<PAGE>
As filed with the Securities and Exchange Commission on November 14, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
DIGITAL EQUIPMENT CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2226590
(State or other jurisdiction of Incorporation (I.R.S. Employer
or organization) Identification No.)
111 Powdermill Road - MSO2, Maynard, Massachusetts 01754
(Address of principal executive offices) (Zip Code)
Digital Equipment Corporation 1995 Equity Plan
Digital Equipment Corporation 1995 Stock Option Plan for Nonemployee
Directors(Full title of the plans)
_________________________
Gail S. Mann
Digital Equipment Corporation
111 Powdermill Road - MSO2-3/F13
Maynard, Massachusetts 01754-1499
(508) 493-2206
(Name, address including zip code and telephone number,
including area code, of agent for service)
__________________________
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum Amount of
Title of Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered/(1)/ Per Share Offering Price Fee
Common Stock (Par Value 10,000,000/(2)/ $55.875 $558,750,000 $111,750
$1.00)
Common Stock (Par Value 50,000/(3)/ $55.875 $ 2,793,750 $ 559
$1.00)
TOTAL: 10,050,000 $55.875 $561,543,750 $112,309
shares =======
</TABLE>
(1) The price of $55.875 per share, which is the average of the high and low
prices reported on the New York Stock Exchange on November 8, 1995, is set
forth solely for purposes of calculating the filing fee pursuant to Rule
457(c).
(2) Represents shares of Common Stock to be issued under Registrant's 1995
Equity Plan. Calculated with reference to the formula specified in the
1995 Equity Plan and based on the number of issued shares of Common Stock
of the Registrant as on November 1, 1995.
(3) Represents shares of Common Stock to be issued under Registrant's 1995
Stock Option Plan for Nonemployee Directors.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
----------------
The documents containing the information specified in this Item 1 will be
sent or given to employees or directors, as the case may be, as specified by
Rule 428(b)(1). In accordance with the rules and regulations of the Securities
and Exchange Commission (the "Commission") and the instructions to Form S-8,
such documents are not being filed with the Commission either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424.
Item 2. Registrant Information and Employee Plan Annual Information.
-----------------------------------------------------------
The documents containing the information specified in this Item 2 will be
sent or given to employees or directors, as the case may be, as specified by
Rule 428(b)(1). In accordance with the rules and regulations of the Commission
and the instructions to Form S-8, such documents are not being filed with the
Commission either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents filed with the Commission are incorporated by
reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
July 1, 1995 (and the documents incorporated by reference therein);
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995; and
(c) The section entitled "Description of Common Stock" contained in the
prospectus included in the Registrant's Registration Statement No. 33-
25280, and the section entitled "Information Regarding the
Classification of the Board of Directors" contained in the
Registrant's definitive Proxy Statement dated September 14, 1990.
All documents subsequently filed with the Commission by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered herein have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
<PAGE>
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interest of Named Experts and Counsel.
-------------------------------------
None.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Page II-1 of Registrant's Registration Statement No. 33-51987 is
incorporated by reference herein.
Item 7. Exemption From Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
The Exhibit Index immediately preceding the exhibits is incorporated by
reference herein.
Item 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
-------- -------
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
POWER OF ATTORNEY
I, the undersigned director or officer of Digital Equipment Corporation, a
Massachusetts corporation, do hereby severally constitute and appoint Robert B.
Palmer, Gail S. Mann and Thomas C. Siekman, and each of them alone, to be true,
sufficient and lawful attorneys for me, to sign for me and in my name in the
capacity or capacities indicated below any and all post-effective amendments to
this Registration Statement and all other documents relating thereto.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on this 9th
day of November, 1995.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Robert B. Palmer
--------------------------------------
Robert B. Palmer, Chairman of the
Board, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert B. Palmer Chairman of the Board, November 9, 1995
- ------------------------------ President and Chief Executive
Robert B. Palmer Officer (Principal Executive
Officer) and Director
/s/ Vincent J. Mullarkey Vice President, Finance and November 9, 1995
- ------------------------------ Chief Financial Officer (Chief
Vincent J. Mullarkey Financial Officer)
/s/ E. C. Prokopis Vice President and Controller November 9, 1995
- ------------------------------ (Chief Accounting Officer)
E. C. Prokopis
/s/ Vernon R. Alden Director November 9, 1995
- ------------------------------
Vernon R. Alden
Director November 9, 1995
- ------------------------------
Colby H. Chandler
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Arnaud de Vitry Director November 9, 1995
- ------------------------------
Arnaud de Vitry
/s/ Frank P. Doyle Director November 9, 1995
- ------------------------------
Frank P. Doyle
/s/ Robert R. Everett Director November 9, 1995
- ------------------------------
Robert R. Everett
/s/ Kathleen F. Feldstein Director November 9, 1995
- ------------------------------
Kathleen F. Feldstein
/s/ Thomas P. Gerrity Director November 9, 1995
- ------------------------------
Thomas P. Gerrity
/s/ Thomas L. Phillips Director November 9, 1995
- ------------------------------
Thomas L. Phillips
/s/ Delbert C. Staley Director November 9, 1995
- ------------------------------
Delbert C. Staley
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
------ -------
Exhibit 4.1 Rights Agreement dated as of December 11, 1989 between the
Registrant and First Chicago Trust Company of New York, as
Rights Agent (filed under cover of Form SE as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated December 12, 1989
and incorporated by reference herein).
Exhibit 5 Opinion of Counsel
Exhibit 23.1 Consent of Counsel (included in Exhibit 5)
Exhibit 23.2 Consent of Coopers & Lybrand L.L.P.
