<PAGE>
PART III
Item 10, Item 11, Item 12 and Item 13 to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 31, 1996 are hereby amended and restated
in their entirety as set forth below:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item (i) is included in Part I of this
Annual Report on Form 10-K under the heading "Executive Officers and
Management of the Company", and (ii) is set forth below:
CLASS I DIRECTOR
JAMES S. SALTZMAN, age 52, has been the General Partner of Saltzman
Partners, an investment firm, since 1982. He served as Chairman of the Board
of Directors of the Company from February 1994 to February 1995. He has been
a director of the Company since 1992.
CLASS II DIRECTOR
THOMAS H. CONWAY, age 57, has been Chief Executive Officer of the Company
since 1991, President of the Company since December 1995 and from 1991 to
February 1994 and President of T.H. Conway and Associates, Inc., a management
consulting firm specializing in corporate operational and financial
remediation, since July 1993. From 1985 to June 1993, he was President of
Conway and Youngman, a management consulting firm. He has been a director of
the Company since March 1993 (at which time he was elected to fill a vacancy
in the Class II Directors) and has been Chairman of the Board of Directors
since February 1995.
Prior to joining the Company in August 1991, Mr. Conway served as interim
Chief Executive Officer of Smart Names, Inc. A petition for involuntary
bankruptcy under Chapter 7 was filed against Smart Names, Inc. in the
Bankruptcy Court for the State of Maryland on February 28, 1992.
CLASS III DIRECTORS
LELAND S. KOLLMORGEN, age 69, has been the President of TLK Inc., a
business consulting firm, since 1983 and is a self-employed consultant. Rear
Admiral Kollmorgen (USN, Retired) is a consultant and former Chief of Naval
Research to the United States Navy. He has been a director of the Company
since 1988.
JAMES L. MCKENNEY, age 67, has been the John J. McLean Professor of
Business Administration at Harvard University since 1960. Mr. McKenney has
been a director of the Company since November 1994.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies or reports filed by reporting persons
of the Company pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Company believes that all filings
required to be made by reporting persons of the Company were timely made in
accordance with the requirements of the Exchange Act, except that Mr. Borin
filed his Form 3 four months late and Mr. Woods filed his Form 3 two months
late.
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ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item (i) is included in the first
paragraph of Item 13 of Part III of this Annual Report on Form 10-K, and (ii)
is set forth below:
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive directors' fees of
$2,000 per year. Such outside directors also receive fees of $500 for each
Board meeting attended in person and $250 for each telephonic Board meeting,
and directors who are members of Committees of the Board receive fees of $250
per Committee meeting attended, provided such Committee meeting was not held
on the same day as a Board meeting. Directors are also reimbursed for
expenses incurred in attending Board or Committee meetings. Directors who are
employees receive no additional compensation for serving as directors.
Under the Company's 1992 Director Stock Option Plan, each newly elected
outside director is granted, upon his initial election as a director, a
non-qualified option to purchase 20,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock as of the date of
grant. Each option granted under the 1992 Director Stock Option Plan becomes
exercisable on a cumulative basis in five equal annual installments beginning
on the date of grant.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information concerning the
compensation, for the fiscal years indicated, of the Company's Chief
Executive Officer and the Company's four other most highly compensated
executive officers during fiscal 1996 (the "Senior Executives").
