SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 19, 1998
---------------------------------
(Date of earliest event reported)
Digital Equipment Corporation
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(Exact name of Registrant as specified in its charter)
Massachusetts 1-5296 04-2226590
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(State of (Commission (IRS Employer
Incorporation) File No.) Identification No.)
111 Powdermill Road, Maynard, Massachusetts 01754
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(Address of principal executive offices,
including zip code)
(978) 493-5111
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(Registrant's telephone number, including area code)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
On March 19, 1998, a duly appointed special committee of the Board of
Directors of Digital Equipment Corporation ("Digital") adopted the Digital
Equipment Corporation Key Employee Severance Plan (the "Severance Plan")
for the benefit of certain employees of Digital and its subsidiaries. Nine
senior executives, nineteen other executives, and all employees who have
the title of vice president (together, the "Executives") are eligible to
participate in the Severance Plan, which provides for, among other things,
a severance payment in the event an Executive's employment is terminated
within one year following a change of control of Digital.
Digital also entered into a certain Severance Agreement with Robert
B. Palmer, dated as of March 19, 1998 (the "Severance Agreement"). Such
Severance Agreement provides that, among other things, Mr. Palmer would
receive a severance payment in the event that his employment with Digital
were to be terminated within two years following a change of control of
Digital.
Consummation of the merger contemplated by the Amended and Restated
Agreement and Plan of Merger, dated as of January 25, 1998 by and among
Digital, Compaq Computer Corporation and Compaq Merger, Inc. will
constitute a change of control for purposes of both the Severance Plan and
the Severance Agreement.
Copies of the Severance Plan and Severance Agreement are attached
hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated
herein by reference.
On May 6, 1998, Digital issued a press release relating to an
amendment of its financial results for the third quarter and the
year-to-date period ended March 28, 1998. A copy of such press release is
attached hereto as Exhibit 99 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
Exhibit 10.1 - Digital Equipment Corporation Key Employee
Severance Plan, effective as of March 19, 1998
Exhibit 10.2 - Severance Agreement, dated as of March 19, 1998,
by and between Digital Equipment Corporation and
Robert B. Palmer
Exhibit 99 - Press Release of Digital Equipment Corporation
dated May 6, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Gail S. Mann
---------------------------------
Gail S. Mann
Vice President, Assistant General
Counsel, Secretary and Clerk
Dated: May 6, 1998
EXHIBIT INDEX
Exhibit No. Description
10.1 Digital Equipment Corporation Key Employee Severance Plan,
effective as of March 19, 1998
10.2 Severance Agreement, dated as of March 19, 1998, by and
between Digital Equipment Corporation and Robert B. Palmer
99 Press Release of Digital Equipment Corporation dated
May 6, 1998
EXHIBIT 10.1
DIGITAL EQUIPMENT CORPORATION
KEY EMPLOYEE SEVERANCE PLAN
The Company hereby adopts the Digital Equipment Corporation Key
Employee Severance Plan for the benefit of certain employees of the Company
and its subsidiaries, on the terms and conditions hereinafter stated. All
capitalized terms used herein are defined in Section 1 hereof. This Plan is
intended to be a plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees, within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended and shall be interpreted
in a manner consistent with such intention.
SECTION 1. DEFINITIONS. As hereinafter used:
1.1 "Board" means the Board of Directors of the Company or, on
and after the occurrence of the Change in Control, the Board of Directors
of the Parent.
1.2 "Cause" means (i) the willful and continued failure by the
Eligible Employee to substantially perform the Eligible Employee's duties
with the Employer (other than any such failure resulting from the Eligible
Employee's incapacity due to physical or mental illness), or (ii) the
willful engaging by the Eligible Employee in conduct which is demonstrably
injurious to the Company, its subsidiaries, or any member of the Parent
Group, monetarily or otherwise. For purposes of this definition, no act, or
failure to act, on the Employee's part shall be deemed "willful" unless
done, or omitted to be done, by the Employee not in good faith and without
reasonable belief that the Employee's act, or failure to act, was in the
best interest of the Company.
1.3 "Change in Control" means any of the following events which
takes place on or after January 25, 1998:
(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
Company or any subsidiary of the Company, 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 Company's outstanding voting securities.
(2) The first purchase under a tender offer or exchange offer, other
than an offer by the Company or any subsidiary of the Company, pursuant to
which shares of the Company'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 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
Company 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.
(4) The consummation of a merger, consolidation, liquidation or
dissolution of the Company, or the sale of all or substantially all of the
assets of the Company.
1.4 "Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
1.5 "Company" means the Digital Equipment Corporation or any
successors thereto.
1.6 "Eligible Employee" means any employee that is a Tier 1
Employee, Tier 2 Employee or Tier 3 Employee. An Eligible Employee becomes
a "Severed Employee" once he or she incurs a Severance.
1.7 "Employer" means the Company or any of
its subsidiaries.
1.8 "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
1.9 "Good Reason" means, the occurrence, on or after the date
of a Change in Control and without the affected Eligible Employee's written
consent, of (i) the assignment to the Eligible Employee of duties in the
aggregate that are inconsistent with the Eligible Employee's level of
responsibility immediately prior to the date of the Change in Control
(other than pursuant to a transfer or promotion to a position of equal or
enhanced responsibility or authority) or any diminution in the nature or
status of the Eligible Employee's responsibilities from those in effect
immediately prior to the date of the Change in Control (except, (x) in the
case of an Eligible Employee who was, immediately prior to the Change in
Control, an executive officer of the Company, any such assignment or
diminution due solely to the fact that the Eligible Employee has ceased to
be an executive officer of a public company and (y) any reasonable
alteration in the Eligible Employee's reporting responsibilities as a
result of the consummation of the transactions constituting the Change in
Control); (ii) a reduction by the Employer (or any member of the Parent
Group) in the Eligible Employee's annual base salary or annual bonus
opportunity from that in effect immediately prior to the Change in Control
other than as part of a general reduction applicable to the business,
function or location with which the Eligible Employee is affiliated; or
(iii) the relocation of the Eligible Employee's principal place of
employment to a location more than fifty (50) miles from the Eligible
Employee's principal place of employment immediately prior to the date of
the Change in Control.
