Exhibit
10(h)


 


As Amended
and Restated Effective November 21, 2002


As Amended
and Restated Effective September 12, 2002


Amended and
Restated Effective July 18, 2002


Amended and
Restated September 4, 2001


Amended and
Restated January 20, 1998


Reflects
5-for-2 stock split dated July 14, 1997,


2-for-1
stock split dated January 20, 1998 and


mergers
& acquisitions through September 1, 1997


 


COMPAQ COMPUTER CORPORATION


1995 EQUITY INCENTIVE PLAN


SECTION 1.           Purpose.  The purposes of the Compaq Computer
Corporation 1995 Equity Incentive Plan are to promote the interests of the
Company and its stockholders by (a) attracting and retaining exceptional
executive personnel and other key employees of the Company, Compaq and
Affiliates, as defined below; (b) motivating such employees by means of
performance-related incentives to achieve long-range performance goals; and (c)
enabling such employees to participate in the long-term growth and financial
success of the Company.


SECTION 2.           Definitions.  As used in the Plan, the following terms
shall have the meanings set forth below:


“Affiliate”
shall mean (a) any entity that, directly or indirectly, is controlled by the
Company or Compaq and (b) any entity in which the Company or Compaq has a
significant equity interest, in either case as determined by the Committee.


“Award”
shall mean any option or stock appreciation right granted under the Plan.


“Award
Agreement” shall mean any written agreement, contract, or other instrument or
document evidencing any Award, which may, but need not, be executed or
acknowledged by a Participant, and shall be subject to the terms and conditions
of the Plan.


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


“Change in Control” shall be deemed to have
occurred if:  (a) Prior to May 3, 2002 (i)
any “person” as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than Compaq, any trustee or other fiduciary holding securities under
any employee benefit plan of Compaq, or any company owned, directly or
indirectly, by the stockholders of Compaq in substantially the same proportions
as their ownership of Stock of Compaq), is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Compaq representing 30% or more of the combined voting power of
Compaq’s then outstanding securities; (ii) during any period of two consecutive
years (not including any period prior to the adoption of the Plan), individuals
who at the beginning of such period constitute the Board , and any new director
(other than a director designated by a person who has entered into an agreement
with Compaq to effect a transaction described in clause (i), (iii), or (iv) of
this paragraph whose election by the Board or nomination for election by Compaq’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 ; (iii) the
stockholders of Compaq approve a merger or consolidation of Compaq with any
other corporation, other than a merger or consolidation that would result in
the voting securities of Compaq 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 Compaq or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected 


 


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to
implement a recapitalization of Compaq (or similar transaction) in which no person
acquires more than 30% of the combined voting power of Compaq’s then
outstanding securities shall not constitute a Change in Control of Compaq; or
(iv) the stockholders of Compaq approve a plan of complete liquidation of
Compaq or an agreement for the sale or disposition by Compaq of all or
substantially all of Compaq’s assets. 
If any of the events enumerated in clauses (i) through (iv) occur, the
Board shall determine the effective date of the Change in Control resulting
therefrom, for purposes of the Plan. 
For purposes of (1) applying Awards granted on or after September 1,
2001, (2) applying the provisions of Section 9(a) to Awards (other than Options
and Stock Appreciation Rights) granted prior to September 1, 2001, and (3)
applying the provision of Section 8(a)(i)(A) to all Options and Stock
Appreciation Rights, whenever granted, the definition of Change in Control set
forth in this paragraph shall be revised by substituting the phrase “a merger
or consolidation of Compaq with any other corporation is consummated” for the
phrase “the stockholders of Compaq approve a merger or consolidation of Compaq
with any other corporation” in clause (iii) of the definition above, and (b) On
or after May 3, 2002, the Board in its sole discretion determines that a change
in control has occurred.


“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.


“Committee”
shall mean a committee or committees of the Board designated by the Board to
administer the Plan and prior to May 3, 2002, the committee must be composed of
not less than the minimum number of persons from time to time required by Rule
16b-3, each of whom, to the extent necessary to comply with Rule 16b-3 only, is
a “Non-Employee Director “ within the meaning of Rule 16b-3.


“Compaq”
shall mean Compaq Computer Corporation, together with any successor thereto.


“Company”
shall mean any successor or parent company of Compaq.


