Exhibit 10(a)(1)

 

COMPAQ COMPUTER CORPORATION

1985 NONQUALIFIED STOCK OPTION AGREEMENT

 

 

This Stock Option Agreement is between COMPAQ COMPUTER CORPORATION, a Delaware
corporation (the “Company”), and ________________________ (the “Options”).

 

W I T N E S S E T H:

 

WHEREAS, the Company has adopted the COMPAQ COMPUTER CORPORATION 1985
Nonqualified Stock Option Plan, which plan is incorporated herein by reference
and made a part of this agreement;

 

WHEREAS, the Company has determined that it would be in the best interests of
the Company, and its shareholders to grant the option provided for herein (the
“Option”) to Optionee pursuant to the Plan and the terms set forth herein as an
inducement to remain in the service of the Company and as an incentive for
increased efforts during such service;

 

NOW THEREFORE, for and in consideration of these premises it is agreed as
follows:

 

1.             Option.  Subject to the terms and conditions contained herein,
the Company hereby grants to Optionee an option to purchase from the Company
_________shares of the Company’s common stock, $.01 par value (“Common Stock”)
at a price of _________ per share.

 

2.             Exercise of Option. 

 

(a)           Providing the conditions of subparagraphs (b), (c), (d), and (e)
of this paragraph 2 have been satisfied, Optionee may exercise this Option to
purchase a number of shares of Stock which shall not exceed the difference
between A and B, where

 

A  =                                   the product of the number of shares
subject to this Option multiplied by a fraction, the numerator of which is the
number of whole months which have elapsed since _____________________________
(not to exceed (48) and the demoninator of which is 48.

 

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B  =                                       the number of shares of Stock
previously acquired by Optionee’s partial exercise of this Option.

 

(b)           Optionee must have been a full time employee of the Company for a
period of three (3) months prior to any exercise, in whole or part, of the
Option.

 

(c)           This Option may be exercised in whole or in part at any time
during the period beginning one year after Optionee’s date of employment and
ending ten years from the date of this Agreement, provided that Optionee may not
exercise this option more often than twice during any calendar year. The Option
is not transferable or assignable by the Optionee other than by will or the laws
of descent and distribution. The Option shall be exercisable by the Optionee
only during his lifetime.

 

(d)           Options may be exercised in whole or in part with respect to whole
shares only within the period permitted for exercise thereof, and shall be
exercised by written notice of intent to exercise the Option with respect to a
specified number of shares delivered to the Company at its principal office and
payment in full to the Company at its principal office in the amount of the
option price for the number of shares of the Common Stock with respect to which
the Option is then being exercised. The payment of the option price shall be
made in cash or, with the consent of the Committee, in whole or in part in
Common Stock valued at Fair Market Value which is owned by the Optionee.

 

(e)           This Option may not be exercised prior to the registration of the
Stock with the Securities and Exchange Commission and any applicable state
agencies. However, this condition may be waived by the Committee if it
determines that such registration is not necessary in order to legally issue
shares of Stock to Optionee.

 

(f)            Upon the Company’s determination that the Option has been validly
exercised as to any of the Stock, the Secretary of the Company shall issue or
cause to be issued certificates in the Optionee’s name for the number of shares
set forth in his written notice. However, the Company shall not be liable to the
Optionee for damages relating to any delays in issuing the certificates to him,
any loss of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.

 

3.             Employment of Optionee.  Subject to the terms of any employment
contract to the contrary, the Company shall have the right to terminate or
change the terms of employment of Optlonee at any time and for any reason
whatsoever.

 

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4.             Death of Optionee.  Upon the death of optionee, all options
hereunder exercisable at the date of such death shall be thereafter exercisable
by Optionee’s executor or administrator, or the person or persons to whom his
rights under this Agreement shall pass by will or by the laws of descent and
distribution as the case may be, until the termination of the option in
accordance with this Agreement and the COMPAQ COMPUTER CORPORATION 1985
Nonqualified Stock Option Plan.  In no event may any option be exercised after
the end of the Option Period.

 

5.             Transferability of Option.  This option shall not be transferable
by Optionee otherwise than by Optionee’s will or by the laws of descent and
distribution.  During the lifetime of Optionee, the option shall be exercisable
only by him. Any heir or legatee of Optionee shall take rights herein granted
subject to the terms and conditions hereof.  No such transfer of this Agreement
to heirs or legatees of Optionee shall be effective to bind the Company unless
the Company shall have been furnished with written notice thereof and a copy of
such evidence as the Committee may deem necessary to establish the validity of
the transfer and the acceptance by the transferee or transferees of the terms
and conditions hereof.

