<PAGE>
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
DATA GENERAL CORPORATION
- ----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
- ----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- ----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------------
(5) Total fee paid:
- ----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- ----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ----------------------------------------------------------------------
(3) Filing Party:
- ----------------------------------------------------------------------
(4) Date Filed:
- ----------------------------------------------------------------------
<PAGE>
[DATA GENERAL logo] (508) 898-5000
- --------------------------------------------------------------------------------
4400 COMPUTER DRIVE, WESTBORO, MASSACHUSETTS 01580
December 17, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 1:00 P.M., Eastern Standard Time, on Wednesday,
January 27, 1999, at the Enterprise Room, Fifth Floor, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts.
This year in addition to electing directors, you are being asked to
approve an amendment to the Company's Certificate of Incorporation to increase
the number of authorized shares of the Common Stock of the Company. Your Board
of Directors urges you to read the accompanying proxy statement and recommends
that you vote "FOR" both Proposal No. 1 and Proposal No. 2.
At the meeting, the Board of Directors will also report on the
Company's affairs and a discussion period will be provided for questions and
comments.
The Board of Directors appreciates and encourages stockholder
participation in the Company's affairs. Whether or not you plan to attend the
meeting, it is important that your shares be represented. Please sign, date, and
mail the enclosed Proxy in the envelope provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
Ronald L. Skates
President and Chief Executive Officer
<PAGE>
DATA GENERAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Westboro, Massachusetts
December 17, 1998
The Annual Meeting of Stockholders of Data General Corporation will be
held at the Enterprise Room, Fifth Floor, State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts, on Wednesday, January 27, 1999, at
1:00 P.M., Eastern Standard Time, for the following purposes:
1. To elect seven directors for the ensuing year.
2. To approve an amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares
of the Common Stock of the Company from 100 Million shares to
150 Million shares.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on November 30, 1998
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
Stockholders are requested promptly to complete, sign, date and return
the enclosed form of proxy in the envelope provided. No postage is required if
mailed in the United States.
Carl E. Kaplan
Secretary
<PAGE>
DATA GENERAL CORPORATION
4400 COMPUTER DRIVE
WESTBORO, MASSACHUSETTS 01580
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of the Common Stock,
$.01 par value per share ("Common Stock"), of Data General Corporation (the
"Company") in connection with the solicitation of proxies on behalf of the Board
of Directors of the Company for use at the Annual Meeting of Stockholders to be
held on January 27, 1999, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors knows of no
other business that will come before the meeting.
Proxies for use at the meeting will be mailed to stockholders on or
about December 17, 1998, and will be solicited chiefly by mail, but additional
solicitations may be made by telephone or telegram. The Company has retained
Morrow & Co., Inc. to assist it with the solicitation, at an estimated fee of
$5,000, plus reimbursement of out-of-pocket expenses. The Company may enlist the
assistance of brokerage houses and banks in soliciting proxies. All solicitation
expenses, including costs of preparing, assembling and mailing proxy material,
will be borne by the Company.
Revocability and Voting of Proxy
A form of proxy for use at the meeting and a return envelope for the
proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
the Secretary of the Company a written revocation or duly executed proxy bearing
a later date or by voting in person at the meeting. Shares represented by
executed and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. Shares represented by executed proxies which
abstain from one or all matters to be acted upon at the meeting and broker
non-votes will be considered for the purpose of determining whether or not a
quorum is present at the meeting but will not be considered in determining
whether or not the matter for which authority to vote has been properly withheld
is approved by an affirmative vote of the requisite percentage of the shares
voting on such matter. ("Broker non-votes" are shares held by brokers or
nominees which are present in person or represented by proxy, but which are not
voted on a particular matter because instructions have not been received from
the beneficial owner.)
The affirmative vote of the holders of a plurality of the shares of
Common Stock present or represented at the meeting is required for the election
of directors (Proposal No. 1). The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock present or represented at the meeting
is required to approve the amendment to the Company's Restated Certificate of
Incorporation (Proposal No. 2 ). If no specifications are given, the proxies
intend to vote the shares represented thereby "FOR" Proposal No. 1 and "FOR"
Proposal No. 2 as set forth in the accompanying Notice of Annual Meeting of
Stockholders, and in accordance with their best judgment on any other matters
that may properly come before the meeting.
Only stockholders of record at the close of business on November 30,
1998, are entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. The Company had outstanding on November 30, 1998,
49,842,460 shares of Common Stock, each of which is entitled to one vote upon
the matters to be presented at the meeting.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of November 15, 1998,
regarding the beneficial ownership of the Company's Common Stock of (i) each
person known to the Company to own beneficially more than five percent of the
Company's outstanding Common Stock, (ii) the four most highly compensated
executive officers of the Company other than the chief executive officer, and
(iii) all present executive officers and directors of the Company as a group.
Amount and Nature Percentage of
Name and Address of Beneficial Owner of Beneficial Ownership Common Stock
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.
1585 Broadway
New York, New York 10036 ................ 5,162,903 (1) 10.4%
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071 ........... 3,820,000 (2) 7.7%
Cramer Rosenthal McGlynn, Inc.
707 Westchester Avenue
White Plains, New York 10604 ............ 2,773,100 (3) 5.6%
Ethan Allen, Jr. .............................. 103,973 (4) .2%
William J. Cunningham ......................... 159,893 (5) .3%
Arthur W. DeMelle ............................. 102,500 (6) .2%
Joel Schwartz ................................. 189,558 (7) .4%
All present executive officers and directors
as a group (eleven persons) .............. 2,940,911 (8) 5.9%
(1) This figure is based on information set forth in the Schedule 13G dated May
8, 1998 (the "Morgan Schedule"), filed by Morgan Stanley Dean Witter & Co.
("Morgan") with the Securities and Exchange Commission on behalf of itself
and its wholly owned subsidiary, Morgan Stanley Asset Management Limited
("Morgan Limited"). The Morgan Schedule states that Morgan has shared power
to dispose or direct the disposition of 5,162,903 of such shares, and
shared power to vote or direct the vote of 5,004,803 of such shares. The
Morgan Schedule also states that Morgan Limited has shared power to dispose
or direct the disposition of 4,787,672 of such shares, and shared power to
vote or direct the vote of 4,629,572 of such shares.
(2) This figure is based on information set forth in the Amendment to Schedule
13G dated July 9, 1998 (the "Capital Schedule"), filed by Capital Research
and Management Company ("Capital"), with the Securities and Exchange
Commission. The Capital Schedule states that Capital has the sole power to
dispose or direct the disposition of all of such shares and that Capital
has no power to vote or direct the vote of any of such shares. The Capital
Schedule states that Capital disclaims beneficial ownership of all such
shares.
(3) This figure is based on information set forth in the Schedule 13G dated
February 23, 1998 (the "Cramer Schedule"), filed by Cramer Rosenthal
McGlynn, Inc. ("Cramer") with the Securities and Exchange Commission. The
Cramer Schedule states that Cramer has shared power to dispose or direct
the disposition of all of such shares, and shared power to vote or direct
the vote of all of such shares.
<PAGE>
(4) Includes 102,500 shares of Common Stock that may be acquired through
exercise of stock options.
(5) Includes 156,250 shares of Common Stock that may be acquired through
exercise of stock options.
(6) Includes 102,500 shares of Common Stock that may be acquired through
exercise of stock options.
(7) Includes 188,362 shares of Common Stock that may be acquired through
exercise of stock options.
(8) Includes 2,450,339 shares of Common Stock that may be acquired through
exercise of stock options.
<PAGE>
\
PROPOSAL NO. 1 -- ELECTION OF SEVEN DIRECTORS
Seven directors (constituting the entire Board) are to be elected at
the meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. Each person named below is now a director of the Company. In the event
any of these nominees shall be unable to serve as a director, discretionary
authority is reserved to vote for a substitute. The Board of Directors has no
reason to believe that any of these nominees will be unable to serve.
The nominees, their ages, the year in which each first became a
director, their principal occupations or employment during the past five years,
and the number and percentage of shares of Common Stock beneficially owned by
each, are:
<TABLE>
<CAPTION>
Year Amount and
First Nature (1) Percentage
Became Principal Occupation During of of Common
Nominee Age Director the Past Five Years Beneficial Stock (2)
Ownership
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frederick R. Adler 72 1968 Chairman of the Executive Committee of 277,547 0.6%
the Board of Directors since July, 1982; (7)(8)(9)(10)
Managing General Partner of Adler &
Company, a venture capital investment
firm, and a general partner of its
related investment funds for more than
five years; of counsel to Fulbright &
Jaworski L.L.P., attorneys, and until
December, 1995, a Senior Partner of such
firm. (3)(5)
Ferdinand Colloredo- 59 1986 Chairman of the Board and Chief Executive 33,475
Mansfeld Officer of Cabot Industrial Trust, a real (7)(8)(9)
estate investment trust, since 1998;
Chairman of the Board and Chief
Executive Officer of Cabot Partners
Limited Partnership, a real estate
investment firm, 1990 to 1998;
Chairman, Chief Executive Officer and
Chief Investment Officer of Cabot,
Cabot & Forbes Realty Advisors, Inc.,
1986 to 1990. (3)(4)(6)
Jeffrey M. Cunningham 46 1997 Business consultant; Group Publisher of 18,119
Forbes, Inc., 1997 to 1998; Publisher of (7)(8)(9)
Forbes Magazine from 1993 to 1997, and
Associate Publisher from 1989 to 1993.
