Conference 7.286::digital

3251.0. "Stock options and the sale of parts of Digital" by RUTILE::DAVIS () Mon Jul 18 1994 15:31

What happens to my stock options, if the business group I am in is sold to 
another company?

In the context of the regrant program, I asked this question of Investor
Services.  Since they only administer the options, they rightly pointed me at
the Stock Option committee folks in Compensation and Benefits, who told me
that my question doesn't have an answer at the moment.

The prospectus talks about terminations and about what happens if control 
of the entire company changes; however, I could find nothing that seemed to 
cover the case I am wondering about.  The case need have nothing to do with
contract terms with an acquiring company or a spinoff - unless options are
exchanged for options or shares in the new company.  That is, the Board could
say that this is a new kind of termination, and option holders have n days to
exercise options.  The prospectus (1990 Equity Plan Stock Option Information,
section 6.5, "Other Termination of Employment") says that unexercised
options expire.

I suspect many people will be wondering about this.

Thoughts?

I haven't givent this much thought, but if your division is sold off, you'll (in
all probability) have to turn in your Digital badge-- hence be terminated.  I'd
focus on the termination clause(s).