“Employee”
shall mean an employee of the Company, Compaq or of any Affiliate, but shall
exclude any individual who are classified by the Company as (a) leased from or
otherwise employed by a third party; (b) independent contractors; (c)
intermittent or temporary, even if any such classification is changed
retroactively as a result of an audit, litigation or otherwise; or (d) on or
after May 3, 2002, either a member of the Board or a covered officer as defined
in Section 162(m) of the Code at the time of grant.


“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.


“Executive
Officer” shall mean, at any time, an individual who is an executive officer of
Compaq within the meaning of Exchange Act Rule 3b-7 as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time, or who is an officer of the
Company within the meaning of Exchange Act Rule 16a-1(f) as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.


“Fair
Market Value” shall mean the fair market value of the property or other item
being valued, as determined by the Committee in its sole discretion.  On or after May 3, 2002 and unless otherwise
determined by the Committee or its designate, the fair market value shall mean
the average of the highest and lowest quoted sales prices for such Shares as of
such date (or if no sales were reported on such date, the average on the last
preceding day a sale was made) as quoted on the stock exchange or a national
market system, with the highest trading volume, as reported in such source as
the Committee shall determine.


“Incentive
Stock Option” shall mean a right to purchase Shares that is granted under
Section 6 of the Plan and that is intended to meet the requirements of Section
422 of the Code or any successor provision thereto.


“Non-Qualified
Stock Option” shall mean a right to purchase Shares that is granted under
Section 6 of the Plan and that is not intended to be an Incentive Stock Option.


“Option” shall mean, prior to May 3, 2002, an
Incentive Stock Option or a Non-Qualified Stock Option and shall include a
Restoration Option and, on or after May 3, 2002, a Non-Qualified Stock Option.


 


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“Participant”
shall mean any Employee selected by the Committee to receive an Award under the
Plan.


“Person”
shall mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, government or political
subdivision thereof or other entity.


“Plan”
shall mean this Compaq Computer Corporation 1995 Equity Incentive Plan, as
amended from time to time.


“Rule
16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under
the Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.


“SEC”
shall mean the Securities and Exchange Commission or any successor thereto and
shall include the staff thereof.


“Shares”
shall mean shares of the common stock, $.0l par value, of the Company, or such
other securities of the Company as may be designated by the Committee from time
to time.


“Stock
Appreciation Right” shall mean any right granted under Section 7 of the Plan.


“Substitute
Awards” shall mean Awards granted in assumption of, or in substitution for,
outstanding awards previously granted by a company acquired by the Company or
Compaq or with which the Company or Compaq combines.


SECTION 3.           Administration.


(a)                                  Authority of
Committee.  The Plan
shall be administered by the Committee. 
Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the Plan,
the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated
in connection with, Awards; (iv) determine the terms and conditions of any
Award; (v) determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited, or suspended and the method
or methods by which Awards may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (ix) adopt rules, procedures, and sub-plans to the
Plan relating to the operation and administration of the Plan, as the Committee
deems desirable to accommodate tax and other laws, regulations and practices in
foreign jurisdictions; (x) approve forms of Notice for use under the Plan; (xi)
authorize substitution under the Plan of any or all outstanding Non-Qualified
Stock Options or outstanding stock appreciation rights held by service
providers of an entity acquired by the Company; and (xii) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan and any Award granted hereunder.


(b)                                 Committee Discretion
Binding.  Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, Compaq,
any Affiliate, any Participant, any holder or beneficiary of any Award, any
stockholder and any Employee.


 


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(c)                                  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.


SECTION
4.           Shares Available for
Awards.


(a)                                  Shares
Available.  Subject to
adjustment as provided in Section 4(b), the number of Shares with respect to
which Awards may be granted under the Plan shall be 65,682,498 million.  If, after the effective date of the Plan,
any Shares covered by an Award granted under the Plan or by an award granted
under any prior stock award plan of the Company or Compaq, or to which such an
Award or award relates, are forfeited, or if such an Award or award is settled
for cash or otherwise terminates or is canceled without the delivery of Shares,
then the Shares covered by such Award or award, or to which such Award or award
relates, or the number of Shares otherwise counted against the aggregate number
of Shares with respect to which Awards may be granted, to the extent of any
such settlement, forfeiture, termination or cancellation, shall again become
Shares with respect to which Awards may be granted. In the event that any
Option or other Award granted hereunder or any award granted under any prior
stock award plan of the Company or Compaq is exercised through the delivery of
Shares or in the event that withholding tax liabilities arising from such Award
or award are satisfied by the withholding of Shares, the number of Shares
available for Awards under the Plan shall be increased by the number of Shares
so surrendered or withheld.  Prior to
May 3, 2002 and notwithstanding the foregoing and subject to adjustment as
provided in Section 4(b), no Executive Officer of the Company may receive
Awards under the Plan in any calendar year that relate to more than 2,500,000
Shares; provided, however, a new employee who begins service as Chief Executive
Officer may receive Awards that relate to up to 5,000,000 Shares in the
calendar year in which employment with the Company begins.


