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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-7760/0-20290
COMPUTERVISION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 04-2491912
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
100 CROSBY DRIVE,
BEDFORD, MASSACHUSETTS 01730
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 275-1800
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
11 3/8% Senior Subordinated Notes due 1999
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of voting stock held by non-affiliates of the
registrant, based upon the closing sale price of such stock on March 25, 1997 on
the New York Stock Exchange was approximately $250,606,357. Shares of voting
stock held by each executive officer and director and by each person who owns
10% or more of the outstanding Common Stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
Number of shares of Common Stock outstanding as of March 25, 1997:
63,575,158.
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DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Proxy Statement for the Annual Meeting of
Stockholders to be held on June 10, 1997 are incorporated by reference in Part
III of the Form 10-K.
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PART 1
ITEM 1. BUSINESS
The Company develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. The Company's principal
products include design automation and product data management software.
Manufacturers use the Company's software to design, enhance, and modify their
products and to access, share and manage their product data collaboratively. The
Company's support services include implementation, consulting and training
services designed to assist customers in reengineering their product development
processes and in increasing productivity.
The Company was organized under the laws of the State of Delaware on June
9, 1972 as Prime Computer, Inc. The Company's principal executive offices are
located at 100 Crosby Drive, Bedford, MA 01730 and its telephone number is (617)
275-1800.
RECENT DEVELOPMENTS
On November 1, 1996, Kathleen A. Cote, President and Chief Operating
Officer of the Company, was appointed Chief Executive Officer of the Company.
Ms. Cote, who was named a Director of the Company on July 25, 1996, has been
with the Company since November 1986, serving in various positions, including
Vice President, Services and Vice President, Manufacturing.
On March 19, 1997, the Company announced the termination of its agreement
with J.F. Lehman & Company for the sale of its Open Service Solutions ("OSS")
business unit and the signing of a non-binding letter of intent with M.D. Sass
Investors Services, Inc. ("Sass"), a 17% shareholder of the Company, for the
purchase by Sass of a 51% interest in the OSS business. In connection with this
transaction, the Company will receive from Sass $5.1 million in cash and will
receive from the entity that operates the OSS business (a) $25 million in cash
and (b) a promissory note in the amount of $25 million. The cash payment of $25
million will be funded by a bank loan to the OSS business, secured by its
assets. The Company will continue to own 49% of the OSS business, subject to an
option granted to Sass to purchase up to one-fifth of the balance of the
Company's equity position. The transaction is subject to execution and delivery
of a definitive agreement and to the availability of financing, receipt of
approval from the Company's banks, compliance with the Company's financing
instruments and other customary closing conditions. As a result, no assurance
can be given that the transaction will be consummated.
OVERVIEW
The traditional computer-aided design, computer-aided manufacturing
("CAD/CAM") product development process has focused primarily on the design of
individual components or parts and optimization of the individual engineer's
productivity. Generally, this process is implemented through assembly of the
individually-designed components and physical mock-ups.
To improve the design process, reduce development time and costs and
improve quality, many manufacturers are moving beyond the traditional product
development process to a process that focuses on complete assemblies,
substitutes electronic prototypes for physical prototypes and enables design and
build teams to work concurrently. This product development process, which is
marketed by the Company as "Electronic Product Definition" ("EPD"), is
"assembly-centric", while traditional product development is
"component-centric." EPD is the Company's product and process response to the
customer's need to concurrently create, manage, share and reuse electronic
product information in a collaborative environment. Companies from the
aerospace, automotive, white goods, shipbuilding and consumer products
industries today implement EPD in an effort to obtain a competitive advantage.
EPD enables customers to create and store a single product definition that
can be made available in electronic form for further design work, simulation and
analysis, manufacturing planning, production
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The following trademarks and service marks are used in this Form 10-K:
Computervision, CADDS, MEDUSA, Optegra, Personal Designer and Personal Machinist
are registered trademarks of the Company. Dimension III, Electronic Product
Definition, EPD, EPD.Connect and PELORUS are trademarks of, and Open Service
Solutions is a service mark of, the Company. Trade names and trademarks of other
companies appearing in this Form 10-K are the property of their respective
holders.
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engineering, and other related activities in the product development process.
Using the EPD approach, individuals from various disciplines of a customer's
extended enterprise and key suppliers can collaborate more effectively and can
concurrently access and manipulate design and manufacturing information early in
the development process where the greatest cost, quality, and productivity gains
can be achieved.
Today, collaborative design environments are more often heterogeneous as
manufacturers and their suppliers employ different CAD/CAM systems. The Company
has developed its EPD approach to allow EPD to be implemented by users of
product information created using the Company's or another CAD/CAM system.
The Company markets two families of software products which may be used
separately. When integrated and complemented by the Company's implementation and
support services, these products provide customers with a comprehensive EPD
capability.
Design Automation Software -- which includes component modeling software
used to design, test, and manufacture individual components; and assembly
modeling software used by design teams to work concurrently to design and
assemble components digitally into complete products; and
Product Data Management ("PDM") Software -- which is used to access, share,
view, configure and manage product data, including geometry and associated
product attributes, by cross-functional product teams in a collaborative manner
throughout the enterprise.
SOFTWARE PRODUCTS
The Company's products include primarily software for design automation and
PDM. Although these products may be applied separately, the Company believes
that its customers achieve the greatest benefits from these products by applying
them in an integrated fashion to form an EPD environment.
The Company's design automation software includes products that allow a
customer to create and store a single product definition that can be made
available in electronic form for simultaneous review and analysis by design and
build teams located throughout the customer's enterprise. These teams can use
the software for further design work, simulation and analysis, manufacturing
planning, production engineering, and other activities in the product
development process.
The Company's PDM products provide data access needed to realize the
benefits of forming collaborative, concurrent design teams. These products
include software for product data management, configuration management, product
visualization, product structure navigation and workflow planning and
management.
DESIGN AUTOMATION SOFTWARE
Component Modeling Software. The Company's CADDS family of component
modeling products provides integrated CAD/CAM solutions from conceptual design
to manufacturing. The principal strength of the Company's CADDS products is its
hybrid modeler, which allows designers to choose the appropriate design
technique (wireframe, surface or solids) and the appropriate modeling approach
(parametric or explicit) that is best suited for the design problem. Hybrid
modeling software facilitates the use of "legacy" data (which contributes to the
faster design of derivative products), and enhances sharing of CAD data with
extended enterprise suppliers and contractors. Hybrid modeling also enables
engineers to model complex parts and contributes to lowering part counts, rapid
prototyping and facilitating transfer of design data into the manufacturing
process.
CADDS products also include integrated software development tools for
detail design, drafting and analysis and CAM packages for a variety of numerical
control and other manufacturing applications (e.g. five-axis numerical control).
CADDS 5, the Company's current version of CADDS, incorporates feature-based
parametric and explicit solids modeling, variational geometry and sketching,
NURBS-based surface modeling and an easy-to-use, icon-driven user interface.
CADDS 5 operates on workstations marketed by Digital Equipment, Hewlett-Packard,
IBM, Silicon Graphics and Sun Microsystems.
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Assembly Modeling Software. The Company's Concurrent Assembly Mock-Up
("CAMU") software provides a multi-user, concurrent environment to enable
cross-functional teams to design and build products within the context of the
entire product assembly as compared to isolated component design. CAMU software
is designed to manage complex assemblies involving thousands of parts, and to
enable each member of a design and build team to see simultaneously the work of
others as well as the entire product structure. Users are able to design complex
product structures easily, readily change one part, reflect the changes in other
parts, and check the fit and configuration of individual design changes with the
product as a whole.
PELORUS Products. The Company continues to develop its Pelorus products to
provide a suite of design automotive applications built for the PC/Windows
platforms. Its Pelorus products are organized around principles of
assembly-concentricity, interoperability and associativity/flexibility.
Other Software. In addition, the Company markets a range of other software
products for DOS and UNIX operating systems, including its MEDUSA 2D integrated
drawing-based design environment and products, its Personal Designer and
Personal Machinist Series, and its Dimension III products for plant design and
plant maintenance.
PRODUCT DATA MANAGEMENT SOFTWARE
The Company's PDM products and software solutions are designed to improve
collaboration and information access and sharing throughout an enterprise. These
products provide for data management, configuration management, workflow
management, advanced product visualization and product structure navigation.
Using these products and software solutions, design and build teams have the
ability to leverage and control all information about product development and
related design, test, analysis and manufacturing processes. The integration of
the Company's PDM with design automation software products from the Company or
other design automation suppliers allows customers to implement a product
development process organized around a single common electronic definition of
the product. The Company's PDM products operate on Windows/NT and most major
UNIX platforms and support Oracle's industry-standard relational database
management software.
The Company's principal data management software is its Optegra family of
object-oriented PDM software. Optegra employs object-oriented technology in a
client/server architecture and provides the capabilities to develop customized
templates for specific product development tasks such as management of
engineering change orders; to integrate data from multiple applications; and to
support concurrent enterprise-wide management of product data across an extended
enterprise.
Data Management Software. The Company's data management software products
provide single and distributed vaulting of product geometry and attribute data
("Optegra Vault" and "Optegra Distributed Vault"), control of access to such
data by clients and project organization support for engineering and related
applications. Vaulting is the electronic control of data stored in a secured
central depository. This software works with a variety of geometry systems,
including AutoCAD, IBM CATIA and Pro/ENGINEER, as well as the Company's CADDS
and MEDUSA applications.
Configuration Management Software. The Company's configuration management
software applications ("Optegra Configuration Master") simplify configuration
management by allowing manufacturers to manage and maintain a total product
configuration from a single database for its entire life cycle. The software
integrates engineering and manufacturing bills of material into one computerized
record of configuration and provides a means to track the history of each item.
Workflow Management Software. The Company's workflow management software
("Optegra Workflow Manager") permits organizations to distribute product-related
data in accordance with routing instructions. These instructions can be
predetermined or on an ad hoc basis.
Other EPD Software. On March 5, 1997, the Company announced a new software
tool, EPD.Connect, that is designed to provide a virtual work environment for
product manufacturers that improves team productivity by connecting members of a
design team with the information and applications specifically required for
their individual tasks. EPD.Connect software dynamically links a product to its
structure and
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associates it to the processes and applications used to create or modify the
product. A user is able to review at one time a graphical representation of the
product and its structure and any of the processes used in the design and
modification of the product, and to share the information with other members of
the design team. The Company anticipates its EPD. Connect software will be
shipped at the end of March 1997.
SOFTWARE SUPPORT SERVICES
The Company's software support service offerings are developed to enhance
the productivity of its customers' people, processes and technology. Because of
the complexity of its customers' requirements, the Company markets a wide range
of services and ongoing support. The Company's service offerings include
assessment and design, installation and integration, customization, project
management, functional utilization of the Company's products and ongoing system
support.
Software Services. The Company provides software support services,
including bug fixes, enhancements and hotline support, through a global network
of service centers. This support network allows the Company to leverage
information and resources across diverse geographic areas to respond efficiently
to critical customer issues.
Productivity Services. The Company's productivity services include
business consulting, implementation consulting for EPD, design automation and
PDM products, and customer education and training.
Business consulting is an integral part of the Company's EPD strategy and
includes the application of the Company's Product Development Diagnostic
consulting approach and its best practices database to re-engineering of the
Company's customers' design processes. The Product Development Diagnostic
approach assesses the effectiveness of people, processes and technology in a
customer's product development process, compares that with known industry best
practices and highlights opportunities for improvement.
Implementation consulting services may include technology integration,
optimization and project management. Implementation consulting may also include
specialized software development to integrate the Company's software products to
the particular needs of the customer's product development process.
OPEN SERVICE SOLUTIONS
The Company's Open Service Solutions (OSS) business provides services to
both the Company's software customers and to customers of selected third party
hardware and software vendors. The OSS offerings include system hardware and
operating systems services, network design and implementation, systems
integration, and database support and consulting for enterprise-wide systems and
networks. Open Service Solutions is a worldwide support organization that is ISO
9000 certified.
On March 19, 1997 the Company signed a non-binding letter of intent with
M.D. Sass Investors Services, Inc. ("Sass"), a 17% shareholder of the Company,
for the purchase by Sass of a 51% interest in the OSS business. (See "Recent
Developments" above).
PRODUCT DEVELOPMENT
The Company's software developers seek to understand customer requirements
and rapidly and cost effectively build and deliver high quality products and
enhancements that respond to those requirements. Its developers are organized
into concurrent design and build teams, each of which has a focus on specific
software development projects or basic technologies. The Company employs
advanced software development tools widely. The Company has three principal
development centers, located in Bedford, Massachusetts, San Diego, California
and Pune, India.
During 1994, 1995 and 1996, the Company spent approximately $58.8 million,
$41.5 million and $40.1 million (including amounts capitalized as software
development), respectively, on software research, development and engineering,
constituting approximately 20%, 15% and 13% of its total software revenue.
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SALES, MARKETING AND DISTRIBUTION
The Company's customers are principally automotive, aerospace,
shipbuilding, general mechanical and consumer goods manufacturers, for whom
rapid and cost effective product development is critical. These customers build
products having complex assemblies employing an extended enterprise of
geographically dispersed developers and manufacturers.
Sales to these customers are complex and usually involve providing
diagnostic consulting and support for customer implementation of the Company's
software products in an EPD process. These customers typically purchase not only
software for component modeling, assembly design and product data management,
but also diagnostics, implementation consulting and training.
The Company has developed a specialized sales and support organization,
which it refers to as its Global Industries Group, with knowledge of
industry-specific development processes and the skills to advise and support the
customer with respect to implementation of EPD.
A key component of the Company's sales strategy is to target industry
leaders for each of the Company's principal markets. Among its principal
customers which are implementing the Company's EPD strategy are Lucas Aerospace
Ltd., Halliburton Energy Services, Lockheed Martin Corporation, The Raytheon
Company, BMW Rolls-Royce, Short Brothers, The Rover Group, Hughes Space and
Communications Company, Vickers Shipbuilding and Engineering Ltd., Fiat Auto
S.p.A., Peugeot S.A., Rolls-Royce Aerospace Group, Allison Engine Corporation
and the four principal partners of Airbus Industrie -- Aerospatiale S.N.I.,
British Aerospace Airbus Limited, Construcciones Aeronauticas, S.A. and
Daimler-Benz Aerospace Airbus GmbH.
The Company markets its products and services through a worldwide direct
sales force located in the United States, Europe, Australia and Asia. In those
countries in which the Company does not have a direct sales force, the Company
distributes its products through international distributors.
To complement the Company's worldwide direct sales organization, the
Company has established alternate channels of distribution, including
value-added resellers and systems integrators.
While no one customer accounted for more than ten percent of the Company's
total revenue in 1996, the Company derived approximately 16% of its 1996
software product revenue from a contract with Electronic Data Systems, as a
systems integrator to the Rolls Royce Aerospace Group and Allison Engine
Corporation, and approximately 6% of its 1996 software product revenue related
to a contract with Peugot S.A. including Automobile Peugeot and Citroen.
INTERNATIONAL OPERATIONS
During 1994, 1995, and 1996, international sales, including U.S. export
sales, accounted for approximately 69%, 73% and 73% of total revenue,
respectively. Financial information concerning domestic and international
operations and the Company's foreign currency hedging program appear in Note 8
and Note 2, respectively, of Notes to Consolidated Financial Statements.
While computer technology and software have evolved toward universal
standards, there continue to be differences in languages, applications and
software usage among countries which are best recognized by local management.
Country managers work closely with the heads of each of the Company's business
units to tailor product development and marketing strategies to the needs of
each foreign market. The Company has a significant presence in each of the major
markets for its products, including North America, Germany, the United Kingdom,
France, Italy and Japan. In addition, the Company also markets its products in
Eastern Europe and the People's Republic of China.
PRODUCTION
The Company designs, develops and produces the majority of its software
products and makes its products, user manuals and other documentation available
on a variety of electronic and printed media. Shipments are generally made
within one to two weeks of receiving an order which is common in the software
industry. In light of the short time between order and shipment of the Company's
products, the Company
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generally has relatively little backlog at any given date, and the Company does
not believe that backlog is representative of potential sales for any future
period.
The Company has from time to time licensed from third parties certain
technology for inclusion in its products and expects that it will continue to do
so in the future. These licenses generally provide for the Company's payment of
royalties based on product sales. During 1995 and 1996, the Company expensed
approximately $12.6 million and $16.1 million, respectively, for royalties and
support fees to third parties.
COMPETITION
The software markets in which the Company operates are highly competitive
and characterized by rapid advances in technology. To compete successfully, the
Company must continue to enhance its current products and services and develop
new products and services which can be offered at competitive prices and on a
timely basis.
The Company considers its principal competitors in the EPD market to be IBM
(which markets a component modeling system, CATIA, developed and maintained by
Dassault Systems S.A.) and Unigraphics, a division of Electronic Data Systems.
In the design automation market, the Company's principal competitors are
Intergraph Corporation, Parametric Technology Corporation and Structural
Dynamics Research Corporation. In the product data management market, the
Company competes with a number of smaller companies, including Metaphase
Technology, Inc. and Sherpa Corporation. In the area of design automation for
complex assemblies, one of the Company's most significant sources of competition
also comes from design tools developed internally by manufacturers to meet their
own needs.
The Company believes that the principal competitive factors in its markets
are its ability to provide EPD products and services, product quality and
functionality, product breadth and integration, support, ease of product use,
sales and marketing strength, customer support services, corporate reputation
and financial strength.
Because of the intense competition and rapid technological changes in the
industry, the Company's business will be adversely affected if the Company
incurs significant delays in developing new products or enhancements, if such
products or enhancements do not gain customer acceptance, or if products or
technologies developed by others serve to render the Company's products or
technologies noncompetitive or obsolete. The Company is aware of ongoing efforts
by competitors to develop competitive products, and there can be no assurance
that competitors will not develop equivalent or superior products to those
produced by the Company. The Company's competitive position is also affected by
the financial strength of its competitors. Many of the Company's current and
potential competitors have greater financial and operating resources than the
Company and the Company has a higher debt-to-equity ratio and a higher cash debt
service than most of its competitors, and a negative net worth.
The Company's services business competes on the basis of price and the
quality and reliability of its customer services, support, consulting and
training. As the Company continues to expand its services beyond its installed
customer base to products sold by other vendors and to networks and systems
integration services, the Company believes that competition will increase for
non-proprietary products.
PROPRIETARY RIGHTS
The Company relies on a combination of contracts, patents, copyrights and
trade secrets to establish and protect its proprietary rights in technology. In
addition, the Company maintains relevant trademark registration in its major
markets. The Company distributes its products under software license agreements
which grant customers licenses to the Company's products and which contain
various provisions protecting the Company's ownership and confidentiality of the
licensed technology. The source code of the Company's products is protected as a
trade secret and as an unpublished copyrighted work. However, no assurance can
be given that others will not copy or otherwise obtain and use the Company's
products or technology without authorization. In addition, effective copyright
and trade secret protection may be unavailable or limited in certain foreign
countries.
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The Company believes that, due to the rapid technological advances within
its industry, factors such as the technological and creative skills of its
personnel are more important to establishing and maintaining a technology
leadership position within the industry than are the various legal protections
of its technology.
From time to time, the Company is subject to claims of infringement by it
of proprietary rights of third parties. There can be no assurance that such
claims, if resolved in a manner unfavorable to the Company, will not have a
material adverse effect on the Company.
EMPLOYEES
As of December 31, 1996, the Company had a total of approximately 2,000
employees. The Company has not experienced any work stoppages, and it considers
its employee relations to be satisfactory.
EXECUTIVE OFFICERS
The following persons are executive officers of the Company as of December
31, 1996, having been appointed to their respective positions to serve until the
election and qualification of their respective successors.
Russell E. Planitzer, age 53, Chairman of the Board of the Company since
August 1989. Mr. Planitzer was Chief Executive Officer from April 1993 to
November 1996 and President of the Company from April 1993 to November 1995. Mr.
Planitzer was a General Partner of J.H. Whitney & Co. ("Whitney"), a private
investment banking firm, for more than five years. He resigned from Whitney in
November 1991. Mr. Planitzer is also a director of Intersolv, Inc.
Kathleen A. Cote, age 48, President and Chief Executive Officer since
November 1996 and President and Chief Operating Officer from November 1995 to
November 1996. Previously, she was Vice President, Marketing and Services since
1994. Ms. Cote has been with the Company since November 1986, serving in various
positions, including Vice President, Customer Service and Vice President,
Manufacturing. She was appointed a Director of the Company in July 1996. Ms.
Cote is also a director of Bay Networks, Inc.
Barry F. Cohen, PhD., age 52, Senior Vice President, Human Development and
Organizational Productivity since October 1993. Previously, he was the
co-founder of Possibilities, Inc., a consulting firm specializing in individual
development, organizational development and leadership development, for more
than five years.
Anthony N. Fiore, Jr., age 50, Vice President, Business Operations and
General Counsel since 1994. Previously he served as Vice President, General
Counsel since December 1989. He has been Corporate Secretary since 1990. He
originally joined the Company in 1984.
William A. Foniri, age 47, Vice President and Chief Financial Officer since
July 1996 and Treasurer since March 1996. Prior to that time, he served as Vice
President, Business Management from November 1995 to July 1996. Mr. Foniri has
been with the Company since 1980 serving in various finance and service
positions, including vice president, service business manager and director of
finance and business planning for the Company's service organization.
Rock S. Gnatovich, age 43, Vice President, Worldwide Marketing since
February 1996. Mr. Gnatovich served in various positions at Structural Dynamics
Research Corporation from 1990 to 1995, the most recent being Vice President of
North American Product Data Management. Prior to that he worked for
approximately five years at each of CIMLINC and Applicon.
James E. Hayden, age 43, Vice President, Controller since June 1995. He was
appointed Corporate Controller in June 1994. Mr. Hayden has been employed by the
Company since 1986 and has served in various positions within the finance
organization, including Director of Finance and Administration for the
international sales subsidiaries.
Attilio Rimoldi, age 54, Senior Vice President, Research and Development
from January 1994 to February 1997. Mr. Rimoldi served as a consultant to the
Company from July 1992 to 1994, working with the
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Company's customers and software developers in Europe. Previously he worked for
Intergraph Corporation for nine years, first as Vice President of the Mechanical
Business Unit and most recently as President of its European Mechanical
Competence Center. In February 1997, Mr. Rimoldi left the Company.
Edward D. Wagner, age 38, Vice President, Business Manager for PELORUS from
October 1995 until January 1997. Previously, Mr. Wagner was Vice President of
Marketing at Rasna Corporation from 1993 to 1995. From 1987 to 1993, he was a
founder and principal of Boston Communications, a marketing strategies and
public relations consulting firm that specialized in design automation. In
January 1997, Mr. Wagner left the Company.
ITEM 2. PROPERTIES
The Company's principal executive offices are located in Bedford,
Massachusetts. The Company's principal facilities are as follows:
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TOTAL
SQUARE LEASE
LOCATION OPERATION FOOTAGE EXPIRATION
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Bedford, MA(1)............ Administrative and R&D 284,500 12/31/2009
Wiesbaden, Germany(1)..... Sales and Service 97,200 08/31/2005
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(1) These facilities have excess or vacant space which the Company is attempting
to sublease.
The Company also leases additional space in various locations throughout
the United States and abroad, primarily for sales, customer service and R&D
operations. The Company believes that its existing facilities are adequate to
meet its current requirements. Approximately 62.5% of the space in the
facilities listed in the foregoing table is currently used by the Company in its
operations.
The Company has approximately 203,600 square feet of vacant leased
facilities that it is currently attempting to sublease. It is also subleasing
approximately 764,600 square feet at a loss. A substantial portion of these
sublet facilities are located in the Northeastern region of the United States
and in the United Kingdom. The Company is continuing its efforts to sublease all
its vacant facilities.
If the Company is unsuccessful in its efforts to negotiate additional
subleases or extend existing subleases on these facilities, the future cash
needs to meet these facility obligations will be substantial, including
approximately $11 million in 1997, $12 million in 1998, and $12 million in 1999,
net of known sublease receipts and assuming there are no lump-sum settlements on
any of the leases. Based upon current and expected real estate conditions, the
Company has reserved approximately $61.5 million in connection with its vacant
facility obligations for financial reporting purposes as of December 31, 1996,
which it believes is adequate. (See Note 6, "Capital Leases, Lease Commitments
and Rent Expense" of Notes to Consolidated Financial Statements.)
ITEM 3. LEGAL PROCEEDINGS
(1) On March 28, 1991, Joseph and Josephine Dieter, former stockholders of
the Company, brought suit against the Company, DR Holdings, DR Acquisition
Corporation, a former subsidiary of DR Holdings, Mr. Russell E. Planitzer,
Chairman of the Board of Directors of the Company, and Messrs. Don E. Ackerman
and Peter M. Castleman, former directors of the Company, in the Court of
Chancery of Delaware as both an individual and a class action (on behalf of all
persons, other than the defendants, who were stockholders of the Company on
December 28, 1989). The suit arises out of the merger between the Company and
certain subsidiaries of DR Holdings, and the related merger agreement. The suit
alleges, among other things, that, in connection with the acquisition of the
Company by DR Holdings, the Board of Directors of the Company breached its
fiduciary duties to Company stockholders by (i) approving the merger which
plaintiffs allege was unfair to Company stockholders, and (ii) by not
withdrawing from the merger agreement and/or renegotiating the consideration
that was to be received by Company stockholders whose shares were not purchased
in the tender offer. The plaintiffs seek, among other things, an order granting
all Company stockholders as of
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December 28, 1989 damages in an undetermined amount. The plaintiffs then filed
an amended and supplemented complaint which removed DR Holdings as a defendant
since it is in bankruptcy, and removed DR Acquisition Corporation since it had
been merged into the Company. The trial occurred in September of 1996. The
Company is in the process of filing post trial briefs and the Court is expected
to have the matter under submission by July, 1997. Although the parties have
engaged in post-trial settlement discussions, it is not yet possible to predict
the outcome or quantify any possible exposure of the Company. If this lawsuit is
not settled, and the court awards the plaintiffs substantial monetary damages,
it could have a material adverse effect on the Company's financial condition and
results of operations.
(2) In a letter dated June 11, 1993, the United States Environmental
Protection Agency ("EPA") notified the Company of its potential liability
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") for a release of hazardous substances disposed of at the Shaffer
Landfill portion of the Ironhorse Park Superfund Site in Billerica,
Massachusetts ("Shaffer Site"). The Company was one of approximately 60
businesses and individuals to receive such a letter. The Company is cooperating
with approximately 30 other potentially responsible parties ("PRPs") who have
formed a group, and expects to participate in the common efforts of that group.
The Company has informed the EPA of its intent to cooperate with the other PRPs
in common efforts. The Company investigated the extent of its involvement with
the Shaffer Site and participated in a confidential mediation process which
allocated remedial costs among the members of the PRP group. The Company has
received information through the PRP group indicating that the anticipated costs
of completing the EPA's proposed remedy at the Shaffer Site is likely to range
between $20 million and $30 million. After the PRPs failed to reach agreement
with the EPA regarding settlement, the Department of Justice ("DOJ") and the
Massachusetts Attorney General ("MAG") both filed complaints on January 5, 1995,
seeking past costs against 10 PRPs. The Company was not named. However, it could
be named later by the government, and some of the named defendants have
indicated they will commence third-party actions against other PRPs, including
the Company, if ongoing negotiations do not result in a settlement. Negotiations
have been ongoing relative to several substantive matters and the Company cannot
predict at this time if any agreement on issues will be reached with the
government.
(3) Several tax issues which pertain to Computervision tax returns for
years prior to 1988 (when Computervision was acquired by Prime Computer, Inc.)
remain outstanding. The most significant issue involves the qualification of a
domestic international sales corporation ("DISC") for tax years 1983 and 1984.
If the DISC is disqualified, the Company will be subject to additional tax and
interest in the range of $9.0 million to $12.0 million after the usage of net
operating losses. A trial on these issues was held before the Tax Court on
October 25, 1994. On March 18, 1996 the Tax Court ruled in favor of the Company.
On April 16, 1996 the Company filed a Motion for Reconsideration with the Tax
Court on the one issue, which concerned whether income was reportable as capital
gain or ordinary income, on which the decision was unfavorable to the Company.
The Motion for Reconsideration was denied by the Judge on May 27, 1996. As to
the portion of the decision unfavorable to the government, the Company does not
know whether the government will appeal the decision. Even if the government
does not appeal the decision, the Company will owe some tax and interest on this
case, but is also owed a refund on a related case. The computation of the tax
payment and the timing of the tax payment and refund have not been determined.
The Company's calculation of the adjustments resulting from the Court's decision
were reviewed by Counsel and submitted to the IRS on November 12, 1996.
(4) The Company is involved in numerous other legal proceedings and
litigation incidental to the normal course of the Company's business. The
Company believes that the ultimate disposition of these other proceedings and
litigation will not have a material adverse effect on the Company's financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the vote of the security holders of the
Company during the fourth quarter of the fiscal year ended December 31, 1996.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is listed on the New York Stock Exchange, ticker
symbol CVN. The Company's debentures and notes are not listed on any exchange.
The high and low prices of the Company's common stock in 1995 and 1996, as
reported by the New York Stock Exchange's consolidated transaction reporting
system, are shown in the table below.
<TABLE>
<CAPTION>
1995
------------
HIGH LOW
---- ---
<S> <C> <C>
1st Quarter.......................................... $ 6 1/8 $3 5/8
2nd Quarter.......................................... $ 6 3/4 $4 3/4
3rd Quarter.......................................... $14 3/8 $6 1/4
4th Quarter.......................................... $15 1/2 $9 3/4
</TABLE>
<TABLE>
<CAPTION>
1996
------------
HIGH LOW
---- ---
<S> <C> <C>
1st Quarter.......................................... $15 1/4 $ 9
2nd Quarter.......................................... $12 3/4 $8 3/4
3rd Quarter.......................................... $10 5/8 $5 3/4
4th Quarter.......................................... $10 3/8 $7 7/8
</TABLE>
The Company's Revolving Credit Agreement prohibits the Company from paying
cash dividends. The Company is also restricted from paying cash dividends under
the terms of the Indenture for its 11 3/8% Senior Subordinated Notes due 1999.
Although a prior bank credit agreement permitted limited dividends, on October
21, 1993, the Board of Directors of the Company voted to discontinue paying
dividends.
As of March 25, 1997, there were 63,575,158 shares of the Company's common
stock outstanding held by approximately 3,071 shareholders of record.
ITEM 6. SELECTED FINANCIAL DATA
The response to this item is contained in Note 14, "Selected Financial
Data" of the Notes to the Consolidated Financial Statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the consolidated
financial statements and footnotes for the years ended December 31, 1994, 1995
and 1996 included elsewhere in this report. The amounts set forth below are in
thousands, except per share data.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
International operations accounted for approximately 69%, 73% and 73% of
the Company's total revenue during 1994, 1995 and 1996, respectively.
Consequently, the Company's results of operations were affected by movements in
foreign exchange rates. However, the Company enters into foreign exchange
forward contracts on firm intercompany balances in order to mitigate a portion
of the foreign exchange rate exposure.
On September 25, 1996, the Company signed a definitive Asset Purchase
Agreement to sell its Open Service Solutions ("OSS") business to an affiliate of
J.F. Lehman & Company ("J.F. Lehman"). On March 19, 1997, the Company announced
the termination of its agreement with J.F. Lehman and the signing of a
non-binding letter of intent with M.D. Sass Investors Services, Inc. ("Sass"), a
17% shareholder of the Company, for the purchase by Sass of a 51% interest in
the OSS business. In connection with this transaction, the Company will receive
from Sass $5,100 in cash and will receive from the entity that operates the OSS
business (a) $25,000 in cash and (b) a promissory note in the amount of $25,000.
The cash payment of
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$25,000 will be funded by a bank loan to the OSS business, secured by its
assets. The Company will continue to own 49% of the OSS business, subject to an
option granted to OSS to purchase up to one-fifth of the balance of the
Company's equity position. The transaction is subject to execution and delivery
of a definitive agreement and to the availability of financing, receipt of
approval from the Company's banks, compliance with the Company's financing
instruments and other customary closing conditions. As a result, no assurance
can be given that the transaction will be consummated.
Software Revenue and Gross Margins
Total 1996 software revenue increased $16,214 or 6% from 1995, as product
revenue increased $28,012 or 17% and service revenue decreased $11,798 or 10%.
Product and service revenue for 1996 included unfavorable foreign exchange
impacts of $3,700 and $3,400, respectively. The 1996 product revenue increase
was primarily attributable to volume increases and included $27,000 related to a
contract with Electronic Data Systems as systems integrator to the Rolls-Royce
Aerospace Group and Allison Engine Company and $11,200 related to a contract
with Peugeot SA, including Automobiles Peugeot and Citroen, while 1995 product
revenue included $11,900 related to contracts with the Airbus Consortium
(British Aerospace Airbus Limited, Aerospatiale S.N.I., and Daimler Benz
Aerospace Airbus GmbH). During 1996, revenue from the Company's CADDS and
product data management software products increased $17,600 or 17% and $16,000
or 56%, respectively, over 1995 primarily due to favorable customer response to
the Company's Electronic Product Definition products. Revenue from several of
the Company's older mechanical CAD software products declined by $5,400 or 20%
from 1995, as expected demand for these products declined. Service revenue
decreased primarily due to an unfavorable year over year foreign exchange
impact, continued lower maintenance revenue as a result of lower pricing on new
products and upgrades within the existing customer base, and decreased training
revenue, offset by increased consulting revenue.
Total 1995 software revenue increased slightly from 1994, and included
favorable foreign exchange impacts of $5,900 and $7,400 on product and service
revenue, respectively. The 1995 product revenue included $11,900 related to
contracts with the Airbus Consortium (British Aerospace Airbus Limited,
Aerospatiale S.N.I. and Daimler Benz Aerospace Airbus GmbH) while 1994 product
revenue included $16,400 related to a contract with Rolls-Royce plc. Product
revenue increased slightly principally due to increases in CADDS software
products, offset by decreases in the Company's other product lines as the
Company transitioned to its newer products. Service revenue decreased slightly
from 1994, primarily due to continued lower maintenance revenue as a result of
lower unit prices as new products are introduced, offset by increased training
and consulting service revenue.
Software product margins for 1996 were 91% compared to 90% and 81% for 1995
and 1994, respectively. The improvement in software product margins in 1996
primarily resulted from a decrease in amortization of previously capitalized
software costs, partially offset by increased royalties for software licensed
from third parties. The improvement in 1995 margins from 1994 primarily resulted
from a decrease in amortization of previously capitalized software costs.
Services margins for 1996, 1995 and 1994 were 39%, 42% and 41%,
respectively. The decrease in services margins in 1996 was primarily due to
decreased maintenance margins resulting from competitive pricing pressures, and
decreased training margins. The improvement in 1995 margins from 1994 primarily
resulted from lower costs due to the full benefit of the 1994 reorganization of
software support into regional centers.
Other Revenue and Gross Margins
Other services revenue (representing the OSS business unit) for 1996
decreased $46,089 or 21% from 1995, and included an unfavorable year over year
foreign exchange impact of $3,200. The decrease was primarily due to the
expected continuing reduction in proprietary hardware services, which declined
approximately $41,700 or 31% year over year, as well as the disruption caused by
the September 25, 1996 agreement to sell the OSS business to J.F. Lehman.