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------- --------------- ------------------
Options All Other
Name and Principal Position Fiscal Year Salary (1) Bonus($) (No. of shares) Compensation($)(2)
- -------------------------------------- ------------- ------------ ---------- --------------- ------------------
1996 $182,200 $-- -- $---
Thomas H. Conway(3) President, Chief
Executive Officer and Chairman of the 1995 $141,200 -- -- --
Board of Directors 1994 $157,250 -- -- --
1996 $156,923 -- -- --
Daniel M. Clarke(4) Former President 1995 $149,654 30,000 60,000 --
and Chief Operating Officer 1994 $131,615 20,000 -- --
1996 $120,751 10,000 -- 1,221
James G. Hickey Vice President,
Customer Support, and Managing 1995 $120,751 -- 25,000 1,222
Director, Europe 1994 $120,751 20,000 -- 1,522
1996 $122,135 15,000 -- 1,221
Kevin J. Duffy Senior Vice President
and General Manager, Xyvision 1995 $119,741 20,000 10,000 1,349
Publishing Group 1994 $115,500 20,000 -- 1,304
1996 $116,768 -- 4,500 287
Paul J. Woods Senior Vice President 1995 $129,165 -- -- 323
and General Manager,, Contex Group 1994 $125,800 -- -- 315
</TABLE>
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<PAGE>
(1) In accordance with the rules of the SEC, other compensation in the form
of perquisites and other personal benefits has been omitted because such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total annual salary and bonus for the Senior Executive.
(2) Consists of Company matching contributions to 401(k) Plan.
(3) The Company pays T.H. Conway and Associates, Inc., a management
consultant firm of which Mr. Conway is the President, directly for Mr.
Conway's services. See "Certain Transactions."
(4) Mr. Clarke served as President and Chief Operating Officer until
December 8, 1995.
OPTION GRANTS
The following table sets forth, on an aggregated basis, the exercise of
stock options during fiscal 1996 by each of the Senior Executives and the
fiscal year-end value of unexercised options held by such officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
for Option Term
Individual Grants (3)
Executive Officer ----------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options Granted to
Options Granted Employees in Fiscal Exercise or Base
(#)(1) Year Price($/Sh)(2) Expiration Date 5% ($) 10% ($)
- ----------------- ------------------- ------------------- ------------------- --------------- --------
Thomas H. Conway -- -- -- -- $-- $ --
Daniel M. Clarke -- -- -- -- $ -- $ --
James G. Hickey -- -- -- -- $ -- $ --
Kevin J. Duffy -- -- -- -- $ -- $ --
Paul J. Woods 4,500 1.6 $0.95 8/16/05 $0 $ 0
</TABLE>
(1) Each option becomes exercisable in equal annual installments over a five
year period commencing on the date of grant.
(2) The exercise price is equal to the fair market value on the date of
grant.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term (ten years from
the date of grant). These gains are based on assumed rates of stock
appreciation of 5% and 10% compounded annually from the date the respective
options were granted to their expiration date. Actual gains, if any, on stock
option exercises will depend on the future performance of the common stock
and the date on which the options are exercised.
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<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning grants of
stock options during fiscal 1996 to each of the Senior Executives.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Number of Shares Underlying
Unexercised Options at Fiscal Value of Unexercised In-the-Money
Shares Acquired on Year-End Options at Fiscal Year-End(1)
Name Exercise Value Realized
----------------------------------------------------------------------------------------------------------------- -------------
----------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------------- ------------------ ---------------
Thomas H. Conway 0 $0 300,000 0 $ 0 $ 0
Daniel M. Clarke 80,000 0 (2) 0 0 0 0
James G. Hickey 0 0 82,640 42,360 1,130 4,520
Kevin J. Duffy 0 0 71,801 38,199 560 2,240
Paul J. Woods 0 0 15,500 4,500 0 0
</TABLE>
(1) Based on the fair market value of the Common Stock on March 31, 1996
($.31 per share).
(2) Based upon the fair market value of the Common Stock on January 1, 1996
($.34375 per share) and on March 2, 1996 ($.26875 per share), the dates of
option exercise, less the applicable option exercise prices, Mr. Clarke had a
net loss of approximately $3,820.
AGREEMENTS WITH SENIOR EXECUTIVES
In 1990, the Company entered into agreements with Messrs. Clarke and
Hickey entitling such individuals to benefits under the Company's Severance
Program for Executive Committee Corporate Officers. Under this Program, an
employee whose employment is terminated by the Company involuntarily without
"cause" (as defined in the Program) is entitled to (i) a severance payment in
the amount of three months salary; (ii) if he has not obtained other
employment within three months after his employment termination date,
bi-weekly salary payments for an additional period from such date until the
earlier of one year after his employment termination date or the date on
which he obtains other employment; and (iii) a continuation of medical,
dental and insurance benefits until the earlier of one year after his
employment termination date or the date on which he obtains other employment.