(4)(5)
<PAGE>
Ronald L. Skates 57 1989 President and Chief Executive Officer of 1,975,849 4.0%
the Company from November, 1989 to (7)(11)
date; (7)(11) Executive Vice President
and Chief Operating Officer from 1988
to 1989; Senior Vice President from
1986 to 1988. (3)
W. Nicholas Thorndike 65 1994 Corporate director and trustee. (4)(5) 34,922
(7)(8)(9)
Donald H. Trautlein 72 1989 Retired; Chairman of the Board of 20,000
Directors and Chief Executive Officer of (7)(9)
Bethlehem Steel Corporation from 1980 to
1986. (3)(4)(5)
Richard L. Tucker 58 1994 Managing Director of Trinity Investment 25,075
Management Corporation. (4)(5)(6) (7)(8)(9)
<FN>
(1) As of November 15, 1998. Unless otherwise indicated, the persons shown
have sole voting and investment power over the shares listed.
(2) Messrs. Colloredo-Mansfeld, Cunningham, Thorndike, Trautlein and
Tucker own less than 0.1% of the Company's Common Stock.
(3) Member of Executive Committee of Board of Directors.
(4) Member of Audit Committee of Board of Directors.
(5) Member of Compensation Committee of Board of Directors.
(6) Member of Nominating Committee of Board of Directors.
(7) Includes shares of Common Stock that may be acquired through exercise
of stock options, as follows: for Mr. Adler, 15,000 shares; for Mr.
Colloredo-Mansfeld, 20,000 shares; for Mr. Cunningham, 8,000 shares;
for Mr. Skates, 1,803,727 shares; for Mr. Thorndike, 20,000 shares; for
Mr. Trautlein, 14,000 shares; and for Mr. Tucker, 20,000 shares.
(8) Includes shares of Common Stock that may be acquired through exercise
of share units under the Data General Corporation Stock Compensation
Plan for Non-Employee Directors, as follows (without regard to
fractional shares): for Mr. Adler, 3,674 shares; for Mr.
Colloredo-Mansfeld, 1,267 shares; for Mr. Cunningham, 4,119 shares; for
Mr. Thorndike, 2,922 shares; and for Mr. Tucker, 2,875 shares.
(9) Includes 1,500 restricted shares of Common Stock granted to
Non-Employee Directors in November, 1997, vesting 500 shares each
November based on continued service on the Board.
(10) Includes 256,873 shares of Common Stock owned by a trust as to which
Mr. Adler has neither voting nor investment powers.
<PAGE>
(11) Includes 6,000 shares of Common Stock owned by family members as to
which Mr. Skates disclaims beneficial ownership; includes also 32,000
shares of Common Stock in which Mr. Skates has shared voting and
investment powers, owned by family trusts of which Mr. Skates is a
co-trustee and in which each trustee has the power without the other to
both vote and dispose of trust assets.
</FN>
</TABLE>
Mr. Adler is a director of Prime Cellular, Inc., Shells Seafood
Restaurants, Inc., and USA Detergents, Inc.; a member of the Board of Memorial
Sloan-Kettering Cancer Center; Chairman of the Board of Intracoastal Health
Systems; and of counsel to Fulbright & Jaworski L.L.P., legal counsel to the
Company. Mr. Colloredo-Mansfeld is a director of Raytheon Company, and until
November 30, 1995 was a director of Shawmut National Corporation. Mr.
Colloredo-Mansfeld is Chairman of the Boards of Trustees of Cabot Industrial
Trust and of Massachusetts General Hospital, and is a trustee of the Boston
Athenaeum. Mr. Cunningham serves as a member of the Boards of Schindler Holding
Ltd., the Global Economic Council, the Junior Achievement Foundation and the
American Swiss Foundation. Mr. Skates is a trustee of Cabot Industrial Trust and
of Massachusetts General Hospital. Mr. Thorndike serves as a corporate director
or trustee of a number of organizations, including Bradley Real Estate Inc.,
Cabot Industrial Trust, Courier Corporation, Massachusetts General Hospital,
Providence Journal Company, Eastern Utility Associates and The Putnam Funds. In
February, 1994, Mr. Thorndike accepted appointment as a successor trustee of
private trusts in which he has no beneficial interest, and concurrently became,
serving until October, 1994, Chairman of the Board of two privately owned
corporations controlled by such trusts that filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in August, 1994. Mr.
Trautlein is a director of PXRE Corporation.
The Board of Directors has an Audit Committee which met five times
during the fiscal year ended September 26, 1998 (the "1998 fiscal year").
Representatives of Price Waterhouse LLP or its successor, PricewaterhouseCoopers
LLP, the Company's auditors, were present at all such meetings. The primary
functions of the Audit Committee are to provide assistance to the Board of
Directors in fulfilling its responsibilities relating to corporate accounting
and reporting practices and to maintain, by way of regularly scheduled meetings,
a direct line of communication among the directors, the Company's internal
auditors and independent accountants. In addition, the Audit Committee is
responsible for reviewing and monitoring the performance of non-audit services
by the Company's independent accountants and for considering the range of
non-audit and audit fees.
The Board of Directors has a Nominating Committee. During the 1998
fiscal year, the Nominating Committee did not meet. The primary functions of the
Nominating Committee are to consider qualified candidates to fill vacant seats
on the Board which may arise during the year and to recommend to the Board for
nomination for election to fill any such vacancies such candidates as it deems,
in its discretion, appropriate. The Nominating Committee does not consider
nominees recommended by stockholders for election as directors.
The Board of Directors has a Compensation Committee. During the 1998
fiscal year, the Compensation Committee met twice. The Compensation Committee's
functions are to review the compensation of the Company's executive officers and
recommend to the Board of Directors the compensation of such executive officers.
Other committees on which directors serve include the Executive
Committee, the Employee Qualified Stock Purchase Plan Committee and the
committees for the Company's employee stock option plans.
<PAGE>
During the 1998 fiscal year, the Board of Directors held seven
meetings. Each of the directors attended at least 75% of the meetings of the
Board of Directors and of all the committee(s) of the Board of Directors on
which the Director served.
THE BOARD OF DIRECTORS DEEMS THE ELECTION TO THE BOARD OF DIRECTORS OF ALL THE
ABOVE-DESCRIBED NOMINEES TO BE IN THE BEST INTEREST OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 1.
<PAGE>
PROPOSAL NO. 2 - INCREASE OF AUTHORIZED COMMON STOCK
The Board of Directors has unanimously adopted and submits to
stockholders for their approval an amendment to Article FOURTH of the Restated
Certificate of Incorporation to increase the authorized number of shares of
Common Stock, $.01 par value, from 100 Million to 150 Million shares. The text
of the proposed amendment is set forth in Appendix A to this proxy statement and
the following discussion is qualified by reference to Appendix A. The Board of
Directors recommends a vote FOR approval of this amendment.
The authorized stock of the Company consists of 100,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock, $.01 par value. As of
September 26, 1998, 49,897,604 shares of Common Stock were issued and
outstanding, 208,653 shares of which were held by the Company as treasury
shares. No shares of Preferred Stock are issued or outstanding. As of September
26, 1998, (a) 8,122,000 shares were reserved for issuance upon conversion of the
Company's 6% Convertible Subordinated Notes due 2004, (b) approximately
8,676,000 shares were reserved for issuance under the Company's stock option
plans, under which options to purchase a total of approximately 5,291,000 shares
of Common Stock were outstanding, (c) approximately 1,598,000 shares were
reserved for issuance pursuant to the employee stock purchase program, and (d)
100,000 shares were reserved for issuance under the Company's Stock Compensation
Plan for Non-Employee Directors, under which approximately 12,000 share units
(ultimately convertible to an equal number of shares of Common Stock) were
outstanding. Accordingly, approximately 31,500,000 shares of Common Stock
remained available and unreserved as of September 26, 1998.