Exhibit 24 Power of Attorney (continued on page 6 of this Registration
Statement)
Exhibit 99.1 1995 Equity Plan
Exhibit 99.2 1995 Stock Option Plan for Nonemployee Directors
<PAGE>
EXHIBIT 5
14 November 1995
Digital Equipment Corporation
111 Powdermill Road
Maynard, Massachusetts 01754
Re: Registration Statement on Form S-8
Relating to the Digital Equipment Corporation
1995 Equity Plan; 1995 Stock Option Plan for Nonemployee
Directors (collectively, the "Plans")
-----------------------------------------------------------
Ladies and Gentlemen:
I am Vice President, Clerk, Secretary and Assistant General Counsel of Digital
Equipment Corporation (the "Corporation"), a Massachusetts corporation. I am of
the opinion that the 10,050,000 shares of Common Stock, par value $1.00 per
share, proposed to be issued by the Corporation pursuant to the Plans will be
legally issued, fully-paid and nonassessable after the issuance of such shares
in accordance with the terms of the Plans.
I am further of the opinion that no action of any governmental authority is
necessary for the issuance and sale of such shares by the Corporation except
that the above-referenced Registration Statement shall have become effective and
such action as may be necessary under the securities laws of the several states
shall have been taken.
I hereby consent to the filing of this opinion as Exhibit 5 to the above-
referenced Registration Statement.
Very truly yours,
/s/ Gail S. Mann
Gail S. Mann
Vice President, Assistant General Counsel,
Secretary and Clerk
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 for the Digital Equipment Corporation 1995 Equity Plan and the Digital
Equipment Corporation 1995 Stock Option Plan for Nonemployee Directors of our
reports dated July 31, 1995, on our audits of the consolidated financial
statements and financial statement schedules of Digital Equipment Corporation as
of July 1, 1995 and July 2, 1994 and for each of the three years in the period
ended July 1, 1995, which reports are contained in or incorporated by reference
in the Corporation's Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts Coopers & Lybrand L.L.P.
November 14, 1995
<PAGE>
EXHIBIT 99.1
DIGITAL EQUIPMENT CORPORATION
1995 EQUITY PLAN
Section 1 -- Purpose
The Digital Equipment Corporation 1995 Equity Plan (the "Plan") is intended
to advance the interests of Digital Equipment Corporation (the "Corporation")
and its stockholders by providing equity-based incentives to better align the
interests of key employees with those of stockholders, and to attract, retain
and motivate such employees.
Section 2 -- Administration
The Plan shall be administered by a committee appointed by the Board of
Directors of the Corporation (the "Committee"), which shall consist of not fewer
than two members of the Corporation's Board of Directors. All members of the
Committee must be "disinterested administrators" within the meaning of
Rule 16b-3 or any successor provision ("Rule 16b-3") under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and "outside directors" within
the meaning of Section 162(m) or any successor provision of the Internal Revenue
Code of 1986, as amended (the "Code"), if required for compliance with Rule
16b-3 or Section 162(m) of the Code, as the case may be. Any authority or power
granted in the Plan to the Committee shall also be deemed to be granted to the
Board of Directors, and any action permitted to be taken or determination
permitted to be made by the Committee may also be taken or made by the Board of
Directors; provided, however, that to the extent required by Rule 16b-3 and/or
Section 162(m) of the Code with respect to specific grants of Awards, such power
or authority shall only reside in and such actions or determinations shall only
be made by an administrator or administrators in compliance with Rule 16b-3 or
Section 162(m) of the Code, as the case may be. The Board of Directors may also
establish a committee of one or more members of the Corporation's Board of
Directors who are also officers of the Corporation for the purposes of
administering grants of Awards under the Plan to Employees who are not subject
to the provisions of Section 16 of the 1934 Act. If such a committee is
established, it shall have all the power and authority of the Committee under
the Plan with respect to such Awards.
Subject to the provisions of the Plan, the Committee shall have the authority
to select the Employees who are eligible to participate in the Plan, to
determine the Awards to be granted to each Employee, to determine the time or
times when Awards shall be exercisable or when restrictions, conditions and
contingencies shall lapse, to establish any other restrictions, conditions and
contingencies on Awards in addition to those prescribed by the Plan and to
determine whether any Option granted shall be an ISO or a Non-Qualified Option.
The Committee shall also prescribe the form of agreements or other instruments
under the Plan and the legends, if any, to be affixed to the certificates
representing shares of Stock to be issued.
1
<PAGE>
The Committee shall have full authority to interpret the Plan, to grant
waivers of Plan restrictions, to amend the provisions of Award instruments and
to adopt such rules, regulations and guidelines for carrying out the Plan as it
may deem necessary or proper, all of which powers shall be executed in the best
interests of the Corporation and in keeping with the purposes of the Plan. Such
powers shall include, but shall not be limited to, the power to modify or amend
the Plan and to adopt such procedures, subplans and the like as may be necessary
to comply with provisions of the laws of other countries in which the
Corporation or any subsidiary of the Corporation may operate in order to assure
the viability of Awards granted under the Plan and to enable Employees employed
in such other countries to receive advantages and benefits under the Plan and
consistent with such laws.
The determinations of the Committee in the administration of the Plan shall
be final and conclusive unless otherwise determined by the Board of Directors.
Section 3 -- Shares of Stock Subject to the Plan
(a) Shares Available for Issuance. The shares of stock available for issuance
under the Plan shall be authorized but unissued shares of the Corporation's
Common Stock or previously issued shares of the Corporation's Common Stock
reacquired by the Corporation in any manner and held in its treasury ("Stock").
No fractional shares of Stock shall be delivered under the Plan.
(b) Maximum Number of Shares Available for Issuance. Subject to adjustment as
provided in Section 7.7 below, the maximum number of shares of Stock available
for the grant of Awards under the Plan from the date of its adoption by the
Board of Directors until June 29, 1996, shall be the maximum number of shares of
Stock available for issuance under the Corporation's 1990 Equity Plan (the "1990
Plan") as of the date of approval of the Plan by the Corporation's stockholders,
plus any shares of Stock subject to Awards under the 1990 Plan that expire
unexercised or are forfeited, terminated, cancelled (in whole or in part) or in
any other manner are not issued to an Employee at any time. Subject to
adjustment as provided in Section 7.7 below, the maximum number of shares of
Stock available for the grant of Awards under the Plan for each fiscal year
subsequent to the fiscal year ending on June 29, 1996, but prior to the
beginning of the fiscal year commencing on June 28, 1998, shall be two percent
(2%) of the total number of issued shares of the Corporation's Common Stock
(including treasury shares) as of the first day of such fiscal year. Such
maximum number of shares shall be increased in any fiscal year by the number of
shares of Stock available for the grant of Awards hereunder in the previous
fiscal year or years but not covered by Awards granted hereunder in such fiscal
year or years since the adoption of the Plan, plus any shares of Stock subject
to Awards under the 1990 Plan or the Plan that expire unexercised or are
forfeited, terminated, cancelled (in whole or in part), or in any other manner
are not issued to an Employee, plus any shares of Stock tendered to the
Corporation as full or partial payment for the exercise of any Option under the
1990 Plan or the Plan and the payment of any withholding taxes arising
therefrom.