 

6.             Stockholder Rights.  Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by this Agreement
until the date of issuance of a certificate for shares of Common Stock purchased
pursuant to this Agreement.  Until such time, Optionee shall not be entitled to
dividends or to vote at meetings of the stockholders of the Company. Except as
provided in paragraph 8 hereof, no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash or securities or other property)
paid or distributions or other rights granted in respect of any share of Common
Stock for which the record date for such payment, distribution or grant is prior
to the date upon which the Optionee shall have been issued share certificates,
as provided hereinabove.

 

7.             Extraordinary   Corporate   Transactions.  New option rights may
be substituted for the option rights granted hereunder or the Company’s duties
as to options granted pursuant to this Agreement may be assumed, by a
corporation other than the Company, or by a parent or subsidiary of the Company
or such corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved.  Notwithstanding the foregoing or the provisions of paragraph 8
hereof, in the event such corporation, or parent or subsidiary of the Company or
such corporation, does not substitute new option rights for, and substantially
equivalent to, the option rights granted hereunder, or assume the option rights
granted hereunder, the option rights granted hereunder shall terminate and
thereupon become null and void (i) upon dissolution or liquidation of the
Company, or similar occurrence, (ii) upon any merger, consolidation,
acquisition, separation, reorganization, or  similar occurrence,

 

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where the Company will not be a surviving entity or (iii) upon a transfer of
substantially all of the assets of the Company or more than 60% of the
outstanding Common Stock; provided, however, that the Optionee shall have the
right immediately prior to or concurrently with such dissolution, liquidation,
merger, consolidation, acquisition, separation, reorganization or similar
occurrence, to exercise any unexpired option rights granted hereunder to the
extent such option rights are then exercisable.

 

8.             Changes in Capital Structure.  The  existence  of outstanding
options shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceedings, whether of a similar character or
otherwise. Provided, however, that if the outstanding shares of Common Stock of
the Company shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, or recapitalization, the number
and kind of shares subject to the Plan or subject to any options theretofore
granted, and the option prices, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of shares without changing the aggregate
option price.

 

                9.             Compliance with Securities Laws.  Upon the
acquisition of any shares pursuant to the exercise of the option herein granted,
Optionee (or any person acting under paragraph 5) will enter into such written
representations, warranties and agreements as the Company may reasonably request
in order to comply with applicable securities laws or with this Agreement.

 

10.           Resolution of Disputes.  As a condition of the granting of the
option hereby, the Optionee and his heirs and successors agree that any dispute
or disagreement which may arise hereunder shall be determined by the Committee
in its sole discretion and judgment, and that any such determination and any
interpretation by the Committee of the terms of this Agreement shall be final
and shall be binding and conclusive, for all purposes, upon the Company,
Optionee, his heirs and personal representatives.

 

11.           Legend on Certificates.  The certificates representing the shares
of Common Stock purchased by exercise of an option may be stamped or otherwise
imprinted with a legend in such form as the Company or its counsel may require
with respect to any applicable statutory, contractual or other restrictions on
sale or transfer and the stock transfer records of the Company may reflect
stop-transfer instructions with respect to such shares.

 

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12.           Notices.  Every notice hereunder shall be in writing and shall be
given by registered or certified mail. All notices of the exercise of any option
hereunder shall be directed to COMPAQ Computer Corporation, 20555 FM 149,
Houston, Texas 77070, Attention: President.  Any notice given by the Company to
Optionee directed to him at his address on file with the Company shall be
effective to bind any other person who shall acquire rights hereunder. The
Company shall be under no obligation whatsoever to advise Optionee of the
existence, maturity or termination of any of Optionee’s rights hereunder and
Optionee shall be deemed to have familiarized himself with all matters contained
herein and in the Plan which may affect any of Optionee’s rights or privileges
hereunder.

 

13.           Interpretation.  Whenever the term “Optionee” is used herein under
circumstances applicable to any other person or persons to whom this award, in
accordance with the provisions of paragraph 4 hereof, may be transferred, the
word “Optionee” shall be deemed to include such person or persons. References to
the masculine gender herein also include the feminine gender for all purposes.

 

14.           Other Restrictions.  Notwithstanding any of the other provisions
hereof, Optionee agrees that he will not exercise the option(s) granted hereby,
and that the Company will not be obligated to issue any shares pursuant to this
Agreement, if the exercise of the optlon(s) or the Issuance of such shares of
Common Stock would constitute a violation by the Optionee or by the Company of
any provision of any law or regulation of any governmental authority or national
securities exchange.

 

15.           Agreement Subject to Plan.  This Agreement is subject to the
Plan.  The terms and provisions of the plan (including any subsequent amendments
thereto) are hereby incorporated herein by reference thereto. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan will govern and
prevail. All definitions of words and terms contained in the Plan shall be
applicable to this Agreement.

 

IN WITNESS WHEREOF,  this Agreement has been executed as of the ________ day of
____________ 1986.

 

 

Attested By:

COMPAQ Computer Corporation

________________________

By:  _________________________

 

 

 

Date: ________________________

 

 

 

Optionee

 

_____________________________

 

 

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