the holders thereof will not be entitled to preemptive rights. See
"Description of Lanier's Capital Stock" beginning on page 57.
Harris intends to use a book entry system to distribute the Lanier Shares
in the Distribution unless the stockholder requests a stock certificate.
Following the Distribution, each record holder of Harris stock on the Record
Date will receive from ChaseMellon Shareholder Services, L.L.C. (the
"Distribution Agent") a statement of the Lanier Shares credited to the
stockholder's account. After the Distribution, stockholders may request stock
certificates from Lanier's transfer agent instead of participating in the book
entry system.
Fractional Lanier Shares will not be issued. If a stockholder's account
with Harris' dividend reinvestment program is credited with a fractional Harris
share as of the Record Date, the Distribution Agent will aggregate all
fractional Lanier Shares that would otherwise have been credited to a
stockholder's account into whole shares, and sell such whole shares in the open
market at then prevailing prices on behalf of all stockholders entitled to
receive fractional shares, who will receive cash in the amount of their pro rata
share of the total sale proceeds, net of brokerage commissions. Such sales are
expected to be made as soon as practicable after the mailing of the account
statements to Harris stockholders.
No Harris stockholder will be required to pay any cash or other
consideration for the Lanier Shares received in the Distribution, or to
surrender or exchange Harris shares in order to receive Lanier Shares. The
Distribution will not affect the number of, or the rights attaching to,
outstanding Harris shares. No vote of Harris stockholders is required or sought
in connection with the Distribution, and Harris stockholders will have no
appraisal rights in connection with the Distribution.
In order to receive Lanier Shares in the Distribution, Harris stockholders
must be stockholders at the close of business on the Record Date.
RESULTS OF THE DISTRIBUTION
After the Distribution, Lanier will be a separate public company operating
its current office products and document management solutions business.
Immediately after the Distribution, Lanier expects to have approximately -
holders of record of Lanier Shares and approximately - Lanier Shares
outstanding, based on the number of stockholders of record and outstanding
Harris shares on -, 1999, the distribution ratio of one Lanier Share for
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every Harris share and the retention by Harris of approximately 10% of the
outstanding Lanier Shares. Harris Options held by Lanier employees or Harris
employees who will become Lanier employees will be replaced by Lanier Options.
Performance share awards granted to Lanier employees under the Harris Stock
Incentive Plan will be canceled and replaced by Lanier performance shares
granted under the Lanier Stock Plan. See "Relationship Between Harris and Lanier
Following the Distribution -- Employee Benefits and Compensation Allocation
Agreement" on page 21. The actual number of Lanier Shares to be distributed will
be determined as of the Record Date. The Distribution will not affect the number
of outstanding Harris shares or any rights of Harris stockholders.
LISTING AND TRADING OF THE LANIER SHARES
Lanier has filed an application to list the Lanier Shares on the New York
Stock Exchange under the symbol "LR." A stockholder who decides to sell any
Lanier Shares or Harris shares should make sure that such stockholder's
stockbroker, bank or other nominee understands whether such stockholder wants to
sell Harris shares, Lanier Shares, or both. Beginning on or about -, 1999 and
continuing until -, 1999, New York Stock Exchange practices should generally
allow sales of Harris shares either together with the right to receive the
Lanier Shares in the Distribution or without the right to receive the Lanier
Shares. A stockholder that sells Harris shares with the right to receive the
Lanier Shares will be required to deliver to the buyer the Lanier Shares
received in respect of such Harris shares in the Distribution. Stockholders
should also be able to sell their rights to receive Lanier Shares without
selling Harris shares.
Sales of Harris shares with the right to receive the Lanier Shares should
generally settle in the three business day settlement period. Sales of Harris
shares without the right to receive the Lanier Shares and sales of the Lanier
Shares without Harris shares are expected to settle four business days following
the date account statements for the Lanier Shares are mailed. Beginning about -,
1999, stockholders should only be able to sell Harris shares and Lanier Shares
separately. Stockholders should check with their brokers or banks.
The Lanier Shares distributed to Harris stockholders will be freely
transferable, except for Lanier Shares received by persons who may be deemed to
be "affiliates" of Lanier under the Securities Act of 1933. Persons who may be
deemed to be affiliates of Lanier after the Distribution generally include
individuals or entities that control, are controlled by, or are under common
control with Lanier and may include certain directors, officers and significant
stockholders of Lanier. Persons who are affiliates of Lanier will be permitted
to sell their Lanier Shares only pursuant to an effective registration statement
under the Securities Act or an exemption from the registration requirements of
the Securities Act, such as the exemptions afforded by Section 4(1) of the
Securities Act and the brokerage sales provisions of Rule 144 thereunder. It is
believed that persons who may be deemed to be affiliates of Lanier after the
Distribution will own approximately - Lanier Shares, or less than 2% of the
outstanding Lanier Shares.
Harris will retain approximately 10% of the outstanding Lanier Shares, and
Lanier will grant Harris certain rights entitling Harris to cause Lanier to
register Harris' Lanier Shares under the securities laws. Harris has agreed not
to sell its Lanier Shares for six months following the Distribution, but Harris
intends to sell its shares within two years after the Distribution. In addition,
Harris has agreed to vote its Lanier Shares in proportion to votes cast by other
Lanier stockholders. See "Relationship Between Harris and Lanier Following the
Distribution -- Registration Rights Agreement" on page 20.
There can be no assurance as to whether the Lanier Shares will be actively
traded or as to the prices at which Lanier Shares will trade. Some of the Harris
stockholders who receive Lanier Shares may decide that they do not want shares
in an office products and document management solutions company, and may sell
their Lanier Shares following the Distribution. This may delay the development
of an orderly trading market in the Lanier Shares for a period of time following
the Distribution. Until the Lanier Shares are fully distributed and an orderly
market develops, the prices at which the Lanier Shares trade may fluctuate
significantly and may be lower or higher than the price that would be expected
for a fully distributed issue. Prices for Lanier Shares will be determined in
the marketplace and may be influenced by many factors, including the depth and
liquidity of the market for the Lanier Shares, Lanier's results of operations,
what investors think of Lanier and the office products and document
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management solutions business, the amount of dividends that Lanier pays, changes
in economic conditions in the office products and document management solutions
business and general economic and market conditions.
Following the Distribution, Harris common stock will continue to be listed
and traded on the New York Stock Exchange under the symbol "HRS." As a result of
the Distribution, the trading price of Harris common stock immediately following
the Distribution will likely be lower than the trading price of Harris common
stock immediately prior to the Distribution. Until the market has fully analyzed
the operations of Harris without the operations of Lanier, the prices at which
Harris common stock trades may fluctuate significantly.
In addition, the stock market often experiences significant price
fluctuations that are unrelated to the operating performance of the specific
companies whose stock is traded. Market fluctuations could have a material
adverse impact on the trading price of the Lanier Shares and/or Harris common
stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following summary of the material federal income tax consequences of
the Distribution is not a complete description of those consequences and, in
particular, may not address federal income tax considerations that affect the
treatment of a stockholder who acquired Harris stock pursuant to an employee
benefit plan. Each stockholder's individual circumstances may affect the tax
consequences of the Distribution to such stockholder. In addition, no
information is provided herein with respect to tax consequences under applicable
foreign, state or local laws. Consequently, each Harris stockholder is advised
to consult his or her own tax advisor as to the specific tax consequences of the
Distribution.
Neither Harris nor Lanier has requested an advance ruling from the Internal
Revenue Service as to the tax consequences of the Distribution.
GENERAL
Sullivan & Cromwell, special counsel to Harris, expects to render an
opinion to Harris that the Distribution is a distribution described in Section
355 of the Code. In rendering its opinion, counsel will rely upon analysis,
representations and future undertakings from Lanier and Harris and certain other
data, documentation and other materials that Sullivan & Cromwell deemed
necessary for purposes of its opinion. The opinion of counsel will not be
binding on the Internal Revenue Service or the courts; accordingly, there can be
no complete assurance that the Distribution will qualify as a tax-free
transaction.
HOLDERS OF HARRIS COMMON STOCK
The following is a summary, subject to the qualifications set forth above,
of the material federal income tax consequences of the Distribution to holders
of Harris common stock:
- Except for any cash received in lieu of a fractional Lanier Share, a
Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of Lanier Shares in the Distribution.
- A Harris stockholder's holding period for the Lanier Shares received in
the Distribution will include the period for which that stockholder's
Harris shares were held if those shares were held as capital assets.
- A Harris stockholder's tax basis for Lanier Shares received in the
Distribution will be determined by allocating to the Lanier Shares, on
the basis of the relative fair market values of Harris shares and Lanier
Shares at the time of the Distribution, a portion of the stockholder's
basis in his or her Harris shares. The Harris stockholder's basis in his
or her Harris shares will be decreased by the portion allocated to the
Lanier Shares.
- The receipt of cash in lieu of a fractional Lanier Share will be treated
as a sale of the fractional Lanier Share, and a stockholder will
recognize gain or loss equal to the difference between the amount of cash
received and the stockholder's basis in the fractional Lanier Share, as
determined above. The gain or loss will be capital gain or loss if the
stockholder holds his or her Harris shares as capital assets, and will be
long-term capital gain or loss if the holding period for the fractional
Lanier Share, as determined above, is more than one year.
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- A Harris stockholder will not recognize any income, gain or loss as a
result of the receipt of the preferred stock purchase rights which are
attached to Lanier Common Stock in the Distribution, and the receipt of
such rights will have no effect on a stockholder's basis or holding
period in the Lanier Shares or the Harris shares. For federal income tax
purposes, the distribution of such rights will not occur unless and until
they become separately transferable.
- Current Treasury regulations require each holder of Harris common stock
who receives Lanier Shares pursuant to the Distribution to attach to his
or her federal income tax return for the year in which the Distribution
occurs a detailed statement setting forth such data as may be appropriate
in order to show the applicability of Section 355 of the Code to the
Distribution. Harris will convey appropriate information to each holder
of record of Harris common stock as of the Record Date.
- If, contrary to the opinion of Sullivan & Cromwell, the Distribution were
not to qualify for tax-free treatment under Section 355 of the Code for
any reason other than a post-Distribution acquisition of Harris or
Lanier, then each Harris stockholder who receives Lanier Shares in the
Distribution would generally be taxed as if he or she received a dividend
equal to the fair market value of his or her Lanier Shares. However,
Harris stockholders would not recognize gain or loss solely because
either Harris or Lanier is acquired by a third party after the
Distribution.
HARRIS AND LANIER
Assuming that the Distribution qualifies for tax-free treatment under
Section 355 of the Code, neither Harris nor Lanier will recognize any gain or
loss in the Distribution other than deferred intercompany gains that may be
triggered as a result of the Distribution. Harris expects that the Distribution
will trigger deferred gains resulting in tax liabilities of less than $5 million
that will be payable by Lanier under the Tax Disaffiliation Agreement. Harris
does not expect that the Distribution will result in the recognition of any
other deferred intercompany transactions or excess loss accounts.
However, if the Distribution were not to qualify for tax-free treatment,
then, in general, a substantial corporate tax would be payable by the
consolidated group of which Harris is the common parent based upon the
difference between (1) the aggregate fair market value of Lanier Shares
distributed in the Distribution and (2) Harris' adjusted basis in the Lanier
Shares. The corporate level tax would be payable by Harris. However, under
certain circumstances, Lanier has agreed to indemnify Harris for this tax
liability. This indemnification obligation would have a material adverse effect
on the results of operations and financial position of Lanier. See "Relationship
Between Harris and Lanier Following the Distribution -- Tax Disaffiliation
Agreement" beginning on page 20. In addition, under the consolidated return
regulations, each member of Harris' consolidated group (including Lanier) is
severally liable for such tax liability.
Harris would incur this substantial corporate tax liability under Section
355(e) of the Code if Harris were to be acquired by a third party within two
years after the Distribution and Harris failed to prove that the subsequent
acquisition of Harris and the Distribution were not made pursuant to a plan or a
series of related transactions. Similarly, if Lanier is acquired by a third
party within two years after the Distribution, and Harris failed to prove that
the subsequent acquisition of Lanier and the Distribution were not made pursuant
to a plan or a series of related transactions, Harris would also incur this
substantial corporate tax liability under Section 355(e) of the Code.
Lanier would be obligated to indemnify Harris under the Tax Disaffiliation
Agreement for the full amount of any liability of Harris incurred solely because
(1) Lanier breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free,
or (2) Lanier or an affiliate's post-Distribution action or omission contributes
to an Internal Revenue Service determination that the Distribution was not
tax-free. Harris will indemnify Lanier for all taxes and liabilities incurred
solely because (1) Harris breaches a representation or covenant given to
Sullivan & Cromwell in connection with rendering its tax opinion, which breach
contributes to an Internal Revenue Service determination that the Distribution
was not tax-free, or (2) Harris or an affiliate's post-Distribution action or
omission contributes to an Internal Revenue Service determination that the
Distribution was not tax-free. If the Internal Revenue Service determines that
the
18
<PAGE> 32
Distribution was not tax-free for any other reason, Harris and Lanier will
indemnify each other against 50% of all taxes and liabilities. If triggered,
Lanier's indemnification obligation would have a material adverse effect on the
results of operations and financial position of Lanier.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
For a description of the agreement pursuant to which Harris and Lanier have
provided for certain tax disaffiliation and other tax-related matters, see
"Relationship Between Harris and Lanier Following the Distribution -- Tax
Disaffiliation Agreement" beginning on page 20.
REASONS FOR FURNISHING THIS DOCUMENT
This document is being furnished solely to provide information to Harris
stockholders who will receive Lanier Shares in the Distribution. It is not, and
is not to be construed as, an inducement or encouragement to buy or sell any
securities of Harris or Lanier. Neither Harris nor Lanier will update the
information contained in this document except in the normal course of their
respective public disclosure practices.
RELATIONSHIP BETWEEN HARRIS AND LANIER
FOLLOWING THE DISTRIBUTION
For purposes of governing certain of the ongoing relationships between
Harris and Lanier after the Distribution and to provide for an orderly
transition to the status of two independent companies, Harris and Lanier have
entered or will enter into the agreements described in this section. The forms
of agreements summarized in this section are included as exhibits to the
Registration Statement on Form 10 (including any amendments thereto, the
"Registration Statement") that Lanier has filed with the Securities and Exchange
Commission (the "Commission"), and the following summaries are qualified in
their entirety by reference to the agreements as so filed. See "Additional
Information" on page 65.
DISTRIBUTION AGREEMENT
Prior to the Distribution Date, Harris and Lanier will enter into the
Distribution Agreement, which will provide for, among other things, the
principal corporate transactions required to effect the Distribution and certain
other agreements relating to the continuing relationship between Lanier and
Harris after the Distribution.
The Distribution Agreement will provide that prior to the Distribution Date
Lanier will issue to Harris a number of Lanier Shares so that the total number
of Lanier Shares owned by Harris is one less than 10% of the outstanding Lanier
Shares after giving effect to the Distribution. Harris will effect the
Distribution by delivering a certificate representing approximately 90% of such
Lanier Shares to the Distribution Agent.
Although Harris and Lanier have generally held their assets separately, the
Distribution Agreement will provide for the transfer of certain assets used
exclusively in Lanier's business to Lanier and the assumption by Lanier of the
related liabilities, and the transfer of certain assets used exclusively in
Harris' business to Harris and the assumption by Harris of the related
liabilities. The asset transfers made pursuant to the Distribution Agreement
will be made without any representation, warranty or covenant of Harris or
Lanier with respect to such assets, title thereto or the legal sufficiency of
the transfers and assignments thereof. All asset transfers will be effected on
an "as is, where is" basis.
Under the Distribution Agreement and effective as of the Distribution Date,
Lanier will assume, and will agree to indemnify Harris against, all liabilities,
litigation and claims, including related insurance costs, arising out of
Lanier's business, and Harris will retain, and will agree to indemnify Lanier
against, all liabilities, litigation and claims, including related insurance
costs, arising out of Harris' businesses. The foregoing obligations will not
entitle an indemnified party to recovery to the extent any such liability is
covered by proceeds received by such party from any third party insurance
policy.
The Distribution Agreement will provide for the payment of a dividend by
Lanier or its affiliates to Harris or its affiliates immediately prior to the
Distribution, the assumption by Lanier of certain of Harris' indebtedness
19
<PAGE> 33
relating to Lanier's business and the settlement of certain intercompany loans
between Harris and Lanier. The aggregate amount of such dividend will be the sum
of: (i) $700 million; plus (ii) any cash retained by Lanier on the Distribution
Date; less (iii) the amount of debt retained or assumed by Lanier; and less (iv)
amounts owed by Lanier under Lanier's European asset securitization facility.
The Distribution Agreement will provide that each of Harris and Lanier
shall be granted access to certain records and information in the possession of
the other, and will require the retention by each of Harris and Lanier for a
period of eight years following the Distribution Date of all such information in
its possession.
TRANSITION SERVICES AGREEMENT
Harris and Lanier will enter into a Transition Services Agreement prior to
the Distribution Date under which, in exchange for the fees specified in such
agreement, Harris will agree to continue to provide certain administrative
services to Lanier, including tax filing assistance, information management
services and other services, and Lanier will agree to provide certain
administrative services to Harris. The Transition Services Agreement will
provide that each of Lanier and Harris will undertake to provide the same degree
of care and diligence as it uses in providing these services to itself and its
subsidiaries. The Transition Services Agreement will expire - years from the
Distribution Date. Lanier believes that the terms and conditions of the
Transition Services Agreement are as favorable to Lanier as those available from
unrelated parties for a comparable arrangement.
REGISTRATION RIGHTS AGREEMENT
Harris and Lanier will enter into a Registration Rights Agreement prior to
the Distribution Date in which Harris will agree not to offer, sell, contract to
sell or otherwise transfer or dispose of any of the Lanier Shares retained by
Harris during the period ending on the 180th calendar day following the
Distribution Date. The Registration Rights Agreement will provide that Harris
will vote its Lanier Shares on all matters in proportion to the way in which the
other Lanier stockholders vote their Lanier Shares. The Registration Rights
Agreement will also provide that at any time during the period commencing on the
120th calendar day after the Distribution Date and terminating upon the second
anniversary of the Distribution Date, Harris will have the right on two
occasions to require Lanier to file with the Commission a registration statement
under the Securities Act registering all or a portion of the Lanier Shares held
by Harris. On one of these occasions, Harris will be entitled to cause Lanier to
file with the Commission a "shelf" registration statement covering the resale of
the Lanier Shares retained by Harris. Lanier has agreed to use its reasonable
efforts to keep any such registration statement continuously effective for the
period of time terminating upon the earlier of the date that Harris no longer
holds any Lanier Shares or the second anniversary of the Distribution Date. The
Registration Rights Agreement will also provide that Lanier will take certain
actions to assist Harris in offering, marketing and selling the Lanier Shares
retained by Harris and pay certain expenses in connection therewith. In
addition, the Registration Rights Agreement will also provide that Lanier will
indemnify Harris against certain losses, claims, damages and liabilities,
including liabilities under the federal securities laws.
TAX DISAFFILIATION AGREEMENT
Harris and Lanier will enter into a Tax Disaffiliation Agreement which sets
out each party's rights and obligations with respect to deficiencies and
refunds, if any, of federal, state, local or foreign taxes for periods before
and after the Distribution and related matters such as the filing of tax returns
and the conduct of Internal Revenue Service and other audits. Under the Tax
Disaffiliation Agreement, Lanier will indemnify Harris for any tax liability of
Lanier or its affiliates for any period. Lanier will also indemnify Harris for
all taxes and liabilities incurred solely because (1) Lanier breaches a
representation or covenant given to Sullivan & Cromwell in connection with
rendering its tax opinion, which breach contributes to an Internal Revenue
Service determination that the Distribution was not tax-free or (2) Lanier or an
affiliate's post-Distribution action or omission contributes to an Internal
Revenue Service determination that the Distribution was not tax-free. Harris
will indemnify Lanier for all taxes and liabilities incurred solely because (1)
Harris breaches a representation or covenant given to Sullivan & Cromwell in
connection with rendering its tax opinion, which breach contributes to an
Internal Revenue Service determination that the Distribution was not tax-free,
or (2) Harris or an affiliate's
20
<PAGE> 34
post-Distribution action or omission contributes to an Internal Revenue Service
determination that the Distribution was not tax-free. If the Internal Revenue
Service determines that the Distribution was not tax-free for any other reason,
Harris and Lanier will indemnify each other against 50% of all taxes and
liabilities.
Lanier will also indemnify Harris for any taxes resulting from any internal
realignment undertaken to facilitate the Distribution on or before the
Distribution Date. Any such taxes are not expected to be material.
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT
Prior to the Distribution, Harris and Lanier will enter into the Employee
Benefits and Compensation Allocation Agreement (the "Employee Benefits
Agreement"), which will contain certain provisions relating to employee
compensation, benefits and labor matters and the treatment of options to
purchase and awards with respect to Harris shares held by Lanier employees or
Harris employees who will become Lanier employees. The Employee Benefits
Agreement will provide that Harris Options held by Lanier employees or Harris
employees who will become Lanier employees will be replaced by Lanier Options.
The option price and number of shares subject to each option will be adjusted so
that the aggregate difference between the market price and the option price will
be equal for the Harris Options and the Lanier Options. The number of shares
subject to each Lanier Option will be determined by multiplying (i) the number
of shares subject to each Harris Option by (ii) a number equal to (A) the
closing price of Harris shares on the New York Stock Exchange on the Record
Date, divided by (B) the opening price of the Lanier Shares on the New York
Stock Exchange on the day following the Distribution Date (such result, the
"Lanier Option Adjustment Ratio"). Similarly, the price of each Lanier Option
will be determined by dividing the price of each Harris Option by the Lanier
Option Adjustment Ratio. Performance share awards granted to Lanier employees
under Harris' Stock Incentive Plan will be canceled and replacement performance
shares will be awarded under the Lanier Stock Plan by multiplying the number of
performance shares by the Lanier Option Adjustment Ratio.
21
<PAGE> 35
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
HISTORICAL AND PRO FORMA CONSOLIDATED CAPITALIZATION
The following table sets forth the historical and pro forma consolidated
debt and capitalization of Lanier at April 2, 1999. This data should be read in
conjunction with the historical consolidated balance sheet of Lanier and the pro
forma consolidated balance sheet and the notes thereto, and the introduction to
the pro forma consolidated financial statements appearing elsewhere in this
document. The pro forma information set forth below gives effect to the
Distribution as if it had occurred on April 2, 1999. The pro forma information
may not necessarily reflect the debt and capitalization of Lanier in the future
or as it would have been had Lanier been a separate, independent company at
April 2, 1999 or had the Distribution actually been effected on such date.
<TABLE>
<CAPTION>
APRIL 2, 1999
----------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt...................................... $ 155,425 -- $ 155,425
Current portion of long-term debt.................... 7,838 -- 7,838
Long-term debt....................................... 10,101 $ 597,779(A) 607,880
Shareholder Equity:
Preferred stock, par value $1.00; authorized
1,000,000 shares; issued none................... -- -- --
Common stock, par value $1.00; authorized 1,000,000
shares; issued 384,893 shares................... 385 505(B) 890
Additional paid-in-capital......................... 329,336 (147,747)(C) 181,589
Retained earnings.................................. 567,988 (567,988)(C) --
Accumulated comprehensive loss..................... (33,133) -- (33,133)
---------- --------- ---------
Total shareholder equity............................. 864,576 (715,230) 149,346
---------- --------- ---------
Total capitalization................................. $1,037,940 $(117,451) $ 920,489
========== ========= =========
</TABLE>
NOTES TO PRO FORMA COMBINED CAPITALIZATION
The following adjustments were made to the balance sheet of Lanier as of April
2, 1999 to give effect to the Distribution as if it had occurred as of that
date.
(A) To reflect additional debt of Lanier to be incurred on or prior to the
Distribution Date under a new credit facility. Pro forma debt is subject to
change and the components may be revised prior to the Distribution Date.
(B) To reflect Lanier common stock to be distributed in the Distribution and the
conversion of performance share awards. Pro forma par value is $.01 and
500,000,000 shares of Lanier Common Stock are authorized.
(C) To reflect pro forma income adjustments, settlement of intercompany loans
and a dividend to be paid by Lanier to Harris immediately prior to the
Distribution. The aggregate amount of such dividend will be the sum of: (i)
$700 million; plus (ii) any cash retained by Lanier on the Distribution
Date; less (iii) the amount of debt retained or assumed by Lanier; and less
(iv) amounts owed by Lanier under Lanier's European asset securitization
facility. See "Notes to Pro Forma Consolidated Income Statement" on page 28
and "Notes to Pro Forma Consolidated Balance Sheet" on page 26.
22
<PAGE> 36
DIVIDEND POLICIES
Following the Distribution, Lanier's dividend policy will be set by
Lanier's board of directors. Lanier intends to pay quarterly cash dividends,
although the declaration and payment of dividends is at the discretion of
Lanier's board of directors and will be subject to Lanier's financial results
and the availability of surplus funds to pay dividends. Delaware law prohibits
Lanier from paying dividends or otherwise distributing funds to its
stockholders, except out of legally available funds. The amount of quarterly
cash dividends will depend on a number of factors, including Lanier's financial
condition, capital requirements, results of operations, future business
prospects and other factors the Lanier Board may deem relevant. No assurance can
be given that Lanier will pay any dividends. See "Risk Factors -- Uncertainty of
Dividends" on page 11. Certain covenants set forth in the Credit Facility may
limit Lanier's ability to declare and pay dividends and distributions on the
Lanier Shares. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Credit Facility" on page 35. Lanier intends to
establish a direct stock purchase and dividend reinvestment plan that will
enable holders to purchase additional Lanier Shares and to reinvest dividends
into additional Lanier Shares.
Following the Distribution, Harris intends to pay quarterly dividends at an
initial annual rate substantially below Harris' current dividend rate of $.96
per share. No determination has been made by Harris' board of directors with
respect to the initial dividend rate that will be paid following the
Distribution. The payment and level of dividends is at the discretion of Harris'
board of directors and will be subject to Harris' financial results and the
availability of surplus funds to pay dividends. Delaware law prohibits Harris
from paying dividends or otherwise distributing funds to its stockholders,
except out of legally available funds. The declaration of dividends and the
amount thereof will depend on a number of factors, including Harris' financial
condition, capital requirements, results of operations, future business
prospects and other factors Harris' board of directors may deem relevant. No
assurance can be given that Harris will pay any dividends.
23
<PAGE> 37
LANIER WORLDWIDE, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Lanier was acquired by Harris in 1983 and has no recent operating history
as an independent company. The historical consolidated financial statements of
Lanier contained in this document reflect periods during which Lanier did not
operate as an independent company, and certain assumptions were made in
preparing such financial statements. Therefore, the historical consolidated
financial statements may not necessarily reflect the consolidated results of
operations or financial position that would have existed had Lanier been an
independent company.
The following pro forma consolidated financial statements of Lanier make
adjustments to the historical consolidated balance sheet at April 2, 1999 as if
the Distribution had occurred on April 2, 1999, and the historical consolidated
income statements for the three quarters ended April 2, 1999 and the year ended
July 3, 1998, as if the Distribution had occurred on June 28, 1997.
The pro forma consolidated financial statements of Lanier should be read in
conjunction with the historical Consolidated Financial Statements of Lanier and
the Notes thereto contained elsewhere in this document. The pro forma
consolidated financial information is presented for informational purposes only
and may not necessarily reflect the future earnings, results of operations or
financial position of Lanier or what the earnings, results of operations or
financial position would have been had Lanier's businesses been operated as an
independent company for the periods indicated.
24
<PAGE> 38
LANIER WORLDWIDE, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
APRIL 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- ----------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................... $ 71,143 -- $ 71,143
Trade receivables................................... 393,787 -- 393,787
Receivables from parent............................. 93,467 $(93,467)(A) --
Inventories......................................... 187,340 -- 187,340
Prepaid expenses.................................... 22,150 -- 22,150
Deferred income taxes............................... 35,949 3,299(B) 39,248
---------- -------- ----------
TOTAL CURRENT ASSETS........................ 803,836 (90,168) 713,668
OTHER ASSETS
Rental equipment-net................................ 161,758 -- 161,758
Property, plant and equipment-net................... 43,448 -- 43,448
Notes receivables-net............................... 198,053 -- 198,053
Intangibles-net..................................... 156,520 -- 156,520
Other............................................... 46,188 -- 46,188
---------- ----------
TOTAL OTHER ASSETS.......................... 605,967 -- 605,967
---------- -------- ----------
TOTAL ASSETS.......................................... $1,409,803 $(90,168) $1,319,635
========== ======== ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable....................................... $ 155,425 -- $ 155,425
Trade payables...................................... 73,934 -- 73,934
Accrued compensation................................ 48,075 -- 48,075
Retirement plan accounts............................ 32,961 -- 32,961
Accrued interest and sundry taxes................... 18,598 $ 22,033(B) 40,631
Other accrued items................................. 71,609 5,250(B) 76,859
Unearned service income............................. 97,258 -- 97,258
Income taxes........................................ 13,762 -- 13,762
Long-term debt-current portion...................... 7,838 -- 7,838
---------- -------- ----------
TOTAL CURRENT LIABILITIES................... 519,460 27,283 546,743
OTHER LIABILITIES
Deferred income taxes............................... 15,666 -- 15,666
Long-term debt...................................... 10,101 597,779(C) 607,880
SHAREHOLDER EQUITY
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 384,893
shares........................................... 385 505(D) 890
Additional paid-in capital.......................... 329,336 (147,747)(E) 181,589
Retained earnings................................... 567,988 (567,988)(E) --
Accumulated comprehensive loss...................... (33,133) -- (33,133)
---------- -------- ----------
Total Shareholder Equity.................... 864,576 (715,230) 149,346
---------- -------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.............. $1,409,803 $(90,168) $1,319,635
========== ======== ==========
</TABLE>
25
<PAGE> 39
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The following adjustments were made to Lanier's April 2, 1999 historical
consolidated balance sheet to give effect to the Distribution as if it had
occurred on that date.
(A) Settlement of intercompany accounts between Harris and Lanier.
(B) Accruals for additional interest expense, additional administrative expenses
expected to be incurred by Lanier as a publicly traded corporation, and the
related tax benefit resulting from these expenses.
(C) To reflect additional new debt of Lanier to be incurred on or prior to the
Distribution Date under the Credit Facility. Pro forma debt is subject to
change and correspondingly may be revised prior to the Distribution Date.
(D) To reflect additional Lanier Shares to be distributed after giving effect to
the Distribution, Lanier Shares retained by Harris and the conversion of
performance share awards of Harris. Pro forma par value is $.01 and
500,000,000 shares of Lanier Common Stock are authorized.
(E) To reflect pro forma income adjustments, settlement of intercompany loans
and a dividend to be paid by Lanier to Harris immediately prior to the
Distribution. The aggregate amount of such dividend will be the sum of: (i)
$700 million; plus (ii) any cash retained by Lanier on the Distribution
Date; less (iii) the amount of debt retained or assumed by Lanier; and less
(iv) amounts owed by Lanier under Lanier's European asset securitization
facility.
26
<PAGE> 40
LANIER WORLDWIDE, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE THREE QUARTERS ENDED APRIL 2, 1999
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- ----------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals......................... $ 582,511 -- $ 582,511
Service income.................................... 465,978 -- 465,978
Finance income.................................... 28,223 -- 28,223
---------- ----------
1,076,712 -- 1,076,712
COSTS AND EXPENSES
Cost of product sales and rentals................. 382,726 -- 382,726
Cost of service................................... 262,815 -- 262,815
Selling and administrative expenses............... 328,816 $(13,622)(A) 315,194
Interest expenses................................. 15,767 22,033(B) 37,800
Other-net......................................... 4,502 -- 4,502
---------- -------- ----------
994,626 8,411 1,003,037
---------- -------- ----------
Income before income taxes........................ 82,086 (8,411) 73,675
Income taxes...................................... 29,384 (3,299)(C) 26,085
---------- -------- ----------
NET INCOME........................................ $ 52,702 $ (5,112) $ 47,590
========== ======== ==========
Net income per share.............................. $ 0.54(D)
==========
</TABLE>
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT
The following adjustments were made to Lanier's historical consolidated income
statement for the three quarters ended April 2, 1999.
(A) The pro forma adjustments to administrative expense reflect the estimate of
$5.3 million for additional legal, audit and other similar expenses that
Lanier is expected to incur as a publicly traded corporation. Allocation of
Harris expense is made as a percentage of Lanier's net sales. Prior to the
Distribution, Harris charged Lanier for certain administrative expenses.
This expense ($18.9 million) has been eliminated as a pro forma adjustment.
(B) Adjustment to interest expense to reflect additional long-term debt of
Lanier using an annual estimated interest rate of 7.2% assuming $700 million
of indebtedness net of cash on July 4, 1998.
(C) Adjustment for income tax provision related to pretax adjustments.
(D) Net income per share is computed based on 88,766,000 shares, which
represents the approximate number of Lanier Shares expected to be
distributed in the Distribution based on the number of Harris shares
outstanding as of April 2, 1999, the retention of Lanier Shares by Harris
and conversion of Harris performance share awards.
27
<PAGE> 41
LANIER WORLDWIDE, INC.
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE FISCAL YEAR ENDED JULY 3, 1998
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------
(AUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUE
Product sales and rentals......................... $ 721,791 -- $ 721,791
Service income.................................... 532,986 -- 532,986
Finance income.................................... 33,558 -- 33,558
---------- ----------
1,288,335 -- 1,288,335
COSTS AND EXPENSES
Cost of product sales and rentals................. $ 453,968 -- $ 453,968
Cost of service................................... 304,901 -- 304,901
Selling and administrative expenses............... 410,452 $(15,586)(A) 394,866
Restructuring expense............................. 8,500 -- 8,500
Interest expense.................................. 8,236 42,164(B) 50,400
Other-net......................................... 2,877 -- 2,877
---------- -------- ----------
1,188,934 26,578 1,215,512
---------- -------- ----------
Income before income taxes........................ 99,401 (26,578) 72,823
Income taxes...................................... 36,604 (10,425)(C) 26,179
---------- -------- ----------
NET INCOME........................................ $ 62,797 $(16,153) $ 46,644
========== ======== ==========
Net income per share.............................. $ 0.52(D)
==========
</TABLE>
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT
The following adjustments were made to Lanier's historical consolidated income
statement for the fiscal year ended July 3, 1998.
(A) The pro forma adjustments to administrative expense reflect the estimate of
$7.0 million annually for additional legal, audit and other similar expenses
that Lanier is expected to incur as a publicly traded corporation. Prior to
the Distribution, Harris charged Lanier for certain administrative expenses.
Allocation of Harris expense is made as a percentage of Lanier's net sales.
This expense ($22.6 million) has been eliminated as a pro forma adjustment.
(B) Adjustment to interest expense to reflect additional long-term debt of
Lanier using an estimated annual interest rate of 7.2%, assuming $700
million of indebtedness net of cash on June 28, 1997.
(C) Adjustment for income tax provision related to pre-tax adjustments.
(D) Net income per share is computed based on 89,063,000 shares, which
represents the approximate number of Lanier Shares expected to be
distributed in the Distribution based on the number of Harris shares
outstanding on July 3, 1998, the retention of Lanier Shares by Harris and
conversion of Harris performance share awards.
28
<PAGE> 42
LANIER WORLDWIDE, INC.
SELECTED FINANCIAL DATA
The selected historical consolidated financial data of Lanier set forth
below is qualified in its entirety by, and should be read in conjunction with,
the Consolidated Financial Statements of Lanier, including the Notes thereto,
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this document. The income statement data for
each of the three fiscal years ended July 3, 1998 and the balance sheet data as
of July 3, 1998 and June 27, 1997 are derived from, and are qualified by
reference to, the consolidated financial statements included elsewhere in this
document that have been audited by Ernst & Young LLP, Lanier's independent
certified public accountants. The income statement data for the three quarters
ended April 2, 1999 and April 3, 1998 and the balance sheet data as of April 2,
1999 are derived from Lanier's unaudited consolidated financial statements. In
the opinion of management of Lanier, all adjustments (consisting of normal
recurring adjustments) necessary to fairly present the data for such periods are
included. Data for the three quarters ended April 2, 1999 is not necessarily
indicative of future results.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE QUARTERS ENDED
------------------------------------------------------------ -----------------------------
JULY 3, JUNE 27, JUNE 30, JUNE 30, JUNE 30, APRIL 2, APRIL 3,
1998 1997 1996 1995 1994 1999 1998
---------- ---------- ---------- ---------- -------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Product sales and
rentals............. $ 721,791 $ 704,282 $ 719,803 $ 674,694 $635,044 $ 582,511 $ 532,395
Service income........ 532,986 465,732 396,159 348,850 308,107 465,978 398,102
Finance income........ 33,558 29,871 28,760 27,543 27,305 28,223 25,291
---------- ---------- ---------- ---------- -------- ------------- -------------
1,288,335 1,199,885 1,144,722 1,051,087 970,456 1,076,712 955,788
Costs and Expenses
Cost of product sales
and rentals......... 453,968 426,042 448,845 415,121 382,243 382,726 330,650
Cost of service....... 304,901 255,705 219,042 194,322 174,504 262,815 228,089
Selling and
administrative
expenses............ 410,452 399,470 370,004 349,840 337,934 328,816 312,203
Restructuring
expenses............ 8,500 -- -- -- -- -- --
Interest expenses..... 8,236 8,797 11,010 11,485 7,487 15,767 6,487
Other -- net.......... 2,877 7,964 5,218 (2,428) 6,911 4,502 1,809
---------- ---------- ---------- ---------- -------- ------------- -------------
1,188,934 1,097,978 1,054,119 968,340 909,079 994,626 879,238
---------- ---------- ---------- ---------- -------- ------------- -------------
Income before income
taxes................. 99,401 101,907 90,603 82,747 61,377 82,086 76,550
Income taxes............ 36,604 38,208 33,331 30,454 24,750 29,384 28,452
---------- ---------- ---------- ---------- -------- ------------- -------------
Net Income.............. $ 62,797 $ 63,699 $ 57,272 $ 52,293 $ 36,627 $ 52,702 $ 48,098
========== ========== ========== ========== ======== ============= =============
Financial Position (end
of period)
Total assets............ 1,182,032 1,151,881 1,056,814 1,011,404 872,671 1,409,803
Long-term debt.......... 3,660 3,990 4,103 4,192 2,066 10,101
Shareholder equity...... 803,657 750,157 689,240 635,113 577,849 864,576
</TABLE>
29
<PAGE> 43
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Pro Forma
Consolidated Financial Statements," "Selected Financial Data," the Consolidated
Financial Statements of Lanier, including the Notes thereto, and the other
financial information appearing elsewhere in this document. Except for the
historical information contained herein, the discussions in this document
contain forward-looking statements that involve risks and uncertainties.
Lanier's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed under "Risk Factors" beginning on page 7, as well as
those discussed elsewhere in this document.