In addition, an employee whose employment terminates for any reason, whether
voluntary or involuntary, within three months following a "change in control"
(as defined in the Program) is entitled to receive the benefits described
above, and all outstanding stock options held by the employee shall
immediately become exercisable in full. The Program remains in effect for so
long as such individuals are employed by the Company (although
post-employment benefits expire one year after employment termination). Mr.
Clarke left the employ of the Company in December 1995 and is receiving
benefits under this Program.
The Company has an Employee Severance Benefit Plan in which all full-time
employees (including executive officers) who have been employed for at least
90 days participate. Under this Plan, if a
6
<PAGE>
"change in control" of the Company (as defined in the Plan) occurs, and
within 12 months thereafter a participant's employment with the Company is
terminated either by the Company other than for "cause" or "disability" (each
as defined in the Plan) or by the participant for "good reason" (as defined
in the Plan), then (i) the participant is entitled to (a) a cash payment
equal to 50% of his annual base compensation if he has been employed by the
Company for less than one year or 100% of his annual base compensation if he
has been employed by the Company for one year or more (subject to reduction
in certain events for tax reasons) and (b) a continuation of certain
insurance benefits for a period of one year, and (ii) all outstanding stock
options held by the participant shall immediately become exercisable in full.
Notwithstanding the foregoing, if a particular change in control of the
Company is approved in advance by the Board of Directors of the Company,
participants shall not be entitled to any of the foregoing benefits. This
Plan may be amended or terminated by the Board of Directors at any time prior
to the occurrence of a change in control. Amounts payable to any employee
under the Plan are reduced by amounts payable to such employee under any
other program or agreement under which he will receive benefits.
The Company's employment agreement with T.H. Conway and Associates, Inc.
and Thomas H. Conway, Chief Executive Officer of the Company, is described
below under the heading "Certain Transactions".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of May 31, 1996 (i) by each person who is known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) by each director, (iii) by each of the executive officers named
in the Summary Compensation Table set forth under the caption "Executive
Compensation" below, and (iv) by all current directors and executive officers
as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Shares Percentage of
Beneficially Common Stock
Name and Address Owned(1) Outstanding(2)
5% Stockholders
Tudor Trust(3 c/o Braverman Codron & Company 450 N.
Roxbury Avenue Los Angeles, CA 90210 5,483,958 41.7%
James S. Saltzman(4) General Partner Saltzman Partners
621 E. Germantown Pike Plymouth Valley, PA 19401 1,656,011 18.5%
Other Directors
Thomas H. Conway(5). 325,000 3.6%
Leland S. Kollmorgen(6) 20,000 *
James L. McKenney(7) 8,000 *
Other Senior Executives
1.0%
Daniel M. Clarke 89,644
8
<PAGE>
James G. Hickey (8) 87,640 1.0%
Kevin J. Duffy(9) 73,876 *
Paul J. Woods(10). 15,500 *
All directors and officers as a group (9 persons)(11) 2,205,177 23.3%
- --------------------------------------------------------
</TABLE>
* Less than 1%
(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission by such stockholder of beneficial ownership of those
shares. Each stockholder possesses sole voting and investment power with
respect to the shares listed, except as otherwise indicated. For purposes of
this table, each person or entity listed is included as beneficially owning
any shares issuable upon the conversion of the Series B Stock or upon the
exercise of stock options or warrants that are currently exercisable or
exercisable within 60 days after May 31, 1996.
(2) Number of shares deemed outstanding includes 8,844,099 shares
outstanding as of May 31, 1996, plus any shares issuable upon conversion of
Series B Stock or subject to options or warrants held by the person or entity
in question that are currently exercisable or exercisable within 60 days
following May 31, 1996.