The proposed increase in the authorized number of shares of Common
Stock is designed to provide the Company with flexibility for funding its
capital needs and corporate growth, for potential acquisitions, for future stock
dividends and splits and for reservation of shares to meet the needs of its
various option and other employee benefit plans. The Company has no present
plans for the issuance of any of the additional shares to be authorized if this
amendment is adopted. Such additional shares may be issued on such terms and at
such times as the Board of Directors may determine without further action by the
stockholders, unless otherwise required by the applicable rules of the New York
Stock Exchange and other applicable laws or regulations. Except in certain cases
such as a stock dividend, the issuance of additional shares would have the
effect of diluting the voting power of existing stockholders. Each additional
share of Common Stock authorized by this amendment would have the same rights
and privileges as each share of outstanding Common Stock. Stockholders of Common
Stock have no preemptive rights to receive or purchase any shares of the
presently authorized Common Stock or any of the shares which would be authorized
by this amendment.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting will be necessary
for the approval of this amendment.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 2.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
for the 1996, 1997 and 1998 fiscal years of those persons who were (i) during
the 1998 fiscal year, the chief executive officer and (ii) at the end of the
1998 fiscal year, the four most highly compensated executive officers other than
the chief executive officer.
<TABLE>
<CAPTION>
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------------
Long-term
Annual Compensation (000's) Compensation (1)
------------------------------------- ------------------
Other Securities
Fiscal Year Annual Underlying
Name and Principal Position Ending Salary Bonus Compensation (2) Options
- --------------------------- ------------- ------ ----- --------------- -------
<S> <C> <C> <C> <C> <C>
Ronald L. Skates 1998 $ 750.0 $ 0 $ 2,364.4 (3) 500,000
President & 1997 $ 630.0 $ 10,000.0 100,000
Chief Executive Officer 1996 $ 630.0 $ 1,360.0 75,000
Ethan Allen, Jr. 1998 $ 279.2 $ 0 35,000
Senior Vice President 1997 $ 219.8 $ 116.0 10,000
1996 $ 210.0 $ 75.0 10,000
William J. Cunningham 1998 $ 360.0 $ 0 25,000
Senior Vice President 1997 $ 340.0 $ 275.0 25,000
1996 $ 315.0 $ 185.0 30,000
Arthur W. DeMelle 1998 $ 340.0 $ 0 25,000
Senior Vice President 1997 $ 340.0 $ 255.0 20,000
1996 $ 315.0 $ 135.0 30,000
Joel Schwartz 1998 $ 340.0 $ 0 25,000
Senior Vice President 1997 $ 340.0 $ 255.0 25,000
1996 $ 315.0 $ 185.0 30,000
<FN>
(1) The Company does not maintain any long-term incentive plans other than its
option plans. All long-term compensation earned by executive officers of
the Company during the years shown have been in the form of stock option
grants under those option plans.
(2) Except as noted, exclusive of tax preparation services and other personal
benefits aggregating less than $25,000 per individual.
(3) Includes $ 2,333,333 representing that portion of the $7,000,000 restricted
bonus awarded to Mr. Skates in September, 1997 that was earned and vested
during the 1998 fiscal year.
</FN>
</TABLE>
<PAGE>
Option Grants in the 1998 Fiscal Year
The following table sets forth further information on grants of stock
options to the named executive officers during the 1998 fiscal year. The Company
does not have a stock appreciation rights plan.
<TABLE>
<CAPTION>
Option Grants in the 1998 Fiscal Year
- -----------------------------------------------------------------------------------------------------------------
Number % of Total
of Options
Securities Granted Market Potentially Realizable Value
Underlying to Price(3) at Assumed Annual Rates
Options Employees Option at Option of Stock Price Appreciation
Granted in Fiscal Exercise Date of Expiration For Option Term (4)
Name (1) (2) Year Price Grant Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. L. Skates 500,000 26.6 % $ 20.00 $ 20.00 11/2/07 -- $6,288,946 $15,937,425
E. Allen, Jr. 17,500 0.9 % $ 10.00 $ 20.00 11/2/07 $ 175,000 $ 395,113 $ 732,810
7,500 0.4 % $ 20.00 $ 20.00 11/2/07 -- $ 94,334 $ 239,061
10,000 0.5 % $ 7.75 $ 15.50 5/4/08 $ 77,500 $ 174,979 $ 324,530
--------------------- -----------------------------------------
35,000 1.8 % $ 252,500 $ 664,426 $ 1,296,401
W. J. Cunningham 17,500 0.9 % $ 10.00 $ 20.00 11/2/07 $ 175,000 $ 395,113 $ 732,810
7,500 0.4 % $ 20.00 $ 20.00 11/2/07 -- $ 94,334 $ 239,061
--------------------- -----------------------------------------
25,000 1.3 % $ 175,000 $ 489,447 $971,871
A. W. DeMelle 17,500 0.9 % $ 10.00 $ 20.00 11/2/07 $ 175,000 $ 395,113 $ 732,810
7,500 0.4 % $ 20.00 $ 20.00 11/2/07 -- $ 94,334 $ 239,061
--------------------- -----------------------------------------
25,000 1.3 % $ 175,000 $ 489,447 $971,871
J. Schwartz 17,500 0.9 % $ 10.00 $ 20.00 11/2/07 $ 175,000 $ 395,113 $ 732,810
7,500 0.4 % $ 20.00 $ 20.00 11/2/07 -- $ 94,334 $ 239,061
--------------------- -----------------------------------------
25,000 1.3 % $ 175,000 $ 489,447 $ 971,871
<FN>
(1) The grants described above were made in the 1998 fiscal year. Thereafter,
during the first forty-five days of the 1999 fiscal year, Mr. Skates was
granted an option for 500,000 shares at $17.32 per share. Also during the
first forty-five days of the 1999 fiscal year, Messrs. Cunningham,
Schwartz, and Allen were each granted an option for 40,000 shares at $8.66
per share. The closing market price of the Company's Common Stock on the
date of these grants to Mr. Skates and the other executive officers was
$17.32 per share.
(2) All of the options shown in this table, although immediately exercisable,
are subject to disposition restrictions that require that any shares
acquired on the exercise of such options be offered for resale to the
Company at the original option exercise price upon termination of the
optionee's employment with the Company for any reason except death or
retirement with the consent of the Company. These restrictions lapse in 25%
installments on each of the first four anniversaries of the option grant or
upon a change of control of the Company (as defined in the discussion under
the heading "Employee Agreements", below).
<PAGE>
(3) The market price shown is the closing price of the Company's Common Stock,
based on New York Stock Exchange Composite Tape trading for the date on
which the option was granted.
(4) The projected realizable values shown assume future market prices based,
pursuant to applicable Securities and Exchange Commission regulations, on
arbitrarily assumed annual stock price appreciation rates of 0%, 5% and 10%
for the full terms of the options. These projections are provided for
illustrative purposes only, in order to comply with such regulations, and
no representations are made as to what the actual future price of the
Company's stock will be at any point in time
</FN>
</TABLE>
Option Exercises in the 1998 Fiscal Year and Fiscal Year-End Option Values
The following table sets forth information with respect to (i) stock
options exercised by the chief executive officer and the other named executive
officers during the 1998 fiscal year, and (ii) unexercised, in-the-money stock
options held by such individuals at September 26, 1998.
<TABLE>
<CAPTION>
Option Exercises in the 1998 Fiscal Year and
1998 Fiscal Year-End Option Values
- -----------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year End Fiscal Year End
Acquired -------------------------- ------------------------------
on Value Exercisable Exercisable Exercisable Exercisable
Name Exercise Realized Vested Unvested Vested Unvested
Options(2) Options(2) Options (2) Options (2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R. L. Skates 26,536 $ 343,087 653,650 650,077 $ 918,841 $ 80,490
E. Allen, Jr. 0 12,500 50,000 $ 74,950 $ 139,450
W. J. Cunningham 0 52,500 63,750 $ 308,188 $ 221,125
A. W. DeMelle 0 42,500 60,000 $ 254,675 $ 205,450
J. Schwartz 0 84,612 63,750 $ 486,744 $ 221,125
<FN>
(1) Year-end spread value of options are calculated based on the $11.50 closing
price of the Company's Common Stock on September 25, 1998 (the last trading
day of the 1998 fiscal year), based on New York Stock Exchange Composite
Tape trading for such day.
(2) All of the options shown in this table, although immediately exercisable,
are subject to disposition restrictions that require that any shares
acquired on the exercise of such options be offered for resale to the
Company at the original option exercise price upon termination of the
optionee's employment with the Company for any reason except death or
retirement with the consent of the Company. These restrictions lapse in 25%
installments on each of the first four anniversaries of the option grant.
The option data shown in the "vested" columns relate only to the portion of
any currently outstanding options that have already vested and are free of
the disposition restrictions and related resale requirement. The option
data shown in the "unvested" columns relate to the portion of any currently
outstanding options that have not yet vested, are still subject to the
disposition restrictions and related resale requirement, and thus can be
viewed as being comparable to options that are not yet exercisable.