(b)                                 Adjustments.  In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i)
the number of Shares or other securities of the Company (or number and kind of
other securities or property) with respect to which Awards may be granted, (ii)
the number of Shares or other securities of the Company (or number and kind of
other securities or property) subject to outstanding Awards, and (iii) the
grant or exercise price with respect to any Award, or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award;
provided, in each case, that (A) with respect to Awards of Incentive Stock
Options no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of the Code, as
from time to time amended and (B) with respect to any Award no such adjustment
shall be authorized to the extent that such authority would be inconsistent
with the Plan’s meeting the requirements of Section 162(m) of the Code, as from
time to time amended.


(c)                                  Substitute
Awards.  Any Shares underlying
Substitute Awards shall not, except in the case of Shares with respect to which
Substitute Awards are granted to Employees who are officers or directors of the
Company for purposes of Section 16 of the Exchange Act or any successor section
thereto, be counted against the Shares available for Awards under the Plan.


 


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(d)                                 Sources of
Shares Deliverable Under Awards.  Any Shares delivered pursuant to an Award may consist, in whole
or in part, of authorized and unissued Shares or, prior to May 3, 2002, of
treasury Shares.


SECTION 5.           Eligibility.  Any Employee shall be eligible to be
designated a Participant.  Prior to May
3, 2002 any officer or employee-director of Compaq or any Affiliate shall be
eligible to be designated as a Participant.


SECTION
6.           Stock Options.


(a)                                  Grant.  Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Employees to
whom Options shall be granted, the number of Shares to be covered by each
Option, the option price therefor and the conditions and limitations applicable
to the exercise of the Option.  Prior to
May 3, 2002, the Committee shall have the authority to grant Incentive Stock
Options, or to grant Non-Qualified Stock Options, or to grant both types of
options; in the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to and comply with such rules as may be prescribed
by Section 422 of the Code, as from time to time amended, and any regulations
implementing such statute. On or after May 3, 2002, no Incentive Stock Options
shall be substituted under this Plan.


(b)                                 Exercise Price.  The exercise price for Options (other than
Substitute Awards) granted under the Plan shall be not less than the Fair
Market Value of the underlying Shares at the time of grant.  Neither the Board nor the Committee may
lower the exercise price of outstanding options issued under the Plan.  The Committee shall determine the
appropriate exercise prices for Substitute Awards based on the terms and conditions
of the transaction related to such Awards.


(c)                                  Exercise.  Each Option shall be exercisable at such
times and subject to such terms and conditions as the Committee may, in its
sole discretion, specify in the applicable Award Agreement or thereafter.  The Committee may impose such conditions
with respect to the exercise of options, including without limitation, any
relating to the application of any securities laws, as it may deem necessary or
advisable.


(d)                                 Payment.  No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option cost therefor is
received by the Company.  Such payment
may be made (i) in cash, or its equivalent, (ii) if and to the extent permitted
by the Committee, by exchanging Shares owned by the optionee (which are not the
subject of any pledge or other security interest), (iii) if and to the extent
permitted by the Company, by surrendering all or part of that Option or any
other Option, (iv) consideration received by the Company under a cashless exercise
program implemented by the Company, or (v) by a combination of the foregoing;
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to the Company as of the date of
such tender is at least equal to such option cost.