1.10 "Gross-Up Payment" shall have the meaning set forth in
Section 2.4 hereof.
1.11 "Parent" shall mean Compaq Computer Corporation, if the
Change in Control is the consummation of the transactions contemplated by
the Agreement and Plan of Merger, dated as of January 25, 1998 between the
Company and Compaq Computer Corporation, and otherwise, the parent of the
Company, if any, after a Change in Control.
1.12 "Parent Group" shall mean the Parent and its affiliates,
collectively.
1.13 "Plan" means the Digital Equipment Corporation Key
Employee Severance Plan, as set forth herein, as it may be amended from
time to time.
1.14 "Plan Administrator" means the person or persons appointed
from time to time by the Board which appointment may be revoked at any time
by the Board.
1.15 "Potential Change in Control" shall be deemed to have
occurred if:
(a) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in
Control;
(b) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if
consummated would constitute a Change in Control;
(c) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10%
or more of the combined voting power of the Company's
then outstanding securities, (not including in the
securities beneficially owned by such person any
securities acquired directly from the Company or its
affiliates); or
(d) the Board adopts a resolution to the effect that, for
purposes of this Plan, a Potential Change in Control has
occurred.
1.16 "Severance" means the termination of an Eligible
Employee's employment with the Employer (or, if applicable, the Parent
Group) on or within one year following the date of the Change in Control,
(i) by the Employer other than for Cause, or (ii) by the Eligible Employee
for Good Reason. An Eligible Employee will not be considered to have
incurred a Severance (i) if his or her employment is discontinued by reason
of the Eligible Employee's death or a physical or mental condition causing
such Eligible Employee's inability to substantially perform his or her
duties with the Employer, including, without limitation, such condition
entitling him or her to benefits under any sick pay or disability income
policy or program of the Employer, (ii) by reason of the divestiture of a
facility, sale of a business or business unit, or the outsourcing of a
business activity with which the Eligible Employee is affiliated if the
Eligible Employee is offered comparable employment by the successor
company, or (iii) by reason of the transfer of the Eligible Employee to
employment with another member of the Parent Group if such member assumes
the Employer's responsibilities under the Plan with respect to such
Eligible Employee.
1.17 "Severance Date" means the date on or after the date of
the Change in Control on which an Eligible Employee incurs a Severance.
1.18 "Severance Pay" means the payment determined pursuant to
Section 2.1 or 2.2 hereof, as applicable.
1.19 "Tier 1 Employee" means any employee of the Employer
listed on Schedule A attached hereto.
1.20 "Tier 2 Employee" means any employee of the Employer
listed on Schedule B attached hereto.
1.21 "Tier 3 Employee" means any employee of the Employer who
has the title of vice president and is listed on Schedule C attached
hereto.
SECTION 2. BENEFITS.
2.1 Each Tier 1 Employee and Tier 2 Employee who incurs a
Severance shall be entitled, subject to Sections 2.8, 2.9 and 2.11, to
receive Severance Pay equal to the sum of his or her annual base salary and
target incentive compensation (which target incentive compensation shall
not be less than the target incentive compensation for the Company's 1998
fiscal year), multiplied by (i) 2, in the case of a Tier 1 Employee and
(ii) 1.5, in the case of a Tier 2 Employee. For purposes of this Section,
annual base salary and target incentive compensation shall be determined
immediately prior to the Severance (without regard to any reductions
therein which constitute Good Reason).
2.2 Each Tier 3 Employee who incurs a Severance shall be
entitled to receive Severance Pay equal to his or her annual base salary.
For purposes of this Section, annual base salary shall be determined
immediately prior to the Severance (without regard to any reductions
therein which constitute Good Reason).
2.3 Severance Pay shall be paid to an eligible Severed Employee
in a cash lump sum, as soon as practicable following the Severance Date,
but in no event later than 10 business days immediately following the
expiration of the revocation period, if any, applicable to such Severed
Employee's release, described in Section 2.8.
2.4 If a Severed Employee who was a Tier 1 Employee becomes
entitled to Severance Pay, then if any of the payments or benefits received
or to be received by such Severed Employee in connection with the Change in
Control or his or her termination of employment (whether pursuant to the
terms of this Plan or any other plan, arrangement or agreement) (such
payments or benefits, excluding the Gross-Up Payment, being hereinafter
referred to as the "Total Payments") will be subject to the Excise Tax, the
Company shall pay to the Severed Employee an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Severed
Employee, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon
the Gross-Up Payment, shall be equal to the Total Payments. The amount of
the Gross-Up Payment, if any, shall be determined by the Plan Administrator
or any person or entity designated by the Plan Administrator. The Gross- Up
Payment, if any, shall be paid to an eligible Severed Employee in a cash
lump sum, as soon as practicable following the Severance Date, but, in any
event, not later than 30 business days immediately following the expiration
of the revocation period, if any, applicable to such Severed Employee's
release, described in Section 2.8.
