-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Shm3vuswXttbK3kl9kNtEiYBE8C/JA8CpZmMwuFfngm9AkGrR1DTmGCf7swU7N3t DA6TRuaMUy500C1C+4AMjg== 0000950172-98-000442.txt : 19980507 0000950172-98-000442.hdr.sgml : 19980507 ACCESSION NUMBER: 0000950172-98-000442 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980319 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980506 SROS: CSX SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGITAL EQUIPMENT CORP CENTRAL INDEX KEY: 0000028887 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 042226590 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-05296 FILM NUMBER: 98611021 BUSINESS ADDRESS: STREET 1: 146 MAIN ST CITY: MAYNARD STATE: MA ZIP: 01754 BUSINESS PHONE: 6178975111 MAIL ADDRESS: STREET 1: 111 POWDER MILL ROAD MS02-3/F13 STREET 2: 111 POWDER MILL ROAD MS02-3/F13 CITY: MAYNARD STATE: MA ZIP: 01754 8-K 1 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 ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Massachusetts 1-5296 04-2226590 -------------- ----------- ------------------- (State of (Commission (IRS Employer Incorporation) File No.) Identification No.) 111 Powdermill Road, Maynard, Massachusetts 01754 ------------------------------------------------- (Address of principal executive offices, including zip code) (978) 493-5111 ---------------------------------------------------- (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 EX-10 2 EXHIBIT 10.1 - EMPLOYEE SEVERANCE PLAN 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 EX-10 3 EXHIBIT 10.2 - SEVERANCE AGREEMENT 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 EX-99 4 EXHIBIT 99 - PRESS RELEASE EXHIBIT 99 Investor Contact: Patrick Spratt 978-493-7182 pat.spratt@digital.com Media Contact: Dan Kaferle 978-493-2195 dan.kaferle@digital.com 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. -----END PRIVACY-ENHANCED MESSAGE-----