(e)                                  Restoration
Options.  Prior to May 3, 2002 and in
the event that any Participant delivers Shares in payment of the exercise price
of any Option granted hereunder in accordance with Section 6(d) or of any
option granted under a prior stock award plan of the Company, or in the event
that the withholding tax liability arising upon exercise of any such Option or
option by a Participant is satisfied through the withholding by the Company of
Shares otherwise deliverable upon exercise of the Option or option, the
Committee shall have the authority to grant or provide for the automatic grant
of a Restoration Option to such Participant. 
The grant of a Restoration Option shall be subject to the satisfaction
of such conditions or criteria as the Committee in its sole discretion shall
establish from time to time.  A
Restoration Option shall entitle the holder thereof to purchase a number of
Shares equal to the number of such Shares so delivered or withheld upon
exercise of the original Option or option. 
A Restoration Option shall have a per share exercise price of not less
than 100% of the per Share Fair Market Value on the date of grant of such
Restoration Option and such other terms and conditions as the Committee in its
sole discretion shall determine.


 


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SECTION 7.           Stock Appreciation Rights.


(a)                                  Grant.


(i)                                     Prior to May 3, 2002 and
subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees to whom Stock Appreciation Rights
shall be granted, the number of Shares to be covered by each Stock Appreciation
Right Award, the grant price thereof and the conditions and limitations
applicable to the exercise thereof. 
Stock Appreciation Rights may be granted in tandem with another Award,
in addition to another Award, or freestanding and unrelated to another
Award.  Stock Appreciation Rights
granted in tandem with or in addition to an Award may be granted either at the
same time as the Award or at a later time. 
Stock Appreciation Rights shall not be exercisable earlier than six
months after grant, and shall have a grant price as determined by the Committee
on the date of grant.


(ii)                                  On or after May 3, 2002, no
Stock Appreciation Rights shall be granted under this Plan.


(b)                                 Exercise and
Payment.  A Stock Appreciation Right
shall entitle the Participant to receive an amount equal to the excess of the
Fair Market Value of a Share on the date of exercise of the Stock Appreciation
Right over the grant price thereof, provided that the Committee may for
administrative convenience determine that, with respect to any Stock
Appreciation Right that is not related to an Incentive Stock Option and that
can only be exercised for cash during limited periods of time in order to
satisfy the conditions of Rule 16b-3, the exercise of such Stock Appreciation
Right for cash during such limited period shall be deemed to occur for all
purposes hereunder on the day during such limited period on which the Fair
Market Value of the Shares is the highest. 
Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted prior to such determination as well as Stock Appreciation Rights
thereafter granted.  The Committee shall
determine whether a Stock Appreciation Right shall be settled in cash, Shares
or a combination of cash and Shares.


(c)                                  Other Terms and
Conditions.  Subject to
the terms of the Plan and any applicable Award Agreement, the Committee shall
determine, at or after the grant of a Stock Appreciation Right, the term,
methods of exercise, methods and form of settlement, and any other terms and
conditions of any Stock Appreciation Right. 
Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. 
The Committee may impose such conditions or restrictions on the exercise
of any Stock Appreciation Right as it shall deem appropriate.


SECTION 8.           Termination or Suspension of
Employment.  The following
provisions shall apply in the event of the Participant’s termination of employment
unless the Company shall have provided otherwise, either at the time of the
grant of the Award or thereafter.


(a)                                  Non-Qualified
Stock Options and Stock Appreciation Rights.


(i)                                     Termination of Employment.


(A)                              For
Non-Qualified Stock Options and Stock Appreciation Rights granted prior to May
3, 2002 and if the Participant’s employment with the Company, Compaq or an
Affiliate is terminated for any reason other than death, permanent and total
disability, or retirement, the Participant’s right to exercise any
Non-Qualified Stock Option or Stock Appreciation Right shall terminate, and
such Option or Stock Appreciation Right shall expire, on the earlier of (a) the
first anniversary of such termination of employment or (b) the date such Option
or Stock 


 


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Appreciation
Right would have expired had it not been for the termination of employment;
provided, however, that if, within one year following a Change in Control, the
Participant’s employment is terminated in a Qualifying Termination (as defined
in subparagraph (iv) below), the Participant shall have the right to exercise
any outstanding Option or Stock Appreciation Right until the earlier of (i) the
third anniversary of such termination of employment (in the case of Options or
Stock Appreciation Rights granted prior to September 1, 2001) or the first
anniversary of the effective date of such Qualifying Termination (in the case
of Options or Stock Appreciation Rights granted on or after September 1, 2001 and
prior to the Change in Control) or (ii) the date such Option or Stock
Appreciation Right would have expired had it not been for such termination of
employment.  The Participant shall have
the right to exercise such Option or Stock Appreciation Right 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)                                For Options
granted on or after May 3, 2002 and if a Participant ceases to be an Employee
of the Company, Compaq or an Affiliate for any reason other than death,
permanent and total disability, or retirement, the Participant’s right to
exercise any vested or unvested Option shall terminate, and such Option shall
expire.