In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the
Gross-Up Payment, the Severed Employee shall repay to the Company, within
five (5) business days following the time that the amount of such reduction
in the Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income
and employment taxes imposed on the Gross-Up Payment being repaid by the
Severed Employee, to the extent that such repayment results in a reduction
in the Excise Tax and a dollar-for-dollar reduction in the Severed
Employee's taxable income and wages for purposes of federal, state and
local income and employment taxes), plus interest on the amount of such
repayment at 120% of the semiannual compounding short term Applicable
Federal Rate published with respect to the month in which occurs the
Severance Date. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder in calculating the Gross-Up Payment
(including by reason of any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payment), the Company shall make
an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Severed Employee with
respect to such excess) within five (5) business days following the time
that the amount of such excess is finally determined. The Severed Employee
shall notify the Company immediately of the assertion by any taxing
authority of any underpayment of tax. The Severed Employee and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount
of liability for Excise Tax with respect to the Total Payments and in
resolving any dispute with any taxing authority regarding any asserted
underpayment of Excise Tax.
2.5 The Company shall provide each Severed Employee with
outplacement services which the Parent determines are reasonable and
appropriate for such Severed Employee's level, position and location;
provided, however, that in no event shall the provision of such services
extend beyond the period beginning on the Severance Date and ending six (6)
months thereafter, or such shorter period as the Parent shall determine to
be reasonable and appropriate given the Severed Employee's level, position
and location. No cash option shall be available with respect to such
outplacement services.
2.6 In the event of a claim by an Eligible Employee as to the
amount or timing of any payment or benefit, such Eligible Employee shall
present the reason for his or her claim in writing to the Plan
Administrator. The Plan Administrator shall, within fourteen (14) days
after receipt of such written claim, send a written notification to the
Eligible Employee as to its disposition. In the event the claim is wholly
or partially denied, such written notification shall state the specific
reason or reasons for the denial. In the event an Eligible Employee wishes
to appeal the denial of his or her claim, or in the event the Plan
Administrator does not respond within the fourteen day period set forth
above, the Eligible Employee may request a review of such denial or
nonresponse by making application in writing to a committee (the
"Committee"), which shall be comprised of two members, who shall initially
be Frank P. Doyle and Hans W. Gutsch, within sixty (60) days after receipt
of such denial or the expiration of the applicable fourteen day period, as
applicable. In the event of a vacancy on the Committee, the Plan
Administrator shall appoint a successor Committee member; provided, that
the Plan Administrator shall use reasonable best efforts to ensure that at
least one member of the Committee at all times is an individual who
performed services for the Company at a senior management or Board level
prior to the Change in Control, or, if no such individual is available to
serve on the Committee, that at least one Committee member is unaffiliated
in any other way with the Company or Parent. Notwithstanding the above,
Frank P. Doyle shall serve on the Committee for so long as he is willing
and able to do so. The Committee shall send a written notification to the
Eligible Employee of the final disposition of his or her appeal within 30
days of the receipt of such written appeal. Except as provided in the
preceding portion of this Section 2.6, all disputes under this Plan shall
be settled exclusively by binding arbitration in New York, New York, in
accordance with the rules of the American Arbitration Association then in
effect. The arbitrator shall apply a de novo standard of review in
considering the claim of the Eligible Employee. Judgment may be entered on
the arbitrator's award in any court having jurisdiction.
2.7 The Company will pay to each Eligible Employee all
reasonable legal fees and expenses incurred by such Eligible Employee in
pursuing any claim under the Plan in which such Eligible Employee prevails
in all material respects.
2.8 No Severed Employee shall be eligible to receive Severance
Pay or other benefits under the Plan unless he or she first executes a
written release substantially in the form attached as Exhibit A hereto,
(or, if the Severed Employee was not a United States employee, a similar
release which is in accordance with the applicable laws in the relevant
jurisdiction). The effectiveness of such release shall not be affected by
any repayment pursuant to Section 2.11.
2.9 A Severed Employee who receives Severance Pay shall not,
for a period of three months immediately following the Severance Date, work
in any capacity for, or otherwise participate as a director, officer,
member, partner, employee, consultant, representative or advisor of, a
competitor of the Company or any member of the Parent Group.
2.10 The Company shall be entitled to withhold from amounts to
be paid to the Severed Employee hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time
required to withhold.
2.11 Any provision of this Plan to the contrary
notwithstanding, a Severed Employee's entitlement to Severance Pay
hereunder is expressly conditioned upon such Employee's agreement to
maintain the confidentiality of the Company's (and Parent's, following a
Change in Control) proprietary information and trade secrets, and upon the
Employee's compliance with the provisions of Section 2.9. The Company, or
Parent, as the case may be, shall be entitled to full repayment of the
Severance Pay, along with any and all amounts paid pursuant to Section 2.4,
in the event of a breach by the Employee of either of such conditions.
SECTION 3. PLAN ADMINISTRATION.
3.1 The Plan Administrator shall administer the Plan and may
interpret the Plan, prescribe, amend and rescind rules and regulations
under the Plan and make all other determinations necessary or advisable for
the administration of the Plan, subject to all of the provisions of the
Plan, including, without limitation, Section 2.6 thereof.
3.2 The Plan Administrator may delegate any of its duties
hereunder to such person or persons from time to time as it may designate.
3.3 The Plan Administrator is empowered, on behalf of the Plan,
to engage accountants, legal counsel and such other personnel as it deems
necessary or advisable to assist it in the performance of its duties under
the Plan. The functions of any such persons engaged by the Plan
Administrator shall be limited to the specified services and duties for
which they are engaged, and such persons shall have no other duties,
obligations or responsibilities under the Plan. Such persons shall exercise
no discretionary authority or discretionary control respecting the
management of the Plan. All reasonable expenses thereof shall be borne by
the Employer.
SECTION 4. PLAN MODIFICATION OR TERMINATION.