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<PAGE> 13
Other services revenue for 1995 decreased $66,985 or 23% from 1994. The
decrease was primarily due to the expected continuing reduction in hardware
services, which declined $60,996 or 30% year over year, offset by a favorable
year over year foreign exchange impact of $10,000.
Other services margins for 1996, 1995 and 1994 were 23%, 30% and 32%,
respectively. The decreases in margins were attributable to several factors,
including the disruption caused by the Sepember 25, 1996 agreement to sell the
OSS business to J.F. Lehman, the recording of certain inventory reserve
provisions and a shift in the revenue mix towards system integration revenue
which contributes a lower margin.
Selling and Administrative Expense
Total selling and administrative expense for 1996 increased $2,455 or 2%
from 1995, and included a favorable year over year foreign exchange impact of
$2,600. The increase was primarily due to increased spending for marketing and
the cost of a special service bonus to the former CEO. Total selling and
administrative expense for 1995 decreased $14,712 or 9% from 1994, due to the
cost benefits associated with the resizing of the Company's administrative
operations. This decrease was partially offset by an unfavorable foreign
exchange impact for 1995 of $6,200. The decrease in other services selling and
administrative expense year over year results from a decrease in other services
revenue as a percentage of total revenue.
Research, Development and Engineering Expense
Software product research, development and engineering expense for 1996,
1995 and 1994 is net of amounts capitalized as software development costs of $0,
$0 and $1,545, respectively. Software product research, development and
engineering expenditures (software product research, development and engineering
expense plus capitalized software) as a percentage of total software revenue for
1996, 1995 and 1994 was 13%, 15% and 20%, respectively.
Total 1996 research, development and engineering expense decreased $2,289
or 5% from 1995 primarily due to additional cost savings resulting from the
continued reallocation of development to the Company's development facility in
India. Total 1995 research, development and engineering expense decreased
$16,186 or 27% from the prior year. The 1995 decrease was primarily due to
reductions in costs as a result of the reorganization and refocus of research
and development activity, including reallocation of development to the Company's
development facility in India (opened in 1994), the elimination of managerial
positions while maintaining a focused software development capacity and the
elimination of non-strategic activities and product lines, offset by reduced
software capitalization.
Non-recurring Charges
The 1996 results include a non-recurring charge of $14,500 which represents
$3,500 of purchased in-process R&D associated with the acquisition of 3rd Angle
Ltd., a UK-based technology company, and $11,000 of restructuring costs
associated with the implementation of ongoing cost savings (primarily personnel
reductions and the closing of facilities). The 1996 results also include a
non-recurring charge of $5,000 associated with the write-off of fees and
expenses incurred in connection with the terminated agreement to sell the OSS
business to J.F. Lehman. There were no non-recurring charges in 1995 or 1994.
Interest and Other Expense, Net
Interest and other expense, net for 1996 decreased $14,118 or 31% from 1995
and decreased $4,757 or 10% in 1995 from 1994 due primarily to the redemption in
full of the $125,000 10 7/8% Senior Notes in the fourth quarter of 1995 (See
"Long-Term Liquidity" below) and a reduction in costs associated with the
Company's revolving line of credit.
Income Taxes
The provision for income taxes is lower than the statutory rate in all
periods primarily due to the benefit of prior year net operating loss
carryforwards (See Note 7 "Provision for Income Taxes" of Notes to Consolidated
Financial Statements).
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<PAGE> 14
Extraordinary Charge
During the fourth quarter of 1995, the Company recorded an extraordinary
charge relating to a redemption premium ($5,437) and fees ($2,493) associated
with the early retirement of the Company's $125,000 10 7/8% Senior Notes.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The software industry segment in which the Company operates is subject to
continuing changes and significant competitive pressures. The Company faces
several risks in its business, some of which are beyond its control. The
following is a discussion of some of the risks which the Company faces.
Potential Fluctuations of Quarterly Operating Results; Impact of
Significant Contracts. The Company's quarterly operating results may vary
significantly depending on factors such as the timing of significant orders and
the timing of new product introductions by the Company and its competitors. The
majority of the Company's software product revenues in each quarter result from
orders booked in that quarter and a substantial portion of the Company's orders
and shipments typically occur during the last two weeks of each quarter so that
forecasting of revenue is uncertain. As expenses in the short term are incurred
in advance of expected revenues, the Company may not be able to reduce expenses
commensurately with an unanticipated shortfall in revenue in a given quarter.
The Company has focused its direct software sales efforts primarily on
large customers. The Company expects this reliance on large customers to
continue into 1997. As the software and services provided under large contracts
affect the customer's entire enterprise and affect the core of the customer's
product development efforts, the purchase decisions are made at senior
management levels of the enterprise and the sales cycle is generally much longer
than is typically the case, making the timing of such orders more difficult to
anticipate. In addition, the customer's own design cycle and capital spending
budget will affect the timing of orders. A large customer's delay in making
purchase decisions, or the Company's failure to obtain one or more significant
contracts could have a material adverse impact on the orders and shipments
planned for a current or future quarter.
The Company also markets its products in Eastern Europe and the People's
Republic of China where issues of governmental approval and hard currency
availability further lengthen the sales cycle and affect the predictability of
orders.
Large contracts increasingly require the Company to provide additional
consulting and other services. At times, the customer's implementation schedule
may differ from the Company's expectations and the Company may incur costs to
fulfill its contractual commitments before the customer requests implementation
services.
In addition, the Company has historically experienced a seasonal decline in
revenue in the first and third quarters of each fiscal year, primarily due to
capital budgeting cycles of customers and the European holiday schedule,
respectively.
New Products, Technological Change and Market Pressures. The Company
continues to devote substantial resources to the research, development,
acquisition and marketing of design automation, product data management and
workflow technologies, and believes that their acceptance by customers is
critical to the future success of the Company. However, the development of new
technology and products is made increasingly complex and uncertain, as the
Company expands its use of third party technology through licensing or
acquisition. There can be no assurance that the Company will be successful in
developing, acquiring or licensing, and marketing these new products, that
customers will accept them or that competitors will not develop products or
technologies which render the Company's products or technologies noncompetitive
or obsolete.
In addition to new technology, competitors are constantly marketing their
products in new ways, with new pricing, combinations of products and service
options which may affect the Company's own pricing and packaging decisions and
margins. Also, competitors are aligning with new partners and buying technology
to
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<PAGE> 15
strengthen the breadth of their product offerings and reduce the Company's
distinctive breadth of product offerings.
Dependence on Certain Industries. The Company sells its products to
customers in a number of industries, but its product revenues are heavily
concentrated in the automotive, aerospace and shipbuilding industries and may be
adversely affected by reductions in capital spending in these industries, as
well as cyclical economic trends affecting these industries. The Company's
future revenues would also be adversely affected by future declines in sales to
its automotive, aerospace and shipbuilding customers. In addition, customers in
these industries tend to continue with a technology choice for long periods (an
entire development cycle) so that an opportunity lost at a given customer will
not become a new opportunity for several years.
OSS Business. The Company has signed a non-binding letter of intent to
sell a 51% interest in the OSS business. The Company's failure to complete this
sale and the related transactions, and/or disruptions to the business caused
while the sale is being consummated, could have an adverse impact on OSS revenue
and, thereby, affect the Company's overall operating results and cash flow. In
addition, the Company's inability to offset attrition in maintenance revenue
with increased systems integration and networking revenue, and to offset a
revenue decline with reduced costs, would have an adverse impact on the
financial performance of the OSS business and the Company.
Possible Limitations on Net Operating Loss Carryforwards. In the past, the
Company has incurred substantial net operating loss carryforwards ("NOLs") which
may reduce taxes owed on future taxable income (See Note 7, "Provision for
Income Taxes" of Notes to Consolidated Financial Statements). The Internal
Revenue Code of 1986, as amended (the "Code") places annual limitations on the
ability of a corporation to use NOLs to offset taxable income for taxable years
following a change of more than 50% of the ownership of a corporation. In 1996,
a change of more than 50% of the ownership of the corporation occurred, which
results in an annual limitation on the usage of NOLs of approximately $40,000 to
$50,000. Although the Company has computed its NOLs and reported them to the
Internal Revenue Service (the "IRS") in a manner that indicates that they
generally will be available to be used to offset the Company's taxable income in
future years, there is a significant possibility that the IRS will disagree with
the Company's determination of the amount of NOLs that could be so used. In such
event, if the IRS were to prevail, the use of a portion or all of the Company's
NOLs could be disallowed and the Company would realize taxable income at an
earlier time than would otherwise be the case. In such an event, the Company
would be required to pay increased taxes from cash flow and could be required
for financial reporting purposes to increase its future provisions for income
taxes, thereby reducing the Company's net income.
Other Risks. The Company faces other risks in common with others in the
software industry which could also impair the Company's future financial
performance. For example, the market for high technology stocks is extremely
volatile and can be affected by factors beyond the Company's control, such as
the performance of the Company's competitors, market conditions in the CAD/CAM
and PDM industries or general economic conditions. International sales are
subject to additional risks, including the fact that foreign countries could
impose additional withholding taxes or otherwise further tax the Company's
income, impose tariffs or adopt other restrictions on foreign trade; agreements
and intellectual property rights may be difficult to enforce through a foreign
country's legal system; and unfavorable exchange rate shifts may be difficult to
anticipate. Despite a significant reduction in the Company's long term
indebtedness, the Company remains highly leveraged and has a stockholders'
deficit which may place the Company at a competitive disadvantage. The risks
from competition, liquidity needs, loss or challenge to proprietary rights and
litigation described elsewhere in this report could also have an adverse effect
on future financial results.
SHORT-TERM LIQUIDITY AND CAPITAL RESOURCES
As a result of the 1996 and previous restructurings, including the 1993
exit from the hardware resale business, the Company has substantial cash payment
obligations that are unrelated to its current operations. The Company expects to
make cash payments in respect of such liabilities of approximately $27,000 in
1997. The Company will record a non-recurring charge of approximately $7,000 in
the first quarter of 1997, related
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<PAGE> 16
primarily to completing the separation of the OSS business from the software
business. In addition, the Company expects to record a non-recurring charge of
approximately $12,000 in the second quarter of 1997 related to restructuring the
software business due principally to the Company's failure to meet its revenue
plan for the first quarter of 1997 and the resulting revisions to its 1997
business plan, as described below. The Company believes that cash generated from
operations, supplemented by borrowings under the Revolving Credit Facility
("Revolving Credit Facility") and from factoring arrangements which may be
entered into from time to time will be sufficient to fund such cash payments, as
well as debt service, normal working capital and other cash requirements.
The Revolving Credit Facility provided for a revolving line of credit (the
"Revolving Credit Line") of $50,000 for working capital and for sinking fund
payments on the Company's 8% Convertible Subordinated Debentures (unpaid
principal balance of $54,110 at December 31, 1996), of which $20,000 is
available for letters of credit. Pursuant to the terms of the Revolving Credit
Facility, the Company has granted the lenders a security interest in all of the
Company's U.S. assets. Letters of credit outstanding at December 31, 1996 were
$8,521 and there were no borrowings outstanding. The Revolving Credit Facility
requires the Company to satisfy certain financial and other covenants. As a
result of the non-recurring charges of $19,500 in the fourth quarter of 1996
(See "Non-recurring Charges" above) and an expected non-recurring charge of
$7,000 in the first quarter of 1997, the Company would not have satisfied the
financial covenants of its Revolving Credit Facility. As a result, the Company
and its lending banks signed an amendment which modifies the financial covenants
through December 31, 1997. The Company also agreed with its banks that it would
amend the Revolving Credit Facility to provide for a borrowing base limitation
and would limit outstanding borrowings to $18,800, including letters of credit
($3,800 outstanding at March 27, 1997) until the facility is so amended. Loans
under the Revolving Credit Facility will bear interest at a Base Rate or
Eurodollar rate, as selected by the Company, plus an Applicable Margin. On
December 31, 1996, the rates ranged from 7.5% to 9.25%.
Due to the substantial shortfall in revenue for the quarter ended March 30,
1997, the Company was unable to satisfy certain of the financial covenants, as
amended, under the Revolving Credit Facility (under which no borrowings were
outstanding) ("Bank Covenants"). On April 15, 1997, the Company reached an
agreement with its lending banks to waive the default in the Bank Covenants for
the quarter ended March 30, 1997, to amend the Bank Covenants to conform with
the Company's revised business plan for 1997, and to implement a borrowing base
limitation (the "April 1997 Amendment"). Pursuant to the terms of the April 1997
Amendment, the Company may borrow funds secured by the accounts receivable of
the Company, Computervision Pty. Limited (Australia), Computervision S.A.
(France), Computervision GmbH (Germany) and Computervision Limited (U.K.). Until
such time as the April 1997 Amendment is executed, the Company may borrow on its
U.S. accounts receivable ($8,800 at March 30, 1997). Thereafter, until the
security interests are perfected, the Company may borrow the lesser of the
borrowing base limitation and (i) $25,000 for the period from April 15, 1997 to
June 30, 1997, and (ii) $35,000 thereafter. In addition, the April 1997
Amendment also limits the borrowings outstanding at the end of each fiscal
quarter ($18,000 for the second quarter of 1997, $21,000 for the third quarter
of 1997 and $16,000 for each subsequent quarter), and increases the interest
rate to LIBOR plus 2.5% for borrowings of $25,000 or less and LIBOR plus 3% for
borrowings greater than $25,000.
Because the Company's borrowings under the amended Revolving Credit
Facility will be limited to a fixed percentage of the Company's accounts
receivable, the Company's ability to fund its operations over the short-term is
dependent upon its success in achieving its revised business plan for 1997. If
the Company is unsuccessful in achieving its business plan, its short-term
liquidity will be adversely impacted, which could require a curtailment of
certain business activities that in turn could have a material adverse effect on
the Company's business.
As discussed above, the Company has signed a non-binding letter of intent
regarding the sale of 51% of its equity interest in the OSS business. If the
transaction is completed, the Company expects to use the net proceeds to meet
short-term working capital needs. If the transaction is not completed, the
Company expects to continue to manage the OSS business.
The indenture governing the Company's 8% Convertible Subordinated
Debentures requires the Company to make, by December 1 of each year commencing
in 1995 and ending in 2008, sinking fund payments of
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<PAGE> 17
$5,500 per year. The Company may, however, satisfy this sinking fund
requirement, in whole or in part, through certain redemptions, or purchases and
delivery to the indenture trustee for cancellation, of 8% Convertible
Subordinated Debentures. The December 1995 sinking fund requirement was
satisfied by delivery for cancellation of debentures held by the Company. The
December 1996 sinking fund requirement was satisfied in part by delivery for
cancellation of $4,525 principal amount of debentures held by the Company. The
remaining requirement was satisfied by purchase and delivery of $975 principal
amount of debentures.
Despite a significant reduction in the Company's long term indebtedness,
the Company remains highly leveraged and has a stockholders' deficit. This
indebtedness requires the Company to dedicate a significant portion of its cash
flow from operations to service its indebtedness and makes the Company more
vulnerable to unfavorable changes in general economic conditions.
LONG-TERM LIQUIDITY
The Company's principal long-term liquidity requirements are payments for
interest, previously accrued restructuring obligations and capital expenditures
as well as the repayment of the Senior Subordinated Notes which mature in 1999.
The Company expects to meet its long-term liquidity requirements, including
repayment of its Senior Subordinated Notes, through funds generated from
operations, bank borrowings, and sales of equity and/or debt securities. The
Company believes that it will require additional funds in 1999 to satisfy these
obligations and, as a result, will seek to obtain such funds through a sale of
equity and/or debt securities or other financing arrangements. However, no
assurances can be given that such funds will be available when required or on
terms favorable to the Company.
On October 25, 1995, the Company completed a public offering of 13,800
shares of common stock at $12 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
Since 1989, the Company has incurred substantial obligations in connection
with the restructuring of the Company. The Company estimates that it will be
required to make cash payments of approximately $27,000, $14,000 and $12,000 in
1997, 1998 and 1999, respectively, of which $11,000, $12,000 and $12,000,
respectively, relate to vacant or partially vacant leased premises, net of known
sublease receipts and assuming that there are no lump-sum settlements on any of
the leases. To the extent the Company is unable to negotiate additional
subleases on its excess real estate or negotiate favorable settlements, the
Company's total future cash needs to meet these rental obligations and
anticipated operating costs will be approximately $73,000 through 2011,
including the amounts stated above. Based upon current and expected real estate
conditions, the Company has reserved $61,500 in connection with its net vacant
facility obligations for financial reporting purposes as of December 31, 1996,
which it believes to be adequate.
OPERATIONS AND INVESTMENTS
The Company generated $7,882 of cash from operations during 1996 compared
to generating $11,961 of cash from operations in 1995. During 1996, current
assets used cash of $7,309 and current liabilities used cash of $36,510. During
1995, current assets generated cash of $12,460 and current liabilities used cash
of $57,917. The year to year change in current assets was driven primarily by
the 1996 investment in accounts receivable. The year to year change in current
liabilities resulted primarily from a reduction in restructuring payments made.
The Company expended $11,479 for property and equipment during 1996
compared to $9,172 in 1995. The increase was primarily due to increased
leasehold improvements and the timing of development software license purchases.
Other assets increased $643 in 1996 and decreased $2,521 in 1995. The change was
primarily due to an increase in amounts capitalized for software purchases in
1996.
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LEGAL PROCEEDINGS
As discussed in Note 13 "Litigation" of Notes to Consolidated Financial
Statements, the Company is a party to several legal proceedings, certain of
which could have a material adverse effect upon the Company's business if
unfavorable judgments are rendered against the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data of the Company on pages to
of this Form 10-K are indexed herein under Item 14(a)(1). See also the financial
statement schedules appearing herein, as indexed under Item 14(a)(2).
ITEM 9. CHANGES AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the Company's Directors is incorporated by reference
herein to material under the captions "Nominees and Other Members of the Board
of Directors" and "Certain Transactions -- Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on June 10, 1997 (the "Proxy Statement"). Information
concerning the Company's Executive Officers is included in Part I under the
caption "Executive Officers".
ITEM 11. EXECUTIVE COMPENSATION
The response to this Item is contained in the Company's Proxy Statement
under the caption "Compensation of Executive Officers" and is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this Item is incorporated herein by reference to the
material under the heading "Stock Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
incorporated herein by reference to the material under the caption "Certain
Transactions" in the Company's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K
14(a)(1) CONSOLIDATED FINANCIAL STATEMENTS
Set forth below is a listing of the Consolidated Financial Statements of
the Company with reference to the page numbers in this Form 10-K at which such
Statements are disclosed.
<TABLE>
<CAPTION>
PAGE NUMBERS OF
THIS FORM 10-K
---------------
<S> <C>
Report of Management.......................................... 19
Report of Independent Public Accountants...................... 20
Consolidated Balance Sheets -- December 31, 1995 and 1996..... 21
Consolidated Statements of Income for the Years Ended December
31, 1994, 1995, and 1996.................................... 22
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
PAGE NUMBERS OF
THIS FORM 10-K
---------------
<S> <C>
Consolidated Statements of Stockholders' Equity (Deficit) for
the Years Ended December 31, 1994, 1995, and 1996........... 23
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995, and 1996........................... 24
Notes to Consolidated Financial Statements.................... 25
</TABLE>
14(a)(2) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The documents and schedules listed below are filed as part of this report:
<TABLE>
<CAPTION>
PAGE NUMBER OF
THIS FORM 10-K
---------------
<S> <C>
Schedule II -- Allowance for Doubtful Accounts................ 45
</TABLE>
All other schedules have been omitted since they are not required, not
applicable, or the information is included in the Consolidated Financial
Statements or notes thereto.
Financial statements are presented on a consolidated basis since the
Company is primarily an operating company. All subsidiaries included in the
consolidated financial statements are wholly-owned by the Company with the
exception of the Company's Japanese subsidiary which is 70% owned by the
Company.
14(a)(3) EXHIBITS
The exhibits filed as part of this Form 10-K are listed in the Exhibit
Index immediately preceding the exhibits. The Company has identified with an
asterisk in the Exhibit Index each management contract and compensation plan
filed as an exhibit to this Form 10-K in response to Item 14(c) of Form 10-K.
14(b) REPORTS ON FORM 8-K
A report on Form 8-K was filed on October 1, 1996 to report that the
Company had signed an agreement for the sale of its Open Service Solutions
business to an investment group headed by J.F. Lehman & Company.
A report on Form 8-K was filed on October 31, 1996 to report the Company's
financial results for the third quarter of 1996.
A report on Form 8-K was filed on November 12, 1996 to report the
appointment of Kathleen A. Cote as Chief Executive Officer of the Company.
A report on Form 8-K was filed on January 16, 1997 to report the Company's
preliminary financial results for the fourth quarter of 1996 and certain related
matters.
A report on Form 8-K was filed on February 3, 1997 to report the Company's
financial results for the fourth quarter and year ended December 31, 1996.
A report on Form 8-K was filed on March 25, 1997 to report (a) the
termination of the Company's agreement with J. F. Lehman & Co. to purchase its
Open Service Solutions (OSS) business unit, (b) the signing of a non-binding
letter of intent for the sale of 51% of OSS to M. D. Sass Investors Services,
Inc., an affiliate of the Company, and (c) the appointment of James P. Regan as
President and CEO of the renamed services business, CV Services International.
A report on Form 8-K was filed on April 8, 1997 to report (a) the Company's
preliminary financial results for the first quarter of 1997 and (b) the election
of James B. Rubin, Senior Managing Director of M. D. Sass Investors Services,
Inc., a 17% shareholder of the Company, as a member of the Company's Board of
Directors.
18
<PAGE> 20
REPORT OF MANAGEMENT
The accompanying consolidated financial statements and related information
of Computervision Corporation and subsidiaries (the "Company") have been
prepared by management, which is responsible for their integrity and
objectivity. The statements have been prepared in conformity with generally
accepted accounting principles and necessarily include some amounts based on
management's best estimates and judgments.
Management is also responsible for maintaining a system of internal
controls as a fundamental requirement for the operational and financial
integrity of results. The Company has established and maintains a system of
internal controls designed to provide reasonable assurance that the books and
records reflect the transactions of the Company and that its established
policies and procedures are carefully followed. The Company's internal control
system is based upon standard procedures, policies and guidelines and
organizational structures that provide an appropriate division of responsibility
and the careful selection and training of qualified personnel. Our internal
auditors monitor compliance with the system of internal controls by means of an
annual plan of internal audits. On an ongoing basis, the system of internal
controls is reviewed, evaluated and revised as necessary in light of the results
of constant management oversight, internal and independent audits, changes in
Computervision's business and other conditions.
The Company's accompanying consolidated financial statements have been
audited by Arthur Andersen LLP, independent public accountants, whose audit was
made in accordance with generally accepted auditing standards. Management has
made available to Arthur Andersen LLP all of the Company's financial records and
related data, as well as the minutes of stockholders' and directors' meetings.
Furthermore, management believes that all representations made to Arthur
Andersen LLP during its audit were valid and appropriate. The Report of
Independent Public Accountants appears below.
The Board of Directors exercises its oversight responsibility for the
consolidated financial statements through its Audit Committee, comprised of
Directors who are not employees of the Company. Periodically, the Committee
meets privately with the internal auditors and the independent auditors and
representatives of management to assure that each is carrying out its
responsibilities. To assure independence, Arthur Andersen LLP has full and free
access to the Audit Committee to discuss internal accounting control, auditing
and financial reporting matters.
<TABLE>
<S> <C>
KATHLEEN A. COTE WILLIAM A. FONIRI
President and Chief Vice President Finance, Chief
Executive Officer Financial Officer and Treasurer
</TABLE>
19
<PAGE> 21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Computervision Corporation:
We have audited the accompanying consolidated balance sheets of
Computervision Corporation and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Computervision Corporation and subsidiaries as of December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in Item
14(a) (2) is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. The schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 27, 1997 (except with
respect to the matter discussed
in Note 4, as to which
the date is April 15, 1997)
20
<PAGE> 22
COMPUTERVISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....................................... $ 50,979 $ 38,565
Accounts receivable, less allowance for doubtful accounts of
$3,623 and $2,929, respectively.............................. 92,271 102,509
Current deferred income taxes................................... 16,444 7,448
Prepaid expenses and other current assets....................... 18,003 16,019
------------ ------------
TOTAL CURRENT ASSETS.................................... 177,697 164,541
PROPERTY AND EQUIPMENT, AT COST
Land, buildings and leasehold improvements...................... 41,367 35,524
Production and test equipment................................... 7,230 4,777
Computer systems and spares..................................... 99,780 67,001
Office equipment and other...................................... 22,261 19,251
------------ ------------
170,638 126,553
Less -- accumulated depreciation................................ (124,230) (95,498)
------------ ------------
PROPERTY AND EQUIPMENT, NET....................................... 46,408 31,055
------------ ------------
DEFERRED INCOME TAX ASSETS........................................ 10,766 4,113
CAPITALIZED SOFTWARE.............................................. 2,105 1,276
DEFERRED FINANCE COSTS............................................ 5,344 3,734
OTHER ASSETS...................................................... 4,597 3,626
------------ ------------
$ 246,917 $ 208,345
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable................................................ $ 27,259 $ 19,776
Notes payable and current portion of long-term debt............. 9,186 9,888
Accrued compensation, severance and related costs............... 61,722 57,482
Deferred revenue and customer advances.......................... 39,148 40,503
Accrued and deferred income taxes............................... 31,910 15,019
Other current liabilities and accrued expenses.................. 90,977 81,822
------------ ------------
TOTAL CURRENT LIABILITIES............................... 260,202 224,490
------------ ------------
DEFERRED INCOME TAXES............................................. 27,284 30,174
LONG-TERM DEBT, LESS CURRENT PORTION.............................. 222,641 217,346
OTHER LONG-TERM LIABILITIES....................................... 74,516 53,110
COMMITMENTS AND CONTINGENCIES (see Notes 2, 6 and 13)
STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 par value; 5,000,000 shares authorized;
none issued and outstanding
Common stock, $0.01 par value; 100,000,000 shares authorized;
62,815,017 and 63,509,999 shares, respectively, issued and
outstanding.................................................. 628 635
Capital in excess of par value.................................. 1,183,056 1,186,109
Retained deficit................................................ (1,533,351) (1,511,148)
Cumulative translation adjustment............................... 11,941 7,629
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT............................. (337,726) (316,775)
------------ ------------
$ 246,917 $ 208,345
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
<PAGE> 23
COMPUTERVISION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
SOFTWARE REVENUE
Product.............................................. $163,199 $163,716 $191,728
Services............................................. 122,980 122,885 111,087
-------- -------- --------
Total Software Revenue....................... 286,179 286,601 302,815
OTHER SERVICES REVENUE................................. 287,458 220,473 174,384
-------- -------- --------
Total Revenue................................ 573,637 507,074 477,199
COST OF SALES
Software
Product........................................... 30,218 17,181 16,382
Services.......................................... 72,682 70,704 67,748
Other Services....................................... 196,743 154,870 134,686
-------- -------- --------
Total Cost of Sales.......................... 299,643 242,755 218,816
-------- -------- --------
GROSS PROFIT........................................... 273,994 264,319 258,383
SELLING AND ADMINISTRATIVE EXPENSE
Software............................................. 117,503 113,611 119,465
Other Services....................................... 37,720 26,900 23,501
RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSE
Software............................................. 57,223 41,533 40,144
Other Services....................................... 2,096 1,600 700
NON-RECURRING CHARGES
Software............................................. -- -- 14,500
Other Services....................................... -- -- 5,000
-------- -------- --------
OPERATING INCOME
Software............................................. 8,553 43,572 44,576
Other Services....................................... 50,899 37,103 10,497
-------- -------- --------
Total Operating Income....................... 59,452 80,675 55,073
INTEREST AND OTHER EXPENSE, NET........................ 49,681 44,924 30,806
-------- -------- --------
INCOME BEFORE INCOME TAXES............................. 9,771 35,751 24,267
PROVISION FOR INCOME TAXES............................. -- 5,005 2,610
-------- -------- --------
NET INCOME BEFORE EXTRAORDINARY CHARGE................. 9,771 30,746 21,657
EXTRAORDINARY CHARGE................................... -- (7,930) --
-------- -------- --------
NET INCOME............................................. $ 9,771 $ 22,816 $ 21,657
======== ======== ========
EARNINGS (LOSS) PER SHARE
Earnings before extraordinary charge................. $ 0.20 $ 0.58 $ 0.33
Extraordinary Charge................................. -- (0.15) --
-------- -------- --------
Net Earnings................................. $ 0.20 $ 0.43 $ 0.33
======== ======== ========
Weighted Average Shares Outstanding.................... 48,367 52,591 64,784
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE> 24
COMPUTERVISION CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL
------------------ IN EXCESS CUMULATIVE
NUMBER PAR OF PAR ACCUMULATED TRANSLATION
OF SHARES VALUE VALUE DEFICIT ADJUSTMENT
--------- ----- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993............ 48,183 $ 482 $1,024,704 $(1,565,222) $ 9,859
Issuance of Common Stock under
employee stock purchase plan..... 227 2 669 0 0
Restricted Stock Compensation...... 0 0 257 0 0
Minimum pension liability
adjustment....................... 0 0 0 7,824 0
Translation adjustment............. 0 0 0 0 2,241
Net income......................... 0 0 0 9,771 0
------ ---- ---------- ----------- -------
BALANCE AT DECEMBER 31, 1994............ 48,410 484 1,025,630 (1,547,627) 12,100
Issuance of Common Stock under
employee stock purchase plan..... 165 2 671 0 0
Issuance of Common Stock under
stock option plan................ 440 4 1,748 0 0
Restricted Stock Compensation...... 0 0 514 0 0
Issuance of Common Stock, net of
underwriting fees and expenses... 13,800 138 154,493 0 0
Minimum pension liability
adjustment....................... 0 0 0 (8,540) 0
Translation adjustment............. 0 0 0 0 (159)
Net income......................... 0 0 0 22,816 0
------ ---- ---------- ----------- -------
BALANCE AT DECEMBER 31, 1995............ 62,815 628 1,183,056 (1,533,351) 11,941
Issuance of Common Stock under
employee stock purchase plan..... 83 1 678 0 0
Issuance of Common Stock under
stock option plan................ 612 6 2,375 0 0
Minimum pension liability
adjustment....................... 0 0 0 546 0
Translation adjustment............. 0 0 0 0 (4,312)
Net income......................... 0 0 0 21,657 0
------ ---- ---------- ----------- -------
BALANCE AT DECEMBER 31, 1996............ 63,510 $ 635 $1,186,109 $(1,511,148) $ 7,629
====== ==== ========== =========== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE> 25
COMPUTERVISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM (USED FOR) OPERATIONS
Net income...................................... $ 9,771 $ 22,816 $ 21,657
Add items not requiring cash:
Depreciation of property and equipment..... 42,460 25,093 21,748
Amortization of intangibles................ 14,474 5,864 1,715
Amortization of finance costs and debt
discounts................................ 3,404 5,290 2,911
Provision for doubtful accounts............ 7,701 88 212
Provision (benefit) for deferred income
taxes.................................... 1,216 67 17
Charge for purchased in-process R&D........ -- -- 3,500
Changes in assets and liabilities:
Accounts receivable........................ 74,070 14,212 (11,306)
Prepaid expenses and other................. 15,497 (1,752) 3,997
Accounts payable, accrued expenses and
income taxes............................. (177,758) (57,917) (36,510)
Other...................................... (1,336) (1,800) (59)
--------- --------- --------
Total cash flows from (used for)
operations.......................... (10,501) 11,961 7,882
--------- --------- --------
INVESTING ACTIVITIES
Expenditures for property and equipment......... (15,116) (9,172) (11,479)
(Increase) decrease in other assets............. 693 2,521 (643)
Acquisition..................................... 0 0 (1,070)
--------- --------- --------
Total cash flows used for
investments......................... (14,423) (6,651) (13,192)
--------- --------- --------
FINANCING ACTIVITIES
(Decrease) increase in notes payable............ 7,739 (4,927) 465
Payments on long-term borrowings................ (2,035) (126,655) (6,360)
Net proceeds from Stock Offering................ -- 154,631 --
Proceeds from issuance of Common Stock.......... 671 2,425 3,060
--------- --------- --------
Total cash from (used for) financing
activities.................................... 6,375 25,474 (2,835)
--------- --------- --------
Foreign exchange impact on cash................. (5,563) 4,955 (4,269)
--------- --------- --------
Net increase (decrease) in cash and cash
equivalents................................... (24,112) 35,739 (12,414)
Cash and cash equivalents at beginning of
period........................................ 39,352 15,240 50,979
--------- --------- --------
Cash and cash equivalents at end of period...... $ 15,240 $ 50,979 $ 38,565
========= ========= ========
Supplementary data requirements:
Cash interest paid......................... $ 45,295 $ 48,066 $ 27,299
Cash taxes paid (refunded)................. $ (4,508) $ (373) $ 957
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
24
<PAGE> 26
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) ORGANIZATION AND RECAPITALIZATION
The Company develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing processes. The Company's principal
products include design automation and product data management software.
Manufacturers use the Company's software to design, enhance and modify their
products and to access, share and manage their product data collaboratively. The
Company's support services include implementation, consulting and training
services designed to assist customers in reengineering their product development
processes and in increasing productivity.
In 1989, DR Holdings Inc. of Delaware ("DR Holdings") acquired the Company
(the "Acquisition") in a purchase transaction. In August 1992, the Company
completed a recapitalization (the "Recapitalization"), which included the sale
of $300,000 of common stock and $300,000 of notes to the public. The proceeds
were used to retire debt. In addition, a loan from Lehman Brothers Holdings Inc.
("Lehman Holdings") was retired through the payment of cash and the issuance of
common stock of the Company. As a result of the Recapitalization, and subsequent
liquidation of DR Holdings, the common stock of the Company owned by DR Holdings
was distributed to its creditors.
On October 25, 1995, the Company completed a public offering of 13,800
shares of common stock at $12.00 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
OPERATING ENVIRONMENT
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for discussion of the Company's current operating
environment and revenue trends.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its domestic and foreign subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires 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 periods. Actual results could differ from those estimates.
REVENUE RECOGNITION
In accordance with AICPA Statement of Position 91-1 "Software Revenue
Recognition", revenue from software sales is recognized at the time the product
is delivered, if collection is probable. Revenue from post-contract and other
services is deferred and recognized ratably over the contractual period. Revenue
from consulting and training services is recognized as the services are
provided.
25
<PAGE> 27
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
TRANSLATION OF FOREIGN CURRENCIES AND HEDGING INSTRUMENTS
Assets and liabilities of foreign subsidiaries are translated into U.S.
dollars at the period-end exchange rates, while equity accounts are translated
at historical rates. Revenues and expenses are translated at the average
exchange rates during the period.
The Company enters into forward foreign exchange contracts to hedge firm
intercompany balances. The Company does not engage in speculation and,
therefore, the forward exchange contracts do not subject the Company to risk due
to exchange rate movements as gains and losses on these contracts offset losses
and gains on the assets or liabilities of the transactions being hedged. As of
December 31, 1996 and 1995, the Company had $9,933 and $1,451 of net forward
exchange contracts outstanding, 65% and 84% of which were in European
currencies, respectively. The forward exchange contracts generally have
maturities of three months or less.