(3) Includes 4,200,000 shares of Common Stock issuable upon the exercise
of Common Stock Purchase Warrants and 117,458 shares of Common Stock issuable
upon conversion of Series B Stock. See "Certain Transactions" regarding
additional shares which may be acquired by Tudor Trust. Does not include
warrants for an aggregate of 10,000,000 shares of Common Stock of the Company
issued to Tudor Trust on June 13, 1996, of which warrants for 3,275,000
shares are currently exercisable and of which warrants for 6,725,000 shares
will be exercisable upon stockholder approval, and the filing, of an
amendment to the Company's Certificate of Incorporation increasing the number
of authorized shares.
(4) Includes 20,000 shares of Common Stock subject to stock options and
93,372 shares of Common Stock issuable upon conversion of Series B Stock
owned by Saltzman Partners, of which Mr. Saltzman is the General Partner.
(5) Includes 300,00 shares subject to stock options.
(6) Includes 19,000 shares subject to stock options.
(7) Includes of 8,000 shares subject to stock options.
(8) Includes of 87,640 shares subject to stock options.
(9) Includes 73,801 shares subject to stock options.
(10) Consists of 15,500 shares subject to stock options.
(11) Includes a total of 543,091 shares subject to stock options and 93,372
shares issuable upon conversion of Series B Stock.
8
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN TRANSACTIONS
Under an employment agreement with Thomas H. Conway, Chief Executive
Officer of the Company, effective October 1, 1993, the Company has agreed to
pay Mr. Conway the sum of $9,000 per month, plus reasonable out of pocket
expenses, plus $200 per hour for each hour of services rendered to the
Company in excess of 45 hours per week. This cash compensation is in lieu of
all non-cash benefits employees of the Company normally receive (such as
health insurance benefits and vacation time). This agreement also provides
that Mr. Conway may employ additional members of T.H. Conway and Associates,
a consulting firm of which he is a principal, at specified rates, provided
that the aggregate amount of compensation and reimbursement of out-of-pocket
expenses paid to such employees may not exceed $50,000 per year without
advance approval of the Board of Directors. In January 1996, the Company
agreed to pay Mr. Conway a maximum of $20,000 per month, plus reasonable out
of pocket expenses, for his services. The Company has paid Mr. Conway $20,000
per month, plus reasonable out of pocket expenses, for his services since
February 1996. In fiscal 1996, the Company paid $182,200 and $4,650 to T.H.
Conway and Associates, Inc. for services of Mr. Conway and its employees
other than Mr. Conway, respectively, and an aggregate of $7,095 for
reimbursement of expenses. In addition, each member of the Board of Directors
of the Company has signed an agreement that they will not sue Mr. Conway or
T.H. Conway and Associates, Inc. in connection with the performance of
services to the Company except for fraud, malfeasance or gross negligence.
Mr. Conway is a general partner of CR Management LP, which has a fifty
percent equity interest in Document Management Solutions, Inc., a software
integration services company serving the publishing industry. The Company
paid Document Management Solutions, Inc. $64,632 in fiscal year 1996 for
integration services.
On June 30, 1992, the Company obtained a $2,000,000 line of credit with
Tudor Trust, a current investor in the Company. The line, which is payable on
demand, is secured by substantially all of the assets of the Company and has
been used for working capital and general business purposes. Interest on the
line of credit is payable monthly. The Company issued 400,000 shares of
common stock and a common stock purchase warrant for 100,000 shares of common
stock at an exercise price of $.50 per share to the Tudor Trust, for no
additional consideration upon signing of the line of credit. In addition, as
required by the line of credit, from September 30, 1992 through June 30,
1993, the Company granted the investor four additional common stock purchase
warrants, each covering 100,000 shares of common stock. On September 28,
1993, the Company and the investor amended the line of credit. Under the
terms of this amendment: (i) the amount available under the line of credit
was increased from $2,000,000 to $2,500,000; (ii) annual interest rate was
reduced from 13% to 10%; and (iii) the term of the line of credit was
extended from June 30, 1994 to June 30, 1995. In consideration of such
changes, the Company: (i) reduced the exercise price of 200,000 and 100,000
common stock purchase warrants exercisable by Tudor Trust from $.50 and $.25
per share, respectively, to $.09 per share (the fair market value of the
common stock on September 28, 1993); (ii) issued 200,000 shares of common
stock and a warrant to purchase 300,000 shares of common stock at an exercise
price of $.09 per share to Tudor Trust for no additional consideration; and
(iii) agreed to grant the investor up to eight additional warrants, each
covering 125,000 shares of common stock at an exercise price at the lesser of
the fair market value of the common stock on the date of issue or $1.00 per
share.
