Exhibit 10(k)


 


Amended and restated
November 21, 2002


Amended and restated September 12, 2002


Amended September 4, 2001


Amended September 22,
1994


 


 


COMPAQ COMPUTER
CORPORATION


 


1985 STOCK OPTION PLAN


 


 


ARTICLE I


Definitions


 


1.01                           “Board” shall mean the Board of Directors of the Company.


 


1.02                           “Code” shall mean the Internal Revenue Code of 1986, as amended.


 


1.03                           “Committee” shall mean the body comprised of the member or members
of the Board appointed by the Board to administer the Plan.


 


1.04                           “Common Stock” means the Company’s $.01 par value common stock.


 


1.05                           “Company” shall mean Compaq Computer Corporation or any successor thereto.


 


1.06                           “Fair Market Value” shall mean the value of a share of Common
Stock as determined by the Board. The Board shall determine the Fair Market
Value as follows:


 


1                                          If the Common Stock shall not then be listed and traded upon a
recognized securities exchange or in the NASDAQ National Market System, upon
the basis of the mean between the bid and asked quotations for such stock on
the Date of Grant (as reported by a recognized stock quotation service) or, in
the event that there shall be no bid or asked quotations on the Date of Grant,
then upon the basis of the mean between the bid and asked quotations on the
date nearest preceding the Date of Grant; or


2                                          If the Common Stock shall then be listed and traded upon a
recognized securities exchange or in the NASDAQ National Market System, upon
the basis of the reported closing price at which shares of the Common Stock
were traded on such recognized securities exchange or system on the Date of
Grant or, if the Common Stock was not traded on said date, upon the basis of
the reported closing price on the date nearest preceding the Date of Grant.


 


1.07                           “Date of Grant” means the later of (i) the date on which the Board
approves the grant of an Option or (ii) the date on which the Optionee is
employed by the Company or a Subsidiary.


 


 


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1.08                           “Incentive Option” means an option to purchase Common Stock
granted pursuant to the provisions of the Plan, including the provisions of
Paragraphs 8.02, 8.03, 8.04, and 8.05 of the Plan.


 


1.09                           “Optionee” shall mean an employee of the Company to whom an Option
has been granted under the Plan.


 


1.10                           “Plan” shall mean the Compaq Computer Corporation 1985 Stock
Option Plan, the terms of which are set forth herein.


 


1.11                           “Incentive Stock Option Agreement” shall mean the any written
notice, agreement, or other instrument or document evidencing an Incentive
Option and under which the Optionee may purchase Common Stock pursuant to the
terms of the Plan.


 


1.12                           “Subsidiary” or “Subsidiaries” shall mean any corporation which is
a subsidiary corporation of the Company pursuant to Section 425(f) of the Code.


 


1.13                           “Successor” shall mean the legal representative of the estate of a
deceased Optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by the reason of the death of any Optionee.


 


1.14                           “Nonqualified Option” shall mean an option to purchase Common
Stock granted pursuant to the provisions of the Plan, but which is not subject
to the provisions of Paragraphs 8.02 and 8.05 of the Plan.


 


1.15                           “Nonqualified Stock Option Agreement” shall mean any written
notice, agreement, or other instrument or document evidencing a Nonqualified
Option and under which the Optionee may purchase Common Stock pursuant to the
terms of the Plan.


 


1.16                           “Option” shall refer to either or both Incentive Options and
Nonqualified Options granted pursuant to the terms of the Plan.


 


 


ARTICLE II


Purpose


 


The purpose of the Plan is to advance the
interests of the Company and its stockholders by offering to employees of the
Company and its Subsidiaries the opportunity to acquire, or increase a
proprietary interest in the Company by the grant to employees of Incentive
Options entitled to the income tax benefits described in Section 422A of the
Code under the terms set forth in the Plan and by the grant to employees of
Nonqualified Options. By so doing, the Company seeks to motivate, obtain, and
attract those highly competent individuals upon whose judgment, initiative,
leadership, and continuing efforts the success of the Company depends.