PROPERTY AND EQUIPMENT
The Company provides for depreciation and amortization by charges to
operations on the straight-line method in amounts estimated to expense the cost
of buildings, equipment and improvements over their estimated useful lives as
follows:
<TABLE>
<CAPTION>
ASSET CLASSIFICATION USEFUL LIVES
------------------------------------------------------------------ ------------
<S> <C>
Buildings and leasehold improvements.............................. 3-30 years
Production and test equipment..................................... 3-8 years
Computer systems and spares....................................... 3-5 years
Office equipment and other........................................ 3-8 years
</TABLE>
Maintenance and repairs are charged to operations as incurred. When
equipment and improvements are fully depreciated, sold or otherwise disposed of,
the asset cost and accumulated depreciation are removed from the accounts and
the resulting gain or loss, if any, is included in the results of operations.
CAPITALIZATION OF SOFTWARE DEVELOPMENT COSTS
In accordance with Statement of Financial Accounting Standards No. 86
("SFAS 86"), "Accounting for the Costs of Computer Software to Be Sold, Leased
or Otherwise Marketed", the Company has capitalized certain computer software
development costs. During the years ended December 31, 1996, 1995 and 1994 the
Company capitalized $0, $0 and $1,545 of software costs, respectively. The
capitalized software is being amortized over lives ranging from three to five
years. The Company charged to expense $14,215, $5,359 and $1,715 of amortization
of capitalized software costs for the years ended December 31, 1994, 1995 and
1996, respectively.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
In 1996, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of", with no material impact on the
financial position or results of operations.
STOCK-BASED COMPENSATION
Effective January 1, 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for
Stock-Based Compensation". The Company has elected to continue to account for
stock options at intrinsic value under APB Opinion No. 25 with disclosure of the
effects of fair value accounting on net income and earnings per share on a pro
forma basis (See Note 11 "Stock Plans").
26
<PAGE> 28
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME TAXES
The Company adopted the liability method of accounting for income taxes
under Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes" as of January 1, 1993 with no cumulative effect of
a change in accounting for income taxes on the reported results of operations.
RECLASSIFICATIONS
Certain prior year balances in the financial statements have been
reclassified to conform to the current year financial statement presentation.
EARNINGS/LOSS PER SHARE
Earnings/Loss Per Share for the years ended December 31, 1994, 1995 and
1996 have been computed based upon the weighted average number of shares of
Common Stock and equivalents outstanding, if dilutive, during the year. Fully
diluted net income per share for all periods has not been presented as it is not
materially different from primary net income per share. On October 25, 1995, the
Company completed a public offering of 13,800 shares of common stock. The net
proceeds of approximately $155,000 were applied on December 4, 1995 to the
redemption in full of the outstanding $125,000 Senior Notes due in 1997. If this
transaction had occurred as of January 1, 1995, the net earnings per share for
1995 would have been $0.55 vs the reported $0.43.
(3) CASH, CASH EQUIVALENTS AND FINANCIAL INSTRUMENTS
The Company classifies all cash investments with an original maturity of
less than ninety days as cash equivalents and values them at cost which
approximates market. The Company's policy is to invest cash primarily in income
producing short-term money market instruments and to keep uninvested cash
balances at minimum levels.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and accounts receivable. As of December 31, 1996, the Company had no significant
concentrations of credit risk.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value: (i) forward foreign exchange contracts (used for hedging purposes)
were estimated by obtaining quotes from brokers and (ii) long-term debt was
estimated based on the closing market price of the issue for the Senior
Subordinated Notes and based upon the most recent quoted market prices for the
8% Convertible Subordinated Debentures.
The estimated fair values of the Company's financial instruments at
December 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
1995 1996
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Forward foreign exchange contracts - net
payable................................. $67 $68 $201 $205
Long-term debt:
8% Convertible Subordinated
Debentures........................... 36,066 46,822 36,654 50,322
11 3/8% Senior Subordinated Notes....... 175,000 182,823 175,000 182,035
</TABLE>
27
<PAGE> 29
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Company would not be able to sell its forward foreign exchange
contracts without exposing the Company to significant risk of movements in
foreign exchange rates. Also, certain financing agreements prohibit repurchase
or redemption of the long-term debt before its maturity.
(4) NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt at December 31, 1995 and 1996 consisted of
the following:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Notes Payable:
Notes Payable to banks................................. $ 2,812 $ 3,277
Revolving Credit Facility.............................. -- --
-------- --------
Total Notes Payable............................ $ 2,812 $ 3,277
======== ========
Long-Term Debt:
8% Convertible Subordinated Debentures, due 2009, net
of unamortized discount of $19,019 and $17,456, and
current portion of $975 and $5,500, respectively.... $ 35,091 $ 31,154
11 3/8% Senior Subordinated Notes, due 1999............ 175,000 175,000
Other Long-Term Debt, less current portion of $5,399
and $1,111.......................................... 12,550 11,192
-------- --------
Total Long-Term Debt, less current portion..... $222,641 $217,346
======== ========
</TABLE>
The average amount of short-term borrowings outstanding during 1996 was
$1,256, with a maximum outstanding of $11,500. The weighted average interest
rates on December 31, 1996 and for the year then ended was 9.25%.
NOTES PAYABLE TO BANKS
Notes payable to banks at December 31, 1995 and 1996 consisted of
borrowings by the Company's international subsidiaries under certain of the
Company's lines of credit. Borrowings under such lines bear interest at
prevailing or negotiated rates.
REVOLVING CREDIT ARRANGEMENTS
On November 17, 1995, the Company entered into a three-year, $50,000 credit
facility (the "Revolving Credit Facility") with Bankers Trust Company (Fleet
Bank of Massachusetts later became a co-agent) to replace the existing Revolving
Credit Agreement.
The Revolving Credit Facility provided for a revolving line of credit (the
"Revolving Credit Line") of $50,000 for working capital and for sinking fund
payments on the Company's 8% Convertible Subordinated Debentures (unpaid
principal balance of $54,110 at December 31, 1996), of which $20,000 is
available for letters of credit. Pursuant to the terms of the Revolving Credit
Facility, the Company has granted the lenders a security interest in all of the
Company's U.S. assets. Letters of credit outstanding at December 31, 1996 were
$8,521 and there were no borrowings outstanding. The Revolving Credit Facility
requires the Company to satisfy certain financial and other covenants. As a
result of the non-recurring charges of $19,500 in the fourth quarter of 1996
(See Note 5 "Non-recurring Charges") and an expected non-recurring charge of
$7,000 in the first quarter of 1997, the Company would not have satisfied the
financial covenants of its Revolving Credit Facility. As a result, the Company
and its lending banks signed an amendment which modifies the financial covenants
through December 31, 1997. The Company also agreed with its banks that it would
amend the Revolving Credit Facility to provide for a borrowing base limitation
and would limit outstanding borrowings to $18,800 including letters of credit
($3,800 outstanding at March 27, 1997) until the facility is so amended.
28
<PAGE> 30
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Loans under the Revolving Credit Facility will bear interest at a Base Rate or
Eurodollar rate, as selected by the Company, plus an Applicable Margin. On
December 31, 1996, the rates ranged from 7.5% to 9.25%.
Due to the substantial shortfall in revenue for the quarter ended March 30,
1997, the Company was unable to satisfy certain of the financial covenants, as
amended, under the Revolving Credit Facility (under which no borrowings were
outstanding) ("Bank Covenants"). On April 15, 1997, the Company reached an
agreement with its lending banks to waive the default in the Bank Covenants for
the quarter ended March 30, 1997, to amend the Bank Covenants to conform with
the Company's revised business plan for 1997, and to implement a borrowing base
limitation (the "April 1997 Amendment"). Pursuant to the terms of the April 1997
Amendment, the Company may borrow funds secured by the accounts receivable of
the Company, Computervision Pty. Limited (Australia), Computervision S.A.
(France), Computervision GmbH (Germany) and Computervision Limited (U.K.). Until
such time as the April 1997 Amendment is executed, the Company may borrow on its
U.S. accounts receivable ($8,800 at March 30, 1997). Thereafter, until the
security interests are perfected, the Company may borrow the lesser of the
borrowing base limitation and (i) $25,000 for the period from April 15, 1997 to
June 30, 1997, and (ii) $35,000 thereafter. In addition, the April 1997
Amendment also limits the borrowings outstanding at the end of each fiscal
quarter ($18,000 for the second quarter of 1997, $21,000 for the third quarter
of 1997 and $16,000 for each subsequent quarter), and increases the interest
rate to LIBOR plus 2.5% for borrowings of $25,000 or less and LIBOR plus 3% for
borrowings greater than $25,000.
Because the Company's borrowings under the amended Revolving Credit
Facility will be limited to a fixed percentage of the Company's accounts
receivable, the Company's ability to fund its operations over the short term is
dependent upon its success in achieving its revised business plan for 1997. If
the Company is unsuccessful in achieving its business plan, its short-term
liquidity will be adversely impacted, which could require a curtailment of
certain business activities that in turn could have a material adverse effect on
the Company's business.
CONVERTIBLE SUBORDINATED DEBENTURES
The 8% Convertible Subordinated Debentures due December 1, 2009 are
convertible into cash at the rate of 33.33% of the principal amount at any time
prior to maturity at the option of the holder. No material conversions occurred
during the years ended December 31, 1994, 1995 and 1996. At the time of the
Acquisition, the 8% Convertible Subordinated Debentures were revalued to reflect
their current market values. The discount is being amortized to interest expense
over the remaining life of the debentures. A sinking fund requirement to retire
$5,500 principal amount of debentures per year began in December 1995. The
December 1995 sinking fund requirement was satisfied by delivery for
cancellation of debentures held by the Company. The December 1996 sinking fund
requirement was satisfied in part by delivery for cancellation of $4,525
principal amount of debentures held by the Company. The remaining requirement
was satisfied by purchase and delivery of $975 principal amount of debentures.
SENIOR NOTES AND SENIOR SUBORDINATED NOTES
The Company's previous Senior Notes bore interest at 10 7/8% per annum with
semi-annual interest payments due February 15 and August 15, commencing February
15, 1993. The Senior Notes were to mature on August 15, 1997 and were redeemable
in whole or in part at the option of the Company on or after August 15, 1995, at
104.35% of the principal amount thereof and on or after August 15, 1996 at
102.175% of the principal amount thereof, in each case together with accrued
interest to the date of redemption.
On October 25, 1995 the Company completed a public offering of 13,800
shares of common stock at $12 per share. The net proceeds from this sale,
approximately $155,000, were applied on December 4, 1995 to the redemption in
full of the outstanding $125,000 Senior Notes due in 1997. The total cost of the
redemption, including the redemption premium and interest accrued to the
redemption date, was approximately $135,000.
29
<PAGE> 31
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
The Senior Subordinated Notes bear interest at 11 3/8% per annum with
semi-annual interest payments due February 15 and August 15, commencing on
February 15, 1993. The Senior Subordinated Notes mature on August 15, 1999 and
are redeemable in whole or in part at the option of the Company on or after
August 15, 1997, at 101.896% of the principal amount thereof, and on or after
August 15, 1998 at 100% of the principal amount thereof, in each case together
with accrued interest to the date of redemption.
The Senior Subordinated Note indenture contains certain restrictions on the
payment of annual dividends and specifies certain events of default.
INTEREST AND OTHER EXPENSE, NET
Interest and Other Expense, net for the years ended December 31, 1994, 1995
and 1996 consists of the following:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Interest income................................... $(1,307) $(1,864) $(1,750)
Interest expense to third parties................. 46,741 46,113 32,277
Interest expense to related parties............... 2,030 -- --
Other expense, net................................ 2,217 675 279
------- ------- -------
Interest and other expense, net.............. $49,681 $44,924 $30,806
======= ======= =======
</TABLE>
(5) NON-RECURRING CHARGES
The 1996 results include a non-recurring charge of $14,500 which includes
$3,500 related to the fair value of purchased in-process R&D associated with the
acquisition of 3rd Angle Ltd., a UK-based technology company. This in-process
R&D had not yet reached technological feasibility and had no alternative future
use. The balance relates to $11,000 of restructuring costs associated with the
implementation of ongoing cost savings (primarily personnel reductions of
approximately 100 positions in R&D, sales and marketing, and the closing of
facilities). The 1996 results also include a non-recurring charge of $5,000
associated with the write-off of fees and expenses incurred in connection with
the terminated agreement to sell the Open Service Solutions business to J.F.
Lehman & Company. There were no non-recurring charges in 1995 or 1994.
(6) CAPITAL LEASES, LEASE COMMITMENTS AND RENT EXPENSE
The Company conducts its operations primarily in leased facilities under
lease arrangements expiring on various dates through the year 2014. Certain
long-term capital leases have been included in Property and Equipment and
Long-Term Debt in the accompanying consolidated balance sheets.
Future minimum lease payments under capital and operating leases with
initial terms of one year or more are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES
------------------------------------------------------- ------- ---------
<S> <C> <C>
1997............................................ $ 2,348 $ 30,812
1998............................................ 2,359 25,859
1999............................................ 2,359 21,218
2000............................................ 1,799 18,873
</TABLE>
30
<PAGE> 32
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING DECEMBER 31, LEASES LEASES
------------------------------------------------------- ------- ---------
<S> <C> <C>
2001............................................ 1,647 15,863
Thereafter...................................... 4,722 71,026
------- --------
Total minimum lease payments.................... 15,234 $ 183,651
========
Less: Amount representing interest on capital
leases....................................... 5,531
-------
Present value of minimum lease payments at
December 31, 1996............................ $ 9,703
=======
</TABLE>
Total rent payments for the Company (including vacant or partially vacant
leased premises) for the years ended December 31, 1994, 1995 and 1996 were
$70,440, $59,049 and $40,105, respectively.
As a result of the Acquisition and the subsequent reorganization of the
Company (as discussed in Note 1), certain of the above facilities have been
considered excess. The Company has accrued $72,500 and $61,500 at December 31,
1995 and 1996, respectively, in connection with its net vacant facility
obligations.
(7) PROVISION FOR INCOME TAXES
The components of domestic and foreign income (loss) from operations before
income taxes were as follows:
<TABLE>
<CAPTION>
1994 1995 1996
-------- ------- -------
<S> <C> <C> <C>
Domestic................................... $(14,129) $10,869 $17,187
Foreign.................................... 23,900 24,882 7,080
-------- ------- -------
Total income before income taxes........... $ 9,771 $35,751 $24,267
======== ======= =======
</TABLE>
Significant components of the provision for income taxes by taxing
jurisdiction are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Current:
Federal........................................ $ 0 $ 150 $ 0
Foreign........................................ (1,216) 4,388 2,501
State.......................................... 0 400 92
------- ------ ------
Total current............................. (1,216) 4,938 2,593
Deferred:
Federal........................................ 0 0 0
Foreign........................................ 1,216 67 17
State.......................................... 0 0 0
------- ------ ------
Total deferred............................ 1,216 67 17
------- ------ ------
Total income tax provision.......................... $ 0 $5,005 $2,610
======= ====== ======
</TABLE>
The components of deferred tax assets, valuation allowance and deferred tax
liabilities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
--------- ---------
<S> <C> <C>
Deferred tax assets and valuation allowance:
Restructuring reserves and accruals............... $ 35,799 $ 32,985
Other reserves and accruals not yet deductible.... 16,647 17,633
Book over tax depreciation........................ 606 9,591
Liabilities assumed in purchase business
combination..................................... 3,230 1,824
</TABLE>
31
<PAGE> 33
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1996
--------- ---------
<S> <C> <C>
Tax loss carryforwards............................ 167,221 152,701
General business credit carryforward.............. 17,199 17,053
Alternative minimum tax credit carryforward....... 1,769 1,825
Valuation allowance............................... (188,052) (182,945)
--------- ---------
Total net deferred tax assets................ 54,419 50,667
Deferred tax liabilities:
Other expenses previously deducted on tax
return.......................................... 3,881 935
Assets acquired in purchase business
combination..................................... 7,076 6,287
Investment in foreign subsidiaries................ 43,529 43,529
--------- ---------
Total deferred tax liabilities............... 54,486 50,751
--------- ---------
Net deferred tax asset and liabilities....... $ (67) $ (84)
========= =========
</TABLE>
SFAS 109 requires recognition of income tax benefits for loss
carryforwards, credit carryforwards, and certain temporary differences. The net
tax benefits have been reduced by a valuation allowance as they do not satisfy
the recognition criteria set forth in SFAS 109. Of the valuation allowance at
December 31, 1996, $7,083 will be recorded directly in equity when realized
related to stock option benefits and minimum pension liability adjustments.
For U.S. tax return purposes at December 31, 1996, the Company has $469,809
of loss carryforwards and $18,878 of federal income tax credits which should be
available to reduce future income tax liabilities. These loss carryforwards will
expire beginning in 2003 through 2011 and the federal credit carryforwards will
expire in 1997 through 2003. The Company also has $111,866 of foreign loss
carryforwards at December 31, 1996. These foreign loss carryforwards will expire
beginning in 1997.
The NOLs and tax credit carryforwards generally should be available to be
carried forward to future years. However, Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"), contains provisions which limit a
corporation's use of NOLs and tax credits after a change of more than 50% of the
ownership of the corporation. Subject to these limitations, the NOLs generally
are available to offset a taxpayer's taxable income in future years. In 1996, a
change of more than 50% of the ownership of the corporation occurred which
results in an annual limitation on the usage of NOLs of approximately $40,000 to
$50,000. Although the Company has computed its NOLs and reported them to the
Internal Revenue Service (the "IRS") in a manner that indicates that they
generally will be available to be used to offset the Company's taxable income in
future years, there is a significant possibility that the IRS will disagree with
the Company's determination of the amount of NOLs that could be so used. In such
event, if the IRS were to prevail, the use of a portion or all of the Company's
NOLs could be disallowed.
The U.S. federal statutory tax rate on corporations was 35% in 1994, 1995
and 1996. A reconciliation between the Company's effective tax rate (provision
for income taxes as a percentage of income before income taxes) and the
statutory tax rate is as follows:
<TABLE>
<CAPTION>
1994 % 1995 % 1996 %
------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Tax provision (benefit) at federal
statutory rate........................ $ 3,420 35.0% $ 12,514 35.0% $ 8,494 35.0%
Increase (reduction) due to:
Difference between U.S. tax rate
and tax rates used in other
jurisdictions.................... 4,120 42.2% (2,752) (7.7)% 719 3.0%
State taxes, net of federal income
tax benefit...................... 0 0.0% 260 0.7% 60 0.2%
Decrease in valuation allowance.... (7,705) (78.8)% (10,882) (30.4)% (10,107) (41.7)%
</TABLE>
32
<PAGE> 34
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1994 % 1995 % 1996 %
------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Nondeductible compensation......... 0 0.0% 1,000 2.8% 400 1.6%
Tax on repatriation of foreign
income in excess of foreign tax
credits.......................... 0 0.0% 2,400 6.7% 1,674 6.9%
Other, net......................... 165 1.6% 2,465 6.9% 1,370 5.7%
------- ----- -------- ----- -------- -----
Effective tax provision and rate........ $ 0 0.0% $ 5,005 14.0% $ 2,610 10.7%
======= ===== ======== ===== ======== =====
</TABLE>
At December 31, 1996, the undistributed earnings of the foreign
subsidiaries upon which no U.S. income taxes have been provided is immaterial.
(8) INDUSTRY SEGMENT AND GEOGRAPHIC OPERATIONS
The Company operates in two industry segments: Software - providing CAD/CAM
solutions and services including training and consulting services incident to
those products; and OSS - providing services and training for other hardware and
software products. Segment financial information is as follows:
<TABLE>
<CAPTION>
SOFTWARE OSS CONSOLIDATED
-------- -------- ------------
<S> <C> <C> <C>
1994
Revenue................................ $286,179 $287,458 $573,637
Gross Margin........................... 183,279 90,715 273,994
Operating Expenses..................... 174,726 39,816 214,542
Operating Income....................... 8,553 50,899 59,452
Identifiable Assets
Accounts Receivable.................. 68,316 34,224 102,540
Fixed Assets......................... 43,420 24,955 68,375
Other................................ 7,464 750 8,214
Corporate Assets(b).................... -- -- 84,055
--------
Total Assets........................... 263,184
Capital Expenditures................... 6,077 9,039 15,116
Depreciation and Amortization.......... 31,782 25,152 56,934
1995
Revenue................................ 286,601 220,473 507,074
Gross Margin........................... 198,716 65,603 264,319
Operating Expenses..................... 155,144 28,500 183,644
Operating Income....................... 43,572 37,103 80,675
Identifiable Assets
Accounts Receivable.................. 64,332 27,939 92,271
Fixed Assets......................... 26,991 19,417 46,408
Other................................ 2,105 200 2,305
Corporate Assets(b).................... -- -- 105,933
--------
Total Assets........................... 246,917
Capital Expenditures................... 2,032 7,140 9,172
Depreciation and Amortization.......... 18,811 12,146 30,957
1996
Revenue................................ 302,815 174,384 477,199
Gross Margin........................... 218,685 39,698 258,383
Operating Expenses(a).................. 174,109 29,201 203,310
Operating Income....................... 44,576 10,497 55,073
</TABLE>
33
<PAGE> 35
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SOFTWARE OSS CONSOLIDATED
-------- -------- --------
<S> <C> <C> <C>
Identifiable Assets
Accounts Receivable.................. 76,563 25,946 102,509
Fixed Assets......................... 18,072 12,983 31,055
Other................................ 1,276 -- 1,276
Corporate Assets(b).................... -- -- 73,505
--------
Total Assets........................... 208,345
Capital Expenditures................... 7,255 4,224 11,479
Depreciation and Amortization.......... 13,138 10,325 23,463
</TABLE>
- ---------------
(a) Operating expenses for 1996 software company include a non-recurring charge
of $14,500 for purchased R&D associated with an acquisition and
restructuring costs associated with ongoing cost savings. Operating expenses
for 1996 OSS business include a non-recurring charge of $5,000 associated
with the write-off of fees and expenses incurred in connection with a
terminated agreement to sell the OSS business.
(b) Corporate assets includes cash and cash equivalents, deferred tax assets,
deferred finance costs, prepaid expenses and other assets.
Geographic financial information is as follows:
<TABLE>
<CAPTION>
ADJUSTMENTS
UNITED PACIFIC AND
STATES EUROPE RIM ELIMINATIONS CONSOLIDATED
-------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1994
Sales to unaffiliated customers... $194,014 $275,544 $104,079 $ 0 $573,637
Intercompany transfers............ 106,726 28,976 0 (135,702) 0
-------- -------- -------- --------- --------
Total revenue................ 300,740 304,520 104,079 (135,702) 573,637
======== ======== ======== ========= ========
Operating income (loss)........... (13,130) 42,396 30,186 0 59,452
======== ======== ======== ========= ========
Identifiable assets............... 109,634 116,102 37,448 0 263,184
======== ======== ======== ========= ========
1995
Sales to unaffiliated customers... $164,891 $250,875 $ 91,308 $ 0 $507,074
Intercompany transfers............ 92,056 25,847 0 (117,903) 0
-------- -------- -------- --------- --------
Total revenue................ 256,947 276,722 91,308 (117,903) 507,074
======== ======== ======== ========= ========
Operating income.................. 15,326 52,837 12,512 0 80,675
======== ======== ======== ========= ========
Identifiable assets............... 74,919 132,490 39,508 0 246,917
======== ======== ======== ========= ========
1996
Sales to unaffiliated customers... $176,503 $221,702 $ 78,994 $ 0 $477,199
Intercompany transfers............ 86,291 10,238 0 (96,529) 0
-------- -------- -------- --------- --------
Total revenue................ 262,794 231,940 78,994 (96,529) 477,199
======== ======== ======== ========= ========
Operating income (loss)........... 23,133 32,014 (74) 0 55,073
======== ======== ======== ========= ========
Identifiable assets............... 56,757 122,629 28,959 0 208,345
======== ======== ======== ========= ========
</TABLE>
Intercompany transfers between geographic areas are accounted for at prices
which approximate arm's length transactions. Expenses incurred in one geographic
area which benefit other areas have been allocated to each area on a percentage
of revenue basis.
34
<PAGE> 36
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Sales to unaffiliated customers outside the United States, including U.S.
export sales, were approximately $395,805, $369,048 and $346,950 for the years
ended December 31, 1994, 1995 and 1996, respectively, which represented 69%, 73%
and 73% of total revenue.
(9) QUARTERLY RESULTS (UNAUDITED)
Financial results by quarter for 1995 and 1996 are summarized below:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1995
Total revenue...................................... $119,475 $131,362 $125,387 $130,850
Gross profit....................................... 59,231 66,977 65,214 72,897
Operating income................................... 14,547 20,209 21,221 24,698
Net income(a)...................................... 2,946 7,127 8,023 4,720
Net earnings per share(b).......................... 0.06 0.14 0.16 0.08
1996
Total revenue...................................... $113,235 $118,957 $123,253 $121,754
Gross profit....................................... 60,528 64,206 67,914 65,735
Operating income (loss)(c)......................... 17,084 19,467 22,753 (4,231)
Net income (loss)(c)............................... 8,168 10,653 13,094 (10,258)
Net earnings (loss) per share...................... 0.13 0.16 0.20 (0.16)
</TABLE>
- ---------------
(a) Net income for the fourth quarter of 1995 includes an extraordinary charge
of $7,930 relating to a redemption premium and fees associated with the
early retirement of the Company's $125,000 10 7/8% Senior Notes.
(b) The sum of the quarterly per share amounts does not equal the full year
total due to the Company's share offering in the fourth quarter of 1995.
(c) The fourth quarter of 1996 includes a non-recurring charge of $14,500 for
purchased R&D associated with an acquisition and restructuring costs
associated with ongoing cost savings, and a non-recurring charge of $5,000
associated with the write-off of fees and expenses incurred in connection
with a terminated agreement to sell the OSS business.
(10) EMPLOYEE RETIREMENT AND SALARY CONTINUATION PROGRAMS
The Company maintains various employee retirement and salary continuation
programs, as discussed below. The Company does not, however, maintain any
post-employment benefit plans other than retirement plans.
Capital Accumulation Plan
The Capital Accumulation Plan is available to all U.S. employees upon
completion of one year of service. The plan provides various alternative
investment funds in which the employee may elect to contribute pre-tax savings
and the Company's matching contribution on a tax deferred basis. Under the plan,
each participant may elect to withhold a percentage of their annual
compensation. The Company makes matching contributions to the plan based on the
employee's length of service with the Company. The matching contributions are
made on a fiscal year basis to participants who are employed by the Company as
of December 31 of each fiscal year. The matching contribution expense for the
years ended December 31, 1994, 1995 and 1996 was $2,417, $1,989 and $1,905,
respectively.
35
<PAGE> 37
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Pension Plans
The Company and its subsidiaries maintain various defined benefit and
defined contribution pension plans covering substantially all employees.
Benefits under the defined benefit plans are based upon length of service and
average compensation and generally vest over two to ten years of service.
Effective April 1, 1990, the Company froze the benefits under the U.S. Pension
Plan indefinitely.
The actuarially computed net periodic pension cost for the defined benefit
plans for the years ended December 31, 1994, 1995 and 1996 was comprised of the
following:
<TABLE>
<CAPTION>
U.S. PLAN FOREIGN PLANS
---------------------------- -----------------------------
1994 1995 1996 1994 1995 1996
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest cost........................ $2,427 $ 2,305 $ 2,607 $ 2,538 $ 2,628 $ 3,097
Service cost......................... 0 0 0 3,241 2,530 2,269
Actual return on plan assets......... (176) (1,877) (1,247) 700 (4,148) (3,779)
Net amortization and deferral........ (561) 707 (11) (3,738) 1,184 579
------ ------- ------- ------- ------- -------
Net periodic pension cost............ $1,690 $ 1,135 $ 1,349 $ 2,741 $ 2,194 $ 2,166
====== ======= ======= ======= ======= =======
</TABLE>
The funded status of the defined benefit plans as of December 31, 1995 and
1996 is as follows:
<TABLE>
<CAPTION>
U.S. PLAN FOREIGN PLANS
----------------- -----------------
1995 1996 1995 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of the accumulated benefit
obligation............................................... $35,262 $35,898 $33,880 $41,125
Vested benefit obligation.................................. 35,262 35,898 30,285 38,626
Projected benefit obligation............................... 35,262 35,898 38,424 45,994
Plan assets at fair value.................................. 19,282 24,034 37,440 42,349
------- ------- ------- -------
Excess of projected benefit obligation over plan assets.... 15,980 11,864 984 3,645
Unrecognized net gain (loss)............................... (8,540) (7,994) 5,427 1,681
Minimum pension liability adjustment....................... 8,540 7,994 0 0
------- ------- ------- -------
Accrued pension cost....................................... $15,980 $11,864 $ 6,411 $ 5,326
======= ======= ======= =======
</TABLE>
Three international plans had an accumulated benefit obligation in excess
of plan assets of $5,191 and $6,433 at December 31, 1995 and 1996, respectively.
The following assumptions were used to determine the accrued pension cost
for the U.S. plan in 1995 and 1996, respectively: the discount rates for
computing the projected benefit obligation were 7.25% and 7.5%; the rate of
compensation increase was zero for both years since benefits were frozen; and
the annual rate of return on plan assets was 7.5% for both years. As a result of
reducing the discount rate for computing the projected benefit obligation at
December 31, 1995, the Company was required to record a minimum pension
liability adjustment of $8,540. The Company did not record the tax benefit on
this adjustment as realization was not assured. An adjustment of $546 was
recorded in 1996 to reflect the increase in the discount rate. The plan assets
consist primarily of guaranteed interest and investment contracts with insurance
companies and banks. The Company contributes all amounts deemed necessary on an
actuarial basis to provide the U.S. plan with assets sufficient to meet the
benefits to be paid to plan participants. The amounts are determined by an
independent actuary based on the Projected Unit Credit Actuarial Cost Method.
Based on the actuarial valuations, the Company contributed $4,062, $6,306 and
$4,919 to the plan during 1994, 1995 and 1996, respectively.
The accrued international pension cost was actuarially computed using
assumptions applicable to each subsidiary plan and economic environment. The
following range of assumptions was used in the determination of the accrued
pension cost in 1995 and 1996, respectively: the discount rates for computing
the projected benefit obligation were 4.5% to 8.5% and 4.0% to 8.5%; the rates
of compensation increase were 3.5% to 6.0%
36
<PAGE> 38
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
for both years; the rates of social security increases were 0.0% to 5.5% for
both years; and the annual rates of return on plan assets were 5.5% to 9.0% and
4.5% to 9.0%. Plan assets primarily consist of guaranteed interest and
investment contracts with insurance companies.
The total expense for the defined contribution plans for the years ended
December 31, 1994, 1995 and 1996 was approximately $347, $117 and $60,
respectively.
Officers Life Insurance and Supplementary Retirement Plan
The Company had an Officers Life Insurance and Supplementary Retirement
Plan for certain former executives of the former Computervision. The full cost
of this plan has been accrued for in the Consolidated Balance Sheets. The
Company made retirement benefit payments of $294, $334 and $458 to certain
former executives under this plan for the years ended December 31, 1994, 1995
and 1996, respectively.
Employment Agreements
Russell E. Planitzer, Chairman of the Board of Directors and Kathleen A.
Cote, President and Chief Executive Officer, have each entered into employment
agreements with the Company which provide for severance payments in the event
their employment is terminated prior to the expiration of their employment
terms. The severance amounts range from $300 to $5,600, depending on the timing
and circumstances of the termination.
All other executive officers have been afforded continuation of salary
protection for one year if their employment with the Company is involuntarily
terminated. The Company has entered into Retention Agreements with its corporate
officers and certain key employees that provide for a continuation of salary and
benefits in the event of a termination of employment under circumstances after a
change of control of the Company has occurred.
(11) STOCK PLANS
The Company accounts for its stock issuance plans in accordance with
Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees". Effective January 1, 1996, the Company adopted the provisions of
SFAS 123, "Accounting for Stock-Based Compensation". The Company has elected to
continue to account for stock options at intrinsic value with disclosure of the
effects of fair value accounting on net income and earnings per share on a pro
forma basis.
Restricted Stock Agreements
During 1994, the Company received 300 shares of Common Stock from Lehman
Holdings on the condition that the Company grant the shares to four executive
officers under a Restricted Stock Agreement. The shares were issued without
charge to four executive officers and vested ratably over a twelve month period
ending September 1995. The Restricted Stock Agreement qualified as a
compensatory stock plan, with the deferred compensation cost of $771 recognized
ratably over the twelve month period from the issuance date.
Stock Option Plan
In June 1992, the Board of Directors adopted the Company's 1992 stock
option plan which provides for the grant of options to officers, employees, and
consultants of the Company and its subsidiaries. A total of 4,400 shares of
Common Stock was originally reserved for issuance under the Stock Option Plan.
The Board of Directors amended the plan in September 1994 to authorize and
reserve an additional 5,000 shares for grant under the plan. Options granted may
be either incentive or non-qualified options. The options generally expire ten
years from the date of grant and vest ratably over the first five years or four
years, as determined by the
37
<PAGE> 39
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Compensation Committee. The Company has amended its 1992 Stock Option Plan to
provide that 50% of the then unvested options of each option holder shall vest
immediately upon a change of control of the Company.
Director Stock Option Plans
In April 1993, the Board of Directors adopted the Company's 1993 Director
Stock Option Plan to encourage ownership in the Company by non-employee
Directors whose continued services are considered essential to the Company's
future progress and to provide them with further incentive to remain as
Directors of the Company. A total of 200 shares of Common Stock were reserved
for issuance under this plan. Options for 102 shares were granted, of which 100
shares remain outstanding under this plan. Options granted are non-qualified and
at the fair market value at the date of grant and vest ratably over a five year
period.
In January 1995, the Board of Directors adopted a new Director Option Plan
which was approved by stockholders at the 1995 Annual Meeting of Stockholders.
An additional 400 shares have been reserved for issuance. Options for 106 shares
were granted in January 1995 in recognition of past service at an exercise price
of $5.00 (fair value at grant date) and vest ratably over three years. The Plan
provides that Directors will receive an annual option grant of 6 shares each
that will vest in one year. The 1995 Director Option Plan supersedes the 1993
Director Stock Option Plan.
SUMMARY OF STOCK OPTION PLAN ACTIVITY
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
---------------------------
RESERVED WEIGHTED-AVERAGE
SHARES NUMBER EXERCISE PRICE
-------- ------ ----------------
<S> <C> <C> <C>
Balance, December 31, 1993.............................. 4,600 3,737 $ 8.09
Additional Reserved................................ 5,000
Granted............................................ -- 4,236 3.96
Exercised.......................................... -- --
Cancelled.......................................... -- (3,202) 8.67
------ ------
Balance, December 31, 1994.............................. 9,600 4,771 3.77
Additional Reserved................................ 400
Granted............................................ -- 2,310 7.66
Exercised.......................................... -- (440) 4.08
Cancelled.......................................... -- (572) 4.15
------ ------
Balance, December 31, 1995.............................. 10,000 6,069 5.30
Granted............................................ -- 2,396 9.90
Exercised.......................................... -- (612) 3.84
Cancelled.......................................... -- (754) 4.67
------ ------
Balance, December 31, 1996.............................. 10,000 7,099 7.02
====== ======
</TABLE>
At December 31, 1996 options to purchase 2,123 common shares were
exercisable with a weighted average exercise price of $4.87 and 2,901 shares
were available for future option grants.
