1 sounds harsh. I'm completely open with my side projects and that I use company equipment when working on them. I can't imagine what kind of hostile relationship you must have with your boss where that's a problem.
However, a lot of Corporate America frowns upon their employees doing side work. Some (un-winnable, we believe) employment agreements in the US even forbid moonlighting.
So, this was a general point to avoid the potential conflict entirely.