 


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ARTICLE III


Effective Date of the Plan


 


The Plan shall become effective on the
date of its adoption by a resolution of the Board. Within one year of such
adoption, this Plan shall be submitted to the stockholders of the Company
entitled to vote thereon; should a majority of the stockholders of the Company
entitled to vote thereon fail to approve the Plan within such year, this Plan
shall automatically terminate.


 


 


ARTICLE IV


Eligibility


 


Options may be granted only to officers
and employees (including officers and employees who are also directors) of the
Company or any of its Subsidiaries.


 


 


ARTICLE V


Administration of the Plan


 


The Plan shall be administered by the
Board. The Board may, in its discretion, appoint a Committee to administer the
Plan. The Committee shall consist of three or more disinterested directors,
none of whom shall be eligible (or shall have been eligible for one year prior
to appointment to the Committee) to be granted Options under the Plan. The
Committee shall serve at the pleasure of the Board and shall exercise all
powers of the Board granted herein, other than the power to amend the Plan.


 


The Board shall have the sole discretion
and authority, subject to the provisions of the Plan, to determine the
employees to whom and the time or times at which Options shall be granted, and
the number of shares of the Common Stock which shall be subject to each Option.
Subject to the express provisions of the Plan, the Board shall also have full
and final authority to interpret the Plan, and to make all other determinations
and to take all other actions it deems necessary or advisable for the proper
administration of the Plan. All such actions and determinations shall be
conclusively binding for all purposes and upon all persons. The majority of the
members of the Board shall constitute a quorum and any action taken by a
majority present at a meeting at which a quorum is present or any action taken
without a meeting evidenced by writing executed by a majority of the Board
shall constitute the action of the Board.


 


Delegation of Authority for the Day-to-Day
Administration of the Plan.  Except to the extent prohibited by applicable law or applicable rules of
a stock exchange, the Board or any of its committees as shall be administering
the Plan may delegate to one or more individuals the day-to-day administration
of the Plan and any of the functions assigned to it in this Plan. The
delegation may be revoked at any time.


 


 


ARTICLE VI


Common Stock Subject to Options


 


Subject to the adjustments specified
below, the aggregate number of shares of Common Stock that may be issued upon
the exercise of all Options that may be granted under the Plan shall not exceed
19,800,000 shares of the Common Stock. Any shares subject to an Option which
for 


 


 


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any reason is surrendered, expires or is terminated unexercised as
to such shares may again be subject to an Option under the Plan.


 


 


ARTICLE VII


Adjustments and Change in Control


 


7.01                           Adjustment.  The total number of shares of Common Stock
available for Options under the Plan or which may be allocated to any one
employee, the number of shares of Common Stock subject to outstanding Options
and the exercise price for such Options shall be appropriately adjusted by the
Board for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock dividend, subdivision or combination of
shares or reclassification, as may be necessary to maintain the proportionate
interest of the Option holder. In the event of a merger or consolidation of the
Company or a tender offer for shares of Common Stock, the Board may make such
adjustments with respect to Options under the Plan and take such other action
as it deems necessary or appropriate to reflect or in anticipation of such
merger, consolidation or tender offer including, without limitation, the
substitution of new Options, the termination or adjustment of outstanding
Options, and the acceleration of Options.


 


7.02                           Immediate Vesting.  Notwithstanding any other provision of the
Plan to the contrary, upon a Change in Control, as defined below, all
outstanding Awards shall vest, become immediately exercisable or payable, or
have all restrictions lifted as may apply to the type of Award; provided,
however, that unless otherwise determined by the Committee at the time of award
or thereafter, if it is determined that the Net After-Tax Amount to be realized
by any optionee, taking into account the accelerated vesting provided for by
this paragraph 7.02 as well as all other payments to be received by such
optionee in connection with such Change in Control, would be higher if options
did not vest in accordance with the foregoing paragraph 7.02, then and to such
extent the options shall not vest. The determination of whether any such option
should not vest shall be made by a nationally recognized accounting firm
selected by the Company, which shall be instructed to consider that (i) stock
options shall be vested in the order in which they were granted and within each
grant in the order in which they would otherwise have vested and (ii) unless
and to the extent any other plan, arrangement or contract of the Company
pursuant to which any such payment is to be received provides to the contrary,
such other payment shall be deemed to have occurred after any acceleration of
options.