GENERAL
Lanier is a worldwide supplier of office equipment and facilities
management services. On April 13, 1999 Lanier's parent company, Harris,
announced that it would spin Lanier off into a separate publicly traded company.
Harris intends to accomplish this transaction through a U.S. tax-free
distribution of Lanier stock to Harris shareholders.
Lanier and its subsidiaries form one of the world's largest independent
suppliers of copiers, facsimiles and other related automated office imaging
equipment. With over 1,600 sales and service locations in more than 100
countries, Lanier markets these products and related services, parts and
supplies to customers both on a direct sales basis and through a worldwide
network of independent dealers, Lanier's centralized sales and service
organizations give it a competitive advantage in the pursuit of national and
global account business. Lanier provides customers with a wide array of
customized document management solutions including black and white digital and
analog copiers, color copiers, facsimile machines, multi-function devices,
dictation equipment, computer based health care information management systems,
associated parts and supplies, and a variety of related outsourcing services,
including legal support services. Lanier sources substantially all of these
products from a variety of manufacturers, seeking out the "best-of-breed."
In March 1997, Lanier acquired Quorum Group, Inc., a litigation services
company (the "Quorum Acquisition"). In July 1998, Lanier acquired the Copying
Systems Division of Agfa-Gevaert Group ("Agfa") for $168.3 million (the "Agfa
Acquisition"). The sale of Agfa private label products has added $160.0 million
in revenues for the three quarters ended April 2, 1999. The combined effect of
these sales and the additional sales force presence provided by the Agfa
Acquisition has effectively doubled Lanier's sales and market size in the
European office equipment market.
In May 1999, Lanier sold its electronic medical transcription services
business to MedQuist Transcriptions, Ltd. for approximately $34.0 million. The
sale resulted in an pre-tax gain of $21.5 million, which will be reflected in
the fiscal quarter ending July 2, 1999. In June 1999, Lanier sold its direct
sales operations in France. The sale of such operations resulted in a $4.0
million pre-tax loss, which will be reflected in the fiscal quarter ending July
2, 1999.
In the fourth quarter of fiscal year 1999, Lanier's management determined
that it was necessary and appropriate to record a pre-tax charge to earnings of
$8.0 million in order to write down certain components of Lanier's inventory to
their net realizable values. This action was primarily a result of the fact that
the shift in technology in the document imaging industry from analog products to
digital products has occurred at a much more rapid rate than either the industry
or Lanier's management had anticipated. Lanier's sales of used analog products
decreased 33% in unit terms during fiscal year 1999, while placements of digital
products increased by over 300% in unit terms during the same period. This trend
has accelerated during the third and fourth quarters of fiscal year 1999. In the
month of April 1999, for the first time, sales of Lanier's digital products
exceeded sales of its analog products. Additionally, in recent months, Lanier
has observed a dramatic decline in demand for analog products. As a result of
this faster-than-expected technology shift, Lanier has an excess supply of
analog and older generation digital products.
Lanier's management has determined that its investment in a
technology-related company has been significantly impaired due to developments
related to this company and Lanier's fourth-quarter decision to
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discontinue the product line which utilized the software sold by the company.
Lanier thus expects to take an impairment charge of $7.7 million before tax
relating to these assets in the fiscal quarter ending July 2, 1999.
CERTAIN COMPONENTS OF NET INCOME
Lanier derives its revenues from three primary sources: (i) sales of
equipment and related supplies, parts and services; (ii) consulting and other
professional services; and (iii) finance income from its captive leasing
company. Revenues generated by these areas depend upon a number of factors, such
as the technological competitiveness of its product line, demand for and price
of equipment, Lanier's reputation for providing timely and reliable service,
Lanier's competition in the industry and general economic conditions.
Net Sales. Net sales consists of revenue from product sales, rentals and
service revenue, net of any returns and finance income.
Cost of Goods Sold. Cost of goods sold consists primarily of the cost of
new equipment, cost of supplies and parts, labor costs to provide services,
rental equipment depreciation and other direct operating costs. Lanier
depreciates its rental equipment primarily over periods of three to five years
on a straight-line basis.
Operating Expenses. Operating expenses consist of selling, administrative,
engineering and general expenses, including salaries, wages and related expenses
paid to employees, advertising costs, employee training costs, occupancy of
leased space directly related to sales or service, and other selling expenses.
Operating expenses also include all overhead expenses related to Lanier's
corporate offices, such as salaries, taxes and benefits, occupancy of corporate
leased space, training and travel expenses.
Other Income and Expense. Other income and expense consists of provisions
for bad debts, interest expense, amortization of goodwill, royalties and other
miscellaneous items of income and expense.
RESULTS OF OPERATIONS
Operating expenses include charges by Harris to Lanier for Lanier's
proportionate share of legal, financial, and other administrative expenses.
Following the Distribution, Lanier plans to acquire these services independently
of Harris. Although it is not possible to predict accurately what relationship
the future expense will bear to the historic expense for these items, Lanier
does not expect that the acquisition of these services from sources independent
of Harris will have any material adverse effect.
Interest expense reflected in the historical financial statements is
related to currently outstanding debt. Future interest expense will be
significantly higher as a result of debt incurred related to the Distribution.
See "-- Credit Facility" on page 35.
THREE QUARTERS ENDED APRIL 2, 1999 COMPARED TO THREE QUARTERS ENDED APRIL 3,
1998
Net Sales. Net sales increased 12.7% to $1,048.5 million for the three
quarters ended April 2, 1999 (the "Period") from $930.5 million for the three
quarters ended April 3, 1998. This increase is attributable to the Agfa
Acquisition, which was completed at the beginning of the Period.
Product sales and rental revenue increased 9.4% to $582.5 million for the
Period compared to $532.4 million for the corresponding period in the prior
fiscal year. Increased sales and rentals resulting from the Agfa acquisition
were $82.8 million for the Period. The increase in product sales and rental
revenues from the Agfa Acquisition was partially offset by increased competition
and by the continued market transition from analog to digital copier technology.
This transition has resulted in a market-wide excess supply of analog copiers,
which is driving down prices on used and re-manufactured equipment.
Service revenue increased 17.1% to $466.0 million for the Period from
$398.1 for the corresponding period in the prior fiscal year. This increase is
primarily due to the Agfa Acquisition, which contributed $77.3 million of
service revenue for the Period.
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Sales from Lanier's operations outside of the United States increased by
53.2% to $426.0 million for the Period compared to $278.0 million for the
corresponding period in the prior fiscal year. Sales from Agfa private label
products in Europe and the United Kingdom provided $160.0 million for the
Period. Sales in the United States decreased 4.6% to $622.5 million for the
Period from $652.6 million for the corresponding period in the prior fiscal
year.
Gross Margin. Gross margin on product and rental revenue declined to 34.3%
of net sales for the Period compared to 37.9% for the corresponding period in
the prior fiscal year. This decline was primarily a result of increased price
competition on analog products coupled with lower overall margins on digital
products. Service margins increased to 43.6% compared to 42.7% of net sales for
the same period in the prior fiscal year. This increase was the result of
reductions in personnel and related compensation expenses following Lanier's
restructuring actions and cost containment programs which were initiated in
fiscal year 1998 and continued in fiscal year 1999.
Operating Expenses. Selling and administrative expenses increased 5.3% to
$328.8 million for the Period compared to $312.2 million for the corresponding
period for the prior fiscal year. Selling and marketing expenses increased by
$15.0 million in total dollars as a result of the Agfa Acquisition, but
decreased from 17.0% to 16.5% of net sales. General and administrative expenses
increased by $5.4 million in total dollars as a result of the Agfa Acquisition,
but decreased from 14.9% to 13.7% of net sales.
Other Income and Expense. Finance income increased $2.9 million for the
Period over the comparable period in the prior year due to increased customer
leasing. Interest expense increased to $15.8 million as compared to $6.5 million
during the same period in the prior fiscal year primarily due to borrowings used
to fund the Agfa Acquisition. Other-net expense increased $2.7 million in the
Period over last year's comparable period due primarily to increased provisions
for doubtful accounts.
Net Income. Net income increased 9.6% to $52.7 million for the Period
compared to $48.1 million during the same period in the prior fiscal year. Net
income for domestic operations declined 8.2% to $34 million as compared to $37.1
million during the same period in the prior fiscal year. Net income from
international operations increased 70.0% to $18.7 million from $11.0 million
during the same period in the prior fiscal year. This increase primarily
resulted from the income generated by European operations from the sale of Agfa
products and services.
FISCAL YEAR ENDED JULY 3, 1998 COMPARED TO FISCAL YEAR ENDED JUNE 27, 1997
Net Sales. Net sales increased 7.2% to $1,254.8 million in fiscal year 1998
from $1,170.0 million in fiscal year 1997. Product sales and rental revenue in
Lanier's core business increased by $17.5 million. Of this amount, $8.6 million
resulted from the acquisition of six copy and dictation companies. The remainder
of the increase resulted from internal growth.
Service related revenue increased by $67.3 million, or 14.4%, to $533.0
million. The facilities management product line contributed $36.2 million of
this increase, primarily as a result of having a full year of revenue in fiscal
year 1998 as a result of the Quorum Acquisition. The incremental fiscal year
1998 revenue over fiscal year 1997 revenue resulting from the Quorum
Acquisition, which was completed during the third quarter of fiscal year 1997,
was $20.5 million. Lanier also acquired two other facilities management
companies in fiscal year 1998 which resulted in $6.6 million of incremental
revenue for the period. The remainder of the service revenue increase was a
result of growth in equipment service revenue and transcription services.
Lanier's sales outside the United States increased 2.4% to $371.5 million
in fiscal 1998 compared to $362.2 million in fiscal year 1997. Lanier's European
operation experienced a $12.8 million decrease, while sales in the Latin
American region increased $11.8 million. Lanier's operations in Australia,
Canada and the United Kingdom contributed to a smaller increase.
Gross Margin. Gross Margin decreased from 41.7% of net sales in fiscal year
1997 to 39.5% of net sales in fiscal year 1998. Gross margins were lower in
fiscal year 1998 as a result of increasing price competition
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throughout the copier industry. Margin pressure has also resulted from the lower
margin outsourcing and service based businesses becoming a larger portion of
Lanier's revenue.
Operating Expenses. Selling, administrative and general expenses for fiscal
year 1998 remained relatively constant in absolute dollars but decreased as a
percentage of net sales from 34.1% in fiscal year 1997 to 32.7% in fiscal year
1998. Selling, administrative and general expenses all contributed to reduced
operating expenses as a percentage of net sales.
Restructuring Charge. In fiscal year 1998, Lanier recorded a charge to
income of $8.5 million ($5.3 million after tax) related to the restructuring of
the organization. These cash charges reflect the costs of severance payments and
out-placement services for terminated employees. Of the total amount,
approximately $3.0 million was used in the U.S. operations and approximately
$5.5 million was used in the European operations.
Other Income and Expense. Finance income increased $3.7 million in fiscal
year 1998 due to increased customer leasing. Interest expense decreased by $0.6
million from fiscal year 1997 due to a favorable average interest rate of 8.4%
in 1998 as compared to 9.2% in 1997. Other-net expense decreased $5.1 million in
fiscal year 1998 due primarily to lower provisions for doubtful accounts and
prior year expenses associated with acquisitions of new businesses.
Net Income. Net income for fiscal year 1998 decreased 1.4% to $62.8 million
from $63.7 million in fiscal year 1997. Fiscal year 1998 net income attributable
to domestic operations increased 0.6% to $53.0 million from $52.7 million in the
prior year. Net income attributable to international operations in 1998
decreased 10.9% to $9.8 million compared to $11 million in fiscal 1997.
FISCAL YEAR ENDED JUNE 27, 1997 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1996
Net Sales. Prior to fiscal year 1996, Lanier had reported the results of
operations of its international subsidiaries with a one-month lag relative to
its domestic subsidiaries. In fiscal year 1996, Lanier brought the close of its
international subsidiaries concurrent with the rest of its business. As a result
of this change, fiscal year 1996 included one additional month of revenue for
international operations of $24.1 million. Including this additional revenue,
net sales in fiscal year 1997 increased 4.8% to $1,170.0 million from $1,116.0
million in fiscal year 1996.
Lanier's product sales for fiscal year 1997 declined by $8.4 million to
$645.4 million, a decrease of 1.3%. Excluding the effect of the additional month
of revenue in international operations in fiscal year 1996, product sales would
have increased by $1.0 million for the period. This trend is consistent with the
movement of customers toward outsourcing of their document management processes.
Rental income declined 10.8% to $58.9 million in fiscal year 1997 from $66.0
million in fiscal 1996 as Lanier continued to move its customer base toward
sales-type lease arrangements.
Service revenue increased 17.5% to $465.7 million in fiscal year 1997
compared to $396.2 million in fiscal year 1996. This increase was primarily a
result of Lanier's rapid growth in its facilities management business, which
increased by $53.2 million over the period. Of this amount, $27.0 million
resulted from the Quorum Acquisition, which was completed in the third quarter
of fiscal year 1997. Additionally, Lanier acquired three other service related
companies which accounted for $7.3 million of revenue for the period.
Lanier's sales outside the United States were $362.2 million in fiscal year
1997 compared to $385.4 million in fiscal year 1996, a decline of 6.0%. As noted
above, the fiscal year 1996 sales included one additional month of revenue for
international operations of $24.1 million. Adjusting for the additional month of
revenue, sales outside the United States were level from fiscal year 1996 to
fiscal year 1997. Lanier acquired three copier dealers outside the United States
which contributed $2.8 million of revenue for fiscal year 1997, which was offset
by a $10.4 million decrease in revenue in Lanier's European operations, while
Latin American sales increased $3.3 million. Lanier's operations in Australia,
Canada and the United Kingdom contributed the remainder of the increase.
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Gross Margin. Overall gross margins increased to 41.7% of net sales in
fiscal year 1997 compared to 40.2% of net sales in fiscal year 1996. Gross
margins primarily related to product sales increased by 2.7 points as a result
of the decline in product costs sourced from Japan. This decline in costs was a
result of the strengthening of the U.S. dollar versus the Japanese Yen during
the period.
Operating Expenses. Selling and administrative expenses for fiscal year
1997 increased to 34.1% of net sales from 33.2% of net sales in fiscal year
1996. A total of $21.3 million of this increase was related to Lanier's
investment in improving technology in an enhanced order processing system and
sales force automation project.
Other Income and Expense. Finance income increased $1.1 million in fiscal
year 1997 over the prior year due to increased customer leasing. Interest
expense for fiscal year 1997 decreased to $8.8 million, or 20.0%, compared to
$11.0 million in fiscal year 1996. This decrease was related to lower interest
rates on loans obtained from other Harris entities. Other-net expense increased
$2.7 million in fiscal year 1997 over fiscal year 1996 primarily due to expenses
associated with the Quorum Acquisition.
Net Income. Net Income for fiscal year 1997 increased 11.2% to $63.7
million compared to $57.3 million in fiscal year 1996. Net income attributable
to domestic operations increased 24.9% to $52.7 million in fiscal year 1997 from
$42.2 million in fiscal year 1996. Fiscal year 1997 net income attributable to
international operations decreased 27.2% to $11.0 million compared to $15.1
million in fiscal year 1996.
RESTATEMENT OF FINANCIAL RESULTS
In connection with its internal audit reviews in early 1999, Lanier
detected accounting misstatements by a former employee at one of its foreign
subsidiaries. These misstatements resulted in an overstatement of earnings over
the past five fiscal years in an aggregate amount of $10.0 million before income
taxes and any potential recovery. The financial statements included in this
document reflect the correction of such misstatements. Lanier management has
completed its investigation of these matters and believes that no further
correction will be required.
LIQUIDITY AND CAPITAL RESOURCES
Lanier's net cash flow provided by operating activities was $146.4 million,
$106.1 million and $4.2 million in fiscal years 1998, 1997 and 1996,
respectively. Operating cash flow for the three quarters ended April 2, 1999 was
$107.6 million, an increase of $49.9 million from the same period in fiscal year
1998. The increase is primarily due to a $41.0 million reduction in inventory
levels during the period (net of a $26.7 million addition of inventory from the
Agfa Acquisition).
Lanier used $98.4 million, $107.5 million and $88.9 million net cash in
investing activities during fiscal years 1998, 1997 and 1996, respectively.
During the three quarters ended April 2, 1999, Lanier used $244.8 million in
investing activities, consisting of $171.1 million, 168.3 million of which
related to the Agfa Acquisition and $73.7 million for investments in plant and
equipment.
Cash provided by financing activities was $115.4 million for the three
quarters ended April 2, 1999, consisting of financing used in the Agfa
Acquisition, net of positive cash flows during the three quarters following the
Agfa Acquisition.
Lanier has no material commitments other than its supply agreements with
its vendors. Lanier will continue to make additional investments in facilities,
equipment and computer equipment in order to support its revenue growth.
Lanier's cash flow from operations, together with anticipated borrowing
arrangements, is expected to adequately finance its operating cash requirements
and capital expenditures for the next fiscal year. Lanier expects to fund future
acquisitions and long-term growth primarily with cash flows from operations,
borrowings under the Credit Facility and possible future sales of additional
equity or debt securities.
Capital expenditures for plant and equipment were $20.1 million for the
three quarters ended April 2, 1999, up $4.3 million from the total fiscal year
1998 expenditures. For the three quarters ended April 2, 1999,
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$53.5 million was invested in equipment for rental to customers which is
slightly more than the amount invested for the three quarters ended April 3,
1998.
CREDIT FACILITY
Prior to the Distribution, Lanier will incur debt under the Credit Facility
in connection with the payment of a dividend by Lanier to Harris immediately
prior to the Distribution. As a result of this incurrence of debt and the
assumption by Lanier of certain of Harris' indebtedness relating to Lanier's
business, Lanier will have approximately $700 million of indebtedness net of
cash on the Distribution Date. The terms of the Credit Facility will include
customary affirmative and negative covenants that will, among other things,
require Lanier to satisfy certain financial tests and maintain certain financial
ratios, and may limit Lanier's ability to declare and pay dividends and
distributions on the Lanier Shares.
Lanier may also incur additional indebtedness under the Credit Facility
from time to time for general corporate purposes, including working capital,
capital expenditures and future acquisitions.
In the fourth quarter of fiscal year 1999, Lanier entered into an asset
securitization agreement with a financial institution, as a result of which it
received $32 million in exchange for certain trade accounts receivable. This
transaction is treated as a sale of receivables and therefore is not reflected
on the balance sheet. This amount is included in determining indebtedness as
stipulated in the dividend formula described in "Relationship Between Harris and
Lanier Following the Distribution -- Distribution Agreement" beginning on page
19.
IMPACT OF FOREIGN EXCHANGE
Lanier's international business is transacted in local currency. The impact
of translating the assets and liabilities of these operations to U.S. dollars is
included as a component of shareholder equity. At April 2, 1999 the cumulative
translation adjustment reduced Shareholder Equity by $33.1 million compared to a
reduction of $31.0 million at July 3, 1998.
Lanier utilizes exchange rate agreements with suppliers and foreign
currency hedging instruments to minimize the risks of international
transactions. Gains and losses resulting from currency rate fluctuations did not
have a material effect on Lanier's results in the three quarters ended April 2,
1999 or April 3, 1998 or in fiscal years 1998, 1997 or 1996.
SEASONALITY AND INFLATION
Lanier's management does not believe that Lanier's business is subject to
significant fluctuations based on seasonal effects.
Lanier's management does not believe that the rate of inflation has had a
material effect on the operating results of Lanier because, to the extent
feasible, Lanier has consistently followed a practice of adjusting its prices to
reflect the impact of inflation on wages and salaries for employees and costs of
purchased materials and services.
MARKET RISK
Impact of Foreign Exchange. Lanier's international sales are generally
denominated in the currency of the customer, which exposes Lanier to
fluctuations in foreign currency exchange rates and to other material risks
associated with international operations. Lanier has not in the past suffered a
material adverse impact from currency fluctuations for any of the periods under
consideration. Lanier's risk from such activities has been reduced because
Lanier has been able to pay the expenses of its international operations in
local currencies, which has lessened the need for conversion into U.S. dollars.
In addition, Lanier utilizes exchange rate agreements which provided limited
protection against currency exchange risks. Factors that could impact the
effectiveness of Lanier's hedging program include volatility of currency markets
and the cost and availability of hedging instruments. A 10 percent adverse
change in currency exchange rates for Lanier's foreign currency derivatives held
at July 3, 1998 would have an impact of approximately $13.1 million on the fair
value of such instruments. This quantification of exposure to the market risk
associated with foreign exchange financial
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instruments does not take into account the offsetting impact of changes in the
fair value of Lanier's foreign denominated assets, liabilities, and firm
commitments.
Gains and losses resulting from currency rate fluctuations did not have a
material effect on Lanier's results of operations in fiscal years 1998, 1997 or
1996, but Lanier's risk in this area may increase in this regard as Lanier's
international sales increase in volume and geographic distribution. The impact
of translating the assets and liabilities of those operations into U.S. dollars
is included as a component of Shareholder Equity.
Interest Rate Risk. The financial statements included in this document were
prepared based upon Lanier's current financing structure. Under this structure,
Harris provides financing to Lanier via its own lines of credit. Following the
Distribution, Lanier will arrange its own capital structure independent of
Harris. Although it is not possible to predict accurately the exact nature of
this capital structure or its related expense, Lanier does not expect an adverse
effect from this change.
IMPACT OF YEAR 2000
The year 2000 statements set forth below are designated as "Year 2000
Readiness Disclosures" pursuant to the Year 2000 Information and Readiness
Disclosure Act.
Certain software and hardware systems are time sensitive. Older
time-sensitive systems often use a two-digit dating convention (e.g., "00"
rather than "2000") that could result in system failure and disruption of
operations as the year 2000 approaches. The Year 2000 problem will impact
Lanier, its vendors and suppliers, customers, and other third parties that
interface with Lanier.
With regard to the Year 2000 problem, more than 40 project initiatives of
varying magnitudes have been identified throughout Lanier and its various
business operations. These initiatives relate to four basic aspects of Lanier
and its various business operations: internal information technology ("IT")
systems, including sales order processing, contract management, financial
systems and service management; internal non-IT systems, including office
equipment and test equipment; products; and material third-party relationships.
Each project has been assigned a leader and prioritized based on the size
of the task and the perceived business risk. A steering team comprising senior
management in key functional areas including accounting, finance, legal, quality
and new processes and information management has been established to monitor and
oversee the progress of each project. In addition, Lanier has established a Year
2000 Task Force to manage Lanier's overall internal readiness and its business
continuity planning efforts, and has created a web site at www.lanier.com, on
which it provides detailed information and updates concerning year 2000 issues,
Lanier's efforts to address such issues, and the year 2000 compliance of its
products and internal systems. Lanier expects to have substantially completed
all of its Year 2000 initiatives by the end of the fiscal year ended July 2,
1999.
Internal IT Systems. Lanier has determined it needs to replace or modify
several of its software systems and is in the process of replacing or
outsourcing many of its time-sensitive software systems. In addition, Lanier has
programs for reprogramming other time-sensitive software and equipment. For
example, Lanier has replaced its accounts receivable and payable systems and its
internal purchasing system. Lanier has upgraded its general ledger system to be
Year 2000 compliant and has modified its sales order processing system, billing
system and its contract management system to be Year 2000 compliant. As a
result, Lanier believes that it will be 100% complete with its internal IT
systems prior to the end of the quarter ending October 1, 1999.
Internal Non-IT Systems. Lanier believes that a limited number of its
non-IT systems, such as office equipment and test equipment with date-sensitive
software and embedded microprocessors may be affected. Lanier believes that its
exposure related to non-IT systems is minimal and that a disruption of any of
these systems will not materially inhibit its ability to conduct business
operations.
Products. Lanier has initiated formal programs to advise and work with
customers to resolve Year 2000 problems. All of Lanier's current product
offerings are Year 2000 compliant. Customers who own older generation products
which are not Year 2000 compliant have been notified of the issue and, wherever
possible, been given suggestions for manual overrides of the particular product.
However, Lanier believes it has no material
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exposure to contingencies related to the Year 2000 issue for the products it has
sold. Lanier has Year 2000 exposure in its operating systems and business
systems; including engineering, order fulfillment, program management, financial
and administrative functions. It is Lanier's belief that the greatest potential
risk from the Year 2000 issue could be its inability to meet commitment dates on
delivery of product and has focused the majority of Lanier's effort and
dedicated resources to address this issue. In addition, Lanier believes that a
limited number of the non-information technology systems, such as office
equipment and test equipment with date-sensitive software and embedded
microprocessors may be affected, and evaluation and remediation are underway.
Material Third-Party Relationships. Lanier has also initiated
communications with significant suppliers, customers, and other relevant third
parties to identify and minimize disruptions to Lanier's operations and to
assist in resolving Year 2000 issues. Lanier has identified 40 key suppliers and
performed an in-depth analysis of the product lines provided to Lanier in order
to ensure that such products are Year 2000 compliant. Additionally, Lanier has
identified critical parts and components necessary to support its existing
product lines and is building safety stocks of these items prior to the end of
the calendar year 1999. However, there can be no certainty that the systems and
products of other companies on which Lanier relies will not have an adverse
effect on Lanier's operations.
Lanier believes it has diligently addressed the Year 2000 issues and that
it will satisfactorily resolve significant Year 2000 problems. Lanier
anticipates completing substantially all of its Year 2000 projects by the end of
fiscal year 1999. In the event Lanier falls short of these milestones,
additional internal resources will be focused on completing these projects or
developing contingency plans.
The estimated cost for resolving Year 2000 issues is approximately $11.5
million with an approximate remaining balance of $0.4 million planned for fiscal
year 2000. These costs are generally not incremental to existing information
technology budgets; internal resources were re-deployed and timetables for
implementation of replacement systems were accelerated. The largest portion of
this expenditure is being used to replace existing software and hardware.
Approximately $5.2 million of the above total is related to investments in
hardware or other capitalizable costs or operating leases which will be
amortized in current or future periods. Estimates of the Year 2000 related costs
are based on numerous assumptions and there is no certainty that estimates will
be achieved and actual costs could be materially greater than anticipated.
Specific factors that might cause such differences include, but are not limited
to, the continuing availability of personnel trained in this area, the ability
to timely identify and correct all relevant computer programs, and similar
uncertainties.
Lanier is working to identify and analyze the most likely worst-case
scenarios, any of which could have a material adverse effect on Lanier's ability
to provide products and services to its customers. These possible scenarios
include the failure of water and power supplies, the failure of communications
and financial systems, major transportation disruptions, and lack of Year 2000
readiness of third-party vendors and customers. Lanier continues to develop
contingency plans to address potential Year 2000 problems relating to the
infrastructure and Lanier's business partners. These plans are expected to be
completed no later than September 30, 1999. Despite such efforts, an
infrastructure problem or combination of the above-mentioned Year 2000 problems
not within Lanier's control could have a material adverse impact on Lanier's
business and its results of operations.
EURO CONVERSION
On January 1, 1999, certain member nations of the EMU adopted a common
currency, the Euro. For a three-year transition period, both the Euro and
individual participants' currencies will remain in circulation. After January 1,
2002, the Euro will be the sole legal tender for EMU countries. The adoption of
the Euro affects a multitude of financial systems and business applications as
the commerce of these nations will be transacted in the Euro and the existing
national currency. For fiscal year 1998, approximately 11.7% of Lanier's
revenues were derived from EMU countries.
Lanier is currently addressing Euro-related issues and its impact on
information systems, currency exchange rate risk, taxation, contracts,
competition, and pricing. For the three quarters ended April 2, 1999, Lanier did
not experience an adverse impact or material expense related to the adoption of
the Euro. All cost associated with the adoption of the Euro has been expensed by
Lanier as incurred. Lanier expects to complete the Euro-related systems
conversion by the quarter ending October 1, 1999.
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LANIER'S BUSINESS
GENERAL
Lanier and its subsidiaries form one of the world's largest independent
suppliers of copiers, facsimiles and other related automated office imaging
equipment. With over 1,600 sales and service locations in more than 100
countries, Lanier markets these products and related services, parts and
supplies to customers both on a direct sales basis and through a worldwide
network of independent dealers. Lanier provides customers with a wide array of
customized document management solutions including black and white digital and
analog copiers, color copiers, facsimile machines, multi-function devices,
dictation equipment, computer based health care information management systems,
associated parts and supplies, and a variety of related outsourcing services,
including legal support services. Lanier sources substantially all of these
products from a variety of manufacturers, seeking out the "best-of-breed."
Selected products undergo rigorous testing by Lanier, and upgrades are often
recommended to the manufacturers in order to meet Lanier's demanding standards.
Lanier targets sales of its products to four primary markets: (i)
global/national or "key" accounts; (ii) major accounts; (iii) commercial users;
and (iv) specific vertical industries, such as the health care and legal
industries. Some of Lanier's national customers include Abbott Laboratories,
Corning, Inc., CountryWide Home Loans, Federal Express, Merck & Company, Inc.,
Minnesota Mining & Manufacturing Co. and the National Aeronautics & Space
Administration (NASA).
Lanier, headquartered in Atlanta, Georgia, was founded in 1934 as The
Lanier Company, a Southeastern distributor of "Ediphone" dictation machines.
Lanier entered the copier business in 1955 as an independent distributor of 3M
"Thermofax" dry process copiers. In 1977, Lanier was spun-off as a separate
public company from its then-parent corporation, Oxford Industries. Lanier, then
known as Lanier Business Products, was subsequently acquired by Harris in 1983.
In 1985, Lanier was incorporated in Delaware as Harris/3M Document Products,
Inc., a joint enterprise between Lanier Business Products, Inc., a subsidiary of
Harris, and the Minnesota Mining and Manufacturing Co. Harris purchased 3M's
interest in that venture in 1989 and changed the name of the company to Lanier
Worldwide, Inc.
INDUSTRY OVERVIEW
The document imaging and management industry consists of the production and
supply of various imaging products and supplies, as well as the provision of
pre-sale consulting services and after-market product services. Lanier's
competitors include the distribution units of large office equipment
manufacturers and other independent distributors. According to industry sources,
the total global market for its document imaging and management products and
services will grow from approximately $75 billion in 1999 to approximately $97
billion in 2002.
Companies in the document imaging industry sell products primarily through
three channels of distribution: (i) direct customer sales; (ii) dealer sales;
and (iii) retail sales. Direct customer sales include sales calls by sales force
personnel, sales through telephone marketing and internet sales. Dealer sales
result from customer calls performed by independent or company-owned dealer
outlets. Retail sales include sales of low-end products, typically through
national retail outlets or local smaller retailers.
Traditionally, the products offered by companies in the document imaging
industry have used analog technology. Lanier's management believes, however,
that customers' increasing use of digital technology will eventually lead to the
replacement of analog products with digital products. According to industry
sources, approximately 378,000 digital copiers were sold in the United States in
1998 (or approximately 19.6% of new copiers shipped in 1998), an increase of
1,114% since the end of 1996. Industry sources predict that, by the end of 2003,
approximately 87% of all new copier placements will be digital machines. Digital
products, unlike analog products, can connect and communicate with other office
imaging equipment, enabling customers to more efficiently connect and utilize
their document management solutions over a wide array of configurations. Digital
products may also offer a wider array of more useful features, such as higher
quality copies, color capability, finishing capability and multi-function
capability. The market trend toward digital technology has also led document
management companies to include training for sales, service, maintenance and
help desk personnel with respect to the new digital products.
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As document imaging products and services have become more complex and
service-intensive, customers have begun to seek outsourcing services, such as
facilities management services, and professional services that require expertise
in document imaging and management, such as consulting services and systems
integration services.
The document imaging industry as a whole remains highly fragmented, with
only a few large companies. Many customers purchase products through independent
dealers that operate only in a particular geographic area. As digital technology
replaces analog technology, many of these independent dealers may not have the
training to sell or service the new technology. Further, as customers
consolidate their accounts in order to integrate their document management
solutions, they may seek providers that have a larger geographic scope. Thus,
smaller independent dealers may determine to sell to larger companies in the
industry who have more training capability and cover a larger geographic area.
Further, the fragmented nature of the industry allows for consolidation in order
to achieve economies of scale and lower operating expenses on a company-wide
basis.
LANIER PRODUCTS AND SERVICES
Lanier offers its customers a comprehensive solution to their document
management needs through products and services that take advantage of
technological advancements and Lanier's experience in the document imaging and
management industry.
PRODUCTS
Lanier offers a full range of document copiers, from desktop units to high
speed and high volume systems. Within this range, Lanier offers both color
copiers and black and white copiers, as well as both analog and digital copiers.
Lanier offers several devices that perform more than one traditional function,
such as Hewlett-Packard "mopiers" that can print multiple original copies direct
from the customer's networked systems as a finished (i.e., stapled, collated,
etc.) document product.
Lanier also offers a full range of facsimile machines. Lanier offers
multi-function products that can meet customers' facsimile needs, as well as
traditional stand-alone machines.
Finally, Lanier offers a range of both digital and analog dictation
products.
SERVICES
Product Support. Lanier's service force provides a range of product-support
services from traditional on-site repairs to after-market supplies such as toner
and paper products. Lanier supports many of its customers with around the clock,
seven days a week on-site service, and supports all of its customers' service
and help needs with a sophisticated logistics, call reception/dispatch and
multi-level help desk and hotline. Additionally, Lanier provides customer
application training and support if needed by the customer.
Lanier has a worldwide service force of approximately 2,900 employees.
Lanier continually trains its sales force on new products, technologies, and
sales techniques. Because of the industry trend toward digital technology and
new systems, Lanier's management believes that its training and instruction
services, as well as its help desk and hotline, provide Lanier with an advantage
over its competitors.
Outsourcing Services. Lanier provides its customers with a wide range of
consulting and professional services, such as facilities management, systems
integration and other consulting services.
Through its facilities management services, Lanier can equip, staff and
manage most aspects of a customer's reprographic and document management needs
at the customer's facility. In addition to copying and printing, Lanier provides
file room maintenance, decentralized copier management, facility mail and
courier services and address list maintenance. Lanier seeks to work with the
customer to identify methods in which Lanier can help meet all of the customer's
document management needs, whether by implementation of new products or by
systems integration.
Lanier's systems integration services offer customers the ability to
leverage Lanier's substantial experience in the areas of connectivity and
efficiency of document management networks. Lanier helps customers enhance
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the performance of their network by either adding new or enhanced technology
products or increasing the efficiency of the current system. As an example,
Lanier offers its health care clients a system that allows its customers to
connect a digital dictation station with the hospital database containing
patient records in order to enable doctors to view a patient's information while
at the same time dictating a diagnosis or prescription for the patient.
DOCutivity(TM) Approach. Lanier has implemented its DOCutivity(TM) approach
in order to improve its customers' document management productivity by
strategically integrating Lanier's products and services. DOCutivity(TM)
streamlines the process for customers and allows Lanier to provide each customer
with customized document analysis that will allow the customer to improve its
document productivity and efficiency. Each member of the Lanier sales force is
trained in the DOCutivity(TM) approach and analysis.
Through the DOCutivity(TM) approach, Lanier assesses the customer's
document management challenges and goals, while extensively analyzing the
customer's existing capabilities. Lanier's sales personnel examine the
customer's office and workgroup functions and determine the financial impact of
implementing a new, more productive and efficient document management solution
for the customer. Lanier's sales personnel then offer solutions to the customer
based on Lanier's extensive industry knowledge and experience, for an improved
document management strategy.
For example, one recent oil refinery customer sought to replace its analog
copiers supplied by multiple vendors on a cost-effective basis. Lanier sales
personnel used the DOCutivity(TM) analysis to implement a strategy to: (i)
reduce the customer's high cost of copying and print cartridges associated with
multiple vendors; (ii) improve efficiency by eliminating manual distribution of
documents; and (iii) eliminate redundancy in the document management cycle.
Lanier proposed an all-digital, multi-function device configuration connected to
the customer's Local Area Network. Through this configuration, Lanier helped the
customer (i) reduce costs by capturing original prints and their corresponding
replication and (ii) eliminate redundancy by combining the creation of originals
with both duplication and distribution. Overall, Lanier estimated that the
DOCutivity(TM) approach saved the customer approximately $144,000 per year in
excess costs.
PRODUCT FINANCING
A portion of Lanier's operating income arises from the financing of its
customers' purchases of Lanier products. On average, 46% of Lanier's aggregate
sales in the United States, Puerto Rico, Canada and Australia are financed
through leases that typically have a term of 3 years. In Europe, 16% of Lanier's
sales derive from rental arrangements that differ from leases primarily because
customers may terminate the rental agreement more quickly and easily. Lanier's
ability to provide financing at competitive rates and realize operating income
is highly dependent upon its own costs of borrowing, which, in turn, depend upon
Lanier's credit standing. Significant changes in such standing could reduce the
profitability of Lanier's financing business and/or make Lanier's financing less
attractive to customers. Lanier cannot be certain that it can maintain credit
standing sufficient to realize profits on the portion of its revenues derived
from financing arrangements.
LANIER'S TARGET MARKETS
Lanier targets four primary markets: (i) global/national or "key" accounts;
(ii) major accounts; (iii) commercial accounts; and (iv) specific vertical
industry markets, such as the health care and legal industry.
National or "key" accounts are large corporations that tend to require full
document imaging and management throughout the customer's entire organization,
whether that organization is regional, national or global. Lanier management has
targeted these accounts with multiple sales and service entries as a growth
vehicle for Lanier because these accounts tend to generate substantial and
recurring revenues over longer-term contracts.
Some of Lanier's national or "key" accounts include Abbott Laboratories,
Corning, Inc., Countrywide Home Loans, Federal Express, Merck & Company, Inc.,
Minnesota Mining & Manufacturing Co. and the National Aeronautics & Space
Administration (NASA).
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Lanier has set specific criteria to define major accounts and identified a
list of these accounts in each district. Management is then focused on these
accounts utilizing major account representatives and the DOCutivity(TM)
methodology.
Lanier has also targeted commercial accounts, which are local or small
businesses. Sales to commercial accounts typically consist of the sale of Lanier
products, coupled with a maintenance and supply agreement.
Lanier also targets specific vertical industries that tend to involve more
intensive use of Lanier's products, such as the health care and legal
industries. Because of its heavy use of documents, Lanier sales and service
personnel target the legal market for the full range of Lanier products and
services. Lanier management believes that Lanier has a reputation for quality
products and superior after-sales service and support within the legal market.
Because of the legal market's use of multiple products that Lanier sells and
services, Lanier management believes that the legal market represents a
significant source for cross-selling opportunities.
Similarly, Lanier targets the health care industry because Lanier's
management believes it offers continued growth opportunities. Over 50% of the
hospitals in the United States use Lanier digital dictation systems, often in
multiple areas of the hospital. As digital systems become more accepted in other
areas of Lanier products (particularly copiers), management believes that Lanier
can leverage its reputation for digital dictation systems with these hospitals
in order to become the provider of choice for other products. In addition, the
increased complexity and connective nature of these products will allow Lanier
to offer to its health care customers its expertise in systems integration and
other consulting services.