9
<PAGE>
On December 3, 1993, the Company and Tudor Trust entered into an
additional amendment to the line of credit. Under the terms of this
amendment, the amount available under the line of credit was increased to
$3,000,000. In consideration of this change, the Company: (i) issued 100,000
shares of common stock and a warrant to purchase 500,000 shares of common
stock at fair market value of the common stock on December 3, 1993; and (ii)
agreed to grant Tudor Trust up to seven additional common stock purchase
warrants between December 31, 1993 and June 30, 1995, each covering 200,000
shares of common stock at an exercise price at the lesser of the fair market
value of the common stock on the date of grant or $1.00 per share (these
warrants are in lieu of the last seven of the warrants referred to in clause
(iii) of the preceding paragraph).
On February 29, 1996, the Company and Tudor Trust entered into an
additional amendment to the line of credit. Under the terms on this
amendment, the amount available under the line of credit was increased to
$4,000,000 and the term of the line of credit was extended to December 31,
1997. In consideration of these changes, the Company granted the investor a
common stock purchase warrant for 200,000 shares of Common Stock at an
exercise price of $.10 per share (the fair market value of the Common Stock
on the date of issuance of such warrant) and agreed to continue to grant the
investor for each fiscal quarter for which amounts are outstanding under the
credit line a Common Stock purchase warrant for 200,000 shares of Common
Stock, provided that the number of shares subject to the warrant shall be
325,000 (rather than 200,000 shares in the event that the maximum amount of
outstanding credit line advances on one or more dates during the quarter
ending on the issue date of such warrant exceeds $3,000,000). The exercise
price of the first five warrants (beginning with the warrant for the quarter
ended September 30, 1995) will be at the lesser of the fair market value of
the common stock on the date of the grant or $1.00 per share while the
exercise price of the final five warrants will be the fair market value of
the common stock on the date of the grant.
Late in fiscal 1996, management of the Company concluded that, due
principally to the significant losses from operations in the third and fourth
quarters of fiscal 1996 (which amounted to approximately $1.8 million and
$2.5 million, respectively), the Company's $4,000,000 credit line would be
insufficient to finance the Company's cash needs during the first quarter of
fiscal 1997. Accordingly, after investigating a number of alternative sources
of financing, the Company entered into an amendment to its line of credit
agreement with Tudor Trust, effective as of May 31, 1996, pursuant to which
(a) Tudor Trust agreed to (i) increase the maximum loan amount to $5,000,000,
(ii) reduce the interest rate on the line of credit from 10% to 8% per annum,
(iii) eliminate any borrowing covenants or conditions that would prevent the
Company from accessing the full $5,000,000 of available credit, and (iv)
eliminate the requirement for the issuance of additional warrants to Tudor
Trust under the line of credit (which were issuable on a quarterly basis),
and (b) in consideration therefor, on June 13, 1996, the Company issued to
Tudor Trust warrants for 10,000,000 shares of Common Stock of the Company at
an exercise price of $.10 per share (representing the fair market value of
the common stock of the Company as of the date of warrant issuance). Of the
warrants for 10,000,000 shares of Common Stock, warrants for 3,275,000 shares
are currently exercisable and warrants for 6,725,000 shares will be
exercisable upon stockholder approval, and the filing of an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares. See "Amendment to Certificate of Incorporation" regarding these
warrants. In connection with this line of credit amendment, Tudor Trust
exercised warrants for the purchase of 2,092,500 shares of Common Stock of
the Company for an aggregate purchase price of $200,000.