The Plan may be amended or terminated by the Board at any
time; provided, however, that the Plan may not be terminated during the
pendency of or within six (6) months following the cessation of a Potential
Change in Control or within one year following a Change in Control; and
further provided, however, that the Plan may not be amended, if such
amendment would be adverse to the interests of any Eligible Employee,
without such Eligible Employee's written consent. No Plan termination shall
affect the rights of any Eligible Employee under this Plan, without such
Eligible Employee's written consent.
SECTION 5. GENERAL PROVISIONS.
5.1 Except as otherwise provided herein or by law, no right or
interest of any Eligible Employee under the Plan shall be assignable or
transferable, in whole or in part, either directly or by operation of law
or otherwise, including without limitation by execution, levy, garnishment,
attachment, pledge or in any manner; no attempted assignment or transfer
thereof shall be effective; and no right or interest of any Eligible
Employee under the Plan shall be liable for, or subject to, any obligation
or liability of such Eligible Employee. When a payment is due under this
Plan to a Severed Employee who is unable to care for his or her affairs,
payment may be made directly to his or her legal guardian or personal
representative.
5.2 If the Company or any other member of the Parent Group is
obligated by law or by contract to pay severance pay, a termination
indemnity, notice pay, or the like, or if the Company or any other member
of the Parent Group is obligated by law to provide advance notice of
separation ("Notice Period"), then any Severance Pay hereunder shall be
reduced by the amount of any such severance pay, termination indemnity,
notice pay or the like, as applicable, and by the amount of any
compensation received during any Notice Period.
5.3 Neither the establishment of the Plan, nor any
modification thereof, nor the creation of any fund, trust or account, nor
the payment of any benefits shall be construed as giving any Eligible
Employee, or any person whomsoever, the right to be retained in the service
of the Employer, and all Eligible Employees shall remain subject to
discharge to the same extent as if the Plan had never been adopted.
5.4 If any provision of this Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any
other provisions hereof, and this Plan shall be construed and enforced as
if such provisions had not been included.
5.5 This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Eligible Employee, present and future, and any successor to the Employer.
5.6 The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
5.7 The Plan shall not be funded. No Eligible Employee shall
have any right to, or interest in, any assets of any Employer which may be
applied by the Employer to the payment of benefits or other rights under
this Plan.
5.8 Any notice or other communication required or permitted
pursuant to the terms hereof shall have been duly given when delivered or
mailed by United States Mail, first class, postage prepaid, addressed to
the intended recipient at his, her or its last known address.
5.9 This Plan shall be construed and enforced according to
the laws of the State of New York to the extent not preempted by federal
law, which shall otherwise control.
Schedule A
Bruce L. Claflin, Harold O. Copperman, Richard J. Fishburn, Charles B.
Holleran, Vincent J. Mullarkey, John J. Rando, Thomas C. Siekman, William
D. Strecker and Ilene B. Jacobs
Schedule B
Bobby A.F. Choonavala, Hans W. Dirkmann, Michael Gallup, Graham Long, Luis
M. Zuniga, R. Edward Caldwell, Howard Elias, Donald Z. Harbert, Ellen J.
Lary, Jesse Lipcon, John F. McClelland, Mahendra R. Patel, Alexis Makris,
Paul J. Milbury, Timothy M. Leisman, Peter A. Mercury, Kannankote S.
Srikanth, Gail S. Mann and Robert M. Supnik
Exhibit A
WAIVER AND RELEASE OF CLAIMS
In consideration of, and subject to, the payments to be made to me by
Digital Equipment Corporation, a Massachusetts corporation (the "Company")
or any of its subsidiaries, pursuant to the Digital Equipment Corporation
Key Employee Severance Plan (the "Plan"), which I acknowledge that I would
not otherwise be entitled to receive, I hereby waive any claims I may have
for employment or re-employment by the Company or any subsidiary or parent
of the Company after the date hereof, and I further agree to and do release
and forever discharge the Company or any subsidiary or parent of the
Company, and their respective past and present officers, directors,
shareholders, employees and agents from any and all claims and causes of
action, known or unknown, arising out of or relating to my employment with
the Company or any subsidiary or parent of the Company, or the termination
thereof, including, but not limited to, wrongful discharge, breach of
contract, tort, fraud, the Civil Rights Acts, Age Discrimination in
Employment Act, Employee Retirement Income Security Act, Americans with
Disabilities Act, or any other federal, state or local legislation or
common law relating to employment or discrimination in employment or
otherwise.
Notwithstanding the foregoing or any other provision hereof, nothing
in this Waiver and Release of Claims shall adversely affect (i) my rights
under the Plan; (ii) my rights to benefits other than severance benefits
under plans, programs and arrangements of the Company or any subsidiary or
parent of the Company which are accrued but unpaid as of the date of my
termination; or (iii) my rights to indemnification under any
indemnification agreement, applicable law and the certificates of
incorporation and bylaws of the Company and any subsidiary or parent of the
Company, and my rights under any director's and officers' liability
insurance policy covering me.
I acknowledge that I have signed this Waiver and Release of Claims
voluntarily, knowingly, of my own free will and without reservation or
duress, and that no promises or representations have been made to me by any
person to induce me to do so other than the promise of payment set forth in
the first paragraph above and the Company's acknowledgment of my rights
reserved under the second paragraph above.
I understand that this release will be deemed to be an application
for benefits under the Plan, and that my entitlement thereto shall be
governed by the terms and conditions of the Plan, including, without
limitation Section 2.6 thereof which requires that disputes under the Plan
be settled exclusively by binding arbitration after exhaustion of remedies
and procedures provided in the Plan, and I expressly hereby consent to such
terms and conditions.