STRATEGY
Lanier's goal is to become the leading global provider of document imaging
products and related services and support. In order to accomplish this goal,
Lanier intends to use the following strategies:
- continue to cultivate its "best of breed" sourcing and distribution
relationships;
- deliver integrated document management solutions to its customers;
- focus on customer satisfaction and retention;
- maintain and develop its effective marketing initiatives;
- attract, retain and incentivize its employees; and
- continue to add revenue and operating income through selective
acquisitions.
Cultivate Sourcing and Distribution Relationships
Lanier has historically sought out the "best of breed" in its products by
sourcing products from a variety of manufacturers. Selected products undergo
rigorous testing by Lanier, and Lanier often recommends upgrades to its
suppliers. Lanier intends to continue to seek the best products available
throughout the world in order to offer the best possible products to its
customers. In particular, in order to maintain pace with the industry-wide shift
to digital products, Lanier intends to expand its offering of digital document
imaging products. Lanier believes that its current supplier relationships will
allow it to offer high-quality document imaging products in each segment of the
digital market. Lanier also intends to explore new relationships as
manufacturers develop new multi-function digital machines. For example,
beginning July 1, 1999, Lanier expects to begin selling and servicing the new
"mopier" line of products developed by Hewlett-Packard Company. The Mopier line
represents a shift in document management technology to enable the customer to
use a printer in order to create multiple originals with finishing (i.e.,
stapling, collating, etc.) capabilities.
Deliver Integrated Document Management Solutions
Lanier sales personnel have been trained to approach every sales
opportunity using the DOCutivity(TM) sales method. Lanier seeks to offer its
customers a full range of products and services and to address its customers'
document production and management needs through an integrated document
solution. Management believes that this integrated DOCutivity(TM) approach
enables Lanier to be more successful in securing larger, national customers
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that seek such comprehensive document solutions and generate substantial and
recurring revenues over longer term contracts. Management also believes that its
DOCutivity(TM) approach allows Lanier to cross sell its products and services,
as they comprise components of an integrated solution. Additionally, management
believes that as document management technology grows more complex, many
customers, particularly legal and other professional service providers, will
seek to outsource more of their document management functions. Lanier seeks to
continue to grow its facilities management business in order to meet the growth
in this document outsourcing market.
Focus on Customer Satisfaction
Lanier focuses on customer satisfaction as an opportunity to grow its
business through continuing and expanding its sales with existing customers.
Lanier analyzes its clients' document production and management needs and
challenges through the eyes of its customers, an approach Lanier refers to as
Customer Vision(TM). Management believes that this perspective allows Lanier to
align its business practices and processes with the way that its customers wish
to do business, build customer loyalty and foster long term customer
relationships. Lanier provides the Performance Promise(TM), which Lanier
believes is the document management industry's first and most comprehensive
product guarantee that covers all product lines and guarantees product
performance with 99% uptime, as well as a service availability guarantee. Lanier
also offers a 24 hour, seven day a week help desk to provide customer service
support by highly trained personnel that management believes helps contribute to
its reputation as a leading service provider in the industry. Lanier believes
that it has achieved customer satisfaction levels exceeding 90% in each of its
target markets in each of the last two fiscal years and has received customer
satisfaction awards from several of its customers, including Abbott
Laboratories, DuPont, Kinko's and Pacific Bell.
Maintain and Develop Effective Marketing Initiatives
Lanier believes that it has a high quality sales force that is trained in
effective sales techniques, sophisticated document imaging products, such as
digital and multi-function machines, and Lanier's DOCutivity(TM) sales approach.
Lanier seeks to capitalize on its trained sales force by cross selling its
products and services to its customers through the integrated DOCutivity(TM)
approach. Management also seeks to grow its business by marketing its global
presence to multi-national customers that seek a worldwide product and service
provider. Lanier is also expanding its low cost telemarketing initiative, which
currently accounts for a majority of the sales of its supplies and lower end
products. Lanier is also seeking to develop marketing and sales of its products
over the Internet.
Attract, Retain and Incentivize Employees
Management believes that Lanier can stimulate internal growth by continuing
to attract and retain high quality employees. Management also believes that
Lanier can increase the productivity of its sales personnel through the use of
performance benchmarks and other incentive opportunities. Lanier management
believes that the ability to offer equity incentives to its employees that match
Lanier's performance as a stand-alone company will aid its efforts to increase
its employees' productivity.
Grow through Selective Acquisitions
Lanier will actively seek strategic acquisitions that complement its
existing businesses, either in Lanier's existing markets or in new markets.
Lanier seeks acquisition targets that embody a similar culture to Lanier's and
that management believes it can successfully integrate into Lanier's existing
businesses. Lanier seeks to make acquisitions that will enable Lanier to
leverage cost saving opportunities and increase revenue and operating income.
During the last three fiscal years, Lanier has acquired 18 businesses that have
added approximately $261.0 million in revenues (measured from the date of each
acquisition). In July 1998, Lanier acquired the Copying Systems Division of
Agfa. The Agfa Acquisition has added $160 million in revenues for the three
quarters ended April 2, 1999, and has effectively doubled Lanier's sales and
market size in the European office equipment market.
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EMPLOYEES
Lanier employs approximately 9,200 individuals throughout the world,
including 2,100 sales personnel. None of Lanier's United States employees is
covered by a collective bargaining agreement. Management believes that Lanier
has good relations with its employees.
SALES AND MARKETING
Lanier distributes its sales personnel both geographically and by target
market. Lanier operates domestically from 106 district offices in the United
States and operates internationally through subsidiaries and branches located in
27 countries throughout the world. Lanier is represented through independent
distributors in over 80 additional countries. Overall, Lanier operates over
1,600 sales and service locations throughout the world. Lanier's Global Accounts
Program enables its international customers to make supplier and equipment
selections on a worldwide basis through one agreement in order to improve the
customer's purchasing power, office productivity and operating efficiency.
Lanier has separate sales groups focused on each of its target markets, with
sales personnel dedicated to each of the global/national, major, commercial,
health care and legal target markets.
INTERNATIONAL OPERATIONS
Net sales from international operations were $371.5 million, or 29.6%, and
$426.0 million, or 40.6%, of Lanier's total net sales for fiscal 1998 and the
three quarters ended April 2, 1999, respectively, compared with $362.2 million,
or 31.0%, and $278.0 million, or 29.9%, for fiscal year 1997 and the three
quarters ended April 3, 1998. Foreign operations represented 32.9% of long-lived
assets as of April 2, 1999, compared to 17.2% of long-lived assets as of April
3, 1998. Lanier's products are primarily produced in Asia.
The particular economic, social and political conditions for business
conducted outside of the United States differ from those encountered by domestic
operations. Management of Lanier believes that the composite business risk for
Lanier's international operations as a whole is somewhat greater than that faced
by its domestic operations as a whole. Lanier's international operations are
subject to political, economic and other risks inherent in operating in
countries outside the United States, including possible adverse government
regulation, imposition of import and export duties and quotas, currency
restrictions, price controls, potentially burdensome taxation and/or other
restrictive government actions. See "Risk Factors -- Lanier is Subject to Risks
Related to International Operations" on page 11. Nevertheless, Lanier's
management believes that these risks are offset by the diversification of
Lanier's international operations.
Financial information regarding Lanier's domestic and international
operations is contained in Note O to Lanier's Consolidated Financial Statements.
SUPPLIERS
Lanier sources its products from multiple suppliers throughout the world,
including Ricoh, Toshiba, Canon, Sharp and Okidata. Although Lanier has
contractual relationships with many of its suppliers, Lanier continually seeks
the best products to offer to its customers and does not enter into exclusive
arrangements with any of its suppliers. Management does not believe that Lanier
depends on any particular supplier.
TRADEMARKS AND LICENSES
Lanier distributes its products principally under the Lanier trademark.
Beginning July 1, 1999, however, Lanier expects to begin selling and servicing
Hewlett-Packard's Mopier line of products under the Hewlett-Packard trademark,
in addition to products sold under the Lanier trademark.
COMPETITION
Lanier operates in highly competitive markets. Lanier's competitors include
the distribution units of large office equipment manufacturers and independent
distributors, as well as office superstores and consumer electronics chains. As
digital and other new technology develops, Lanier may find itself competing with
new distribution channels, including computer distributors and value added
resellers, for products containing new
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technology. Principal areas of competition in these markets include price and
product capabilities, quality and speed of post-sales service support,
availability of equipment, parts and supplies, speed of delivery, financing
terms and availability of financing, leasing or rental programs.
PROPERTIES
Lanier generally leases its business properties, with the exception of two
facilities that consist of a total of approximately 200,000 square feet located
in Wilmington, Delaware and Tucker, Georgia, neither of which are material to
the operations of Lanier as a whole. Lanier leases a total of approximately 1.6
million square feet of space for its business operations in the United States.
Management of Lanier believes that the properties Lanier occupies are, in
general, suitable and adequate for the purpose for which Lanier utilizes them.
LEGAL PROCEEDINGS
In 1992, the General Services Administration of the United States federal
government (the "GSA") commenced an audit of 48 Multiple Award Schedule
Contracts between Lanier and the GSA. In 1998, the GSA notified Lanier that the
United States federal government might be entitled to a refund with respect to
payments under six of such contracts. Lanier and the GSA have continued
discussions as to the amount of any such refund, which Lanier believes in the
aggregate will not be material to its results of operations or financial
condition.
From time to time, as a normal incident of the nature and kind of business
in which Lanier is engaged, various claims or charges may be asserted and
litigation commenced against Lanier. The amounts claimed may be substantial but
may bear no reasonable relationship to the merits of the claim or the extent of
any real risk or final award. In the opinion of Lanier's management, final
judgments, if any, which might be rendered against Lanier in any current claim
or litigation are either adequately reserved for or would not have a material
adverse effect on Lanier's results of operations or financial condition.
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LANIER'S MANAGEMENT
BOARD OF DIRECTORS
The following table sets forth information as to the persons who are
expected to serve as directors of Lanier following the Distribution. As provided
in Lanier's restated certificate of incorporation, Lanier's board of directors
will be divided into three classes. The table sets forth the names of the
directors of each class and their original terms. Directors in each class
initially will serve until the annual meeting of shareholders held in the year
in which the term for such class expires and will serve thereafter for
three-year terms. Lanier initially intends to have a board of directors that
will consist of nine directors, two of whom are officers of Lanier. Additional
directors will be added to Lanier's board of directors prior to the
Distribution. Information concerning directors selected through the date hereof
is set forth below:
<TABLE>
<CAPTION>
TERM POSITION WITH LANIER AND PRINCIPAL
NAME AGE EXPIRES POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ------- -------- --------------------------------------------
<S> <C> <C> <C> <C>
Wesley E. Cantrell............. 64 2002 Chairman of the Chief Executive Officer since March, 1987.
Board and Chief President, Lanier Business Products, 1977 to
Executive Officer 1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
C. Lance Herrin................ 57 2001 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager - U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager - Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
Lanier's board of directors will establish three standing committees to
assist in the discharge of its responsibilities. The principal functions of each
committee are described below.
AUDIT COMMITTEE
The Audit Committee will assist the board of directors in ensuring that
Lanier's financial, auditing and reporting practices, procedures and controls
are within acceptable limits of sound practice and in accordance with applicable
laws and regulations. The Audit Committee will meet periodically with the
independent auditors, together with representatives of management, as
appropriate, for the purpose of reviewing the scope and results of the annual
audit of the financial statements and the recommendations of the auditors. The
Audit Committee will also evaluate the professional competency of the financial
staff and internal auditors, review the scope of the internal audit program,
review the nature and extent of non-audit professional services performed by the
auditors and annually recommend to the board of directors the firm of
independent public accountants to be selected as
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auditors of Lanier. From time to time the Audit Committee may also undertake
special projects, such as reviewing Lanier's environmental policies.
NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee will review and evaluate plans
for the development, training and utilization of Lanier's management resources;
review Lanier's compensation philosophy and will establish the compensation of
officers of Lanier other than the chief executive officer and president, whose
compensation will be recommended by the Nominating and Compensation Committee
and approved by all of the outside directors; and administer Lanier's stock
incentive and stock based compensation plans and other incentive plans. The
Nominating and Compensation Committee will also oversee the financial
administration and operation of Lanier's various retirement and pension plans,
including the selection and review of the performance of the investment funds
and the independent investment advisors for the plans.
The Nominating and Compensation Committee will manage succession at the
executive officer level and identify and promote candidates for and to executive
positions; identify, evaluate and recommend director nominees to the board of
directors to fill vacancies and to be elected at the annual meeting of the
stockholders; recommend directors' compensation and benefit plans to the board
of directors; recommend committees of the board of directors and committee
members; set meeting schedules for the board of directors and recommend meeting
schedules for the committees; and facilitate the board of directors' evaluation
of its effectiveness. The committee will consider suggestions for director
nominees from all sources, including stockholders. Any stockholder suggestion,
together with an appropriate biographical summary, should be sent to the
Secretary of Lanier. In addition, Lanier's bylaws establish certain requirements
concerning stockholder nominations for election of directors, including that
notice of such nominations be delivered to the Secretary of Lanier not less than
90 nor more than 120 days prior to the date of the annual meeting of
stockholders. Each notice of nomination is required to contain the name and
address of the stockholder who intends to make the nomination; the name, address
and written consent of the nominee and such other nominee information as would
be required to be disclosed in a proxy solicitation.
EXECUTIVE COMMITTEE
The Executive Committee will be authorized to evaluate and review Lanier's
financial position, capital structure, significant capital asset transactions,
major acquisitions and divestitures, and during the intervals between the
meetings of the board of directors, to the extent permitted by law, to exercise
all of the powers of the board of directors (except for certain matters reserved
for the board of directors) in the management of the business of Lanier.
DIRECTORS' COMPENSATION
Non-employee directors will receive an annual retainer fee of $30,000. In
addition, non-employee directors who serve on the standing committees will
receive an additional annual fee of $1,500 for their services on each committee,
or $3,000 if serving as chairperson of a committee.
Each non-employee director will also receive $1,000 for attendance at each
board meeting. In addition, each non-employee director will receive $800 for
attendance at each committee meeting and for participation in a telephonic or
video conference meeting. Each non-employee director will also be reimbursed for
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. In addition, each non-employee director will be provided
travel, accident and disability insurance in the event that the director is
involved in an accident while traveling on business relating to Lanier.
Under the Lanier Stock Plan, which will be adopted in connection with the
Distribution, each non-employee director will be granted an option to purchase
10,000 Lanier Shares on the later of the Distribution Date or the date such
director joins Lanier's board of directors and thereafter, beginning in 2000,
will automatically be granted an option to purchase 2,000 Lanier Shares on the
first business day of the month following the month in which the annual meeting
is held. The options will be non-statutory options for tax purposes and will be
priced at 100% of the fair market value on the date of grant. Fifty percent of
the options will become exercisable on the
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first anniversary of the date of grant and 25% on each of the next two
succeeding anniversary dates; however, any options outstanding for more than one
year at the time a Change in Control (as defined in the Lanier Stock Plan) of
Lanier occurs will become immediately exercisable. In the event of a director's
retirement, vested options may be exercised for three years thereafter, and, in
the event of a director's death or disability, options then exercisable may be
exercised for twelve months thereafter. In no event may such options be
exercisable more than ten years after the date of grant. Neither Lanier's board
of directors nor any committee of the board of directors has any discretion with
respect to options granted to non-employee directors.
Under the Lanier Directors Deferred Compensation Plan (the "Directors
Plan"), which will be adopted in connection with the Distribution, each
non-employee director may also elect to defer all or a portion of his or her
fees. A director's account will be credited with a number of units of Lanier
common stock equivalents based upon the fair market value of the Lanier Shares
on the date the fees otherwise would be paid. Once amounts are deferred they are
only payable following a director's resignation, retirement or death. Each
Lanier common stock unit will be credited with dividend equivalents, which are
deemed reinvested in additional Lanier common stock units on the dividend
payment date. Amounts deferred under the Directors Plan will be paid in whole
shares of Lanier common stock and in cash for any factional shares as soon as
practicable following resignation, retirement or death. Within ninety days
following a Change in Control (as defined in the Directors' Plan), Lanier shall
pay to each director (or former director) a cash lump sum payment equal to the
then remaining balance in each such director's account.
In connection with the Distribution, each of the directors and executive
officers (including those named in the Summary Compensation Table below) will
enter into an indemnification agreement with Lanier pursuant to which each
director and executive officer shall be indemnified against expenses (including
attorneys' fees, judgments, fines, and amounts paid in settlement) actually and
reasonably incurred in connection with any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal or administrative or
investigative, to which he or she was, is, or is threatened to be made a party
by reason of being or having been such a director or officer, to the full extent
allowable under Delaware law.
Lanier has adopted a policy that directors retire from the board of
directors effective at the end of the month in which they reach age seventy-two.
In addition, a director is expected to automatically tender his or her
resignation in the event of retirement or other significant change in status
from the positions held at the time of election to the board of directors,
although the board of directors may opt to have such director continue to serve
on the board of directors.
EXECUTIVE OFFICERS
Listed below is certain information concerning individuals who are expected
to serve as executive officers of Lanier following the Distribution. These
individuals are currently responsible for the management of Lanier's business as
conducted in its capacity as a subsidiary of Harris.
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
Wesley E. Cantrell.......... 64 Chairman of the Board and Chief Executive Officer since March, 1987.
Chief Executive Officer President, Lanier Business Products, 1977 to
1987. Executive Vice President and National
Sales Manager, 1972 to 1977. Vice President,
1966 to 1972. Employed by Lanier since 1955.
Member of the board of directors of Ann
Taylor Stores Corp., Environmental Design
International Ltd. and Impact Ministries, a
not-for-profit organization, and member of
the advisory board of First Union National
Bank of Atlanta.
</TABLE>
47
<PAGE> 61
<TABLE>
<CAPTION>
POSITION WITH LANIER AND PRINCIPAL
NAME AGE CURRENT POSITION BUSINESS AFFILIATIONS DURING PAST FIVE YEARS
---- --- ---------------- --------------------------------------------
<S> <C> <C> <C>
C. Lance Herrin............. 57 President and Chief Chief Operating Officer since July, 1998.
Operating Officer Executive Vice President and General
Manager -- U.S. Operations, 1993 to 1998.
Executive Vice President and General
Manager -- Imaging Systems Division, 1987 to
1993. Executive Vice President, Lanier
Business Products, 1982 to 1987. Senior Vice
President, 1981 to 1982. Vice President,
1977 to 1981. Employed by Lanier since 1967.
James A. MacLennan.......... 39 Executive Vice President, Executive Vice President and Chief Financial
Chief Financial Officer Officer since November, 1998. Vice
President, Finance, 1997 to 1998. Vice
President Accounting, Noble Drilling Corp.,
1995 to 1997. Director-Risk/Audit, Noble
Drilling Corp., 1993 to 1995. Financial
Reporting Manager, Esso Australia, Ltd.,
1990 to 1993. Affiliate Advisor, Exxon Co.,
Intl., 1987 to 1990. Financial Analyst, Esso
UK, 1985 to 1987.
David J. Marini............. 45 Executive Vice President and General Manager, Worldwide Field Operations,
General Manager, Worldwide since July, 1998. Executive Vice President
Field Operations since 1991. Vice President, Scientific
Calculations Division of Harris Corporation,
1983 to 1991.
Paul M. Anderson............ 50 Vice President-Worldwide Vice President, Worldwide Marketing since
Marketing July, 1998. Vice President since 1989.
Employed by Lanier since 1972.
Vera M. Arthur.............. 43 Vice President-Human Vice President, Human Resources since April,
Resources 1999. Vice President, Marketing, 1993 to
1999. Various management positions, 1986 to
1993. International Marketing Services
Manager, Sangamo Weston, 1984 to 1986.
Export Operations Manager, Lanier Business
Products, 1979 to 1984.
Brian R. Bergin............. 52 Vice President-Worldwide Vice President, Worldwide Sourcing and
Sourcing and Development Development since November, 1998. Vice
President since 1992. Employed by Lanier
since 1976.
J. Michael Kelly............ 52 Vice President, General Corporate Secretary since January, 1999,
Counsel and Secretary Vice President since 1989. General Counsel
since 1987. Counsel, Harris Corporation,
1980 to 1987.
Timothy A. Vellek........... 43 Vice President-Worldwide Vice President, Worldwide Service since
Service August, 1998. Vice President since 1991.
Employed by Lanier since 1978.
</TABLE>
There is no family relationship between any of Lanier's executive officers
or directors and there are no arrangements or understandings between any of
Lanier's executive officers or directors and any other person pursuant to which
any of them was elected an officer or director, other than arrangements or
understandings with directors or officers of Lanier acting solely in their
capacities as such. Generally, following the Distribution, Lanier's executive
officers will be elected annually and will serve at the pleasure of Lanier's
board of directors.
48
<PAGE> 62
Lanier has established suggested stock ownership guidelines for its
Chairman and Chief Executive Officer, President and Chief Operating Officer and
certain vice presidents. Target ownership levels are based on the officer's base
salary (three times base salary for the Chairman and Chief Executive Officer,
two and one half times base salary for the President and Chief Operating
Officer, two times base salary for executive vice presidents and up to one times
base salary for certain vice presidents). Attainment of the target levels may be
spread over a five year period and the suggested ownership level is 25% of
target after two years and an additional 25% each year thereafter. All shares
owned (or beneficially owned) by the officer will be counted towards the target,
including, for example, shares owned for the officer's account under a qualified
retirement plan.
HISTORICAL COMPENSATION OF LANIER EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
annual and long-term compensation for services to Lanier for Lanier's chief
executive officer and the other four most highly compensated executives of
Lanier. During the fiscal years ended July 3, 1998, June 27, 1997 and June 30,
1996, the individuals were compensated in accordance with Harris' plans and
policies. All references in the following tables to stock and stock options
relate to awards of stock and stock options granted by Harris. Harris has not
granted stock appreciation rights. Such amounts do not reflect the compensation
such persons will receive following the Distribution. All share data have been
adjusted to reflect a two-for-one stock split effected by Harris in September
1997. Harris options held by Lanier employees will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio, and the option price of each Lanier Option will be
determined by dividing the price of each Harris option by the Lanier Option
Adjustment Ratio.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
AWARDS PAYOUT
---------- ------------
ANNUAL COMPENSATION UNDERLYING
-------------------------------------- OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SARS PAYOUT(2)(3) COMPENSATION(4)
POSITION YEAR SALARY($) BONUS($) COMPENSATION(1) (#) ($) ($)
------------------ ------ --------- -------- --------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell....... 1998 312,115 352,501 26,400 25,986 407,100 26,386
Chairman and 1997 300,000 403,100 15,200 25,988 302,500 25,411
Chief Executive Officer 1996 297,462 372,960 6,800 30,406 225,000 9,414
C. Lance Herrin.......... 1998 218,077 255,585 10,560 8,000 159,300 20,046
President and Chief 1997 206,154 292,320 6,080 8,000 176,000 7,677
Operating Officer 1996 187,115 291,760 2,720 8,000 135,000 6,978
James A. MacLennan(5).... 1998 152,462 48,921 0 0 0 1,968
Executive Vice
President 1997 43,269 12,499 0 0 0 132
Chief Financial Officer 1996 -- -- -- -- -- --
David J. Marini.......... 1998 169,038 181,070 7,920 13,658 119,475 11,538
Executive Vice
President 1997 161,539 174,825 4,560 11,040 137,500 3,451
and General Manager, 1996 158,077 150,840 2,040 8,104 108,000 4,009
Worldwide Field
Operations
Paul M. Anderson......... 1998 88,654 122,283 2,640 2,000 39,825 7,443
Vice President -- 1997 81,200 123,468 1,520 2,000 63,800 4,141
Worldwide Marketing 1996 76,904 118,090 680 2,000 52,200 3,859
</TABLE>
- ---------------
(1) None of the executive officers named in the Summary Compensation Table
received personal benefits in excess of the lesser of $50,000 or 10% of
annual salary and bonus for fiscal 1998, 1997, or 1996; the amounts reported
represent dividend equivalent payments on outstanding performance shares
granted under the Harris Stock Incentive Plan for which the performance
period had not expired.
49
<PAGE> 63
(2) The value of the performance shares earned for the three year performance
period ended July 3, 1998 (Mr. Cantrell -- 9,200 shares; Mr. Herrin -- 3,600
shares; Mr. Marini -- 2,700 shares; and Mr. Anderson -- 900 shares is based
upon the closing price of Harris common stock on July 2, 1998 (the last
trading day of fiscal year 1998).
(3) Payouts for fiscal 1997 and 1996 were made pursuant to grants under the
Lanier Long Term Incentive Plan for key employees. The payments reflected in
the table for fiscal years 1997 and 1996 are for performance during the
three-year performance periods ended June 27, 1997 and June 30, 1996,
respectively.
(4) Amounts reported include:
(i) Contributions to the Lanier Savings Incentive Plan for fiscal year
1998; Mr. Cantrell -- $5,935, Mr. Herrin -- $7,415, Mr. MacLennan -- $847,
Mr. Marini -- $6,403, and Mr. Anderson -- $6,034; for fiscal year 1997; Mr.
Cantrell -- $4,500, Mr. Herrin -- $4,500, Mr. MacLennan -- $132, Mr.
Marini -- $2,729 and Mr. Anderson -- $3,247, for fiscal year 1996; Mr.
Cantrell -- $4,500, Mr. Herrin -- $4,945, Mr. Marini -- $3,287, and Mr.
Anderson -- $2,859.
(ii) Contributions to the Lanier Supplemental Executive Retirement
Savings Plan for fiscal year 1998: Mr. Cantrell -- $15,537, Mr.
Herrin -- $7,681, Mr. MacLennan -- $920, Mr. Marini -- $4,398, and Mr.
Anderson -- $363.
(iii) The taxable portion of premiums on life insurance provided for
fiscal year 1998: Mr. Cantrell -- $4,914, Mr. Herrin -- $4,950, Mr.
MacLennan -- $201, Mr. Marini -- $737, and Mr. Anderson -- $1,046; for
fiscal year 1997: Mr. Cantrell -- $4,914, Mr. Herrin -- $3,177, and Mr.
Anderson -- $894; for fiscal year 1996: Mr. Cantrell -- $4,914, Mr.
Herrin -- $2,033, and Mr. Anderson -- $1,000.
(5) Mr. MacLennan commenced employment with Lanier in March 1997; the amounts
reported for fiscal year 1997 reflect less than a full year of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Shown below is additional information on grants of stock options made under
the Harris Stock Incentive Plan during Harris' fiscal year 1998. The amounts
shown for potential realizable values are based upon assumed annualized rates of
Harris stock price appreciation of five percent and ten percent over the full
ten year term (or shorter term) of the options, as required by the Commission,
and are not intended to represent or forecast possible future appreciation, if
any, of the price of Harris common stock.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell... 20,000 2.73 43.188 8/22/07 543,208 1,376,595
5,986 0.82 45.375 8/26/99 21,974 44,580
C. Lance Herrin...... 8,000 1.09 43.188 8/22/07 217,283 550,538
James A. MacLennan... 0 0 -- -- 0 0
</TABLE>
50
<PAGE> 64
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
David J. Marini...... 6,000 0.82 43.188 8/22/07 162,962 412,979
246 0.03 48.250 8/26/04 4,781 11,122
2,722 0.37 48.250 8/25/05 62,060 148,363
768 0.10 45.313 8/26/99 2,780 5,638
649 0.09 45.313 8/28/02 7,365 16,099
2,026 0.28 45.313 8/23/06 47,637 115,915
60 0.01 52.938 8/24/00 400 828
435 0.06 52.938 8/23/01 4,191 8,897
752 0.10 52.938 8/27/03 12,097 27,039
Paul M. Anderson..... 2,000 0.27 43.188 8/22/07 54,321 137,660
</TABLE>
- ---------------
(1) All stock option grants were made under the Harris Stock Incentive Plan. The
term of each stock option is generally ten years and is exercisable in
installments of 50% after one year, 75% after two years, and 100% after
three years. The exercise price is the closing price of a share of Harris
common stock on the date of the grant. The exercise price may be paid in
cash and/or shares of Harris common stock, or "cashless exercise" procedures
may be used. If shares of Harris common stock are delivered in payment of
the exercise price, a Restoration Stock Option ("RSO") is granted equal to
the number of shares used to exercise the stock option. The expiration date
of these options is the same as the expiration date of the underlying
options. RSO grants are non-qualified, and are exercisable commencing six
months after the date of grant at the market value on the grant date. Other
than the first listed option grant for each named executive, the options
listed under their names represent RSO grants. In the event of a change of
control, outstanding options become immediately exercisable.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Shown below is information with respect to the number of Harris shares
acquired upon exercise of stock options and the aggregate gains realized on
exercises during fiscal year 1998 for those executive officers of Lanier named
in the Summary Compensation Table. The table also sets forth the number of
shares covered by exercisable and unexercisable options held by such executives
on July 3, 1998 and the aggregate gains that would have been realized had these
options been exercised on July 3, 1998, even though these options were not
exercised, and the unexercisable options could not have been exercised on July
3, 1998. These options were granted under the Harris Stock Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
HARRIS SHARES VALUE FISCAL YEAR-END (#) FISCAL YEAR-END(2)($)
ACQUIRED ON REALIZED(1) --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wesley E. Cantrell.... 16,000 465,500 81,084 40,986 1,511,880 231,563
C. Lance Herrin....... 0 0 22,000 14,000 473,560 92,625
James A. MacLennan.... 0 0 0 0 0 0
David J. Marini....... 12,178 217,769 5,934 15,190 9,825 69,469
Paul M. Anderson...... 0 0 2,500 3,500 35,969 23,156
</TABLE>
51
<PAGE> 65
- ---------------
(1) Market value on the date of exercise of Harris shares covered by exercised
options, less option exercise price.
(2) Market value of Harris shares underlying in-the-money options on July 3,
1998, less option exercise price. The market value is based on the July 2,
1998 closing price of $44.25 per share of the Harris common stock reported
as New York Exchange Composite Transactions.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Shown below is information with respect to awards of performance shares
granted under the Harris Stock Incentive Plan during Harris fiscal year 1998 to
those Lanier executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
OTHER PERIOD ------------------------------------------
UNTIL THRESHOLD MAXIMUM
NUMBER OF MATURATION HARRIS TARGET HARRIS
NAME HARRIS SHARES OR PAYOUT SHARES(#) HARRIS SHARES(#) SHARES(#)
---- ------------- -------------- --------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Wesley E. Cantrell......... 10,000 6/30/00 0 10,000 20,000
C. Lance Herrin............ 4,000 6/30/00 0 4,000 8,000
James A. MacLennan......... 0 -- 0 0 0
David J. Marini............ 3,000 6/30/00 0 3,000 6,000
Paul M. Anderson........... 1,000 6/30/00 0 1,000 2,000
</TABLE>
Awards of performance shares under the Harris Stock Incentive Plan to
participants are made at the beginning of each performance period and are earned
based on the performance of Lanier, Harris or some combination thereof. The
Harris Stock Incentive Plan is designed to motivate key employees to maximize
stockholder value by aligning their interests with stockholder interests. For
Lanier executives the payout is determined by the Management Development and
Compensation Committee of Harris' board of directors based upon financial
performance compared with strategic plan objectives. Performance criteria
include Lanier's net income and return on capital during the three-year
strategic plan cycle. Share payouts are made following the determination of the
committee and range from zero to a maximum of 200% of the original shares
awarded. Participants receive quarterly cash payments on the performance share
awards in an amount equal to dividends paid to stockholders on the Harris
shares.
LANIER DEFINED BENEFIT RETIREMENT PLANS
Lanier's domestic defined benefit retirement program consists of (i) a
tax-qualified, funded pension plan, the Lanier Pension Equity Plan (the "PEP"),
which is available to substantially all of the United States employees of Lanier
and its participating subsidiaries and affiliated companies, and (ii) for
executive officers and other key employees, one non-qualified, unfunded Lanier
Supplemental Executive Retirement Plan (the "SERP") that provides benefits
which, but for certain limits imposed by the Internal Revenue Code on
tax-qualified plans, would be provided under the PEP. The PEP is a defined
benefit plan. The PEP and the SERP are fully paid by Lanier, and employees
become vested upon the completion of five years of service.
In July 1997, the PEP was amended to provide for a lump-sum retirement
benefit calculated by reference to a formula based upon final average pay, age
and years of service. However, if the determination of benefits payable to
individuals currently eligible for retirement or nearing retirement under the
revised PEP, including Mr. Cantrell and Mr. Herrin, would result in a reduction
of future benefit accruals under the PEP as in effect prior to the July 1997
amendment, the benefits payable to such a person would be as calculated under
the PEP without giving effect to the July 1997 amendment. Such employees will
receive annual pension benefits determined by adding (a) 1.22% of the average of
the employee's five highest consecutive years' compensation in the last ten
calendar years before retirement ("five-year average compensation") multiplied
by the lesser of the employee's years of service or 30 and (b) 0.33% of that
part of the employee's five-year average compensation in excess of a certain
amount, multiplied by the lesser of the employee's years of service or 30 (the
"Pre-July 1997 Formula"). Benefits are computed as a straight life annuity, but
may be converted to a lump sum or other form.
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<PAGE> 66
The pension benefits for Mr. MacLennan, Mr. Marini and Mr. Anderson under
the PEP is based on the July 1997 amendment and is stated as a lump sum benefit.
The formula for the lump sum benefit is the product of the employee's PEP
credits times the employee's five-year average compensation plus 50% of the
five-year average compensation in excess of a certain amount. PEP credits are
awarded for age and service performed on or after July 1, 1997 and for the
frozen accrued benefit calculated under Pre-July 1997 Formula described above
determined as of June 30, 1997. Benefits are computed as a lump sum but may be
converted to a straight life annuity or other form.
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. Cantrell and Mr. Herrin calculating annual benefits under
the terms of the PEP (as in effect prior to the July 1997 amendment) and the
SERP payable at age 65 or older.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
HIGHEST CONSECUTIVE FOR CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 56,600 $ 75,400 $ 94,300 $113,200
500,000...................................... 114,700 152,900 191,200 229,400
750,000...................................... 172,800 230,400 288,100 345,700
1,000,000...................................... 231,000 307,900 384,900 461,900
1,250,000...................................... 289,100 385,400 481,800 578,200
</TABLE>
The following table sets forth the estimated annual benefits under the PEP
and the SERP for Mr. MacLennan, Mr. Marini and Mr. Anderson, calculating
benefits under the terms of the PEP (as in effect after the July 1997 amendment)
and the SERP payable at age 65 or older:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
HIGHEST CONSECUTIVE CREDITED YEARS OF SERVICE
5-YEAR AVERAGE --------------------------------------------
COMPENSATION 15 20 25 30
------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 250,000...................................... $ 51,260 $ 60,580 $ 69,900 $ 76,114
500,000...................................... 104,884 123,954 143,024 155,737
750,000...................................... 158,508 187,328 216,148 235,361
1,000,000...................................... 212,132 250,702 289,271 314,984
1,250,000...................................... 265,756 314,075 362,395 394,608
</TABLE>
Executives have estimated credited years of service under the PEP and the
SERP as follows:
Wesley E. Cantrell -- 30 years
C. Lance Herrin, Jr. -- 28 years
James A. MacLennan -- 2 years
David J. Marini -- 7 years
Paul M. Anderson -- 29 years
Executives have estimated five-year average compensation under the PEP and
the SERP as follows:
<TABLE>
<S> <C>
Wesley E. Cantrell.......................................... $880,962
C. Lance Herrin............................................. $509,811
James A. MacLennan.......................................... $207,817
David J. Marini............................................. $391,592
Paul M. Anderson............................................ $208,048
</TABLE>
Compensation as in effect prior to the July 1997 amendment consists of base
salary, bonuses and sales commissions and, for periods prior to 1998, income
recognized upon the exercise of Harris stock options. Compensation as in effect
after the July 1997 amendment consists of gross income, including salary,
bonuses, sales commissions, vacation pay, compensation received while on an
authorized leave of absence, and short-term disability payments, but excluding
severance pay, payments made in consideration of a release of employment
53
<PAGE> 67
with Lanier, payments attributable to domestic or foreign assignment
differential, any contest payments, any expense-related reimbursement, and
payments made under any long-term incentive plan, including income for the
exercise of stock options or the value of life insurance includible in the
participant's gross income. For periods prior to 1998, income recognized upon
the exercise of Harris stock options is included. Base salary includes certain
deferred amounts.
Benefits under the PEP and the SERP are not subject to any deduction for
Social Security or other offset amounts.
LONG-TERM COMPENSATION
Equity-based incentive compensation for Lanier executives will be provided
under the Lanier Stock Plan, which will be adopted by Harris as the sole
stockholder of Lanier prior to the Distribution. The Lanier Stock Plan will
permit the granting of (1) stock based on performance criteria, (2) restricted
stock, (3) stock options, including incentive stock options, (4) stock
appreciation rights (freestanding or in tandem with stock options) and (5) other
awards valued by reference to, or otherwise based on, Lanier Share Awards
granted pursuant to the Lanier Stock Plan, as determined and approved by a
committee comprising of at least two non-employee directors (the "Committee").
Incentives will be awarded in the form of stock options, which provide
value to the executives only when the price of Lanier Shares increases above the
option grant price. Options may vest based on established performance criteria.
In connection with the Distribution, stock options granted to Lanier
employees under the Harris Stock Incentive Plan will be replaced by Lanier
Options. The option price and number of shares subject to each Lanier Option
will be adjusted so that the aggregate difference between the market price and
the option price will be equal for the Harris Options and the Lanier Options.
The number of Lanier Shares subject to each Lanier Option will be determined by
multiplying the number of shares subject to each Harris Option by the Lanier
Option Adjustment Ratio and the option price of each Lanier Option will be
determined by dividing the price of each Harris Option by the Lanier Option
Adjustment Ratio.
Incentives may also be awarded in the form of performance share awards. The
Lanier Stock Plan will provide for the Committee to determine the applicable
performance goals utilizing one or more of the performance criteria set forth in
the Lanier Stock Plan, Lanier's strategic planning process and a period of time
(generally, three fiscal years) during which Lanier's performance is to be
measured. The Committee then will assign to each participant a number of
performance shares and establish a mechanism for computing the number of
performance shares that can be earned during the period based on Lanier's
performance. If the performance goals are satisfied the participant will receive
a number of Lanier Shares equal to the number of performance shares.
In connection with the Distribution, performance share awards granted to
Lanier employees under the Harris Stock Incentive Plan will be canceled and
replacement performance shares will be awarded under the Lanier Stock Plan by
multiplying the number of performance shares by the Lanier Option Adjustment
Ratio.
Cash-based long-term incentive compensation for Lanier executives will be
provided under the Lanier Long-Term Incentive Plan (the "LTIP") which is
currently in effect. The LTIP will permit the granting of cash awards based on
performance criteria. Awards granted pursuant to the LTIP will be determined and
approved by the Committee.