2
<PAGE>
(c) Limitations on Issuance. Notwithstanding any other provision of the
Plan, in no event shall more than 5,000,000 shares of Stock be cumulatively
available for the issuance of Stock pursuant to ISO's granted under the Plan,
nor shall more than 1,000,000 shares of Stock be cumulatively available for
grant pursuant to Restricted Stock Awards, Unrestricted Stock Awards and Stock
Unit Awards. Notwithstanding any other provision of the Plan, no Employee may be
granted in any fiscal year beginning with the fiscal year commencing July 2,
1995, in the aggregate, Awards relating to, in the aggregate, more than one
million (1,000,000) shares of Stock. In all events, determinations under the
preceding sentence shall be made in a manner that is consistent with Section
162(m) of the Code and the regulations promulgated thereunder.
(d) Dividends. Notwithstanding the foregoing, any dividend or dividend
equivalent paid or credited to an Employee in shares of Stock or Stock Units
pursuant to Sections 5.4(b) or 5.5 below shall not be subtracted from the
maximum number of shares available for the grant of Awards under the Plan or the
cumulative aggregate number of shares available for grant pursuant to Restricted
Stock Awards, Unrestricted Stock Awards and Stock Unit Awards.
(e) Expiration, Forfeiture, Cancellation or Settlement in Cash. Shares of
Stock subject to Awards that expire unexercised or are forfeited, terminated,
canceled (in whole or in part), or in any other manner are not issued to an
Employee (including shares of Stock that are not issued to an Employee pursuant
to Awards settled in cash in lieu thereof), shall become available immediately
for the future grant of Awards under the Plan.
3
<PAGE>
Section 4 -- Eligibility
Awards may be granted under the Plan only to Employees of the Corporation or
of a subsidiary of the Corporation. The term "Employees" shall include officers
as well as all other employees of the Corporation or of a subsidiary of the
Corporation. Members of the Committee and members of the Board of Directors who
are not Employees of the Corporation or of a subsidiary of the Corporation shall
not be eligible to participate in the Plan. Awards may be granted to the same
Employee on more than one occasion.
Section 5 -- Types of Awards
5.1 Authority.
The Committee shall have the authority to grant Awards singly, in combination
or in tandem. The term "Awards" includes options, stock appreciation rights,
awards of Stock of the Corporation and awards of stock units or phantom shares
of stock, all on the terms and conditions hereinafter established.
5.2 Options.
(a) Definition of Options. An "Option" is an Award entitling the recipient
upon exercise of the Option to purchase Stock at a specified price for a
specified period of time. Both "incentive stock options" ("ISO's"), as defined
in Section 422 of the Code, or any successor provision, and Options that are not
incentive stock options ("Non-Qualified Options"), may be granted under the
Plan. Instruments evidencing ISO's shall contain such terms and conditions as
are required under applicable provisions of the Code.
(b) Exercise Price. The Committee shall determine the exercise price of an
Option which shall not be less than 100% of the Fair Market Value per share of
the Stock on the date the Option is granted. For purposes of the Plan, "Fair
Market Value" of a share of Stock on a given date will be the average of the
high and low selling prices of the Corporation's Common Stock in the New York
Stock Exchange Composite Transactions Index on such date, or if not a business
day, as of the last business day for which prices are available prior to such
date.
(c) Duration of Options. The Committee shall determine the latest date on
which an Option may be exercised which shall be no later than the date that is
ten years after the date the Option was granted.
(d) Exercise of Options. Subject to the applicability of Section 7.3 below,
an Option shall become exercisable at such time or times, and on such
conditions, as the Committee may specify. The Committee may at any time
accelerate the time at which all or any part of an Option may be exercised.
4
<PAGE>
An Employee electing to exercise an Option shall give written or electronic
notice to the Corporation or its agent of the election and of the number of
shares of Stock that the Employee elects to acquire, accompanied by any
documents or instruments required by the Corporation or its agent and payment in
full for the Stock purchased, together with provision for the amount of any
taxes due in respect of the sale and issue thereof.
(e) Payment for Stock. Stock purchased by an Employee upon exercise of an
Option may be paid for in any legal manner so specified by the Committee,
including the following methods, which may be used in combination if specified
by the Committee:
(1) In cash or by check, bank draft or money order payable to the order
of the Corporation.
(2) If permitted by applicable law, through the delivery of an
assignment to the Corporation of a sufficient amount of the proceeds from the
sale of unrestricted Stock acquired upon exercise to pay for all of the Stock
so acquired and any tax withholding obligation resulting from such exercise;
and an authorization to the broker or selling agent to pay that amount to the
Corporation.
(3) Through the delivery of an amount of previously acquired shares of
unrestricted Stock having in the aggregate a Fair Market Value equal to the
exercise price, provided that such method is consistent with applicable tax
laws, policies and eligibility criteria established by the Committee.
Employees may further apply the Stock acquired upon such exercise to satisfy
the exercise price for additional Stock.
With respect to ISO's, acceptable methods of payment for stock upon exercise of
an Option shall be set forth in the Award instrument granting the applicable
ISO.
(f) Special Rules for ISO's. The aggregate Fair Market Value (determined as
of the date of grant) of the shares of Stock covered by ISO's granted under this
Plan or any other equity plan of the Corporation and its subsidiaries, that
becomes exercisable for the first time by the Employee in any calendar year
shall not exceed $100,000. Nothing in this special rule shall be construed as
limiting the exercisability of any Option unless the Committee provides for a
limitation at the time of grant.