(ii)                                  Death, Disability or
Retirement.


(A)                              For Non-Qualified
Stock Options and Stock Appreciation Rights granted prior to May 3, 2002 and if
the Participant’s employment with the Company, Compaq or an Affiliate is
terminated by death, permanent and total disability, or retirement, the
Participant or his successor (if employment is terminated by death) shall have
the right to exercise any Non-Qualified Stock Option or Stock Appreciation
Right to the extent it was exercisable at the date of such termination of
employment and shall not have been exercised, but in no event shall such option
be exercisable later than the date the Option would have expired had it not
been for the termination of such employment. 
The meaning of the terms “total and permanent disability” and “retirement”
shall be determined by the Committee.


(B)                                For Options
granted on or after May 3, 2002 and if a Participant’s employment with the
Company, Compaq or an Affiliate is terminated by total and permanent
disability, or retirement, all unvested Options shall immediately vest and the
Participant shall have the right to exercise any Option within three years of
the date of such disability or retirement, but in no event shall such option be
exercisable later than the date the Option would have expired had it not been
for the termination of such employment. 
The meaning of the terms “total and permanent disability” and
“retirement” shall be determined by the Committee.


(C)                                For Options
granted on or after May 3, 2002 and if a Participant’s employment with the
Company, Compaq or an Affiliate is terminated by death, all unvested Options
shall immediately vest and, subject to applicable laws and subparagraph (e)
below, the Participant’s designated beneficiaries or successors shall have the
right to exercise the Option within one year of the date of the death of
Participant whether the Participant was an Employee, retired or disabled, but
in no event shall such option be exercisable later than the date the Option
would have expired had it not been for Participant’s death.


(iii)                               Acceleration and Extension
of Exercisability. 
Notwithstanding the foregoing, the Committee may, in its discretion,
provide (A) that an Option granted to a Participant may terminate at a date
earlier than that set forth above, (B) that an Option granted to a 


 


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Participant may terminate at a date later than that set forth above,
provided such date shall not be beyond the date the Option would have expired
had it not been for the termination of the Participant’s employment, and (C) that
an Option or Stock Appreciation Right may become immediately exercisable when
it finds that such acceleration would be in the best interests of the Company.


(iv)                              Definition of Qualifying
Termination.  For
purposes of subparagraph (a)(i)(A) above, the term “Qualifying Termination”
shall have the meaning ascribed to such term in the Participant’s individual
employment or severance agreement with the Compaq or its Affiliate.  If the Participant is not a party to an
individual employment or severance agreement with the Compaq or its Affiliate,
the term “Qualifying Termination” shall have the meaning ascribed to the term
“Qualified Termination” in the Compaq Computer Corporation employee severance
plan, as may be amended from time to time, in which such Participant is
eligible to participate.


(b)                                 Incentive Stock
Options.  Except as otherwise
determined by the Committee at the time of grant, if the Participant’s
employment with the Company is terminated for any reason, the Participant shall
have the right to exercise any Incentive Stock Option and any related Stock
Appreciation Right during the 90 days after such termination of employment to
the extent it was exercisable at the date of such termination, but in no event
later than the date the option would have expired had it not been for the
termination of such employment.  If the
Participant does not exercise such Incentive Stock Option or related Stock
Appreciation Right to the full extent permitted by the preceding sentence, the
remaining exercisable portion of such Incentive Stock Option automatically will
be deemed a Non-Qualified Stock Option, and such Option and any related Stock
Appreciation Right will be exercisable during the period set forth in Section
8(a) of the Plan, provided that in the event that employment is terminated
because of death or the Participant 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 422 of the Code, or any successor provision, and any regulations
promulgated thereunder.


(c)                                  Leave Without
Pay.  No Award may be exercised
during any leave of absence other than an approved personal or medical leave
with an employment guarantee upon return. An Award shall continue to vest
during any authorized leave of absence and such Award may be exercised to the
extent vested upon the Participant’s return to active employment status, in
accordance with the terms thereof, to the extent permitted by local law.


(d)                                 Beneficiary
Designation.