The LTIP will provide for the Committee to determine the applicable
performance criteria utilizing Lanier's strategic planning process and a period
of time (generally, three fiscal years) during which Lanier's performance is to
be measured. The Committee then will assign to each participant a cash award
target and establish a mechanism for computing the amount of the cash award that
can be earned during the period based on Lanier's performance.
The maximum amount that may be awarded to a participant each year is 200%
of such target award based on the degree of achievement of the performance
goals. The maximum incentive award payable to any executive
54
<PAGE> 68
officer in any year will be $2,000,000. Upon the occurrence of a Change in
Control (as defined in the LTIP), Lanier will pay an amount equal to the target
award for the performance period. An employee may elect to defer all or a
portion of any award until normal retirement age. Interest will be paid on the
amount deferred based on the average long-term treasury bill rate. Deferred
awards are payable in a lump sum or installments as elected by the employee.
Stock options and performance share awards made under the Lanier Stock Plan or
cash awards paid under the LTIP are intended to satisfy the exemption for
performance-based compensation under Section 162(m) of the Internal Revenue
Code.
LANIER DEFINED CONTRIBUTION RETIREMENT PLANS
Lanier's defined contribution retirement program consists of (i) a
tax-qualified funded defined contribution plan, the Lanier Savings Incentive
Plan (the "SIP"), which is available to substantially all of the United States
employees of Lanier and its participating subsidiaries and affiliated companies
and (ii) for executive officers and other key employees the non-qualified
unfunded Lanier Supplemental Executive Retirement Savings Plan (the "SIP SERP")
that provides benefits, which, but for certain limits imposed by the Internal
Revenue Code on tax-qualified plans, would be provided under the SIP. The SIP
will be funded by employee contributions and matching contributions (with
certain limitations) by Lanier, which may be made in cash or Lanier common
stock. An employee's interest in Lanier's contributions will vest based on the
employee's years of service and a five-year vesting schedule.
Benefits payable to an employee upon retirement will be based on the
contributions made by the employee, the contributions made by Lanier, if any,
and the performance of the employee's chosen investments. Therefore, Lanier
cannot estimate the annual benefits which will be payable to participate in the
SIP and the SIP SERP upon retirement at normal retirement age.
KEY CONTRIBUTOR PLAN
Lanier's Key Contributor Plan (the "Key Contributor Plan"), which is
currently in effect, links a portion of total compensation for certain key
employees to the attainment of corporate financial objectives as approved by the
Committee. Under the Key Contributor Plan, a target annual incentive award is
established for each participant with quarterly targets. The maximum incentive
amount that may be awarded to a participant each year is 120% of such target
award based on the degree of achievement of pre-established performance goals,
which may include any combination of the following: Lanier's revenue, earnings
per share of common stock, net income, return on equity, return on capital,
return on assets or total shareholder return or cash flow. The maximum annual
incentive award payable to any executive officer of Lanier is $2,000,000. The
awards are paid quarterly dependent upon attainment of quarterly performance
targets or the annual performance targets. Upon the occurrence of a Change in
Control (as defined in the Key Contributor Plan), Lanier will pay any annual
incentive awards to participants as soon as practicable in an amount not less
than the target annual incentive award as approved for the fiscal year. It is
intended that the incentive awards satisfy the exemption for performance-based
compensation under Section 162(m) of the Internal Revenue Code.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
In connection with the Distribution, the executive officers of Lanier will
enter into Executive Severance Agreements ("Severance Agreement") which will
provide certain officers of Lanier with severance benefits in the event the
officer's employment is terminated by Lanier without Cause or by the executive
for Good Reason within two years following a Change in Control (all terms as
defined in the Severance Agreement). Under the Severance Agreement, the
executive agrees not to voluntarily terminate his or her employment with Lanier
during the six-month period following a Change in Control. The lump sum
severance benefit payable under the Severance Agreement equals the sum of (a)
the executive's unpaid base salary through date of termination, a pro rata
annual bonus (as determined under the Severance Agreement) and any compensation
deferred by the executive other than under a tax-qualified plan; and (b) from
one to three times the executive's highest annual rate of base salary during the
12-month period prior to the date of termination and from one to three times the
greater of the executive's highest annual bonus in the last three years, the
executive's target bonus for the year during which the Change in Control
occurred, or the executive's target bonus for the year in which the executive's
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employment is terminated. In addition, the executive receives the same level of
medical, dental, accident, disability, life insurance and any similar benefits
(or the highest level of coverage provided to active executives, if more
favorable) or the cash equivalent to the value of such benefits if the executive
is prevented from participating in the plans for a period of two years following
termination. The executive also receives reimbursement for any relocation
expense related to pursuit of other business opportunities incurred within two
years following the date of termination, for recruitment or placement services
of up to $4,000 and for professional financial or tax planning services of up to
$5,000. The Severance Agreement also provides for a tax gross-up payment to the
executive in the event that payment of any severance benefits are subject to
excise tax imposed under Section 4999 of the Internal Revenue Code. In addition,
Lanier shall reimburse the executive for any legal fees and costs with respect
to any dispute arising under the Severance Agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris. After the Distribution,
Harris will retain approximately 10% of the outstanding Lanier Shares. The
following table sets forth each person or entity, other than Harris, that is
expected to own beneficially more than 5% of the Lanier Shares outstanding
immediately following the Distribution, based on the ownership of Harris common
stock as known to Lanier.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
------------------- -------------------- -----------
<S> <C> <C>
The Prudential Insurance Company of America............. 7,965,692(2) 9.0%
751 Broad Street
Newark, New Jersey 07102-3777
J.P. Morgan & Co. Incorporated.......................... 4,971,371(3) 5.6%
60 Wall Street
New York, NY 10260
</TABLE>
- ---------------
(1) Based on the number of Lanier Shares expected to be outstanding on the
Distribution Date.
(2) The information is based on a Schedule 13G with respect to Harris common
stock filed by The Prudential Insurance Company of America ("Prudential")
with the Commission on February 22, 1999 in which Prudential states that it
has sole dispositive and voting power with respect to 1,095,000 of the
Harris shares, shared dispositive power with respect to 6,867,693 of the
Harris shares and shares voting power with respect to 6,843,035 of the
Harris shares.
(3) The information is based on a Schedule 13G with respect to Harris common
stock filed by J.P. Morgan & Co. Incorporated ("J.P. Morgan") with the
Commission on May 7, 1999 in which J.P. Morgan states that it has sole
dispositive power with respect to 4,717,071 of the Harris shares, sole
voting power with respect to 3,509,011 of the Harris shares, shared
dispositive power with respect to 209,700 of the Harris shares and shared
voting power with respect to 99,300 of the Harris shares.
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<PAGE> 70
BENEFICIAL OWNERSHIP OF MANAGEMENT
All of the outstanding Lanier Shares are, and prior to the Distribution
will be, held beneficially and of record by Harris and no director or executive
of Lanier owns any Lanier Shares. The following table sets forth information
concerning the Lanier Shares that are projected to be beneficially owned after
the Distribution by each of the directors and each of the executive officers
named in the Summary Compensation Table and by all directors and executive
officers as a group. The projections are based on the number of Harris shares
held by such persons as of June 18, 1999 and reflect the Distribution Ratio of
one Lanier Share for every share of common stock of Harris held on the Record
Date.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
SHARES DEFERRED EXERCISABLE
BENEFICIALLY STOCK WITHIN PERCENT
NAME OF BENEFICIAL OWNER OWNED(1)(2) UNITS(3) 60 DAYS(4) OF CLASS(5)
------------------------ ------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Wesley E. Cantrell..................... 74,692 445 22,500 *
C. Lance Herrin........................ 16,052 195 9,000 *
James A. MacLennan..................... 114 93 0 *
David J. Marini........................ 20,185 0 7,000 *
Paul M. Anderson....................... 2,942 76 2,650 *
All executive officers and directors
as a group (9 persons)............... 119,311 831 46,450 *
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, and subject to community property laws where
applicable, Lanier believes that each of the persons named in the table has
sole voting and investment power with respect to the Lanier Shares indicated
as beneficially owned. The information is based on information supplied by
the directors and executive officers.
(2) The Lanier Shares reported include performance shares expected to be awarded
under Lanier's Stock Plan to be adopted in connection with the Distribution,
as discussed above under "Long-Term Compensation," and assumes a Lanier
Option Adjustment Ratio of 1:1. Under the Lanier's Stock Plan, the named
individuals would have sole voting power but no investment power, as
follows: Mr. Cantrell -- 25,000; Mr. Herrin -- 10,000; Mr. Marini -- 7,500;
and Mr. Anderson -- 2,000.
(3) The Lanier Shares reported are amounts deferred in the form of stock
equivalent units under the Lanier Supplemental Executive Retirement Savings
Plan discussed above under "Lanier Defined Contribution Retirement Plans"
which are settled in cash following, or under certain circumstances prior
to, retirement. These deferred stock equivalent units may not be voted or
transferred.
(4) The Lanier Shares reported relate to Lanier Options expected to be awarded
under Lanier's Stock Plan, as discussed above under "Long-Term
Compensation," and assumes a Lanier Option Adjustment Ratio of 1:1. The
Lanier Shares reported can be acquired through exercise of such Lanier
Options on or prior to September 1, 1999.
(5) Based on the number of Lanier Shares expected to be outstanding on the
Distribution Date.
DESCRIPTION OF LANIER'S CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under Lanier's restated certificate of incorporation, the total number of
shares of all classes of stock that Lanier has authority to issue is
525,000,000, of which 25,000,000 are shares of preferred stock, without par
value, and 500,000,000 are shares of common stock, par value $0.01 per share.
Based on the number of Harris shares outstanding at -, 1999, - Lanier Shares,
constituting approximately 90% of the Lanier Shares outstanding as of the
Distribution Date, will be issued to stockholders of Harris. Harris will retain
- - Lanier Shares, or approximately 10% of the outstanding Lanier Shares. All of
the Lanier Shares to be distributed to Harris stockholders in the Distribution
will be fully paid and non-assessable. - Lanier Shares have been reserved for
issuance under Lanier's Stock Plan. No shares of preferred stock have been
issued, although shares of preferred stock have been reserved for issuance under
the Rights Agreement (as defined below).
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<PAGE> 71
The following summary of certain terms of Lanier's capital stock describes
material provisions of, but does not purport to be complete and is subject to,
and qualified in its entirety by, Lanier's restated certificate of incorporation
and Lanier's bylaws, the forms of which are included as exhibits to the
Registration Statement, and by applicable provisions of law.
COMMON STOCK
The holders of the Lanier Shares will be entitled to one vote for each
share on all matters voted on by stockholders, and the holders of such shares
will possess all voting power, except as otherwise required by law or provided
in any resolution adopted by Lanier's board of directors with respect to any
series of preferred stock of Lanier. There are no cumulative voting rights.
Accordingly, the holders of a majority of the Lanier Shares voting for the
election of directors can elect all of the directors, if they choose to do so,
subject to any rights of the holders of preferred stock to elect directors.
Subject to any preferential or other rights of any outstanding series of
preferred stock of Lanier that may be designated by Lanier's board of directors,
the holders of the Lanier Shares will be entitled to such dividends as may be
declared from time to time by Lanier's board of directors from funds available
therefor, and upon liquidation will be entitled to receive pro rata all assets
of Lanier available for distribution to such holders. See "Risk
Factors -- Uncertainty of Dividends" on page 11 and "Dividend Policies" on page
23.
PREFERRED STOCK
Lanier's board of directors is authorized without further stockholder
approval (except as may be required by applicable law or New York Stock Exchange
regulations) to provide for the issuance of shares of preferred stock, in one or
more series, and to fix for each such series such voting powers, designations,
preferences and relative, participating, optional and other special rights, and
such qualifications, limitations or restrictions, as are stated in the
resolution adopted by Lanier's board of directors providing for the issuance of
such series and as are permitted by the Delaware General Corporation Law. See
"Certain Anti-Takeover Provisions of Lanier's Certificate of Incorporation,
Bylaws and Rights Agreement and Delaware Law -- Preferred Stock" beginning on
page 60. Should Lanier's board of directors elect to exercise this authority,
the rights and privileges of holders of the Lanier Shares could be made subject
to the rights and privileges of any such series of preferred stock. Presently,
Lanier has no plans to issue any preferred stock, except that Lanier's
Stockholder Protection Rights Agreement (the "Rights Agreement") provides for
the issuance of shares of participating preferred stock under the circumstances
specified in the Rights Agreement, upon exercise or exchange of rights (the
"Rights") issued thereunder. See "Certain Anti-Takeover Provisions of Lanier's
Certificate of Incorporation, Bylaws and Rights Agreement and Delaware
Law -- Stockholder Protection Rights Agreement" beginning on page 61.
NO PREEMPTIVE RIGHTS
No holder of any stock of Lanier of any class authorized at the
Distribution Date will have any preemptive right to subscribe to any securities
of Lanier of any kind or class.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for Lanier immediately following the
Distribution will be ChaseMellon Shareholder Services, L.L.C.
CERTAIN ANTI-TAKEOVER PROVISIONS
OF LANIER'S CERTIFICATE OF INCORPORATION, BYLAWS AND
RIGHTS AGREEMENT AND DELAWARE LAW
GENERAL
Lanier's restated certificate of incorporation, Lanier's bylaws, the Rights
Agreement and the Delaware General Corporation Law contain certain provisions
that could delay or make more difficult an acquisition of control of Lanier not
approved by Lanier's board of directors, whether by means of a tender offer,
open market
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purchases, a proxy contest or otherwise. These provisions have been implemented
to enable Lanier, particularly (but not exclusively) in the initial years of its
existence as an independent, publicly owned company, to develop its business in
a manner which will foster its long-term growth without disruption caused by the
threat of a takeover not deemed by Lanier's board of directors to be in the best
interests of Lanier and its stockholders. See also "-- Stockholder Protection
Rights Agreement" beginning on page 61. These provisions could have the effect
of discouraging third parties from making proposals involving an acquisition or
change of control of Lanier, although such a proposal, if made, might be
considered desirable by a majority of Lanier's stockholders. These provisions
may also have the effect of making it more difficult for third parties to cause
the replacement of the current management of Lanier without the concurrence of
Lanier's board of directors. In addition, certain provisions of the Tax
Disaffiliation Agreement to be entered into by Harris and Lanier may also have
the effect of discouraging third parties from making proposals involving an
acquisition or change of control of Lanier prior to the second anniversary of
the Distribution Date. See "Relationship Between Harris and Lanier Following the
Distribution -- Tax Disaffiliation Agreement" beginning on page 20. Set forth
below is a description of the provisions contained in Lanier's restated
certificate of incorporation and bylaws, the Rights Agreement and the Delaware
General Corporation law that could impede or delay an acquisition of control of
Lanier that Lanier's board of directors has not approved. This description is
intended as a summary only and is qualified in its entirety by reference to
Lanier's restated certificate of incorporation, Lanier's bylaws and the Rights
Agreement, the forms of which are included as exhibits to the Registration
Statement, as well as the Delaware General Corporation law.
CLASSIFIED BOARD OF DIRECTORS
Lanier's restated certificate of incorporation provides for Lanier's board
of directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of Lanier's board of
directors will be elected each year. The first class of directors will initially
serve a one-year term, and the second class of directors will initially serve a
two-year term. Thereafter, each class of directors will be elected for a
three-year term. See "Lanier's Management -- Board of Directors" beginning on
page 45.
This provision could prevent a party who acquires control of a majority of
the outstanding voting stock from obtaining control of Lanier's board of
directors until the second annual stockholders meeting following the date on
which the acquiror obtains the controlling stock interest and could have the
effect of discouraging a potential acquiror from making a tender offer or
otherwise attempting to obtain control of Lanier and could thus increase the
likelihood that incumbent directors will retain their positions.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
Lanier's restated certificate of incorporation and bylaws provide that the
number of directors shall be fixed only by resolution at Lanier's board of
directors from time to time. Lanier's restated certificate of incorporation
provides that the directors may be removed by stockholders only both for cause
and by the affirmative vote of at least 80% of the shares entitled to vote.
Lanier's restated certificate of incorporation and bylaws provide that
vacancies on the board of directors may be filled only by a majority vote of the
remaining directors or by the sole remaining director.
STOCKHOLDER ACTION
Lanier's restated certificate of incorporation provides that stockholder
action may be taken only at an annual or special meeting of stockholders and
that stockholders may not act by written consent. Lanier's restated certificate
of incorporation and bylaws provide that special meetings of stockholders may be
called only by Lanier's board of directors. Stockholders are not permitted to
call a special meeting or to require Lanier's board of directors to call a
special meeting of stockholders.
ADVANCE NOTICE FOR STOCKHOLDER PROPOSALS OR NOMINATIONS AT MEETINGS
Lanier's bylaws establish an advance notice procedure for stockholder
proposals to be brought before any annual or special meeting of stockholders and
for nominations by stockholders of candidates for election as
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directors at an annual meeting or a special meeting at which directors are to be
elected. Subject to any other applicable requirements, including, without
limitation, Rule 14a-8 under the Exchange Act, only such business may be
conducted at a meeting of stockholders as has been brought before the meeting
by, or at the direction of, Lanier's board of directors, or by a stockholder who
has given Lanier's Secretary timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. The presiding
officer at such meeting has the authority to make such determinations. Only
persons who are nominated by, or at the direction of, Lanier's board of
directors, or who are nominated by a stockholder who has given timely written
notice, in proper form, to Lanier's Secretary prior to a meeting at which
directors are to be elected will be eligible for election as directors of
Lanier.
To be timely, notice of nominations or other business to be brought before
any meeting must be delivered to Lanier's Secretary not less than 90 days nor
more than 120 days prior to the first anniversary date of the annual meeting for
the preceding year; provided, however, that if the annual meeting is not
scheduled to be held within a period that commences 30 days before and ends 30
days after such anniversary date, such advance notice shall be given by the
later of (i) the close of business on the date 90 days prior to the date of the
annual meeting or (ii) the close of business on the tenth day following the date
that the meeting date is first publicly announced or disclosed.
Any stockholder who gives notice of a proposal must provide the text of the
proposal to be presented, a brief written statement of the reasons why he or she
favors the proposal, the stockholder's name and address, the number and class of
all shares of each class of Lanier stock owned, any material interest the
stockholder may have in the proposal (other than as a Lanier stockholder) and,
in the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
The notice of any nomination for election as a director must set forth the
name of the nominee, the number and class of all shares of each class of Lanier
capital stock beneficially owned by the nominee, the information regarding the
nominee required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K
adopted by the Commission, the signed consent of each nominee to serve as a
director if elected, the nominating stockholder's name and address, the number
and class of shares of Lanier stock owned by such nominating stockholder and, in
the case of any person that holds Lanier stock through a nominee or "street
name" holder of record of such stock, evidence establishing such person's
indirect ownership of Lanier stock and entitlement to vote on the matter
proposed at the annual meeting.
AMENDMENTS TO BYLAWS
Lanier's restated certificate of incorporation provides that only Lanier's
board of directors or the holders of 80% of the shares of Lanier's capital stock
entitled to vote at an annual or special meeting of stockholders have the power
to amend or repeal Lanier's bylaws.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
Any proposal to amend, alter, change or repeal any provision of Lanier's
restated certificate of incorporation requires approval by the affirmative vote
of a majority of the voting power of all of the shares of Lanier's capital stock
entitled to vote on such matters, with the exception of certain provisions of
Lanier's restated certificate of incorporation which require a vote of 80% or
more of such voting power.
PREFERRED STOCK
Lanier's restated certificate of incorporation authorizes Lanier's board of
directors by resolution to issue one or more series of Preferred Stock and to
determine, with respect to any series of preferred stock, the terms and rights
of such series.
Lanier believes that the availability of the preferred stock will provide
Lanier with increased flexibility in structuring possible future financing and
acquisitions and in meeting other corporate needs which might arise. Having such
authorized shares available for issuance will allow Lanier to issue shares of
preferred stock without
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<PAGE> 74
the expense and delay of a special stockholders' meeting. The authorized shares
of preferred stock, as well as Lanier Shares, will be available for issuance
without further action by Lanier's stockholders, unless such action is required
by applicable law or the rules of the New York Stock Exchange or any other stock
exchange on which Lanier's securities may be listed. Although Lanier's board of
directors has no intention at the present time of doing so, it would have the
power (subject to applicable law) to issue a series of preferred stock that
could, depending on the terms of such series, impede the completion of a merger,
tender offer or other takeover attempt. For instance, subject to applicable law,
such series of preferred stock might impede a business combination by including
class voting rights which would enable the holder to block such a transaction.
See "-- Stockholder Protection Rights Agreement" below.
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Each share of Lanier Common Stock has attached to it one right (a "Right").
Each Right entitles its registered holder to purchase from Lanier, on or after
the Separation Time (as hereinafter defined), one one-hundredth of a share of
Participating Preferred Stock, no par value (the "Participating Preferred"), for
$- (the "Exercise Price"), subject to adjustment. The Rights will not trade
separately from the Lanier Common Stock until the Separation Time.
The Rights will be evidenced by common stock certificates until the earlier
of (either, the "Separation Time") (i) the close of business on the tenth
business day (or such later date as Lanier's board of directors may from time to
time fix by resolution adopted prior to the Separation Time that would otherwise
have occurred) after the date on which any Person (as defined in the Rights
Agreement) commences a tender or exchange offer which, if consummated, would
result in such Person's becoming an Acquiring Person (as defined below) and (ii)
the first date (the "Stock Acquisition Date") of public announcement by Lanier
(by any means) that a Person has become an Acquiring Person; provided that if a
tender or exchange offer referred to in clause (i) is canceled, terminated or
otherwise withdrawn prior to the Separation Time without the purchase of any
shares of stock pursuant thereto, such offer shall be deemed never to have been
made. An Acquiring Person is any Person who is the Beneficial Owner (as defined
in the Rights Agreement) of 15% or more of the outstanding Lanier Shares,
excluding (i) Lanier, any majority-owned subsidiary of Lanier or any employee
stock ownership or other employee benefit plan of Lanier or a subsidiary of
Lanier (or any entity or trustee holding shares of Lanier common stock pursuant
to the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of Lanier or any subsidiary of
Lanier), (ii) any Person who is the beneficial owner of 15% or more of the
outstanding shares of Lanier Common Stock on the date of the Rights Agreement or
any Person who became the Beneficial Owner of 15% or more of the outstanding
Lanier Shares solely as a result of an acquisition of Lanier Shares by Lanier,
until such time as such Person acquires additional Lanier Shares other than
through a dividend or stock split, (iii) any Person who becomes an Acquiring
Person without any plan or intent to seek or affect control of Lanier if such
Person, upon notice by Lanier, promptly divests sufficient securities to reduce
its Beneficial Ownership below 15% or (iv) any Person who Beneficially Owns
Lanier Shares that were solely (A) acquired upon exercise of an option granted
by Lanier in connection with an agreement to merge with, or acquire, Lanier
entered into prior to a Stock Acquisition Date, (B) owned by such Person and its
Affiliates and Associates (as defined in the Rights Agreement) at the time of
such grant or (C) amounting to less than 1% of the outstanding Lanier Shares,
acquired by Affiliates and Associates of such Person after the time of such
grant.
The Rights Agreement provides that, until the Separation Time, the Rights
will be transferred with and only with the Lanier common stock. Lanier Share
certificates issued after the Record Time but prior to the Separation Time shall
evidence one Right for each share of Lanier common stock represented thereby and
shall contain a legend incorporating by reference the terms of the Rights
Agreement (as it may be amended from time to time). Promptly following the
Separation Time, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of Lanier Shares at the
Separation Time.
The Rights will not be exercisable until the Separation Time. The Rights
will expire on the earliest of (i) the Exchange Time (as defined below), (ii)
the close of business on the tenth anniversary of the Record Time, unless
extended by action of Lanier's board of directors, (iii) the date on which the
Rights are redeemed as described below and (iv) immediately prior to the
effective time of a consolidation, merger or share exchange of Lanier
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(A) into another corporation or (B) with another corporation where Lanier is the
surviving corporation but Lanier Shares are converted into cash or securities of
another corporation, in either case pursuant to an agreement that Lanier entered
into prior to a Stock Acquisition Date (in any such case, the "Expiration
Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, may be
adjusted from time to time to prevent dilution in the event of a common stock
dividend on, or a subdivision or a combination into a smaller number of shares
of, Lanier Common Stock, or the issuance or distribution of any securities or
assets in respect of, in lieu of or in exchange for Lanier Common Stock.
In the event that prior to the Expiration Time a Flip-in Date (as defined
below) occurs, each Right (other than Rights Beneficially Owned by the Acquiring
Person or any affiliate or associate thereof, which Rights shall become void)
shall constitute the right to purchase from Lanier, upon the exercise thereof in
accordance with the terms of the Rights Agreement, that number of shares of
Lanier Common Stock having an aggregate market price (as defined in the Rights
Agreement), on the Stock Acquisition Date equal to twice the Exercise Price for
an amount in cash equal to the then current Exercise Price. In addition,
Lanier's board of directors may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the Beneficial Owner of
more than 50% of the outstanding shares of Lanier Common Stock, elect to
exchange all (but not less than all) the then outstanding Rights (other than
Rights Beneficially Owned by the Acquiring Person or its Affiliates or
Associates, which Rights become void) for shares of Lanier Common Stock at an
exchange ratio of one share of Lanier Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of the Separation Time (the "Exchange Ratio").
Immediately upon such action by Lanier's board of directors (the "Exchange
Time"), the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of shares of Lanier
Common Stock equal to the Exchange Ratio. A "Flip-In Date" is defined in the
Rights Agreement as any Stock Acquisition Date or such later date as Lanier's
board of directors may from time to time fix by resolution adopted prior to the
Flip-In Date that would otherwise have occurred.
Whenever Lanier becomes obligated under the preceding paragraph to issue
shares of Lanier Common Stock upon exercise of or in exchange for Rights,
Lanier, at its option, may substitute shares of participating preferred stock
for shares of Lanier Common Stock, at a ratio of one one-hundredth of a share of
the Participating Preferred for each share of Lanier Common Stock.
In the event that prior to the Expiration Time Lanier enters into,
consummates or permits to occur a transaction or series of transactions after
the time an Acquiring Person has become such in which, directly or indirectly,
(i) Lanier shall consolidate, merge or participate in a statutory share exchange
with any other Person if, at the time of the consolidation, merger or statutory
share exchange or at the time Lanier enters into any agreement with respect to a
consolidation, merger or share exchange, the Acquiring Person is the Beneficial
Owner of 90% or more of the outstanding shares of Lanier Common Stock or
controls Lanier's board of directors and either (A) any term of or arrangement
concerning the treatment of shares of Lanier Common Stock in such consolidation,
merger or statutory share exchange relating to the Acquiring Person is not
identical to the terms and arrangements relating to other holders of Lanier
Common Stock or (B) the person with whom the transaction or transactions occur
is the Acquiring Person or an affiliate or associate of the Acquiring Person or
(ii) Lanier or one or more of its subsidiaries sells or otherwise transfers
assets (A) aggregating more than 50% of the assets (measured by either book
value or fair market value) or (B) generating more than 50% of the operating
income or cash flow of Lanier and its subsidiaries taken as a whole to any other
Person (other than Lanier or one or more of its wholly owned subsidiaries) or to
two or more such Persons which are affiliated or otherwise acting in concert,
if, at the time of such sale or transfer of assets or at the time Lanier (or any
such subsidiary) enters into an agreement with respect to such sale or transfer,
the Acquiring Person controls Lanier's board of directors (a "Flip-over
Transaction or Event"), Lanier shall take such action as shall be necessary to
ensure, and shall not enter into, consummate or permit to occur such Flip-over
Transaction or Event until it shall have entered into a supplemental agreement
with the Person engaging in such Flip-over Transaction or Event or the parent
corporation thereof (the "Flip-over Entity"), for the benefit of the holders of
the Rights, provided that upon consummation or occurrence of the Flip-over
Transaction or Event (i) each Right shall thereafter constitute the right to
purchase from the Flip-over Entity, upon exercise thereof in accordance with the
terms of the Rights
62
<PAGE> 76
Agreement, that number of shares of common stock of the Flip-over Entity having
an aggregate market price on the date of consummation or occurrence of such
Flip-over Transaction or Event equal to twice the Exercise Price for an amount
in cash equal to the then current Exercise Price and (ii) the Flip-over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of Lanier pursuant to the Rights Agreement.
Lanier's board of directors may, at its option, at any time prior to the
Flip-in Date, redeem all (but not less than all) the then outstanding Rights at
a redemption price of $.01 per Right. Immediately upon the action of Lanier's
board of directors to redeem the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive the redemption price in cash or
securities of Lanier.
The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as stockholders of Lanier, including the right to vote or to
receive dividends.
Lanier and the Rights Agent may from time to time supplement or amend the
Rights Agreement without the approval of any holders of Rights (i) prior to the
Flip-In Date, in any respect and (ii) on or after the Flip-In Date, to make any
changes that Lanier may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of Rights generally or
in order to cure any ambiguity or correct or supplement any inconsistent or
defective provision contained therein.
The Rights will not prevent a takeover of Lanier. However, the Rights may
cause substantial dilution to a person or group that acquires 15% or more of the
Lanier Shares unless the Rights are first redeemed by Lanier's board of
directors. Nevertheless, the rights should not interfere with a transaction that
is in the best interests of Lanier and its stockholders because the Rights can
be terminated on or prior to the Flip-in Date and before the transaction is
consummated.
As long as the rights are attached to Lanier Common Stock, Lanier will
issue one Right with each new share of Lanier Common Stock so that all shares
will have Rights attached. Lanier's board of directors has reserved - shares of
participating preferred stock for issuance upon exercise of the Rights.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise and as Exhibit B the form of Certificate of
Designation and Terms of the Participating Preferred Stock) is filed as an
exhibit to the Registration Statement. The foregoing description of the Rights
is qualified in its entirety by reference to the Rights Agreement and such
exhibits.
DELAWARE LAW
Under Section 203 of the Delaware General Corporation Law ("Section 203"),
which will be applicable to Lanier after the Distribution, certain "business
combinations" (defined generally to include mergers or consolidations between
the Delaware corporation and an interested stockholder and transactions with an
interested stockholder involving the assets or stock of the corporation or its
majority-owned subsidiaries and transactions which increase the interested
stockholder's percentage ownership of stock) between a publicly held Delaware
corporation and an "interested stockholder" (defined generally as those
stockholders who become beneficial owners of 15% or more of a Delaware
corporation's voting stock or their affiliates) are prohibited for a three-year
period following the date that such stockholder became an interested
stockholder, unless (i) the corporation has elected in its certificate of
incorporation not to be so governed, (ii) either the business combination or the
proposed acquisition of stock resulting in the person becoming an interested
stockholder was approved by the board of directors of the corporation before the
other party to the business combination became an interested stockholder, (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by officers who are also directors or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan) or (iv) the business combination was approved by the board of
directors of the corporation and also ratified by two-thirds of the voting stock
which the interested stockholder did not own.
63
<PAGE> 77
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. Lanier's restated certificate of incorporation does not exclude
Lanier from restrictions imposed under Section 203. The provisions of Section
203 may encourage companies interested in acquiring Lanier to negotiate in
advance with Lanier's board of directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approved either the business combination or the transaction which results in the
stockholder becoming an interested stockholder. Such provisions also may have
the effect of preventing changes in the management of Lanier. It is possible
that such provisions could make it more difficult to accomplish transactions
which stockholders may otherwise deem to be in their best interests.
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
LIMITATION ON LIABILITY OF DIRECTORS
Pursuant to authority conferred by Section 102 of the Delaware General
Corporation Law, Article Eleventh of Lanier's restated certificate of
incorporation ("Article Eleventh") eliminates the personal liability of Lanier's
directors to Lanier or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such exemption from
liability or limitation thereof is not permitted under the Delaware General
Corporation Law as currently in effect or as it may hereafter be amended. Under
the Delaware General Corporation Law as in effect on the date hereof, Lanier's
directors remain liable for (i) any breach of the duty of loyalty to Lanier or
its stockholders, (ii) any act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (iii) any violation of
Section 174 of the Delaware General Corporation Law, which proscribes the
payment of dividends and stock purchases or redemptions under certain
circumstances and (iv) any transaction from which directors derive an improper
personal benefit.
Article Eleventh provides that any future repeal or amendment of its terms
(including any amendment or repeal of this Article Eleventh made by virtue of
any change in the Delaware General Corporation Law) will not adversely affect
any rights of directors existing thereunder with respect to acts or omissions
occurring prior to such repeal or amendment.
INDEMNIFICATION
Lanier's bylaws and Section 145 of the Delaware General Corporation Law,
which allows, and in some cases requires, the indemnification of directors and
officers under certain circumstances, grant Lanier's directors and officers a
right to indemnification to the fullest extent permitted by law for all expenses
relating to civil, criminal, administrative or investigative procedures to which
they are a party (i) by reason of the fact that they are or were directors or
officers of Lanier or (ii) by reason of the fact that, while they are or were
directors or officers of Lanier, they are or were serving at the request of
Lanier as a director, officer or employee of another enterprise. Lanier's bylaws
further provide that an advancement for any such expenses shall only be made
upon delivery to Lanier by the indemnitee of an undertaking to repay all amounts
so advanced if it is ultimately determined that such indemnitee is not entitled
to be indemnified by Lanier.
INDEMNIFICATION AGREEMENTS
In connection with the Distribution, Lanier will enter into indemnification
agreements with certain of its directors and officers. These agreements will
require Lanier to indemnify these directors and officers with respect to their
activities as directors or officers of Lanier or when serving at Lanier's
request as a director, officer or trustee of another corporation, trust or other
enterprise against expenses (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by them in any
threatened, pending or completed suit or proceeding to which they are, or are
threatened to be made, parties as a result of their service to Lanier. Lanier
will agree to indemnify each indemnitee for any one or a combination of the
following, whichever is most advantageous to the indemnitee: (i) the benefits
provided by Lanier's restated certificate of incorporation and bylaws in effect
on the date of the indemnification agreement; (ii) the benefits provided by
Lanier's restated
64
<PAGE> 78
certificate of incorporation and bylaws at the time expenses are incurred by the
indemnitee; (iii) the benefits allowable under Delaware law in effect on the
date of the indemnification agreement; (iv) the benefits allowable under the law
of the jurisdiction under which Lanier exists at the time expenses are incurred
by the indemnitee; (v) the benefits available under liability insurance obtained
by Lanier; and (vi) such other benefits as may be otherwise available to
indemnitee under Lanier's existing practices. Under the indemnification
agreements, each indemnitee will continue to be indemnified even after ceasing
to occupy a position as an officer, director, employee or agent of Lanier with
respect to suits or proceedings arising out of acts or omissions during his or
her service to Lanier.
Each indemnitee will agree to notify Lanier promptly of any proceeding
brought or threatened and not to make any admission or settlement without
Lanier's consent, unless the indemnitee determines to undertake his or her own
defense and waives the benefits of the indemnification agreement.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The consolidated financial statements of Lanier Worldwide, Inc. and its
subsidiaries at July 3, 1998 and June 27, 1997, and for each of the three years
in the period ended July 3, 1998, appearing in this Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report appearing thereon elsewhere herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
Lanier has filed with the Commission the Registration Statement under the
Securities Exchange Act of 1934, as amended, with respect to the Lanier Common
Stock and the preferred stock purchase rights associated with each share of
Lanier Common Stock. This document does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto, to
which reference is hereby made. Statements made in this document as to the
contents of any contract, agreement or other document referred to herein are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
such exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
The Registration Statement and the exhibits thereto filed by Lanier with
the Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Regional Offices of the Securities and Exchange
Commission at Seven World Trade Center, Thirteenth Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such information can be obtained by mail from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a website that contains reports, proxy and information statements and
other information regarding statements regarding registrants that file
electronically with the Commission. The address of the Commission's website is
http://www.sec.gov. The address of Lanier's website is http://www.lanier.com.
After the Distribution, Lanier will be required to comply with the
reporting requirements of the Exchange Act and to file with the Commission
reports, proxy statements and other information as required by the Exchange Act.
Additionally, Lanier will be required to provide annual reports containing
audited financial statements to its stockholders in connection with its annual
meetings of stockholders. After the Distribution, these reports, proxy
statements and other information will be available to be inspected and copied at
the public reference facilities of the Commission or obtained by mail or over
the Internet from the Commission, as described above. After the Distribution,
the Lanier Shares will be listed on the New York Stock Exchange. When the Lanier
Shares commence trading on the New York Stock Exchange, such reports, proxy
statements and other information will be available for inspection at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
65
<PAGE> 79
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Lanier Worldwide, Inc.
We have audited the accompanying consolidated balance sheets of Lanier
Worldwide, Inc. and subsidiaries as of July 3, 1998 and June 27, 1997, and the
related consolidated statements of income, changes in shareholder equity and
cash flows for each of the three fiscal years in the period ended July 3, 1998.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lanier
Worldwide, Inc. and subsidiaries as of July 3, 1998, and June 27, 1997, and the
related consolidated statements of their operations and their cash flows for
each of the three fiscal years in the period ended July 3, 1998, in conformity
with generally accepted accounting principles.