10
<PAGE>
On July 29, 1994, the Company entered into an exchange agreement with
Saltzman Partners, Tudor Trust and certain other parties relating to the 15%
Exchange Notes of the Company held by such stockholders. James S. Saltzman,
the General Partner of Saltzman Partners, is a director of the Company.
Saltzman Partners and Tudor Trust held 15% Exchange Notes in the principal
amounts of $1,087,500 and $630,000, respectively, which they exchanged upon
the terms set forth below. The Company entered into the exchange agreement in
order to relieve itself of the payment obligations on the 15% Exchange Notes,
which were to mature beginning September 30, 1994. Under the terms of the
exchange agreement, Xyvision issued the following securities to holders of
its 15% Exchange Notes in exchange for the delivery of its 15% Exchange Notes
for cancellation: (i) a new promissory note in a principal amount equal to
the principal amount of the 15% Exchange Note, which would mature 30 months
from the date of issuance and would not bear interest; (ii) such number of
shares of the Company's common stock as is determined by dividing the
aggregate principal amount of the 15% Exchange Note delivered for
cancellation by $10.00; and (iii) such number of shares of Series B Preferred
Stock of Xyvision as is determined by dividing the accrued interest in the
15% Exchange Note delivered for cancellation by $10.00. Dividends of $.40 per
share accrue annually on the Series B Preferred Stock and are payable on a
quarterly basis. The Series B Preferred Stock has a liquidation preference of
$12.50 per share and is convertible into Common Stock at a rate of two shares
of common stock for each share of Series B Preferred Stock. Pursuant to the
exchange agreement, Saltzman Partners received a 4% Exchange Note in the
principal amount of $1,087,500, 108,750 shares of common stock and 46,686
shares of Series B Preferred Stock, and Tudor Trust received 4% Exchange
Notes in an aggregate principal amount of $630,000, an aggregate of 63,000
shares of common stock and an aggregate of 26,113 shares of Series B
Preferred Stock.
Tudor Trust and Saltzman Partners, both of whom are significant
stockholders of the Company and own a significant portion of the outstanding
Debentures and/or 4% Promissory Notes, have presented to the Company the
following proposal relating to the exchange of Debentures and 4% Promissory
Notes for common stock of the Company; they, along with certain other holders
of the Debentures, would exchange their Debentures for such number of shares
of common stock of the Company as is equal to the sum of the principal amount
of the Debentures exchanged plus the accrued interest thereon, divided by
$3.33; and they, along with certain other holders of the 4% Promissory Notes,
would exchange their 4% Promissory Notes for such number of shares of common
stock of the Company as is equal to the principal amount of the 4% Promissory
Notes exchanged divided by $2.00 (any accrued but unpaid interest would be
paid in cash at the time of such exchange). The consummation of the exchange
transaction for the Debentures would be contingent upon the participation in
such exchange by the holders of at least 50% of the principal amount of the
outstanding Debentures; and the consummation of the exchange transaction for
the 4% Promissory Notes would be contingent upon the participation in such
exchange by the holders of at least 75% of the principal amount of the
outstanding 4% Promissory Notes. Together, Tudor Trust and Saltzman Partners
currently own approximately 41% of the principal amount of the outstanding
Debentures and approximately 45% of the principal amount of the outstanding
4% Promissory Notes. The Board of Directors of the Company has voted to
accept the terms of the exchange proposal made by Tudor Trust and Saltzman
Partners and to proceed with such exchange transactions, assuming the
requisite number of holders of the Debentures and 4% Promissory Notes agree
to the terms of such exchanges. While the Company believes that such exchange
transactions would be very beneficial to the Company and its stockholders and
would significantly improve the Company's balance sheet and liquidity
position, there can be no assurance that such exchange transactions will be
consummated.
11
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 10-K/A amending its Annual Report on
Form 10-K for the fiscal year ended March 31, 1996 to be signed on its behalf
by the undersigned, thereunto duly authorized.
XYVISION, INC.
Date: July 29, 1996
By: /s/ Eugene P. Seneta
Eugene P. Seneta
Vice President, Chief
Financial Officer,
Treasurer and Secretary
12