 


7.03                           Change in Control. A
“Change in Control” shall be deemed to have occurred if: (i) any “person” as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, (the “Exchange Act”) (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of Stock of the
Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities; (ii) during any period of two consecutive years (not
including any period prior to January 18, 1989), individuals who at the
beginning 


 


 


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of such period constitute the Board of
Directors, and any new director (other than a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this paragraph whose election by the
Board of Directors or nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the two year period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority of the Board of Directors; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires more than 30% of
the combined voting power of the Company’s then outstanding securities shall
not constitute a Change in Control of the Company; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of the Company’s assets.


 


7.04                           Net After-Tax Amount.  “Net After-Tax Amount” shall mean the net
amount of compensation, assuming for this purpose only that all vested options
are exercised upon such Change in Control, to be received (or deemed to have
received) by such optionee in connection with such Change in Control under any
option agreement and under any other plan, arrangement or contract of the
company to which such optionee is a party, after giving effect to all income
and excise taxes applicable to such payments.


 


 


ARTICLE VIII


Terms and conditions of Options


 


8.01                           Option Grant and Agreement.  Each Incentive Option
and each Nonqualified Option granted prior to September 22, 1994 shall be
evidenced by a written Incentive Stock Option Agreement or a written
Nonqualified Stock Option Agreement, as applicable, dated as of the Date of
Grant and executed by the Company and the Optionee, which Agreement shall set forth
the applicable terms and conditions provided in this Article VIII and such
other provisions which the Board, in its discretion, may deem appropriate. Each
Incentive Option and each Nonqualified Option granted on or after September 22,
1994, shall be evidenced by a Stock Option Agreement in the form of a written
notice to the Participant receiving an option, which notice shall set forth the
applicable terms and conditions provided in this Article VIII and such other
provisions which the Board, in its discretion may deem appropriate.


 


8.02                           Participation Limitation.  In accordance with rules
and procedures established by the Committee, the aggregate Fair Market Value
(determined as of the time of grant) of the stock subject to Incentive Stock
Options as defined by Section 422A 


 


 


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of the Code (“Section 422A”) held by any
optionee that become exercisable for the first time by such optionee during any
calendar year under the Plan (and under any other benefit plans of the Company
or of any parent or subsidiary corporation of the Company) shall not exceed
$100,000 or, if different the maximum limitation in effect at the time of grant
under Section 422A or any successor provision, and any regulations promulgated
thereunder. The terms of any Incentive Option granted hereunder shall comply in
all respects with the provisions of Section 422A, or any successor provision,
and any regulations promulgated thereunder.


 


8.03                           Option Price.  The per share Option price of the Common
Stock subject to each Option shall be determined by the Board but the per share
price shall not be less than the Fair Market Value of the Common Stock on the
Date of Grant.


 


8.04                           Option Period.  Each Option granted must be granted within
ten years from the date of the Plan’s adoption by the Board. The period of
exercise of each Option shall be set forth in the applicable Option Agreement;
provided that such period shall not exceed ten years from the Date of Grant.


 


8.05                           Ten Percent Shareholder Limitations.  In any case in which an
Incentive Option is granted to an employee who, at the time the Incentive
Option is granted, owns more that ten percent (10%) of the total combined
voting power of all classes of stock of the Company, its parent or subsidiary,
the per share Incentive Option price of the Common Stock subject to each
Incentive Option shall be determined by the Board but the share price not be
less than one hundred and ten percent of the Fair Market Value of the Common
Stock on the Date of Grant; furthermore, the period for exercise, of each such
Incentive Option shall not exceed five (5) years from the Date of Grant. For
the purposes of the immediately preceding sentence, an employee shall be
considered owning the shares of Common Stock owned, directly or indirectly, by
or for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors and lineal descendants. In addition, the stock owned directly or
indirectly, by or for a corporation, partnership, estate or trust shall be considered
as owned proportionately by or for its shareholders, partners or beneficiaries.