Had compensation costs for the stock option plans (including the Company's
Employee Stock Purchase Plan) been determined using the fair value method, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts:
38
<PAGE> 40
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Net Income
As reported........................................ $ 22,816 $ 21,657
Pro forma.......................................... $ 21,690 $ 17,899
Earnings per share
As reported........................................ $ 0.43 $ 0.33
Pro forma.......................................... $ 0.42 $ 0.28
</TABLE>
Consistent with SFAS 123, pro forma net income and earnings per share have
not been calculated for options granted prior to January 1, 1995. Pro forma
compensation cost may not be representative of that to be expected in future
years.
The weighted average fair value of options granted was $4.41 for options
granted during 1995 and $5.43 for options granted during 1996. The values were
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants in 1995 and 1996,
respectively; risk-free interest rates of 6.25% and 5.99%, expected dividend
yields of 0% for both periods, expected lives of 5 years for both years and
expected volatilities of 57% and 56%.
The following is a summary of options outstanding and exercisable at
December 31, 1996;
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- --------------------------------
NUMBER WEIGHTED-AVERAGE NUMBER
RANGE OF OUTSTANDING REMAINING WEIGHTED-AVERAGE EXERCISABLE WEIGHTED-AVERAGE
EXERCISE PRICES AT 12/31/96 CONTRACTUAL LIFE EXERCISE PRICE AT 12/31/96 EXERCISE PRICE
- ---------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$2.50 - $6.00 3,850 7.4 years $4.19 1,931 $4.27
$6.00 - $10.00 876 9.6 7.35 16 6.57
$10.00 - $14.50 2,373 9.0 11.49 176 11.92
----- -----
7,099 8.2 7.02 2,123 4.87
===== =====
</TABLE>
Employee Stock Purchase Plan
In April 1993, the Company established a domestic and an international
employee stock purchase plan for all employees covering a total of 750 shares of
the Company's Common Stock. The plans permit employees of the Company to
withhold up to 10% of their base compensation to purchase the Company's common
stock at a 15% discount from the market price. The first offering commenced on
July 1, 1993. Employees purchased 90 and 227 shares in 1995 and 1994,
respectively, for $264 and $671. The 1993 plans were closed in 1995.
In April 1995, the Company established a new domestic and international
employee stock purchase plan for all employees covering a total of 1,000 shares
of the Company's Common Stock. The purchase terms are identical to the prior
plan. The first offering commenced July 1, 1995. Employees purchased 83 and 75
shares in 1996 and 1995, respectively, for $678 and $409. For pro forma
compensation expense, the weighted average fair value of shares sold in 1996 was
$2.83.
Stock Warrants
In connection with a 1993 amendment to the Revolving Credit Facility, the
Banks were issued a Common Stock purchase warrant that permits the Banks to
purchase 200 shares of the Company's common stock at an exercise price of $3.88
per share (fair market value at date of issuance) through December 31, 1998. One
bank exercised its warrant to purchase 92 shares in February 1996 for $356.
39
<PAGE> 41
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(12) RELATED PARTIES
The following summarizes the significant related party transactions (See
also Note 15 "Subsequent Event"):
Several directors provided consulting services to the Company in 1994, 1995
and 1996 for which they received fees during a year ranging from $6 to $44.
The Company recognized $11,200 of software product revenue from Peugeot SA
during the quarter ended March 31, 1996. A member of senior management of
Peugeot SA is also a director of the Company.
At December 31, 1996, the Company had a loan of $200 outstanding to Mr.
Gnatovich of which $100 will be forgiven ratably over the next 4 years of
employment. The remaining $100 will be repaid by the deduction of $25 each year
from any bonus payments owed.
In 1994, pursuant to separate, substantially identical Registration Rights
Agreements, the Company registered, under separate registration statements and
at the Company's sole expense, the shares of Common Stock owned by DR Holdings
and private purchasers of shares from Lehman Holdings. The Company is obligated
to maintain the Lehman Holdings purchasers' registration statement until May 31,
1997.
In January 1993, Lehman Holdings (which at the time owned approximately 22%
of the outstanding Common Stock of the Company) provided a Revolving Loan
Facility to the Company which enabled the Company to borrow up to $25,000 if
necessary in connection with posting a bond or paying a settlement or judgment
in connection with certain antitrust litigation. In August 1993, Lehman Holdings
agreed to extend the termination date of the Revolving Loan Facility from
October 3, 1993 to July 3, 1994 for which it was paid an extension fee of $1,000
and a monthly availability fee of $250 through June 1994. In June 1994, the
Company borrowed approximately $7,500 under the Revolving Loan Facility to
settle the antitrust litigation and terminated the remainder of the commitment.
The Company paid interest at LIBOR plus 5% on this loan. The loan was repaid in
full on February 10, 1995.
The Company's bylaws require that all transactions between the Company and
its officers, Directors and other affiliates must (i) be approved by a majority
of the members of the Company's Board of Directors and by a majority of the
disinterested members of the Company's Board and (ii) be on terms no less
favorable to the Company than could be obtained from third parties. In addition,
this policy requires that any loans by the Company to its officers, directors,
or other affiliates be for bona fide business purposes only. The terms of the
indentures associated with the Senior Subordinated Notes and the Revolving
Credit Facility also contain restrictions on transactions with affiliates.
(13) LITIGATION
(1) On March 28, 1991, Joseph and Josephine Dieter, former stockholders of
the Company, brought suit against the Company, DR Holdings, DR Acquisition
Corporation, a former subsidiary of DR Holdings, Mr. Russell E. Planitzer,
Chairman of the Board of Directors of the Company, and Messrs. Don E. Ackerman
and Peter M. Castleman, former directors of the Company, in the Court of
Chancery of Delaware as both an individual and a class action (on behalf of all
persons, other than the defendants, who were stockholders of the Company on
December 28, 1989). The suit arises out of the merger between the Company and
certain subsidiaries of DR Holdings, and the related merger agreement. The suit
alleges, among other things, that, in connection with the acquisition of the
Company by DR Holdings, the Board of Directors of the Company breached its
fiduciary duties to the Company stockholders by (i) approving the merger which
plaintiffs allege was unfair to Company stockholders, and (ii) by not
withdrawing from the merger agreement and/or renegotiating the consideration
that was to be received by Company stockholders whose shares were not purchased
in the tender offer. The plaintiffs seek, among other things, an order granting
all Company stockholders as of December 28, 1989 damages in an undetermined
amount. The plaintiffs then filed an
40
<PAGE> 42
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
amended and supplemented complaint which removed DR Holdings as a defendant
since it is in bankruptcy, and removed DR Acquisition Corporation since it had
been merged into the Company. The trial occurred in September of 1996. The
Company is in the process of filing post trial briefs and the Court is expected
to have the matter under submission by July 1997. Although the parties have
engaged in post-trial settlement discussions, it is not yet possible to predict
the outcome or quantify any possible exposure to the Company. If this lawsuit is
not settled, and the court awards the plaintiffs substantial monetary damages,
it could have a material adverse effect on the Company's financial condition and
results of operations.
(2) In a letter dated June 11, 1993, the United States Environmental
Protection Agency ("EPA") notified the Company of its potential liability
pursuant to the Comprehensive Environmental Response Compensation and Liability
Act ("CERCLA") for a release of hazardous substances disposed of at the Shaffer
Landfill portion of the Ironhorse Park Superfund Site in Billerica,
Massachusetts ("Shaffer Site"). The Company was one of approximately 60
businesses and individuals to receive such a letter. The Company is cooperating
with approximately 30 other potentially responsible parties ("PRPs") who have
formed a group, and expects to participate in the common efforts of that group.
The Company has informed the EPA of its intent to cooperate with the other PRPs
in common efforts. The Company investigated the extent of its involvement with
the Shaffer Site and participated in a confidential mediation process which
allocated remedial costs among the members of the PRP group. The Company has
received information through the PRP group indicating that the anticipated costs
of completing the EPA's proposed remedy at the Shaffer Site is likely to range
between $20,000 and $33,000. After the PRPs failed to reach agreement with the
EPA regarding settlement, the Department of Justice ("DOJ") and the
Massachusetts Attorney General ("MAG") both filed complaints on January 5, 1995,
seeking past costs against 10 PRPs. The Company was not named. However, it could
be named later by the government and some of the named defendants have indicated
they will commence third-party actions against other PRPs, including the
Company, if ongoing negotiations do not result in a settlement. Negotiations
have been ongoing relative to several substantive matters and the Company cannot
predict at this time if any agreement on issues will be reached with the
government.
(3) Several tax issues which pertain to Computervision tax returns for
years prior to 1988 (when Computervision was acquired by Prime Computer, Inc.)
remain outstanding. The most significant issue involves the qualification of a
domestic international sales corporation ("DISC") for tax years 1983 and 1984.
If the DISC is disqualified, the Company will be subject to additional tax and
interest in the range of $9,000 to $12,000 after the usage of net operating
losses. A trial on these issues was held before the Tax Court on October 25,
1994. On March 18, 1996 the Tax Court ruled in favor of the Company. On April
16, 1996 the Company filed a motion for Reconsideration with the Tax Court on
the one issue, which concerned whether income was reportable as capital gain or
ordinary income, on which the decision was unfavorable to the Company. The
Motion for Reconsideration was denied by the Judge on May 27, 1996. The Company
does not know whether the government will appeal the decision. Even if the
government does not appeal the decision, the Company will owe some tax and
interest on this case, but is also owed a refund on a related case. The
computation of the tax payment and the timing of the tax payment and refund have
not been determined. The Company's calculation of the adjustments resulting from
the Court's decision were reviewed by Counsel and submitted to the IRS on
November 12, 1996.
(4) The Company is involved in numerous other legal proceedings and
litigation incidental to the normal course of the Company's business. The
Company believes that the ultimate disposition of these other proceedings and
litigation will not have a material adverse affect on the Company's financial
position.
41
<PAGE> 43
COMPUTERVISION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(14) SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1992 1993 1994 1995 1996
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenue.................. $1,065,579 $ 827,315 $ 573,637 $ 507,074 $ 477,199
Gross profit................... 459,587 322,966 273,994 264,319 258,383
Operating income (loss)(a)..... 48,733 (517,992) 59,452 80,675 55,073
Income (loss) from continuing
operations(b)................ (142,189) (571,107) 9,771 22,816 21,657
Net income (loss).............. (225,872) (571,107) 9,771 22,816 21,657
Pro forma earnings (loss) and
earnings (loss) per share:(c)
Continuing operations..... (3.46) (11.89) 0.20 0.43 0.33
Net earnings (loss)....... (6.09) (11.89) 0.20 0.43 0.33
Cash dividends declared and
paid......................... -- 1,440 -- -- --
Total assets................... 904,312 412,713 263,184 246,917 208,345
Total long-term liabilities,
less current portion......... 443,910 580,798 476,890 324,441 300,630
Stockholders' equity
(deficit).................... 48,979 (530,177) (509,413) (337,726) (316,775)
</TABLE>
- ---------------
(a) Operating income (loss) included non-recurring charges of $25,000, $515,800
and $19,500 for the years ended December 31, 1992, 1993 and 1996,
respectively.
(b) Loss from continuing operations for year ended December 31, 1992 also
included charges of $64,050 associated with the Company's 1992
Recapitalization.
(c) Pro forma earnings (loss) from continuing operations per share and pro forma
net loss per share for the year ended December 31, 1992 have been adjusted
to reflect the Company's issuance of 23,000 shares of common stock in 1992
to retire certain long-term debt of the Company (see Note 1). The pro forma
earnings (loss) from continuing operations per share and pro forma net
earnings (loss) per share calculations, therefore, reflect, on a pro forma
basis, the elimination of interest expense related to the retired portion of
the debt and the issuance of the 23,000 shares.
(15) SUBSEQUENT EVENT
On March 19, 1997, the Company announced the termination of its agreement
with J.F. Lehman & Company for the sale of its Open Service Solutions ("OSS")
business unit and the signing of a non-binding letter of intent with M.D. Sass
Investors Services, Inc. ("Sass"), a 17% shareholder of the Company, for the
purchase by Sass of a 51% interest in the OSS business. In connection with this
transaction, the Company will receive from Sass $5,100 in cash and will receive
from the entity that operates the OSS business (a) $25,000 in cash and (b) a
promissory note in the amount of $25,000. The cash payment of $25,000 will be
funded by a bank loan to the OSS business, secured by its assets. The Company
will continue to own 49% of the OSS business, subject to an option granted to
Sass to purchase up to one-fifth of the balance of the Company's equity
position. The transaction is subject to execution and delivery of a definitive
agreement and to the availability of financing, receipt of approval from the
Company's banks, compliance with the Company's financing instruments and other
customary closing conditions. As a result, no assurance can be given that the
transaction will be consummated.
42
<PAGE> 44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: April 15, 1997
COMPUTERVISION CORPORATION
(REGISTRANT)
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------
<C> <S>
By: /s/ KATHLEEN A. COTE Chief Executive Officer
- ------------------------------------------
Kathleen A. Cote
By: /s/ WILLIAM A. FONIRI Chief Financial Officer
- ------------------------------------------ (Principal Financial
William A. Foniri Officer)
By: /s/ JAMES E. HAYDEN Corporate Controller
- ------------------------------------------ (Principal Accounting
James E. Hayden Officer)
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Company
and in the capacities indicated as of April 15, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------
<C> <S>
/s/ RUSSELL E. PLANITZER Chairman of the Board
- ------------------------------------------
Russell E. Planitzer
/s/ JEAN-SERGE G. BERTONCINI Director
- ------------------------------------------
Jean-Serge G. Bertoncini
/s/ NORMAN A. BOLZ Director
- ------------------------------------------
Norman A. Bolz
/s/ KEVIN J. BURNS Director
- ------------------------------------------
Kevin J. Burns
/s/ KATHLEEN A. COTE Director
- ------------------------------------------
Kathleen A. Cote
/s/ JOHN F. CUNNINGHAM Director
- ------------------------------------------
John F. Cunningham
/s/ EUGENE M. FREEDMAN Director
- ------------------------------------------
Eugene M. Freedman
/s/ LAWRENCE L. LANDRY Director
- ------------------------------------------
Lawrence L. Landry
</TABLE>
43
<PAGE> 45
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------
<C> <S>
/s/ ANDREW G. C. SAGE II Director
- ------------------------------------------
Andrew G. C. Sage II
Director
- ------------------------------------------
James E. Rubin
</TABLE>
44
<PAGE> 46
SCHEDULE II
COMPUTERVISION CORPORATION
ALLOWANCE FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
NET
BALANCE AT PROVISIONS DEDUCTIONS BALANCE AT
BEGINNING CHARGED TO FROM END OF
OF PERIOD OPERATIONS ALLOWANCE(1) PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1996................... $3,623 $ 212 $ (906) $2,929
Year Ended December 31, 1995................... $5,498 $ 88 $ (1,963) $3,623
Year Ended December 31, 1994................... $6,309 $7,701 $ (8,512) $5,498
</TABLE>
- ---------------
(1) Accounts deemed uncollectible, net of recoveries.
45
<PAGE> 47
EXHIBIT INDEX
The exhibits listed below are filed as part of this annual report:
<TABLE>
<C> <S>
3.01 Amended and Restated Certificate of Incorporation of the Registrant, filed as
Exhibit 3.02 to the Company's Registration Statement on Form S-1, File No.
33-48455 and incorporated herein by reference. ................................
3.02 Amended and Restated By-Laws of the Registrant, filed as Exhibit 3.04 to the
Company's Registration Statement on Form S-1, File No. 33-48455 and
incorporated herein by reference. .............................................
4.01 Specimen Certificate for shares of the Registrant's Common Stock, filed as
Exhibit 4.01 to the Company's Registration Statement on Form S-1, File No.
33-48455 and incorporated herein by reference. ................................
4.02 Description of Capital Stock (contained in the Amended and Restated Certificate
of Incorporation of the Registrant filed as Exhibit 3.01). ....................
4.03 Indenture, dated as of December 1, 1984, between a subsidiary of the Registrant
and The Bank of New York, as Trustee, as amended, relating to the 8%
Convertible Subordinated Debentures due 2009, filed as Exhibit 4.03 to the
Company's Registration Statement on Form S-1, File No. 33-48455 and
incorporated herein by reference. First Supplemental Indenture entered into as
of February 8, 1988, to the Indenture dated as of December 1, 1984 relating to
the 8% Convertible Subordinated Debentures due 2009, filed as Exhibit 4.03 to
the Company's Annual Report in Form 10-K for the year ended December 31, 1993
and incorporated herein by reference. Second Supplemental Indenture entered
into as of December 31, 1992 to the Indenture dated as of December 1, 1984
relating to the 8% Convertible Subordinated Debentures due 2009, filed as
Exhibit 4.04 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1992 and incorporated herein by reference. .......................
4.04 Indenture, dated as of February 1, 1987, between the Registrant and The Bank of
New York (as successor trustee to The First National Bank of Boston), as
Trustee, as amended, relating to the Registrant's 5 3/4% Convertible
Subordinated Debentures due 2012, filed as Exhibit 4.04 to the Company's
Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
by reference. .................................................................
4.05 Indenture between the Registrant and United States Trust Company of New York,
as Trustee, dated as of August 15, 1992 relating to the Registrant's 11 3/8%
Senior Subordinated Notes due 1999, filed as Exhibit 4.09 to the Company's
Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
by reference. .................................................................
4.06 Common Stock Purchase Warrant dated December 22, 1993 and issued to Chemical
Bank, filed as Exhibit 4.03 to the Company's Annual Report in Form 10-K for the
year ended December 31, 1993 and incorporated herein by reference. ............
*10.01 1995 Directors' Stock Option Plan, filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by
reference. ....................................................................
10.02 Amended and Restated Lease Agreement dated as of January 1, 1995 between United
Trust Fund Limited Partnership and Computervision Corporation, filed as Exhibit
10.20 to the Company's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference. ................................
*10.03 1992 Stock Option Plan as amended September 15, 1994, April 18, 1995 and
December 5, 1996. .............................................................
*10.04 Annual Management Incentive Plan, effective January 1, 1995, filed as Exhibit
10.03 to the Company Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference. ....................................
*10.05 Officer's Perquisites Plan, as amended, filed as Exhibit 10.10 to the Company's
Registration Statement on Form S-1, File No. 33-48455 and incorporated herein
by reference. .................................................................
10.06 Form of Indemnity Agreement between the Company and each of its directors and
officers, filed as Exhibit 10.12 to the Company's Registration Statement on
Form S-1, File No. 33-48455 and incorporated herein by reference. .............
*10.07 Employment Agreement dated as of June 11, 1996 between the Company and Russell
E. Planitzer. .................................................................
</TABLE>
<PAGE> 48
<TABLE>
<C> <S>
*10.08 Amended and Restated Employment Agreement dated as of September 4, 1996 between
the Company and Kathleen A. Cote. .............................................
*10.09 Letter Agreement, dated August 17, 1993 between the Company and Barry F. Cohen,
Ph.D. and Memorandum dated March 28, 1994 to Barry Cohen regarding Employment
Agreement, filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993 and incorporated herein by reference. ....
*10.10 Letter Agreement, dated January 4, 1990, between the Company and Anthony N.
Fiore, Jr., filed as Exhibit 10.25 to the Company's Registration Statement on
Form S-1, File No. 33-48455 and incorporated herein by reference. .............
*10.11 Letter Agreement dated January 18, 1995 between the Company and Douglas P.
Smith; Letter Agreement dated January 24, 1995 between the Company and Douglas
P. Smith; Note dated January 19, 1995 between the Company and Douglas P. Smith,
filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference. .................
*10.12 Letter Agreement dated June 15, 1994 between the Company and Attilio Rimoldi.
Memorandum dated August 22, 1995 from Anthony N. Fiore, Jr. to Attilio Rimoldi,
filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference. .................
*10.13 Letter Agreement dated June 5, 1995 between the Company and James E. Hayden,
filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference. .................
*10.14 Letter Agreement dated September 21, 1995 between the Company and Edward D.
Wagner, filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference. ........
*10.15 Letter Agreement dated October 6, 1992 between the Company and William A.
Foniri, filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by reference. ........
*10.16 Letter Agreement dated February 19, 1996 between the Company and Rock
Gnatovich, filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and incorporated herein by reference. ....
*10.17 Form of Consulting Agreement executed between the Company and Mr. Sage, filed
as Exhibit 10.16 to the Company's Registration Statement on Form S-1, File No.
33-48455 and incorporated herein by reference. ................................
*10.18 1995 Domestic and International Employee Stock Purchase Plans, filed as Exhibit
10.17 to the Company's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference. ................................
*10.19 1993 Directors' Stock Option Plan, filed as Exhibit 10.43 to the Company's
Post-Effective Amendment No. 1 to Registration Statement on Form -1, File No.
33-48455 and incorporated herein by reference. ................................
*10.20 Management Retention Agreement dated as of September 4, 1996 between the
Company and Barry F. Cohen. ...................................................
*10.21 Management Retention Agreement dated as of September 4, 1996 between the
Company and Kathleen A. Cote. .................................................
*10.22 Management Retention Agreement dated as of September 4, 1996 between the
Company and Anthony N. Fiore, Jr. .............................................
*10.23 Management Retention Agreement dated as of September 4, 1996 between the
Company and William Foniri. ...................................................
*10.24 Management Retention Agreement dated as of September 4, 1996 between the
Company and Rock S. Gnatovich. ................................................
*10.25 Management Retention Agreement dated as of September 4, 1996 between the
Company and James Hayden. .....................................................
*10.26 Promissory Note dated July 16, 1996 between the Company and Rock S.
Gnatovich......................................................................
*10.27 Promissory Note date March 18, 1996 between the Company and Douglas P. Smith;
Promissory Note dated June 24, 1996 between the Company and Douglas P. Smith;
Separation Agreement date September 25, 1996 between the Company and Douglas
Smith; Consultant Agreement dated as of October 14, 1996 between the Company
and Douglas P. Smith...........................................................
</TABLE>
<PAGE> 49
<TABLE>
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10.28 Credit Agreement dated as of November 17, 1995 (the "Credit Agreement") between
Bankers Trust Company ("Bankers Trust"), Fleet Bank of Massachusetts, NA
("Fleet") and the Company, filed as Exhibit 10.01 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and incorporated
herein by reference............................................................
10.29 First Amendment to the Credit Agreement dated as of February 15, 1996..........
10.30 Second Amendment to the Credit Agreement dated as of March 22, 1996............
10.31 Third Amendment to the Credit Agreement dated as of March 27, 1997. ...........
11.01 Statement re: computation of per share earnings. ..............................
21.01 Subsidiaries. .................................................................
23.01 Consent of Independent Public Accountants. ....................................
</TABLE>
<PAGE> 1
EXHIBIT 10.03
COMPUTERVISION CORPORATION
--------------------------
1992 STOCK OPTION PLAN
----------------------
(as amended September 15, 1994, April 18, 1995 and December 5, 1996)
------------------------------------------------------------------
1. PURPOSE
-------
The purpose of this plan (the "Plan") is to secure for Computervision
Corporation (the "Company") and its shareholders the benefits arising from
capital stock ownership by employees and officers of, and consultants or
advisors to, the Company and its parent and subsidiary corporations who are
expected to contribute to the Company's future growth and success. Except where
the context otherwise requires, the term "Company" shall include the parent and
future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of
the Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code"). Those provisions of the Plan which make express reference to Section
422 of the Code shall apply only to incentive Stock Options (as that term is
defined in the Plan).
2. TYPES OF OPTIONS AND ADMINISTRATION
-----------------------------------
(a) TYPE OF OPTIONS. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the Code
or non-statutory options which are not intended to meet the requirements of
Section 422 of the Code.
(b) ADMINISTRATION. The Plan will be administered by the Board of Directors
of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors
may, in its sole discretion, grant options to purchase shares of the Company's
Common Stock ("Common Stock") and issue shares upon exercise of such options as
provided in the Plan. The Board shall have authority, subject to express
provisions of the Plan, to construe the respective option agreements and the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the respective option agreements,
which need not be identical, and to make all other determinations in the
judgment of the Board of Directors necessary or desirable for the administration
of the Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option agreement
in the manner and to the extent it shall deem expedient to carry the Plan into
effect, and it shall be the sole and final just of such expediency. No director
or person acting pursuant to authority delegated by the Board of Directors shall
be liable for any action or determination under the Plan made in good faith. The
Board of Directors may, to the full extent permitted by or consistent with
applicable laws or regulations (including, without limitation, applicable state
law and
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<PAGE> 2
Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), or any successor rule ("Rule 16b-3"), delegate any or all of its powers
under the Plan to a committee (the "Committee") appointed by the Board of
Directors, and if the Committee is so appointed all references to the Board of
Directors in the Plan shall mean and relate to such Committee.
(c) APPLICABILITY OF RULE 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply only to such person as are required
to file reports under Section 16(a) of the Exchange Act (a "Reporting Person").
3. ELIGIBILITY
-----------
(a) GENERAL. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company; provided, that the class of employees to whom incentive Stock Options
may be granted shall be limited to all employees of the Company. A person who
has been granted an option may, if he or she is otherwise eligible, be granted
additional options if the Board of Directors shall so determine.
(b) GRANT OF OPTIONS TO DIRECTORS AND OFFICERS. From and after the
registration of the Common Stock of the Company under the Exchange Act, the
selection of a director or an officer (as the terms "director" and "officer" are
defined for purposes of Rule 16b-3) as a recipient of an option, the timing of
the option grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of Directors,
of which all members shall be "disinterested persons" (as hereinafter defined),
or (ii) by two or more directors having full authority to act in the matter,
each of whom shall be a "disinterested person". For the purposes of the Plan, a
director shall be deemed to be a "disinterested person" only if such person
qualifies as a "disinterested person" within the meaning of Rule 16b-3, as such
term is interpreted from time to time.
(c) YEARLY LIMITATION ON OPTION GRANTS. After April 1, 1995, the Board of
Directors may not grant to any individual in any year options to purchase more
than 700,000 shares of the Common Stock of the Company.
4. STOCK SUBJECT TO PLAN
---------------------
Subject to adjustment as provided in Section 15 below, the maximum number
of shares of Common Stock of the Company which may be issued and sold under the
Plan is 9,400,000 shares. If an option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject to such option shall again be available for subsequent option
grants under the Plan. If shares issued upon exercise of an option under the
Plan are tendered to the Company in payment of the exercise price of an option
granted under the Plan, such tendered shares shall again be available for
subsequent option grants under the Plan; provided that in no event shall
2
<PAGE> 3
(i) the total number of shares issued pursuant to the exercise of incentive
Stock Options under the Plan, on a cumulative basis, exceed the maximum number
of shares authorized for issuance under the Plan exclusive of shares made
available for issuance pursuant to this sentence or (ii) the total number of
shares issued pursuant to the exercise of options by Reporting Persons, on a
cumulative basis, exceed the maximum number of shares authorized for issuance
under the Plan exclusive of shares made available for issuance pursuant to this
sentence.
5. FORMS OF OPTION AGREEMENTS
--------------------------
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. PURCHASE PRICE
--------------
(a) GENERAL. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors, PROVIDED,
HOWEVER, that (i) in the case of an Incentive Stock Option, the exercise price
shall not be less than 100% of the fair market value of such stock, as
determined by the Board of Directors, at the time of grant of such option, or
less than 110% of such fair market value in the case of options described in
Section 11(b); and (ii) in the case of non-statutory options, the exercise price
shall not be less than 50% of the fair market value of such stock, as determined
by the Board, at the time of grant of such option.
(b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or to the extent provided in the applicable option agreement, (i) by delivery to
the Company of shares of Common Stock of the Company already owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, or (ii) by any combination of such methods of payment.
The fair market value of any shares of the Company's Common Stock or other
non-cash consideration which may be delivered upon exercise of an option shall
be determined by the Board of Directors. No shares of Common Stock may be
tendered or used in payment of the purchase price payable upon exercise of
options granted pursuant hereto, unless the tendered shares have been held by
the optionee for at least twelve (12) months.
7. OPTION PERIOD
-------------
Each option and all rights thereunder shall expire on such date as shall be
set forth in the applicable option agreement, except that in the case of an
Incentive Stock Option, such date shall not be later than ten (10) years after
the date on which the option is
3
<PAGE> 4
granted and, in all cases, options shall be subject to earlier termination as
provided in the Plan.
8. EXERCISE OF OPTIONS
-------------------
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times, and during such period as shall be set
forth in the agreement evidencing such option, subject to the provisions of the
Plan.
9. NON-TRANSFERABILITY OF OPTIONS
------------------------------
Incentive Stock Options, and all options granted to Reporting Persons,
shall not be assignable or transferable by the person to whom they are granted,
wither voluntarily or by operation of law, except by will or the laws of descent
and distribution, and during the life of the optionee, shall be exercisable only
by the optionee; provided, however, that non-statutory options may be
transferred pursuant to a qualified domestic relations order (as defined in Rule
16b-3).
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP
---------------------------------------------------------
Except as provided in Section 11(d) with respect to Incentive Stock
Options, and subject to the provisions of the Plan, the Board of Directors shall
determine the period of time during which an optionee may exercise an option
following (i) the termination of the optionee's employment or other relationship
with the Company or (ii) the death or disability of the optionee. Such periods
shall be set forth in the agreement evidencing such option.
11. Incentive Stock Options
-----------------------
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) EXPRESS DESIGNATION. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.
(b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock Option is
to be granted under the Plan, is at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:
4
<PAGE> 5
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market
value of one share of Common Stock at the time of grant; and
(ii) The option exercise period shall not exceed five years from the
date of grant.
(c) DOLLAR LIMITATION. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other Incentive Stock Option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.
(d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company except that:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employee of
the Company (or within such lesser period as may be specified in the
applicable option agreement), provided, that the agreement with
respect to such option may designate a longer exercise period and that
the exercise after such three-month period shall be treated as the
exercise of a non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company, the
Incentive Stock Option may be exercised by the person to whom it is
transferred by will or the laws of descent and distribution within the
period of one year after the date of death (or within such lesser
period as may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provision thereto) while in the
employ of the Company, the Incentive Stock Option may be exercised
within the period of one year after the date the optionee ceases to be
such an employee because of such disability (or within such lesser
period as may be specified in the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
5
<PAGE> 6
12. ADDITIONAL PROVISIONS
---------------------
(a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its sole
discretion, include additional provisions in option agreements covering options
granted under the Plan, including without limitation restrictions on transfer,
repurchase rights, commitments to pay cash bonuses, to make, arrange for or
guarantee loans or to transfer other property to optionees upon exercise of
options, or such other provisions as shall be determined by the Board of
Directors; provided that such additional provisions shall not be inconsistent
with any other term or condition of the Plan, and such additional provisions
shall not cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code.
(b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; provided however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3.
13. GENERAL RESTRICTIONS
--------------------
(a) INVESTMENT REPRESENTATIONS. The Company may require any person to whom
an option is granted, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Company to the effect that
such person is acquiring the Common Stock subject to the option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws, or with covenants or representations made by the Company in
connection with any public offering of its Common Stock.
(b) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to the
requirement that if at any time, counsel to the Company shall determine that the
listing, registration or qualification of the shares subject to such option upon
any securities exchange or under any state or federal law, or the consent or
approval or that the disclosure of non-public information or the satisfaction of
any other condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such option may not be exercised, in
whole or in part, unless such listing, registration, qualification, consent or
approval, or satisfaction of such condition shall have been effected or obtained
on conditions acceptable to the Board of Directors. Nothing herein shall be
deemed to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
6
<PAGE> 7
14. RIGHTS AS A SHAREHOLDER
-----------------------
The holder of an option shall have no rights as a shareholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS AND RELATED TRANSACTIONS
--------------------------------------------------------------------
(a) GENERAL. If, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction. (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares of other securities of other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common Stock or
other securities, an appropriate and proportionate adjustment may be made in (x)
the maximum number and kind of shares reserved for issuance under the Plan, (y)
the number and kind of shares or other securities subject to any then
outstanding options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan, without changing the aggregate
purchase price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment would cause the Plan to fail to comply with Section 422 of the Code
or with Rule 16b-3.
(b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this Section
15 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
16. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.
----------------------------------------------------
(a) CONSEQUENCES OF ACQUISITION EVENTS. Upon the occurrence of an
Acquisition Event (as defined below), or the execution by the Company of any
agreement to effect an Acquisition Event, the Board shall take any one or more
of the following actions with respect to then outstanding options: (i) provide
that outstanding options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such options substituted for incentive stock options
shall satisfy, in the determination of the Board, the requirements of Section
424(a) of the Code; (ii) upon written notice to the optionees, provide that all
then unexercised options will become exercisable in full as of a specified date
(the "Acceleration Date") prior to the Acquisition Event and will terminate
immediately prior to the consummation of such
7
<PAGE> 8
Acquisition Event, except to the extent exercised by the optionee between the
Acceleration Date and the consummation of such Acquisition Event; or (iii) in
the event of an Acquisition Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of
Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), provide that all outstanding options shall terminate upon consummation
of such Acquisition Event and each optionee shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options. An "Acquisition Event" shall mean: (i) any merger or
consolidation which results in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; (ii) any sale of all or
substantially all of the assets of the Company; (iii) the complete liquidation
of the Company; or (iv) the acquisition of "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) of securities of the Company representing 40%
or more of the combined voting power of the Company's then outstanding
securities (other than through a merger or consolidation or an acquisition of
securities directly from the Company) by any "person", as such term is used in
Sections 13(d) and 14(d) of the Exchange Act other than the Company, any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of stock of
the Company.
(b) SUBSTITUTE OPTIONS. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
17. NO SPECIAL EMPLOYMENT RIGHTS
----------------------------
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. OTHER EMPLOYEE BENEFITS
-----------------------
8
<PAGE> 9
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
19. AMENDMENT OF THE PLAN
---------------------
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required under Section 422 of the Code or any
successor provision with respect to Incentive Stock Options, or under Rule
16b-3, the Board of Directors may not effect such modification or amendment
without such approval.
9
<PAGE> 10
(b) The termination or any modification or amendment of the Plan shall not,
without the consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the optionee affected, the
Board of Directors may amend the outstanding option agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualifications of the Plan under Rule 16b-3.
20. WITHHOLDING
-----------
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan.
(b) With the exception of officers of the Company who are designated as
"Section 16 Officers" by the Company, optionees shall have the right to elect to
have a portion of the shares of Common Stock to be issued on exercise of the
option withheld by the Company to satisfy all or any portion of any applicable
tax withholding requirements.
21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
-------------------------------------------
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefore of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
canceled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the ten-current exercise price per share of such
outstanding options.
22. EFFECTIVE DATE AND DURATION OF THE PLAN
---------------------------------------
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, no
options previously granted under the Plan shall be deemed to be Incentive Stock
Options and no Incentive Stock Options shall be granted thereafter. Amendments
to the Plan not requiring shareholder approval shall become effective when
adopted by the Board of Directors; amendments requiring shareholder
10
<PAGE> 11
approval (as provided in Section 19) shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted after the date of such
amendment shall become exercisable (to the extent that such amendment to the
Plan was required to enable the Company to grant such Incentive Stock Option to
a particular optionee) unless and until such amendment shall have been approved
by the Company's shareholders. If such shareholder approval is not obtained
within twelve months of the Board's adoption of such amendment, any Incentive
Stock Options granted on or after the date of such amendment shall terminate to
the extent that such amendment to the Plan was required to enable to the Company
to grant such option to a particular optionee. Subject to this limitation,
options may be granted under the Plan at any time after the effective date and
before the date fixed for termination of the Plan.