Orlando, Florida
July 29, 1998
F-1
<PAGE> 80
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JULY 3, JUNE 27, APRIL 2,
1998 1997 1999
---------- ---------- -----------
(In thousands) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................... $ 87,096 $ 18,647 $ 71,143
Trade receivables................................... 347,772 360,189 393,787
Receivables from parent............................. 14,327 68,964 93,467
Inventories......................................... 201,642 203,026 187,340
Prepaid expenses.................................... 8,899 7,822 22,150
Deferred income taxes............................... 36,243 37,604 35,949
---------- ---------- ----------
TOTAL CURRENT ASSETS........................ 695,979 696,252 803,836
OTHER ASSETS
Rental equipment, less allowance for depreciation
($202,537 in 1999, $158,792 in 1998 and $144,852
in 1997)......................................... 109,567 95,930 161,758
Property, plant and equipment, less allowance for
depreciation ($80,765 in 1999, $65,830 in 1998
and $50,034 in 1997)............................. 45,839 48,609 43,448
Notes receivables-net............................... 210,001 203,355 198,053
Intangibles, less accumulated amortization ($34,582
in 1999, $28,241 in 1998 and $22,496 in 1997).... 100,452 97,813 156,520
Other............................................... 20,194 9,922 46,188
---------- ---------- ----------
TOTAL OTHER ASSETS.......................... 486,053 455,629 605,967
---------- ---------- ----------
TOTAL ASSETS.......................................... $1,182,032 $1,151,881 $1,409,803
========== ========== ==========
LIABILITIES AND SHAREHOLDER EQUITY
CURRENT LIABILITIES
Notes payable....................................... $ 52,918 $ 37,888 $ 155,425
Trade payables...................................... 44,606 51,697 73,934
Retirement plan accounts............................ 32,833 33,716 48,075
Accrued compensation................................ 27,187 32,914 32,961
Accrued interest and sundry taxes................... 13,681 16,425 18,598
Other accrued items................................. 31,833 26,357 71,609
Unearned service income............................. 125,740 145,096 97,258
Income taxes........................................ 5,659 18,000 13,762
Long-term debt-current portion...................... 2,192 2,845 7,838
---------- ---------- ----------
TOTAL CURRENT LIABILITIES................... 336,649 364,938 519,460
OTHER LIABILITIES
Deferred income taxes............................... 38,066 32,796 15,666
Long-term debt...................................... 3,660 3,990 10,101
SHAREHOLDER EQUITY
Preferred Stock, without par value: authorized
1,000,000 shares, issued-none.................... -- -- --
Common Stock, $1.00 par value, 1,000,000 shares
authorized; issued and outstanding 384,893 shares
in 1999, 41,893 in 1998 and 1997................. 42 42 385
Additional paid-in capital.......................... 313,054 313,054 329,336
Retained earnings................................... 521,578 458,781 567,988
Accumulated comprehensive loss...................... (31,017) (21,720) (33,133)
---------- ---------- ----------
TOTAL SHAREHOLDER EQUITY.................... 803,657 750,157 864,576
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDER EQUITY.............. $1,182,032 $1,151,881 $1,409,803
========== ========== ==========
</TABLE>
See Notes to Financial Statements
F-2
<PAGE> 81
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE QUARTERS ENDED
------------------------------------ ---------------------
JULY 3, JUNE 27, JUNE 30, APRIL 2, APRIL 3,
1998 1997 1996 1999 1998
---------- ---------- ---------- ---------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUE
Product sales and rentals........... $ 721,791 $ 704,282 $ 719,803 $ 582,511 $532,395
Service income...................... 532,986 465,732 396,159 465,978 398,102
Finance income...................... 33,558 29,871 28,760 28,223 25,291
---------- ---------- ---------- ---------- --------
1,288,335 1,199,885 1,144,722 1,076,712 955,788
COST AND EXPENSES
Cost of product sales and rentals... 453,968 426,042 448,845 382,726 330,650
Cost of service..................... 304,901 255,705 219,042 262,815 228,089
Selling and administrative
expenses......................... 410,452 399,470 370,004 328,816 312,203
Restructuring expenses.............. 8,500 -- -- -- --
Interest expenses................... 8,236 8,797 11,010 15,767 6,487
Other-net........................... 2,877 7,964 5,218 4,502 1,809
---------- ---------- ---------- ---------- --------
1,188,934 1,097,978 1,054,119 994,626 879,238
---------- ---------- ---------- ---------- --------
Income before income taxes.......... 99,401 101,907 90,603 82,086 76,550
Income taxes........................ 36,604 38,208 33,331 29,384 28,452
---------- ---------- ---------- ---------- --------
NET INCOME............................ $ 62,797 $ 63,699 $ 57,272 $ 52,702 $ 48,098
========== ========== ========== ========== ========
</TABLE>
See Notes to Financial Statements
F-3
<PAGE> 82
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE QUARTERS ENDED
-------------------------------- ---------------------
JULY 3, JUNE 27, JUNE 30, APRIL 2, APRIL 3,
1998 1997 1996 1999 1998
-------- --------- --------- --------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income................................ $62,797 $ 63,699 $ 57,272 $ 52,702 $48,098
Adjustments to Net Income:
Depreciation............................ 72,838 62,641 56,745 90,505 53,536
Amortization............................ 6,326 5,571 5,930 6,341 4,692
Non-current deferred income taxes....... 5,270 3,970 7,350 (22,400) 8,239
Changes in assets and liabilities:
Trade Receivables....................... 8,730 (78,421) (36,946) 26,871 25,573
Receivable from parent.................. 54,637 97,109 (88,163) (79,140) 601
Inventories............................. 3,151 (51,799) 26,080 40,961 (20,089)
Intangibles............................. 828 (4,747) (1,239) 2,562 1,403
Prepaid expenses........................ (1,077) (1,743) (190) (13,251) (1,241)
Trade payables and accrued
liabilities.......................... (13,559) 13,372 (1,766) 11,956 (21,575)
Unearned service income................. (19,194) 843 8,464 (32,851) (14,808)
Income taxes............................ (11,574) (1,006) (31,220) 27,404 (7,139)
Other................................... (22,813) (3,400) 1,906 (4,052) (19,598)
------- --------- --------- --------- -------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES.............................. 146,360 106,089 4,223 107,608 57,692
INVESTING ACTIVITIES
Capital expenditures:
Cash paid for acquired business......... (13,966) (12,459) (16,873) (171,117) (9,828)
Plant and equipment..................... (15,837) (34,527) (10,924) (20,144) (11,008)
Rental equipment........................ (68,622) (60,529) (61,144) (53,535) (52,138)
------- --------- --------- --------- -------
NET CASH USED IN INVESTING ACTIVITIES..... (98,425) (107,515) (88,941) (244,796) (72,974)
FINANCING ACTIVITIES
Proceeds from borrowings.................. 62,596 101,149 193,091 222,145 36,427
Payments of borrowings.................... (46,856) (91,469) (187,894) (106,738) (22,139)
------- --------- --------- --------- -------
NET CASH PROVIDED BY FINANCING
ACTIVITIES.............................. 15,740 9,680 5,197 115,407 14,288
Effect of exchange rates on cash and cash
equivalents............................. 4,774 (1,263) (1,624) 5,828 25
------- --------- --------- --------- -------
INCREASE/DECREASE IN CASH AND CASH
EQUIVALENTS............................. 68,449 6,991 (81,145) (15,953) (969)
Cash and cash equivalents at beginning of
year.................................... 18,647 11,656 92,801 87,096 18,647
------- --------- --------- --------- -------
CASH AND CASH EQUIVALENTS AT END OF
YEAR.................................... $87,096 $ 18,647 $ 11,656 $ 71,143 $17,678
======= ========= ========= ========= =======
</TABLE>
See Notes to Financial Statements
F-4
<PAGE> 83
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER EQUITY
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------
JULY 3, JUNE 27, JUNE 30,
1998 1997 1996
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK
Balance at beginning of year........ $ 42 $ 41 $ 41
Shares issued to affiliates (1,000
shares).......................... -- 1 --
-------- -------- --------
Balance at end of year.............. 42 42 41
-------- -------- --------
ADDITIONAL PAID IN CAPITAL
Balance at beginning of year........ 313,054 306,658 306,658
Shares issued to affiliates......... -- 6,396 --
-------- -------- --------
Balance at end of year.............. 313,054 313,054 306,658
-------- -------- --------
RETAINED EARNINGS
Balance at beginning of year........ 458,781 395,082 337,810
Net income.......................... 62,797 $62,797 63,699 $63,699 57,272 $57,272
-------- -------- --------
Balance at end of year.............. 521,578 458,781 395,082
-------- -------- --------
ACCUMULATED COMPREHENSIVE LOSS
Balance at beginning of year........ (21,720) (12,541) (9,396)
Change in cumulative translation
adjustments...................... (9,297) $(9,297) (9,179) $(9,179) (3,145) $(3,145)
======= ======= =======
Total comprehensive income.......... $53,500 $54,520 $54,127
-------- ======= -------- ======= -------- =======
Balance at end of year.............. (31,017) (21,720) (12,541)
-------- -------- --------
Total Shareholder Equity.............. $803,657 $750,157 $689,240
======== ======== ========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE> 84
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
THREE QUARTERS ENDED
------------------------------------------
APRIL 2, 1999 APRIL 3, 1998
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
COMMON STOCK
Balance at beginning of year................... $ 42 $ 42
Shares issued to affiliates (343,000 shares)... 343 --
-------- --------
Balance at end of period....................... 385 42
-------- --------
ADDITIONAL PAID IN CAPITAL
Balance at beginning of year................... 313,054 313,054
Shares issued to affiliates.................... 16,282 --
-------- --------
Balance at end of period....................... 329,336 313,054
-------- --------
RETAINED EARNINGS
Balance at beginning of year................... 521,578 458,781
Net income..................................... 52,702 $52,702 48,098 $48,098
Dividend paid.................................. (6,292) --
-------- --------
Balance at end of period....................... 567,988 506,879
-------- --------
ACCUMULATED COMPREHENSIVE LOSS
Balance at beginning of year................... (31,017) (21,720)
Change in cumulative translation adjustments... (2,116) (2,116) (8,323) (8,323)
------- -------
Total comprehensive income..................... $50,586 $39,775
-------- ======= -------- =======
Balance at end of period....................... (33,133) (30,043)
-------- --------
Total Shareholder Equity......................... $864,576 $789,932
======== ========
</TABLE>
See Notes to Financial Statements
F-6
<PAGE> 85
LANIER WORLDWIDE, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 3, 1998
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- The combined financial statements include the accounts
of Lanier Worldwide, Inc. and Subsidiaries ("Lanier"). Lanier is a wholly owned
subsidiary of Harris Corporation ("Harris") that sells and leases office
equipment products and provides related services to this marketplace. The
accompanying consolidated financial statements include accounts of Lanier and
its subsidiaries. These statements have been prepared in conformity with
generally accepted accounting principles and require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Significant intercompany transactions and accounts have been eliminated.
Corporate expense allocations charged by Harris are based on a percentage of
Lanier's net sales. These amounts were $22.6 million in 1998, $21.1 million in
1997 and $20.1 million in 1996. Interest expense is provided on direct
borrowings of Lanier. Interest expense of Harris has not been allocated to
Lanier. It is not practicable to estimate what shareholder equity would have
been if Lanier had operated as an unaffiliated entity. In the opinion of
management, the allocation methods used are reasonable.
Lanier sells products to other affiliated operations of Harris. Sales to these
operations were are not material.
FISCAL YEAR -- Fiscal years end on the Friday nearest June 30. The 1998 fiscal
year includes 53 weeks, while 1997 and 1996 fiscal years include 52 weeks.
CASH EQUIVALENTS -- Cash equivalents are temporary cash investments with a
maturity of three months or less when purchased. These investments include
accrued interest and are carried at the lower of cost or market.
INVENTORIES -- Inventories are carried at the lower of cost, determined by the
First-In-First-Out (FIFO) method, or market.
RENTAL EQUIPMENT -- Rental equipment and service parts are carried on the basis
of cost. Depreciation is computed by the straight-line method using estimated
useful lives of up to five years.
MACHINERY AND EQUIPMENT -- Machinery and equipment are carried on the basis of
cost. Depreciation is computed by the straight-line method using the estimated
useful lives of the assets.
REVENUE RECOGNITION -- Revenue is recognized from sales when a product is
shipped, from rentals as they accrue, and from services and maintenance when
performed. Unearned income on service contracts is amortized by the
straight-line method over the term of the contracts.
ADVERTISING -- Advertising and promotional costs are expensed when incurred.
INCOME TAXES -- Lanier follows the liability method of accounting for income
taxes and is included with its parent, Harris, in a consolidated federal income
tax return. Harris requires each of its businesses to provide taxes on financial
statement pre-tax income or loss at applicable statutory tax rates. Amounts
receivable or payable for current and prior years' income taxes are treated as
intercompany transactions in accordance with Harris policy. Deferred income
taxes resulting from temporary differences between the financial statements and
the tax basis of assets and liabilities are separately classified on the balance
sheets.
INTANGIBLES -- Intangibles resulting from acquisitions are being amortized by
the straight-line method principally over periods between 15 and 40 years.
Recoverability of intangibles is assessed using estimated undiscounted cash
flows of related operations. Intangibles that are not expected to be recovered
through future undiscounted cash flows are charged to expense when identified.
Amounts charged to expense are amounts in excess of the fair value of the
intangible asset. Fair value is determined as the present value of estimated
expected future cash flows using a discount rate commensurate with the risks
involved.
F-7
<PAGE> 86
FUTURES AND FORWARD CONTRACTS -- When Lanier sells products outside the United
States or enters into purchase commitments, transactions are frequently
denominated in currencies other than U.S. dollars. To minimize the impact on
revenue and cost from currency fluctuations, Lanier enters into currency
exchange agreements that qualify for hedge accounting treatment. It is Lanier's
policy not to speculate in foreign currencies. Currency exchange agreements are
designated as, and are effective as, hedges of foreign currency commitments. In
addition, these agreements are consistent with the designated currency of the
underlying transaction and mature on or before the underlying transaction. Gains
and losses on currency exchange agreements that qualify as hedges are deferred
and recognized as an adjustment of the carrying amount of the hedged asset,
liability or commitment. Gains and losses on currency exchange agreements that
do not qualify as hedges are recognized in income based on changes in the fair
market value of the currency exchange agreement.
FOREIGN CURRENCY TRANSLATION -- The functional currency for international
subsidiaries is the local currency. Assets and liabilities are translated at
current rates of exchange, and income and expense items are translated at the
weighted average exchange rate for the year. The resulting translation
adjustments are recorded as a separate component of accumulated comprehensive
loss.
NOTE B -- ACQUISITION
On July 9, 1998, Lanier acquired the Copying Systems Division of the
Agfa-Gevaert Group which is a member of the Bayer Group, Leverkusen, Germany
(the "Agfa Acquisition"). The transaction was accounted for as a purchase. The
purchase price, which is subject to adjustment, was $171 million in cash. The
purchase price exceeded the fair value of net assets acquired by approximately
$46 million, which is being amortized on a straight-line basis over 20 years.
The results of the Agfa Acquisition are included in the accompanying interim
financial statements for the three quarters ended April 2, 1999 from the date of
acquisition.
The following summarized unaudited pro forma combined financial information
assumes the acquisition had occurred at the beginning of each period:
<TABLE>
<CAPTION>
FISCAL YEAR
THREE QUARTERS ENDED ENDED
(IN THOUSANDS) APRIL 2, 1999 JULY 3, 1998
-------------- -------------------- ------------
<S> <C> <C>
Net sales............................................ $1,048,489 $1,519,754
Net income........................................... $ 52,702 $ 66,021
</TABLE>
Pro forma results include the effects of purchase accounting adjustments and
additional interest expense as if the debt incurred in connection with the
acquisition had been outstanding from the beginning of each period. The pro
forma financial information is not necessarily indicative of either the results
of operations that would have occurred had the acquisition taken place at the
beginning of the periods presented or of future results of combined operations.
NOTE C -- ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued FAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The statement
establishes standards for recording derivative financial instruments and the
recognition of gains or losses resulting from changes in the fair values of
those instruments. Lanier plans to adopt the new standard in fiscal 2000,
however, Lanier has not determined the anticipated impact of FAS No. 133.
NOTE D -- RESTRUCTURING
In fiscal 1998, Lanier recorded a $8.5 million charge ($5.3 million after income
tax) for the restructuring of its operations. Restructuring provisions are for
the reduction of approximately 350 employees, primarily service and
administrative. All employee terminations are planned for fiscal 1999 with cash
outlays expected to be paid during the second half of fiscal 1999 from currently
available cash sources. For the three quarters ended April 2, 1999, 189
employees have been terminated resulting in a $5.4 million cash usage of
reserves.
F-8
<PAGE> 87
NOTE E -- RECEIVABLES
Receivables are summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Accounts receivable......................................... $245,120 $263,535
Notes receivable due within one year-net.................... 111,762 108,399
-------- --------
356,882 371,934
Less allowances for collection losses....................... 9,110 11,745
-------- --------
$347,772 $360,189
======== ========
</TABLE>
NOTE F -- INVENTORIES
Inventories are summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Finished products........................................... $152,980 $163,878
Work in process............................................. 47,223 34,996
Raw materials and supplies.................................. 1,439 4,152
-------- --------
$201,642 $203,026
======== ========
</TABLE>
At July 3, 1998, Lanier was committed to purchase $26.8 million of inventory
from suppliers. Management believes the cost of this inventory approximates
current market value.
NOTE G -- PLANT AND EQUIPMENT
Plant and equipment are summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Land........................................................ $ 854 $ 854
Buildings................................................... 18,982 18,129
Machinery and equipment..................................... 91,833 79,660
-------- --------
111,669 98,643
Less allowances for depreciation............................ 65,830 50,034
-------- --------
$ 45,839 $ 48,609
======== ========
</TABLE>
NOTE H -- CREDIT ARRANGEMENTS
Lanier has lines of credit for short-term borrowings aggregating $96.6 million
from various U.S. and foreign banks, of which $43.7 million was available on
July 3, 1998. These arrangements provide for borrowing at various interest
rates, are reviewed annually for renewal, and may be used on such terms as
Lanier and the banks mutually agree. These lines do not require compensating
balances. Short-term debt outstanding under these lines on July 3, 1998 was
$52.9 million. The weighted average interest rate for short-term debt was 8.4
percent at July 3, 1998 and 9.2 percent at June 27, 1997.
F-9
<PAGE> 88
NOTE I -- LONG-TERM DEBT
Long-term debt includes the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Bank notes.................................................. $ 870 $ 891
Other notes................................................. 1,624 1,464
Capital leases.............................................. 766 1,135
Revenue bonds............................................... 400 500
-------- --------
$ 3,660 $ 3,990
======== ========
</TABLE>
The weighted average interest rate for long-term debt was 8.7 percent at July 3,
1998 and 8.6 percent at June 27, 1997. Maturities of long-term debt for the five
years following 1998 are: $2.2 million in 1999, $2.1 million in 2000, $0.9
million in 2001, $0.4 million in 2002, and $0.2 million in 2003.
NOTE J -- INTEREST EXPENSE
Total interest was $8.2 million in 1998, $8.8 million in 1997 and $11.0 million
in 1996. Interest paid was $8.2 million in 1998, $8.5 million in 1997 and $11.1
million in 1996.
NOTE K -- LEASE COMMITMENTS
Total rental expense amounted to $40.9 million in 1998, $33.2 million in 1997,
and $28.1 million in 1996. Future minimum rental commitments under leases,
primarily used for land and buildings, amounted to approximately $84.8 million
at July 3, 1998. These commitments for the years following 1998 are:
1999 -- $31.9 million, 2000 -- $18.6 million, 2001 -- $12.5 million,
2002 -- $9.7 million, 2003 -- $6.0 million, and $6.1 million thereafter.
NOTE L -- CUSTOMER LEASING
Lanier's net investment in sales-type leases is as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Total minimum lease payments receivables.................... $375,453 $364,701
Residual value of equipment................................. 5,700 --
Less unearned finance income................................ 57,258 50,315
-------- --------
Present value of minimum lease payments receivable.......... 323,895 314,386
Less allowance for collection losses........................ 2,132 2,632
Less current portion........................................ 111,762 108,399
-------- --------
$210,001 $203,355
======== ========
</TABLE>
The amount of minimum rental payments receivable for sales-type leases for each
of the next five years are: 1999 -- $144.0 million, 2000 -- $108.6 million,
2001 -- $73.2 million, 2002 -- $36.3 million and 2003 -- $19.5 million.
NOTE M -- RETIREMENT BENEFITS
Lanier has noncontributory defined benefit pension plans which cover employees
in the United States and a number of other countries. Pension benefits are based
principally on an employee's years of service and compensation near retirement.
Lanier's pension funding policy is to deposit with an independent trustee
amounts at least equal to those required by law. Trust funds are maintained to
provide pension benefits to plan participants and beneficiaries.
F-10
<PAGE> 89
The components of pension cost are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997 1996
-------------- ------ ------ ------
<S> <C> <C> <C>
Benefits earned during the year............................. $5,056 $6,562 $6,098
Interest cost on projected benefit obligation............... 9,362 8,909 8,432
Actual return on plan assets................................ (8,909) (7,498) (6,917)
Amortization:
Prior service cost........................................ 132 (8) 2
Transition obligation..................................... (258) (275) (275)
Unrecognized (gain) loss.................................. (77) 222 126
------ ------ ------
Net pension cost............................................ $5,306 $7,912 $7,466
====== ====== ======
</TABLE>
The discount rates used in determining the actuarial present value of the
projected benefit obligation are 4.0 to 8.0 percent in 1998, 4.0 to 8.3 percent
in 1997 and 4.0 to 8.5 percent in 1996. The expected increase in future
compensation levels was 2.5 to 6.0 percent in 1998, 3.0 to 6.0 percent in 1997,
and 3.0 to 6.5 percent in 1996. The expected long-term rate of return on assets
was 4.5 to 10.0 percent in 1998 and 4.5 to 9.5 percent in 1997 and 1996.
The consolidated accrued pension liability at July 3, 1998 and June 27, 1997 for
defined benefit plans is shown below. Plan assets consist primarily of listed
stocks and bonds.
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997
-------------- -------- --------
<S> <C> <C>
Actuarial value of benefit obligations:
Vested benefit obligation.............................. $107,227 $ 68,719
Accumulated benefit obligation......................... 108,389 80,840
Projected benefit obligation........................... 131,752 112,929
Plan assets at fair value................................... 115,940 95,745
Projected benefit obligation in excess of plan assets....... 15,812 17,330
Unrecognized net gain....................................... 10,435 7,784
Prior service cost not yet recognized in net periodic
pension cost.............................................. (1,229) (1,476)
Unrecognized net transitional asset......................... 1,323 1,839
-------- --------
Pension liability........................................... $ 26,341 $ 25,477
======== ========
</TABLE>
Retirement benefits include a fully funded savings plan for U.S. employees.
Employees may participate in the savings plan by contributing a portion of their
compensation. Lanier matches 50 percent of employee contributions up to 6
percent of each participating employee's compensation.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees. Lanier accrues the estimated cost of these
medical benefits during an employee's active service life. Benefit obligations
and cost under this plan are not material.
Retirement and defined benefit plan expenses amounted to $10.9 million in 1998,
$10.7 million in 1997 and $10.0 million in 1996.
F-11
<PAGE> 90
NOTE N -- INCOME TAXES
The provisions for income taxes are summarized below:
<TABLE>
<CAPTION>
(IN MILLIONS) 1998 1997 1996
------------- -------- ------- --------
<S> <C> <C> <C>
Current:
United States............................................. $ 27,929 $20,861 $ 21,215
International............................................. 3,039 7,548 4,188
State and local........................................... 4,418 5,478 4,000
-------- ------- --------
35,386 33,887 29,403
-------- ------- --------
Deferred:
United States............................................. (1,842) 3,243 3,603
International............................................. 2,159 1,092 (226)
State and local........................................... 901 (14) 551
-------- ------- --------
1,218 4,321 3,928
-------- ------- --------
$ 36,604 $38,208 $ 33,331
======== ======= ========
</TABLE>
The components of deferred income tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------- ----------------------
(IN THOUSANDS) CURRENT NON-CURRENT CURRENT NON-CURRENT
-------------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Inventory valuations.......................... $14,850 $ -- $15,361 $ --
Accruals...................................... 15,680 1,091 15,719 823
Depreciation.................................. -- (37,915) -- (23,517)
Leases........................................ (2,926) (12,595) (2,008) (19,290)
International tax loss carryforwards.......... -- 6,501 -- 5,986
All other-net............................... 8,639 11,353 8,532 9,188
------- ----------- ------- -----------
36,243 (31,565) 37,604 (26,810)
Valuation allowance........................... -- (6,501) -- (5,986)
------- ----------- ------- -----------
$36,243 $ (38,066) $37,604 $ (32,796)
======= =========== ======= ===========
</TABLE>
A reconciliation of the statutory United States income tax rate to the effective
income tax rate follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Statutory U.S. income tax rate............................. 35.0% 35.0% 35.0%
State taxes................................................ 3.5 3.5 3.3
Other items................................................ (1.7) (1.0) (1.5)
-------- -------- --------
Effective income tax rate.................................. 36.8% 37.5% 36.8%
-------- -------- --------
</TABLE>
United States income taxes have not been provided on $127.0 million of
undistributed earnings of international subsidiaries because of the Business's
intention to reinvest these earnings. The determination of unrecognized deferred
U.S. tax liability for the undistributed earnings of international subsidiaries
is not practicable.
At July 3, 1998, Lanier had net international income tax loss carryforwards of
approximately $17.6 million. Loss carryforwards are available for an indefinite
period of time and have been offset by valuation allowances in both 1998 and
1997.
Pretax income of international subsidiaries was $21.4 million in 1998, $20.5
million in 1997 and $19.8 million in 1996.
Income taxes paid were $43.0 million in 1998, $35.4 million in 1997 and $28.7
million in 1996.
F-12
<PAGE> 91
NOTE O -- GEOGRAPHIC INFORMATION
Lanier operates exclusively in the office equipment industry. Substantially all
revenues result from the sale and rental of office equipment and related
services. All intercompany revenues are eliminated in computing revenues.
A summary of Lanier's operations by geographic area is summarized below:
<TABLE>
<CAPTION>
(IN THOUSANDS) 1998 1997 1996
-------------- -------- -------- --------
<S> <C> <C> <C>
United States Operations
Net sales.............................................. $902,034 $823,947 $746,482
Long-lived assets...................................... $212,461 $194,686 $154,037
International
Net sales.............................................. $352,743 $346,067 $369,480
Long-lived assets...................................... $ 63,591 $ 57,588 $ 55,897
</TABLE>
Export sales included in U.S. Operations were $18.3 million in 1998, $16.1
million in 1997, and $15.9 million in 1996.
NOTE P -- FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, accounts receivable, notes receivable,
accounts payable, short-term debt and long-term debt approximates fair value.
Lanier uses foreign exchange contracts and options to hedge intercompany
accounts and off-balance-sheet foreign currency commitments. Specifically, these
foreign exchange contracts offset foreign currency denominated inventory and
purchase commitments from suppliers, accounts receivable from and future
committed sales to customers. Management believes the use of foreign currency
financial instruments should reduce the risks that arise from doing business in
international markets. Contracts are generally one year or less. At July 3,
1998, open foreign exchange contracts were $185.5 million (as described below),
of which $3.4 million were to hedge off-balance-sheet commitments. Additionally,
for the year ended July 3, 1998, Lanier purchased and sold $689.5 million of
foreign exchange forward and option contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheet as other assets and are recorded in income as part of the
underlying transaction when it is recognized.
At July 3, 1998, Lanier had $6.5 million in open option contracts. Total open
foreign exchange contracts at July 3, 1998, are described in the table below:
COMMITMENTS TO BUY FOREIGN CURRENCIES
(in thousands)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Belgian Franc................................. 1,192,279 32,303 (351) 9
German Mark................................... 31,259 17,523 (239) 3-9
Swiss Franc................................... 8,721 6,296 (560) 3
French Franc.................................. 30,084 4,966 (4) 3
Japanese Yen.................................. 601,000 4,756 (433) 3
Norwegian Krone............................... 23,646 3,112 (36) 6
Netherlands Guilder........................... 3,089 1,537 (22) 9
Italian Lira.................................. 1,692,579 964 (14) 12
South African Rand............................ 5,155 878 -- 1
Hungarian Forint.............................. 192,869 840 38 6
Malaysian Ringgit............................. 1,057 283 (28) 3
Australian Dollar............................. 190 115 1 6
Canadian Dollar............................... 163 114 (3) 6
</TABLE>
F-13
<PAGE> 92
COMMITMENTS TO SELL FOREIGN CURRENCIES
(in thousands)
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------- DEFERRED
FOREIGN GAINS MATURITIES
CURRENCY CURRENCY U.S. AND (LOSSES) (IN MONTHS)
-------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Swiss Franc................................... 91,900 60,651 202 1-3
British Pound................................. 6,913 11,269 (249) 12
Belgian Franc................................. 345,834 9,370 102 9
Canadian Dollar............................... 13,016 9,259 397 6-8
German Mark................................... 15,770 8,952 233 3-9
Danish Krone.................................. 18,432 2,696 21 9
Netherlands Guilder........................... 2,865 1,422 17 9
Swedish Krone................................. 10,273 1,307 23 12
Finnish Markka................................ 6,384 1,171 10 9
Irish Punt.................................... 828 1,151 (2) 9
French Franc.................................. 6,131 1,032 21 3
Hungarian Forint.............................. 192,869 833 (46) 6
Czech Republic Koruna......................... 25,003 718 (43) 6
Norwegian Krone............................... 5,104 663 -- 6
Spanish Peseta................................ 78,262 527 17 3
Australian Dollar............................. 703 469 35 6-8
Malaysian Ringgit............................. 1,057 266 11 3
</TABLE>
NOTE Q -- INTERIM FINANCIAL STATEMENTS
Interim financial statements for the first three quarters of fiscal 1999 and
1998 are unaudited. These statements were prepared on the same basis as the
audited financial statements for the three years ended July 3, 1998 and are in
conformity with generally accepted accounting principles.
F-14
<PAGE> 93
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
EXHIBITS TO FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
LANIER WORLDWIDE, INC.
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
2.1 Form of Distribution Agreement.*
3.1 Form of Amended and Restated Certificate of Incorporation of
Lanier Worldwide, Inc.
3.2 Form of By-Laws of Lanier Worldwide, Inc.
4.1 Form of Stockholder Protection Rights Agreement.
4.2 Form of Certificate of Designation and Terms of Registrant's
Participating Preferred Stock.
10.1 Form of Tax Disaffiliation Agreement.*
10.2 Form of Credit Agreement.*
10.3 Form of Transition Services Agreement.*
10.4 Form of Distribution Agreement (filed as Exhibit 2.1).
10.5 Form of Employee Benefits Compensation and Allocation
Agreement.*
10.6 Form of Registration Rights Agreement.
10.7 Form of Stock Incentive Plan.*
12.1 Computation of Ratios of Earnings to Fixed Charges.
21.1 List of Subsidiaries.*
23.1 Consent of Independent Certified Public Accountants.
27.1 Financial Data Schedule.
- -------------
* To be filed by Amendment
<PAGE> 1
Exhibit 3.1
FORM OF AMENDED
---------------
AND RESTATED
------------
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
LANIER WORLDWIDE, INC.
----------------------
LANIER WORLDWIDE, INC., a Delaware corporation (the "Corporation"),
hereby certifies as follows:
1. The name of the Corporation is Lanier Worldwide, Inc. and it was
originally incorporated under the name Harris/3M Document Products, Inc. The
date of filing of its original certificate of incorporation with the Secretary
of State was December 2, 1985.
2. This Restated Certificate of Incorporation amends, restates and
integrates the provisions of the Certificate of Incorporation as currently in
effect of said Corporation and has been duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware by written consent of the holders of all of the outstanding stock
entitled to vote thereon in accordance with the provisions of Section 228 of the
General Corporation Law of the State of Delaware.
3. The text of the Restated Certificate of Incorporation as currently
in effect is hereby amended and restated to read herein as set forth in full:
FIRST. The name of the Corporation is Lanier Worldwide, Inc.
SECOND. The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 525,000,000, of which 500,000,000
shares of the par value of $0.01 per share shall be a separate class designated
as Common Stock and 25,000,000 shares without par value shall be a separate
class designated as Preferred Stock.
<PAGE> 2
A. COMMON STOCK
(i) Voting. Except as may be provided in this Restated Certificate of
Incorporation or required by law, the Common Stock shall have voting rights in
the election of directors and on all other matters presented to stockholders,
with each holder of Common Stock being entitled to one vote for each share of
Common Stock held of record by such holder on such matters.
(ii) Dividends. Subject to the rights of the holders of any series of
Preferred Stock, holders of Common Stock shall be entitled to receive such
dividends and distributions (whether payable in cash or otherwise) as may be
declared on the Common Stock by the board of directors of the Corporation from
time to time out of assets or funds of the Corporation legally available
therefor; provided that the board of directors of the Corporation shall declare
no dividend, and no dividend shall be paid, with respect to any outstanding
share of Common Stock, whether in cash or otherwise (including any dividend in
shares of Common Stock on or with respect to shares of Common Stock ( "Stock
Dividends")), unless, simultaneously, the same dividend is declared or paid with
respect to each share of Common Stock. Stock Dividends with respect to Common
Stock may be paid only with shares of Common Stock.
(iii) Subdivisions, Combinations and Mergers. In the event of any
merger, statutory share exchange, consolidation or similar form of corporate
transaction involving the Corporation (whether or not the Corporation is the
surviving entity), the holders of Common Stock shall be entitled to receive the
same per share consideration, if any.
(iv) Rights on Liquidation. Subject to the rights of the holders of any
series of Preferred Stock, in the event of any liquidation, dissolution or
winding-up of the Corporation (whether voluntary or involuntary), the assets of
the Corporation available for distribution to stockholders shall be distributed
in equal amounts per share to the holders of Common Stock.
For purposes of this paragraph, a merger, statutory share exchange,
consolidation or similar corporate transaction involving the Corporation
(whether or not the Corporation is the surviving entity), or the sale, transfer
or lease by the Corporation of all or substantially all its assets, shall not
constitute or be deemed a liquidation, dissolution or winding-up of the
Corporation.
B. PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series from time
to time as determined by the board of directors of the Corporation, and the
board of directors of the Corporation is authorized to fix by resolution or
resolutions the designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof, of the shares of each
series of Preferred Stock, including the following:
<PAGE> 3
(i) the distinctive serial designation of such series which shall
distinguish it from other series;
(ii) the number of shares included in such series;
(iii) whether dividends shall be payable to the holders of the shares
of such series and, if so, the basis on which such holders shall be entitled to
receive dividends (which may include, without limitation, a right to receive
such dividends or distributions as may be declared on the shares of such series
by the board of directors of the Corporation, a right to receive such dividends
or distributions, or any portion or multiple thereof, as may be declared on the
Common Stock or any other class of stock or, in addition to or in lieu of any
other right to receive dividends, a right to receive dividends at a particular
rate or at a rate determined by a particular method, in which case such rate or
method of determining such rate may be set forth), the form of such dividend,
any conditions on which such dividends shall be payable and the date or dates,
if any, on which such dividends shall be payable;
(iv) whether dividends on the shares of such series shall be cumulative
and, if so, the date or dates or method of determining the date or dates from
which dividends on the shares of such series shall be cumulative;
(v) the amount or amounts, if any, which shall be payable out of the
assets of the Corporation to the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, and the relative rights of priority, if any, of payment of the
shares of such series;
(vi) the price or prices (in cash, securities or other property or a
combination thereof) at which, the period or periods within which and the terms
and conditions upon which the shares of such series may be redeemed, in whole or
in part, at the option of the Corporation or at the option of the holder or
holders thereof or upon the happening of a specified event or events;
(vii) the obligation, if any, of the Corporation to purchase or redeem
shares of such series pursuant to a sinking fund or otherwise and the price or
prices (in cash, securities or other property or a combination thereof) at
which, the period or periods within which and the terms and conditions upon
which the shares of such series shall be redeemed or purchased, in whole or in
part, pursuant to such obligation;
(viii) whether or not the shares of such series shall be convertible or
exchangeable, at any time or times at the option of the holder or holders
thereof or at the option of the Corporation or upon the happening of a specified
event or events, into shares of any other class or classes or any other series
of the same or any other class or classes of stock of the Corporation or any
other securities or property of the Corporation or any other entity, and the
price or prices (in cash, securities or other property or a combination thereof)
or rate or rates of conversion or exchange and any adjustments applicable
thereto; and
3
<PAGE> 4
(ix) whether or not the holders of the shares of such series shall have
voting rights, in addition to the voting rights provided by law, and if so the
terms of such voting rights, which may provide, among other things and subject
to the other provisions of this Restated Certificate of Incorporation, that each
share of such series shall carry one vote or more or less than one vote per
share, that the holders of such series shall be entitled to vote on certain
matters as a separate class (which for such purpose may be comprised solely of
such series or of such series and one or more other series or classes of stock
of the Corporation) and that all the shares of such series entitled to vote on a
particular matter shall be deemed to be voted on such matter in the manner that
a specified portion of the voting power of the shares of such series or separate
class are voted on such matter.
For all purposes, this Restated Certificate of Incorporation shall
include each certificate of designations (if any) setting forth the terms of a
series of Preferred Stock.
Subject to the rights, if any, of the holders of any series of
Preferred Stock set forth in a certificate of designations, an amendment of this
Restated Certificate of Incorporation to increase or decrease the number of
authorized shares of any series of Preferred Stock (but not below the number of
shares thereof then outstanding) may be adopted by resolution adopted by the
board of directors of the Corporation and approved by the affirmative vote of
the holders of a majority of the voting power of all outstanding shares of
Common Stock of the Corporation and all other outstanding shares of stock of the
Corporation entitled to vote thereon irrespective of the provisions of the
Delaware General Corporation Law, with such outstanding shares of Common Stock
and other stock considered for this purpose as a single class, and no vote of
the holders of any series of Preferred Stock, voting as a separate class, shall
be required therefor.
Except as otherwise required by law or provided in the certificate of
designations for the relevant series, holders of Common Stock, as such, shall
not be entitled to vote on any amendment of this Restated Certificate of
Incorporation that alters or changes the powers, preferences, rights or other
terms of one or more outstanding series of Preferred Stock if the holders of
such affected series are entitled, either separately or together with the
holders of one or more other series of Preferred Stock, to vote thereon as a
separate class pursuant to this Restated Certificate of Incorporation or
pursuant to the Delaware General Corporation Law as then in effect.
FIFTH. All corporate powers shall be exercised by the board of
directors of the Corporation, except as otherwise specifically required by law
or as otherwise provided in this Restated Certificate of Incorporation. Any
meeting of stockholders may be postponed by action of the board of directors at
any time in advance of such meeting. The board of directors of the Corporation
shall have the power to adopt such rules and regulations for the conduct of the
meetings and management of the affairs of the Corporation as they may deem
proper and the power to adjourn any meeting of stockholders without a vote of
the stockholders, which powers may be delegated by the board of directors to the
chairman of such meeting either in such rules and regulations or pursuant to the
by-laws of the Corporation.
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Special meetings of stockholders of the Corporation may be called at
any time by, but only by, the board of directors of the Corporation, to be held
at such date, time and place either within or without the State of Delaware as
may be stated in the notice of the meeting.
The board of directors of the Corporation is authorized to adopt, amend
or repeal by-laws of the Corporation. No adoption, amendment or repeal of a
by-law by action of stockholders shall be effective unless approved by the
affirmative vote of the holders of not less than 80% of the voting power of all
outstanding shares of Common Stock of the Corporation and all other outstanding
shares of stock of the Corporation entitled to vote on such matter, with such
outstanding shares of Common Stock and other stock considered for this purpose
as a single class. Any vote of stockholders required by this Article FIFTH shall
be in addition to any other vote of stockholders that may be required by law,
this Restated Certificate of Incorporation, the by-laws of the Corporation, any
agreement with a national securities exchange or otherwise.
SIXTH. Elections of directors need not be by written ballot except and
to the extent provided in the by-laws of the Corporation.
SEVENTH. The directors of the Corporation shall be divided into three
classes. The number of directors of the Corporation and the number of directors
in each class of directors shall be fixed only by resolution of the board of
directors of the Corporation from time to time. The initial term of office of
the first such class of directors shall expire at the annual meeting of
stockholders in 2000, the initial term of office of the second such class of
directors shall expire at the annual meeting of stockholders in 2001 and the
initial term of office of the third such class of directors shall expire at the
annual meeting of stockholders in 2002, with each such class of directors to
hold office until their successors have been duly elected and qualified. At each
annual meeting of stockholders, directors elected to succeed the directors whose
terms expire at such annual meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders in the third year following the
year of their election and until their successors have been duly elected and
qualified. If the number of directors is changed, any increase or decrease shall
be apportioned among the classes in such manner as the board of directors of the
Corporation shall determine, but no decrease in the number of directors may
shorten the term of any incumbent director.