I acknowledge that I have been given not less than [twenty-one
(21)][forty-five (45)] days to review and consider this Waiver and Release
of Claims, and that I have had the opportunity to consult with an attorney
or other advisor of my choice and have been advised by the Company to do so
if I choose. I may revoke this Waiver and Release of Claims seven days or
less after its execution by providing written notice to the Company.
Finally, I acknowledge that I have read this Waiver and Release of
Claims and understand all of its terms.
_________________________________
Executive's Signature
_________________________________
Print Name
_________________________________
Date Signed
EXHIBIT 10.2
SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of March 19, 1998, is made by and
between Digital Equipment Corporation, a Massachusetts corporation (the
"Company"), and Robert B.
Palmer (the "Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders to foster the continued employment of the
Executive;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall commence
on the date hereof and shall continue in effect through December 31, 2000;
provided, however, that commencing on January 1, 1999 and each January 1
thereafter, the Term shall automatically be extended for one additional
year unless, not later than September 30 of the preceding year, the Company
or the Executive shall have given notice not to extend the Term; and
further provided, however, that if a Change in Control shall have occurred
during the Term, the Term shall expire on the last day of the twenty-fourth
(24th) month following the month in which such Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of
the Executive's covenants set forth in Section 4 hereof, the Company
agrees, under the conditions described herein, to pay the Executive the
Severance Payments and the other payments and benefits described herein.
Except as provided in Section 9.1 hereof, no Severance Payments shall be
payable under this Agreement unless there shall have been a termination of
the Executive's employment with the Company on or following the date of the
Change in Control and during the Term. This Agreement shall not be
construed as creating an express or implied contract of employment and,
except as otherwise agreed in writing between the Executive and the
Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control during the Term, the Executive will remain in
the employ of the Company until the earliest of (i) a date which is six (6)
months from the date of such Potential Change of Control, (ii) the date of
a Change in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason or by reason of death, or Disability
or (iv) the termination by the Company of the Executive's employment for
any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term, during
any period that the Executive fails to perform the Executive's full-time
duties with the Company as a result of incapacity due to physical or mental
illness, the Company shall pay the Executive's full salary to the Executive
at the rate in effect at the commencement of any such period, together with
all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company during such period, until the Executive's employment is terminated
by the Company for Disability.
5.2 If the Executive's employment shall be terminated for any
reason on or following a Change in Control and during the Term, the Company
shall pay the Executive's full salary to the Executive through the Date of
Termination at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect immediately prior to the
Change in Control, together with all compensation and benefits payable to
the Executive through the Date of Termination under the terms of the
Company's compensation and benefit plans, programs or arrangements as in
effect immediately prior to the Date of Termination; provided, however,
that if the Date of Termination occurs following the end of the Company's
1998 fiscal year and prior to the date of payment of the annual incentive
compensation with respect to such fiscal year, then the Company shall pay
to the Executive such annual incentive compensation in the amount and at
the time such annual incentive compensation would otherwise be payable; and
provided, further, that if the Date of Termination occurs prior to the end
of the Company's 1998 fiscal year, the Company shall pay to the Executive,
at the time annual incentive compensation would otherwise be payable, a
pro-rata portion of the annual incentive compensation with respect to such
fiscal year, such pro-rata portion to be based on the number of days in
such fiscal year up to and including the Date of Termination.
5.3 If the Executive's employment shall be terminated for any
reason following a Change in Control and during the Term, the Company shall
pay to the Executive the Executive's normal post-termination compensation
and benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements as in effect immediately prior to the Date
of Termination, but shall not include any payments or benefits under any
severance plan of the Company.
6. Severance Payments.
6.1 If the Executive's employment is terminated on or following
the date of a Change in Control and during the Term, other than (i) by the
Company for Cause, (ii) by reason of death or Disability, or (iii) by the
Executive without Good Reason, then, the Company shall pay the Executive
the amounts, and provide the Executive the benefits, described in this
Section 6.1 ("Severance Payments") and Section 6.2, in addition to any
payments and benefits to which the Executive is entitled under Section 5
hereof.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to three times the
sum of (i) the Executive's base salary as in effect immediately prior to
the Date of Termination or, if higher, in effect immediately prior to
the Change in Control and (ii) the higher of the Executive's target
incentive compensation for the year in which occurs the Date of Termination
or the Executive's target incentive compensation for the Company's 1998
fiscal year.
(B) The coverage period for the purpose of the group health
continuation requirements of Section 4980B of the Code shall commence on
the Date of Termination. The Executive shall also have the right to
exercise his rights, if any, to convert his group life, disability and
accident insurance benefits to corresponding individual insurance coverage
as of the Date of Termination. In each case the Company shall waive or pay,
as applicable, the premiums with respect to such life, disability, accident
and health insurance coverage for the Executive and his dependents (as such
term was applied by the Company immediately prior to the Change in Control)
for a period of eighteen (18) months immediately following the Date of
Termination, so that such coverage is provided at no greater cost to the
Executive than the cost to the Executive immediately prior to the Date of
Termination. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1(B) shall be reduced to the extent benefits of the same
type are received by or made available to the Executive during the eighteen
(18) month period following the Executive's termination of employment (and
any such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the
Company shall reimburse the Executive for the excess, if any, of the cost
of such benefits to the Executive over such cost immediately prior to the
Date of Termination.
6.2 (A) If any of the payments or benefits received or to be
received by the Executive in connection with a Change in Control or the
Executive's termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement) (such payments
or benefits, excluding the Gross-Up Payment, being hereinafter referred to
as the "Total Payments") will be subject to the Excise Tax, the Company
shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of any
Excise Tax on the Total Payments and any federal, state and local income
and employment taxes and Excise Tax upon the Gross-Up Payment, shall be
equal to the Total Payments. The amount of the Gross-Up Payment, if any,
shall be determined by Parent or any person or entity designated by Parent.