</FN>
</TABLE>
<PAGE>
Compensation Pursuant to Plan
Pension Plans
The Company maintains a noncontributory, defined benefit pension plan
(the "Pension Plan"). Substantially all domestic employees of the Company are
eligible to participate in the Pension Plan. All executive officers of the
Company participate in the Pension Plan. The amount of the contribution accrued
each year by the Company and participating affiliates under the Pension Plan is
actuarially determined and equals at least the minimum amount required under the
Internal Revenue Code, as amended (the "Code"). Pension benefits paid from the
Pension Plan are based on base salary, exclusive of overtime, bonuses, nonsales
incentive compensation and other similar types of payments but inclusive of
sales incentives and commissions, up to a certain maximum, and an employee's
period of service. In general, pension benefits become nonforfeitable (vested)
after the completion of five years of service.
Under the Pension Plan, a participant's pension at normal retirement
(age 65) is equal to the sum of his yearly benefits accrued during his period of
service. In general, for each year of credited service completed by an employee
after becoming a participant in the Pension Plan, the employee accrues an annual
benefit in an amount equal to 1.5 percent of his compensation. For the Pension
Plan year commencing October 1, 1998, the amount of compensation taken into
account to calculate the Pension Plan benefit may not exceed $160,000 per annum
under the Code. Each employee who was a participant on October 1, 1997 had his
benefit updated based on his compensation on October 1, 1997, for each year of
service as a participant in the Pension Plan to that date. As of October 29,
1998, the estimated annual benefits payable upon retirement at age 65, based on
a single life annuity, pursuant to the Pension Plan for the following
individuals would be: to Mr. Skates, $58,275; to Mr. Allen, $55,750; to Mr. W.
Cunningham, $37,037; to Mr. DeMelle, $33,763; and to Mr. Schwartz, $49,246. In
addition to pension benefits, the Pension Plan provides amounts to fund medical
benefits for certain retired employees and their dependents.
In June 1989, the Board of Directors adopted the Data General
Corporation Supplemental Retirement Benefit Plan (the "Supplemental Plan")
effective October 1, 1989. The Supplemental Plan provides additional retirement
benefits for eligible employees, including executive officers of the Company,
who retire under the Company's Pension Plan. The Supplemental Plan was adopted
in order to compensate eligible employees for reductions in the benefits
calculated under the Pension Plan due to the change in the formula for the
calculation of benefits under the Pension Plan and/or legislative and regulatory
limitations. The Supplemental Plan benefit equals a participant's retirement
benefit calculated in an amount equal to one percent of his compensation not in
excess of the Federal Insurance Contribution Act ("FICA") wage base and two
percent of his compensation in excess of the FICA wage base, reduced by an
amount equal to the actual amount of the benefit that is payable under the
normal form of payment provided for under the Pension Plan. The Supplemental
Plan was also updated by basing the benefit thereunder on the participant's
compensation on October 1, 1997. The Supplemental Plan is funded pursuant to a
non-qualified deferred compensation arrangement under which the Company
transfers certain amounts to a trust to be held for the benefit of the
Supplemental Plan participants, except in the event of the insolvency of the
Company. As of October 29, 1998, the estimated annual benefits payable upon
retirement at age 65, based on a single life annuity, pursuant to the
Supplemental Plan for the following individuals would be: to Mr. Skates,
$228,405; to Mr. Allen, $72,968; to Mr. W. Cunningham, $55,957; to Mr. DeMelle,
$49,935; and to Mr. Schwartz, $72,183.
In December 1994, the Board of Directors adopted a Supplemental
Retirement Benefit (the "Supplemental Benefit") to provide Mr. Skates a
retirement benefit to supplement that available to him under the Company's
Pension Plan and Supplemental Plan. The Supplemental Benefit provides that if
Mr. Skates retires
<PAGE>
from service to the Company at age 65, he will receive from the
Company' Pension Plan, current Supplemental Plan and the Supplemental Benefit
a combined joint and survivor annuity equal to 60% of the average of his
three highest years of cash compensation excluding any bonuses he may be
awarded. If Mr. Skates retires prior to attaining age 65, the 60% benefit
rate will be reduced by two percentage points for each year his retirement
precedes age 65. If at any time Mr. Skates dies, is terminated due to
disability, is terminated by the Board without cause, or his employment
is terminated other than for cause after a Change in Control (as defined
in the discussion under the heading "Employee Agreements", below), payment
of the above-described benefit may commence prior to age 65, at the reduced
rate described above. As of October 29, 1998, the estimated annual benefit
payable upon retirement at age 65 pursuant to the Pension Plan, the Supplemental
Plan and the Supplemental Benefit to Mr. Skates would be $450,000.
Stock Options
The Company maintains a Restricted Stock Option Plan, Employee Stock
Option Plan, 1998 Employee Stock Option Plan, Employee Qualified Stock Purchase
Plan, 1994 Non-Employee Director Stock Option Plan and 1998 Non-Employee
Director Stock Option Plan which are available to the officers and directors of
the Company.
Restricted Stock Option Plan. The Restricted Stock Option Plan (the
"Restricted Plan"), which was originally adopted by the Board of Directors on
November 19, 1976 and approved by the stockholders on January 18, 1977,
authorizes the Company to grant "restricted stock options" to employees and
consultants of the Company and its subsidiaries. The Restricted Plan, which was
amended in 1988 to extend the termination date of the Restricted Plan to
December 31, 1998 and which has been amended from time to time to increase the
number of shares available thereunder, provides for the granting of options to
purchase up to 11,000,000 shares of Common Stock coupled with a prohibition
against disposition of the shares and an obligation to offer such shares for
resale to the Company at their original purchase price upon termination of
employment for any reason except death or retirement with the consent of the
Company. The restrictions against disposition and the obligation of resale lapse
from time to time as to portions of the grant, as determined by the Restricted
Stock Option Plan Committee (the "Restricted Plan Committee"). The Restricted
Plan Committee which administers the Restricted Plan consists of not fewer than
three non-employee directors, and currently consists of Messrs. J. Cunningham,
Thorndike, Trautlein and Tucker. The Restricted Plan provides for the issuance
of Common Stock to employees for any lawful consideration as determined by the
Board of Directors so long as it is not less than the lower of (i) 50 percent of
the book value per share of Common Stock as of the end of the fiscal year
immediately preceding the date of such grant or (ii) 25 percent of the fair
market value per share of Common Stock on the date of such grant. Subject to the
terms of the Restricted Plan, the Restricted Plan Committee has exclusive
authority to select the employees or others to whom options are granted and to
determine the number of shares subject to such options and the time or times
when options are exercisable
Employees of the Company and its subsidiaries, including officers and
consultants (approximately 4,700 persons) are eligible to receive options under
the Restricted Plan. Directors who are also employees are eligible to receive
options if they are not members of the Restricted Plan Committee. Directors who
are not employees may also receive options under the Non-Employee Director Stock
Option Plans described under the heading "Non-Employee Director Stock Option
Plans", below. Options may be granted to the same employee on more than one
occasion. However, the number of shares issued to any one employee under the
Restricted Plan shall not exceed ten percent of the aggregate number of shares
issuable thereunder nor exceed three percent during any consecutive twelve-month
period. The Company reserves the right under the Restricted Plan to terminate an
employee's option with the employee's consent and to substitute one or more
options with different terms and conditions, including a lower option price.
Options may be granted under the Restricted Plan from time to time through
December 31, 1998, the termination date of the Plan.
<PAGE>
An option granted under the Restricted Plan is a non-statutory option
and is taxed in accordance with Section 83 of the Code and the regulations
thereunder. An employee granted an option under the Restricted Plan generally
will realize income when the shares purchased pursuant to the option become
transferable or are no longer subject to a substantial risk of forfeiture. The
income realized (the difference between the exercise price of the option and the
fair market value of the shares at the time the shares are transferable or are
no longer subject to a substantial risk of forfeiture) will be ordinary income
to the employee for which the Company can claim a business expense deduction.
Employee Stock Option Plans. The Employee Stock Option Plan, which was
adopted by the Board of Directors on October 6, 1981, approved by the
stockholders on January 19, 1982 and amended from time to time thereafter, among
other things, to increase the number of shares available thereunder, authorizes
the Company to grant either "incentive stock options" to employees of the
Company or its subsidiaries, under Section 422 of the Code, or non-qualified
options to purchase collectively up to 7,000,000 shares of Common Stock. The
1998 Employee Stock Option Plan, a broadly based plan in which all employees of
the Company are eligible to participate, was adopted by the Board of Directors
on November 4, 1998. The 1998 Employee Stock Option Plan authorizes the Company
to grant non-qualified options to purchase collectively up to 2,500,000 shares
of Common Stock. Substantially all employees of the Company and of designated
subsidiaries are eligible to participate in the above-described employee stock
option plans (collectively, the "Employee Stock Option Plans"). The purpose of
the Employee Stock Option Plans is to strengthen the Company's ability to
attract, motivate, and retain employees and, in particular, to provide the
Company with the necessary flexibility to compete for highly skilled personnel.