(b) TERMINATION. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate with respect to Incentive Stock Options, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of options granted under the
Plan. Unless sooner terminated in accordance with Section 16, the Plan shall
terminate with respect to options which are not Incentive Stock Options on the
date specified in (ii) above. If the date of termination is determined under (I)
above, then options outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such
options.
23. PROVISION FOR FOREIGN PARTICIPANTS
----------------------------------
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
ADOPTED BY THE BOARD OF DIRECTORS ON JUNE 3, 1992
AMENDMENTS ADOPTED BY THE BOARD ON SEPTEMBER 15,
1994 AND APRIL 18, 1995
APPROVED BY THE SOLE STOCKHOLDER ON AUGUST 13, 1993
CERTAIN AMENDMENTS APPROVED BY STOCKHOLDERS JUNE
13, 1995
11
<PAGE> 1
EXHIBIT 10.07
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement"), made as of the 11th day of
June, 1996, is entered into between Computervision Corporation, a Delaware
corporation with its principal place of business at 100 Crosby Drive, Bedford,
Massachusetts 01730 (the "Company"), and Russell E. Planitzer, 975 Memorial
Drive, Cambridge, Massachusetts 02138 (the "Executive").
WHEREAS, the Executive has been employed by the Company as Chief Executive
Officer of the Company pursuant to an Amended and Restated Employment Agreement
between the Executive and the Company, restated as of January 1, 1994 (the
"Employment Agreement"), and
WHEREAS, the Company and the Executive desire to amend and replace the
Employment Agreement with this Agreement,
NOW THEREFORE, the Company and the Executive hereby agree as follows:
1. TERMINATION OF FORMER EMPLOYMENT AGREEMENT. The Employment Agreement is
hereby amended in its entirety by this Agreement, and from and after the date of
this Agreement the terms and conditions of the Executive's employment shall be
governed exclusively by this Agreement.
2. TERM OF EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement. During the period commencing June 11,
1996 and ending
<PAGE> 2
October 31, 1996 (the "Full-time Employment Period"), the Executive shall be a
full-time employee of the Company and will serve as Chief Executive Officer and
Chairman of the Board of the Company. During the period commencing November 1,
1996 and ending June 30, 1997, the Executive shall be a part-time employee of
the Company and, in such capacity, will serve as Chairman of the Board and as a
Director of the Company (the "Part-time Employment Period"). During the
Part-time Employment Period, the Executive shall not be required to devote more
than sixty (60) percent of his business time to his duties as Chairman and as a
Director of the Company. During the period commencing July 1, 1997 and ending
June 30, 1998 (the "Consultation Period"), the Executive shall serve as a
consultant to the Company and continue to serve as Chairman of the Board and as
a Director of the Company. In his capacity as a consultant during the
Consultation Period, the Executive will not be obligated to devote more than
thirty (30) days in any twelve-month period or more than three (3) days in any
calender month to the performance of consulting services to or for the benefit
of the Company.
3. DUTIES AND RESPONSIBILITIES. The Executive, during the Full-time
Employment Period, shall, as a full-time employee of the Company, report to the
Board of Directors ("Board"), serve as Chairman of the Board of Directors of the
Company and Chairman of the Board's Executive Committee and Chief Executive
Officer.
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The Executive shall be available in Massachusetts during the Full-time
Employment Period to the extent necessary and appropriate for him to fulfill his
duties and responsibilities to the Company. During the Full-time Employment
Period, the Executive shall be subject to the supervision of, and shall have
such authority and responsibilities customary for a Chief Executive Officer and
as are delegated to him by, the Board. During the Part-time Employment Period,
the Executive shall have such authority and responsibilities as are delegated to
him by the Board, including, without limitation, assisting the Chief Executive
Officer and responsibility for the review, on behalf of the Board, of management
strategies, plans, policies and human resources, and for undertaking operational
and strategic activities and programs as agreed with the Board and the Chief
Executive Officer of the Company. The Executive shall also assist the Board in
evaluating management's performance.
The Executive, during the Consultation Period, shall serve as an adviser to
the Chief Executive Officer of the Company, and shall assist in promoting the
Company's business, subject to his commitment to the performance of consulting
services for the Company as provided in Section 2 of this Agreement.
The Executive hereby accepts such employment and consultancy and agrees to
undertake such duties and responsibilities and such other related duties and
responsibilities as the parties shall mutually agree to. During the Part-time
Employment Period and the
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Consultation Period, the Executive shall be permitted to pursue such other
business activities as he shall desire, PROVIDED that such activities do not
interfere with the performance of his part-time duties and his consulting
services (as the case may be) specified in Section 2 and Section 3 of this
Agreement.
The Executive agrees to abide by the applicable rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein which may be adopted from time to time by the Company and communicated
to him, except to the extent inconsistent with this Agreement.
4. Compensation.
------------
4.1 SALARY. During the Full-time and Part-time Employment Periods, the
Company shall pay the Executive, in biweekly installments, a salary of $785,000
per annum. During the Consultation Period, the Company shall pay the Executive,
in biweekly installments, the sum of $250,000 per annum (which shall include his
compensation for services as a Director).
4.2 SPECIAL BONUS FOR SERVICES. In consideration for his services
rendered to the Company prior to the date of this Agreement and as an inducement
to perform services for the Company as provided herein, the Company shall pay
the Executive a performance bonus in the aggregate amount of $2,227,000
(hereinafter "Special Bonus"), payable one-half ($1,113,500) on October 31, 1996
PROVIDED that the Executive continues to serve as Chief Executive Officer of the
Company through October 31, 1996,
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and the remaining one-half ($1,113,500) on June 30, 1997, PROVIDED that the
Executive continues to serve as Chairman of the Board from November 1, 1996
through June 30, 1997 SUBJECT, HOWEVER, to the Executive's rights to receive
such payments prior to the respective dates as set forth in Sections 13.2 and
13.3 of this Agreement.
5. HEALTH BENEFITS. During the Full-time and Part-time Employment Periods,
the Consultation Period and any period that he serves as a Director of the
Company, the Executive shall be entitled to participate in all of the health and
medical benefits that the Company currently has in place and/or establishes and
makes available for participation by key executives of the Company, to the same
extent as senior executives of the Company.
6. STOCK OPTION/STOCK INCENTIVE PLANS. During the Full-time and Part-time
Employment Periods, the Executive shall be entitled to participate in the
Company's stock option and other stock incentive plans for senior executive(s);
PROVIDED, HOWEVER, that the grant of any stock options shall be subject to the
discretion of the Board or a committee of the Board if the Board delegates such
authority to a committee. Stock options to purchase Common Stock of the Company
held by the Executive as of the date of this Agreement are hereinafter referred
to as "Outstanding Stock Options." The Outstanding Stock Options shall vest and
become immediately exercisable as provided in Section 9 of this Agreement.
Options awarded to the Executive after the
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<PAGE> 6
date hereof shall continue to vest during the Full-time and Part-time Employment
Periods, the Consultation Period and for such period thereafter as the Executive
shall continue to serve as a Director of the Company. Notwithstanding any
provision to the contrary in the plans or agreements governing the Executive's
stock options, the periods governing the post-employment exercise of such stock
options shall not begin to run until such time as the Executive shall cease to
serve as a Director of the Company.
7. OTHER BENEFITS. During the Full-time and Part-time Employment Periods,
the Executive shall be entitled to participate in all incentive, saving and
retirement plans, practices and policies and programs applicable generally to
other peer executives of the Company and its affiliated companies. During the
Full-time and Part-time Employment Periods, the Consultation Period and for such
period thereafter as the Executive shall continue to serve as a Director of the
Company, the Executive shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs) to the extent applicable generally to other peer executives of the
Company and its affiliated companies.
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<PAGE> 7
8. PERQUISITES. Under the Company's executive officers perquisite program,
the Executive shall, during the Full-time and Part-time Employment Periods, have
available $30,000 per annum to use for such purposes as financial planning, tax
preparation, club memberships, personal computers or automobile expenses,
PROVIDED that automobile expenses shall be limited to fifty percent (50%) of the
annual perquisite fund. In addition, during the Full-time and Part-time
Employment Periods and the Consultation Period, the Company shall reimburse the
Executive for business expenses incurred by the Executive in the performance of
his duties and responsibilities in accordance with the Company's expense
reimbursement program, subject to the Executive's presentation to the Company of
vouchers, expense statements and/or such other supporting documentation
evidencing the incurrence of such expenses.
9. VESTING OF STOCK OPTIONS AND ACCELERATION OF COMPENSATION PAYMENTS. All
of the Executive's Outstanding Stock Options shall continue to vest during the
Full-time and Part-time Employment Periods, the Consultation Period and for such
period thereafter as the Executive shall serve as a Director of the Company and
shall be and become immediately vested and exercisable in full, to the extent
not otherwise then vested or exercisable, on the date that (i) the Company shall
remove the Executive as Chairman of the Board prior to the expiration of the
Consultation Period without Cause (as defined below), (ii) the Executive's
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<PAGE> 8
employment is terminated by his death or disability, (iii) the Executive
voluntarily terminates his employment or consultancy pursuant to Section 12.2 of
this Agreement or (iv) the Company and the Executive mutually agree to
termination of the Executive's employment as Chairman of the Board prior to the
expiration of the Consultation Period. In addition, if the Executive's
employment as Chairman of the Board is terminated pursuant to clauses (i), (ii),
(iii) or (iv) of this Section 9, all of the payments to which the Executive is
entitled under this Agreement from the date of termination through the
expiration of the Consultation Period shall be accelerated and paid in a lump
sum to the Executive no later than fourteen (14) days after the date of such
termination. The terms and provisions relating to vesting and exercise after
employment termination in the Executive's Outstanding Options are hereby
replaced and superseded by the terms and provisions set forth in Section 6 and
in this Section 9.
10. EXPENSE SUPPLEMENT. During the six month period commencing January 1,
1997 and ending June 30, 1997, the company shall pay the Executive the sum of
$6,000 per month to assist the Executive in defraying travel, lodging and other
expenses that the Executive may incur. The Executive shall not be required to
account for such expenses.
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<PAGE> 9
11. SECRETARIAL ASSISTANCE. During the Full-time and Part-time Employment
Periods and the Consultation Period, the Company shall provide the Executive
with an executive secretary to support the Executive's performance of his duties
and responsibilities as an employee or consultant and Chairman of the Board, as
the case may be.
12. EMPLOYMENT TERMINATION.
12.1 The employment of the Executive by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
(a) Expiration of the Full-time and Part-time Employment Periods
and the Consultation Period, whichever occurs later, unless extended by mutual
agreement.
(b) At the election of the Company, for Cause, immediately upon
written notice by the Company to the Executive. For the purposes of this
Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after (1) a written demand for substantial performance is delivered to
the Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
of the Company believes that the Executive has not substantially performed the
Executive's
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<PAGE> 10
duties and (2) the failure by the Executive to remedy such substantial
non-performance within a reasonable period of time after receipt of such written
demand, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith
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<PAGE> 11
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Upon the death of the Executive or thirty days after
disability of the Executive. As used in this Agreement, the term "disability"
shall mean an event of disability entitling the Executive to coverage under the
Company's then current long-term disability plan.
12.2 The Executive may elect to terminate his employment upon thirty
(30) days' prior written notice if the Company fails to make any payment due the
Executive under this Agreement and such failure is not cured within thirty (30)
days after the Executive gives written notice of such failure to the Company.
13. Effect of Termination
---------------------
13.1 TERMINATION FOR CAUSE. In the event the Executive's employment is
terminated for Cause pursuant to Section 12.1(b), the Company shall pay to the
Executive the salary and benefits accrued and payable through his last day of
employment as an employee or consultant, as the case may be.
13.2 TERMINATION FOR DEATH OR DISABILITY. In the event the Executive's
employment is terminated by death prior to the expiration of the Full-time or
Part-time Employment Periods or the Consultation Period, the Company shall pay
to the estate of the Executive a lump sum amount equal to the sum of (a) the
salary, compensation or bonus which would otherwise be payable to the
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Executive up to the end of the sixth month after the death occurs and (b) the
remaining unpaid balance of the Special Bonus. If the Executive's employment is
terminated because of disability, the Company shall pay to the Executive (a) in
biweekly installments, the salary, additional compensation and bonus otherwise
payable to him up to the end of the month in which the Executive becomes
eligible for the Company's long-term disability benefits plan and (b) a lump sum
equal to the remaining unpaid balance of the Special Bonus.
13.3 TERMINATION FOR OTHER THAN CAUSE, DEATH OR DISABILITY. In the
event the Executive's employment is terminated other than for Cause, death or
disability or is terminated by the Executive in accordance with Section 12.2,
(i) the Company shall pay to the Executive (a) in biweekly
installments, commencing within thirty (30) days of the last day of actual
employment, the Executive's then current salary through the later of the
expiration of the Full-time and Part-time Employment Periods and the
Consultation Period, as the case may be and (b) in a lump sum cash payment,
payable within thirty (30) days of the last day of actual employment, the
remaining unpaid balance of the Special Bonus; and
(ii) until the expiration of the Full-time and Part-time
Employment Periods and the Consultation Period, whichever occurs later, the
Company shall continue to provide the Executive the benefits to which the
Executive and/or his family would be entitled to receive from the Company if his
employment or
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consultancy, as the case may be, had not been so terminated. For purposes of
eligibility for any retiree benefits pursuant to any retirement plans or
programs, the Executive shall be considered to have remained employed until the
end of the Consultation Period, as the case may be, and to have retired on the
last day of such period.
14. Gross-Up Payment.
----------------
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment benefit or distribution by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 14) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code ("Code") or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the
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Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 14(c), all determinations
required to be made under this Section 14, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Arthur
Andersen & Co. or such other certified public accounting firm as may be
designated by the Executive (the "Accounting Firm"), which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for any individual,
entity or group such that it is not independent, the Executive shall appoint
another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 14(b), shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code
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<PAGE> 15
at the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 14(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
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(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; PROVIDED, HOWEVER, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 14(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial
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jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 14(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 14(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by
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the Executive of an amount advanced by the Company pursuant to Section 14(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
15. Non-Compete
-----------
(a) During the Full-time and Part-time Employment Periods and the
Consultation Period, the Executive will not directly or indirectly as an
individual proprietor, partner, stockholder, officer, employee, director, joint
venturer, investor, lender, or in any other capacity whatsoever (other than as
the holder of not more than one percent (1%) of the total outstanding stock of a
publicly held company), engage in the business of developing, producing,
marketing or selling products and/or services of the kind developed or being
developed, produced, marketed or sold by the Company while the Executive was
employed by the Company.
(b) At the option of the Company, for a period of one year after the
termination or expiration of the Consultation Period, the Executive will not
directly or indirectly:
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(i) become an owner, partner, joint venturer, stockholder,
investor (other than as the holder of not more than one percent (1%) of the
total outstanding stock), officer, employee, or director of (x) any company or
entity that produces, markets or sells products and/or services of the kind
developed or being developed, produced, marketed or sold by the Company while
the Executive was employed by the Company ("CAD/CAM" products and/or services)
which is in the top 10 by CAD/CAM revenue (excluding the Company) at the time of
termination based upon the then current Dataquest or similar survey) (for
purposes of this agreement, a "Top Ten Company") or (y) any company or entity
that has direct contractual relationships with any Top Ten Company to develop or
design products to the specifications of any such Top Ten Company, or
(ii) recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company;
(c) If any restriction set forth in this Section 15 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
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(d) The restrictions contained in this Section 15 are necessary for
the protection of the business and goodwill of the Company and are considered by
the Executive to be reasonable for such purpose. The Executive agrees that any
breach of this Section 15 will cause the Company substantial and irrevocable
damage and therefore, in the event of any such breach, in addition to such other
remedies which may be available, the Company shall have the right to seek
specific performance and injunctive relief.
16. Proprietary Information and Development.
---------------------------------------
16.1 Proprietary Information.
-----------------------
(a) The Executive agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and customer and
supplier lists. The Executive will not disclose any Proprietary Information to
others outside the Company or use the same for any unauthorized purposes without
written approval by the Board, either during or after his employment, unless and
until such Proprietary Information has become public
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knowledge or is otherwise publicly known or available outside the Company
without fault by the Executive.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive property of
the Company to be used by the Executive only in the performance of his duties
for the Company.
(c) The Executive agrees that his obligation not to disclose or
use information, know-how and records of the types set forth in paragraphs (a)
and (b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
or to the employee in the course of the Company's business.
16.2 Developments.
------------
(a) The Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not, which are created,
made, conceived or reduced to practice by the Executive or under his direction
or jointly with others during his employment by the
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Company, whether or not during normal working hours or on the premises of the
Company (all of which are collectively referred to in this Agreement as
"Developments").
(b) The Executive agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all his right, title
and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this Section
16.2(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Executive not during normal working hours, not on the
Company's premises and not using the Company's tools, devices, equipment or
Proprietary Information.
(c) The Executive agrees to cooperate fully with the Company,
both during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Executive
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
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16.3 OTHER AGREEMENTS. The Executive hereby represents that he is not
bound by the terms of any other agreement which will interfere or conflict with
the terms of this Agreement. The Executive further represents that his
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust prior
to his employment with the Company. The representations contained in this
Section 16.3 are necessary for the protection of the business and goodwill of
the Company, and the Executive agrees that any breach of this Section has the
potential to cause the Company substantial and irrevocable damage, and
therefore, in the event of any such breach, the Company shall have the right to
immediately terminate this Agreement with no further obligations to the
Executive beyond his salary through his last day of actual work.
17. Indemnification.
---------------
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with
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respect to employee benefit plans, whether or not the basis of such Proceeding
is the Executive's alleged action in an official capacity while serving as a
director, officer, member, employee or agent, the Executive shall be indemnified
and held harmless by the Company to the fullest extent permitted or authorized
by the Company's certificate of incorporation or bylaws or, if greater, by the
laws of the State of Delaware, against all cost, expense, liability and loss
(including, without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement), reasonably
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if he has ceased to be a
director, member, employee or agent of the Company or other entity and shall
inure to the benefit of the Executive's heirs, executors and administrators. The
Company shall advance to the Executive all reasonable costs and expenses
incurred by him in connection with a Proceeding within 20 days after receipt by
the Company of a written request for such advances. Such request shall include
an undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive
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<PAGE> 25
under Section 17(a) that indemnification of the Executive is proper because he
has met the applicable standard of conduct, nor a determination by the Company
(including its board of directors, independent legal counsel or stockholders)
that the Executive has not met such applicable standard of conduct, shall create
a presumption that the Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
18. NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery, facsimile
transmission (confirmed received) or upon deposit in the United States Post
Office, by registered or certified mail, postage prepaid, addressed to the other
party at the address shown above, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 15.
19. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements
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and understandings, whether written or oral, relating to the subject matter of
this Agreement.
21. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
22. SURVIVAL. The provisions of Sections 15, 16 and 17 shall remain in
effect in the event the Executive is terminated and shall survive the
termination and expiration of this Agreement.
23. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
24. Successors And Assigns.
----------------------
(a) This Agreement shall be binding upon and inure to the benefit of
both parties and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may
succeed to its assets or business, provided, however, that the obligations of
the Executive are personal and shall not be assigned by him.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had
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<PAGE> 27
taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
25. Miscellaneous.
-------------
25.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.
25.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
25.3 In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
COMPUTERVISION CORPORATION
By: /s/ Barry F. Cohen
-------------------
EXECUTIVE
/s/ Russell E. Planitzer
-------------------------
Russell E. Planitzer
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<PAGE> 1
EXHIBIT 10.08
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") made as of the 4th day of
September, 1996 as an amendment and restatement of the Agreement dated December
1, 1995 is entered into by Computervision Corporation, a Delaware corporation
with its principal place of business at 100 Crosby Drive, Bedford, Massa
chusetts 01730 (the "Company") and Kathleen A. Cote, 58 North Street, Lexington,
MA. 02173 (the "Employee").
The Company desires to continue to employ the Employee, and the Employee
desires to continue to be employed by the Company, pursuant to the terms and
conditions of this Agreement. In consideration of the mutual covenants and
premises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERMS OF EMPLOYMENT. The Company hereby agrees to employ the
Employee, and the Employee hereby accepts employment with the Company, upon the
terms set forth in this Agreement, for a three year period commencing on
September 1, 1996 (the "Com mencement Date") and ending on August 31, 1999 (the
"Termination Date") (such period, as it may be extended as provided in this
Agreement, the "Employment Period"), unless otherwise terminated or modified in
accordance with the provisions of Section 4 below. At any time prior to any
September 1st that is then twenty-four (24) months prior to the Termination Date
(as the Termination Date may be extended in accordance herewith), the Company in
its sole discretion may extend the then current Termination Date for a one year
period by providing the Employee with written notice to that effect. (Thus, for
example, the Company shall have the right to extend the current Termination Date
of August 31, 1999 to August 31, 2000 only if it provides written notice of its
election to extend prior to September 1, 1997. Similarly, if the Company does
elect to extend the Termination Date of August 31, 2000, it may further extend
the Termination Date to August 31, 2001 if it provides written notice of its
election to extend prior to September 1, 1998.)
2. TITLE, CAPACITY.
2.1 From September 1, 1996 through October 30, 1996 (the "Transition
Period"), the Employee shall serve as the President and Chief Operating Officer
of the Company and shall report to, and be subject to the supervision of, the
Chief
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<PAGE> 2
Executive Officer of the Company ("CEO"). From and after Novem ber 1, 1996, the
Employee shall serve as President and Chief Executive Officer and report to the
Board of Directors of the Company (the "Board"). The Employee shall be based in
Massachusetts to fulfill her duties and responsibilities to the Company.
2.2 The Employee hereby accepts such employment and agrees to
undertake such duties and responsibilities inherent in such positions and such
other duties and responsibilities as the CEO or the Board, as the case may be,
shall from time to time reasonably assign to her. The Employee agrees to devote
her entire business time, attention and energies to the business and interests
of the Company during the Employment Period, except with respect to incidental
business activities and outside directorships which shall be fully disclosed to
the Board by the Employee and approved by the Board prior to engagement in such
activities or directorships (other than outside directorships with Walden
University and Bay Networks, Inc. (hereinafter "Current Directorships") which
have been disclosed to and ap proved by the Board). None of any such
directorships or activi ties shall, in the sole determination of the Board,
cause a conflict of interest or interfere with the Employee's performance of her
duties hereunder. (The Company agrees that the Current Directorships do not
conflict or interfere with the Employee's performance of her duties hereunder.)
The Employee agrees to abide in all material respects by all lawful rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the Company,
except to the extent inconsistent with this Agreement. The Employee acknowledges
receipt of copies of all such rules and policies committed to writing as of the
date of this Agreement.
3. Compensation and Benefits.
-------------------------
3.1 SALARY. During the Transition Period, the Company shall pay the
Employee, in biweekly installments, an annual base salary of $400,000 per annum
and, thereafter, the Company shall pay the Employee an annual base salary of
$600,000. Such salary shall be subject to increase from time to time as
determined by the Board, in its sole discretion, upon recommendation by the
Compensation Committee to the Board based upon a review that shall take place at
least yearly. Such salary shall not be reduced without the consent of the
Employee.
3.2 ANNUAL INCENTIVE BONUS. Under the Company's Management Incentive
Plan (the "Plan"), the award of an annual incentive bonus to the Employee will
depend upon corporate and individual performance. Individual performance
objectives (the "IPOs") will be established annually no later than each
February 1, as mutually agreed to by the Employee and the Board. The Annual
IPO will include both quantitative and qualitative goals
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<PAGE> 3
and will include financial objectives for each fiscal year. For each calendar
year during the Employment Period, the incentive bonus opportunity may range
from 0 - 100% (0 - 200% in the event of over achievement) of annual base salary.
The Compensation Committee will evaluate each February the achievement of the
IPO's for the past fiscal year and recommend to the Board the Employee's bonus
award for such year, based upon the Employee's achievement of her IPOs and the
achievement of the corporate performance goals for such year. Each annual
incentive bonus shall be payable either in a lump sum, or in installments, as
determined by the Board, at the time or times the Company pays incentive bonus
compensation to its other key executives.
3.3 STOCK OPTION GRANT. The Employee acknowledges the receipt of a
grant under the Company's 1992 Stock Option Plan of an option to purchase
200,000 shares of the Company's Common Stock having a fair market value as of
September 3, 1996 the ("Grant Date"), such option to vest ratably at a rate of
25% on each of the first four anniversaries of such Grant Date.
3.4 ADOPTION/PARTICIPATION IN STOCK PLANS OR PROGRAMS, ETC. If during
the Employment Period, the Company shall adopt a stock purchase, restricted
stock, stock appreciation, bonus unit or similar plan or program for
participation by key executives of the Company, the Employee shall have the
opportunity to partici pate therein to the extent permitted by then current laws
and regulations.
3.5 FRINGE BENEFITS. The Employee shall be entitled to participate in
all benefit programs that the Company currently has in place and/or establishes
and makes available for partici pation by key executives of the Company and, to
the extent not covered by such key executive programs, shall be entitled to
participate in all benefit programs that the Company currently has in place
and/or establishes and makes available for partici pation to its other
employees, if any, to the extent that the Employee's position, tenure, salary,
age, health and other qualifications make her eligible to participate,
including, but not limited to, four weeks' annual vacation and the officers'
perquisite program.
Under the officers' perquisite program, the Employee shall have
available $30,000 per calendar year.
4. Employment Termination.
----------------------
4.1 The employment of the Employee by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:
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<PAGE> 4
(a) Expiration of the Employment Period in accordance with
Section 1, unless extended by mutual agreement;
(b) At the election of the Company, for Cause (as defined below),
immediately upon written notice by the Company to the Employee. For the purposes
of this Agreement, "Cause" shall be deemed to exist solely upon (i) the
Employee's engaging in (x) dishonesty or (y) gross negligence or misconduct
which is materi ally injurious to the Company, as determined in good faith by
the Board, or (ii) conviction of the Employee of, or the entry of a pleading of
guilty or nolo contendere by the Employee to, any crime involving moral
turpitude or any felony; or (iii) the Employee's violation of any material
provisions of this Agree ment, which violation, if capable of cure, is not cured
by the Employee within 30 days of receipt of written notice of such violation.
For the purposes of clause (iii) of Section 4.1(b) a material provision shall
include, but is not limited to, the confidentiality, nondisclosure and
non-competition provisions of Sections 6 and 7 of this Agreement, as determined
in good faith by the Board;
(c) Upon the death of the Employee or thirty (30) days after
Disability of the Employee (The term "Disability" shall mean an event of
disability entitling Employee to coverage under the Company's then current
long-term disability plan);
(d) At the election of the Company, for failure by the Employee
to substantially meet the Employee's IPOs for any calendar year
("Non-Performance"), such termination being effec tive upon not less than thirty
(30) days' prior written notice by the Company to the Employee;
(e) At the election of the Company for other than
Non-Performance, death, Disability or Cause, upon not less than thirty (30)
days' prior written notice of termination, provided that the Employee shall be
entitled as liquidated damages for such termination to those amounts set forth
in Section 5.4, and the Employee hereby waives all right or entitlement for any
and all damages not covered in Section 5.4; and
(f) At the election of the Employee, upon not less than four (4)
months' prior written notice of termination.
5. Effect of Termination.
---------------------
5.1 TERMINATION FOR CAUSE. In the event the Employee's employment is
terminated for Cause pursuant to Section 4.1(b) prior to the expiration of the
Employment Period, the Company shall pay to the Employee the biweekly base
salary otherwise payable to her under Section 3.1 for a period beginning
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<PAGE> 5
on the date of such termination and ending on (a) the date that is six (6)
months following such termination, or (b) the expiration date of the
Employment Period, whichever occurs first.
5.2 TERMINATION FOR DEATH OR DISABILITY. If the Employee's employment
is terminated by death prior to the expira tion of the Employment Period, the
Company shall pay to the estate of the Employee the biweekly base salary and
bonus which would otherwise be payable to the Employee through the end of the
sixth month after the death occurs. If the Employee's employment is terminated
because of Disability, pursuant to Section 4.1(c), the Company shall pay to the
Employee the biweekly base salary and bonus otherwise payable to her through the
end of the month in which the Employee becomes entitled to receive payments
under the Company's long-term disability plan.
5.3 TERMINATION FOR NON-PERFORMANCE. If the Employee's employment is
terminated for Non-Performance pursuant to Section 4.1(d) prior to the
expiration of the Employment Period, the Company shall pay to the Employee the
biweekly base salary otherwise payable to her under Section 3.1 and continue her
health, life and dental benefits on the same basis as during the Employment
Period until the earlier of (a) the expiration of the Employment Period, and (b)
twenty-four (24) months following the date of such termination.
5.4 TERMINATION FOR REASONS OTHER THAN NON-PERFORMANCE, CAUSE, DEATH
OR DISABILITY. If the Employee's employment is involuntarily terminated by the
Company for other than Non- Performance, Cause, death or Disability during the
Employment Period:
(a) The Company shall pay to the Employee through the end of the
Employment Period, commencing within thirty (30) days after the last day of
actual employment, (i) the Employee's then current biweekly base annual salary
through the end of the Employment Period; and (ii) to the extent not yet paid,
bonus payments for each partial or full year remaining in the Employment Period
based on and equal to the annual incentive bonus paid or payable to the Employee
for the last full fiscal year during the Employment Period; such payments shall
be made in biweekly installments during the remainder of the Employment Period;
and
(b) During the balance of the Employment Period, or such longer
period as any plan, program, practice or policy provides, the Company shall
continue benefits to the Employee and/or the Employee's family at least equal to
those available if the Employee's employment had not been terminated, including
the perquisite fund described in Section 3.4. For purposes of eligibility for
retiree benefits pursuant to any such plans or programs, the Employee shall be
considered to have remained
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<PAGE> 6
employed until the end of the Employment Period and to have retired on the last
day of such period.
5.5 TERMINATION AT ELECTION OF EMPLOYEE. In the event the Employee
voluntarily terminates her employment with the Company pursuant to Section
4.1(f), the Company shall pay to the Employee the biweekly base salary payable
under Section 3.1 through her last day of actual employment, and no incentive
bonus or other payments or benefits will be payable to the Employee, except for
payments and benefits theretofore accrued and payable under the Company's
retirement and employee welfare benefit plans.
5.6 PAYMENTS TO EMPLOYEE'S ESTATE. In the event of the Employee's
death at a time that the Company is obligated to make continuing payments to the
Employee pursuant to Sections 5.1, 5.3 and 5.4 ("Continuing Payments"), the
Company shall pay to the estate of the Employee the Continuing Payments to
which, and as and when, the Employee would have otherwise been entitled had such
death not occurred.
5.7 SURVIVAL. The provisions relating to post-termination payment and
benefits and the provisions of Sections 6 and 7 shall survive and continue to
remain in effect after the termination and expiration of this Agreement and
termination of the Employee's employment.
6. Non-Compete.
-----------
(a) During such period of time that the Employee is employed by the
Company, the Employee will not directly or indirectly as an individual
proprietor, partner, stockholder, officer, employee, consultant, director, joint
venture, investor, lender, or in any other capacity whatsoever (other than as
the holder of not more than one percent (1%) of the total outstanding stock of a
publicly held company), engage in the business of developing, producing,
marketing or selling products of the kind or type developed or being developed,
produced, marketed or sold by the Company while the Employee was employed by the
Company.
(b) For the period the Employee is receiving compensation payments
from the Company pursuant to this Agreement, including any post-termination
payments or benefits, the Employee will not directly or indirectly:
(i) become an owner, partner, joint venture, stockholder,
investor (other than as the holder of not more than one percent (1%) of the
total outstanding stock), officer, employee, consultant or director of (x) any
company or entity that develops, produces, markets or sells CAD/CAM
(computer-aided
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<PAGE> 7
design, computer-aided manufacturing) products and/or services which is in the
top 10 by CAD/CAM revenue (excluding the Company) at the time of termination
based upon the then current Dataquest or similar survey (for purposes of this
agreement, a "Top Ten Company") or (y) any company or entity that has direct
contrac tual relationships with any Top Ten Company to develop or design
products to the specifications of any such Top Ten Company, or
(ii) recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company.
(c) If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(d) The restrictions contained in this Section 6 are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Section 6 will cause the Company substantial and irrevocable damage and
therefore, in the event of any such breach, in addi tion to such other remedies
which may be available, the Company shall have the right to seek specific
performance and injunctive relief.
7. Proprietary Information and Development.
---------------------------------------
7.1 Proprietary Information.
-----------------------
(a) The Employee agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company's business or finan cial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, Copyrightable Material
(as defined below), and customer and supplier lists. The Employee will not
disclose any Proprietary Information to others outside the Company or use the
same for any unauthorized purposes without written approval by the Company,
either during or after her employment, unless and until such Proprietary
Information has become public knowledge or is otherwise publicly known in the
industry in which the Company
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<PAGE> 8
competes or available outside the Company without fault by the Employee.
(b) The Employee agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Employee or others, which shall
come into her custody or possession, shall be and are the exclusive prop erty of
the Company to be used by the Employee only in the performance of her duties for
the Company.
(c) The Employee agrees that her obligation not to disclose or
use information, know-how and records of the types set forth in paragraphs (a)
and (b) above, also extends to such types of information, know-how, records and
tangible property of customers of the Company or suppliers to the Company or
other third parties who may have disclosed or entrusted the same to the Company
under obligation of confidentiality or to the Employee in the course of the
Company's business.
7.2 Developments.
------------
(a) The Employee will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship (including "Copyrightable Material"), whether
patent able or not, which are created, made, conceived or reduced to practice by
the Employee or under her direction or jointly with others during her employment
by the Company, whether or not during normal working hours or on the premises of
the Company (all of which are collectively referred to in this Agreement as
"Developments"). "Copyrightable Material" means all works of authorship,
including, but not limited to, books, papers, arti cles, software programs,
documentation, logic diagrams, teaching texts, videotapes, drawings and
graphics. The Employee acknowl edges that all such Copyrightable Material shall
be deemed to be a "work made for hire," as that term is used in U.S. Copyright
Law, and that all right, title and interest in and to the Copy rightable
Material and to the copyright therein shall belong exclusively to the Company.
(b) The Employee agrees to assign and does hereby assign to the
Company (or any person or entity designated by the Company) all her right, title
and interest in and to all Develop ments and all related patents, patent
applications, copyrights and Copyrightable Material.
(c) The Employee shall return to the Company upon termination of
employment for any reason all documents, software, cassettes, lap-top or other
computers and related peripherals,
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<PAGE> 9
computer disks, access cards, keys and other items or materials developed for or
otherwise belonging to the Company and all copies thereof which are in her
possession or under her control; and further agrees to delete and destroy any
information belonging to the Company from her personal computer.
(d) The Employee has read, and understands and agrees to comply
with, the Company's Code of Conduct, including the guidelines and the appended
corporate policies (the "Code"), and further agrees to report immediately to the
Company any circumstances which may constitute a violation of any portion of the
Code.
(e) The Employee agrees to cooperate fully with the Company, both
during and after her employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. The Employee
shall sign all papers, including, without limitation, copyright applications,
patent applications, declarations, oaths, formal assignments, assignment of
priority rights, and powers of attorney, which the Company may deem necessary
or desirable in order to protect its rights and interests in any Development.
The Company shall pay the reasonable out-of-pocket expenses of the Employee
incurred in providing such cooperation.