The Total Payments will be subject to all applicable federal, state and
local income and employment taxes. Any applicable federal, state and local
income and employment taxes, as well as any applicable Excise Tax, shall be
withheld by the Company in accordance with applicable law.
(B) In the event that the Excise Tax is finally determined to
be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, the Executive shall repay to the Company, within ten (10)
business days following the time that the amount of such reduction in the
Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the
Executive, to the extent that such repayment results in a reduction in the
Excise Tax and a dollar-for-dollar reduction in the Executive's taxable
income and wages for purposes of federal, state and local income and
employment taxes), plus interest on the amount of such repayment at 120% of
the semiannual compounding short term Applicable Federal Rate published
with respect to the month in which occurs the Date of Termination. In the
event that the Excise Tax is determined to exceed the amount taken into
account hereunder in calculating the Gross-Up Payment (including by reason
of any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such excess) within ten
(10) business days following the time that the amount of such excess is
finally determined.
(C) The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments and each shall use reasonable best
efforts to ensure prompt resolution of any such proceedings. The Company
shall select counsel, exercise control, and bear and pay directly all costs
and expenses (including legal fees and additional interest and penalties)
incurred in connection with any such claim or proceeding, in each case to
the extent related to the Excise Tax, and shall indemnify and hold the
Executive harmless, on an after-tax basis, as provided in Section 6.2(A),
for any Excise Tax or income or employment tax (including interest and
penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
6.3 The payments provided in subsection (A) of Section 6.1
hereof and in subsection (A) of Section 6.2 hereof shall be made as soon as
practicable following the Date of Termination but, in any event no later
than 10 business days immediately following the expiration of the
revocation period, if any, applicable to the Executive's release, described
in Section 6.5, and interest shall accrue on such payments, to the extent
the Company fails to make such payments when due, at 120% of the semiannual
compounding short term Applicable Federal Rate published for the month in
which occurs the date of the expiration of such period. At the time that
payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated.
6.4 The Company also shall pay to the Executive all reasonable
legal fees and expenses incurred by the Executive in pursuing any claim
arising under this Agreement in which the Executive prevails in all
material respects.
6.5 The Executive shall not be entitled to receive Severance
Payments or other benefits pursuant to this Agreement unless he shall have
executed a written release substantially in the form attached as Exhibit A
hereto.
6.6 If the Executive receives Severance Payments hereunder, he
shall not, for a period of three months immediately following the Date of
Termination, work in any capacity for, or otherwise participate as a
director, officer, member, partner, employee, consultant, representative or
advisor of, a competitor of the Company or any member of the Parent Group.
6.7 The Company shall provide the Executive with outplacement
services suitable to the Executive's position, for a period ending on the
first anniversary of the Date of Termination, or if sooner, on the date the
Executive obtains employment. At the Executive's option and for a period
ending on the first anniversary of the Date of Termination, the Company
shall provide the Executive, at a mutually agreed location other than the
Company's premises, office space and secretarial services similar to those
provided to the Executive immediately prior to the Date of Termination. In
the event the Executive elects to have the Company provide such office
space and secretarial services to the Executive, the Company may reduce, in
its reasonable judgment, the value of and extent to which outplacement
services are provided to the Executive as described above. No cash option
shall be available with respect to such outplacement services or office
space and secretarial service arrangement.
6.8 The Company shall provide the Executive, for a period
ending on the first anniversary of the Date of Termination, or sooner if
Executive so requests, security services substantially similar to those
provided to him by the Company immediately prior to the Date of
Termination.
7. Compensation During Dispute.
7.1 Dispute. If one party to this Agreement notifies the other
party that a dispute exists concerning the termination of the Executive's
employment hereunder, or otherwise arising under this Agreement (which
notice shall be given by no later than sixty (60) days following the Date
of Termination, determined without regard to this Section), the Date of
Termination shall be extended until the earlier of (i) the date on which
the Term ends, (ii) the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or in accordance with the
provisions of Section 14 below or (iii) 120 days following the Date of
Termination (determined without regard to this Section); provided, however,
that the Date of Termination shall be extended by a notice of dispute only
if the notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.2 Compensation During Dispute. If a purported termination
occurs on or after the date of a Change in Control and during the Term and
the Date of Termination is extended in accordance with Section 7.1 hereof,
the Company shall continue to pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the Date of Termination, as determined in accordance with Section 7.1
hereof. Amounts paid under this Section 7.2 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due
under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, then except as
required by Section 6.2(C) hereof, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to
the Executive by the Company pursuant to Section 6 hereof. Further, the
amount of any payment or benefit provided for in this Agreement (other than
Section 6.1(B) hereof) shall not be reduced by any compensation earned by
the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as
the Executive would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after a Change in
Control, except that, for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination.
9.2 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be
payable to the Executive hereunder (other than amounts which, by their
terms, terminate upon the death of the Executive) if the Executive had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive's
estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States first class mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address inserted below the
Executive's signature on the final page hereof and, if to the Company, to
the address set forth below, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
Digital Equipment Corporation
111 Powdermill Road
Maynard, MA 01754
Attn: General Counsel
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and such
officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or of
any lack of compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of New York. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. The obligations of the Company and
the Executive under this Agreement which by their nature may require either
partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 6 and 7 hereof) shall survive such
expiration.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration.