 


8.06                           Exercise of Options.  Incentive Options and Nonqualified Options
shall become exercisable in whole or in part and at such time or times as shall
be set forth in the Incentive Stock Option Agreement or Nonqualified Stock
Option Agreement, as applicable. Options shall be exercised by notice of intent
to exercise the Option with respect to a specified number of whole shares
delivered to the Company at its principal office, and payment in full to the
Company 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
Board, in whole or in part in Common Stock valued at Fair Market Value which is
owned by the Optionee.


 


8.07                           Non-Transferability of Options; Transfer upon Death of Optionee.  No Option shall be
transferable or assignable by the Optionee, other than by will or the laws of
descent and distribution. Each Option shall be exercisable during the
Optionee’s lifetime, only by the Optionee.


 


 


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8.08                           Effect of Death or Other Termination of Employment.


 


 


(a)           If the
Optionee’s employment with the Company is terminated for any reason other than
death, disability, or retirement, the Optionee’s right to exercise any Stock
Option shall terminate, and such Option shall expire, on the earlier of (A) the
first anniversary of such termination of employment or (B) the date such Option
would have expired had it not been for the termination of employment; provided,
however, that if, within one year following an occurrence of a Change in
Control, the Optionee’s employment is terminated in a Qualifying Termination
(as defined in paragraph (d) below), the Optionee shall have the right to
exercise such Option until the earlier of (1) the third anniversary of such
termination of employment or (2) the date such Option would have expired had it
not been for such termination of employment. 
For purposes of applying the immediately preceding proviso with respect
to treatment of Options in the event of a Qualifying Termination, the
definition of a Change in Control set forth in Section 7.03 of Article VII
shall be revised by substituting the phrase “a merger or consolidation of the
Company with any other corporation is consummated” for the phrase “the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation” in clause (iii) of said Section 7.03 of Article VII. The Optionee shall have the right to exercise such Option prior
to such expiration to the extent it was exercisable at the date of such
termination of employment and shall not have been exercised.


 


(b)           If the
Optionee’s employment with the Company is terminated by reason of death,
disability, or retirement, the Optionee’s right to exercise any Stock Option
shall terminate, and such Option shall expire, on the earlier of (A) the third
anniversary of such termination of employment or (B) the date such Option would
have expired had it not been for the termination of employment. The Optionee
(or his successor if his employment is terminated by death) shall have the
right to exercise such Option prior to such expiration to the extent it was
exercisable at the date of such termination of employment and shall not have
been exercised.


 


(c)           Notwithstanding
the foregoing, the Board may in its discretion provide in an Option Agreement
that such option shall terminate at a date earlier or later than that set forth
above, provided such date shall not be beyond the earlier of (i) three years
from the last day of Optionee’s employment or (ii) the date such Option would
have expired had it not been for the termination of the Optionee’s employment.


 


(d)           The term
“disability” as used in this paragraph means total and permanent disability.
The terms “disability” and “retirement” shall be determined in accordance with
applicable Company personnel policies as interpreted in the exercise of the
Board’s discretion.  For purposes
of subparagraph (a) above, the term “Qualifying Termination” shall have the
meaning ascribed to such term in the Optionee’s individual employment or
severance agreement with the Company or its Subsidiaries.  If the Optionee is not a party to an
individual employment or severance agreement with the Company or its
Subsidiaries, the term “Qualifying Termination” shall have the meaning ascribed
to the term “Qualified Termination” in the Compaq Computer Corporation employee
severance plan in which such Optionee is eligible to participate.


 


(e)           No transfer of
an Option by an Optionee by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice of the same and an authenticated copy of the will
and/or such other evidence as the Board may deem necessary to establish the
validity of the transfer and the acceptance of the transferee or transferees of
the terms and conditions of such Option.


 


 


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(f)            In the event
an Optionee holds an Incentive Stock Option, such option to the extent not
exercised during the 90 days after termination of employment, automatically
will be deemed a Nonqualified Stock Option and such Option will be exercisable
during the remainder of the time set forth above; provided that in the event
that employment is terminated because of death or the Optionee dies in such
90-day period, the Option will continue to be an Incentive Stock Option to the
extent provided by Section 421 or Section 422A of the Code, or any successor
provision, and any regulations promulgated thereunder.