(i)                                     A Participant may file a
written designation of a beneficiary who is to receive the Participant’s rights
pursuant to Participant’s Award or the Participant may include his or her
Awards in an omnibus beneficiary designation for all benefits under the Plan.
To the extent that the Participant has completed a designation of beneficiary
while employed with the Company, Compaq or an Affiliate such beneficiary
designation shall remain in effect with respect to any Award hereunder until
changed by the Participant.


(ii)                                  Such designation of
beneficiary may be changed by the Participant at any time by written notice. In
the event of the death of an Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant’s death, the Company shall allow the executor or administrator of
the estate of the Participant to exercise the Award, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may allow the spouse or one or more dependents or
relatives of the Participant to exercise the Award.


 


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SECTION 9.           Change in
Control.


 


(a)                                  For Awards
granted prior to May 3, 2002 and notwithstanding any other provision of the
Plan to the contrary, (i) all Awards granted prior to September 1, 2001 shall
vest and become immediately exercisable or payable, or have all restrictions
lifted as may apply to the type of Award and no outstanding Stock Appreciation
Right may be terminated, amended, or suspended upon or after a Change in
Control and (ii) all Awards granted on or after September 1, 2001 shall vest
and become immediately exercisable or payable, or have all restrictions lifted
as may apply to the type of Award, upon a Qualifying Termination (as defined in
Section 8(a)(iv) of the Plan) within one year following a Change in Control.


(b)                                 For Options
granted on or after May 3, 2002 and in the event there is a Change of Control
of the Company, as determined by the Board, the Board may in its discretion
provide for (i) the assumption or substitution of, or adjustments to, each
outstanding Award; (ii) the acceleration of the vesting of Awards and
termination of any restriction on Awards; and (iii) the cancellation of Awards
for a cash payment to the Participants.


(c)                                  For Options
granted on or after May 3, 2002 and in the event of the proposed dissolution or
liquidation of the Company, the Committee shall notify each Participant as soon
as practicable prior to the effective date of such proposed transaction. The
Committee in its discretion may provide for an Award to be fully vested and
exercisable until ten (10) days prior to such transaction. In addition, the
Committee may provide that any restrictions on any Award shall lapse prior to
the transaction, provided the proposed dissolution or liquidation takes place
at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Award will terminate immediately prior to the
consummation of such proposed transaction.


SECTION 10.         Amendment and Termination.


(a)                                  Amendments to
the Plan.  The Board
may amend, alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that no such amendment, alteration, suspension,
discontinuation or termination shall be made without stockholder approval if
such approval is necessary to comply with any tax or regulatory requirement,
including for these purposes any approval requirement that is a prerequisite
for exemptive relief from Section 16(b) of the Exchange Act, for which or with
which the Board deems it necessary or desirable to qualify or comply.  Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with local rules and regulations in any
jurisdiction outside the United States.


(b)                                 Amendments to
Awards.  The Committee may waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted, prospectively or
retroactively; provided that any such waiver, amendment, alteration,
suspension, discontinuance, cancellation, or termination that would adversely
affect the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the consent
of the affected Participant, holder, or beneficiary.


(c)                                  Adjustment of
Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.  The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the Company,
Compaq, any Affiliate, or the financial statements of the Company, Compaq or
any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that
no such adjustment shall be authorized to the extent that such authority would
be inconsistent with the Plan’s meeting the requirements of Section 162(m) of
the Code, as from time to time amended.


(d)                                 Cancellation.  Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be canceled in 


 


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consideration
of a cash payment or alternative Award made to the holder of such canceled
Award equal in value to the Fair Market Value of such canceled Award.


(e)                                  Employee Status
Change to Part-Time.  Prior to
May 3, 2002 and at such time as a full-time employee becomes a part-time
employee of the Company, on the next vesting date following such  status change, all Awards previously granted
to such employee will be automatically amended to reflect the vesting of all
such Awards to be reduced by one-half with respect to any portion of the Awards
not yet vested.


(f)                                    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 Award previously granted based on such terms and conditions as the
Committee shall establish and communicate to the Participant in connection with
such offer.


SECTION 11.         General Provisions.


(a)                                  Nontransferability.  No Award shall be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Participant, except by will or the laws of descent and distribution, provided,
however, that an Award granted prior to May 3, 2002 may be transferable, to the
extent set forth in the applicable Award Agreement and in accordance with
procedures adopted by the Committee.