No director who is part of any such class of directors may be removed
except both for cause and with the affirmative vote of the holders of not less
than 80% of the voting power of all outstanding shares of stock of the
Corporation entitled to vote generally in the election of directors, considered
for this purpose as a single class.
Vacancies and newly created directorships resulting from any increase
in the authorized number of directors or from any other cause (other than
vacancies and newly created directorships which the holders of any class or
classes of stock or series thereof are expressly entitled by this Restated
Certificate of Incorporation to fill) shall be filled by, and only by, a
majority of the directors then in office, although less than a quorum, or by the
sole remaining director. Any director appointed to fill a vacancy or a newly
created directorship shall hold
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office until the next election of the class of directors of the director which
such director replaced or the class of directors to which such director was
appointed, and until his or her successor is elected and qualified or until his
or her earlier resignation or removal.
Notwithstanding the foregoing, in the event that the holders of any
class or series of Preferred Stock of the Corporation shall be entitled, voting
separately as a class, to elect any directors of the Corporation, then the
number of directors that may be elected by such holders voting separately as a
class shall be in addition to the number fixed pursuant to a resolution of the
board of directors of the Corporation. Except as otherwise provided in the terms
of such class or series, (i) the terms of the directors elected by such holders
voting separately as a class shall expire at the annual meeting of stockholders
next succeeding their election without regard to the classification of other
directors and (ii) any director or directors elected by such holders voting
separately as a class may be removed, with or without cause, by the holders of a
majority of the voting power of all outstanding shares of stock of the
Corporation entitled to vote separately as a class in an election of such
directors.
EIGHTH. In taking any action, including action that may involve or
relate to a change or potential change in the control of the Corporation, a
director of the Corporation may consider, among other things, both the long-term
and short-term interests of the Corporation and its stockholders and the effects
that the Corporation's actions may have in the short term or long term upon any
one or more of the following matters:
(i) the prospects for potential growth, development, productivity and
profitability of the Corporation;
(ii) the Corporation's current employees;
(iii) the Corporation's employees and other beneficiaries receiving or
entitled to receive retirement, welfare or similar benefits from or pursuant to
any plan sponsored, or agreement entered into, by the Corporation;
(iv) the Corporation's customers and creditors;
(v) the ability of the Corporation to provide, as a going concern,
goods, services, employment opportunities and employment benefits and otherwise
to contribute to the communities in which it does business; and
(vi) such other additional factors as a director may consider
appropriate in such circumstances.
Nothing in this Article EIGHTH shall create any duty owed by any
director of the Corporation to any person or entity to consider, or afford any
particular weight to, any of the foregoing matters or to limit his or her
consideration to the foregoing matters. No such employee, former employee,
beneficiary, customer, creditor or community or member thereof
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shall have any rights against any director of the Corporation or the Corporation
under this Article EIGHTH.
NINTH. From and after the filing of this Restated Certificate of
Incorporation, no action of stockholders of the Corporation required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting of stockholders, without prior notice
and without a vote, and the power of stockholders of the Corporation to consent
in writing to the taking of any action without a meeting is specifically denied.
Notwithstanding this Article NINTH, the holders of any series of Preferred Stock
of the Corporation shall be entitled to take action by written consent to such
extent, if any, as may be provided in the terms of such series.
TENTH. No provision of Article FIFTH, SEVENTH, EIGHTH, NINTH OR
ELEVENTH or of this Article TENTH shall be amended, modified or repealed, and no
provision inconsistent with any such provision shall become part of this
Restated Certificate of Incorporation, unless such matter is approved by the
affirmative vote of the holders of not less than 80% of the voting power of all
outstanding shares of Common Stock of the Corporation and all other outstanding
shares of stock of the Corporation entitled to vote on such matter, with such
outstanding shares of Common Stock and other stock considered for this purpose
as a single class. Any vote of stockholders required by this Article TENTH shall
be in addition to any other vote of the stockholders that may be required by
law, this Restated Certificate of Incorporation, the by-laws of the Corporation,
any agreement with a national securities exchange or otherwise.
ELEVENTH. A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director of the Corporation, except to the extent that such exemption
from liability or limitation thereof is not permitted under the Delaware General
Corporation Law as currently in effect or as the same may hereafter be amended.
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IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and attested by its duly authorized officer on this ____ day of
_______________, 1999.
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Exhibit 3.2
FORM OF BY-LAWS
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OF
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LANIER WORLDWIDE, INC.
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ARTICLE I
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STOCKHOLDERS
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SECTION 1.1. ANNUAL MEETINGS. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place either within
or without the State of Delaware as may be designated by the Board of Directors
from time to time. Any other business properly brought before the meeting may be
transacted at the annual meeting.
SECTION 1.2. SPECIAL MEETINGS. Special meetings of stockholders may be
called at any time by, and only by, the Board of Directors, to be held at such
date, time and place either within or without the State of Delaware as may be
stated in the notice of the meeting.
SECTION 1.3. NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as it
appears on the records of the Corporation.
SECTION 1.4. ADJOURNMENTS. Any meeting of stockholders, annual or
special, may be adjourned from time to time, to reconvene at the same or some
other place, and notice need not be given of any such adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 1.5. QUORUM. At each meeting of stockholders, except where
otherwise required by law, the Corporation's certificate of incorporation or
these by-laws, the holders of a majority of the outstanding shares of stock
entitled to vote on a matter at the meeting, present in person or represented by
proxy, shall constitute a quorum. For purposes of the foregoing, where a
separate vote by class or classes is required for any matter, the holders of a
majority of the outstanding
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shares of such class or classes, present in person or represented by proxy,
shall constitute a quorum to take action with respect to that vote on that
matter. Two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum of the holders of any class of stock
entitled to vote on a matter, the meeting of such class may be adjourned from
time to time in the manner provided by Sections 1.4 and 1.6 of these by-laws
until a quorum of such class shall be so present or represented. Shares of its
own capital stock belonging on the record date for the meeting to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be counted
for quorum purposes; provided, however, that the foregoing shall not limit the
right of the Corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
SECTION 1.6. ORGANIZATION. Meetings of stockholders shall be presided
over by a Chairman of the Board, if any, or in the absence of a Chairman of the
Board by a Vice Chairman of the Board, if any, or in the absence of a Vice
Chairman of the Board by a Chief Executive Officer, or in the absence of a Chief
Executive Officer by a President, or in the absence of a President by a Chief
Operating Officer, or in the absence of a Chief Operating Officer by a Vice
President, or in the absence of the foregoing persons by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. A Secretary, or in the absence of a Secretary an
Assistant Secretary, shall act as secretary of the meeting, but in the absence
of a Secretary and any Assistant Secretary the chairman of the meeting may
appoint any person to act as secretary of the meeting.
The order of business at each such meeting shall be as determined by
the chairman of the meeting. The chairman of the meeting shall have the right
and authority to adjourn a meeting of stockholders without a vote of
stockholders and to prescribe such rules, regulations and procedures and to do
all such acts and things as are necessary or desirable for the proper conduct of
the meeting and are not inconsistent with any rules or regulations adopted by
the Board of Directors pursuant to the provisions of the certificate of
incorporation, including the establishment of procedures for the maintenance of
order and safety, limitations on the time allotted to questions or comments on
the affairs of the Corporation, restrictions on entry to such meeting after the
time prescribed for the commencement thereof and the opening and closing of the
voting polls for each item upon which a vote is to be taken.
SECTION 1.7. INSPECTORS. Prior to any meeting of stockholders, the
Board of Directors, a Chairman of the Board, a Vice Chairman of the Board, a
Chief Executive Officer, a President, a Chief Operating Officer, a Vice
President or any other officer designated by the Board shall appoint one or more
inspectors to act at such meeting and make a written report thereof and may
designate one or more persons as alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at the meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability. The
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inspectors shall ascertain the number of shares outstanding and the voting power
of each, determine the shares represented at the meeting and the validity of
proxies and ballots, count all votes and ballots, determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors and certify their determination of the number of
shares represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons to assist them in the performance
of their duties. The date and time of the opening and closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxy or vote, nor any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls. In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a stockholder who submits a
proxy by telegram, cablegram or other electronic transmission from which it can
be determined that the proxy was authorized by the stockholder, ballots and the
regular books and records of the Corporation, and they may also consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the stockholder holds of record. If the
inspectors consider other reliable information for such purpose, they shall, at
the time they make their certification, specify the precise information
considered by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
SECTION 1.8. VOTING; PROXIES. Unless otherwise provided in the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question. If the
Corporation's certificate of incorporation provides for more or less than one
vote for any share on any matter, every reference in these by-laws to a majority
or other proportion of shares of stock shall refer to such majority or other
proportion of the votes of such shares of stock. Each stockholder entitled to
vote at a meeting of stockholders may authorize another person or persons to act
for such stockholder by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power, regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the Corporation
generally. A stockholder may revoke any proxy which is not irrevocable by
attending the meeting and voting in person or by filing an instrument in writing
revoking the proxy or another duly executed proxy bearing a later date with a
Secretary. Voting at meetings of stockholders need not be by written ballot
unless so directed by the chairman of the meeting or the Board of Directors.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. In all other matters, unless otherwise required by law,
the Corporation's certificate of incorporation or these by-laws, the affirmative
vote of the holders of a majority of the shares present in person or represented
by proxy at the meeting and entitled to vote on the subject
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matter shall be the act of the stockholders. Where a separate vote by class or
classes is required, the affirmative vote of the holders of a majority (or, in
the case of an election of directors, a plurality) of the shares of such class
or classes present in person or represented by proxy at the meeting shall be the
act of such class or classes, except as otherwise required by law, the
Corporation's certificate of incorporation or these by-laws.
SECTION 1.9. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which record date shall not be more than sixty nor less
than ten days before the date of such meeting. If no record date is fixed by the
Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to the
action for which a record date is being established. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
SECTION 1.10. LIST OF STOCKHOLDERS ENTITLED TO VOTE. A Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the municipality where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
SECTION 1.11. ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND
OTHER STOCKHOLDER PROPOSALS.
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(a) The matters to be considered and brought before any annual or
special meeting of stockholders of the Corporation shall be limited to only such
matters, including the nomination and election of directors, as shall be brought
properly before such meeting in compliance with the procedures set forth in this
Section 1.11.
(b) For any matter to be properly brought before any annual meeting of
stockholders, the matter must be (i) specified in the notice of annual meeting
given by or at the direction of the Board of Directors, (ii) otherwise brought
before the annual meeting by or at the direction of the Board of Directors or
(iii) brought before the annual meeting in the manner specified in this Section
1.11(b) (x) by a stockholder that holds of record stock of the Corporation
entitled to vote at the annual meeting on such matter (including any election of
a director) or (y) by a person (a "Nominee Holder") that holds such stock
through a nominee or "street name" holder of record of such stock and can
demonstrate to the Corporation such indirect ownership of, and such Nominee
Holder's entitlement to vote, such stock on such matter. In addition to any
other requirements under applicable law, the Corporation's certificate of
incorporation and these by-laws, persons nominated by stockholders for election
as directors of the Corporation and any other proposals by stockholders shall be
properly brought before an annual meeting of stockholders only if notice of any
such matter to be presented by a stockholder at such meeting (a "Stockholder
Notice") shall be delivered to a Secretary at the principal executive office of
the Corporation not less than ninety nor more than one hundred and twenty days
prior to the first anniversary date of the annual meeting for the preceding
year; provided, however, that if and only if the annual meeting is not scheduled
to be held within a period that commences thirty days before and ends thirty
days after such anniversary date (an annual meeting date outside such period
being referred to herein as an "Other Meeting Date"), such Stockholder Notice
shall be given in the manner provided herein by the later of (i) the close of
business on the date ninety days prior to such Other Meeting Date or (ii) the
close of business on the tenth day following the date on which such Other
Meeting Date is first publicly announced or disclosed. Any stockholder desiring
to nominate any person or persons (as the case may be) for election as a
director or directors of the Corporation at an annual meeting of stockholders
shall deliver, as part of such Stockholder Notice, a statement in writing
setting forth the name of the person or persons to be nominated, the number and
class of all shares of each class of stock of the Corporation owned of record
and beneficially by each such person, as reported to such stockholder by such
person, the information regarding each such person required by paragraphs (a),
(e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange
Commission, each such person's signed consent to serve as a director of the
Corporation if elected, such stockholder's name and address, the number and
class of all shares of each class of stock of the Corporation owned of record
and beneficially by such stockholder and, in the case of a Nominee Holder,
evidence establishing such Nominee Holder's indirect ownership of stock and
entitlement to vote such stock for the election of directors at the annual
meeting. Any stockholder who gives a Stockholder Notice of any matter (other
than a nomination for director) proposed to be brought before an annual meeting
of stockholders shall deliver, as part of such Stockholder Notice, the text of
the proposal to be presented and a brief written statement of the reasons why
such stockholder favors the proposal and setting forth such stockholder's name
and address, the number and class of all shares of each class of stock of the
Corporation owned of record and
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beneficially by such stockholder, any material interest of such stockholder in
the matter proposed (other than as a stockholder), if applicable, and, in the
case of a Nominee Holder, evidence establishing such Nominee Holder's indirect
ownership of stock and entitlement to vote such stock on the matter proposed at
the annual meeting. As used in these by-laws, shares "beneficially owned" shall
mean all shares which such person is deemed to beneficially own pursuant to
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934 (the "Exchange
Act"). If a stockholder is entitled to vote only for a specific class or
category of directors at a meeting (annual or special), such stockholder's right
to nominate one or more individuals for election as a director at the meeting
shall be limited to such class or category of directors.
Notwithstanding any provision of this Section 1.11 to the contrary, in
the event that the number of directors to be elected to the Board of Directors
of the Corporation at the next annual meeting of stockholders is increased by
virtue of an increase in the size of the Board of Directors and either all of
the nominees for director at the next annual meeting of stockholders or the size
of the increased Board of Directors is not publicly announced or disclosed by
the Corporation at least one hundred days prior to the first anniversary of the
preceding year's annual meeting, a Stockholder Notice shall also be considered
timely hereunder, but only with respect to nominees to stand for election at the
next annual meeting as the result of any new positions created by such increase,
if it shall be delivered to a Secretary at the principal executive office of the
Corporation not later than the close of business on the tenth day following the
first day on which all such nominees or the size of the increased Board of
Directors shall have been publicly announced or disclosed.
(c) Except as provided in the immediately following sentence, no matter
shall be properly brought before a special meeting of stockholders unless such
matter shall have been brought before the meeting pursuant to the Corporation's
notice of such meeting. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any stockholder entitled to vote for the election of such director(s)
at such meeting may nominate a person or persons (as the case may be) for
election to such position(s) as are specified in the Corporation's notice of
such meeting, but only if the Stockholder Notice required by Section 1.11(b)
hereof shall be delivered to a Secretary at the principal executive office of
the Corporation not later than the close of business on the tenth day following
the first day on which the date of the special meeting and either the names of
all nominees proposed by the Board of Directors to be elected at such meeting or
the number of directors to be elected shall have been publicly announced or
disclosed.
(d) For purposes of this Section 1.11, a matter shall be deemed to have
been "publicly announced or disclosed" if such matter is disclosed in a press
release reported by the Dow Jones News Service, the Associated Press or a
comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission.
(e) In no event shall the adjournment of an annual meeting or a special
meeting, or any announcement thereof, commence a new period for the giving of
notice as provided in this Section 1.11. This Section 1.11 shall not apply to
(i) any stockholder proposal made pursuant to
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Rule 14a-8 under the Exchange Act or (ii) any nomination of a director in an
election in which only the holders of one or more series of Preferred Stock of
the Corporation issued pursuant to Article FOURTH of the Corporation's
certificate of incorporation are entitled to vote (unless otherwise provided in
the terms of such stock).
(f) The chairman of any meeting of stockholders, in addition to making
any other determinations that may be appropriate to the conduct of the meeting,
shall have the power and duty to determine whether notice of nominees and other
matters proposed to be brought before a meeting has been duly given in the
manner provided in this Section 1.11 and, if not so given, shall direct and
declare at the meeting that such nominees and other matters shall not be
considered.
SECTION 1.12. APPROVAL OF STOCKHOLDER PROPOSALS. Except as otherwise
required by law, any matter (other than a nomination for director) that has been
properly brought before an annual or special meeting of stockholders of the
Corporation by a stockholder (including a Nominee Holder) in compliance with the
procedures set forth in Section 1.11 shall require for approval thereof the
affirmative vote of the holders of not less than a majority of all outstanding
shares of Common Stock of the Corporation and all other outstanding shares of
stock of the Corporation entitled to vote on such matter, with such outstanding
shares of Common Stock and other stock considered for this purpose as a single
class. Any vote of stockholders required by this Section 1.12 shall be in
addition to any other vote of stockholders of the Corporation that may be
required by law, the Corporation's certificate of incorporation or these
by-laws, by any agreement with a national securities exchange or otherwise.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 2.1. POWERS; NUMBER; QUALIFICATIONS. The business and affairs
of the Corporation shall be managed by or under the direction of the Board of
Directors, except as may be otherwise required by law or provided in the
Corporation's certificate of incorporation. The number of directors of the
Corporation and the number of directors in each class of directors shall be
fixed only by resolution of the Board of Directors from time to time. If the
holders of any class or classes of stock or series thereof are entitled by the
Corporation's certificate of incorporation to elect one or more directors, the
preceding sentence shall not apply to such directors and the number of such
directors shall be as provided in the terms of such stock. Directors need not be
stockholders.
SECTION 2.2. ELECTION; TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES.
Each director shall hold office until the next election of the class or category
for which such director shall have been chosen, and until his or her successor
is elected and qualified or until his or her earlier resignation or removal. Any
director may resign at any time upon written notice to the Board of Directors or
to a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive
7
<PAGE> 8
Officer, a President, a Chief Operating Officer or a Secretary. Such resignation
shall take effect at the time specified therein, and unless otherwise specified
therein no acceptance of such resignation shall be necessary to make it
effective. No director may be removed except as provided in the Corporation's
certificate of incorporation. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors (other than
any directors elected in the manner described in the next sentence) or from any
other cause shall be filled by, and only by, a majority of the directors then in
office, although less than a quorum, or by the sole remaining director. Whenever
the holders of any class or classes of stock or series thereof are entitled by
the certificate of incorporation to elect one or more directors, vacancies and
newly created directorships of such class or classes or series may be filled by,
and only by, a majority of the directors elected by such class or classes or
series then in office, or by the sole remaining director so elected. Any
director elected or appointed to fill a vacancy or a newly created directorship
shall hold office until the next election of the class of directors of the
director which such director replaced or the class of directors to which such
director was appointed, and until his or her successor is elected and qualified
or until his or her earlier resignation or removal.
SECTION 2.3. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so determined
notice thereof need not be given.
SECTION 2.4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by a Chairman of the Board, if any, by a Vice Chairman
of the Board, if any, by a Chief Executive Officer, if any, by a President, if
any, by a Chief Operating Officer, if any, or by any two directors. Reasonable
notice thereof shall be given by the person or persons calling the meeting.
SECTION 2.5. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE
PERMITTED. Unless otherwise restricted by the Corporation's certificate of
incorporation or these by-laws, members of the Board of Directors, or any
committee designated by the Board, may participate in a meeting of the Board or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
SECTION 2.6. QUORUM; VOTE REQUIRED FOR ACTION. At each meeting of the
Board of Directors, one-half of the number of directors equal to (i) the total
number of directors fixed by resolution of the board of directors (including any
vacancies) plus (ii) the number of directors elected by a holder or holders of
Preferred Stock voting separately as a class, as described in the fourth
paragraph of Article SEVENTH of the certificate of incorporation (including any
vacancies), shall constitute a quorum for the transaction of business. The vote
of a majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board unless the certificate of incorporation or these
by-laws shall require a vote of a greater number. In case at any meeting of the
Board a quorum shall not be present, the members or a majority of
8
<PAGE> 9
the members of the Board present may adjourn the meeting from time to time until
a quorum shall be present.
SECTION 2.7. ORGANIZATION. Meetings of the Board of Directors shall be
presided over by a Chairman of the Board, if any, or in the absence of a
Chairman of the Board by a Vice Chairman of the Board, if any, or in the absence
of a Vice Chairman of the Board, by a Chief Executive Officer, or in the absence
of a Chief Executive Officer, by a President, or in the absence of a President,
by a Chief Operating Officer, or in the absence of a Chief Operating Officer, by
a chairman chosen at the meeting. A Secretary, or in the absence of a Secretary
an Assistant Secretary, shall act as secretary of the meeting, but in the
absence of a Secretary and any Assistant Secretary the chairman of the meeting
may appoint any person to act as secretary of the meeting.
SECTION 2.8. ACTION BY DIRECTORS WITHOUT A MEETING. Unless otherwise
restricted by the Corporation's certificate of incorporation or these by-laws,
any action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or of such committee, as the case may be, then in office
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 2.9. COMPENSATION OF DIRECTORS. Unless otherwise restricted by
the Corporation's certificate of incorporation or these by-laws, the Board of
Directors shall have the authority to fix the compensation of directors.
ARTICLE III
-----------
COMMITTEES
----------
SECTION 3.1. COMMITTEES. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors or
in these by-laws, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by law
to be submitted to stockholders for approval or (ii) adopting, amending or
repealing these by-laws.
9
<PAGE> 10
SECTION 3.2. COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board or a provision in the rules of such committee to the contrary, a majority
of the entire authorized number of members of such committee shall constitute a
quorum for the transaction of business, the vote of a majority of the members
present at a meeting at the time of such vote if a quorum is then present shall
be the act of such committee, and in other respects each committee shall conduct
its business in the same manner as the Board conducts its business pursuant to
Article II of these by-laws.
ARTICLE IV
----------
OFFICERS
--------
SECTION 4.1. OFFICERS; ELECTION OR APPOINTMENT. The Board of Directors
shall take such action as may be necessary from time to time to ensure that the
Corporation has such officers as are necessary, under Section 5.1 of these
by-laws and the Delaware General Corporation Law as currently in effect or as
the same may hereafter be amended, to enable it to sign stock certificates. The
executive officers of the Company shall consist of the Chief Executive Officer,
the President, and such Executive Vice Presidents as the Board of Directors
shall choose to elect, if any. In addition thereto, the officers shall include
such number of Vice Presidents as the Board of Directors may choose to elect,
the Secretary, the Treasurer, the General Counsel, and if so determined by the
Board of Directors, a Controller. In their discretion, the Board of Directors
may elect one or more Assistant Secretaries and Assistant Treasurers and any
other additional officers. Any number of offices may be held by the same person
and directors may hold any office unless the Corporation's certificate of
incorporation or these by-laws otherwise provide.
SECTION 4.2. TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES. Unless
otherwise provided in the resolution of the Board of Directors electing or
authorizing the appointment of any officer, each officer shall hold office until
his or her successor is elected or appointed and qualified or until his or her
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Board or to such person or persons as the Board may designate.
Such resignation shall take effect at the time specified therein, and unless
otherwise specified therein no acceptance of such resignation shall be necessary
to make it effective. The Board may remove any officer with or without cause at
any time. Any officer authorized by the Board to appoint a person to hold an
office of the Corporation may also remove such person from such office with or
without cause at any time, unless otherwise provided in the resolution of the
Board providing such authorization. Any such removal shall be without prejudice
to the contractual rights of such officer, if any, with the Corporation, but the
election or appointment of an officer shall not of itself create contractual
rights. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise may be filled by the Board at any regular or
special meeting or by an officer authorized by the Board to appoint a person to
hold such office.
10
<PAGE> 11
SECTION 4.3. POWERS AND DUTIES IN GENERAL. The powers and duties of the
officers shall be exercised in all cases subject to such directions as the Board
of Directors may see fit to give. The respective powers and duties hereinafter
set forth are subject to alteration by the Board of Directors. The Board of
Directors is also authorized to delegate the duties of any officer to any other
officer, employee or committee and to require the performance of duties in
addition to those provided for herein. Subject to such directions, if any, as
the Board of Directors may give from time to time, the executive officers of the
Company are authorized to establish and to modify from time to time an
Organization Plan defining the respective duties and functions of the officers
of the Company.
SECTION 4.4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
initiate and develop broad Company policies and, subject to the power and
authority of the Board of Directors, have general supervision, direction, and
control of the officers, employees, business and affairs of the Company.
SECTION 4.5. PRESIDENT. The President shall have, subject to the power
and authority of the Board of Directors and the Chief Executive Officer, general
responsibility for the major functions of the business of the Company.
SECTION 4.6. VICE PRESIDENTS. The Vice Presidents of the Company shall
have such duties and responsibilities as are specified by the Board of Directors
and the Chief Executive Officer. In the absence or disability of the President,
the Vice Presidents, in the order designated by the Board of Directors, shall
perform the President's duties.
SECTION 4.7. SECRETARY, TREASURER, GENERAL COUNSEL AND CONTROLLER. The
Secretary, the Treasurer, the General Counsel and the Controller (if any) shall
perform such duties as are indicated by their respective titles, subject to the
provisions of Section 4.3 of this Article. The Secretary shall have the custody
of the corporate seal.
SECTION 4.8. OTHER OFFICERS. All other officers shall have such powers
and duties as may be prescribed by the Board of Directors, or, in the absence of
their action, by the chief executive officers of the Company or by the
respective officers having supervision over them.
SECTION 4.9. COMPENSATION. The Board of Directors is authorized to
determine, or to provide the method of determining, or to empower a special
committee of its members to determine, the compensation.
ARTICLE V
---------
STOCK
-----
11
<PAGE> 12
SECTION 5.1. CERTIFICATES; UNCERTIFICATED SHARES. The shares of stock
in the Corporation shall be represented by certificates, provided that the Board
of Directors of the Corporation may provide by resolution or resolutions that
some or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to any such shares represented by a
certificate theretofore issued until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution or resolutions by
the Board of Directors of the Corporation, every holder of stock represented by
certificates, and upon request every holder of uncertificated shares, shall be
entitled to have a certificate signed by or in the name of the Corporation by a
Chairman or Vice Chairman of the Board or a President or Vice President, and by
a Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, representing
the number of shares of stock in the Corporation owned by such holder. If such
certificate is manually signed by one officer or manually countersigned by a
transfer agent or by a registrar, any other signature on the certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
person were such officer, transfer agent or registrar at the date of issue.
Certificates representing shares of stock of the Corporation may bear such
legends regarding restrictions on transfer or other matters as any officer or
officers of the Corporation may determine to be appropriate and lawful.
If the Corporation is authorized to issue more than one class of stock
or more than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate which the Corporation shall issue to represent such class or
series of stock, provided that, except as otherwise required by law, in lieu of
the foregoing requirements, there may be set forth on the face or back of the
certificate which the Corporation shall issue to represent such class or series
of stock a statement that the Corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of such class or series of stock
and the qualifications, limitations or restrictions of such preferences and/or
rights. Within a reasonable time after the issuance or transfer of
uncertificated shares of any class or series of stock, the Corporation shall
send to the registered owner thereof a written notice containing the information
required by law to be set forth or stated on certificates representing shares of
such class or series or a statement that the Corporation will furnish without
charge to each stockholder who so requests the powers, designations, preferences
and relative, participating, optional or other special rights of such class or
series and the qualifications, limitations or restrictions of such preferences
and/or rights.
Except as otherwise expressly provided by law, the rights and
obligations of the holders of uncertificated shares and the rights and
obligations of the holders of certificates representing stock of the same class
and series shall be identical.
SECTION 5.2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF
NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore
12
<PAGE> 13
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such owner's legal representative, to give the Corporation a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
ARTICLE VI
----------
MISCELLANEOUS
-------------
SECTION 6.1. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
SECTION 6.2. SEAL. The Corporation may have a corporate seal which
shall have the name of the Corporation inscribed thereon and shall be in such
form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
SECTION 6.3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS
AND COMMITTEES. Whenever notice is required to be given by law or under any
provision of the certificate of incorporation or these by-laws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any
written waiver of notice unless so required by the certificate of incorporation
or these by-laws.
SECTION 6.4. INDEMNIFICATION. The Corporation shall indemnify to the
full extent permitted by law any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of the Corporation, is or was a
director, officer, trustee, member, stockholder, partner, incorporator or
liquidator of a Subsidiary of the Corporation, or serves or served at the
request of the Corporation as a director, officer, trustee, member, stockholder,
partner, incorporator or liquidator of or in any other capacity for any other
enterprise. Expenses, including attorneys' fees and expenses, incurred by any
such person in defending any such action, suit or proceeding shall be paid or
reimbursed by the Corporation promptly upon demand by such person and, if any
such demand is made in advance of the final disposition of any such action, suit
or proceeding, promptly upon receipt by the Corporation of an undertaking of
such person to repay such expenses if it shall ultimately be determined that
such person is not entitled to be indemnified by the Corporation. The rights
provided to any person by this by-law shall be enforceable against the
Corporation by such person, who shall be presumed to have relied upon it
13
<PAGE> 14
in serving or continuing to serve as a director or officer or in such other
capacity as provided above. In addition, the rights provided to any person by
this by-law shall survive the termination of such person as any such director,
officer, trustee, member, stockholder, partner, incorporator or liquidator and,
insofar as such person served at the request of the Corporation as a director,
officer, trustee, member, stockholder, partner, incorporator or liquidator of or
in any other capacity for any other enterprise, shall survive the termination of
such request as to service prior to termination of such request. No amendment of
this by-law shall impair the rights of any person arising at any time with
respect to events occurring prior to such amendment.
Notwithstanding anything contained in this Section 6.4, except for
proceedings to enforce rights provided in this Section 6.4, the Corporation
shall not be obligated under this Section 6.4 to provide any indemnification or
any payment or reimbursement of expenses to any director, officer or other
person in connection with a proceeding (or part thereof) initiated by such
person (which shall not include counterclaims or crossclaims initiated by
others) unless the Board of Directors has authorized or consented to such
proceeding (or part thereof) in a resolution adopted by the Board.
For purposes of this by-law, the term "Subsidiary" shall mean any
corporation, partnership, limited liability company or other entity in which the
Corporation owns, directly or indirectly, a majority of the economic or voting
ownership interest; the term "other enterprise" shall include any corporation,
partnership, limited liability company, joint venture, trust, association or
other unincorporated organization or other entity and any employee benefit plan;
the term "officer," when used with respect to the Corporation, shall refer to
any officer elected by or appointed pursuant to authority granted by the Board
of Directors of the Corporation pursuant to clauses (i), (ii), (iii) and (iv) of
Section 4.1 of these by-laws, when used with respect to a Subsidiary or other
enterprise that is a corporation, shall refer to any person elected or appointed
pursuant to the by-laws of such Subsidiary or other enterprise or chosen in such
manner as is prescribed by the by-laws of such Subsidiary or other enterprise or
determined by the Board of Directors of such Subsidiary or other enterprise, and
when used with respect to a Subsidiary or other enterprise that is not a
corporation or is organized in a foreign jurisdiction, the term "officer" shall
include in addition to any officer of such entity, any person serving in a
similar capacity or as the manager of such entity; service "at the request of
the Corporation" shall include service as a director or officer of the
Corporation which imposes duties on, or involves services by, such director or
officer with respect to an employee benefit plan, its participants or
beneficiaries; any excise taxes assessed on a person with respect to an employee
benefit plan shall be deemed to be indemnifiable expenses; and action by a
person with respect to an employee benefit plan which such person reasonably
believes to be in the interest of the participants and beneficiaries of such
plan shall be deemed to be action not opposed to the best interests of the
Corporation.
To the extent authorized from time to time by the Board of Directors,
the Corporation may provide to (i) any one or more employees and other agents of
the Corporation, (ii) any one or more officers, employees and other agents of
any Subsidiary and (iii) any one or more directors, officers, employees and
other agents of any other enterprise, rights of indemnification
14
<PAGE> 15
and to receive payment or reimbursement of expenses, including attorneys' fees,
that are similar to the rights conferred in this Section 6.4 on directors and
officers of the Corporation or any Subsidiary or other enterprise. Any such
rights shall have the same force and effect as they would have if they were
conferred in this Section 6.4.
Nothing in this Section 6.4 shall limit the power of the Corporation or
the Board of Directors to provide rights of indemnification and to make payment
and reimbursement of expenses, including attorneys' fees, to directors,
officers, employees, agents and other persons otherwise than pursuant to this
Section 6.4.
SECTION 6.5. INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, limited liability
company, joint venture, trust, association or other unincorporated organization
or other entity in which one or more of its directors or officers serve as
directors, officers, trustees or in a similar capacity or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or her or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the Board or
the committee, and the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; (ii)
the material facts as to his or her relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by a vote of the stockholders; or (iii) the contract or transaction
is fair as to the Corporation as of the time it is authorized, approved or
ratified, by the Board, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
SECTION 6.6. FORM OF RECORDS. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
SECTION 6.7. LAWS AND REGULATIONS; CLOSE OF BUSINESS.
(a) For purposes of these by-laws, any reference to a statute, rule or
regulation of any governmental body means such statute, rule or regulation
(including any successor thereto) as the same may be amended from time to time.
15
<PAGE> 16
(b) Any reference in these by-laws to the close of business on any day
shall be deemed to mean 5:00 P.M. New York time on such day, whether or not such
day is a business day.
SECTION 6.8. AMENDMENT OF BY-LAWS. These by-laws may be amended,
modified or repealed, and new by-laws may be adopted at any time, by the Board
of Directors. Stockholders of the Corporation may adopt additional by-laws and
amend, modify or repeal any by-law whether or not adopted by them, but only in
accordance with Article FIFTH of the Corporation's certificate of incorporation.
16
<PAGE> 1
Exhibit 4.1
================================================================================
FORM OF STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
o, 1999
between
LANIER WORLDWIDE, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Rights Agent
================================================================================
<PAGE> 2
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
<TABLE>
<CAPTION>
Page
----
ARTICLE I
CERTAIN DEFINITIONS
<S> <C>
1.1 Certain Definitions..................................................2
ARTICLE II
THE RIGHTS
2.1 Legend on Common Stock Certificates.................................11
2.2 Exercise of Rights; Separation of Rights............................12
2.3 Adjustments to Exercise Price; Number of Rights.....................15
2.4 Date on Which Exercise is Effective.................................18
2.5 Execution, Authentication, Delivery and Dating of Rights
Certificates........................................................18
2.6 Registration, Registration of Transfer and Exchange.................19
2.7 Mutilated, Destroyed, Lost and Stolen Rights Certificates...........20
2.8 Persons Deemed Owners...............................................21
2.9 Delivery and Cancellation of Certificates...........................22
2.10 Agreement of Rights Holders.........................................23
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in.............................................................24
3.2 Flip-over...........................................................28
ARTICLE IV
THE RIGHTS AGENT
4.1 General.............................................................29
4.2 Merger or Consolidation or Change of Name of Rights Agent...........30
4.3 Duties of Rights Agent..............................................31
4.4 Change of Rights Agent..............................................34
</TABLE>
-i-
<PAGE> 3
ARTICLE V
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C>
5.1 Redemption..........................................................36
5.2 Expiration..........................................................36
5.3 Issuance of New Rights Certificates.................................37
5.4 Supplements and Amendments..........................................37
5.5 Fractional Shares...................................................38
5.6 Rights of Action....................................................38
5.7 Holder of Rights Not Deemed a Stockholder...........................39
5.8 Notice of Proposed Actions..........................................39
5.9 Notices.............................................................40
5.10 Suspension of Exercisability........................................41
5.11 Costs of Enforcement................................................41
5.12 Successors..........................................................42
5.13 Benefits of this Agreement..........................................42
5.14 Determination and Actions by the Board of Directors, etc............42
5.15 Descriptive Headings................................................43
5.16 Governing Law.......................................................43
5.17 Counterparts........................................................43
5.18 Severability........................................................43
</TABLE>
EXHIBITS
Exhibit A Form of Rights Certificate
(Together with Form of
Election to Exercise)
[Exhibit B Form of Certificate of
Designation and Terms of
Participating Preferred Stock]
-ii-
<PAGE> 4
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
---------------------------------------
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (as amended
from time to time, this "Agreement"), dated as of o, 1999, between Lanier
Worldwide, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company, a o, as
Rights Agent (the "Rights Agent", which term shall include any successor Rights
Agent hereunder).
WITNESSETH:
-----------
WHEREAS, the Board of Directors of the Company has (a)
authorized and declared a dividend of one right ("Right") in respect of each
share of Common Stock (as hereinafter defined) held of record as of the Close of
Business on o, 1999 (the "Record Time") and (b) as provided in Section 2.3,
authorized the issuance of one Right in respect of each share of Common Stock
issued on or after the date hereof and prior to the Separation Time (as
hereinafter defined) and, to the extent provided in Section 5.3, each share of
Common Stock issued after the Separation Time;
WHEREAS, subject to the terms and conditions hereof, each
Right entitles the holder thereof, after the Separation Time, to purchase
securities or assets of the Company (or, in certain cases, securities of certain
other entities) pursuant to the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company desires to appoint the Rights Agent to
act on behalf of the Company, and the Rights Agent is willing so to act, in
connection with the
-1-
<PAGE> 5
issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the
respective agreements set forth herein, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is or becomes the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock after
the effective date of the distribution of shares of Common Stock by Harris
Corporation ("Harris") as contemplated by the Agreement and Plan of
Distribution, dated as of o, 1999, between Harris and the Company; PROVIDED,
HOWEVER, that the term "Acquiring Person" shall not include any Person (i) who
is the Beneficial Owner of 15% or more of the outstanding shares of Common Stock
on the date of this Agreement or who shall become the Beneficial Owner of 15% or
more of the outstanding shares of Common Stock solely as a result of an
acquisition by the Company of shares of Common Stock, until such time hereafter
or thereafter as any of such Persons shall become the Beneficial Owner (other
than by means of a stock dividend or stock split) of any additional shares of
Common Stock, (ii) who becomes the Beneficial Owner of 15% or more of the
outstanding shares of Common Stock but who acquired Beneficial Ownership of
shares of Common Stock without any plan or intention to seek or affect control
of the Company, if such Person promptly divests, or enters
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<PAGE> 6
into an agreement with the Company satisfactory to the Company, in its sole
discretion, to divest, and thereafter promptly divests (without exercising or
retaining any power, including voting power, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock) so that such Person ceases to be the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock or
(iii) who Beneficially Owns shares of Common Stock consisting solely of one or
more of (A) shares of Common Stock Beneficially Owned pursuant to the grant or
exercise of an option granted to such Person (an "Option Holder") by the Company
in connection with an agreement to merge with, or acquire, the Company entered
into prior to a Stock Acquisition Date, (B) shares of Common Stock (or
securities convertible into, exchangeable into or exercisable for Common Stock),
Beneficially Owned by such Option Holder or its Affiliates or Associates at the
time of grant of such option or (C) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for Common Stock) acquired by
Affiliates or Associates of such Option Holder after the time of such grant
which, in the aggregate, amount to less than 1% of the outstanding shares of
Common Stock. In addition, the Company, any Subsidiary of the Company and any
employee stock ownership or other employee benefit plan of the Company or a
Subsidiary of the Company (or any entity or trustee holding shares of Common
Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company) shall not be an Acquiring Person.