Each of the Employee Stock Option Plans is administered by an Employee
Stock Option Plan Committee appointed by the Board of Directors (the "Stock
Option Committee"), currently consisting of Messrs. J. Cunningham, Thorndike,
Trautlein and Tucker, which, subject to the provisions of the applicable
Employee Stock Option Plan, has exclusive authority to select the times when and
the employees to whom stock options may be granted, the number of shares of
Common Stock to be acquired by the exercise of stock options, the exercise price
and the term during which options may be exercised.
To qualify as an incentive stock option under Section 422 of the Code,
an option, among other things, must (i) not be exercisable more than ten years
from the date of grant; (ii) have an exercise price equal to or in excess of the
fair market value of the Common Stock on the date of grant and (iii) not be
transferable other than by will or laws of descent and distribution and must be
exercisable during the employee's lifetime only by him. The non-qualified
options may be granted with an exercise price as determined by the applicable
Employee Stock Option Committee so long as it is not less than the lower of (i)
50 percent of the book value per share of Common Stock as of the end of the
fiscal year immediately preceding the date of such grant or (ii) 25 percent of
the fair market value per share of Common Stock on the date of such grant.
The option agreements between the Company and the optionee contain
restrictions against disposition of the shares acquired upon exercise of
non-qualified options and contain the obligation on the part of the optionee to
offer such shares for resale to the Company at their original purchase price
upon termination of the optionee's employment with the Company. The restrictions
against disposition and the obligation of resale lapse from time to time as to
portions of the grant, as determined by the applicable Employee Stock Option
Committee.
An employee who is granted an incentive stock option will generally
recognize no income or gain on the grant or exercise of the incentive stock
option. If stock purchased pursuant to the exercise of an incentive stock option
is sold more than two years from the date the option is granted and one year
from the date of exercise, the gain realized on the sale of the stock (the
difference between the exercise price of the option and the amount realized on
the sale) will be treated as capital gain rather than as ordinary income. In
general, in the case of incentive stock options, the excess of the fair market
value of the shares on the date of exercise (or, if later, the date the shares
become vested for purposes of Section 83 of the Code) over the exercise price is
included in alternative minimum taxable income for purposes of the "alternative
minimum tax" provisions of the Code. The non-qualified options are taxed in
accordance with Section 83 of the Code and regulations thereunder in the same
manner as restricted stock options. (See previous discussion of tax consequences
under the heading "Restricted Stock Option Plan", above.)
In general, the Company can deduct as a business expense only the
amount equal to the ordinary income, if any, recognized by an employee upon his
sale of Common Stock purchased pursuant to an incentive stock option, as well as
the ordinary income realized by an optionee with respect to the exercise of a
non-qualified option. Under current accounting practice, no charge to the income
of the Company will result from the grant or exercise of an incentive stock
option because the exercise price of the incentive stock option must equal or
exceed the fair market value of the Common Stock on the date of grant. In the
case of a grant of a non-qualified stock option an amount equal to the excess of
the fair market value of the Common Stock at the date of grant over the exercise
price would be amortized as a charge over the option's vesting period. The tax
effect of the benefit of such business expense for tax return purposes in excess
of that charged to earnings will be credited to the Company's additional paid-in
capital.
Employee Qualified Stock Purchase Plan. The Employee Qualified Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors on
November 10, 1970 and approved by the stockholders on January 12, 1971. The
Purchase Plan, which has been amended from time to time, among other things, to
increase the number of shares available thereunder, authorizes the Company to
issue up to 11,100,000 shares of Common Stock.
Substantially all employees who have completed ninety days' employment
with the Company or its designated subsidiaries are eligible to participate in
the Purchase Plan. The Company believes that the Purchase Plan has advanced the
interests of the Company and its subsidiaries and furthered its growth and
development by encouraging and enabling employees to acquire the Common Stock of
the Company and an increased personal and proprietary interest in the continued
success and progress of the Company.
Under the Purchase Plan, options are granted twice yearly and are
exercisable six months from the date of grant. The option price is the lesser of
85 percent of the average market price of the Common Stock of the Company on (i)
the date the option is granted or (ii) the last day of the six month period.
Each eligible employee who continues to be a participant in the Purchase Plan on
the last day of the six month period is deemed to have exercised his option on
such date. The number of shares purchased at the option price by each
participating employee is determined by the amounts accumulated through payroll
deductions of up to 10 percent of such employee's regular base pay and,
effective February 1, 1999, certain designated bonus and other compensation
earned during such six-month period.
Under the Purchase Plan, options granted to participants are intended
to constitute options granted pursuant to an "employee stock purchase plan"
within the meaning of Section 423 of the Code. Accordingly, no taxable income
will be realized by an employee until the shares purchased pursuant to an option
are sold. Under certain circumstances, all or a portion of the gain realized may
be treated as ordinary income to the employee, and the Company will be entitled
to claim a business expense deduction of the amount of ordinary income
recognized by the employee.
The Purchase Plan is administered by the Employee Qualified Stock
Purchase Plan Committee (the "Purchase Plan Committee"), which is composed of at
least three members of the Board of Directors. The Purchase Plan Committee
currently consists of Messrs. Adler, J. Cunningham, Thorndike, Trautlein and
Tucker. Members of the Purchase Plan Committee are presently not eligible to
participate in the Purchase Plan, nor is any employee entitled to participate in
the Purchase Plan to the extent the employee's rights to purchase Common Stock
would accrue at a rate which exceeds $25,000 of fair market value of such stock,
as determined at the time such option is granted, for each calendar year in
which such option is outstanding at any time, or that, after the granting of the
option, such employee would own more than five percent of the Common Stock of
the Company, as defined and prescribed by the Code.
During the 1998 fiscal year, pursuant to the Purchase Plan, Mr. Skates
purchased 841 shares of Common Stock at an average per share price of $13.23 ;
Mr. W. Cunningham purchased 841 shares of Common Stock at an average per share
price of $13.23; Mr. Schwartz purchased 641 shares of Common Stock at an average
per share price of $12.18; Mr. Allen purchased 1,237 shares of Common Stock at
an average per share price of $11.91; and all executive officers as a group
purchased 3,560 shares of Common Stock at an average per share price of $12.58.
Non-Employee Director Stock Option Plans. The 1994 Non-Employee
Director Stock Option Plan (the "1994 Directors' Plan") was adopted by the Board
of Directors on October 31, 1993 and approved by the stockholders on January 26,
1994. The 1994 Directors' Plan authorizes the Company to issue up to 150,000
shares of the Company's Common Stock. The 1994 Directors' Plan provides for the
issuance of an annual option to purchase 4,000 shares of the Company's Common
Stock to each non-employee director who is elected to the Board of Directors at
the Annual Meeting of Stockholders. The 1998 Non-Employee Director Stock Option
Plan (the "1998 Directors' Plan") was adopted by the Board of Directors and
150,000 of the Company's Treasury Shares were allocated to the 1998 Directors'
Plan on November 4, 1998. The 1998 Directors' Plan provides for the issuance of
an annual option to purchase 7,500 shares of the Company's Common Stock to each
non-employee director who is elected to the Board of Directors at the Annual
Meeting of Stockholders (subject to the limitation that the number of shares
available for purchase under such option is reduced by the number of shares
available for purchase under the option simultaneously granted to such director
under the 1994 Directors' Plan). The exercise price per share under each of the
1994 Directors' Plan and the 1998 Directors' Plan (collectively, the "Directors'
Plans") is equal to 100% of the closing price of the Company's Common Stock on
the date of the Company's Annual Meeting of Stockholders at which the subject
director is elected to the Board of Directors.
The Directors' Plans were established to serve the best interests of
the Company by enhancing the ability of the Company to attract and retain the
services of knowledgeable and experienced persons who, through their efforts and
expertise, can make a significant contribution to the success of the Company by
serving as members of the Company's Board of Directors.
Each of the Directors' Plans provide that the option to purchase Common
Stock will be coupled with a prohibition against disposition of the shares and
an obligation to offer such shares for resale to the Company for any reason
except death, disability, or retirement with the consent of the Company. The
restrictions against disposition and the obligation of resale will lapse
cumulatively to the extent of 25 percent of the grant on each anniversary date
of grant of the option. Options will not be transferable other than by will or
the laws of descent and distribution, and will be exercisable during the
lifetime of an optionee only by the optionee. Options will be exercisable only
while the optionee is serving as a director of the Company or (i) within 12
months of the director's retirement from the Board of Directors with the consent
of the Company; (ii) within 12 months of the optionee becoming disabled to serve
as a director of the Company; or (iii) by the director's heirs or estate within
12 months of the director's death. Options terminate ten years from the date of
grant. In the event of a Change of Control of the Company (see definition of
"Change of Control" in the discussion under the heading "Employee Agreements",
below) the restrictions against disposition and the obligation of resale of the
shares acquired pursuant to an option under the Directors' Plans will lapse and
the shares will become freely tradeable.