14.1 In the event that a Change in Control results from the
acquisition of the Company by Compaq Computer Corporation (the "Compaq
Merger") all claims by the Executive for benefits under this Agreement
shall be in writing and shall be directed to and determined by a committee
(the "Committee"), which shall be comprised of two members, who shall
initially be Frank P. Doyle and Hans W. Gutsch. In the event of a vacancy
on the Committee, the Parent shall appoint a successor Committee member;
provided, that the Parent shall use reasonable best efforts to ensure that
at least one member of the Committee at all times is an individual who
performed services for the Company at a senior management or Board level
prior to the Change in Control, or, if no such individual is available to
serve on the Committee, that at least one Committee member is unaffiliated
in any other way with the Company or Parent. Notwithstanding the above,
Frank P. Doyle shall serve on the Committee for so long as he is willing
and able to do so. The Committee shall send a written notification to the
Executive of the disposition of his claim within 30 days of the receipt of
such written claim. All disputes under this Agreement (including without
limitation any disputes existing after the Committee referred to above has
acted, if applicable) shall be settled exclusively by binding arbitration
in New York, New York, in accordance with the rules of the American
Arbitration Association then in effect. The arbitrator shall apply a de
novo standard of review in considering the claim of the Executive. Judgment
may be entered on the arbitrator's award in any court having jurisdiction.
14.2 Notwithstanding any provision of this Agreement to the
contrary, the Executive shall be entitled to seek specific performance of
the Executive's right to be paid until the Date of Termination pursuant to
Section 7.1.
14.3 Executive and the Company shall keep any documents or
testimony prepared or exchanged in connection with the resolution of any
dispute arising under this Agreement, as well as any settlement
negotiations and the terms of any final resolution or arbitrator's
determination with respect to such dispute, completely confidential, except
as may be required (i) in the course of obtaining legal advice with respect
to the rights and obligations created hereby, (ii) in the preparation of
federal, state or local tax returns, (iii) in the course of enforcing any
right or obligation under this Agreement, or (iv) as may be compelled by
legal process.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Board" shall mean the Board of Directors of the Company
or, on and after a Change in Control, the Board of Directors of the Parent.
(B) "Cause" shall mean termination due to any of the following
reasons:
(I) the Executive's final conviction of a felony, or of
any other criminal act, involving moral turpitude, or
(II) the Executive's deliberate and intentional
continuing refusal to substantially perform his duties and
obligations to the Company, determined immediately prior to a Change
in Control (except by reason of incapacity due to illness or
accident) if he (a) shall have failed to remedy such alleged breach
within fifteen (15) days from the date written notice is given by the
Secretary of the Parent demanding that he remedy such alleged breach,
and (b) shall have failed to take reasonable steps in good faith to
that end during such fifteen (15)- day period, provided that, in the
event that the Change in Control is not the Compaq Merger, the
Executive shall be entitled to receive, with respect to this
subparagraph (II), after the end of such fifteen (15)-day period, a
certified copy of a resolution of the Board, adopted by a
Supermajority Vote, finding that the Executive was guilty of conduct
set forth in this subparagraph (II) and specifying the particulars
thereof in detail, and that the Executive has failed to take
reasonable steps in good faith to remedy such alleged breach, or
(III) upon a finding that the Executive engaged in
willful fraud or defalcation either of which involved material funds
or other assets of the Parent Group, which finding shall be made by
Supermajority Vote if the Change in Control is not the Compaq Merger.
(C) A "Change in Control" shall 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 Exchange
Act), other than the Company or any subsidiary of the Company, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the combined voting power
of the Company's outstanding voting securities.
(2) The first purchase under a tender offer or exchange
offer, other than an offer by the Company or any subsidiary of the
Company, pursuant to which shares of the Company'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 Company 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
Company 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.
(4) The consummation of a merger, consolidation,
liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
(D) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(E) "Company" shall mean the Digital Equipment Corporation and,
except in determining whether or not a Change in Control of the Company has
occurred, shall include any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(F) "Date of Termination" shall mean, except where specifically
provided to the contrary herein, the date on which the Executive ceases to
be an employee of the Company irrespective of the cause or manner in which
the employment ends.
(G) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's
duties with the Company for a period of six (6) consecutive months, the
Company shall have given the Executive a notice of termination for
Disability, and, within thirty (30) days after such notice of termination
is given, the Executive shall not have returned to the full-time
performance of the Executive's duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(J) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(K) "Good Reason" means the occurrence, on or after the date of
a Change in Control and without the Executive's written consent, of (i) the
assignment to the Executive of duties in the aggregate that are
inconsistent with the Executive's level of responsibility immediately prior
to the date of the Change in Control or any diminution in the nature or
status of the Executive's responsibilities from those in effect immediately
prior to the date of the Change in Control; (ii) a reduction by the Company
(or any member of the Parent Group) in the Executive's annual base salary
or annual bonus opportunity from that in effect immediately prior to the
Change in Control; or (iii) the relocation of the Executive's principal
place of employment to a location more than fifty (50) miles from the
Executive's principal place of employment immediately prior to the date of
the Change in Control.
(L) "Gross-Up Payment" shall have the meaning set forth in
Section 6.2 hereof.
(M) "Parent" shall mean Compaq Computer Corporation, if the
Change in Control is the Compaq Merger, and otherwise, the parent of the
Company, if any, after a Change in Control.
(N) "Parent Group" shall mean the Parent and its affiliates,
collectively.
(O) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs
shall have occurred:
(I) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(II) the Company or any person publicly announces
an intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 10% or more of either the then outstanding shares
of common stock of the Company or the combined voting power of
the Company's then outstanding securities (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates); or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has
occurred.