7.3 OTHER AGREEMENTS. The Employee hereby represents that she is not
bound by the terms of any other agreement which will interfere or conflict with
the terms of this Agreement. The Employee further represents that her
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by her in confidence or in trust prior
to her employment with the Company. The representations contained in this
Section 7.3 are necessary for the protection of the business and goodwill of the
Company, and the Employee agrees that any breach of this Section has the
potential to cause the Company substantial and irrevocable damage, and
therefore, in the event of any such breach, the Company shall have the right to
immediately terminate this Agreement with no further obligations to the Employee
beyond her salary through his last day of actual work.
7.4 INJUNCTIVE RELIEF. The Employee expressly agrees that in the event
she breaches any of the covenants contained in Section 7.1 and 7.2 of this
Agreement, the damage suffered by the Company will be difficult to ascertain and
money damages alone will not afford an adequate remedy. In the event of such a
breach, in addition to such other remedies which may be provided by law, the
Company shall have the right to seek specific performance of the covenants
contained in this agreement by way of
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<PAGE> 10
temporary and/or permanent injunctive relief.
8. NOTICES. All notices required or permitted under this Agreement shall be
in writing and shall be deemed effective upon personal delivery or upon deposit
in the United States Post Office, by registered or certified mail, postage
prepaid, addressed to the other party at the address shown above, or at such
other address or addresses as either party shall designate to the other in
accordance with this Section 8.
9. PRONOUNS. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
11. AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Employee.
12. GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
13. Successors and Assigns.
----------------------
13.1 This Agreement shall be binding upon and inure to the benefit of
both parties and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may
succeed to its assets or business, provided, however, that the obligations of
the Employee are personal and shall not be assigned by her.
13.2 The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
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14. Miscellaneous.
-------------
14.1 No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by the Company on any one occasion shall be effective only in that
instance and shall not be construed as a bar or waiver of any right on any other
occasion.
14.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
14.3 In case any provision of this Agreement shall be invalid, illegal
or otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
COMPUTERVISION CORPORATION EMPLOYEE:
By: /s/ Russell E. Planitzer By: /s/ Kathleen A. Cote
------------------------------ ---------------------
Russell E. Planitzer, Chairman Kathleen A. Cote
and Chief Executive Officer
By: /s/ Anthony N. Fiore, Jr.
-----------------------------
Anthony N. Fiore, Jr., Vice
President and General Counsel
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EXHIBIT 10.20
COMPUTERVISION CORPORATION
Management Retention Agreement
Mr. Barry F. Cohen
649 Sudbury Road
Concord, MA 01742
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as
their ownership of stock of the Company) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40% or more of
the combined voting power of the
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Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(b) "CAUSE" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company or
in the course of your employment with the Company, (ii) your willful
engaging in gross misconduct which is demonstrably and materially
injurious to the Company, (iii) your willful and
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continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), which
such failure is not cured within 30 days after a written demand for
substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that you
have not substantially performed your duties. For purposes of this
Subsection, no act or failure to act on your part shall be deemed
"willful" unless done or omitted to be done by you not in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
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alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
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(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "Date of Termination" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause,
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shall not be less than thirty (30) days from the date such Notice of Termination
is given and in the case of a termination for Good Reason shall not be less than
fifteen (15) nor more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection.
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive
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base salary and all other earned compensation at the rate in effect at the
commencement of any such period (offset by all compensation payable to you under
the Company's disability plan or program or other similar plan during such
period) until your employment is terminated by reason of Disability. Thereafter,
or in the event your employment is terminated by reason of death, your benefits
shall be determined under the Company's long-term disability, retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
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(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for a 36-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 36-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
seventy-eight (78) substantially equal bi-weekly installments over the
three-year period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement attached hereto as Exhibit A, including
without limitation your agreement to refrain from (i) competing with the
Company, (ii) disclosing or using confidential or proprietary information of the
Company, or (iii) soliciting or otherwise inducing Company employees to leave
the employment of the Company.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if you elect to
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terminate your employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, Company shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or if there
is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
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(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
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(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Title: Vice President, General Counsel
Agreed to as of the 4th day of September, 1996.
/s/ Barry Cohen
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(Signature)
Barry Cohen
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Print Name
Address: 649 Sudbury Road
Concord, MA 01742
<PAGE> 1
EXHIBIT 10.21
COMPUTERVISION CORPORATION
Management Retention Agreement
Ms. Kathleen A. Cote
58 North Street
Lexington, MA 02173
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as
their ownership of stock of the Company) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40% or more of
the combined voting power of the
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Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(b) "CAUSE" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company or
in the course of your employment with the Company, (ii) your willful
engaging in gross misconduct which is demonstrably and materially
injurious to the Company, (iii) your willful and
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continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), which
such failure is not cured within 30 days after a written demand for
substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that you
have not substantially performed your duties. For purposes of this
Subsection, no act or failure to act on your part shall be deemed
"willful" unless done or omitted to be done by you not in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
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alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
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(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "Date of Termination" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause,
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<PAGE> 6
shall not be less than thirty (30) days from the date such Notice of Termination
is given and in the case of a termination for Good Reason shall not be less than
fifteen (15) nor more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection.
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive
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<PAGE> 7
base salary and all other earned compensation at the rate in effect at the
commencement of any such period (offset by all compensation payable to you under
the Company's disability plan or program or other similar plan during such
period) until your employment is terminated by reason of Disability. Thereafter,
or in the event your employment is terminated by reason of death, your benefits
shall be determined under the Company's long-term disability, retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
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<PAGE> 8
(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for a 36-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 36-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
seventy-eight (78) substantially equal bi-weekly installments over the
three-year period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement dated September 4, 1996.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if you elect to
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<PAGE> 9
terminate your employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, Company shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or if there
is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
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<PAGE> 10
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Title: Vice President, General Counsel
Agreed to as of the 4th day of September, 1996.
/s/ Kathleen A. Cote
- --------------------
(Signature)
Kathleen A. Cote
- ------------------
Print Name
Address: 58 North St
-------------------
Lexington, MA 02173
-------------------
<PAGE> 1
EXHIBIT 10.22
COMPUTERVISION CORPORATION
Management Retention Agreement
Mr. Anthony N. Fiore, Jr.
18 Goward Drive
Mansfield, MA 02048
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the
<PAGE> 2
same proportion as their ownership of stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the
Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
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<PAGE> 3
(b) "Cause" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company
or in the course of your employment with the Company, (ii) your
willful engaging in gross misconduct which is demonstrably and
materially injurious to the Company, (iii) your willful and continued
failure to perform substantially your duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), which such failure is
not cured within 30 days after a written demand for substantial
performance is delivered to you by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that you have not
substantially performed your duties. For purposes of this Subsection,
no act or failure to act on your part shall be deemed "willful"
unless done or omitted to be done by you not in good faith and
without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
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<PAGE> 4
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
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<PAGE> 5
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
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<PAGE> 6
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "Date of Termination" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause,
shall not be less than thirty (30) days from the date such Notice of Termination
is given and in the case of a termination for Good Reason shall not be less than
fifteen (15) nor more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection.
-6-
<PAGE> 7
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive base salary and all other earned
compensation at the rate in effect at the commencement of any such period
(offset by all compensation payable to you under the Company's disability plan
or program or other similar plan during such period) until your employment is
terminated by reason of Disability. Thereafter, or in the event your employment
is terminated by reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
-7-
<PAGE> 8
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for a 36-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 36-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
-8-
<PAGE> 9
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
thirty-nine (39) substantially equal bi-weekly installments over the three-year
period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement attached hereto as Exhibit A, including
without limitation your agreement to refrain from (i) competing with the
Company, (ii) disclosing or using confidential or proprietary information of the
Company, or (iii) soliciting or otherwise inducing Company employees to leave
the employment of the Company.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this
Agreement to the same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to obtain an
assumption of this Agreement at or prior to the effectiveness of any succession
shall be a breach of this Agreement and shall constitute Good Reason if you
elect to terminate your employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, Company shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors,
-9-
<PAGE> 10
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or if there is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
<PAGE> 11
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Title: Vice President,
Human Development and
Organizational Productivity
Agreed to as of the 4th day of September, 1996.
/s/ Anthony N. Fiore, Jr.
- ------------------------
(Signature)
Anthony N. Fiore, Jr.
- ----------------------
Print Name
Address: 18 Goward Drive
Mansfield, MA 02048
<PAGE> 1
EXHIBIT 10.23
COMPUTERVISION CORPORATION
Management Retention Agreement
Mr. William Foniri
3 Pilgrim Road
Holliston, MA 01746
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the
<PAGE> 2
same proportion as their ownership of stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the
Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
-2-
<PAGE> 3
(b) "CAUSE" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company or
in the course of your employment with the Company, (ii) your willful
engaging in gross misconduct which is demonstrably and materially
injurious to the Company, (iii) your willful and
continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), which
such failure is not cured within 30 days after a written demand for
substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that you
have not substantially performed your duties. For purposes of this
Subsection, no act or failure to act on your part shall be deemed
"willful" unless done or omitted to be done by you not in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
-3-
<PAGE> 4
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
-4-
<PAGE> 5
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
-5-
<PAGE> 6
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "DATE OF TERMINATION" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause,shall not be less than thirty
(30) days from the date such Notice of Terminationis given and in the case of a
termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given); provided,
however, that if within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance plans in which you
were participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Subsection.
-6-
<PAGE> 7
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive base salary and all other earned
compensation at the rate in effect at the commencement of any such period
(offset by all compensation payable to you under the Company's disability plan
or program or other similar plan during such period) until your employment is
terminated by reason of Disability. Thereafter, or in the event your employment
is terminated by reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
-7-
<PAGE> 8
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for an 18-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 18-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
-8-
<PAGE> 9
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
thirty-nine (39) substantially equal bi-weekly installments over the
eighteen-month period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement attached hereto as Exhibit A, including
without limitation your agreement to refrain from (i) competing with the
Company, (ii) disclosing or using confidential or proprietary information of the
Company, or (iii) soliciting or otherwise inducing Company employees to leave
the employment of the Company.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if you elect to
terminate your employment, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, Company shall mean
the Company as defined above and any successor to its business or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors,
-9-
<PAGE> 10
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or if there is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
-10-
<PAGE> 11
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Title: Vice President, General Counsel
Agreed to as of the 4th day of September, 1996.
/s/ William Foniri
- -------------------
(Signature)
William Foniri
- ------------------
Print Name
Address: 3 Pilgrim Road
-------------------
Holliston, MA 01746
-------------------
<PAGE> 1
EXHIBIT 10.24
COMPUTERVISION CORPORATION
Management Retention Agreement
Mr. Rock S. Gnatovich
46 York Street
Lexington, MA 02173
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the
<PAGE> 2
same proportion as their ownership of stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the
Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
-2-
<PAGE> 3
(b) "CAUSE" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company or
in the course of your employment with the Company, (ii) your willful
engaging in gross misconduct which is demonstrably and materially
injurious to the Company, (iii) your willful and
continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), which
such failure is not cured within 30 days after a written demand for
substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that you
have not substantially performed your duties. For purposes of this
Subsection, no act or failure to act on your part shall be deemed
"willful" unless done or omitted to be done by you not in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
-3-
<PAGE> 4
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
-4-
<PAGE> 5
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
-5-
<PAGE> 6
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "Date of Termination" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause, shall not be less than thirty
(30) days from the date such Notice of Termination is given and in the case of a
termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given); provided,
however, that if within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance plans in which you
were participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Subsection.
-6-
<PAGE> 7
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive base salary and all other earned
compensation at the rate in effect at the commencement of any such period
(offset by all compensation payable to you under the Company's disability plan
or program or other similar plan during such period) until your employment is
terminated by reason of Disability. Thereafter, or in the event your employment
is terminated by reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
-7-
<PAGE> 8
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for an 18-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 18-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
-8-
<PAGE> 9
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
thirty-nine (39) substantially equal bi-weekly installments over the three-year
period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement attached hereto as EXHIBIT A, including
without limitation your agreement to refrain from (i) competing with the
Company, (ii) disclosing or using confidential or proprietary information of the
Company, or (iii) soliciting or otherwise inducing Company employees to leave
the employment of the Company.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if you elect to terminate your employment, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, Company shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors,
-9-
<PAGE> 10
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or if there is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
-10-
<PAGE> 11
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Title: Vice President, General Counsel
Agreed to as of the 4th day of September, 1996.
/s/ Rock Steven Gnatovich
- ----------------------------
(Signature)
Rock Steven Snatovich
- ----------------------------
Print Name
Address: 46 York Street
-------------------
Lexington, Ma 02173
-------------------
<PAGE> 1
EXHIBIT 10.25
COMPUTERVISION CORPORATION
Management Retention Agreement
Mr. James Hayden
11 Castle Road
Westford, MA 01886
Computervision Corporation (the "Company") recognizes that, as is the case
with many publicly-held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among key personnel, may result in the departure or distraction of key
personnel to the detriment of the Company, its stockholders and its customers.
The Board of Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Company's key personnel, including yourself, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company.
In order to induce you to remain in its employ, the Company agrees that you
shall receive the severance benefits set forth in this letter agreement (the
"Agreement") in the event your employment with the Company is terminated under
the circumstances described below subsequent to a "Change in Control" (as
defined below).
1. Certain Definitions.
-------------------
As used herein, the following terms shall have the following respective
meanings:
(a) A "CHANGE IN CONTROL" shall occur or be deemed to have occurred
only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, any corporation owned directly or indirectly by the
stockholders of the Company in substantially the
<PAGE> 2
same proportion as their ownership of stock of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the
Company's then outstanding securities (other than as a result of the
acquisition of such securities directly from the Company);
(ii) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in paragraph (i), (iii) or (iv) of this Subsection) whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office, who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) 50% or more
of the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined), other than a person holding 50% or
more of the combined voting power of the Company's then outstanding
securities immediately prior to such recapitalization, acquires 50% or
more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
-2-
<PAGE> 3
(b) "CAUSE" shall mean (i) an intentional act of fraud,
embezzlement or theft in connection with your duties to the Company or
in the course of your employment with the Company, (ii) your willful
engaging in gross misconduct which is demonstrably and materially
injurious to the Company, (iii) your willful and
continued failure to perform substantially your duties with the
Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), which
such failure is not cured within 30 days after a written demand for
substantial performance is delivered to you by the Board or the Chief
Executive Officer of the Company which specifically identifies the
manner in which the Board or Chief Executive Officer believes that you
have not substantially performed your duties. For purposes of this
Subsection, no act or failure to act on your part shall be deemed
"willful" unless done or omitted to be done by you not in good faith
and without reasonable belief that your action or omission was in the
best interest of the Company.
(c) "DATE OF TERMINATION" shall have the meaning set forth
in Section 3(c).
(d) "DISABILITY" shall be deemed to have occurred if, as a
result of incapacity due to physical or mental illness, you shall have
been absent from the full-time performance of your duties with the
Company for six (6) consecutive months and, within thirty (30) days
after written Notice of Termination by reason of disability is given
to you, you shall not have returned to the full-time performance of
your duties.
(e) "GOOD REASON" shall mean, without your express written
consent, the occurrence after a Change in Control of the Company of
any of the following circumstances unless, in the case of paragraphs
(A), (C), (D), (F) or (G), such circumstances are fully corrected
prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(A) any significant diminution in your position,
duties, responsibilities, power, title or office as in effect
immediately prior to a Change in Control;
-3-
<PAGE> 4
(B) any reduction in your annual base salary as in
effect on the date hereof or as the same may be increased from
time to time;
(C) the failure by the Company to (i) continue in
effect any material compensation or benefit plan in which you
participate immediately prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, (ii)
continue your participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the
time of the Change in Control or (iii) award cash bonuses to you
in amounts and in a manner substantially consistent with past
practice in light of the Company's financial performance and your
individual performance;
(D) the failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's life insurance, medical, health
and accident, or disability plans in which you were participating
at the time of the Change in Control, the taking of any action by
the Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to provide
you with the number of paid vacation days to which you are
entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at
the time of the Change in Control;
(E) any requirement by the Company or of any
person in control of the Company that (i) the location at which
you perform your principal duties for the Company be changed to a
new location that is both outside a radius of 35 miles from your
principal residence at the time of the Change in Control and more
than 35 miles from the location at which you perform your
principal duties for the Company at the time of the Change in
Control or (ii) you travel on an overnight basis more than 90
days in any consecutive 12-month period;
-4-
<PAGE> 5
(F) the failure of the Company to obtain a
reasonably satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in Section
5; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 3(b), which purported
termination shall not be effective for purposes of this
Agreement.
(g) "NOTICE OF TERMINATION" shall have the meaning set forth
in Section 3(b).
(h) "SEVERANCE PAYMENTS" shall have the meaning set
forth in Section 4(c)(ii).
(i) "TERM" shall have the meaning set forth in
Section 2.
2. Term of the Agreement.
---------------------
The term of this Agreement (the "Term") shall commence as of the date
hereof and shall continue in effect through December 31, 1999; provided,
however, that commencing on January l, 2000 and each January l thereafter, the
Term shall be automatically extended for one additional year unless, not later
than November 30 of the preceding calendar year, the Company shall have given
you written notice that the Term will not be extended; and provided further
that, if a Change in Control of the Company shall have occurred during the
original or extended Term, this Agreement shall continue in effect for a period
of not less than 24 months beyond the month in which such Change in Control
occurred.
3. Employment Status; Termination Following Change in Control.
----------------------------------------------------------
(a) No benefits shall be payable under this Agreement unless there has
been a Change in Control of the Company during the Term. You acknowledge that
this Agreement does not constitute a contract of employment or impose on the
Company any obligation to retain you as an employee. You may terminate your
employment at any time, with or without Good Reason. If your employment with the
Company terminates for any reason and subsequently a Change in Control shall
have occurred, you shall not be entitled to any benefits hereunder.
-5-
<PAGE> 6
(b) Any termination of your employment by the Company or by you
following a Change in Control of the Company during the Term shall be
communicated by written notice of termination that indicates the specific
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated ("Notice of Termination"). A Notice
of Termination shall be delivered to the other party hereto in accordance with
Section 6.
(c) The "DATE OF TERMINATION" shall mean (i) if your employment is
terminated for Disability, thirty (30) days after Notice of Termination is given
(provided that you shall not have returned to the full-time performance of your
duties during such thirty (30) day period), and (ii) if your employment is
terminated by the Company for Cause, by you for Good Reason or for any other
reason (other than Disability), the date specified in the Notice of Termination
(which, in the case of a termination for Cause, shall not be less than thirty
(30) days from the date such Notice of Termination is given and in the case of a
termination for Good Reason shall not be less than fifteen (15) nor more than
sixty (60) days from the date such Notice of Termination is given); provided,
however, that if within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay you your full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and continue you
as a participant in all compensation, benefit and insurance plans in which you
were participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Subsection.
-6-
<PAGE> 7
(d) You shall be entitled to the benefits provided in Section 4 if a
Change in Control shall have occurred during the Term and your employment with
the Company is subsequently terminated or terminates within 24 months after such
Change in Control, unless such termination is (A) because of your death, (B) by
the Company for Disability or Cause , or (C) by you other than for Good Reason.
(e) Your right to terminate your employment for Good Reason shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason under this Agreement.
4. COMPENSATION UPON TERMINATION. Following a Change in Control of the
Company, you shall be entitled to the following benefits during a period of
disability, or upon termination of your employment, as the case may be, provided
that such period or termination occurs during the Term:
(a) DISABILITY. During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive base salary and all other earned
compensation at the rate in effect at the commencement of any such period
(offset by all compensation payable to you under the Company's disability plan
or program or other similar plan during such period) until your employment is
terminated by reason of Disability. Thereafter, or in the event your employment
is terminated by reason of death, your benefits shall be determined under the
Company's long-term disability, retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) CAUSE AND VOLUNTARY TERMINATION OTHER THAN FOR GOOD REASON. If
your employment shall be terminated by the Company for Cause or by you other
than for Good Reason following a Change in Control, the Company shall pay you
your full base salary and all other compensation through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, no later
than the full fifth day following the Date of Termination, plus all other
amounts to which you are entitled under any compensation plan of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
-7-
<PAGE> 8
(c) TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION FOR GOOD REASON.
If your employment with the Company is terminated by the Company (other than for
Cause, Disability or your death) or by you for Good Reason within 24 months
after a Change in Control, then you shall be entitled to the benefits below:
(i) the Company shall pay to you (A) your full base salary and
all other compensation through the Date of Termination at the rate in effect at
the time the Notice of Termination is given, no later than the full fifth day
following the Date of Termination, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time such payments
are due and (B) if you so elect, in lieu of your right to continue to receive
deferred compensation under any deferred compensation plan of the Company then
in effect, no later than the fifth full day following the Date of Termination, a
lump-sum amount, in cash, equal to the deferred amounts together with any
earnings credited on such amounts under such plan;
(ii) the Company will pay as severance pay to you, at the time
specified in Subsection (d) below, a severance payment in an amount equal to
2.99 times the sum of (A) the higher of (x) your annual base salary in effect on
the Date of Termination or (y) your annual base salary in effect immediately
prior to the Change in Control, and (B) 100% of the average annual incentive
bonus paid or payable to you by the Company for the two fiscal years ending
immediately prior to the fiscal year in which the Change of Control occurs;
(iii) the Company shall pay to you, as incurred, to the extent
permitted by law, all legal fees and expenses reasonably incurred by you in
seeking to obtain or enforce any right or benefit provided by this Agreement;
and
(iv) for an 18-month period after such termination, the Company
shall arrange to provide you with life, dental, and group health insurance
benefits on terms substantially similar to those applicable immediately prior to
the Notice of Termination. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by you pursuant to this paragraph (iv)
if an equivalent benefit is actually received by you from another employer
during the 18-month period following your termination, and any such benefit
actually received by you shall be reported to the Company.
-8-
<PAGE> 9
(d) The payments provided for in Subsection 4(c)(ii) shall be made in
seventy-eight (78) substantially equal bi-weekly installments over the
three-year period following the Date of Termination.
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as a result of employment by another
employer, by retirement benefits or by offset against any amount claimed to be
owed by you to the Company or otherwise.
(f) The Company's obligation to provide the installment payments and
benefits set forth in Subsection 4(c) are subject to your compliance in all
material respects with all agreements and covenants between you and the Company
set forth in the Employment Agreement attached hereto as Exhibit A, including
without limitation your agreement to refrain from (i) competing with the
Company, (ii) disclosing or using confidential or proprietary information of the
Company, or (iii) soliciting or otherwise inducing Company employees to leave
the employment of the Company.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if you elect to terminate your employment, except that
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, Company shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors,
-9-
<PAGE> 10
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or if there is no such designee, to your estate.
6. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
duly given when delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company, at Computervision Corporation, 100 Crosby Drive, Bedford, Massachusetts
01730, Attention: General Counsel, and to you at the address shown above or to
such other address as either the Company or you may have furnished to the other
in writing in accordance herewith, except that notice of change of address shall
be effective only upon receipt.
7. Miscellaneous.
-------------
(a) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(b) The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
(c) No waiver by you at any time of any breach of, or compliance with,
any provision of this Agreement to be performed by the Company shall be deemed a
waiver of that or any other provision at any subsequent time.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together will constitute one
and the same instrument.
-10-
<PAGE> 11
(e) Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
(f) This Agreement and the Exhibits attached hereto set forth the
entire agreement of the parties hereto in respect of the rights and obligations
of the parties after the occurrence of a Change of Control and supersedes all
prior agreements, promises, covenants and arrangements, whether oral or written,
by any officer, employee or representative of any party hereto in respect of a
Change of Control, PROVIDED, HOWEVER, that the terms and provisions of any
employment agreement now in effect or subsequently entered into between you and
the Company which governs the terms of your employment prior to or without
regard to a Change of Control shall continue to remain in full force and effect
and shall not be modified or superseded by this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
COMPUTERVISION CORPORATION
By /s/ Anthony S. Fiore
--------------------------------------
Agreed to as of the 4th day of September, 1996.
/s/ James Hayden
- ----------------------------
(Signature)
James E. Hayden
- ----------------------------
Print Name
Address: 11 Castle Road
-------------------
Westford, MA 01886
-------------------
<PAGE> 1
EXHIBIT 10.26
PROMISSORY NOTE
$200,000 Date: July 16, 1996
For value received, I, Rock S. Gnatovich, ("Maker"), promise to pay to
Computervision Corporation ("Holder"), or order, at 100 Crosby Drive, Bedford,
Massachusetts, the principal sum of Two Hundred Thousand dollars ($200,000).
The outstanding balance of principal due hereunder may be prepaid in full
or part at any time after the date hereof, without any prepayment penalty, at
the option of Maker. So long as Maker continues to be employed in good standing
by Holder, Holder will forgive $100,000 of the principal ratably over a
four-year period at the rate of 25% of the original balance hereunder per year
commencing on the first anniversary of this Note.
Maker agrees to pay the remaining $100,000 of the principal by the
deduction of $25,000 each year from any bonus payments due to Maker as a
participant of the Management Incentive Plan, beginning with the 1996 bonus
payout.
The entire outstanding balance of principal advanced hereunder and other
charges as may be due hereunder, less any amount forgiven as set forth above,
shall be due and payable in full upon Maker's termination of employment with
Holder and such balance may be offset against amounts otherwise due to Maker.
No delay or omission on the part of Holder in exercising any right
hereunder shall operate as a waiver of such right of Holder, nor shall any
delay, omission or waiver on any one occasion be deemed a bar to or waiver of
the same or any other right on any future occasion. Maker agrees to pay all
reasonable charges of Holder in connection with the collection and enforcement
of this Note, including attorneys' fees. Maker hereby waives presentment,
demand, protest and notices.
None of the terms or provisions of this Note may be excluded, modified, or
amended except by a written instrument duly executed on behalf of Holder,
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts and this Note shall have the effect of an
instrument under seal.
/s/ John F. Lane /s/ Rock S. Gnatovich
- ---------------- ---------------------
Witness Rock S. Gnatovich
<PAGE> 1
EXHIBIT 10.27
PROMISSORY NOTE
$18,000 March 18, 1996
For value received, I, Douglas P. Smith ("Employee"), promise to pay to
Computervision Corporation ("Company"), or order, at 100 Crosby Drive, Bedford,
Massachusetts, the principal sum of Eighteen Thousand dollars ($18,000), without
interest, on or after April 15, 1999 (the "Maturity Date") or such other date as
shall be required upon the occurrence of any of the following events ("Mandatory
Prepayment Events"):
(1) RECEIPT OF AN OVER ACHIEVEMENT BONUS: In the event Employee shall be
awarded an over achievement bonus under the Company's Management Incentive Plan,
the Company shall have the right to apply the full amount of such over
achievement bonus, on a first dollar basis, to the repayment of any unpaid
principal balance due hereunder; or
(2) GAIN FROM THE EXERCISE OF STOCK OPTIONS: In the event that the Employee
shall recognize a gain from the sale of Common Stock of the Company acquired by
the Employee upon the exercise of any stock options granted to him, Employee
shall apply the full amount of such gain, on a first dollar basis, to the
repayment of any unpaid principal balance due hereunder within ten (10) days of
such sale; or
(3) TERMINATION OF EMPLOYMENT: The Employee agrees to pay in full any
outstanding principal amount due hereunder immediately upon voluntary
termination of employment or in the event his employment is terminated for
cause, and, in such event, the Company shall have the right to apply, on a first
dollar basis, any amounts due to Employee upon such termination to the repayment
of any principal amounts due hereunder. In the event the employment of the
Employee is involuntary terminated (other than for cause), all amounts then due
and payable hereunder shall be deemed waived (other than to the extent that such
amounts may be repaid under the provisions of Paragraph 2 above).
In any event, all amounts due and payable hereunder shall be paid on the
Maturity Date.
The outstanding balance of principal due hereunder may be prepaid in full
or part at any time after the date hereof, without any prepayment penalty.
In case any default shall occur in the performance by Employee of any
covenant or promise contained herein, including, without limitation, any
payments due upon the occurrence of any Mandatory Prepayment Event, the Company
shall have the right, upon written demand to the Employee, to accelerate this
Note and, in such event, the entire outstanding principal balance advanced
<PAGE> 2
and remaining due hereunder with interest, if any, together with other charges
as may be due hereunder, shall be then due and payable. The Company shall have
the right to offset such balance against amounts otherwise due Employee.
Employee agrees to pay all reasonable charges of the Company in connection
with the collection and enforcement of this Note, including attorneys' fees.
Employee hereby waives presentment, demand and notice.
This Note shall have the effect of an instrument under seal.
/s/ Jack Lane /s/ Douglas P. Smith
- ------------- --------------------
Witness Douglas P. Smith
<PAGE> 3
PROMISSORY NOTE
$10,000 June 24, 1996
For value received, I, Douglas P. Smith ("Employee"), promise to pay to
Computervision Corporation ("Company"), or order, at 100 Crosby Drive, Bedford,
Massachusetts, the principal sum of Ten Thousand dollars ($10,000), without
interest, on or after April 15, 1999 (the "Maturity Date") or such other date as
shall be required upon the occurrence of any of the following events ("Mandatory
Prepayment Events"):
(1) RECEIPT OF AN OVER ACHIEVEMENT BONUS: In the event Employee shall be
awarded an over achievement bonus under the Company's Management Incentive Plan,
the Company shall have the right to apply the full amount of such over
achievement bonus, on a first dollar basis, to the repayment of any unpaid
principal balance due hereunder; or
(2) GAIN FROM THE EXERCISE OF STOCK OPTIONS: In the event that the Employee
shall recognize a gain from the sale of Common Stock of the Company acquired by
the Employee upon the exercise of any stock options granted to him, Employee
shall apply the full amount of such gain, on a first dollar basis, to the
repayment of any unpaid principal balance due hereunder within ten (10) days of
such sale; or
(3) TERMINATION OF EMPLOYMENT: The Employee agrees to pay in full any
outstanding principal amount due hereunder immediately upon voluntary
termination of employment or in the event his employment is terminated for
cause, and, in such event, the Company shall have the right to apply, on a first
dollar basis, any amounts due to Employee upon such termination to the repayment
of any principal amounts due hereunder. In the event the employment of the
Employee is involuntary terminated (other than for cause), all amounts then due
and payable hereunder shall be deemed waived (other than to the extent that such
amounts may be repaid under the provisions of Paragraph 2 above).
In any event, all amounts due and payable hereunder shall be paid on the
Maturity Date.
The outstanding balance of principal due hereunder may be prepaid in full
or part at any time after the date hereof, without any prepayment penalty.
In case any default shall occur in the performance by Employee of any
covenant or promise contained herein, including, without limitation, any
payments due upon the occurrence of any Mandatory Prepayment Event, the Company
shall have the right, upon written demand to the Employee, to accelerate this
Note and, in such event, the entire outstanding principal balance advanced
<PAGE> 4
and remaining due hereunder with interest, if any, together with other charges
as may be due hereunder, shall be then due and payable. The Company shall have
the right to offset such balance against amounts otherwise due Employee.
Employee agrees to pay all reasonable charges of the Company in connection
with the collection and enforcement of this Note, including attorneys' fees.
Employee hereby waives presentment, demand and notice.
This Note shall have the effect of an instrument under seal.
/s/ John F. Lane /s/ Douglas P. Smith
- ---------------- --------------------
Witness Douglas P. Smith
<PAGE> 5
[COMPUTERVISION LOGO] Computervision Corporation
100 Crosby Drive
Bedford, MA -1730-1480
Telephone: (617) 275-1800
September 25, 1996
Douglas Smith
6 Hill Road
Ross, CA 94957
Dear Doug:
You are hereby notified as of September 27, 1996 (the "Termination Date") that
your employment with Computervision Corporation (the "Company") is being
terminated. The Termination Date will be your last day worked for Computervision
as an Employee.
As you are aware, your employment with the Company and the Company's Code of
Conduct obligate you, among other things, not to disclose or use any
Confidential Company Information acquired as a result of your employment with
the Company.
Confidential Company Information includes, but is not limited to, information
which relates to the Company's past, present and future research, development
and business activities, except to the extent it is publicly known from sources
who have neither misappropriated such information nor breached any obligation of
confidentiality to the Company. Confidential Company Information does not
include your general technical skills and accumulated experience.
The Company wishes specifically to call to your attention the following classes
of Confidential Company Information with the understanding that is it by no
means an all-inclusive listing:
- - The contents, plans and schedules of the Company's future software and
hardware product ("Company Product(s)") offerings.
- - The costs, revenues and profitability of current Company Product offerings.
- - The contents of the Company's business plans, including, without limitation,
strategic and operating plans.
- - The design, attributes, features, and technical details of Company Products.
- - Your knowledge of the Company's customers and suppliers, its customer and
supplier relationships, the Company Products being used by those customers, and
the supplier products being purchased by the Company.
- - Personnel plans, data and information including, without limitation, employee
lists, unique skills sets, knowledge, experience and salaries.
<PAGE> 6
- - Inventions, discoveries, methods, processes and data, both technical and
non-technical.
- - Plans, programs, dealings and relationships between the Company and its
various third party distribution channels.
Should you have any questions concerning whether the Company regards certain
information as confidential or whether your actions violate the Code of Conduct,
you should contact Anthony N. Fiore, Jr., Vice President and General Counsel, at
617/275-1800, extension 5073.
You hereby acknowledge and agree that:
a. You have had access to Confidential Company Information.
b The Company regards such information as confidential.
c. You will not disclose or make use of any such Confidential Company
Information without express written authorization from the Company
d. You will conduct your affairs in such a manner so that they are not
detrimental to the interest of the Company, its products or employees.
e. Upon separation from the Company, you will return to the Company all
Confidential Company Information in your possession and will not retain any
copies.
In addition, in your employment agreement with the Company, you agreed not to
solicit or employ Company employees and not to engage in certain activities
competitive with the Company's business for one year after termination of your
employment. While we naturally assume that you will honor your obligations, we
wanted to remind you so that you will understand the Company's position on the
matter. Hopefully, this will help us both avoid any unpleasantness that may
arise from oversight on your part or failure to appreciate the seriousness with
which the Company will view any breach of your obligations.
The terms and conditions of your separation are as follows:
1. Your accrued and unused vacation credit as of the Termination Date will be
paid in a lump sum with your paycheck on or immediately after the
Termination Date. You will receive your final direct paycheck on October 4,
1996 payable through September 27, 1996.
2. Beginning September 30, 1996 for a two-year period, you will be retained by
the Company as a Consultant.
Your assignment and duties will be directed by either Russell Planitzer,
Kathleen Cote or Barry Cohen.
<PAGE> 7
You will be paid as follows:
o a $25,000.00 Consultant fee for the twelve months beginning September
30, 1996 through September 30, 1997 payable at the beginning of each
quarter.
o a $25,000.00 Consultant fee for the twelve months beginning October 1,
1997 through September 30, 1998 payable at the beginning of each
quarter.
o a $200,000.00 Special Bonus for your work associated with OSS. This is
separate and apart from your eligibility in the Computervision
Management Incentive Bonus Plan as outlined in Section 8. This payment
will also be made at the beginning of each quarter beginning September
30, 1996 through September 30, 1997.
As is our standard practice with all individually-retained consultants, you
will be required to execute a standard consultant agreement which is
attached. Additionally, you will be eligible to obtain consulting
opportunities with companies other than Computervision as long as these
assignments are not in conflict or in the competitive arena in which
Computervision operates.
As of July 27, 1996, the day you moved out of your apartment in Boston.
Computervision will reimburse you for all reasonable and customary travel
and living expenses including a rental car incurred as an employee.