An option granted under either Directors' Plan will be a non-statutory
stock option and will be taxed in accordance with Section 83 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder. A director
granted an option pursuant to either Directors' Plan generally will realize
income when the shares purchased under the option become transferable or are no
longer subject to a substantial risk of forfeiture. The income realized (the
difference between the exercise price of the option and the fair market value of
the shares at the time the shares become transferable or are no longer subject
to a substantial risk of forfeiture) will be ordinary income to the optionee for
which the Company will be able to claim a business expense deduction.
The Board may terminate, modify or suspend each of the Directors' Plans
provided that no such modification shall, without further stockholders'
approval, increase the maximum number of shares which may be issued (other than
adjustments for capital changes), shorten the period over which restrictions
against disposition and obligation of resale lapse, amend the option exercise
price (other than adjustments for capital changes), or extend the period during
which options may be granted or exercised under the Directors' Plan. During the
1998 fiscal year, Messrs. Adler, Colloredo-Mansfeld, J. Cunningham, Thorndike,
Trautlein and Tucker were each granted an option under the 1994 Directors' Plan
to purchase 4,000 shares of the Company's Common Stock with an exercise price
per share of $15.44, which was the fair market value on the date of grant. Each
director elected at the January, 1999 Annual Meeting of Stockholders will be
granted options under the Directors' Plans to purchase, in the aggregate, 7,500
shares of the Company's Common Stock with an exercise price equal to the fair
market value on the date of grant.
Employee Agreements
Beginning in February 1989, the Company entered into employment
agreements (the "Agreements") which become effective upon a change in control of
the Company with its full-time executive officers, including Messrs. Skates,
Allen, W. Cunningham, DeMelle and Schwartz. The Board of Directors believes that
such Agreements will better ensure retention of the current officers and attract
the services of new officers. The Board also believes that under such Agreements
officers are able to devote their full attention and energies to the conduct of
the Company's business without the potentially disturbing distractions that
might arise from a change in control of the Company. Should the Company receive
any proposals with respect to any change in its control, such officers could
then, without being influenced by the uncertainties of their own situations,
assess such proposals, formulate an objective opinion as to whether such
proposals would be in the best interests of the Company and its stockholders and
take such other action regarding such proposals as the Board of Directors might
determine to be appropriate. Each Agreement has a three year term and becomes
effective upon a change in control of the Company as defined in the Agreements.
The Agreements provide that, if a change in control of the Company
should occur, and if within three years thereafter (i) the employment of the
officer is terminated for reasons other than death, disability, retirement, or
"Cause" (as defined in the Agreements); or (ii) the officer voluntarily
terminates his or her employment for "Good Reason" (as defined in the
Agreements); or (iii) the officer voluntarily terminates his or her employment
for any reason or no reason within thirty days of the first anniversary of a
change in control of the Company (the "Window Period"), the officer would
receive specified severance compensation. The Agreements provide generally for
the continuation of employment of the officer with the Company for a three year
period following the date of the change in control upon substantially the same
terms and conditions with respect to duties, responsibilities, salaries,
bonuses, welfare, fringe and other benefits as those enjoyed prior to the date
of the change in control of the Company.
"Good Reason" permitting an officer to receive the specified severance
compensation upon voluntary termination of his or her employment with the
Company during the three year term of the Agreement is defined as a diminution
of responsibilities, assignment of inappropriate duties, failure of the Company
to comply with the compensation and benefit provisions of the Agreement, failure
of the Company to comply with the relocation provisions of the Agreement, any
purported termination in violation of the Agreements or the failure of any
successor to comply with the Agreements.
Upon termination of employment with the Company for death, disability,
retirement or by the officer without Good Reason (other than during the Window
Period) the Company has no obligations under the Agreement other than those
accrued on the date of termination and the customary Company provided death
benefits, disability benefits or retirement benefits as the case may be. Upon
termination by the Company for Cause, the only obligation of the Company to the
officer is for salary and deferred compensation accrued by the officer to the
date of termination. If the officer terminates his or her employment with the
Company for Good Reason, or without any reason during the Window Period, or his
or her employment with the Company is terminated by the Company without Cause,
during the term of the Agreement, then the officer is entitled to (a) a lump sum
cash payment equal to the sum of (1) his or her accrued salary, accrued annual
bonus and deferred compensation to the date of termination, (2) three times his
or her annual base salary and three times his or her "Highest Annual Bonus" (as
defined in the Agreements); (b) retirement benefits and health benefits for the
remainder of the term of the Agreement; (c) certain legal fees and expenses
incurred as a result of termination of employment; and (d) immediate
acceleration of the exercisability of the options granted to the officer
pursuant to the Company's stock option plans, and immediate lapse of any
restrictions against disposition and obligations of resale of the Common Stock
to the Company, with the officer being able to exercise his or her options under
the stock option plans within a period of sixty days following the termination
date. The definition of Highest Annual Bonus is the greater of the highest
annual bonus paid in the past three years or 30% of his or her annual base
salary.
The Company has established a trust fund, with the Boston Safe Deposit
and Trust Company as Trustee. The trust fund is to be funded upon a change in
control of the Company. The purpose of the trust fund is to ensure the proper
payment of the Company's obligations under the Agreements.
In the event that the amount payable to an officer under his or her
Agreement would be subject to the excise tax for federal tax purposes pursuant
to Section 4999 of the Code (the "Excise Tax"), then, unless the value of the
payment of the Excise Tax by the Company to the Executive does not exceed
$50,000 or more, the officer is entitled to receive an additional payment in an
amount such that, after payment by the officer of all taxes, including income
taxes and the Excise Tax imposed upon such additional payment, the officer is in
the same after-tax position as if no Excise Tax had been imposed upon the
officer. If the value to the executive does not exceed $50,000 or more, then the
lump sum cash payment to that officer will be reduced by the amount necessary to
avoid the Excise Tax, up to the aggregate of $50,000.
A change in control of the Company means for purposes of the
Agreements: (i) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 25% or more of either the then outstanding shares of Common Stock of the
Company (the "Outstanding Company Common Stock") or the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities"),
provided, however, that any acquisition by the Company or any of its
subsidiaries, or by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries, or by any corporation with
respect to which, following such acquisition, more than 60% of, respectively,
the then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, shall not constitute a change of control;
or (ii) individuals who, as of January 1, 1989, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any individual becoming a director subsequent to January 1,
1989 whose election, or nomination for election, by the Company's stockholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or (iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or of a complete liquidation or
dissolution of the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
The Code limits the business expense deduction available for so-called
golden parachute payments. A portion of the payments (if any) made (or deemed
made) by the Company under the Agreements may not be deductible as a result of
those limits.
Compensation of Directors
Directors who are full-time officers of the Company receive no
additional compensation for serving on the Board of Directors or its committees.
Directors who are not full-time officers receive an annual retainer of $25,000
in addition to $1,000 for each meeting attended. Directors who serve on one or
more than one of the Audit Committee, the Compensation Committee, the Restricted
Plan Committee, the Stock Option Committees and the Nominating Committee receive
an additional annual retainer of $5,000, but directors who serve on more than
one such committee are limited to only one additional retainer of $5,000.
Directors serving on such committees receive $1,000 for each committee meeting
they attend. In November, 1997, each non-employee director was also awarded a
2,000 share grant of restricted stock vesting over four years based on continued
service on the Board; during the 1998 Fiscal Year, 500 shares of the Company's
Common Stock vested under this grant to each of the incumbent directors.
In November, 1996, the Board of Directors adopted a "Stock Compensation
Plan for Non-Employee Directors" permitting each non-employee director to elect,
prior to the start of a calendar year, to defer all or part of the retainer and
other fee compensation payable to such director for such year in the form of
stock-based units based on the price of the Company's common stock on the date
such compensation would have otherwise been payable. Any such deferred
stock-based units will be converted into, and paid out as, actual shares of
stock following the director's termination of services as a director.
For a description of options granted to non-employee directors, see the
heading "Non-Employee Director Stock Option Plans", above.
In November, 1991, the Company adopted a retirement program for
non-employee directors. This program provides a retirement benefit to each
non-employee director who retires from the Board of Directors after reaching age
72 or after completing at least five years of service as a non-employee
director. The retirement benefit is equal to the highest Board retainer paid to
the director during his years of service to the date of the director's
retirement and is payable for a period of years (not to exceed a maximum of 15
years) equal to the director's years of service on the Board. The five-year
eligibility service requirement is waived in the event of death in service,
retirement due to poor health or retirement within two years of a change in
control, as previously defined under the heading "Employee Agreements", above.
In the event of death after retirement, the director's spouse (if any) is
entitled to a death benefit equal to the remaining balance (if any) of benefits
otherwise payable to the director at the time of his death.
<PAGE>
JOINT REPORT OF COMPENSATION COMMITTEE
AND STOCK OPTION COMMITTEES
The Compensation Committee and Stock Option Committees of the Board of
Directors (respectively, the "Compensation Committee" and the "Stock Option
Committees", and collectively, the "Committees") are each composed entirely of
non-employee directors.