 


8.09                           Leave Without Pay. Any
time spent by a Participant in the status of “leave without pay” shall be
disregarded for purposes of determining the extent to which an Option or any
portion thereof has vested. The meaning of the term “leave without pay” shall
be determined by the Committee and shall include but not be limited to periods
during which the Participant is receiving payments under the Company’s
Long-Term Disability Plan.


 


8.10                           Rights of Stockholder.
Optionee or his Successor shall have no rights as a stockholder with respect to
any shares subject to an Option until the certificates evidencing the shares
purchased are properly delivered to such Optionee or his Successor.


 


8.11                           Buyout Provisions. At any time, the
Committee may, but shall not be required to, authorize the Company to offer to
buy out for a payment in cash or shares an Option previously granted based on
such terms and conditions as the Committee shall establish and communicate to
the Optionee in connection with such offer.


 


 


ARTICLE IX


Restrictions on Issuing Shares


 


The exercise of each Option shall be
subject to the condition that if at any time the Board shall determine in its
discretion that the listing, registration or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body is necessary or desirable as a condition of or in connection with such
exercise of delivery or purchase of shares pursuant to the Plan, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.


 


In addition, the exercise of each Option
shall be subject to the condition that, if required by the Board, Optionee
shall give satisfactory assurance in writing, signed by Optionee, his successor
or legal representative, as the case may be, that such shares are being
purchased for investment and not with a view to the distribution thereof; provided
that such assurance shall be deemed inapplicable to (i) any sale of such shares
by such Optionee made in accordance with the terms of a registration statement
covering such sale, which has therefore been (or may hereafter be) filed and
become effective under the Securities Act of 1933, as amended, and with respect
to which no stop order suspending the effectiveness thereof has been issued,
and (ii) any other sale of such shares with respect to which, in the opinion of
counsel for the Company, such assurance is not required to be given in order to
comply with the provisions of the Securities Act of 1933, as amended.


 


 


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ARTICLE X


Amendment, Suspension and Termination of
the Plan


 


The Board shall have the right to amend,
suspend or terminate the Plan at any time; provided, however, that no such
action shall affect any Option granted without the consent of the Optionee or
his Successor of the Option. In addition, unless duly approved by a majority of
the holders of Common Stock entitled to vote thereon at a meeting (which may be
the annual meeting), or the equivalent of said meeting, duly called and held
for such purpose, no amendment or change shall be made in the Plan (a)
increasing the total number of shares which may be issued under the Plan
(except for adjustments for recapitalization, stock dividends and other changes
in the corporate structure and except as contemplated in Article VII), (b)
changing the minimum purchase price hereinbefore specified for the Common Stock
subject to the Options, (c) changing the maximum period during which the
Options may be exercised, (d) increasing the maximum number of shares for which
Incentive Options may be granted to any one employee, or (e) extending the
period during which Options may be granted under the Plan. It is contemplated
that the Incentive Options issued pursuant to the Plan qualify as “Incentive
Stock Options” within the meaning of Section 422A of the Code. Accordingly, the
Board shall administer the Plan and make such amendments as to accomplish this
purpose.


 


 


ARTICLE XI


Miscellaneous


 


11.01                     Employment.
Nothing in the Plan, any Option granted pursuant to the Plan, or in any
Incentive Stock Option Agreement or Nonqualified Stock Option Agreement shall
confer upon any employee the right to continue in the employ of the Company or
any Subsidiary.


 


11.02                     Other Compensation Plans. The adoption of the Plan shall not affect any other stock
option, incentive or other compensation plans in effect for the Company or any
Subsidiary or preclude the Company from establishing any other forms of
incentive or other compensation for employees of the Company or any Subsidiary.


 


11.03                     Plan Binding on Successors. The Plan shall be binding on the successors and assigns of the
Company.


 


11.04                     Use of Proceeds. The
proceeds from the sale of Common Stock, pursuant to Options granted under the
Plan, shall constitute general funds of the Company.


 


 


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