You will be required to submit a quarterly invoice prior to the beginning
of the quarter to include your monthly retainer and any normal or customary
business expenses, along with supported receipts for payment.
3. If you wish to continue your medical and dental coverage beyond the
Termination Date, you may do so for an additional 18 months pursuant to
your rights under the Consolidated Omnibus Budget Reconciliation Act
(COBRA) or until you become eligible for coverage under another plan,
whichever is earlier. If you elect to continue coverage beyond your
Termination Date, you will be responsible for paying the full cost of
coverage.
4. Effective as of the Termination Date, your participation in the Company
Capital Accumulation Plan ("CAP") will cease. As a Consultant you will not
be eligible to participate/contribute to the Plan further not will you
receive a match for 1996.
Your fund balances will be prepared for distribution within eight (8) weeks
following the end of the month in which termination occurs. However, plan
distributions after January 1, 1993 are considered taxable and will be
subject to an automatic twenty (20) percent withholding tax unless you
direct State Street Bank and Trust ("Plan Administrator") to make the
distribution check payable directly to an Individual Retirement Arrangement
("IRA") or other qualified retirement plan. Any distribution check payable
directly to you will require the Plan Administrator to withhold twenty (20)
percent of the distribution as taxes. The withholding is required even if
you roll over the distribution into an IRA or other qualified plan within
the requisite sixty (60) day period.
The Plan Administrator will be prepared to issue your distribution check
payable either to you or your IRA or other qualified retirement plan upon
your request. At the time your funds are to be distributed, the Plan
Administrator will advise you of the options available and provide you with
the appropriate form to execute your choice. If the total amount
<PAGE> 8
of your account exceeds $3,500, you may leave the funds in the CAP Plan
permanently or until you have made a distribution choice. Funds left in the
CAP Plan would remain subject to the Cap Plan provisions.
5. On February 19,1996 the Compensation Committee voted to modify the vesting
of your options that would have vested in 1999 and 2000 to vest in 1997 and
1998 respectively. Additionally, Computervision has agreed to establish a
Consulting Agreement with you as set forth by the attached agreement.
6. In consideration of the provisions of Paragraph 5, the adequacy of which
you hereby acknowledge, you hereby fully, forever, irrevocably and
unconditionally release, remise and discharge the Company, its officers,
directors, stockholders, agents and employees from any and all claims,
charges, complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants, contracts,
agreements, promises, doings, omissions, damages, executions, obligations,
liabilities, and expenses (including attorneys' fees and costs), of every
kind and nature which you ever have had or now have against the Company,
its officers, directors, stockholders, agents and employees, including, but
not limited to, all employment discrimination claims under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. S2000e. et seq., the Age Discrimination
in Employment Act, 29 U.S.C. S621 et seq., and M.G.L. C. 151B S1 et seq.,
and any other discrimination claims or wrongful discharge claims, and you
further agree not to file any such claims, charges or actions.
7. The release and covenant not to sue contained in this Separation Agreement
(Paragraph 6 above) does not waive or release any rights or claims that you
may have under the Age Discrimination in Employment Act that arise after
the date you sign this Separation Agreement. You are strongly encouraged to
consult with an attorney before signing this Separation Agreement. You
understand that whether or not to do so is your decision. You further
understand and agree that:
a. You have executed this Separation Agreement after having had the
opportunity to consider the issues generally addressed herein for a full
twenty-one (21) days from the date of receipt thereof.
b. You have carefully read and fully understand all of the provisions of
this Separation Agreement; you understand that, through this Separation
Agreement, you are releasing the Company from any and all claims you may
have against it; you knowingly and voluntarily agree to all of the terms
set forth in this Separation Agreement; and intend to be legally bound by
this Separation Agreement; and you are hereby advised in writing to
consider the terms of this Separation Agreement and consult with an
attorney of your choice prior to executing this Separation Agreement; and
you warrant that you have had a full and complete opportunity to consult
with counsel; and you sign your name as your own free act.
c. You hereby affirm that no other promises or agreements of any kind have
been made to or with you by any person or entity to cause you to sign this
Separation Agreement and you fully understand the meaning and intent of the
release contained in Paragraph 6 above. You further agree that the Company
shall have the right to withhold, offset, or recover from you the
consideration paid or to be paid to you under Paragraph 6. in the event you
file any claims, charges, or actions in violation of Paragraph 6. You
further
<PAGE> 9
agree that you shall have no right to revoke the release set forth in
Paragraph 6, and that such release shall remain in full force and effect
even if the Company so withholds, offsets or recovers such consideration.
d. You have a full seven (7) days following the execution of this
Separation Agreement to evoke this Separation Agreement and you have been
and hereby are advised in writing that this Separation Agreement shall not
become effective and enforceable until the revocation period has expired.
8. Your 1996 Bonus eligibility is outlined as follows:
Your Management Incentive Bonus target is 50% of your base compensation.
o 50% of this target is related to the successful achievement of the
Corporation's EPS goal
o 20% of this target is related to the successful acheivement of the
Corporation's goal of growing software revenue
o 30% of this target is related to the successful achievement of your
IPO's as follow:
- 25% develop CV Corporation Tax strategy and gain acceptance by the
Audit Committee
- 25% complete a strategy plan for September 1, 1996 within the
established $1.1 million budget
- 50% successfully sell the OSS Business Unit
Payment for the last IPO(Successfully sell the OSS Business Unit) will be
as follows:
- 100% of the IPO amount if sale results in $75 - $100 million in
value
- 150% of the IPO amount if sale results in $100 - $125 million in
value
- 200% of the IPO amount if sale results in greater than $125 million
in value
9. Currently you have an outstanding employee payable in the amount of
$3,769.16 owed for an advance made to you for medical expenses incurred
while you were in Germany. Additionally, during 1996, Computervision
advanced to you, a total of $28,000.00. Both of these must be repaid to the
Company either through, on a first dollar basis, any earned management or
other bonus payment you receive or through the gain on the exercise of
stock options, again on a first dollar basis.
10. Effective as of the Termination Date you will be vested in the Company's
Pension Plan.
11. In exchange for the Company's promises contained in this letter, you agree
to: (i) cooperate fully with the Company in connection with any pending or
threatened litigation in which you are in possession of relevant facts
and/or may be a witness; (ii) return to the Company on or before the
Termination Date (September 27, 1996) any and all corporate credit cards,
keys, access cards or the like issued to you; (iii) return to the Company
on or before the Termination Date (September 27, 1996) all Company provided
computer equipment and/or software; (iv) upon notice from the Company,
promptly reimburse the Company for any personal expenses previously charged
on your corporate cards, or the Company will be permitted to offset amounts
due from your base salary payments during the Notice Period.
<PAGE> 10
12. It is understood and agreed by both parties that the release contained in
this Separation Agreement does not constitute an admission of liability or
wrongdoing by either party.
13. The terms and conditions set forth herein and the content of discussions
resulting in this Separation Agreement are confidential and may not be
disclosed by you to any third party without express written consent of the
Company, except for your attorney and/or tax advisor, your spouse, or as
may be required by law, statute or regulation.
14. Upon the occurrence of any violation by you of the provisions set forth in
this Separation Agreement, your employment agreement and/or your
obligations under the Code of Conduct, the Company may elect to consider
any or all Company obligations under this Separation Agreement null and
void, may elect to seek damages or injunctive relief for any breach of
confidentiality, or other such obligations or both. However, any suits or
proceedings brought by you to enforce the payment provisions and other
obligations of the Company as set forth in this Separation Agreement shall
not be a breach or violation by you.
15. This Separation Agreement constitutes the complete understanding between
you and the Company regarding the payment and benefits terms of your
separation and supersedes any and all prior or contemporaneous agreements,
promises, or inducements, no matter what the form, concerning this matter.
Without limitation, the consideration provided herein shall be in lieu of
notice and benefits under the standard United States Separation
Notification Policy. No promises or agreements, modifications or changes
made subsequent to the execution of this Separation Agreement shall be
binding unless reduced to writing and signed by authorized representatives
of both parties.
If the above is acceptable to you, kindly sign the original and a copy of this
Separation Agreement where indicated below and return the copy to me within
twenty-two (22) days of your receipt.
Sincerely,
COMPUTERVISION CORPORATION
/s/ Jack Lane/ prb
- --------------------------
Jack Lane
Vice President Human Resources
Agreed and Accepted:
/s/ Doug Smith October 20, 1996
- -------------- ----------------
Doug Smith Date
<PAGE> 11
CONSULTANT AGREEMENT
FOR SERVICES PROVIDED TO COMPUTERVISION
AGREEMENT made this 14th day of October, 1996, (hereinafter the "Effective
Date") by and between Douglas P. Smith with principal offices at 6 Hill Road,
Ross, CA 94957 (hereinafter "Service Provider") and Computervision Corporation,
a Delaware corporation with principal offices at 100 Crosby Drive, Bedford,
Massachusetts 01730 (hereinafter "Computervision").
WHEREAS, Computervision is engaged in the design, development, reproduction and
distribution of computer software; and desires to obtain the services of Service
Provider from time to time; and
WHEREAS, the services may be provided for Computervision or for a third party
customer of Computervision (hereinafter "Third Party").
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree as follows:
1. SCOPE OF WORK
Service Provider shall perform such services with regard to strategy and
special projects (the "Services") as may be assigned by Russell Planitzer,
Barry Cohen and/or Kathleen Cote.
2. TERM OF AGREEMENT
This Agreement shall commence on the effective date and continue in full
force and effect for an initial period of twenty-four (24) months.
Thereafter this Agreement shall renew automatically for successive twelve
month periods unless terminated by notice from either party at least thirty
days prior to such renewal or terminated under Section 9.
3. PURCHASE ORDERS
From September 30, 1996 through September 30, 1997, Service Provider will
be paid a quarterly retainer of $6,250.00 per quarter ($25,000 when
annualized). From October 1, 1997 through September 30, 1998, Service
Provider shall be paid a quarterly retainer of $6,250.00 per quarter
($25,000 when annualized).
Service Provider will be reimbursed for reasonable travel and living
expenses incurred in providing Services.
4. SERVICE PROVIDER PERSONNEL
4.1 This is a personal service contract. Service Provider shall perform
Services only personally.
1
<PAGE> 12
5. CONFIDENTIALITY
5.1 During the term of this Agreement, Computervision and/or the Third Party
may disclose to Service Provider, or Service Provider may obtain access to,
develop, or create, proprietary and confidential information or material
concerning or related to Computervision's and/or the Third Party's
manufacturing processes, services, products, or general business
operations. Such information or material includes, but is not limited to,
discoveries, inventions, research, improvements, or deficiencies regarding
Computervision's and/or the Third Party's products or services,
transactional profits, pricing and discount methods, employee lists,
software code, programmer documentation, software algorithms, software
development, testing and diagnostic techniques, customer lists and
identifications, and any information designated or overtly treated by
Computervision as confidential. ("Information"). However, "Information"
shall not include any information which (a) is or becomes publicly known
through no wrongful act or omission by Service Provider; (b) is known by
Service Provider without any proprietary restrictions at the time of
receipt of such Information from Computervision and/or the Third Party; or
(c) becomes rightfully known by Service Provider without proprietary
restrictions from a source other than Computervision or the Third Party.
5.2 Service Provider acknowledges the confidential and proprietary character of
the Information and agrees that the Information is the exclusive and
valuable property of Computervision and/or the Third Party. Accordingly,
Service Provider agrees not to reproduce any of the Information except as
necessary to perform services hereunder, and not to divulge all or any part
of the Information to any third party, either during or after the term of
this Agreement. Service Provider will only use the Information in order to
perform the services and in accordance with Computervision's instructions
and no further use of the Information, in whole or in part, will be made by
Service Provider.
5.3 Service Provider shall not (i) disclose to any third parties the existence
or contents of this Agreement or (ii) use Computervision's or the Third
Party's name in any externally used document, without the prior written
consent of Computervision.
6. INVENTIONS AND WORKS OF AUTHORSHIP; LICENSE TO PREEXISTING MATERIALS
6.1 All computer software and documentation, databases. reports and other
copyrightable materials, product designs, inventions, discoveries,
developments and improvements written, invented, made or conceived by
Service Provider in the course of or arising out of the services performed
hereunder (hereafter "Work Product") shall become and remain the sole and
exclusive property of Computervision. Service Provider shall promptly
notify Computervision in writing of all such Work Product. All
copyrightable materials, including software and computer programs, produced
by Service Provider in rendering services hereunder shall be deemed "works
made for hire" under applicable copyright law. Service Provider hereby
transfers and assigns to Computervision all right, title and interest in
and to all Work Product including all copyrights and patent rights whether
or not copyright or patent applications are filed thereon. Upon request and
at the expense of Computervision, Service Provider will, from time to time
during and after the term of this Agreement, make or assist in applications
upon such Work Product through attorneys and representatives designated by
Computervision for
2
<PAGE> 13
copyright and/or patent in the United States and in all other countries
and shall assign such applications to Computervision.
6.2 In consideration of the sum of $10 and the opportunity to provide
consulting services hereunder, Service Provider for itself and its
employees and successors hereby waives and agrees not to assert or act upon
any moral rights or author's rights with respect to the Work Product,
including without limitation any rights of paternity, integrity, and
disclosure.
6.3 Service Provider shall obtain any necessary agreements from its employees
to effect the foregoing. Notwithstanding the above, Service Provider shall
not be precluded in any way from using any generalized technical knowledge
or expertise developed by Service Provider during its performance of the
services hereunder.
6.4 Service Provider hereby grants to Computervision the non-exclusive,
worldwide, royalty-free right to copy and use internally, any and all
versions of any pre-existing software, documentation, or other materials
provided by Service Provider to Computervision during the course of
rendering services hereunder ("Service Provider Materials"). Such right and
license includes use by Computervision and its majority-owned subsidiaries,
through their employees and onsite independent contractors. Such license to
use shall include use by Computervision and subsidiary personnel for
problem determination and consulting to Computervision's customers at
Computervision customer sites, but shall not include the right to provide
or license Service Provider Materials to such customer for the customer's
own use.
7. INDEMNIFICATION/LIMITATION OF LIABILITY
7.1 Service Provider agrees to take all necessary precautions to prevent injury
to any persons or damage to property during the term of this Agreement and
performance of Services hereunder and shall indemnify and save
Computervision harmless against all claims, loss, damage to persons or
property, and expense (including reasonable attorneys' fees) (i) resulting
from (a) any act or failure to act on the part of Service Provider in
performing Services, or (ii) relating to claims by or damage or injury to
Service Provider, except to the extent that any such claim, loss damage or
expense is due directly to the negligence of Computervision.
7.2 Service Provider will indemnify and hold Computervision and/or the Third
Party harmless from and against any and all damages, expenses (including
reasonable attorneys' fees), claims, judgments, liabilities and costs
arising out of any action or claim for infringement of a patent, copyright,
trademark, trade secret or other third party proprietary right with respect
to the services and products delivered by Service Provider under this
Agreement.
7.3 Except for wrongful disclosure of confidential information or infringement
of the other party's intellectual property rights, neither party shall be
liable for any special, indirect, incidental, or consequential damages of
any kind, even if it was aware of the possibility of such damages.
3
<PAGE> 14
8. TERMINATION
8.1 Computervision may terminate this Agreement, without further payment to
Service Provider) (i) if the Service Provider neglects or fails to perform
or observe any of its obligations hereunder and a cure is not effected
within seven (7) days following its receipt of a termination notice issued
Computervision.
9. NOTICE
Notices hereunder shall be in writing and sent to the address of the
other party set forth on page one above, to the attention of the person
or office indicated below. Such notices shall be sent via fax or
express or first class mail to:
Service Provider
Douglas P. Smith
6 Hill Road
Ross, CA 74957
Computervision Corporation
Attention:General Counsel
10. REPRESENTATIONS OF AUTHORITY
Service Provider hereby represents that (i) it has all licenses, permits,
and authorizations necessary and has obtained all approvals from any
government office, board of directors or shareholders necessary to carry
out the services and related activities and to comply with the terms of
this Agreement, and (ii) if Service Provider is to be paid outside its
headquarters country, it has all approvals, licenses, permits and
authorizations necessary to open and maintain a foreign currency bank
account outside its headquarters country and to accept payment for its
services in or outside its headquarters country in hard currency or its
country's currency.
11. COMPLIANCE WITH EXPORT, IMMIGRATION AND OTHER LAWS.
11.1 Service Provider acknowledges that Information and Work Product is
restricted by law of the United States Government and other governments
from export and import to certain countries and certain organizations and
individuals, and agrees to comply with such laws. Service Provider agrees
that no Information or Work Product or portion thereof will be exported or
re-exported by Service Provider, except to Computervision in the United
States or as Computervision otherwise directs. In performing any activities
hereunder, Service Provider agrees to comply with the U.S. Foreign Corrupt
Practices Act and all applicable laws and regulations of the United States
and any other government with jurisdiction over Service Provider.
11.2 Service Provider (individual or firm) warrants that any employee of Service
Provider offered to Computervision hereunder for work in the United States
is authorized to work in the United States, according to the Immigration
Reform and Control Act (IRCA). Service Provider also certifies that it has
on file a validly completed Federal Form I-9 (Employment Eligibility
Verification) for each such offered employee and will provide a certified
copy of said form to Computervision upon Computervision's request.
4
<PAGE> 15
12. GENERAL TERMS
12.1 This Agreement supersedes all prior written or oral agreements and
understandings between the parties and may not be changed unless mutually
agreed upon in writing by both parties. In the event any provision of this
Agreement is found to be legally unenforceable, such unenforceability shall
not prevent enforcement of any and all other provisions of the Agreement.
The waiver or failure of either party to exercise in any respect any right
provided for herein shall not be deemed a waiver of that right in any other
circumstances or a waiver of any further rights.
12.2 Service Provider is an independent contractor and is neither an agent nor
an employee of Computervision and is not authorized to act on behalf of
Computervision and shall not attempt to do so. Service Provider shall not
assign this Agreement or delegate or subcontract any of its obligations
hereunder, without the prior written consent of Computervision.
12.3 In the event the services provided hereunder have been subcontracted to
Service Provider by Computervision to fulfill Computervision's obligation
to provide services to Computervision's customer ("Customer"), Service
Provider shall not enter into a an arrangement directly with Customer to
provide similar such services during the term of this Agreement and for one
year after its termination, without the prior written consent of
Computervision.
12.4 This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, except those laws relating to conflict or choice of laws.
The state and federal courts located in Massachusetts shall have
nonexclusive jurisdiction of all matters and disputes arising under this
Agreement or in connection with the Work Product or services performed
hereunder.
12.5 Sections 5, 6, 7 and 12.3 shall survive termination or expiration of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Purchased Services
Agreement effective the day and year first above written.
SERVICE PROVIDER COMPUTERVISION CORPORATION
Douglas P. Smith
By: /s/ Douglas P. Smith By: /s/ Jack Lane
--------------------- --------------
Name: Douglas P. Smith Name: Jack Lane
Title: Title: VP of Human Resources
------------------- ----------------------
5
<PAGE> 1
EXHIBIT 10.29
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated as of February 15, 1996, among
Computervision Corporation (the "Borrower"), a Delaware corporation, the
financial institutions listed on the signature pages hereto, Bankers Trust
Company, as Agent and Fleet Bank of Massachusetts, N.A., as Co-Agent under the
Credit Agreement referred to below. All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in the
Credit Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, various lending institutions (the "Banks") , and
Bankers Trust Company, as Agent, are parties to a Credit Agreement dated as of
November 17, 1995 (as amended, modified or supplemented through the date hereof,
the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. Section 1.10(c) is hereby amended by deleting such Section in its
entirety and inserting in lieu thereof a new Section to read as follows:
"(c) If any Bank shall have determined that after the date hereof, the
adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or its parent
corporation with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's or its parent corporation's capital or assets
<PAGE> 2
as a consequence of such Bank's commitments or obligations hereunder to a
level below that which such Bank or its parent corporation could have
achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's or its parent corporation's policies with
respect to capital adequacy), then from time to time, upon written demand
by such Bank (with a copy to the Agent), accompanied by the notice referred
to in the last sentence of this clause (c), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank or its
parent corporation for such reduction. Each Bank, upon determining in good
faith that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which
notice shall set forth the basis of the calculation of such additional
amounts, although the failure to give any such notice shall not release or
diminish the Borrower's obligations to pay additional amounts pursuant to
this Section 1.10(c) upon the subsequent receipt of such notice."
2. ANNEX I to the Credit Agreement is hereby amended by deleting the same
in its entirety and inserting in lieu thereof as a new ANNEX I thereto, the
ANNEX I attached hereto. Each Bank hereby acknowledges and agrees that from and
after the Amendment Effective Date (as hereinafter defined) its Commitment shall
be the amount set forth opposite such Bank's name on ANNEX I attached hereto, as
such amount may be reduced from time to time in accordance with the terms of the
Credit Agreement.
3. ANNEX II to the Credit Agreement is hereby amended by deleting the same
in its entirety and inserting in lieu thereof as a new ANNEX II thereto, the
ANNEX II attached hereto.
4. ANNEX VIII to the Credit Agreement is hereby amended by inserting the
line item "Capitalized Leases...$11,284,000" immediately following the line item
"CV Corporation owes CV UK/CV R&D (netted balance)...$13,735,744".
5. The Amendments to the Subsidiary Guaranty, the Security Agreement and
the Pledge Agreement substantially in the forms attached hereto as Annexes III,
IV and V respectively, are hereby approved.
6. In order to induce the Banks to enter into this Amendment, the Borrower
hereby (i) makes each of the representations, warranties and agreements
contained in the Credit Agreement as though made on the Amendment Effective
Date, unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date and
<PAGE> 3
(ii) represents and warrants that there exists no Default or Event of Default,
in each case on the Amendment Effective Date (as hereinafter defined), both
before and after giving effect to this Amendment.
7. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement.
8. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
9. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
10. This Amendment shall become effective on the date (the "Amendment
Effective Date") when (i) each of the parties hereto shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered the same to the Agent at its New York Office and (ii) the Borrower
shall have delivered to the Agent for the account of each Bank, a new Note duly
executed by the Borrower in the amount, maturity and as otherwise provided in
the Credit Agreement after giving effect to this Amendment.
11. From and after the Amendment Effective Date, all references in the
Credit Agreement and the Notes to the Credit Agreement shall be deemed to be
references to the Credit Agreement as modified hereby.
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
COMPUTERVISION CORPORATION
By /s/ Kevin F. McLaughlin
---------------------------------------
Title: Vice President, Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/Christopher Kinslow
---------------------------------------
Title: Vice President
BANK POLSKA KASA OPIEKI, S.A., NEW YORK BRANCH
By /s/ Harvey Winter
---------------------------------------
Title: Vice President
FLEET BANK OF MASSACHUSETTS, N.A.,
Individually and as Co-Agent
By /s/ William E. Rurode
---------------------------------------
Title: Senior Vice President
<PAGE> 5
ANNEX I
List of Banks
Name of Bank Commitment
- ------------ ----------
Bankers Trust Company $30,000,000.00
Bank Polska Kasa Opieki, S.A.,
New York Branch $ 5,000,000.00
Fleet Bank of Massachusetts, N.A. $15,000,000.00
--------------
Total: $50,000,000.00
<PAGE> 6
ANNEX II
BANK ADDRESSES
Bank Address
- ---- -------
Bankers Trust Company 130 Liberty Street
New York, NY 10006
Attn: Christopher Kinslow
Tel: (212) 250-7671
Fax: (212) 250-7218
Bank Polska Kasa Opieki, S.A., 470 Park Avenue, 15th floor
New York Branch New York, NY 10016
Attn: Harvey Winter
Tel: (212) 251-1222
Fax: (212) 213-2971
Fleet Bank of Massachusetts, N.A. 75 State Street
Boston, MA 02109
Attn: Olaperi Onipede
Tel: (617) 346-1652
Fax: (617) 346-1633
<PAGE> 7
ANNEX III
FIRST AMENDMENT TO SUBSIDIARY GUARANTY
FIRST AMENDMENT (this "Amendment"), dated as of February 15, 1996, to
Subsidiary Guaranty dated as of November 17, 1995 (the "Subsidiary Guaranty").
All capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to in
the Guaranty.
W I T N E S S E T H :
WHEREAS, the undersigned, are parties to a Subsidiary Guaranty; and
WHEREAS, the parties hereto wish to amend the Subsidiary Guaranty as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Subsidiary Guaranty is hereby amended
by deleting the same in its entirety and inserting in lieu thereof a new WHEREAS
clause to read as follows:
"WHEREAS, (i) the Borrower may from time to time be party to one or
more Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging Agreements
permitted by the Credit Agreement (each such Interest Rate Agreement and
permitted Other Hedging Agreement with a Hedging Creditor (as defined
below), a "Secured Hedging Arrangement") with Bankers Trust Company, in its
individual capacity, any Bank or a syndicate of financial institutions
organized by Bankers Trust Company or such Bank, or an affiliate of Bankers
Trust Company or such Bank (even if Bankers Trust Company or any such Bank
ceases to be a Bank under the Credit Agreement for any reason), and any
institution that participates, and in each case their subsequent assigns in
such Secured Hedging Arrangement, (collectively, the "Hedging Creditors,"
and
<PAGE> 8
the Hedging Creditors together with the Bank Creditors, collectively the
"Creditors");"
2. The fifth WHEREAS clause of the Subsidiary Guaranty is hereby amended by
(i) inserting directly after the phrase "the Borrower under the Credit
Agreement" the phrase "and the entering into of Secured Hedging Arrangements"
and (ii) inserting at the end of the clause thereof the phrase "and the Hedging
Creditors to enter into Secured Hedging Arrangements".
3. Section 1(ii) of the Subsidiary Guaranty is hereby amended by (i) in the
first line, deleting the phrase "Interest Rate Creditor" and inserting in lieu
thereof the phrase "Hedging Creditor", (ii) in the fifth line, deleting the
phrase "Secured Interest Rate Agreement" and inserting in lieu thereof the
phrase "Secured Hedging Arrangement", (iii) in the seventh line thereof,
inserting after the word "liabilities" the phrase "up to, but not in excess of,
$15,000,000 in the aggregate at any time" and (iv) in the seventh line deleting
the phrase "Interest Rate Obligations" and inserting in lieu thereof the phrase
"Hedging Obligations".
4. Section 6(f) of the Subsidiary Guaranty is hereby amended by (i) in the
second line, inserting directly after the phrase "Credit Documents" the phrase
"or any Secured Hedging Arrangement" and (ii) in the fourth line, inserting
directly after the phrase "Credit Documents" the phrase "or any Secured Hedging
Arrangement".
5. Section 12 of the Subsidiary Guaranty is hereby amended by inserting in
the second line directly after the phrase "Total Commitment" the phrase "and all
Secured Hedging Arrangements".
6. Section 15 of the Subsidiary Guaranty is hereby amended by (i) in the
twelfth line, deleting in its entirety the phrase "the Interest Rate
Obligations" and inserting in lieu thereof the phrase "the Hedging Creditors as
holders of Hedging Obligations", (ii) in the fourteenth line, deleting the
phrase "Interest Rate Obligations" and inserting in lieu thereof the phrase
"Hedging Obligations" and (iii) at the end of the Section thereof deleting the
phrase "Secured Interest Rate Agreements" and inserting in lieu thereof the
phrase "Secured Hedging Arrangements".
7. Section 17 of the Subsidiary Guaranty is hereby amended by deleting in
the fifth line, the phrase "Secured Interest Rate Agreement" and inserting in
lieu thereof the phrase "Secured Hedging Arrangement".
8. Section 18(iii) of the Subsidiary Guaranty is hereby amended by deleting
the phrase "Interest Rate Creditor" each place it appears and inserting in lieu
thereof the phrase "Hedging Creditor".
9. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Subsidiary
Guaranty.
<PAGE> 9
10. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
11. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
12. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Agent at its
New York Office. From and after such effective date, all references in the
Credit Agreement and the Credit Documents to the Subsidiary Guaranty shall be
deemed to be references to the Subsidiary Guaranty as modified hereby.
<PAGE> 10
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
CV FINANCE HOLDING, INC.,
as Guarantor
By
--------------------------------
Title:
CV INTERNATIONAL HOLDING,
INC., as Guarantor
By
--------------------------------
Title:
PRIME COMPUTER INC. DE
PUERTO RICO, as Guarantor
By
--------------------------------
Title:
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent
By
--------------------------
Title:
<PAGE> 11
ANNEX IV
FIRST AMENDMENT TO SECURITY AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated as of February 15, 1996 to
Security Agreement dated as of November 17, 1995 (the "Security Agreement"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to in
the Security Agreement.
W I T N E S S E T H :
WHEREAS, Computervision Corporation, CV Finance Holding, Inc., CV
International Holding, Inc., Prime Computer Inc. de Puerto Rico (collectively
the "Assignors"), and Bankers Trust Company, as Collateral Agent, are parties to
the Security Agreement; and
WHEREAS, the parties hereto wish to amend the Security Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Security Agreement is hereby amended by
deleting the same in its entirety and inserting in lieu thereof:
"WHEREAS, (i) the Borrower, may from time to time be party to one or
more Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging Agreements
permitted by the Credit Agreement (each such Interest Rate Agreement and
permitted Other Hedging Agreement with a Hedging Creditor (as defined
below), a "Secured Hedging Arrangement") with Bankers Trust Company, in its
individual capacity, any Bank or a syndicate of financial institutions
organized by Bankers Trust Company or such Bank, or an affiliate of Bankers
Trust Company or such Bank (even if Bankers Trust Company or any such Bank
ceases to be a Bank under the Credit Agreement for any reason), and any
institution that participates, and in each case their subsequent assigns in
such Secured Hedging Arrangements, (collectively, the "Hedging Creditors,"
and the Hedging Creditors together with the Bank Creditors, collectively
the "Creditors");"
<PAGE> 12
2. The references to "Secured Interest Rate Agreement" or "Secured Interest
Rate Agreements" in Article 2.3, 2.7, 7.4(c), 7.4(d), 7.5, 8.1, 10.2(a), 10.3,
10.9, and in the definitions of "Contracts" and "Obligations" in Article IX, of
the Security Agreement are hereby amended by changing same to read "Secured
Hedging Arrangement" or "Secured Hedging Arrangements" as the case may be.
3. The references to "Interest Rate Creditor" or "Interest Rate Creditors"
in Article 7.4(c), 7.4(d), 10.1(iv), 10.2(a), and in the definition of
"Obligations" in Article IX, of the Security Agreement are hereby amended by
changing same to read "Hedging Creditor" or "Hedging Creditors", as the case may
be.
4. The references to "Interest Rate Obligations" in Article 7.4(d) and
10.2(a) of the Security Agreement are hereby amended by changing same to read
"Hedging Obligations".
5. Article 8.2 of the Security Agreement is hereby amended by deleting in
the last line the word "and" immediately following the phrase "Credit Agreement"
and inserting in lieu thereof the phrase ", the termination of all Secured
Hedging Arrangements and the payment of".
6. Article IX of the Security Agreement is hereby amended by adding the
following new definitions in appropriate alphabetical order:
"Hedging Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Secured Hedging Arrangement" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Hedging Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
7. The definitions of "Interest Rate Creditors" and "Interest Rate
Obligations" in Article IX of the Security Agreement are hereby deleted in their
entirety.
8. The definition of "Obligations" in Article IX of the Security Agreement
is hereby further amended by (i) deleting the phrase "'Interest Rate
Obligations'" and inserting in lieu thereof the phrase "'Hedging Obligations'"
and (ii) in the thirteenth line inserting after the reference to "this clause
(ii)" the phrase "up to, but not in excess of, $15,000,000 in the aggregate at
any time".
9. Article 10.4 of the Security Agreement is hereby amended by (a) deleting
in the eighth line the "and" after the word "Agreement" and inserting a "," in
<PAGE> 13
lieu thereof and (b) inserting the phrase "and the Secured Hedging Arrangements"
immediately following the phrase "Credit Documents".
10. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Security
Agreement.
11. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
12. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
13. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Collateral
Agent at its New York Office. From and after such effective date, all references
to the Security Agreement in the Credit Agreement and the Credit Documents shall
be deemed to be references to the Security Agreement as modified hereby.
<PAGE> 14
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
COMPUTERVISION CORPORATION,
as an Assignor
By
-------------------------
Title:
CV FINANCE HOLDING, INC.,
as an Assignor
By
-------------------------
Title:
CV INTERNATIONAL HOLDING,
INC.,
as an Assignor
By
-------------------------
Title:
PRIME COMPUTER INC. DE
PUERTO RICO,
as an Assignor
By
-------------------------
Title:
<PAGE> 15
BANKERS TRUST COMPANY,
as Collateral Agent
By
-------------------------
Title:
<PAGE> 16
ANNEX V
FIRST AMENDMENT TO PLEDGE AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated as of February 15, 1996, to
Pledge Agreement dated as of November 17, 1995 (the "Pledge Agreement"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to in
the Pledge Agreement.
W I T N E S S E T H :
WHEREAS, Computervision Corporation, CV Finance Holding, Inc., CV
International Holding, Inc., Prime Computer Inc. de Puerto Rico, and Bankers
Trust Company, as Pledgee, are parties to the Pledge Agreement; and
WHEREAS, the parties hereto wish to amend the Pledge Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Pledge Agreement is hereby amended by
deleting the same in its entirety and inserting in lieu thereof a new WHEREAS
clause to read as follows:
"WHEREAS the Borrower may from time to time be party to one or more
Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging Agreements
permitted by the Credit Agreement (each such Interest Rate Agreement and
permitted Other Hedging Agreement with a Hedging Creditor (as defined
below), a "Secured Hedging Arrangement") with Bankers Trust Company, in its
individual capacity, any Bank or a syndicate of financial institutions
organized by Bankers Trust Company or such Bank, or an affiliate of Bankers
Trust Company or such Bank (even if Bankers Trust Company or any such Bank
ceases to be a Bank under the Credit Agreement for any reason), and any
institution that participates, and in each case their subsequent assigns in
such Secured Hedging Arrangements, (collectively, the "Hedging Creditors,"
and the Hedging Creditors together with the Bank Creditors, collectively
the "Creditors");"
<PAGE> 17
2. The references to "Interest Rate Agreement", "Secured Interest Rate
Agreement" and "Interest Rate Agreements" and "Secured Interest Rate Agreements"
in Sections 1(i), 1(ii), 1(iv), 5, 9(c), 9(d), 18(a) and 20 of the Pledge
Agreement are hereby amended by changing same to read "Secured Hedging
Arrangement" or "Secured Hedging Arrangements", as the case may be.
3. The references to "Interest Rate Obligations" in Sections 1(ii), 9(d)
and 20 of the Pledge Agreement are hereby amended by changing same to read
"Hedging Obligations".
4. The references to "Interest Rate Creditor" or "Interest Rate Creditors"
in Sections 9(c), 9(d), 19(iv) and 20 of the Pledge Agreement are hereby amended
by changing same to read "Hedging Creditors".
5. Section 1(ii) of the Pledge Agreement is hereby further amended by
inserting after the reference to "this clause (ii)" the phrase "up to, but not
in excess of, $15,000,000 in the aggregate at any time".
6. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Pledge
Agreement.
7. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
9. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Pledgee at its
New York Office. From and after such effective date, all references in the
Credit Agreement and Credit Documents to the Pledge Agreement shall be deemed to
be references to the Pledge Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
<PAGE> 18
COMPUTERVISION CORPORATION,
as a Pledgor
By
-------------------------
Title:
CV FINANCE HOLDING, INC.,
as a Pledgor
By
-------------------------
Title:
CV INTERNATIONAL HOLDING,
INC., as a Pledgor
By
-------------------------
Title:
PRIME COMPUTER INC. DE
PUERTO RICO, as a Pledgor
By
-------------------------
Title:
BANKERS TRUST COMPANY,
as Pledgee
By
-------------------------
Title:
<PAGE> 19
FIRST AMENDMENT TO SUBSIDIARY GUARANTY
FIRST AMENDMENT (this "Amendment"), dated as of February 15,
1996, to Subsidiary Guaranty dated as of November 17, 1995 (the "Subsidiary
Guaranty"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Credit Agreement
referred to in the Guaranty.
W I T N E S S E T H :
WHEREAS, the undersigned, are parties to a Subsidiary Guaranty; and
WHEREAS, the parties hereto wish to amend the Subsidiary Guaranty as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Subsidiary Guaranty is hereby amended
by deleting the same in its entirety and inserting in lieu thereof a new WHEREAS
clause to read as follows:
"WHEREAS, (i) the Borrower may from time to time be party to one or
more Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging Agreements
permitted by the Credit Agreement (each such Interest Rate Agreement and
permitted Other Hedging Agreement with a Hedging Creditor (as defined
below), a "Secured Hedging Arrangement") with Bankers Trust Company, in its
individual capacity, any Bank or a syndicate of financial institutions
organized by Bankers Trust Company or such Bank, or an affiliate of Bankers
Trust Company or such Bank (even if Bankers Trust Company or any such Bank
ceases to be a Bank under the Credit Agreement for any reason), and any
institution that participates, and in each case their subsequent assigns in
such Secured Hedging Arrangement, (collectively, the "Hedging Creditors,"
and
<PAGE> 20
the Hedging Creditors together with the Bank Creditors, collectively the
"Creditors");"
2. The fifth WHEREAS clause of the Subsidiary Guaranty is hereby amended by
(i) inserting directly after the phrase "the Borrower under the Credit
Agreement" the phrase "and the entering into of Secured Hedging Arrangements"
and (ii) inserting at the end of the clause thereof the phrase "and the Hedging
Creditors to enter into Secured Hedging Arrangements".
3. Section 1(ii) of the Subsidiary Guaranty is hereby amended by (i) in the
first line, deleting the phrase "Interest Rate Creditor" and inserting in lieu
thereof the phrase "Hedging Creditor", (ii) in the fifth line, deleting the
phrase "Secured Interest Rate Agreement" and inserting in lieu thereof the
phrase "Secured Hedging Arrangement", (iii) in the seventh line thereof,
inserting after the word "liabilities" the phrase "up to, but not in excess of,
$15,000,000 in the aggregate at any time" and (iv) in the seventh line deleting
the phrase "Interest Rate Obligations" and inserting in lieu thereof the phrase
"Hedging Obligations".
4. Section 6(f) of the Subsidiary Guaranty is hereby amended by (i) in the
second line, inserting directly after the phrase "Credit Documents" the phrase
"or any Secured Hedging Arrangement" and (ii) in the fourth line, inserting
directly after the phrase "Credit Documents" the phrase "or any Secured Hedging
Arrangement".
5. Section 12 of the Subsidiary Guaranty is hereby amended by inserting in
the second line directly after the phrase "Total Commitment" the phrase "and all
Secured Hedging Arrangements".
6. Section 15 of the Subsidiary Guaranty is hereby amended by (i) in the
twelfth line, deleting in its entirety the phrase "the Interest Rate
Obligations" and inserting in lieu thereof the phrase "the Hedging Creditors as
holders of Hedging Obligations", (ii) in the fourteenth line, deleting the
phrase "Interest Rate Obligations" and inserting in lieu thereof the phrase
"Hedging Obligations" and (iii) at the end of the Section thereof deleting the
phrase "Secured Interest Rate Agreements" and inserting in lieu thereof the
phrase "Secured Hedging Arrangements".
7. Section 17 of the Subsidiary Guaranty is hereby amended by deleting in
the fifth line, the phrase "Secured Interest Rate Agreement" and inserting in
lieu thereof the phrase "Secured Hedging Arrangement".
8. Section 18(iii) of the Subsidiary Guaranty is hereby amended by deleting
the phrase "Interest Rate Creditor" each place it appears and inserting in lieu
thereof the phrase "Hedging Creditor".
9. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Subsidiary
Guaranty.
<PAGE> 21
10. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
11. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
12. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Agent at its
New York Office. From and after such effective date, all references in the
Credit Agreement and the Credit Documents to the Subsidiary Guaranty shall be
deemed to be references to the Subsidiary Guaranty as modified hereby.
<PAGE> 22
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
CV FINANCE HOLDING, INC.,
as Guarantor
By /s/ Holly H. Stratford
----------------------
Title: Vice President
CV INTERNATIONAL HOLDING,
INC., as Guarantor
By /s/ Anthony Fiore
---------------------
Title: President
PRIME COMPUTER INC. DE
PUERTO RICO, as Guarantor
By /s/ Anthony Fiore
----------------------
Title: President
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent
By /s/ Christopher Kinslow
---------------------------
Title: VP
<PAGE> 23
FIRST AMENDMENT TO SECURITY AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated as of February 15,
1996 to Security Agreement dated as of November 17, 1995 (the "Security
Agreement"). All capitalized terms used herein and not otherwise defined shall
have the respective meanings provided such terms in the Credit Agreement
referred to in the Security Agreement.
W I T N E S S E T H :
WHEREAS, Computervision Corporation, CV Finance Holding, Inc., CV
International Holding, Inc., Prime Computer Inc. de Puerto Rico (collectively
the "Assignors"), and Bankers Trust Company, as Collateral Agent, are parties to
the Security Agreement; and
WHEREAS, the parties hereto wish to amend the Security Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Security Agreement is hereby amended by
deleting the same in its entirety and inserting in lieu thereof:
"WHEREAS, (i) the Borrower, may from time to time be party to one or
more Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging Agreements
permitted by the Credit Agreement (each such Interest Rate Agreement and
permitted Other Hedging Agreement with a Hedging Creditor (as defined
below), a "Secured Hedging Arrangement") with Bankers Trust Company, in its
individual capacity, any Bank or a syndicate of financial institutions
organized by Bankers Trust Company or such Bank, or an affiliate of Bankers
Trust Company or such Bank (even if Bankers Trust Company or any such Bank
ceases to be a Bank under the Credit Agreement for any reason), and any
institution that participates, and in each case their subsequent assigns in
such Secured Hedging Arrangements, (collectively, the "Hedging Creditors,"
and the Hedging Creditors together with the Bank Creditors, collectively
the "Creditors");"
<PAGE> 24
2. The references to "Secured Interest Rate Agreement" or "Secured Interest
Rate Agreements" in Article 2.3, 2.7, 7.4(c), 7.4(d), 7.5, 8.1, 10.2(a), 10.3,
10.9, and in the definitions of "Contracts" and "Obligations" in Article IX, of
the Security Agreement are hereby amended by changing same to read "Secured
Hedging Arrangement" or "Secured Hedging Arrangements" as the case may be.
3. The references to "Interest Rate Creditor" or "Interest Rate Creditors"
in Article 7.4(c), 7.4(d), 10.1(iv), 10.2(a), and in the definition of
"Obligations" in Article IX, of the Security Agreement are hereby amended by
changing same to read "Hedging Creditor" or "Hedging Creditors", as the case may
be.
4. The references to "Interest Rate Obligations" in Article 7.4(d) and
10.2(a) of the Security Agreement are hereby amended by changing same to read
"Hedging Obligations".
5. Article 8.2 of the Security Agreement is hereby amended by deleting in
the last line the word "and" immediately following the phrase "Credit Agreement"
and inserting in lieu thereof the phrase ", the termination of all Secured
Hedging Arrangements and the payment of".
6. Article IX of the Security Agreement is hereby amended by adding the
following new definitions in appropriate alphabetical order:
"Hedging Creditors" shall have the meaning provided in the second
WHEREAS clause of this Agreement.
"Secured Hedging Arrangement" shall have the meaning provided in the
second WHEREAS clause of this Agreement.
"Hedging Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
7. The definitions of "Interest Rate Creditors" and "Interest Rate
Obligations" in Article IX of the Security Agreement are hereby deleted in their
entirety.
8. The definition of "Obligations" in Article IX of the Security Agreement
is hereby further amended by (i) deleting the phrase "'Interest Rate
Obligations'" and inserting in lieu thereof the phrase "'Hedging Obligations'"
and (ii) in the thirteenth line inserting after the reference to "this clause
(ii)" the phrase "up to, but not in excess of, $15,000,000 in the aggregate at
any time".
9. Article 10.4 of the Security Agreement is hereby amended by (a) deleting
in the eighth line the "and" after the word "Agreement" and inserting a "," in
<PAGE> 25
lieu thereof and (b) inserting the phrase "and the Secured Hedging Arrangements"
immediately following the phrase "Credit Documents".
10. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Security
Agreement.
11. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
12. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
13. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Collateral
Agent at its New York Office. From and after such effective date, all references
to the Security Agreement in the Credit Agreement and the Credit Documents shall
be deemed to be references to the Security Agreement as modified hereby.
<PAGE> 26
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
COMPUTERVISION CORPORATION,
as an Assignor
By /s/ Kevin F. McLaughlin
----------------------------
Title: Vice President, Treasurer
CV FINANCE HOLDING, INC.,
as an Assignor
By /s/ Holly H. Stratford
-----------------------------
Title: Vice President
CV INTERNATIONAL HOLDING,
INC.,
as an Assignor
By /s/ Anthony Fiore
----------------------------
Title: President
PRIME COMPUTER INC. DE
PUERTO RICO,
as an Assignor
By /s/ Anthony Fiore
----------------------------
Title: President
<PAGE> 27
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Christropher Kinslow
-------------------------------
Title: VP
<PAGE> 28
FIRST AMENDMENT TO PLEDGE AGREEMENT
FIRST AMENDMENT (this "Amendment"), dated as of February 15, 1996, to
Pledge Agreement dated as of November 17, 1995 (the "Pledge Agreement"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to in
the Pledge Agreement.
W I T N E S S E T H :
WHEREAS, Computervision Corporation, CV Finance Holding, Inc., CV
International Holding, Inc., Prime Computer Inc. de Puerto Rico, and Bankers
Trust Company, as Pledgee, are parties to the Pledge Agreement; and
WHEREAS, the parties hereto wish to amend the Pledge Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. The second WHEREAS clause of the Pledge Agreement is hereby amended by
deleting the same in its entirety and inserting in lieu thereof a new WHEREAS
clause to read as follows:
"WHEREAS the Borrower may from time to time be party to one or
more Interest Rate Agreements and (ii) the Borrower and/or any of its
Subsidiaries may from time to time be party to Other Hedging
Agreements permitted by the Credit Agreement (each such Interest Rate
Agreement and permitted Other Hedging Agreement with a Hedging
Creditor (as defined below), a "Secured Hedging Arrangement") with
Bankers Trust Company, in its individual capacity, any Bank or a
syndicate of financial institutions organized by Bankers Trust Company
or such Bank, or an affiliate of Bankers Trust Company or such Bank
(even if Bankers Trust Company or any such Bank ceases to be a Bank
under the Credit Agreement for any reason), and any institution that
participates, and in each case their subsequent assigns in such
Secured Hedging Arrangements, (collectively, the "Hedging Creditors,"
and the Hedging Creditors together with the Bank Creditors,
collectively the "Creditors");"
<PAGE> 29
2. The references to "Interest Rate Agreement", "Secured Interest Rate
Agreement" and "Interest Rate Agreements" and "Secured Interest Rate Agreements"
in Sections 1(i), 1(ii), 1(iv), 5, 9(c), 9(d), 18(a) and 20 of the Pledge
Agreement are hereby amended by changing same to read "Secured Hedging
Arrangement" or "Secured Hedging Arrangements", as the case may be.
3. The references to "Interest Rate Obligations" in Sections 1(ii), 9(d)
and 20 of the Pledge Agreement are hereby amended by changing same to read
"Hedging Obligations".
4. The references to "Interest Rate Creditor" or "Interest Rate Creditors"
in Sections 9(c), 9(d), 19(iv) and 20 of the Pledge Agreement are hereby amended
by changing same to read "Hedging Creditors".
5. Section 1(ii) of the Pledge Agreement is hereby further amended by
inserting after the reference to "this clause (ii)" the phrase "up to, but not
in excess of, $15,000,000 in the aggregate at any time".
6. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Pledge
Agreement.
7. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Agent.
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
9. This Amendment shall become effective on the date when each of the
parties hereto shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Pledgee at its
New York Office. From and after such effective date, all references in the
Credit Agreement and Credit Documents to the Pledge Agreement shall be deemed to
be references to the Pledge Agreement as modified hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
<PAGE> 30
COMPUTERVISION CORPORATION,
as a Pledgor
By /s/ Kevin F. McLaughlin
--------------------------------
Title: Vice President, Treasurer
CV FINANCE HOLDING, INC.,
as a Pledgor
By /s/ Holly H. Stratford
--------------------------------
Title: Vice President
CV INTERNATIONAL HOLDING,
INC., as a Pledgor
By /s/ Anthony Fiore
--------------------------------
Title: President
PRIME COMPUTER INC. DE
PUERTO RICO, as a Pledgor
By /s/ Anthony Fiore
-------------------------------
Title: President
BANKERS TRUST COMPANY,
as Pledgee
By: /s/ Christopher Kinslow
------------------------------
Title: VP
<PAGE> 31
REVOLVING NOTE
$15,000,000 COPY New York, New York
---- November 17, 1995
FOR VALUE RECEIVED, Computervision Corporation, a Delaware Corporation
(the "Borrower"), hereby promises to pay to the order of FLEET BANK OF
MASSACHUSETTS, N.A. (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Agent") located at 130 Liberty Street, New York, New York 10006, on the
Maturity Date (as defined in the Agreement) the principal sum of FIFTEEN
MILLION DOLLARS ($15,000,000) or if less, the unpaid principal amount of all
Revolving Loans (as defined in the Agreement) made by the Bank pursuant to the
Agreement, payable at such times and in such amounts as are specified in
the Agreement. COPY
----
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of November 17, 1995, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and the Agent
(as amended, modified or supplemented from time to time, the "Agreement") and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). As provided in the Agreement, this Note is subject
to voluntary and mandatory repayment prior to the Maturity Date, in whole or in
part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COMPUTERVISION CORPORATION
By: COPY /s/ Kevin McLaughlin
-------------------------
Title: Vice President, Treasurer
<PAGE> 32
REVOLVING NOTE
$5,000,000 COPY New York, New York
---- November 17, 1995
FOR VALUE RECEIVED, Computervision Corporation, a Delaware Corporation
(the "Borrower"), hereby promises to pay to the order of BANK POLSKA KASA
OPIEKI, S.A., NEW YORK BRANCH (the "Bank"), in lawful money of the United
States of America in immediately available funds, at the office of Bankers
Trust Company (the "Agent") located at 130 Liberty Street, New York, New York
10006, on the Maturity Date (as defined in the Agreement) the principal sum of
FIVE MILLION DOLLARS ($5,000,000) or if less, the unpaid principal amount of all
Revolving Loans (as defined in the Agreement) made by the Bank pursuant to the
Agreement, payable at such times and in such amounts as are specified in the
Agreement.
COPY
- ----
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of November 17, 1995, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and the Agent
(as amended, modified or supplemented from time to time, the "Agreement") and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). As provided in the Agreement, this Note is subject
to voluntary and mandatory repayment prior to the Maturity Date, in whole or in
part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COMPUTERVISION CORPORATION
By: COPY /s/ Kevin McLaughlin
-------------------------
Title: Vice President, Treasurer
<PAGE> 33
REVOLVING NOTE
$30,000,000 COPY New York, New York
---- November 17, 1995
FOR VALUE RECEIVED, Computervision Corporation, a Delaware Corporation
(the "Borrower"), hereby promises to pay to the order of BANKERS TRUST COMPANY
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located
at 130 Liberty Street, New York, New York 10006, on the Maturity Date (as
defined in the Agreement) the principal sum of THIRTY MILLION DOLLARS
($30,000,000) or if less, the unpaid principal amount of all Revolving Loans (as
defined in the Agreement) made by the Bank pursuant to the Agreement, payable
at such times and in such amounts as are specified in the Agreement. COPY
----
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of November 17, 1995, among the Borrower, the financial
institutions from time to time party thereto (including the Bank) and the Agent
(as amended, modified or supplemented from time to time, the "Agreement") and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). As provided in the Agreement, this Note is subject
to voluntary and mandatory repayment prior to the Maturity Date, in whole or in
part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in
the Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COMPUTERVISION CORPORATION
By: COPY /s/ Kevin McLaughlin
-------------------------
Title: Vice President, Treasurer
<PAGE> 1
EXHIBIT 10.30
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
SECOND AMENDMENT (this "Amendment"), dated as of March 22, 1996, among
Computervision Corporation (the "Borrower"), a Delaware corporation, the
financial institutions listed on the signature pages hereto, Bankers Trust
Company, as Agent and Fleet Bank of Massachusetts, N.A., as Co-Agent under the
Credit Agreement referred to below. All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in the
Credit Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, various lending institutions (the "Banks") , and
Bankers Trust Company, as Agent, are parties to a Credit Agreement dated as of
November 17, 1995 (as amended, modified or supplemented through the date hereof,
the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as herein
provided;
NOW, THEREFORE, it is agreed:
1. Section 8.02(j) is hereby amended by inserting the phrase "Designated
Long-Term Factoring and" immediately after the phrase "may enter into" appearing
therein.
2. Section 10 of the Credit Agreement shall be amended by inserting the
following new definition in appropriate alphabetical order:
"Designated Long-Term Factoring" shall mean the Master Agreement and Site
License between the Borrower and GIE PSA Peugeot Citroen, provided that the
Deferred Service Payment pursuant to such agreement shall not exceed $30,000,000
and the factoring pursuant to such agreement shall be expressly without recourse
to the Borrower or any of its Subsidiaries and neither the Borrower nor any of
its Subsidiaries shall grant any Lien on any of their assets pursuant to such
agreement.
3. In order to induce the Banks to enter into this Amendment, the
Borrower hereby (i) makes each of the representations, warranties and agreements
<PAGE> 2
contained in the Credit Agreement as though made on the Amendment Effective
Date, unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date and (ii) represents and warrants that there
exists no Default or Event of Default, in each case on the Amendment Effective
Date (as hereinafter defined), both before and after giving effect to this
Amendment.
4. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement.
5. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
6. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
7. This Amendment shall become effective on the date (the "Amendment
Effective Date") when the Borrower and the Required Banks shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of facsimile transmission) the same to the Agent.
8. From and after the Amendment Effective Date, all references in the
Credit Agreement and each of the other Credit Documents shall be deemed to be
references to the Credit Agreement as modified hereby.
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be duly executed and delivered as of the date first above written.
COMPUTERVISION CORPORATION
By /s/ William Foniri
-------------------------------
Title: Vice President & Treasurer
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/ Christopher Kinslow
-------------------------------
Title: VP
BANK POLSKA KASA OPIEKI, S.A.,
NEW YORK BRANCH
By /s/ Harvey Winter
-------------------------------
Title: Vice President
FLEET BANK OF MASSACHUSETTS,
N.A.,
Individually and as Co-Agent
By /s/ Olaperi Onipede
-------------------------------
Title: Vice President
<PAGE> 1
EXHIBIT 10.31
-------------
THIRD AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIRD AMENDMENT (this "Amendment"), dated as of March 27, 1997, among
Computervision Corporation (the "Borrower"), a Delaware corporation, the
financial institutions listed on the signature pages hereto, Bankers Trust
Company, as Agent and Fleet Bank of Massachusetts, N.A., as Co-Agent under the
Credit Agreement referred to below. All capitalized terms used herein and not
otherwise defined shall have the respective meanings provided such terms in the
Credit Agreement referred to below.
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower, various lending institutions (the "Banks"), and
Bankers Trust Company, as Agent, are parties to a Credit Agreement dated as of
November 17, 1995 (as amended, modified or supplemented through the date hereof,
the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as herein
provided:
NOW, THEREFORE, it is agreed:
1. Section 1.01(A) of the Credit Agreement shall be amended by (a)
deleting the word "and" at the end of clause (iii) thereof and inserting a comma
in lieu thereof, (b) inserting a semi-colon at the end of clause (iv) and the
words "and thereafter" and (c) inserting the following new clause (v):
" (v) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when combined with the amount of all
Swingline Loans then outstanding and the Letter of Credit Outstandings
(exclusive of Swingline Loans and Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, such Revolving
Loans) at such time, an amount equal to (I) at any time prior to the
Borrowing Base Amendment Date, $18,800,000 and (II) at any time on and
after the Borrowing Base Amendment Date, the lesser of (a) the Borrowing
Base then in effect and (b) the Total Commitment at such time (after giving
effect to any reductions to the Total Commitment on such date)."
2. Section 1.01(B)(a) of the Credit Agreement shall be amended by
deleting clause (iii) thereof in its entirety and inserting in lieu thereof the
following new clause (iii):
<PAGE> 2
" (iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of all
Revolving Loans then outstanding and the Letter of Credit Outstandings
(exclusive of Revolving Loans and Unpaid Drawings which are repaid with the
proceeds of, and simultaneously with the incurrence of, such Swingline
Loans) at such time, an amount equal to (I) at any time prior to the
Borrowing Base Amendment Date, $18,800,000 and (II) at any time on and
after the Borrowing Base Amendment Date, the lesser of (a) the Borrowing
Base then in effect and (b) the Total Commitment at such time (after giving
effect to any reductions to the Total Commitment on such date)."
3. Section 1.01(B)(b) of the Credit Agreement shall be amended by
deleting clause (v) thereof in its entirety and inserting in lieu thereof the
following new clause (v):
" (v) any reduction in the Total Commitment or the Borrowing Base
after any such Swingline Loans were made."
4. Section 2.01(b)(i) of the Credit Agreement shall be amended by
deleting clause (y) contained therein in its entirety and inserting in lieu
thereof the following new clause (y):
" (y) when added to the aggregate principal amount of all Loans then
outstanding, an amount equal to (I) at any time prior to the Borrowing Base
Amendment Date, $18,800,000 and (II) at any time on and after the Borrowing
Base Amendment Date, the lesser of (a) the Borrowing Base then in effect
and (b) the Total Commitment at such time (after giving effect to any
reductions to the Total Commitment on such date)."
5. Section 4.02 of the Credit Agreement shall be amended by deleting
clause (A) in its entirety and inserting the following new clause (A) in lieu
thereof:
" (A) REQUIREMENTS: If the sum of (i) the aggregate outstanding
principal amount of Revolving Loans and Swingline Loans (after giving
effect to all other repayments thereof on such date) plus (ii) the Letter
of Credit Outstandings on such date exceeds an amount equal to (I) at any
time prior to the Borrowing Base Amendment Date, $18,800,00 and (II) at any
time on and after the Borrowing Base Amendment Date, the lesser of (a) the
Borrowing Base then in effect and (b) the Total Commitment as then in
effect, the Borrower shall repay on such date the principal of Swingline
Loans, and to the extent such Swingline Loans are insufficient, Revolving
Loans, in an aggregate amount equal to such excess. If, after giving effect
to the prepayment of all outstanding Swingline Loans and
2
<PAGE> 3
Revolving Loans, the aggregate amount of Letter of Credit Outstandings
exceeds an amount equal to (I) at any time prior to the Borrowing Base
Amendment Date, $18,800,000 and (II) at any time on and after the Borrowing
Base Amendment Date, the lesser of (a) the Borrowing Base then in effect
and (b) the Total Commitment as then in effect, the Borrower agrees to pay
to the Agent an amount in cash and/or Cash Equivalents equal to such excess
and the Agent shall hold such payment as security for the obligations of
the Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance satisfactory to the Agent (which shall
permit certain investments in Cash Equivalents satisfactory to the Agent,
until the proceeds are applied to the secured obligations).
6. Section 5.02(A) of the Credit Agreement shall be amended by inserting
the following new clause (c):
" (c) INITIAL BORROWING BASE CERTIFICATE. On the Borrowing Base
Amendment Date, the Borrower shall have delivered to the Agent the initial
Borrowing Base Certificate."
7. Section 7.01 of the Credit Agreement shall be amended by inserting the
following new clauses (i) and (j):
" (i) MONTHLY REPORT. Promptly, and in any event within 10 Business
Days of the end of each calendar month, an accounts receivable aging
categorized by geographical region and a summary of all outstanding
payables."
" (j) BORROWING BASE CERTIFICATE. Once the Borrowing Base Amendment
Date has occurred, not later than 12:00 Noon (New York time) on the seventh
Business Day after the end of each fiscal month, a completed Borrowing Base
Certificate determined as of the last day of such fiscal month."
8. Section 8.09 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and inserting in lieu thereof the following new
Section 8.09:
" 8.09 MINIMUM CONSOLIDATED EBITDA. The Borrower will not permit
Consolidated EBITDA for any Test Period ending closest to the date set
forth below to be less than the amount set forth opposite such date:
3
<PAGE> 4
Date Amount
---- ------
December 31, 1995 $ 86,000,000
March 31, 1996 86,500,000
June 30, 1996 86,500,000
September 30, 1996 86,500,000
December 31, 1996 86,200,000
March 31, 1997 69,800,000
June 30, 1997 68,800,000
September 30, 1997 71,100,000
December 31, 1997 84,400,000
March 31, 1998 115,000,000
June 30, 1998 95,000,000
September 30, 1998 95,000,000
December 31, 1998 100,000,000"
9. Section 8.10 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and inserting in lieu thereof the following new
Section 8.10:
" 8.10 LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio
determined as at the end of any Test Period ending closest to the date set
forth below to be more than the ratio set forth opposite such date:
Date Ratio
---- -----
March 31, 1996 5.75:1
June 30, 1996 5.00:1
September 30, 1996 4.50:1
December 31, 1996 4.25:1
March 31, 1997 6.02:1
June 30, 1997 5.19:1
September 30, 1997 4.76:1
December 31, 1997 3.51:1
March 31, 1998 3.50:1
and each fiscal quarter thereafter."
10. Section 8.11 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and inserting in lieu thereof the following new
Section 8.11:
" 8.11 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the
Fixed Charge Coverage Ratio for any Test Period ending
4
<PAGE> 5
closest to the date set forth below to be less than the ratio set forth
opposite such date:
Date Ratio
---- -----
March 31, 1996 1.00:1
June 30, 1996 1.05:1
September 30, 1996 1.10:1
December 31, 1996 1.10:1
March 31, 1997 1.00:1
June 30, 1997 1.00:1
September 30, 1997 1.00:1
December 31, 1997 1.07:1
March 31, 1998 1.20:1
June 30, 1998 1.20:1
September 30, 1998 1.25:1
December 31, 1998 1.30:1"
11. Section 10 of the Credit Agreement shall be amended by inserting the
following new definition in appropriate alphabetical order:
"Borrowing Base" shall have the meaning provided in the Borrowing Base
Amendment.
"Borrowing Base Amendment" shall be an amendment to this Credit
Agreement executed by the Borrower and the Required Banks, which inter
alia, shall define the Borrowing Base on a mutually agreeable basis.
"Borrowing Base Amendment Date" shall mean the date on which the
Borrowing Base Amendment becomes effective in accordance with its terms, it
being understood that one condition to such effectiveness shall be the
delivery of a Borrowing Base Certificate dated as of such effective date.
"Borrowing Base Certificate" shall have the meaning provided in the
Borrowing Base Amendment.
12. Section 10 of the Credit Agreement shall be further amended by
deleting the period at the end of the definition of "Consolidated EBITDA" and
inserting the following clause in lieu thereof:
"and adjusted by adding, (i) $19,500,000, for the Test Period ending
December 31, 1996; (ii) $26,500,000, for the Test Period ending March 31,
1997; (iii) $26,500,000, for the Test Period ending June 30, 1997; (iv)
5
<PAGE> 6
$26,500,000, for the Test Period ending September 30, 1997; and (v)
$7,000,000, for the Test Period ending December 31, 1997."
13. The Borrower hereby agrees to pay to the Agent for distribution to
each Bank which executes this Amendment, a fee equal to 1/8 of 1% of the
aggregate Commitment of such Bank immediately prior to the Amendment Effective
Date.
14. The Borrower hereby agrees to cooperate in good faith with the Agent
and the Banks with the intention of formulating the definition of Borrowing Base
and having the Borrowing Base Amendment Date occur as soon as reasonably
practical after April 1, 1997. The Borrower hereby agrees to continue to file a
quarterly information statement of Form 10-Q every fiscal quarter and each such
Form 10-Q shall have attached as an exhibit an auditor's review report (which
shall not include any exceptions). Until the Borrowing Base Amendment Date, an
Event of Default will result from the failure of the Borrower to file a form
10-Q complying with the requirements of the preceding sentence. An Event of
Default will exist if the Borrowing Base Amendment Date has not occurred on or
prior to April 1, 1998.
15. In order to induce the Banks to enter into this Amendment, the
Borrower hereby (i) makes each of the representations, warranties and agreements
contained in the Credit Agreement as though made on the Amendment Effective
Date, unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date and (ii) represents and warrants that there
exists no Default or Event of Default, in each case on the Amendment Effective
Date (as hereinafter defined), after giving effect to this Amendment.
16. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement.
17. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
18. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.
6
<PAGE> 7
19. This amendment shall become effective on the date (the "Amendment
Effective Date") when the Borrower and the Required Banks shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of facsimile transmission) the same to the Agent.
20. From and after the Amendment Effective Date, all references in the
Credit Agreement and each of the other Credit Documents shall be deemed to be
references to the Credit Agreement as modified hereby.
* * * * * * * * * * * *
7
<PAGE> 8
IN WITNESS WHEREOF, each of the parties hereto has caused this Third
Amendment to be duly executed and delivered as of the date first above written.
COMPUTERVISION CORPORATION
By: /s/ James E. Hayden
-----------------------
Title: Vice President, Corporate Controller
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Tim Morris
------------------
Title:V.P.
BANK POLSKA KASA OPIEKI, S.A.,
NEW YORK BRANCH
By: /s/ Harvey Winter
---------------------
Title:Vice President
FLEET BANK OF MASSACHUSETTS,
N.A.,
Individually and as Co-Agent
By: /s/ Derrick Upton
---------------------
Title:Assistant Vice President
8
<PAGE> 1
Exhibit 11.01
COMPUTERVISION CORPORATION
Calculation of Shares Used in Determining Earnings/Loss Per Share
For the Years Ended December 31, 1994, 1995 and 1996
(In Thousands)
1994 1995 1996
------------ ------------ ------------
Weighted average number of
common shares outstanding
during the period
48,367 52,591 63,287
============ ============ ============
<PAGE> 1
EXHIBIT 21.01
3/18/97
COMPUTERVISION CORPORATION
(The Following are Wholly Owned Subsidiaries of
Computervision Unless Otherwise Indicated)
NAME STATE OR JURISDICTION
OF INCORPORATION
Computervision Pty. Limited Australia
Computervision Wholesale Pty. Limited Australia
Computervision Retirement Benefits Funds Pty. Limited Australia
Computervision Belgium N.V. Belgium
Computervision (Bermuda) Limited Bermuda
Computervision (Canada) Inc. Canada
Computervision Danmark A.S. Denmark
Oy Computervision A.B. Finland
Computervision S.A. France
(subsidiary of CV Finance Holding, Inc.)
Computervision GmbH Germany
(subsidiary of CV Finance Holding, Inc.)
Computervision Asia Limited Hong Kong
Computervision Service Limited Hong Kong
Computervision Research & Development (India) Pvt. Ltd. India
(100% owned by CV Holding (Mauritius) Ltd.)
Computervision Software Products (India) Private Limited India
(100% owned by CV Holding (Mauritius) Ltd.)
Computervision S.p.A. Italy
(subsidiary of CV Finance Holding, Inc.)
<PAGE> 2
Italcad s.r.l.** Italy
(subsidiary of Computervision S.p.A.)
Nihon Computervision Corporation Japan
(70% owned by Computervision
and 30% owned by Toshiba Corporation)
CV Holding (Mauritius) Ltd. Mauritius
Computervision B.V. Netherlands
(subsidiary of CV Finance Holding, Inc.)
Extended Vision Logistics International B.V. Netherlands
(formerly Computervision Cad/Cam B.V.)
(subsidiary of Computervision B.V.)
Computervision Finance B.V. Netherlands
(subsidiary of Computervision (Bermuda) Limited)
Computervision International Distribution B.V. Netherlands
(subsidiary of Computervision (Bermuda) Limited)
Computervision Norge A.S. Norway
CV Technology Company Limited People's Republic
(50% owned by Computervision Corporation of China
and 50 % by Beijing Aeronautic CAD Technology
Corporation)
Computervision Sp.zo.o Poland
TOO Computervision Russia
(98% owned by Computervision Corporation
and 2% owned by CV International Holding, Inc.)
Computervision Asia Pte. Ltd. Singapore
Computervision Espana, S.A. Spain
Computervision Sverige A.S. Sweden
Computervision Limited United Kingdom
(subsidiary of CV Finance Holding, Inc.)
<PAGE> 3
Computervision Pensions Limited United Kingdom
(subsidiary of Computervision Limited)
Computervision R & D Limited* United Kingdom
(subsidiary of Computervision Limited)
Computervision CAD/CAM Limited* United Kingdom
(subsidiary of Computervision Limited)
Computervision U.K. Holdings Limited* United Kingdom
(subsidiary of Computervision Ltd.)
Cambridge Interactive Systems Limited* United Kingdom
(subsidiary of Computervision Ltd.)
3rd Angle Limited United Kingdom
CV International Holding, Inc. Delaware
(formerly GIS Systems 9, Inc.)
CV Finance Holding, Inc. Delaware
Computervision Securities Corporation Massachusetts
*The Company expects that these subsidiaries will be liquidated during the
second quarter of 1997.
**The assets and liabilities of this subsidiary were transferred to
Computervision S.p.A. effective January 1, 1997. The Company expects that this
subsidiary will be liquidated during the second quarter of 1997.
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated March 27, 1997 (except with respect to the matter
discussed in Note 4, as to which date is April 15, 1997) included in this Form
10-K, into the Company's previously filed Statements on Form S-8 (File Nos.
33-77594, 33-77596, 33-92282, 33-95946 and 33-95990) and on Form S-3 (File Nos.
33-79988 and 33-71438).
/s/ ARTHUR ANDERSEN LLP
-----------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
April 15, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 38,565
<SECURITIES> 0
<RECEIVABLES> 105,438
<ALLOWANCES> 2,929
<INVENTORY> 0
<CURRENT-ASSETS> 164,541
<PP&E> 126,553
<DEPRECIATION> 95,498
<TOTAL-ASSETS> 208,345
<CURRENT-LIABILITIES> 224,490
<BONDS> 217,346
635
0
<COMMON> 0
<OTHER-SE> (317,410)
<TOTAL-LIABILITY-AND-EQUITY> 208,345
<SALES> 191,728
<TOTAL-REVENUES> 477,199
<CGS> 16,382
<TOTAL-COSTS> 218,816
<OTHER-EXPENSES> 203,310
<LOSS-PROVISION> 212
<INTEREST-EXPENSE> 30,806
<INCOME-PRETAX> 24,267
<INCOME-TAX> 2,610
<INCOME-CONTINUING> 21,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,657
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