(P) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
(Q) "Supermajority Vote" means the affirmative vote of not less
than two-thirds of the members of the Board who are not employees of the
Parent Group taken at a meeting of the Board at which the Executive is
given an opportunity to be heard (with counsel); provided, however, that
references herein to any requirement for a Supermajority Vote shall not be
given effect if the Change in Control is the Compaq Merger, and in such
event such references shall be deemed to refer to an action or direction
properly given by Parent to the Executive hereunder.
(R) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described
therein).
(S) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Gail S. Mann
--------------------------------------
Name: Gail S. Mann
Title: Vice President, Assistant
General Counsel, Secretary
and Clerk
/s/ Robert B. Palmer
------------------------------------------
ROBERT B. PALMER
Address:
15 Webster Circle
Sudbury, MA 01776
-------------------------------------------
(Please print carefully)
Exhibit A
WAIVER AND RELEASE OF CLAIMS
In consideration of, and subject to, the payments to be made to me by
Digital Equipment Corporation, a Massachusetts corporation (the "Company")
or any of its subsidiaries, pursuant to the Severance Agreement between the
Company and me dated as of March 19, 1998, which I acknowledge that I would
not otherwise be entitled to receive, I hereby waive any claims I may have
for employment or re-employment by the Company or any subsidiary or parent
of the Company after the date hereof, and I further agree to and do release
and forever discharge the Company or any subsidiary or parent of the
Company, and their respective past and present officers, directors,
shareholders, employees and agents from any and all claims and causes of
action, known or unknown, arising out of or relating to my employment with
the Company or any subsidiary or parent of the Company, or the termination
thereof, including, but not limited to, wrongful discharge, breach of
contract, tort, fraud, the Civil Rights Acts, Age Discrimination in
Employment Act, Employee Retirement Income Security Act, Americans with
Disabilities Act, or any other federal, state or local legislation or
common law relating to employment or discrimination in employment or
otherwise.
Notwithstanding the foregoing or any other provision hereof, nothing
in this Waiver and Release of Claims shall adversely affect (i) my rights
under the Plan; (ii) my rights to benefits other than severance benefits
under plans, programs and arrangements of the Company or any subsidiary or
parent of the Company which are accrued but unpaid as of the date of my
termination; or (iii) my rights to indemnification under any
indemnification agreement, applicable law and the certificates of
incorporation and bylaws of the Company and any subsidiary or parent of the
Company, and my rights under any director's and officers' liability
insurance policy covering me.
I acknowledge that I have signed this Waiver and Release of Claims
voluntarily, knowingly, of my own free will and without reservation or
duress, and that no promises or representations have been made to me by any
person to induce me to do so other than the promise of payment set forth in
the first paragraph above and the Company's acknowledgment of my rights
reserved under the second paragraph above.
I understand that this release will be deemed to be an application
for benefits under the Plan, and that my entitlement thereto shall be
governed by the terms and conditions of the Plan, including, without
limitation Section 2.6 thereof which requires that disputes under the Plan
be settled exclusively by binding arbitration after exhaustion of remedies
and procedures provided in the Plan, and I expressly hereby consent to such
terms and conditions.
I acknowledge that I have been given not less than twenty-one (21)
days to review and consider this Waiver and Release of Claims, and that I
have had the opportunity to consult with an attorney or other advisor of my
choice and have been advised by the Company to do so if I choose. I may
revoke this Waiver and Release of Claims seven days or less after its
execution by providing written notice to the Company.
Finally, I acknowledge that I have read this Waiver and Release of
Claims and understand all of its terms.
______________________________________
Signature
______________________________________
Print Name
______________________________________
Date Signed
EXHIBIT 99
Investor Contact: Patrick Spratt
978-493-7182
[email protected]
Media Contact: Dan Kaferle
978-493-2195
[email protected]
DIGITAL EQUIPMENT CORPORATION AMENDS THIRD QUARTER
FINANCIAL RESULTS
MAYNARD, Mass., May 6, 1998 -- Digital Equipment Corporation announced
today that in connection with regulatory review of the proxy statement for
its pending merger with Compaq Computer Corporation, it has agreed to amend
its financial results for its third quarter and year-to-date period ended
March 28, 1998, to further clarify the impact of specific elements of the
sale of its network products business to Cabletron Systems.
The net income for the quarter is increased by $35 million to $342
million, or $2.23 per diluted common share. This is solely the result of
recognizing, as part of the network products business transaction, a net
gain related to finished goods inventory. This gain had originally been
deferred to coincide with the timing of product revenue recognition. This
amended accounting treatment has the effect of increasing cost of goods
sold over the period this inventory is consumed, including $21 million in
the third quarter.
In addition, certain costs related to the transaction have been
reclassified from other income and expense to "costs attributable to the
sale of assets", a component of operating income. This $33 million
reclassification primarily consists of a write-off of raw material
inventory which was rendered excess by the transaction, and severance and
employee retention expenses.
These changes reduced operating income for the quarter by $54 million
to $41 million.
Digital expects to file today the proxy statement relating to its
pending merger with Compaq, and its Quarterly Report on Form 10-Q for the
third quarter and nine-month period. The Form 10-Q report will provide
additional detail for the amended results.
Digital Equipment Corporation, recognized for product and service
excellence, is a leading supplier of high-performance, Web-based computing
solutions which help enterprises compete in the global marketplace. Digital
gives its customers a winning Internet advantage through a comprehensive
portfolio of Internet solutions based on award-winning systems, advanced
networking infrastructure, innovative software, and industry applications
- -- including those from its business partners. The expertise and experience
of Digital employees help customers plan, design, implement, manage and
support Internet solutions in countries throughout the world. For the
latest company information, visit Digital on the World Wide Web at
http://www.digital.com and/or http://www.newsdesk.com.