The Compensation Committee is responsible for establishing and
administering the overall compensation policies applicable to the Company's
corporate officers, and determining the annual cash compensation levels of the
Company's senior management. The Stock Option Committees (which are comprised of
the same directors) are responsible for establishing the general policies
applicable to granting, vesting and other terms of stock options granted to
current and newly hired officers and other employees under the Company's stock
option plans, and for determining the size and terms of the option grants made
to the Company's executive officers, among others.
The Committees view their charter as being to ensure that the Company's
officer compensation programs are structured and implemented in a manner that
recognizes the Company's need to attract and retain the caliber of senior
executives and other employees required for the Company to compete in a highly
competitive and rapidly evolving business sector, while recognizing and
emphasizing the importance and value of achieving targeted annual and long-term
performance objectives at the corporate, operating unit and individual levels.
Section 162(m)
The annual bonus opportunities and option grants provided to certain
executive officers may result in compensation that may not be fully deductible
under some circumstances, due to the limitations imposed by Internal Revenue
Code Section 162(m). In this regard, the Committees have reviewed the effects
upon the Company of Section 162(m), which limits tax deductions for annual
compensation in excess of one million dollars paid to any of the five most
highly compensated executive officers of a corporation. The Committees have also
noted that due to the Company's large net operating loss carryover position,
Section 162(m) would not have a material impact on the Company's consolidated
net income for the 1999 fiscal year.
Annual Review Process Regarding Performance and
Cash and Stock Compensation Levels
During the summer and fall of 1998, the Committees and the Company's
Chief Executive Officer (the "CEO") conducted, with the assistance and advice of
an independent executive compensation consultant, detailed reviews of the levels
and mix of officer cash and stock compensation, taking into account corporate,
operating unit and individual performance for the fiscal year ended September
26, 1998.
This annual review process included interim meetings involving the CEO,
designated Committee representatives and the compensation consultant as well as
formal Committee meetings to consider the progress of the annual reviews and to
evaluate the recommendations of the working group. As part of the process, the
CEO reviewed with the Committees (i) the assessment of each officer's
performance by his/her immediate supervisor, (ii) the CEO's assessment of the
performance of each executive officer and of the other officers, and (iii) the
CEO's specific recommendations regarding salary, annual bonus and stock option
grant actions for the officer group, and the rationale for such actions. In
addition, the Committees held various private discussions regarding such
matters.
Review of Base Salaries
As part of the annual compensation review process, the base salary rate
of each corporate officer was reviewed, taking into account: (i) each officer's
individual performance for the preceding 12 months compared against assigned
revenue, margin, net income and other goals, and against fiscal 1997
performance, (ii) the scope and importance of the functions the officer
performed or for which the officer was responsible during and as of the end of
the 1998 fiscal year, (iii) the assessment of the officer's initiative,
managerial ability and overall contributions to corporate performance, (iv) the
advice of the independent executive compensation consultant regarding the
competitiveness of the current officer salary levels compared to the external
market based on 1998 survey data, and (v) internal equity considerations.
The weighting given to these factors varied from officer to officer,
based in part upon the importance of the officer's position to the Company and
the caliber of the incumbent, but the Compensation Committee intended that
executive officer base salaries generally be competitive with the estimated
relevant market for each position. Based on 1998 survey data (including a survey
of more than twenty large computer sector companies) and the advice of the
outside compensation consultant regarding such data, the Compensation Committee
believes that the base salaries for the Company's current executive officers are
generally in the 50th to 75th percentile compared to other large computer
companies.
As a result of the 1998 review and after taking into account the
Company's performance during the 1998 fiscal year, the Compensation Committee,
at the recommendation of the CEO, effective for fiscal year 1999, approved
increases in the salaries of three executive officers named in the "Summary
Compensation Table" set forth above (Messrs. Allen, Cunningham and Schwartz) to
$350,000, $375,000 and $375,000, respectively, and also reviewed and approved
increases for selected other corporate officers.
Annual Bonus Award
For the 1998 fiscal year, the Board, at the recommendation of the
Compensation Committee and the Company's CEO, provided bonus opportunities to
four of the named executives in the "Summary Compensation Table" set forth above
(Messrs. Allen, Cunningham, DeMelle and Schwartz), as well as certain other
corporate officers, based on the Company's earnings-per-share ("EPS")
performance, but subject to certain discretionary adjustments (based on level
and importance of an individual officer's contributions to the Company's and/or
unit's overall performance, and other factors). No EPS-based bonus awards,
however, were earned by or paid to any executive officer for the 1998 fiscal
year.
For the 1999 fiscal year, the Board, at the recommendation of the
Compensation Committee and the Company's CEO, provided bonus opportunities to
four of the named executives in the "Summary Compensation Table" set forth above
(Messrs. Allen, Cunningham, DeMelle and Schwartz), as well as to certain other
corporate officers, based on the Company's EPS performance and operating unit
contributed income performance for the 1999 fiscal year, but subject to certain
discretionary adjustments (based on the level and importance of the individual
officer's contributions to the Company's and/or unit's overall performance, and
other factors).
Stock Option Grant
As part of its officer compensation programs, the Company has
traditionally utilized stock options priced primarily at 50% of market on the
date of grant (25% of market for a portion of the initial grants to certain
newly hired officers, and 100% of market in the case of all currently
outstanding option grants to the Company's CEO) and vesting generally in four
equal annual installments. For the 1999 fiscal year, the Stock Option Committees
have approved option grants to the officer group (other than the CEO) which are
priced at 50% of current market value.
The Stock Option Committees believe that option grants have been
effective for both new hire and retention purposes in establishing substantial
stock-based investment risks for employees that emphasize the importance of
shareholder return and encourage a focus on long-term results.
The Stock Option Committees have also established general guidelines
(which were reviewed and updated in 1997) regarding the size and pricing of
officer stock option grants, which establish certain target parameters for
officer option grants, based on various factors, and are intended to provide a
consistent basis for judging the internal fairness and external competitiveness
of officer stock option grants. The Stock Option Committees believe that the
stock option grants made in November, 1997 and November, 1998 reflect, and in
aggregate are consistent with, such guidelines.
CEO Compensation
CEO Cash Compensation
The Compensation Committee's actions in 1997 and in 1998 with respect
to Mr. Skates's cash compensation for the 1998 fiscal year (as reflected in the
"Summary Compensation Table" above) were based upon reviews of both proxy and
survey data regarding the CEO cash compensation practices of other computer
companies, as well as the Committee's evaluations of Mr. Skates's performance as
CEO during the year and the Company's performance during the year, both on an
overall basis and in terms of key strategic initiatives.
For the reasons set forth in the Company's December 17, 1997 Proxy
Statement, the Board, at the recommendation of the Compensation Committee,
increased Mr. Skates's base salary for the 1998 fiscal year from $630,000 to
$750,000.
As described in the December, 1997 Proxy Statement, the Board, at the
Compensation Committee's recommendation, also approved the continuation in the
1998 fiscal year of a CEO bonus opportunity based upon earnings-per-share
performance and, alternatively, upon increases in the Company's market
capitalization. No bonus was earned by Mr. Skates for the 1998 fiscal year based
on the Company's earnings-per-share performance or upon an increase in the
Company's market capitalization.
In September, 1997, the Board also awarded Mr. Skates a $7 million
restricted bonus as an incentive to remain in the employment of the Company as
CEO for an additional three (3) years. This bonus shall become earned and vested
and the restrictions related thereto shall lapse over the three year period
commencing on September 28, 1997 and ending September 30, 2000. The bonus shall
become fully vested and free of restrictions upon a change in control of the
Company, or upon termination of Mr. Skates's employment by the Company. If Mr.
Skates terminates his employment with the Company voluntarily prior to October
1, 2000, he shall be obligated to repay the Company on the day of such
termination any unvested amounts paid to him under the terms of the agreement.
In November, 1998, the Board, at the recommendation of the Compensation
Committee and after taking into account 1998 survey and proxy data with respect
to the CEO cash compensation practices of more than twenty other large computer
sector companies, decided not to increase Mr. Skates's salary for the 1999
fiscal year above the $750,000 rate that applied for the 1998 fiscal year.
At the same time, the Board, at the recommendation of the Compensation
Committee, also approved a CEO bonus opportunity for the 1999 fiscal year based
upon performance against specified earnings-per-share goals (subject to a
maximum of 300% of base salary), or, if greater, performance measured on the
basis of the increase (if any) in the Company's market capitalization during the
1999 fiscal year, based on the difference between (i) the product of the average
daily closing market price of the Company's Common Stock on the New York Stock
Exchange for the last 30 trading days prior to the close of the 1999 fiscal year
times the number of shares actually outstanding as of the close of the 1999
fiscal year and (ii) the product of the average daily closing market price of
the Company's Common Stock on the New York Stock Exchange for the first 30
trading days of the 1999 fiscal year times the number of shares actually
outstanding as of the close of the 1998 fiscal year (subject to a maximum of
$3.5 million, except in the event of a change of control, and to certain other
adjustments). The Board also reserved the right to adjust this bonus in the
event of extraordinary transactions and to award other bonuses.