5
<PAGE>
5.3 Stock Appreciation Rights.
(a) Description of Stock Appreciation Rights. A "Stock Appreciation Right"
("SAR") is an Award entitling the recipient upon exercise of the Right to
receive an amount, in cash or Stock, or a combination thereof (at the
Committee's discretion), equal to the appreciation, if any, in the Fair Market
Value of a share of the Corporation's Common Stock from the date of the grant of
the SAR to the date of its payment or settlement.
(b) Other Terms and Conditions of Stock Appreciation Rights. The Award price
per SAR shall not be less than the Fair Market Value of a share of the
Corporation's Common Stock on the date the SAR is granted. An Employee electing
to exercise a Stock Appreciation Right must give written or electronic notice to
the Corporation or its agent of the election, accompanied by any documents or
instruments required by the Corporation or its agent, together with provision
for the amount of any taxes due with respect thereto.
5.4 Restricted and Unrestricted Stock.
(a) Definition of Restricted Stock Awards. A "Restricted Stock Award"
entitles the recipient to acquire shares of Restricted Stock subject to such
restrictions, conditions and contingencies as may be determined by the Committee
in its sole discretion.
(b) Rights as a Stockholder. At the discretion of the Committee, an Employee
who receives Restricted Stock will have all the rights of a stockholder with
respect to the Restricted Stock, including voting and dividend rights, subject
to the restrictions described in paragraph (c) below and any other restrictions,
conditions and contingencies imposed by the Committee at the time of grant. The
Committee may require that dividends be paid in additional shares of Restricted
Stock or in Stock Units.
(c) Restrictions and Obligations of Resale. "Restricted Stock" is Stock
subject to restrictions against disposition as specified by the Committee in the
Award instrument and may not be sold, transferred, or otherwise disposed of, and
shall not be pledged or otherwise hypothecated, except as provided in the Award
instrument. Except as otherwise provided in the Award instrument, in the event
of termination of employment for any reason other than as specified in Section
6.1 or 6.2, Restricted Stock shall be forfeited to the Corporation, except that
it shall be offered for resale to the Corporation at its original acquisition
price if the Restricted Stock was issued for monetary consideration.
6
<PAGE>
(d) Other Awards Settled with Restricted Stock. The Committee may, at the
time any Award described in this Section 5 is granted, provide that any or all
of the Stock delivered or issuable pursuant to the Award will be Restricted
Stock.
(e) Unrestricted Stock Awards. The Committee may, in its sole discretion,
award to any eligible Employee unrestricted shares of Stock under the Plan
("Unrestricted Stock Award"). Any Employee who receives an Unrestricted Stock
Award will have all the rights of a stockholder, including voting and dividend
rights.
(f) Price of Restricted and Unrestricted Stock. Grants of Restricted Stock
and Unrestricted Stock shall be made at such purchase price as the Committee
shall determine in its sole discretion, and may be issued for no monetary
consideration, subject to applicable state law.
5.5 Stock Units.
(a) A "Stock Unit Award" entitles the recipient to receive, without payment,
"Stock Units" in the form of phantom shares of stock which are valued at the
Committee's discretion in whole or in part by reference to, or otherwise based
on, the Fair Market Value of the Corporation's Common Stock.
(b) An Employee who receives Stock Units may be given rights to dividend
equivalents, subject to any conditions imposed by the Committee at the time of
grant. The Committee may provide that any such dividend equivalents be paid in
cash, in shares of stock or in additional Stock Units.
5.6 Performance Criteria.
The Committee in its discretion may grant Awards contingent on satisfaction
of performance criteria established by the Committee consistent with Section
162(m) of the Code. Such performance criteria shall be based on level of
revenue, operating income, profit after tax, earnings per share, cash flow,
return on equity or return on assets. The Committee may select one criterion or
multiple criteria, and the measurement may be based on Corporation or business
unit performance, or on comparative performance with that of other companies or
units thereof.
The Committee in its discretion may also grant Awards contingent on
satisfaction of performance criteria other than those specified in the paragraph
above.
7
<PAGE>
Section 6 -- Termination of Employment
6.1 Death or Disability of Employee.
Unless otherwise specified in the Award instrument, if an Employee (i) dies
while employed by the Corporation or any subsidiary of the Corporation (or upon
the death of an Employee after termination of employment), or (ii) ceases to be
employed by the Corporation or any subsidiary by reason of his or her permanent
and total disability ("Disability"), as determined by the Committee, the
following rules shall apply:
(a) Each Option and Stock Appreciation Right held by the Employee
immediately prior to his or her death shall become fully exercisable and may
be exercised only until one year after his or her death (whether or not this
period ends after expiration of the exercise period specified in the Award
instrument, but in the case of an ISO, in no event later than the expiration
of the ISO under its original terms) by the Employee's executor or
administrator, or if not so exercised, by the legatees or distributees of his
or her estate or by such other person or persons to whom the Employee's
rights under such Option or Stock Appreciation Right shall pass by will or by
the applicable laws of descent and distribution.
(b) Each Option and Stock Appreciation Right held by the Employee when his
or her employment ends due to Disability shall become fully exercisable and
shall continue to be exercisable in accordance with the terms set forth in
the Award instrument relating to such Award.
(c) Each share of Restricted Stock and each Stock Unit covered by an Award
held by the Employee immediately prior to his or her death or Disability will
immediately become free of all restrictions, conditions and contingencies
thereon.
6.2 Retirement.
If an Employee ceases to be employed by the Corporation or any subsidiary of
the Corporation by reason of his or her retirement at or after age 55, the
Employee's rights with respect to Awards held by him or her as of such
retirement date shall be as set forth in the Award instrument relating to each
such Award. Retirement, including early retirement, under any pension plan of
the Corporation or any subsidiary of the Corporation shall not by itself
constitute retirement for purposes of the Plan.
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6.3 Termination of Employment.