(b)                                 No Rights to
Awards.  No Employee, Participant or
other Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Participants, or holders
or beneficiaries of Awards.  The terms
and conditions of Awards need not be the same with respect to each recipient.


(c)                                  Share
Certificates.  All
certificates for Shares or other securities of the Company, Compaq or any
Affiliate delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any applicable Federal or state laws, and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.


(d)                                 Delegation.  Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers or managers
of the Company, Compaq or any Affiliate, or to a committee of such officers or
managers, the authority, subject to such terms and limitations as the Committee
shall determine, to grant Awards to, or to cancel, modify or waive rights with
respect to, or to alter, discontinue, suspend, or terminate Awards held by,
Employees who are not officers or directors of the Company for purposes of
Section 16 of the Exchange Act, or any successor section thereto, or who are
otherwise not subject to such Section.


(e)                                  Withholding.  A Participant may be required to pay to the
Company, Compaq or any Affiliate and the Company, Compaq or any Affiliate shall
have the right and is hereby authorized to withhold from any Award, from any
payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash,
Shares, other securities, other Awards or other property) of any applicable
withholding taxes in respect of an Award, its exercise, or any payment or
transfer under an Award or under the Plan and to take such other action as may
be necessary in the opinion of the Committee to satisfy all obligations for the
payment of such taxes.  A Participant
may satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Award that number of
Shares having a Fair Market Value equal to the amount required to be
withheld.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Committee may deem 


 


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necessary
or advisable.  The Committee may provide
for additional cash payments to holders of Awards to defray or offset any tax
arising from the grant, vesting, exercise, or payments of any Award.


(f)                                    Award Agreement.  Each Award hereunder shall be evidenced by
an Award Agreement that shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto.


(g)                                 No Limit on
Other Compensation Arrangements.  Nothing contained in the Plan shall prevent the Company, Compaq
or any Affiliate from adopting or continuing in effect other compensation
arrangements, which may, but need not, provide for the grant of options,
restricted stock, Shares and other types of Awards provided for hereunder
(subject to stockholder approval if such approval is required), and such
arrangements may be either generally applicable or applicable only in specific
cases.


(h)                                 No Right to
Employment.  The grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company, Compaq or any Affiliate.  Further, the Company, Compaq or an Affiliate
may at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Notice.


(i)                                     No Rights as
Stockholder.  Subject to
the provisions of the applicable Award, no Participant or holder or beneficiary
of any Award shall have any rights as a stockholder with respect to any Shares
to be distributed under the Plan until he or she has become the holder of such
Shares.


(j)                                     Governing Law.  The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Notice shall be determined in accordance with the laws of the State of
Delaware.


(k)                                  Severability.  If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.


(l)                                     Other Laws.  The Committee may refuse to issue or
transfer any Shares or other consideration under an Award if, acting in its
sole discretion, it determines that the issuance or transfer of such Shares or
such other consideration might violate any applicable law or regulation or
entitle the Company or Compaq to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company or Compaq by a
Participant, other holder or beneficiary in connection with the exercise of
such Award shall be promptly refunded to the relevant Participant, holder, or
beneficiary.  Without limiting the
generality of the foregoing, no Award granted hereunder shall be construed as
an offer to sell securities of the Company or Compaq, and no such offer shall
be outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal securities laws and any other laws
to which such offer, if made, would be subject.


(m)                               No Trust or
Fund Created.  Neither
the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company,
Compaq or any Affiliate and a Participant or any other Person.  To the extent that any Person acquires a
right to receive payments from the Company, Compaq or any Affiliate pursuant to
an Award, such right shall be no greater than the right of any unsecured
general creditor of the Company, Compaq or any Affiliate.


 


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(n)                                 No Fractional
Shares.  No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be canceled, terminated, or otherwise eliminated.


(o)                                 Headings.  Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.


SECTION 12.         Term of the Plan.


(a)                                  Effective Date.  The Plan shall be effective as of January
22, 1997, subject to approval by the stockholders of the Company within one
year thereafter.


(b)                                 Expiration Date.  No Incentive Stock Option shall be granted
under the Plan after January 22, 1997. 
Unless otherwise expressly provided in the Plan or in an applicable
Award Notice, any Award granted hereunder may, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate
any such Award or to waive any conditions or rights under any such Award shall,
continue after the authority for grant of new Awards hereunder has been
exhausted.


 


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