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<PAGE> 7
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act, as such Rule is in
effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rule 13d-3 and 13d-5 under the
Exchange Act, as such Rules are in effect on the date of this Agreement, as well
as any securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time or the occurrence of
conditions) pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (i) solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is accepted
for payment or exchange or (ii) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a
public proxy or consent solicitation made to more than ten holders of shares of
a class of stock of the Company registered under Section 12 of the Exchange Act
and pursuant to,
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<PAGE> 8
and in accordance with, the applicable rules and regulations under the Exchange
Act, except if such power (or the arrangements relating thereto) is then
reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar
provision of a comparable or successor report). For purposes of this Agreement,
in determining the percentage of the outstanding shares of Common Stock with
respect to which a Person is the Beneficial Owner, all shares as to which such
Person is deemed the Beneficial Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in The City of New York are
generally authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 p.m. New
York City time on such date or, if such date is not a Business Day, 5:00 p.m.
New York City time on the next succeeding Business Day.
"Common Stock" shall mean the shares of Common Stock, par
value $0.01 per share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at
which a holder may purchase the securities issuable upon exercise of one whole
Right. Until adjustment thereof in accordance with the terms hereof, the
Exercise Price shall equal $o.
"Expiration Time" shall mean the earliest of (i) the Exchange
Time, (ii) the Redemption Time, (iii) the Close of Business on the tenth
anniversary of the Record Time,
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<PAGE> 9
unless extended by action of the Board of Directors, and (iv) immediately prior
to the effective time of a consolidation, merger or share exchange (each, a
"Business Combination) of the Company (A) into another corporation or (B) with
another corporation in which the Company is the surviving corporation but Common
Stock is converted into cash and/or securities of another corporation, in either
case pursuant to an agreement entered into by the Company prior to a Stock
Acquisition Date.
"Flip-in Date" shall mean any Stock Acquisition Date or such
later date and time as the Board of Directors of the Company may from time to
time fix by resolution adopted prior to the Flip-in Date that would otherwise
have occurred.
"Flip-over Entity," for purposes of Section 3.2, shall mean
(i) in the case of a Flip-over Transaction or Event described in clause (i) of
the definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or Event and (ii) in
the case of a Flip-over Transaction or Event referred to in clause (ii) of the
definition thereof, the Person receiving the greatest portion of the assets,
operating income or cash flow being transferred in such Flip-over Transaction or
Event, provided in all cases if such Person is a subsidiary of a corporation,
the parent corporation shall be the Flip-Over Entity.
"Flip-over Stock" shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the election of
directors (or other persons similarly responsible for direction of the business
and affairs) of the Flip-Over Entity.
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<PAGE> 10
"Flip-over Transaction or Event" shall mean a transaction or
series of transactions on or after a Flip-in Date in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate in a
statutory share exchange with any other Person if, at the time of consummation
of the consolidation, merger or statutory share exchange or at the time the
Company enters into any agreement with respect to any such consolidation, merger
or statutory share exchange, the Acquiring Person is the Beneficial Owner of 90%
or more of the outstanding shares of Common Stock or controls the Board of
Directors of the Company and either (A) any term of or arrangement concerning
the treatment of shares of capital stock in such consolidation, merger or share
exchange relating to the Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Common Stock or (B) the Person
with whom the transaction or series of transactions occurs is the Acquiring
Person or an Affiliate or Associate of the Acquiring Person or (ii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more than
50% of the operating income or cash flow, of the Company and its Subsidiaries
(taken as a whole) to any Person (other than the Company or one or more of its
wholly owned Subsidiaries) or to two or more such Persons which are Affiliates
or Associates or otherwise acting in concert, if, at the time of the entry by
the Company (or any such Subsidiary) into an agreement with respect to such sale
or transfer of assets, the Acquiring Person controls the Board of Directors of
the Company. An Acquiring Person shall be deemed to control the Company's Board
of Directors when, on or following a Flip-in Date, the persons who were
directors of the Company (or
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<PAGE> 11
persons nominated and/or appointed as directors by vote of a majority of such
persons) before the Stock Acquisition Date shall cease to constitute a majority
of the Company's Board of Directors.
"Market Price" per share of any securities on any date shall
mean the average of the daily closing prices per share of such securities
(determined as described below) on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding such date; PROVIDED,
HOWEVER, that if any event described in Section 2.3 hereof, or any analogous
event, shall have caused the closing prices used to determine the Market Price
on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the securities are not listed or ad-
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<PAGE> 12
mitted to trading on any national securities exchange or quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the securities selected by the
Board of Directors of the Company; PROVIDED, HOWEVER, that if on any such date
the securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share
of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights Agent.
"Person" shall mean any individual, firm, partnership, limited
liability company, association, group (as such term is used in Rule 13d-5 under
the Securities Exchange Act of 1934, as such Rule is in effect on the date of
this Agreement), corporation or other entity.
"Preferred Stock" shall mean the series of Participating
Preferred Stock, without par value, of the Company created by a Certificate of
Designation and Terms in substantially the form set forth in Exhibit B hereto
appropriately completed.
"Redemption Price" shall mean an amount equal to one cent,
$0.01.
"Redemption Time" shall mean the time at which the right to
exercise the Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the earlier of (i) the Close of
Business on the tenth Business Day (or such later date as the Board of Directors
of the Company may from time to time fix by resolution adopted prior to the
Separation Time that would otherwise
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<PAGE> 13
have occurred) after the date on which any Person commences a tender or exchange
offer which, if consummated, would result in such Person's becoming an Acquiring
Person and (ii) the Flip-in Date; PROVIDED, that if any tender or exchange offer
referred to in clause (i) of this paragraph is canceled, terminated or otherwise
withdrawn prior to the Separation Time without the purchase of any shares of
Common Stock pursuant thereto, such offer shall be deemed, for purposes of this
paragraph, never to have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that a Person has become an Acquiring
Person or the date on which any Person who has made a tender or exchange offer
for more than 15% of the outstanding shares of Common Stock becomes an Acquiring
Person by the purchase of shares pursuant to the tender or exchange offer (or by
any other means within 180 days following the expiration of such tender or
exchange offer).
"Subsidiary" of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the equity or membership interest is
Beneficially Owned, directly or indirectly, by such Person.
"Trading Day," when used with respect to any securities, shall
mean a day on which the New York Stock Exchange, Inc. is open for the
transaction of business or, if such securities are not listed or admitted to
trading on the New York Stock Exchange, Inc., a day on which the principal
national securities exchange on which such securities are listed or admitted to
trading is open for the transaction of business or, if such securities are not
listed or admitted to trading on any national securities exchange, a Business
Day.
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<PAGE> 14
ARTICLE II
THE RIGHTS
2.1 LEGEND ON COMMON STOCK CERTIFICATES. Certificates for the
Common Stock issued on or after the date of this Agreement but prior to the
Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Stockholder Protection
Rights Agreement, dated as of o, 1999 (as such may be amended from time
to time, the "Rights Agreement"), between Lanier Worldwide, Inc. (the
"Company") and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent, the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may become exercisable for
securities or assets of the Company or securities of another entity,
may be exchanged for shares of Common Stock or other securities or
assets of the Company, may expire, may become void (if they are
"Beneficially Owned" by an "Acquiring Person" or an "Affiliate" or
"Associate" thereof, as such terms are defined in the Rights Agreement,
or by any transferee of any of the foregoing) or may be evidenced by
separate certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing of a copy
of the Rights Agreement to the holder of this certificate without
charge after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.
If the Common Stock issued after the Record Time but prior to the
Separation Time shall be uncertificated, the registration of such Common Stock
on the stock transfer books of the Company shall evidence one Right for each
share of Common Stock
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<PAGE> 15
represented thereby and the Company will mail to every Person that holds such
Common Stock a confirmation of the registration of such Common Stock on the
stock transfer books of the Company, which confirmation will have impressed,
printed, written or stamped thereon or otherwise affixed thereto the above
legend. The Company will mail or arrange for the mailing of a copy of this
Agreement to any Person that holds Common Stock, as evidenced by the
registration of the Common Stock in the name of such Person on the stock
transfer books of the Company, without charge after the receipt of a written
request therefor.
2.2 EXERCISE OF RIGHTS; SEPARATION OF RIGHTS. (a) Subject to
Sections 3.1, 3.2, 5.1 and 5.10 and subject to adjustment as herein set forth,
each Right will entitle the holder thereof, on or after the Separation Time and
prior to the Expiration Time, to purchase, for the Exercise Price, one
one-hundredth of a share of Preferred Stock.
(b) Until the Separation Time, (i) no Right may be exercised
and (ii) each Right will be evidenced by the certificate for the associated
share of Common Stock (or, if the Common Stock shall be uncertificated, by the
registration of the associated Common Stock on the stock transfer books of the
Company) and will be transferable only together with, and will be transferred by
a transfer of, such associated share.
(c) Subject to the terms and conditions hereof, on or after
the Separation Time and prior to the Expiration Time, the Rights (i) may be
exercised and (ii) may be transferred independent of shares of Common Stock.
Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time (other than any
Person whose Rights have become void
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<PAGE> 16
pursuant to Section 3.1(b)), at such holder's address as shown by the records of
the Company (the Company hereby agreeing to furnish, or causing to be furnished,
copies of such records to the Rights Agent for this purpose), (x) a certificate
(a "Rights Certificate") in substantially the form of Exhibit A hereto
appropriately completed, representing the number of Rights held by such holder
at the Separation Time and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any national
securities exchange or quotation system on which the Rights may from time to
time be listed or traded, or to conform to usage, and (y) a disclosure statement
describing the Rights.
(d) Subject to the terms and conditions hereof, Rights may be
exercised on any Business Day on or after the Separation Time and prior to the
Expiration Time by submitting to the Rights Agent the Rights Certificate
evidencing such Rights with an Election to Exercise (an "Election to Exercise")
substantially in the form attached to the Rights Certificate duly completed,
accompanied by payment in cash, or by certified or official bank check or money
order payable to the order of the Company, of a sum equal to the Exercise Price
multiplied by the number of Rights being exercised and a sum sufficient to cover
any transfer tax or charge which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or the issuance or
delivery of certificates (or, if uncertificated, the registration on the stock
transfer books of
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<PAGE> 17
the Company) for shares or depositary receipts (or both) in a name other than
that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.2(d), and subject to
the terms and conditions hereof, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates evidencing such number of
shares or other securities to be purchased or, in the case of uncertificated
shares or other securities, requisition from a transfer agent a notice setting
forth such number of shares or other securities to be purchased for which
registration will be made on the stock transfer books of the Company (the
Company hereby irrevocably authorizing its transfer agents to comply with all
such requisitions) and (B) if the Company elects pursuant to Section 5.5 not to
issue certificates (or effect registration on the stock transfer books of the
Company) representing fractional shares, requisition from the depositary
selected by the Company depositary receipts representing the fractional shares
to be purchased or requisition from the Company the amount of cash to be paid in
lieu of fractional shares in accordance with Section 5.5 and (ii) after receipt
of such certificates, depositary receipts, notices and/or cash, deliver the same
to or upon the order of the registered holder of such Rights Certificate,
registered (in the case of certificates, depositary receipts or notices) in such
name or names as may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than
all the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing
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<PAGE> 18
the Rights remaining unexercised will be issued by the Rights Agent to such
holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered (or
evidenced by registration on the stock transfer books of the Company) upon
exercise of Rights shall, at the time of delivery of the certificates (or
registration) for such shares (subject to payment of the Exercise Price), be
duly and validly authorized, executed, issued and delivered (or registered) and
fully paid and nonassessable; (ii) take all such action as may be necessary to
comply with any applicable requirements of the Securities Act of 1933 or the
Exchange Act, and the rules and regulations thereunder, and any other applicable
law, rule or regulation, in connection with the issuance of any securities upon
exercise of Rights; and (iii) pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in respect of the original
issuance or delivery of the Rights Certificates or of any shares issued upon the
exercise of Rights, PROVIDED, that the Company shall not be required to pay any
transfer tax or charge which may be payable in respect of any transfer involved
in the transfer or delivery of Rights Certificates or the issuance or delivery
of certificates (or the registration) for shares in a name other than that of
the holder of the Rights being transferred or exercised.
2.3 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS. (a) In
the event the Company shall at any time after the Record Time and prior to the
Separation Time (i) declare or pay a dividend on Common Stock payable in Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a
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<PAGE> 19
smaller number of shares of Common Stock, (x) the Exercise Price in effect after
such adjustment will be equal to the Exercise Price in effect immediately prior
to such adjustment divided by the number of shares of Common Stock (the
"Expansion Factor") that a holder of one share of Common Stock immediately prior
to such dividend, subdivision or combination would hold thereafter as a result
thereof and (y) each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor, and the adjusted number of Rights will
be deemed to be distributed among the shares of Common Stock with respect to
which the original Rights were associated (if they remain outstanding) and the
shares issued in respect of such dividend, subdivision or combination, so that
each such share of Common Stock will have exactly one Right associated with it.
Each adjustment made pursuant to this paragraph shall be made as of the payment
or effective date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue any shares of Common Stock otherwise
than in a transaction referred to in the preceding paragraph, each such share of
Common Stock so issued shall automatically have one new Right associated with
it, which Right shall be evidenced by the certificate representing such share
(or, if the Common Stock shall be uncertificated, such Right shall be evidenced
by the registration of such Common Stock on the stock transfer books of the
Company). Rights shall be issued by the Company in respect of shares of Common
Stock that are issued or sold by the Company after the Separation Time only to
the extent provided in Section 5.3.
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<PAGE> 20
(b) In the event the Company shall at any time after the
Record Time and prior to the Separation Time issue or distribute any securities
or assets in respect of, in lieu of or in exchange for Common Stock (other than
pursuant to any non-extraordinary periodic cash dividend or a dividend paid
solely in Common Stock) whether by dividend, in a reclassification or
recapitalization (including any such transaction involving a merger,
consolidation or share exchange), or otherwise, the Company shall make such
adjustments, if any, in the Exercise Price, number of Rights and/or securities
or other property purchasable upon exercise of Rights as the Board of Directors
of the Company, in its sole discretion, may deem to be appropriate under the
circumstances in order to adequately protect the interests of the holders of
Rights generally, and the Company and the Rights Agent shall amend this
Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to
this Section 2.3 shall be calculated to the nearest cent. Whenever an adjustment
to the Exercise Price is made pursuant to this Section 2.3, the Company shall
(i) promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment and (ii) promptly file
with the Rights Agent and with each transfer agent for the Common Stock a copy
of such certificate.
(d) Rights certificates shall represent the securities
purchasable under the terms of this Agreement, including any adjustment or
change in the securities purchasable upon exercise of the Rights, even though
such certificates may continue to express the securities purchasable at the time
of issuance of the initial Rights Certificates.
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<PAGE> 21
2.4 DATE ON WHICH EXERCISE IS EFFECTIVE. Each Person in whose
name any certificate for shares is issued (or registration on the stock transfer
books of the Company is effected) upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on the date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Exercise Price for such Rights (and any
applicable taxes and other governmental charges payable by the exercising holder
hereunder) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the stock transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate (or registration) shall be dated, the next succeeding
Business Day on which the stock transfer books of the Company are open.
2.5 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES. (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President,
Treasurer, Chief Operating Officer or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the countersignature and delivery of such
Rights Certificates.
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<PAGE> 22
Promptly after the Separation Time, the Company will notify
the Rights Agent of such Separation Time and will deliver Rights Certificates
executed by the Company to the Rights Agent for counter-signature, and, subject
to Section 3.1(b), the Rights Agent shall manually countersign and deliver such
Rights Certificates to the holders of the Rights pursuant to Section 2.2(c)
hereof. No Rights Certificate shall be valid for any purpose unless manually
countersigned by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.6 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. (a)
After the Separation Time, the Company will cause to be kept a register (the
"Rights Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer of Rights.
The Rights Agent is hereby appointed "Rights Registrar" for the purpose of
maintaining the Rights Register for the Company and registering Rights and
transfers of Rights after the Separation Time as herein provided. In the event
that the Rights Agent shall cease to be the Rights Registrar, the Rights Agent
will have the right to examine the Rights Register at all reasonable times after
the Separation Time.
After the Separation Time and prior to the Expiration Time,
upon surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Section 2.6(c) and (d), the
Company will execute, and the Rights Agent will countersign and deliver, in the
name of the holder or the designated transferee or transferees, as required
pursuant to the holder's instructions, one or more new Rights
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<PAGE> 23
Certificates evidencing the same aggregate number of Rights as did the Rights
Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be entitled
to the same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights Agent,
as the case may be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the issuance of any new
Rights Certificate under this Section 2.6, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
(d) The Company shall not register the transfer or exchange of
any Rights after such Rights have become void under Section 3.1(b), been
exchanged under Section 3.1(c) or been redeemed under Section 5.1.
2.7 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES.
(a) If any mutilated Rights Certificate is surrendered to the Rights Agent prior
to the Expiration Time, then, subject to Sections 3.1(b), 3.1(c) and 5.1, the
Company shall execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same number of Rights
as did the Rights Certificate so surrendered.
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<PAGE> 24
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security or
indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b), 3.1(c) and 5.1 and in the
absence of notice to the Company or the Rights Agent that such Rights
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this
Section 2.7 in lieu of any destroyed, lost or stolen Rights Certificate shall
evidence an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Rights Certificate shall be at any time
enforceable by anyone, and, subject to Section 3.1(b) shall be entitled to all
the benefits of this Agreement equally and proportionately with any and all
other Rights duly issued hereunder.
2.8 PERSONS DEEMED OWNERS. Prior to due presentment of a
Rights Certificate (or, prior to the Separation Time, the associated Common
Stock certificate or
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notice of transfer, if uncertificated) for registration of transfer, the
Company, the Rights Agent and any agent of the Company or the Rights Agent may
deem and treat the person in whose name such Rights Certificate (or, prior to
the Separation Time, such Common Stock certificate or Common Stock registration,
if uncertificated) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, including the payment of the
Redemption Price and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary. As used in this Agreement, unless the context
otherwise requires, the term "holder" of any Rights shall mean the registered
holder of such Rights (or, prior to the Separation Time, the associated shares
of Common Stock).
2.9 DELIVERY AND CANCELLATION OF CERTIFICATES. All Rights
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly canceled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly canceled by the Rights Agent.
No Rights Certificates shall be countersigned in lieu of or in exchange for any
Rights Certificates canceled as provided in this Section 2.9, except as
expressly permitted by this Agreement. The Rights Agent shall destroy all
canceled Rights Certificates and deliver a certificate of destruction to the
Company.
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2.10 AGREEMENT OF RIGHTS HOLDERS. Every holder of Rights by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a transfer of, the
associated share of Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Stock certificate or Common
Stock registration, if uncertificated) for registration of transfer, the
Company, the Rights Agent and any agent of the Company or the Rights Agent may
deem and treat the person in whose name the Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate or Common Stock
registration, if uncertificated) is registered as the absolute owner thereof and
of the Rights evidenced thereby for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under
the circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Section 2.3(b) or 5.4 hereof.
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ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 FLIP-IN. (a) In the event that prior to the Expiration
Time a Flip-in Date shall occur, except as provided in this Section 3.1, each
Right shall constitute the right to purchase from the Company, upon exercise
thereof in accordance with the terms hereof (but subject to Section 5.10), that
number of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date that gave rise to the Flip-in Date equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that on or after such Stock Acquisition Date any
of the events described in Section 2.3(a) or (b), or any analogous event, shall
have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring Person
or an Affiliate or Associate thereof or by any transferee, direct or indirect,
of any of the foregoing shall become void and any holder of such Rights
(including transferees) shall thereafter have no right to exercise or transfer
such Rights under any provision of this Agreement. If any Rights Certificate is
presented for assignment or exercise and the Person presenting the same will not
complete the certification set forth at the end of the form of assignment or
notice of election to exercise and provide such additional evidence of the
identity of the Beneficial Owner and its Affiliates and Associates (or former
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Beneficial Owners and their Affiliates and Associates) as the Company shall
reasonably request, then the Company shall be entitled conclusively to deem the
Beneficial Owner thereof to be an Acquiring Person or an Affiliate or Associate
thereof or a transferee of any of the foregoing and accordingly will deem the
Rights evidenced thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option,
at any time after a Flip-in Date and prior to the time that an Acquiring Person
becomes the Beneficial Owner of more than 50% of the outstanding shares of
Common Stock elect to exchange all (but not less than all) the then outstanding
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 3.1(b)) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted in order to protect
the interests of holders of Rights generally in the event that after the
Separation Time any of the events described in Section 2.3(a) or (b), or any
analogous event, shall have occurred with respect to the Common Stock (such
exchange ratio, as adjusted from time to time, being hereinafter referred to as
the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the
Company electing to exchange the Rights, without any further action and without
any notice, the right to exercise the Rights will terminate and each Right
(other than Rights that have become void pursuant to Section 3.1(b)), whether or
not previously exercised, will thereafter represent only the right to receive a
number of shares of Common Stock equal to the Exchange Ratio. Promptly after the
action of the Board of Directors electing to
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exchange the Rights, the Company shall give notice thereof (specifying the steps
to be taken to receive shares of Common Stock in exchange for Rights) to the
Rights Agent and the holders of the Rights (other than Rights that have become
void pursuant to Section 3.1(b)) outstanding immediately prior thereto by
mailing such notice in accordance with Section 5.9.
Each Person in whose name any certificate for shares is issued
(or for whom any registration on the stock transfer books of the Company is
made) upon the exchange of Rights pursuant to this Section 3.1(c) or Section
3.1(d) shall for all purposes be deemed to have become the holder of record of
the shares represented thereby on, and such certificate (or registration on the
stock transfer books of the Company) shall be dated (or registered as of), the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of any applicable taxes and other governmental charges
payable by the holder was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the stock transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares on, and such certificate (or registration on the stock transfer
books of the Company) shall be dated (or registered as of), the next succeeding
Business Day on which the stock transfer books of the Company are open.
(d) Whenever the Company shall become obligated under Section
3.1(a) or (c) to issue shares of Common Stock upon exercise of or in exchange
for Rights, the Company, at its option, may substitute therefor shares of
Preferred Stock,
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at a ratio of one one-hundredth of a share of Preferred Stock for each share of
Common Stock so issuable.
(e) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Common Stock or Preferred Stock of
the Company to permit the exercise or exchange in full of the Rights in
accordance with Section 3.1(a) or if the Company so elects to make the exchange
referred to in Section 3.1(c), the Company shall either (i) call a meeting of
stockholders seeking approval to cause sufficient additional shares to be
authorized (provided that if such approval is not obtained the Company will take
the action specified in clause (ii) of this sentence) or (ii) take such action
as shall be necessary to ensure and provide, to the extent permitted by
applicable law and any agreements or instruments in effect on the Stock
Acquisition Date to which it is a party, that each Right shall thereafter
constitute the right to receive, (x) at the Company's option, either (A) in
return for the Exercise Price, debt or equity securities or other assets (or a
combination thereof) having a fair value equal to twice the Exercise Price, or
(B) without payment of consideration (except as otherwise required by applicable
law), debt or equity securities or other assets (or a combination thereof)
having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the
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Board of Directors of the Company, after consultation with a nationally
recognized investment banking firm.
3.2 FLIP-OVER. (a) Prior to the Expiration Time, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-over Transaction or Event unless and until it shall have entered
into a supplemental agreement with the Flip-over Entity, for the benefit of the
holders of the Rights, providing that, upon consummation or occurrence of the
Flip-over Transaction or Event (i) each Right shall thereafter constitute the
right to purchase from the Flip-over Entity, upon exercise thereof in accordance
with the terms hereof, that number of shares of Flip-over Stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of consummation or
occurrence any of the events described in Section 2.3(a) or (b), or any
analogous event, shall have occurred with respect to the Flip-over Stock) and
(ii) the Flip-over Entity shall thereafter be liable for, and shall assume, by
virtue of such Flip-over Transaction or Event and such supplemental agreement,
all the obligations and duties of the Company pursuant to this Agreement. The
provisions of this Section 3.2 shall apply to successive Flip-over Transactions
or Events.
(b) Prior to the Expiration Time, the Company shall not enter
into any agreement with respect to, consummate or permit to occur any Flip-over
Transaction or Event if at the time thereof there are any rights, warrants or
securities outstanding or any
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other arrangements, agreements or instruments that would eliminate or otherwise
diminish in any material respect the benefits intended to be afforded by this
Rights Agreement to the holders of Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 GENERAL. (a) The Company hereby appoints the Rights Agent
to act as agent for the Company in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted to be done by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability. In no event shall the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Rights Agent has been advised of
the possibility of such loss or damage.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its adminis-
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tration of this Agreement in reliance upon any certificate for securities (or
registration on the stock transfer books of the Company) purchasable upon
exercise of Rights, Rights Certificate, certificate for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
4.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
is a party, or any Person succeeding to the shareholder services business of the
Rights Agent or any successor Rights Agent, will be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 4.4 hereof. In case at the time such successor Rights
Agent succeeds to the agency created by this Agreement any of the Rights
Certificates have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name
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of the successor Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
4.3 DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person
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believed by the Rights Agent to be the Chairman of the Board, the President or
any Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate will be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
certificates, if any, for securities purchasable upon exercise of Rights or the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and will be deemed to
have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due authorization, execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any certificate, if any,
for securities purchasable upon exercise of Rights or Rights Certificate (except
its countersignature thereof); nor will it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 3.1(b) hereof) or any adjustment required under the provisions of
Section 2.3, 3.1 or 3.2 hereof or responsible for the manner, method or amount
of any such adjustment or
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the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights after receipt of the
certificate contemplated by Section 2.3 describing any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise
of Rights or any Rights or as to whether any securities purchasable upon
exercise of Rights will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which
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the Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
4.4 CHANGE OF RIGHTS AGENT. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the Company
and to each transfer agent of Common Stock by registered or certified mail, and
to the holders of the Rights in accordance with Section 5.9. The Company may
remove the Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent and to each transfer agent of the Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become incapable of
acting, the Company will appoint a successor to the Rights Agent. If the Company
fails to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of any Rights (which
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holder shall, with such notice, submit such holder's Rights Certificate for
inspection by the Company), then the holder of any Rights may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a Person (or an affiliate of such a Person) organized and doing
business under the laws of the United States or any state of the United States,
in good standing, which is authorized under such laws to exercise the powers of
the Rights Agent contemplated by this Agreement and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
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ARTICLE V
MISCELLANEOUS
5.1 REDEMPTION. (a) The Board of Directors of the Company may,
at its option, at any time prior to the Flip-in Date, elect to redeem all (but
not less than all) the then outstanding Rights at the Redemption Price and the
Company, at its option, may pay the Redemption Price either in cash or shares of
Common Stock or other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at least equivalent in
value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights (or, if the resolution of the Board of
Directors electing to redeem the Rights states that the redemption will not be
effective until the occurrence of a specified future time or event, upon the
occurrence of such future time or event), without any further action and without
any notice, the right to exercise the Rights will terminate and each Right,
whether or not previously exercised, will thereafter represent only the right to
receive the Redemption Price in cash or securities, as determined by the Board
of Directors. Promptly after the Rights are redeemed, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice in accordance with Section 5.9.
5.2 EXPIRATION. The Rights and this Agreement shall expire at
the Expiration Time and no Person shall have any rights pursuant to this
Agreement or any Right after the Expiration Time, except, if the Rights are
exchanged or redeemed, as provided in Section 3.1 or 5.1 hereof, respectively.
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5.3 ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the number or kind or class of shares of stock purchasable upon
exercise of Rights made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock by
the Company following the Separation Time and prior to the Expiration Time
pursuant to the terms of securities convertible or redeemable into shares of
Common Stock or to options, in each case issued or granted prior to, and
outstanding at, the Separation Time, the Company shall issue to the holders of
such shares of Common Stock, Rights Certificates representing the appropriate
number of Rights in connection with the issuance or sale of such shares of
Common Stock; PROVIDED, HOWEVER, in each case, (i) no such Rights Certificate
shall be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be issued
if, and to the extent that, appropriate adjustment shall have otherwise been
made in lieu of the issuance thereof, and (iii) the Company shall have no
obligation to distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of an Acquiring Person or any transferee of any of the
foregoing.
5.4 SUPPLEMENTS AND AMENDMENTS. The Company and the Rights
Agent may from time to time supplement or amend this Agreement without the
approval
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of any holders of Rights (i) prior to the Flip-in Date, in any respect and (ii)
on or after the Flip-in Date, to make any changes that the Company may deem
necessary or desirable and which shall not materially adversely affect the
interests of the holders of Rights generally or in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
inconsistent with any other provisions herein or otherwise defective. The Rights
Agent will duly execute and deliver any supplement or amendment hereto requested
by the Company which satisfies the terms of the preceding sentence.
5.5 FRACTIONAL SHARES. If the Company elects not to issue
certificates representing (or register on the stock transfer books of the
Company) fractional shares upon exercise or redemption of Rights, the Company
shall, in lieu thereof, in the sole discretion of the Board of Directors, either
(a) evidence such fractional shares by depositary receipts issued pursuant to an
appropriate agreement between the Company and a depositary selected by it,
providing that each holder of a depositary receipt shall have all of the rights,
privileges and preferences to which such holder would be entitled as a
beneficial owner of such fractional share, or (b) pay to the registered holder
of such Rights the appropriate fraction of the Market Price per share in cash.
5.6 RIGHTS OF ACTION. Subject to the terms of this Agreement
(including Sections 3.1(b) and 5.14), rights of action in respect of this
Agreement, other than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights; and any holder of any Rights,
without the consent of the Rights Agent or of the holder of any other Rights,
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and
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maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise such holder's
Rights in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
5.7 HOLDER OF RIGHTS NOT DEEMED A STOCKHOLDER. No holder, as
such, of any Rights shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of shares or any other securities which may at any
time be issuable on the exercise of such Rights, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 5.8 hereof), or to receive dividends
or subscription rights, or otherwise, until such Rights shall have been
exercised or exchanged in accordance with the provisions hereof.
5.8 NOTICE OF PROPOSED ACTIONS. In case the Company shall
propose on or after the Separation Time and prior to the Expiration Time (i) to
effect or permit a Flip-over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up
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of the Company, then, in each such case, the Company shall give to each holder
of a Right, in accordance with Section 5.9 hereof, a notice of such proposed
action, which shall specify the date on which such Flip-over Transaction or
Event, liquidation, dissolution, or winding up is to take place, and such
notice shall be so given at least 20 Business Days prior to the date of the
taking of such proposed action.
5.9 NOTICES. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: Corporate Secretary
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Vice President - Administration
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given
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<PAGE> 44
or made if delivered or sent by first-class mail, postage prepaid, addressed to
such holder at the address of such holder as it appears upon the registry books
of the Rights Agent or, prior to the Separation Time, on the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.
5.10 SUSPENSION OF EXERCISABILITY. To the extent that the
Company determines in good faith that some action will or need be taken pursuant
to Section 3.1 or to comply with federal or state securities laws, the Company
may suspend the exercisability of the Rights for a reasonable period in order
to take such action or comply with such laws. In the event of any such
suspension, the Company shall issue as promptly as practicable a public
announcement stating that the exercisability or exchangeability of the Rights
has been temporarily suspended. Notice thereof pursuant to Section 5.9 shall not
be required.
Failure to give a notice pursuant to the provisions of this
Agreement shall not affect the validity of any action taken hereunder.
5.11 COSTS OF ENFORCEMENT. The Company agrees that if the
Company or any other Person the securities of which are purchasable upon
exercise of Rights fails to fulfill any of its obligations pursuant to this
Agreement, then the Company or such Person will reimburse the holder of any
Rights for the costs and expenses (including legal fees) incurred by such holder
in actions to enforce such holder's rights pursuant to any Rights or this
Agreement.
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<PAGE> 45
5.12 SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
5.13 BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the holders of the Rights any legal or equitable right, remedy or
claim under this Agreement and this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of the
Rights.
5.14 DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement. All such actions, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) done or made by the Board shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
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<PAGE> 46
5.15 DESCRIPTIVE HEADINGS. Descriptive headings appear herein
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
5.16 GOVERNING LAW. THIS AGREEMENT AND EACH RIGHT ISSUED
HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND PERFORMED
ENTIRELY WITHIN SUCH STATE.
5.17 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
5.18 SEVERABILITY. If any term or provision hereof or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to circumstances
other than those as to which it is held invalid or unenforceable.
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<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
LANIER WORLDWIDE, INC.
By:__________________________
Name:
Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:__________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 4.2
-----------
FORM OF CERTIFICATE OF DESIGNATION AND TERMS
OF PARTICIPATING PREFERRED STOCK OF LANIER WORLDWIDE, INC.
----------------------------------------------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
----------------------------------------
We, the undersigned, __________________ and
____________________, the ____________________, and __________, respectively, of
Lanier Worldwide, Inc., a Delaware corporation (the "Corporation"), do hereby
certify as follows:
Pursuant to authority granted by Article FOURTH of the
Restated Certificate of Incorporation of the Corporation, and in accordance with
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation has adopted the following
resolutions fixing the designation and certain terms, powers, preferences and
other rights of a new series of the Corporation's Preferred Stock, without par
value, and certain qualifications, limitations and restrictions thereon:
RESOLVED, that there is hereby established a series of
Preferred Stock, without par value, of the Corporation, and the
designation and certain terms, powers, preferences and other rights of
the shares of such series, and certain qualifications, limitations and
restrictions thereon, are hereby fixed as follows:
(i) The distinctive serial designation of this series
shall be "Participating Preferred Stock" (hereinafter called
"this Series"). Each share of this Series shall be identical
in all respects with the other shares of this Series except as
to the dates from and after which dividends thereon shall be
cumulative.
<PAGE> 2
(ii) The number of shares in this Series shall initially
be _______*, which number may from time to time be increased
or decreased (but not below the number then outstanding) by
the Board of Directors. Shares of this Series purchased by the
Corporation shall be canceled and shall revert to authorized
but unissued shares of Preferred Stock undesignated as to
series. Shares of this Series may be issued in fractional
shares, which fractional shares shall entitle the holder, in
proportion to such holder's fractional share, to all rights of
a holder of a whole share of this Series.
(iii) The holders of full or fractional shares of this
Series shall be entitled to receive, when and as declared by
the Board of Directors, but only out of funds legally
available therefor, dividends, (A) on each date that dividends
or other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) are payable on or
in respect of Common Stock comprising part of the Reference
Package (as defined below), in an amount per whole share of
this Series equal to the aggregate amount of dividends or
other distributions (other than dividends or distributions
payable in Common Stock of the Corporation) that would be
payable on such date to a holder of the Reference Package and
(B) on the last day of March, June, September and December in
each year, in an amount per whole share of this Series equal
to the excess (if any) of $____** over the aggregate dividends
paid per whole share of this Series during the three month
period ending on such last day. Each such dividend shall be
paid to the holders of record of shares of this Series on the
date, not exceeding sixty days preceding such dividend or
distribution payment date, fixed for the purpose by the Board
of Directors in advance of payment of each particular dividend
or distribution. Dividends on each full and each fractional
share of this Series shall be cumulative from the date such
full or fractional share is originally issued; provided that
any such full or fractional share originally issued after a
dividend record date and on or prior to the dividend payment
date to which such record date relates shall not be entitled
to receive the dividend payable on such
- ---------------
* Insert number equal to the number of shares of Common Stock outstanding on
date prior to filing certificate of designation divided by the Reference
Package.
** Insert an amount equal to 1/4 of 1% of the Exercise Price divided by the
number of shares of Preferred Stock purchasable upon exercise of one Right
(i.e., a guaranteed 1% dividend). [Note: the foregoing portion of this
footnote (other than the parenthetical) should remain in the final version
of Exhibit B to the Rights Agreement.] Where a Right is exercisable for one
one-hundredth of a share, this simplifies to one-fourth the Exercise Price.
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<PAGE> 3
dividend payment date or any amount in respect of the period
from such original issuance to such dividend payment date.
The term "Reference Package" shall initially
mean 100 shares of Common Stock, par value $0.01 per share
("Common Stock"), of the Corporation. In the event the
Corporation shall at any time after the Close of Business on
________, ____* (A) declare or pay a dividend on any Common
Stock payable in Common Stock, (B) subdivide any Common Stock
or (C) combine any Common Stock into a smaller number of
shares, then and in each such case the Reference Package after
such event shall be the Common Stock that a holder of the
Reference Package immediately prior to such event would hold
thereafter as a result thereof.
Holders of shares of this Series shall not
be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends, as
herein provided on this Series.
So long as any shares of this Series are
outstanding, no dividend (other than a dividend in Common
Stock or in any other stock ranking junior to this Series as
to dividends and upon liquidation) shall be declared or paid
or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other stock ranking
junior to this Series as to dividends or upon liquidation,
unless the full cumulative dividends (including the dividend
to be paid upon payment of such dividend or other
distribution) on all outstanding shares of this Series shall
have been, or shall contemporaneously be, paid. When dividends
are not paid in full upon this Series and other stock ranking
on a parity as to dividends with this Series, all dividends
declared upon shares of this Series and any other stock
ranking on a parity as to dividends shall be declared pro rata
so that in all cases the amount of dividends declared per
share on this Series and such other stock shall bear to each
other the same ratio that accumulated dividends per share on
the shares of the Series and such other stock bear to each
other. Neither the Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series
as to dividends or upon liquidation shall be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys be paid to or
- --------
* For a certificate of designation relating to shares to be issued pursuant
to Section 2.2 of the Rights Agreement, insert the Separation Time. For a
certificate of designation relating to shares to be issued pursuant to
Section 3.1(d) of the Rights Agreement, insert the Flip-in Date. [Note:
this footnote should remain in the final version of Exhibit B to the Rights
Agreement.]
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<PAGE> 4
made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation
ranking junior to this Series as to dividends and upon
liquidation), unless the full cumulative dividends (including
the dividend to be paid upon payment of such dividend,
distribution, redemption, purchase or other acquisition) on
all outstanding shares of this Series shall have been, or
shall contemporaneously be, paid.
(iv) In the event of any merger, consolidation,
reclassification or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of this Series shall at the same time be
similarly exchanged or changed in an amount per whole share
equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may
be, that a holder of the Reference Package would be entitled
to receive as a result of such transaction.
(v) In the event of any liquidation, dissolution or
winding up of the affairs of the Corporation, whether
voluntary or involuntary, the holders of full and fractional
shares of this Series shall be entitled, before any distri-
bution or payment is made on any date to the holders of the
Common Stock or any other stock of the Corporation ranking
junior to this Series upon liquidation, to be paid in full an
amount per whole share of this Series equal to the greater of
(A) $__________* or (B) the aggregate amount distributed or to
be distributed prior to such date in connection with such
liquidation, dissolution or winding up to a holder of the
Reference Package (such greater amount being hereinafter
referred to as the "Liquidation Preference"), together with
accrued dividends to such distribution or payment date,
whether or not earned or declared. If such payment shall have
been made in full to all holders of shares of this Series, the
holders of shares of this Series as such shall have no right
or claim to any of the remaining assets of the Corporation.