Unless otherwise provided in the Award instrument, if an Employee ceases to
be employed by the Corporation or any subsidiary of the Corporation for any
reason other than the reasons specified in Sections 6.1 and 6.2 above, the
following rules shall apply:
(a) Each Option and Stock Appreciation Right held by the Employee that is
unexercised when his or her employment ends shall expire upon such
termination of employment.
(b) Each share of Restricted Stock held by the Employee on which all
restrictions, conditions and contingencies have not lapsed shall be forfeited
or offered for resale to the Corporation in accordance with Section 5.4
above, and each Stock Unit as to which all restrictions, conditions and
contingencies have not lapsed or been performed shall be forfeited.
6.4 Committee Determinations.
Any question as to whether there has been a retirement, Disability or
termination of employment shall be determined by the Committee, and its
determination of such question shall be final.
Section 7 -- General Provisions
7.1 Term and Amendment.
Unless earlier terminated by the Board of Directors, the Plan shall terminate
on December 31, 1998, and no Awards shall be granted under the Plan after such
date; provided, however, that Awards payable or requiring exercise which are
granted on or before this date shall remain payable or exercisable in accordance
with their respective terms after the termination of the Plan; and provided,
further that the authority of the Committee to take actions with respect to any
such Awards as contemplated herein shall extend beyond termination of the Plan.
The Board of Directors may at any time terminate the Plan or suspend the
grant of Awards under the Plan. The Board of Directors may at any time amend the
Plan or any outstanding Award for any lawful purpose; provided, that no
amendment, without the approval of the Corporation's stockholders, shall
increase the maximum number of shares of Stock that may be issued under the Plan
or issued in the aggregate pursuant to the certain Awards listed in Section 3
above (except as permitted by the last paragraph of Section 3 above and
Section 7.7 below); and provided, further, that no amendment, without the
9
<PAGE>
approval of the Corporation's stockholders (where such approval is necessary to
satisfy then-applicable requirements of federal securities laws, the Code or
rules of any stock exchange on which the Corporation's Common Stock is listed),
shall extend the period during which Awards may be granted under the Plan or
amend the eligibility provisions of Section 4 above.
7.2 Non-Transferability of Awards.
(a) Except to the extent permitted by Rule 16b-3 and as otherwise provided in
the Award instrument, no Award (other than Stock or cash transferred to an
Employee under the Plan without restrictions) may be transferred other than by
will or by the laws of descent and distribution, and during an Employee's
lifetime an Award requiring exercise may be exercised only by him or her (or in
the event of incapacity, the person or persons properly appointed to act on his
or her behalf).
(b) Notwithstanding anything contained herein to the contrary, in the event
an Employee terminates his or her employment to assume a position with a
governmental, charitable or educational institution, the Committee, in its sole
discretion and provided such arrangement is in accordance with applicable law,
may authorize a third party, including but not limited to a "blind" trust,
acceptable to the applicable governmental, charitable or educational
institution, the Employee and the Committee, to act on behalf and for the
benefit of such Employee with respect to any Awards.
7.3 Documentation of Awards.
Awards shall be evidenced by written instruments which shall describe the
Award and the terms and conditions thereof. The granting of an Award may be
subject to, and conditioned upon, the Employee's execution of any Award
instrument required by the Committee. Each Award instrument shall contain such
provisions as the Committee shall determine in its sole discretion. The
instruments may be in the form of agreements to be executed by both the Employee
and the Corporation or certificates, letters or similar instruments, which need
not be executed by the Employee but acceptance of which will evidence agreement
to the terms of the Award.
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7.4 Rights as a Stockholder.
Except as specifically provided in the Plan, the receipt of an Award will not
give an Employee rights as a stockholder; the Employee will obtain such rights,
subject to any limitations imposed by the Plan or the Award instrument, upon
actual receipt of Stock.
7.5 Tax Withholding.
The Corporation will withhold from any cash payment made pursuant to an Award
an amount sufficient to satisfy all federal, state and local withholding tax
requirements (the "withholding tax requirements").
In the case of an Award delivered in Stock, the Committee will have the right
to require that the Employee or other appropriate person remit to the
Corporation an amount sufficient to satisfy the withholding tax requirements or
make other arrangements satisfactory to the Committee with regard to such
requirements prior to the event giving rise to such withholding tax requirement.
If and to the extent that withholding is required, the Committee may permit the
Employee or other appropriate person to elect, at the time and in the manner as
the Committee provides, to have the Corporation hold back from the Stock to be
delivered, or to deliver to the Corporation, Stock having a value calculated to
satisfy the withholding tax requirements.
7.6 Deferral of Payments.
The Committee may, in its sole discretion, either in the terms of an Award
instrument or upon the request of an Employee holding an Award, defer the date
on which any payment of cash or Stock under such an Award shall be made. The
Committee may also establish rules and procedures for the crediting of interest
on deferred cash payments and dividends or dividend equivalents for deferred
payments denominated in Stock or Stock Units. Any deferral, whether requested by
the Employee or specified in the Award instrument or otherwise by the Committee,
may be subject to forfeiture in accordance with terms established by the
Committee.
7.7 Adjustments in the Event of Certain Transactions.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Corporation's capitalization, or other
distribution with respect to holders of the Corporation's Common Stock other
than normal cash dividends, the Committee shall make appropriate adjustments to
the maximum number of shares of Stock that may be delivered under the Plan and
to the maximum number of shares of Stock that may be issued pursuant to certain
Awards, all as set forth in Section 3 above.
11
<PAGE>
(b) In any event referred to in paragraph (a), the Committee shall also make
any appropriate adjustments to the number and kind of shares of Stock subject to
Awards then outstanding or subsequently granted, any exercise or purchase prices
relating to Awards and any other provisions of Awards affected by such change.
The Committee may also make adjustments to take into account material changes in
law or in accounting practices or principles, mergers, consolidations,
acquisitions, dispositions, repurchases or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan.