CEO Stock Options Awards
After taking into account the recommendations of the Compensation
Committee, the Stock Option Committees decided in November, 1998 to award Mr.
Skates stock options to purchase 500,000 shares. The options were priced at 100%
of the market price of the Company's stock at the time of grant. The Stock
Option Committees based this action on a number of factors, including, among
others, (i) their assessment of the overall quality and value of Mr. Skates's
efforts during the 1998 fiscal year, and the Company's strategic initiatives
during the year; (ii) information regarding the size and value of CEO stock
options grants among other large computer companies, and the advice of the
Company's outside compensation consultant regarding such data; (iii) the size of
Mr. Skates's prior stock option grants; (iv) the size and value of the vested
in-the-money stock options held by Mr. Skates at the end of the 1998 fiscal
year; and (v) the size of Mr. Skates's base salary, annual bonus award
opportunity for the 1999 fiscal year, and retention bonus opportunities for
fiscal years 1999 and 2000.
Conclusion
The Compensation Committee and Stock Option Committees are of the
opinion that the Company's senior management compensation programs achieve an
appropriate risk/reward balance, and are consistent with the Committees' goals
of having programs that enable the Company to compete for high caliber
executives in a highly competitive and continually evolving sector, while also
emphasizing the importance of achieving annual and long-term performance goals.
Compensation Committee Stock Option Committees
Frederick R. Adler Jeffrey M. Cunningham
Jeffrey M. Cunningham W. Nicholas Thorndike
W. Nicholas Thorndike Donald H. Trautlein
Donald H. Trautlein Richard L. Tucker
Richard L. Tucker
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
five fiscal years ended September 26, 1998 with the cumulative total return on
the Standard & Poors 500 Index and the Standard & Poors Computers (Hardware)
Index (formerly, the Computer Systems Index). The comparison assumes $100 was
invested on September 30, 1993 in the Company's Common Stock and in each of such
indices and assumes reinvestment of dividends, where applicable.
[GRAPH OMITTED]
The graph assumes a $100 investment made on September 30, 1993 and the
reinvestment of all dividends, as follows:
<TABLE>
Dollar Value of $100 Investment at September 30
------------------------------------------------------------------
9/93 9/94 9/95 9/96 9/97 9/98
---------- --------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Data General Corporation 100.00 97.56 101.22 136.59 259.76 105.49
S & P 500 Index 100.00 103.69 134.53 161.89 227.37 247.93
S & P Computers (Hardware) Index 100.00 146.08 209.61 254.24 471.11 553.67
</TABLE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP (and its predecessor, Price Waterhouse LLP)
has been the independent accountants for the Company and will serve in that
capacity for the 1999 fiscal year. A representative of PricewaterhouseCoopers
LLP will be present at the Annual Meeting, will have an opportunity to make a
statement if he desires to do so, and will be available to respond to
appropriate questions from stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Ownership of and certain transactions in Company stock by executive
officers, directors and certain other persons are required to be reported to the
Securities and Exchange Commission pursuant to Section 16 of the Exchange Act.
Based upon a review of the information provided to the Company, all persons
subject to these reporting requirements filed the required reports on a timely
basis during the 1998 fiscal year.
STOCKHOLDER PROPOSALS
FOR NEXT YEAR'S ANNUAL MEETING
It is anticipated that the Year 2000 Annual Meeting of Stockholders
will be held on Tuesday, January 25, 2000. Pursuant to regulations issued by the
Securities and Exchange Commission, the deadline for submitting stockholder
proposals for inclusion in the Company's proxy statement and form of proxy for
the January, 2000 Annual Meeting of Stockholders is August 19, 1999. Pursuant to
the Company's By-Laws, any stockholder proposal submitted to the Company after
October 29, 1999 or before July 31, 1999 will be untimely and not be considered
at the Year 2000 Annual Meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at
the meeting. However, if any other business properly comes before the meeting,
it is the intention of the persons named in the enclosed proxy to vote on such
matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary votes. Therefore, whether or not you expect to attend
the meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Carl E. Kaplan
Dated: December 17, 1998 Secretary
A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER
REQUESTING IT IN WRITING FROM:
ATTENTION: MR. DAVID ROY
INVESTOR RELATIONS DEPARTMENT
DATA GENERAL CORPORATION
3400 COMPUTER DRIVE
WESTBORO, MASSACHUSETTS 01580
<PAGE>
APPENDIX A
AMENDMENT TO CERTIFICATE OF INCORPORATION
PRESENTED AS PROPOSAL NO. 2
Set forth below is the text of proposed Section A to Article FOURTH, as amended,
of the Restated Certificate of Incorporation of the Company, as discussed in the
Proxy Statement under Proposal No. 2 (Increase of Authorized Common Stock):
FOURTH.
A. Authorized Capital Stock. The total number of shares of all
classes of stock which this Corporation shall have authority to issue
is ONE HUNDRED AND FIFTY-ONE MILLION (151,000,000) shares, consisting
of ONE MILLION (1,000,000) shares of Preferred Stock, par value $.01
per share (hereinafter, the "Preferred Stock"), and ONE HUNDRED FIFTY
MILLION (150,000,000) shares of Common Stock, par value $.01 per share
(hereinafter, the "Common Stock").
<PAGE>
DATA GENERAL CORPORATION
P R O X Y
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JANUARY 27, 1999
Ronald L. Skates and Frederick R. Adler, and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Common Stock of Data General Corporation held of record by
the undersigned on November 30, 1998, at the Annual Meeting of Stockholders to
be held at 1:00 P.M. on January 27, 1999, at the Enterprise Room, Fifth Floor,
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts,
and at any adjournments thereof. Any and all proxies heretofore given are hereby
revoked.
PLEASE MARK, DATE AND SIGN THE REVERSE SIDE AND MAIL PROMPTLY IN THE ENCLOSED
ENVELOPE.
(SEE REVERSE SIDE)
DATA GENERAL CORPORATION
P.O. BOX 11235
NEW YORK, N.Y. 19203-0235
_ _ _ _ V_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _V _ _ _ _
Proposal No. 1: Election FOR all / / WITHHOLD AUTHORITY / / *EXCEPTIONS / /
of nominees to vote for all
Directors listed below nominees listed
below
Nominees: Frederick R. Adler, Ferdinand Colloredo-Mansfeld,
Jeffrey M. Cunningham, Ronald L. Skates,
W. Nicholas Thorndike, Donald H. Trautlein
and Richard L. Tucker.
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write the nominee's name
in the space provided below)
o Exceptions: ______________________________________________
Proposal No. 2: To approve an amendment to the Company's Restated Certificate
of Incorporation to increase the number of authorized shares of
the Common Stock of the Company from 100 Million shares to 150
Million shares.
FOR / / AGAINST / / ABSTAIN / /
Change of Address
or Comments Mark Here / /
Unless otherwise specified this Proxy will be voted
FOR Proposals Nos. 1 and 2. The Board of Directors
recommends a vote FOR Proposals Nos. 1 and 2.
Discretionary authority is hereby granted with
respect to such other matters as may properly come
before the meeting. The signer acknowledges receipt
of the Notice of Annual Meeting of Stockholders and
the Proxy Statement furnished therewith.
IMPORTANT: Please sign exactly as name appears hereon.
Each joint owner shall sign. Executors, administrators,
trustees, etc. should give full title.
Dated: ____________________________________, 199__
--------------------------------------------------
Signature
--------------------------------------------------
Signature
Please Sign, Date and Return the Proxy Card Promptly.
Votes MUST be indicated (X) in Black or Blue ink.
<PAGE>
[DATA GENERAL LOGO]
DATA GENERAL CORPORATION
4400 Computer Drive, Westboro, MA 01580
Telephone (508) 898-5000
Dear Stockholder:
Attached below is your proxy card for the January 27, 1999 Annual Meeting of
Stockholders of Data General Corporation. Also enclosed please find the Notice
of Annual Meeting and Proxy Statement.
YOUR VOTE IS IMPORTANT. UNLESS ENOUGH STOCKHOLDERS VOTE THEIR PROXIES, THE
COMPANY WILL NOT BE ABLE TO COMPLETE THE BUSINESS AT ITS MEETING, WHICH WILL
RESULT IN THE ADDITIONAL EXPENSE OF FURTHER MAILINGS TO STOCKHOLDERS UNTIL
ENOUGH VOTES ARE RECEIVED.
Whether or not you plan to attend the Stockholder's Meeting, please immediately
complete and sign the proxy card, and return it in the envelope provided.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU MAY OWN.
Thank you.
PLEASE DETACH PROXY CARD HERE
_ _ _ _ V_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _V _ _ _ _