In the event the assets of the Corporation
available for distribution to the holders of shares of this
Series upon any liquidation,
- --------
* Insert an amount equal to 100 times the Exercise Price in effect as of the
Separation Time. [Note: this footnote should remain in the final version of
Exhibit B to the Rights Agreement. The blank above would actually be
completed (and this footnote would be deleted) when a certificate of
designation is filed after the Separation Time.] Also note that the "100"
in the footnote should be changed if the number of shares in the Reference
Package (see p. 3) is other than 100.
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<PAGE> 5
dissolution or winding up of the Corporation, whether
voluntary or involuntary, shall be insufficient to pay in full
all amounts to which such holders are entitled pursuant to the
first paragraph of this Section (v), no such distribution
shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares
of this Series upon such liquidation, dissolution or winding
up unless proportionate distributive amounts shall be paid on
account of the shares of this Series, ratably in proportion to
the full distributable amounts for which holders of all such
parity shares are respectively entitled upon such liquidation,
dissolution or winding up.
Upon the liquidation, dissolution or winding
up of the Corporation, the holders of shares of this Series
then outstanding shall be entitled to be paid out of assets of
the Corporation available for distribution to its stockholders
all amounts to which such holders are entitled pursuant to the
first paragraph of this Section (v) before any payment shall
be made to the holders of Common Stock or any other stock of
the Corporation ranking junior upon liquidation to this
Series.
For the purposes of this Section (v), the
consolidation or merger of, or binding share exchange by, the
Corporation with any other corporation shall not be deemed to
constitute a liquidation, dissolution or winding up of the
Corporation.
(vi) The shares of this Series shall not be redeemable.
(vii) In addition to any other vote or consent of
stockholders required by law or by the Restated Certificate of
Incorporation, as amended, of the Corporation, each whole
share of this Series shall, on any matter, vote as a class
with any other capital stock comprising part of the Reference
Package and voting on such matter and shall have the number of
votes thereon that a holder of the Reference Package would
have.
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<PAGE> 6
IN WITNESS WHEREOF, the undersigned have signed and attested
this certificate on the ____ day of _________, _____.
---------------------------------
Attest:
- -------------------------
<PAGE> 1
Exhibit 10.6
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated -, 1999 (this
"Agreement"), between Lanier Worldwide, Inc., a Delaware corporation ("Issuer"),
and Harris Corporation, Inc., a Delaware corporation ("Stockholder").
WHEREAS, Issuer and Stockholder have entered into a
Distribution Agreement, dated as of -, 1999, pursuant to which Issuer will issue
to Stockholder - shares of common stock, par value $0.01 per share, of Issuer
(the "Common Stock"); and
WHEREAS, on -, 1999 (the "Distribution Date") Stockholder
intends to make a pro rata distribution to its stockholders of approximately 90%
of the shares of Common Stock outstanding as of the Distribution Date; and
WHEREAS, Stockholder intends to retain approximately 10% of
the shares of Common Stock outstanding as of the Distribution Date (such shares
so retained, the "Shares");
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
----------------------------
1.01 DEFINITIONS. Capitalized terms used but not defined in
this Agreement have the respective meanings ascribed to such terms in the
Distribution Agreement. In addition, the following terms shall have the
following meanings:
(a) "COMMISSION" means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act or the
Exchange Act, as applicable, whichever is the relevant statute.
(b) "COMMON STOCK" has the meaning set forth in the Recitals.
<PAGE> 2
(d) "DEMAND REGISTRATION STATEMENT" has the meaning set forth
in Section 2.02(a).
(e) "DISTRIBUTION AGREEMENT" has the meaning set forth in the
Recitals.
(f) "DISTRIBUTION DATE" has the meaning set forth in the
Recitals.
(g) "EFFECTIVE PERIOD" has the meaning set forth in Section
2.02(b).
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended or any similar successor federal statute and the rules and
regulations of the Commission thereunder, all as shall be in effect from time to
time.
(i) "EXPENSES" has the meaning set forth in Section 2.04.
(j) "INDEMNIFIED PARTY" has the meaning set forth in Section
2.05(c).
(k) "INDEMNIFYING PARTY" has the meaning set forth in Section
2.05(c).
(l) "INSPECTORS" has the meaning set forth in Section
2.03(iv).
(m) "ISSUER" has the meaning set forth in the Preamble.
(n) "PERSON" means any individual, corporation, limited
liability company, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof.
(o) "RECORDS" has the meaning set forth in Section 2.03(iv).
(p) "REGISTERED SHARES" means the Shares of which resales by
the Stockholder have been registered under the Registration Statement.
(q) "SECURITIES" means the Shares until, in the case of any
particular Share, it is (i) disposed of in accordance with the Registration
Statement, (ii) distributed to the public pursuant to Rule 144 under the
Securities Act or (iii) no longer owned of record or beneficially by
Stockholder.
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<PAGE> 3
(r) "REGISTRATION STATEMENT" has the meaning set forth in
Section 2.02(b).
(s) "RELEASE DATE" has the meaning set forth in Section
2.01(a).
(t) "SECURITIES ACT" means the Securities Act of 1933, as
amended or any similar successor federal statute and the rules and regulations
of the Commission thereunder, all as shall be in effect from time to time.
(u) "SHARES" has the meaning set forth in the Recitals.
(v) "SHELF REGISTRATION STATEMENT" has the meaning set forth
in Section 2.02(b).
(w) "STOCKHOLDER" has the meaning set forth in the Preamble.
1.02 HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
ARTICLE II
RESTRICTIONS AND RIGHTS
-----------------------
2.01 RESTRICTIONS. (a) During the period beginning on the
Distribution Date and ending on the 180th calendar day following the
Distribution Date (such date, the "Release Date"), the Stockholder shall not
offer, sell, contract to sell or otherwise dispose of any of the Shares. Any
contrary provision of this Agreement notwithstanding, no provision of this
Agreement shall prohibit, limit, restrict or pertain to the offer, sale,
disposition or voting of shares of Common Stock (i) distributed in respect of
shares of the Stockholder's common stock granted pursuant to the Stockholders=
performance share award program, or (ii) held by any savings plan in which
directors, officers or employees of the Stockholder may be entitled to
participate.
(b) On any matter subject to a vote of stockholders of Issuer,
Stockholder shall vote or cause to be voted all of the Shares owned by it of
record and/or of which it is the beneficial owner in proportion to the
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<PAGE> 4
aggregate votes cast by other stockholders of Issuer entitled to vote on such
matter.
2.02 REGISTRATION RIGHTS. (a) At any time during the period of
time following the 120th calendar day following the Distribution Date and
terminating on the second anniversary of the Distribution Date (the "Effective
Period"), the Stockholder shall have the right on two occasions to require the
Issuer to file with the Commission a registration statement under the Securities
Act providing for the registration under the Securities Act of all or a portion
of the Shares held by the Stockholder (each, a "Demand Registration Statement"),
one of which may be a Shelf Registration Statement (as defined below). As
promptly as practicable, but in no event later than 30 calendar days after
Issuer receives a written request from the Stockholder to file the Demand
Registration Statement, Issuer shall file with the Commission and thereafter
cause to be declared effective promptly the related Demand Registration
Statement with respect to such number of Shares as Stockholder shall have
demanded be registered.
(b) As promptly as practicable, but in no event later than 30
calendar days after Issuer receives a written request from such Stockholder
therefor (which request must be given during the Effective Period), which
written request shall be counted as one of the two demand rights stockholder
holds pursuant to Section 2.02(b), Issuer shall cause to be filed in conformity
with the requirements of the Securities Act a "shelf" registration statement on
any appropriate form pursuant to Rule 415 under the Securities Act (including
all amendments thereto, a "Shelf Registration Statement" and, collectively with
any Demand Registration Statement, a "Registration Statement") in respect of the
resale from time to time by Stockholder, in the manner designated by it in its
request, of the number of Shares designated by Stockholder in its request. Prior
to filing the Registration Statement, Issuer will furnish a draft thereof to
Stockholder and shall not file the Registration Statement without Stockholder's
prior consent, which consent shall not be unreasonably withheld. Issuer shall
use its reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act within 60 calendar days after the receipt of
the request therefor and shall use its reasonable efforts to keep the
Registration Statement continuously effective under the Securities Act during
the period of time (such period being referred to herein as the "Effective
Period") following the initial effectiveness of the Registration Statement and
terminating upon the earlier to occur of the date that (i) Stockholder no longer
holds any Securities or (ii) is the second anniversary of the
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<PAGE> 5
Distribution Date (the "Termination Date"); PROVIDED, HOWEVER, that the
Termination Date shall be extended by any period of time Stockholder may be
unable to effect sales of Registered Shares under Sections 2.03(b) or 2.03(c).
Each Registration Statement shall relate only to the offer and sale of Shares by
the Stockholder and shall not relate to the offer and sale of securities other
than the Shares or to offers or sales by any person or entity other than the
Stockholder.
2.03 REGISTRATION PROCEDURES. (a) In connection with any
Registration Statement, and in accordance with the intended method or methods of
distribution of the Registered Shares as described in writing by Stockholder and
set forth in such Registration Statement or any prospectus supplement contained
therein, Issuer shall, as soon as reasonably practicable (and, in any event,
subject to the terms of this Agreement, at or before the time required by
applicable laws and regulations), but only during the Effective Period:
(i) promptly amend the Registration Statement and
amend or supplement the prospectus incorporated therein (A) to cover
additional Shares, in the event that the number of Shares shall be
increased as a result of a stock split or similar event following the
issuance of any Shares, (B) if required by the registration form
utilized by Issuer for the Registration Statement or by the
instructions applicable to such registration form or otherwise required
by the Securities Act or the rules and regulations thereunder, (C) at
the request of Stockholder, to describe the intended method or methods
of distribution of the Registered Shares pursuant to a written
description furnished by Stockholder, and (D) to the extent necessary
to ensure that the Registration Statement, any prospectus incorporated
therein, and any amendment or supplement thereto, will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of any prospectus, in the light of the
circumstances under which they were made) not misleading; and use its
reasonable efforts to cause any such amendment to the Registration
Statement to be declared effective as soon as practicable after the
filing thereof; PROVIDED, HOWEVER, that Issuer shall furnish copies of
such amendment at a reasonable time prior to the filing thereof and
shall not make any such filing to which Stockholder shall have
reasonably and timely objected; and PROVIDED, FURTHER, that the
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<PAGE> 6
foregoing proviso shall not apply to any document filed by Issuer
pursuant to the Exchange Act which is, or is
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<PAGE> 7
deemed to be, incorporated by reference in any Registration Statement
or any prospectus or prospectus supplement;
(ii) furnish without charge to Stockholder, any sales
or placement agent and any underwriter of Registered Shares, a
reasonable number of copies of the Registration Statement and each
amendment thereto (in each case including all exhibits thereto), each
prospectus or prospectus supplement included in the Registration
Statement (including each preliminary prospectus) and any amendments or
supplements thereto and (upon request by Stockholder) any documents
incorporated therein by reference;
(iii) comply with the provisions of the Securities
Act and all applicable rules and regulations of the Commission with
respect to the disposition of all Registered Shares covered by the
Registration Statement in accordance with the intended method or
methods of distribution thereof set forth in the Registration Statement
or any prospectus supplement contained therein;
(iv) make available for inspection by Stockholder or
by any underwriter, attorney, accountant or other agent retained by
Stockholder (collectively, the "Inspectors") financial and other
records and pertinent corporate documents of Issuer (collectively, the
"Records"), provide the Inspectors with opportunities to discuss the
business of Issuer with its officers, and provide opportunities to
discuss the business of Issuer with the independent public accountants
who have certified its most recent annual financial statements, in each
case to the extent but only to the extent reasonably necessary to
enable Stockholder or any underwriter retained by Stockholder to
conduct a "reasonable investigation" for purposes of Section 11(a) of
the Securities Act. Records which Issuer determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential
shall not be disclosed to any Inspector unless such Inspector enters
into a confidentiality agreement in customary form and reasonably
acceptable to such parties and Issuer and (A) the disclosure of such
Records is necessary to avoid or correct a misstatement of a material
fact or omission to state a material fact in the Registration
Statement, (B) the disclosure of such Records is required by any court
or governmental body with jurisdiction over Stockholder or such
-7-
<PAGE> 8
Inspector or (C) all of the information contained in such Records has
been made generally available to the public. Stockholder will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction or by any governmental body, promptly give prior
notice to Issuer and allow Issuer, at its expense, to undertake
appropriate action to prevent disclosure of those Records deemed
confidential;
(v) promptly notify Stockholder, each sales or
placement agent and each underwriter of Registered Shares (A) when the
Registration Statement or any related prospectus or any amendment or
supplement has been filed, and, with respect to the Registration
Statement or any amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments or supplements to
the Registration Statement or the related prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (D) of the receipt by
Issuer of any notification with respect to the suspension of the
qualification of the Registered Shares for sale in any jurisdiction or
the initiation of any proceeding for such purpose or (E) of the
happening of any event which makes any statement in the Registration
Statement or any post-effective amendment thereto, prospectus or any
amendment or supplement thereto, or any document incorporated therein
by reference, untrue in any material respect or which requires the
making of any changes in the Registration Statement or any prospectus,
or amendment or supplement thereto, so that they will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of any prospectus, in the light of the
circumstances under which they were made) not misleading;
(vi) use its reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto;
(vii) use its reasonable efforts to register or
qualify the Registered Shares for offer and sale under such securities
or "blue sky" laws of such jurisdictions as Stockholder, any sales or
placement agent or underwriter of Registered Shares shall
-8-
<PAGE> 9
reasonably request in writing at least 10 days prior to the closing of
any particular sale pursuant to the Registration Statement; PROVIDED,
HOWEVER, that Issuer shall not be required for any such purpose to (A)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but
for the requirements of this Section 2.03(a)(vii), (B) consent to
general service of process in any such jurisdiction, provided that
Issuer shall execute consents to service of process in the forms
customarily requested in connection with the Registration Statement or
qualification of securities under state or securities or "blue sky"
laws, (C) subject itself to taxation in any such jurisdiction in which
it is not already so subject, or (D) make any changes to its
certificate of incorporation or bylaws or enter into any undertakings
with respect to its corporate affairs other than undertakings
customarily given in connection with qualifications of securities for
sale which do not restrict the conduct of its business;
(viii) use its reasonable efforts to cause the Shares
to be listed for trading on the New York Stock Exchange, Inc. or such
other securities exchange or interdealer quotation system on which
shares of Common Stock may be traded or listed and to cause the
Registered Shares to be registered with or approved by such other
governmental agencies or authorities within the United States (except
as may be required as a consequence of the nature of Stockholder's
business) as may be necessary by virtue of the markets on which the
Registered Shares are listed or quoted to enable Stockholder to
consummate the disposition of the Registered Shares;
(ix) cooperate with Stockholder and any sales or
placement agent or underwriter of Registered Shares to facilitate the
timely preparation and delivery of certificates representing Registered
Shares to be sold pursuant to the Registration Statement, which
certificates shall not bear any restrictive legends except as required
by law or as customarily borne by securities held by DTC or any similar
depository; and, in the case of an underwritten offering, enable such
Registered Shares to be in such denominations and registered in such
names as the managing underwriter or underwriters thereof may request
in writing at least two business days prior to any sale of the
Registered Shares;
-9-
<PAGE> 10
(x) enter into such agreements (including an
underwriting agreement or placement agency agreement) as are customary
in transactions of the kind contemplated by the intended method or
methods of distribution of the Registered Shares set forth in the
Registration Statement and reasonably acceptable to Issuer, and take
such other actions as are reasonably necessary in connection therewith
in order to expedite or facilitate the disposition of Registered
Shares; and (A) make such representations and warranties with respect
to the Registration Statement or any post-effective amendment or
supplement thereto, prospectus or any amendment or supplement thereto,
and documents incorporated by reference, if any, to Stockholder and the
sales or placement agent or underwriters of the Registered Shares in
form, substance and scope as are customary in connection with
transactions of such kind; (B) if requested by the managing
underwriters or lead placement agent of the Registered Shares, obtain
an opinion of outside counsel to Issuer in customary form and covering
matters of the type customarily covered by such an opinion, addressed
to such sales or placement agent or underwriters named in the
underwriting agreement and dated the date of the closing of the sale of
the Registered Shares relating thereto (PROVIDED that such opinion
shall be dated as of a single date and no updates thereof shall be
required); (C) if requested by the managing underwriters or lead
placement agent of the Registered Shares, (I) obtain a "comfort" letter
(or, if a "comfort" letter may not be delivered under applicable
accounting pronouncements or standards, a single "procedures" letter)
and a single update thereof from each of the independent certified
public accountants who have certified the most recent audited financial
statements that are incorporated by reference in the Registration
Statement, which letters shall be addressed to the sales or placement
agent or any underwriter of Registered Shares and shall be dated the
date of the prospectus used in connection with an offering of
Registered Shares and/or the date of the closing of the sale of
Registered Shares, such letter or letters to be in customary form and
covering such matters of the type customarily covered by "comfort"
letters of such type, and (II) use its reasonable efforts to have such
letter addressed to Stockholder; (D) deliver such documents and
certificates as may be reasonably requested by Stockholder and the
sales or placement agent or any underwriter of Registered Shares to
evidence compliance with any conditions contained in the underwriting
agreement or other agreement entered into by Issuer; and (E) undertake
such obligations
-10-
<PAGE> 11
relating to expense reimbursement, indemnification and contribution as
provided in Sections 2.03 and 2.04 of this Agreement; PROVIDED,
HOWEVER, that notwithstanding any other provision of this Agreement,
Issuer shall have no obligation to enter into more than two agreements
covering firm commitment underwritings of publicly offered Registered
Shares pursuant to this Agreement;
(xi) use reasonable efforts to make available to its
security holders an earnings statement, as soon as reasonably
practicable but in no event later than 90 days after the end of the
period of twelve months commencing on the first day of any fiscal
quarter next succeeding each sale by Stockholder of Registered Shares,
which earnings statement shall cover such twelve month period and shall
satisfy the provisions of Section 11(a) of the Securities Act and may
be prepared in accordance with Rule 158 under the Securities Act;
PROVIDED, that Issuer's obligations under this paragraph (xi) may be
satisfied by the timely filing of quarterly or annual reports under the
Exchange Act containing the information specified by Rule 158; and
(xii) use its reasonable efforts to assist
Stockholder in marketing the securities, including causing its
executive officers to participate in such "road show" presentations and
conference calls as may be customary in the marketing of equity
securities; PROVIDED, HOWEVER, that Stockholder shall cause the
managing underwriters or placement agents to give such executives
reasonable advance notice concerning the scheduling of any such
presentation or call and provided, further, that such presentations and
conference calls shall be scheduled with the understanding that the
regular responsibilities of such executive officers will take priority
over any such activities.
(b) In the event that Issuer would be required to provide the
notice contemplated by Section 2.03(a)(v)(E) to Stockholder or any sales or
placement agent or underwriter, Issuer shall, as promptly as practicable,
prepare and furnish to Stockholder and each sales or placement agent or
underwriter a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to purchasers of Registered Shares,
such prospectus shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of
-11-
<PAGE> 12
the circumstances under which they were made, not misleading. Upon receipt of
any notice from Issuer pursuant to Section 2.03(a)(v)(C), (D) or (E),
Stockholder shall, and shall use its reasonable efforts to cause any sales or
placement agent or underwriter to, forthwith discontinue disposition of
Registered Shares until such Person shall have received copies of such amended
or supplemented prospectus and, if so directed by Issuer, to destroy or to
deliver to Issuer all copies, other than permanent file copies, then in its
possession of the prospectus (prior to such amendment or supplement) covering
the Registered Shares as soon as practicable after Stockholder's receipt of such
notice; PROVIDED, HOWEVER, with respect to a notice pursuant to Section
2.03(a)(v)(D), Stockholder shall be obligated to comply with the covenant set
forth in this sentence only with respect to the jurisdiction to which such
notice relates.
(c) In the event that the Board of Directors of Issuer as
determined by majority vote thereof, provides notice to Stockholder (accompanied
by a resolution of the board setting forth the following) that it has determined
that in order for Stockholder to effect sales of Registered Shares, Issuer would
have to disclose material nonpublic information which, if disclosed at such
time, would be materially harmful to Issuer and its stockholders, then, for a
period not to exceed 60 days from the date of receipt of such notice,
Stockholder agrees not to effect, and shall cause any sales or placement agent
or underwriter not to effect, any such sales; PROVIDED that the Issuer may not
exercise this deferral right more than once in any consecutive twelve-month
period.
(d) Stockholder shall furnish to Issuer in writing such
information regarding such Stockholder and its intended method of distribution
of the Registered Shares as Issuer may from time to time reasonably request in
writing, but only to the extent that such information is required in order for
Issuer to comply with its obligations under all applicable securities and other
laws and to ensure that the prospectus relating to the Registered Shares
conforms to the applicable requirements of the Securities Act and the rules and
regulations thereunder. Stockholder shall notify Issuer as promptly as
practicable of any inaccuracy or change in information previously furnished in
writing by Stockholder to Issuer or of the occurrence of any event, in either
case as a result of which any prospectus relating to the Registered Shares
contains or would contain an untrue statement of a material fact regarding
Stockholder or its intended method of distribution of the Registered Shares or
omits to state any material fact regarding Stockholder or
-12-
<PAGE> 13
its intended method of distribution of the Registered Shares required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and promptly furnish
to Issuer any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to Stockholder or the distribution of the Registered
Shares, an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(e) Stockholder and all of its officers and directors will
comply with the provisions of Regulation M promulgated by the Commission, as
applicable to them in connection with sales of Registered Shares.
2.04 REGISTRATION EXPENSES. Issuer agrees to bear and to pay,
or cause to be paid, promptly upon request being made therefor, all expenses
incident to Issuer's performance of or compliance with this Agreement,
including, without limitation: (a) all Commission and any National Association
of Securities Dealers registration and filing fees and expenses, (b) all fees
and expenses in connection with the qualification of the Registered Shares for
offering and sale under state securities or "blue sky" laws referred to in
Section 2.03(a)(vii) hereof, including reasonable fees and disbursements of
counsel for any sales or placement agent or underwriter in connection with such
qualifications, (c) all expenses relating to the preparation, printing,
distribution and reproduction of any Registration Statement, each prospectus
included therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the certificates representing the Registered Shares
and all other documents relating hereto, (d) internal expenses of Issuer
(including, without limitation, all salaries and expenses of Issuer's officers
and employees performing legal or accounting duties), (e) fees, disbursements
and expenses of Issuer's counsel and its other advisors and experts and
independent certified public accountants of Issuer (including the expenses of
any opinions or "comfort" letters required by or incident to such performance
and compliance), and (f) the fees and expenses incurred in connection with the
listing of the Registered Shares on any other stock exchange or dealer quotation
system on which the Common Stock shall at such time be listed or traded
(collectively, the "Expenses"). To the extent that any Expenses are incurred,
assumed or paid by Stockholder or any sales or placement agent or underwriter of
Registered Shares, Issuer shall reimburse
-13-
<PAGE> 14
such Person for the full amount of the Expenses so incurred, assumed or paid
promptly after receipt of a written request therefor, which shall specify in
reasonable detail the nature and amount of the Expenses. Notwithstanding the
foregoing, Stockholder shall pay or cause to be paid, as appropriate, (a) all
agency fees and commissions and underwriting discounts and commissions
attributable to the sale of the Registered Shares by or on behalf of
Stockholder, (b) all expenses and disbursements arising out of or related to any
marketing efforts undertaken pursuant to Section 2.03(a)(xii) of this Agreement,
(c) the fees, disbursements and expenses of its counsel in connection with the
offering and sale of the Registered Shares and (d) the disbursements and
expenses of any placement agents or underwriters in connection with the offering
and sale of the Registered Shares and (e) all transfer taxes applicable to the
sale of the Registered Shares.
2.05 INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY ISSUER. Issuer shall, and it hereby
agrees to, (i) indemnify, defend and hold harmless Stockholder, and each Person
who participates as a sales or placement agent or underwriter in any offering or
sale of the Registered Shares, against any losses, claims, damages or
liabilities to which Stockholder or such agent or underwriter may become
subject, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (A) an untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement, or any preliminary or final prospectus contained
therein, or any amendment or supplement thereto, or any document incorporated by
reference therein, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading or (B) any violation by
Issuer of any federal, state or other law applicable to Issuer in connection
with such registration, and (ii) reimburse Stockholder and any such agent or
underwriter for any legal or other out-of-pocket expenses reasonably incurred by
them in connection with investigating or defending any such action, proceeding
or claim; PROVIDED, HOWEVER, that Issuer shall not be liable to any such Person
in any such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in a Registration Statement, or
preliminary or final prospectus, or amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to Issuer by any such
Person expressly
-14-
<PAGE> 15
for use therein, or by such Person's failure to furnish Issuer, upon written
request, with the information with respect to such Person, or Stockholder's
intended method of distribution, that is the subject of the untrue statement or
omission.
(b) INDEMNIFICATION BY STOCKHOLDER. Stockholder agrees to (i)
indemnify, defend and hold harmless Issuer, and each Person who participates as
a sales or placement agent or underwriter in any offering or sale of the
Registered Shares, against any losses, claims, damages or liabilities to which
Issuer may become subject, insofar as such losses, claims, damages or
liabilities (including any amounts paid in settlement as provided herein), or
actions or proceedings in respect thereof, arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, or any preliminary or final prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Issuer by Stockholder expressly
for use therein, and (ii) reimburse Issuer and any such agent or underwriter for
any legal or other out-of-pocket expenses reasonably incurred by them in
connection with investigating or defending any such action, proceeding or claim.
(c) NOTICE OF CLAIMS, ETC. Promptly after receipt by any party
which is entitled to assert a right to indemnification under Section 2.05(a) or
(b) (each, an "Indemnified Party"), of written notice of the commencement of any
action or proceeding as to which such Indemnified Party is entitled to
indemnification under Section 2.05(a) or (b), such Indemnified Party shall,
without regard to whether a claim in respect thereof is to be made against the
party against whom such right to indemnification may be asserted (an
"Indemnifying Party"), notify such Indemnifying Party in writing of the
commencement of such action or proceeding; but the omission so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party in respect of such action or
proceeding on account of the indemnification provisions of or contemplated by
Section 2.05(a) or (b) unless the Indemnifying Party was materially prejudiced
by such failure of the Indemnified Party to give such notice, and in no event
shall such omission relieve the Indemnifying Party from any other
-15-
<PAGE> 16
liability it may have to such Indemnified Party. In case any such action or
proceeding shall be brought against any Indemnified Party and it shall notify an
Indemnifying Party of the commencement thereof, such Indemnifying Party shall be
entitled to participate therein and, to the extent that it shall determine,
jointly with any other Indemnifying Party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Party,
and, after notice from the Indemnifying Party to the Indemnified Party of its
election so to assume the defense thereof, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal or any other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation (unless the Indemnified Party reasonably
objects to such assumption on the grounds that there may be defenses available
to it which are in conflict with defenses available to the Indemnifying Party,
in which event the Indemnified Party shall have the right to control its defense
and shall be reimbursed by the Indemnifying Party for the expenses incurred in
connection with retaining separate counsel, which shall be limited to a single
law firm in each jurisdiction). If the Indemnifying Party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for all Indemnified Parties with
respect to such claim. The Indemnifying Party will not be subject to any
liability for any settlement made without its consent, which consent shall not
be unreasonably withheld or delayed. No Indemnifying Party will consent to entry
of any judgment or enter into any settlement agreement which does not include,
as an unconditional term thereof, the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect of such claim
or litigation.
(d) CONTRIBUTION. If, for any reason (other than a reason
specified herein), the indemnification provisions contemplated by Section
2.05(a) or (b) hereof are unavailable to hold harmless an Indemnified Party in
respect of any losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to therein, then each Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of, and benefits derived by, the Indemnifying Party and the Indemnified
Party, as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference
-16-
<PAGE> 17
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such Indemnifying Party or by such Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 2.05(d) were determined (i) by pro rata allocation (even if Stockholder
or any agents for, or underwriters of, the Registered Shares, or all of them,
were treated as one entity for such purpose); or (ii) by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 2.05(d). The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above shall be deemed to include
(subject to the limitations set forth in Section 2.05(c) hereof) any legal or
other fees or expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action, proceeding or claim.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(e) BENEFICIARIES OF INDEMNIFICATION. The obligations of
Issuer and Stockholder under this Section 2.05 shall be in addition to any
liability that it may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director and partner of any Indemnified Party and
each agent and underwriter of Securities and each Person, if any, who controls
any Indemnified Party or any such agent or underwriter within the meaning of the
Securities Act; and the obligations of Stockholder contemplated by this Section
2.05 shall be in addition to any liability that Stockholder may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of Issuer (including any Person who, with his consent, is named in any
Registration Statement as about to become a director of Issuer) and to each
Person, if any, who controls Issuer within the meaning of the Securities Act.
2.06 UNDERWRITERS. If any of the Shares are to be sold
pursuant to an underwritten offering, the investment banker or bankers and the
managing underwriter or underwriters thereof shall be selected by Stockholder
and shall be reasonably acceptable to Issuer (PROVIDED, HOWEVER, that Issuer
agrees that Morgan Stanley Dean Witter shall be reasonably acceptable to
Issuer).
-17-
<PAGE> 18
2.07 APPROVAL FOR LISTING. Promptly after the date hereof and
after any subsequent increase in the number of Shares, Issuer shall take all
necessary action to cause all of the Shares to be approved for listing, subject
to official notice of issuance, on the primary national security exchange or
dealer quotation system on which the Common Stock may then be listed or
authorized for quotation.
2.08 SUBSEQUENT REGISTRATION RIGHTS. Nothing in this Agreement
shall prevent the Issuer from granting any registration rights to any other
person in connection with any securities of the Issuer.
ARTICLE III
MISCELLANEOUS
-------------
3.01 TERM OF AGREEMENT; TERMINATION; SURVIVAL. The term of
this Agreement shall commence on the date hereof and such term and this
Agreement shall, subject to Section 3.05, terminate upon the expiration of the
Effective Period.
3.02 SPECIFIC PERFORMANCE AND OTHER EQUITABLE RIGHTS. Each of
the parties hereto recognizes and acknowledges that a breach by a party or by
any assignee thereof of any covenants or other commitments contained in this
Agreement will cause the other party to sustain injury for which it would not
have an adequate remedy at law for money damages. Therefore, each of the parties
hereto agrees that in the event of any such breach, the aggrieved party shall be
entitled to the remedy of specific performance of such covenants or commitments
and preliminary and permanent injunctive and other equitable relief in addition
to any other remedy to which it may be entitled, at law or in equity, and the
parties hereto further agree to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such injunctive or
other equitable relief.
3.03 NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and made if in
writing and if served by personal delivery upon the party for whom it is
intended or delivered by registered or certified mail, return receipt requested,
or if sent by telecopier, upon receipt of oral confirmation that such
transmission has been received, to the Person at the address set forth below, or
such other address as may be
-18-
<PAGE> 19
designated in writing hereafter, in the same manner, by such Person or by
Stockholder:
(a) if to Issuer, addressed as follows:
Lanier Worldwide, Inc.
2300 Parklake Drive, N.E.
Atlanta, Georgia 30345
Attention: General Counsel
Telecopier: (770) 621-1073
(b) if to Stockholder, addressed as follows:
Harris Corporation
1025 West NASA Boulevard
Melbourne, Florida 32919
Attention: Richard L. Ballantyne
Scott T. Mikuen
Telecopier: (407) 727-9234
or to such other address as the relevant party may from time to time advise by
notice in writing given pursuant to this Section 3.03. The date of receipt of
any such notice, request, consent, agreement or approval shall be deemed to be
the date of delivery thereof.
3.04 PARTIES IN INTEREST. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
successors and assigns.
3.05 SURVIVAL. The several indemnities, agreements, and each
other provision set forth in this Agreement or made pursuant hereto shall remain
in full force and effect regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any party, any director or officer of
such party, or any controlling Person of any of the foregoing, and shall survive
the transfer of any Shares by Stockholder. The expense payment provisions of
Section 2.04 and the indemnification and contribution provisions set forth in
Section 2.05 hereof shall survive any termination of this Agreement.
3.06 ASSIGNMENT. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other parties hereto, and any such purported assignment shall be null and
void, except that the Stockholder may assign and delegate its rights and
obligations under this Agreement to any of its majority-owned subsidiaries,
without the consent of Issuer; PROVIDED that such majority-owned subsidiary
executes and delivers to Issuer an agreement to the effect
-19-
<PAGE> 20
that such majority-owned subsidiary agrees to be bound by this Agreement.
3.07 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
3.08 CONSENT TO JURISDICTION. Each of the parties irrevocably
submits to the exclusive jurisdiction of (a) the state courts of the State of
Florida, located in Orlando, and (b) the United States District Court for the
Middle District of Florida, for the purposes of any suite, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Middle District of
Florida or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the state courts of the State of Florida,
located in Orlando. Each of the parties further agrees that service of any
process, summons, notice or document by U.S. registered mail to such party=s
respective address set forth above shall be effective service of process for any
action, suit or proceeding in Florida with respect to any matters to which it
has submitted to jurisdiction in this Section 3.08. Each of the parties
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i)the state courts of the State of Florida, located in
Orlando, or (ii) the United States District Court for the Middle District of
Florida, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any court has been brought in an inconvenient forum.
3.09 SEVERABILITY. It is the intention of the parties that
the provisions of this Agreement be deemed severable and the invalidity or
unenforceability of any provision not affect the validity or enforceability of
the other provisions hereof. It is the intention of the parties that if any
provision of this Agreement, or the application thereof to any Person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances
-20-
<PAGE> 21
shall not be affected by such invalidity or unenforceability.
3.10 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire understanding of the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by Issuer and Stockholder, which shall be binding on
Stockholder and Issuer.
3.11 FURTHER ASSURANCES. Each party shall provide such
further documents or instruments reasonably requested by any other party as may
be necessary or desirable to effect the purpose and intention of this Agreement
and carry out its provisions, whether before or after its termination.
3.12 COUNTERPARTS. This Agreement and any amendments hereto
may be executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first written above.
LANIER WORLDWIDE, INC.
By:_______________________
Name:
Title:
HARRIS CORPORATION
By:_______________________
Name:
Title:
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<PAGE> 1
EXHIBIT 12.1
LANIER WORLDWIDE, INC. AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars, Except Ratios)
<TABLE>
<CAPTION>
YEAR ENDED THREE QUARTERS ENDED
-------------------------------- --------------------
JULY 3, JUNE 27, JUNE 30, APRIL 2, APRIL 3,
1998 1998 1996 1999 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS:
Net Income........................... $ 62,797 $ 63,699 $ 57,272 $ 52,702 $48,098
Plus: Income Taxes................... 36,604 38,208 33,331 29,384 28,452
Fixed Charges...................... 21,861 19,856 20,371 25,986 14,781
-------- -------- -------- -------- -------
$121,262 $121,763 $110,974 $108,072 $91,331
======== ======== ======== ======== =======
FIXED CHARGES:
Interest expense..................... $ 8,236 $ 8,797 $ 11,010 $ 15,767 $ 6,487
Plus: Portion of Rents Deemed
Representative of the Interest
Factor............................. 13,625 11,059 9,361 10,219 8,294
-------- -------- -------- -------- -------
$ 21,861 $ 19,856 $ 20,371 $ 25,986 $14,781
======== ======== ======== ======== =======
RATIO OF EARNINGS TO FIXED CHARGES... 5.55 6.13 5.45 4.16 6.18
======== ======== ======== ======== =======
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent Certified
Public Accountants" and to the use of our report dated July 29, 1998 in the
Registration Statement on Form 10 of Lanier Worldwide, Inc. dated July 2, 1999.
/s/ Ernst & Young LLP
Orlando, Florida
July 2, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS 9-MOS
<FISCAL-YEAR-END> JUL-03-1998 JUN-27-1997 JUN-30-1996 JUL-03-1998
<PERIOD-END> JUL-03-1998 JUN-27-1997 JUN-30-1996 APR-3-1998
<CASH> 87,096 18,647 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 362,099 429,153 0 0
<ALLOWANCES> 9,110 11,745 0 0
<INVENTORY> 201,642 203,026 0 0
<CURRENT-ASSETS> 695,979 696,252 0 0
<PP&E> 380,028 339,425 0 0
<DEPRECIATION> 224,622 194,886 0 0
<TOTAL-ASSETS> 1,182,032 1,151,881 0 0
<CURRENT-LIABILITIES> 336,649 364,938 0 0
<BONDS> 3,660 3,990 0 0
0 0 0 0
0 0 0 0
<COMMON> 42 42 0 0
<OTHER-SE> 803,615 750,115 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,182,032 1,151,881 0 0
<SALES> 1,254,777 1,170,014 1,115,962 930,497
<TOTAL-REVENUES> 1,288,335 1,199,885 1,144,722 955,788
<CGS> 758,869 681,747 667,887 558,739
<TOTAL-COSTS> 410,452 399,470 370,004 312,203
<OTHER-EXPENSES> 2,877 7,964 5,218 1,809
<LOSS-PROVISION> 8,500 0 0 0
<INTEREST-EXPENSE> 8,236 8,797 11,010 6,487
<INCOME-PRETAX> 99,401 101,907 90,603 76,550
<INCOME-TAX> 36,604 38,208 33,331 28,452
<INCOME-CONTINUING> 62,797 63,699 57,272 48,098
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 62,797 63,699 57,272 48,098
<EPS-BASIC> 0 0 0 0
<EPS-DILUTED> 0 0 0 0
[ARTICLE] 5
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] JUL-02-1999
[PERIOD-END] APR-2-1999
[CASH] 71,143
[SECURITIES] 0
[RECEIVABLES] 487,254
[ALLOWANCES] 21,691
[INVENTORY] 187,340
[CURRENT-ASSETS] 803,836
[PP&E] 488,508
[DEPRECIATION] 283,302
[TOTAL-ASSETS] 1,409,803
[CURRENT-LIABILITIES] 519,460
[BONDS] 10,101
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 385
[OTHER-SE] 864,191
[TOTAL-LIABILITY-AND-EQUITY] 1,409,803
[SALES] 1,048,489
[TOTAL-REVENUES] 1,076,712
[CGS] 645,541
[TOTAL-COSTS] 328,816
[OTHER-EXPENSES] 4,502
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 15,767
[INCOME-PRETAX] 82,086
[INCOME-TAX] 29,384
[INCOME-CONTINUING] 52,702
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 52,702
[EPS-BASIC] 0
[EPS-DILUTED] 0
</TABLE>