(c) Any adjustments made pursuant to paragraphs (a) or (b) with respect to
ISO's shall be made only after the Committee, after consulting with the
Corporation's counsel, determines whether such adjustments would constitute a
"modification" of the ISO's (as that term is defined in Section 422 of the Code)
or would otherwise cause any adverse tax consequences for the holders of the
ISO's. If the Committee determines that such adjustments to be made with respect
to ISO's would constitute a modification of the ISO's, it may refrain from
making such adjustments.
7.8 Employment Rights.
Neither the adoption of the Plan nor the grant of Awards shall confer upon
any person any right to continued employment with the Corporation or any
subsidiary of the Corporation or affect in any way the right of the Corporation
or any subsidiary of the Corporation to terminate an employment relationship at
any time. Except as specifically provided by the Committee, the Corporation
shall not be liable for the loss of existing or potential profit in Awards
granted under the Plan in the event of termination of an employment relationship
even if the termination is in violation of an obligation of the Corporation or
any subsidiary of the Corporation to the Employee.
7.9 Change in Control.
(a) In order to maintain Employees' rights in the event of any Change in
Control of the Corporation, the Board of Directors (as constituted on the date
the Award is granted or as constituted immediately prior to the Change in
Control) may, in its sole discretion, as to any Award, either on the date an
Award is granted or any time thereafter, take any one or more of the following
actions:
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<PAGE>
(1) Provide for the acceleration of any time periods relating to the
exercise or realization of or lapse of restrictions, conditions and
contingencies under any Award so that the Award may be exercised or realized
in full on or before a date fixed by the Board of Directors.
(2) Provide for the purchase of any Award, upon the Employee's request, for
an amount of cash equal to the amount that could have been obtained upon the
exercise of the Award or realization of the Employee's rights thereunder had
the Award been currently exercisable or payable.
(3) Make such adjustment to any Award then outstanding as the Board of
Directors deems appropriate to reflect the Change in Control.
(4) Cause any Award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving corporation after the
Change in Control.
Subject to this Section 7.9, the Committee may, in its discretion, include
further provisions and limitations relating to the Change in Control in any
Award instrument as it may deem equitable and in the best interests of the
Corporation.
(b) A "Change in Control" is defined to mean any of the following events:
(1) The acquisition by any person (including a group, within the meaning of
Sections 13(d)(3) or 14(d)(2) of the 1934 Act), other than the Corporation or
any subsidiary of the Corporation, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of the
combined voting power of the Corporation's outstanding voting securities.
(2) The first purchase under a tender offer or exchange offer, other than
an offer by the Corporation or any subsidiary of the Corporation, pursuant to
which shares of the Corporation's Common Stock have been purchased.
(3) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation
cease for any reason (other than death or disability) to constitute at least
a majority thereof, unless the election or the nomination for election by
stockholders of the Corporation of each new Director was approved by a vote
of at least two-thirds of the Directors then still in office who were
Directors at the beginning of the period.
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<PAGE>
(4) Approval by stockholders of the Corporation of a merger, consolidation,
liquidation or dissolution of the Corporation, or the sale of all or
substantially all of the assets of the Corporation.
7.10 Approvals.
Anything in the Plan to the contrary notwithstanding, the effectiveness of
the Plan and of the grant of all Awards is subject to, and the Plan and the
Awards granted under it shall be of no force and effect unless and until, and no
Awards granted shall in any way vest or become exercisable, unless and until the
Plan is approved by the affirmative vote of a majority of the shares of the
Corporation's Common Stock present in person or by proxy and entitled to vote at
a meeting of stockholders at which the Plan is presented for approval. The date
the Plan is approved by the stockholders of the Corporation shall be the
Effective Date of the Plan. The Effective Date must occur within one year after
approval of the Plan by the Board of Directors. Any grant of an Award prior to
the approval by the stockholders of the Corporation shall be void if such
approval is not obtained. The Corporation's obligation to sell and deliver
shares of Stock under the Plan is subject to the approval of any governmental
authority required in connection with the authorization, issuance or sale of the
Stock.
7.11 Successors and Assigns.
The Plan shall be binding upon all successors and assigns of an Employee
receiving an Award under the Plan, including, without limitation, the estate of
any such Employee and the executors, administrators or trustees of such estate,
and any receiver, trustee in bankruptcy or representative of the creditors of
any such Employee.
7.12 1990 Plan.
Upon approval of the Plan by the Corporation's stockholders, the authority to
grant additional Awards under the Corporation's 1990 Plan shall expire. Awards
granted pursuant to the 1990 Plan shall remain outstanding and exercisable and
subject to the Award instruments relating thereto, or in accordance with such
other terms and conditions as the Committee shall determine.
7.13 Governing Law.
The Plan and all determinations made and related actions taken by the
Committee or the Board of Directors, to the extent not otherwise governed by the
Code or the securities laws of the United States, shall be governed by the laws
of the Commonwealth of Massachusetts and shall be construed accordingly.
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<PAGE>
7.14 Definitions.
As used in the Plan, the following terms shall have the following meanings:
<TABLE>
<CAPTION>
Section in Which
Term Term is Defined
-------------------------------------------------------------------------------
<S> <C>
"Awards".......................................................... Section 5.1
"Change in Control"............................................... Section 7.9(b)
"Code"............................................................ Section 2
"Committee"....................................................... Section 2
"Corporation"..................................................... Section 1
"Disability"...................................................... Section 6.1
"Employee"........................................................ Section 4
"Fair Market Value"............................................... Section 5.2(b)
"ISO"............................................................. Section 5.2(a)
"1990 Plan"....................................................... Section 3(b)
"1934 Act"........................................................ Section 2
"Non-Qualified Option"............................................ Section 5.2(a)
"Option".......................................................... Section 5.2(a)
"Plan"............................................................ Section 1
"Restricted Stock"................................................ Section 5.4(c)
"Restricted Stock Award".......................................... Section 5.4(a)
"Rule 16b-3"...................................................... Section 2
"SAR"............................................................. Section 5.3(a)
"Stock"........................................................... Section 3(a)
"Stock Appreciation Right"........................................ Section 5.3(a)
"Stock Units"..................................................... Section 5.5(a)
"Stock Unit Award"................................................ Section 5.5(a)
"Unrestricted Stock Award"........................................ Section 5.4(e)
</TABLE>
15
<PAGE>
EXHIBIT 99.2
DIGITAL EQUIPMENT CORPORATION
1995 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
Section 1 -- Purpose
The purpose of the 1995 Stock Option Plan for Nonemployee Directors (the
"Plan") is to increase the proprietary interest of nonemployee members of the
Board of Directors in the continued success of Digital Equipment Corporation
(the "Corporation") and to provide them with an incentive to continue to serve
as directors.
Section 2 -- Administration
The Plan shall be administered by the Compensation and Stock Option Committee
of the Board of Directors of the Corporation, or any successor committee
thereto. The Committee shall have responsibility finally and conclusively to
interpret the provisions of the Plan and to decide all questions of fact arising
in its application. No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan.
Section 3 -- Type of Options
Options granted pursuant to the Plan shall be nonstatutory options which are
not intended to meet the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
Section 4 -- Eligibility
Directors of the Corporation who are not employees of the Corporation or any
subsidiary or affiliate thereof ("Nonemployee Directors") shall be eligible to
participate in the Plan. Each Nonemployee Director to whom options are granted
hereunder shall be a participant ("Participant") under the Plan. Nonemployee
Directors who were serving as directors of the Corporation on January 1, 1995
are referred to herein as "Existing Nonemployee Directors." Nonemployee
Directors who commence service as directors of the Corporation after January 1,
1995 are referred to herein as "New Nonemployee Directors."
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<PAGE>
Section 5 -- Stock Available under the Plan
Subject to adjustment as provided in Section 9 below, an aggregate of 50,000
shares of the Corporation's Common Stock, plus the number of shares of Common
Stock available for issuance under the Corporation's 1990 Stock Option Plan for
Nonemployee Directors as of the date of approval of the Plan by the
Corporation's stockholders, shall be available for issuance pursuant to the
provisions of the Plan. Such shares may be authorized and unissued shares or may
be shares issued and thereafter acquired by the Corporation. If an option
granted under the Plan or under the 1990 Plan shall expire or terminate for any
reason without having been exercised in whole or in part, the unpurchased shares
subject to such option shall again be available for subsequent option grants
under the Plan.
Section 6 -- Automatic Grant of Options
(a) Each year, on the date of the Corporation's Annual Meeting of
Stockholders, each Existing Nonemployee Director who continues in office after
said Annual Meeting, shall receive automatically and without further action by
the Board of Directors or the Committee, a grant of an option to purchase 1,000
shares of Common Stock of the Corporation in accordance with the provisions of
Section 7, and subject to adjustment as provided in Section 9.
(b) Each year, on the date of the Corporation's Annual Meeting of
Stockholders, each New Nonemployee Director who continues in office after said
Annual Meeting, shall receive automatically and without further action by the
Board of Directors or the Committee, a grant of an option to purchase 2,500
shares of Common Stock of the Corporation in accordance with the provisions of
Section 7, and subject to adjustment as provided in Section 9.
Section 7 -- Terms and Conditions of Options
7.1 Exercise of Options.
(a) Each option granted under the Plan shall be exercisable at the rate of
33% on the first and second anniversaries of the date such option was granted
and 34% on the third anniversary of the date such option was granted, subject to
the provisions of Section 8 hereof.
(b) Notwithstanding the provisions of paragraph (a) above, an option granted
to any Participant shall become immediately exercisable in full upon the first
to occur of:
(1) The death of any Participant, in which case the option may be
exercised by the Participant's executor or administrator, or if not so
exercised, by the legatees or distributees of his or her estate or by such
other person or persons to whom the Participant's rights under the option
shall pass by will or by the applicable laws of descent and distribution;
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<PAGE>
(2) Such time as the Participant ceases to be a director of the
Corporation by reason of his or her permanent disability; or
(3) Such time as the Participant retires from the Board of Directors so
long as he or she is at least 70 years of age and has completed at least five
years of service as a Director at the time of such retirement.
(c) In the event that the Participant ceases to be a director of the
Corporation for any reason other than those specified in paragraph (b) above
prior to the time a Participant's option becomes fully exercisable, the option
will terminate with respect to the shares as to which the option is not then
exercisable and all rights of the Participant to such shares shall terminate
without further obligation on the part of the Corporation.
(d) In the event that the Participant ceases to be a director of the
Corporation after his or her option has become exercisable in whole or in part,
such option shall remain exercisable in whole or in part, as the case may be, in
accordance with the terms hereof.
(e) Options granted under the Plan shall expire ten years from the date on
which the option is granted, unless terminated earlier in accordance with the
Plan; provided, however, that in the event a Participant ceases to be a director
of the Corporation by reason of death, including without limitation in the event
that a Participant dies after ceasing to be a director of the Corporation by
reason of disability or retirement, any option granted to such Participant
hereunder shall expire one year from the date of the Participant's death
(whether or not this period ends after expiration of the exercise period).
7.2 Exercise Price.
The exercise price of an option shall be 100% of the fair market value per
share of Common Stock of the Corporation on the date the option is granted. For
purposes of the Plan, "fair market value" of a share of stock on any date shall
mean the average of the high and low selling prices of the Corporation's Common
Stock on the New York Stock Exchange Composite Transactions Index as of the date
of grant, or if the date of grant is not a business day, as of the last business
day for which prices are available prior to the date of grant.
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<PAGE>
7.3 Payment of Exercise Price.
(a) Subject to the terms and conditions of the Plan and the documentation of
the options pursuant to Section 7.5 hereof, an option granted hereunder shall,
to the extent then exercisable, be exercisable in whole or in part by giving
written notice to the Corporation stating the number of shares with respect to
which the option is being exercised, accompanied by payment in full for such
shares; provided, however, that there shall be no such exercise at any one time
as to fewer than one hundred (100) shares or all of the remaining shares then
purchasable by the person or persons exercising the option, if fewer than one
hundred (100) shares.
(b) Options granted under the Plan may be paid for by (i) delivery of cash,
bank draft, money order or a check to the order of the Corporation in an amount
equal to the exercise price of such options, (ii) by delivery to the Corporation
of shares of Common Stock of the Corporation already owned by the Participant
having a fair market value equal in amount to the exercise price of the option
being exercised, provided that such method is consistent with applicable tax
laws, (iii) if permitted by applicable law, through the delivery of an
assignment to the Corporation of a sufficient amount of the proceeds from the
sale of Common Stock of the Corporation acquired upon exercise to pay for all of
the Common Stock so acquired and an authorization to the broker or selling agent
to pay that to the Corporation, or (iv) by any combination of such methods of
payment.
7.4 Rights as a Stockholder.
Except as specifically provided by the Plan, the grant of an option will not
give a Participant rights as a stockholder; the Participant will obtain such
rights, subject to any limitations imposed by the Plan, upon actual receipt of
Common Stock of the Corporation.
7.5 Documentation of Option Grants.
Option grants shall be evidenced by written instruments prescribed by the
Committee from time to time. The instruments may be in the form of agreements to
be executed by both the Participant and the Corporation or certificates, letters
or similar instruments, which need not be executed by the Participant but
acceptance of which will evidence agreement to the terms of the grant.
4
<PAGE>
7.6 Nontransferability of Options.
No option granted under the Plan shall be assignable or transferable by the
Participant to whom it is granted, either voluntarily or by operation of law,
except by will or the laws of descent and distribution. During the life of the
Participant, the option shall be exercisable only by such person (or in the
event of incapacity, by the person or persons properly appointed to act on his
or her behalf).
7.7 Approvals.
The effectiveness of the Plan and of the grant of all options is subject to
the approval of the Plan by the affirmative vote of a majority of the shares of
the Corporation's Common Stock present in person or by proxy and entitled to
vote at a meeting of the stockholders at which the Plan is presented for
approval. Notwithstanding anything to the contrary in the Plan, no Options
granted hereunder shall become exercisable until such approval has been
received.
The Corporation's obligation to sell and deliver shares of stock under the
Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of the stock.
Section 8 -- Regulatory Compliance and Listing
(a) The issuance or delivery of any shares of stock subject to exercisable
Options hereunder may be postponed by the Committee for such period as may be
required to comply with any applicable requirements under the Federal securities
laws, any applicable listing requirements of any national securities exchange or
any requirements under any law or regulation applicable to the issuance or
delivery of such shares. The Corporation shall not be obligated to issue or
deliver any such shares if the issuance or delivery thereof would constitute a
violation of any provision of any law or of any regulation of any governmental
authority or any national securities exchange.
(b) Should any provision of this Plan require modification or be unnecessary
to comply with the requirements of Section 16 of and Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"), the Committee may
waive such provision and/or amend this Plan to add to or modify the provisions
hereof accordingly.
(c) It is the Corporation's intent that the Plan comply in all respects with
Rule 16b-3 of the 1934 Act (or any successor or amended provisions thereof) and
any applicable Securities and Exchange Commission interpretations thereof. If
any provision of this Plan is deemed not to be in compliance with Rule 16b-3,
the provision shall be null and void.
5
<PAGE>
Section 9 -- Adjustment in Event of Changes in Capitalization
In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Corporation's capitalization, or other
distribution with respect to holders of the Corporation's Common Stock other
than normal cash dividends, automatic adjustment shall be made in the number and
kind of shares as to which outstanding options or portions thereof then
unexercised shall be exercisable and in the available shares set forth in
Section 5 hereof, to the end that the proportionate interest of the option
holder shall be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share. Automatic adjustment
shall also be made in the number and kind of shares subject to options
subsequently granted under the Plan.
Section 10 -- No Right to Reelection
Nothing in the Plan shall be deemed to create any obligation on the part of
the Board of Directors or standing Committee thereof to nominate any Nonemployee
Director for reelection by the Corporation's stockholders, nor confer upon any
Nonemployee Director the right to remain a member of the Board of Directors for
any period of time, or at any particular rate of compensation.
Section 11 -- Amendment and Termination
(a) The Board of Directors shall have the right to amend, modify or terminate
the Plan at any time and from time to time; provided, however, that unless
required by law, no such amendment or modification shall (a) affect any right or
obligation with respect to any grant theretofore made; or (b) unless previously
approved by the stockholders, increase the number of shares of Common Stock
available for grants as provided in Section 5 hereof (as adjusted pursuant to
Section 9 hereof). In addition, no such amendment shall, unless previously
approved by the stockholders (where such approval is necessary to satisfy then
applicable requirements of federal securities laws, the Code or rules of any
stock exchange on which the Corporation's Common Stock is listed), (i) in any
manner affect the eligibility requirements set forth in Section 4 hereof, (ii)
except to the extent provided for in Section 9 hereof, increase the number of
shares of Common Stock subject to any option, (iii) except to the extent
provided for in Section 9 hereof, change the purchase price of the shares of
Common Stock subject to any option, (iv) extend the period during which options
may be granted under the Plan, (v) materially increase the benefits to
Participants under the Plan, (vi) in any manner cause Rule 16b-3 under the 1934
Act (or any successor provision thereof) to become inapplicable to this Plan;
and provided further that, except to the extent permitted by Rule 16b-3, the
provisions of this Plan specified in Rule 16b-3(c)(2)(ii)(A) (or any successor
or amended provision thereof) under the 1934 Act (including without limitation,
provisions of eligibility, amount, price and timing of awards) may not be
amended more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
6
<PAGE>
(b) Unless earlier terminated by the Board of Directors, the Plan shall
terminate on December 31, 2000; provided, however, that options which are
granted on or before this date shall remain exercisable in accordance with their
respective terms after the termination of the Plan.
Section 12 -- 1990 Plan
Upon approval of the Plan by the Corporation's stockholders, the authority to
grant options under the 1990 Stock Option Plan for Nonemployee Directors shall
expire. Options granted pursuant to the 1990 Stock Option Plan for Nonemployee
Directors shall remain outstanding and exercisable and subject to the option
agreement related thereto, or in accordance with such other terms and conditions
as the Committee shall determine.
Section 13 -- Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts.
7
