Exhibit
10(f)


 


 


As Amended
and Restated Effective November 21, 2002


As Amended
and Restated Effective September 12, 2002


As Amended
and Restated Effective July 18, 2002


As Amended
Effective May 3, 2002


As Amended
Effective September 4, 2001


 Adopted January 25, 2001


 


 


COMPAQ COMPUTER CORPORATION


 


2001 STOCK OPTION PLAN


 


SECTION 1.           Purpose.  The Compaq Computer Corporation 2001 Stock
Option Plan has been established to promote the interests of the Company and
its stockholders by (a) attracting and retaining exceptional employees of the
Company, Compaq and Affiliates, as defined below; (b) motivating such employees
and directors by means of performance-related incentives to achieve long-range
performance goals; and (c) enabling such employees and directors 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 pursuant to 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 Compaq employee benefit plan, or any entity owned,
directly or indirectly, by Compaq stockholders in substantially the same
proportions as their ownership of Compaq voting securities), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time), directly
or indirectly, of Compaq securities 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 of
Directors, 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) a merger or consolidation of
Compaq with any other corporation, other than a merger or consolidation that
results in Compaq voting securities 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 voting securities of Compaq or such surviving entity
outstanding immediately after such merger or consolidation; provided, however,
that a merger or consolidation effected 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; or (iv) Compaq stockholders approve a plan of
complete liquidation of Compaq or an agreement for the sale or disposition by
Compaq of all or substantially all of 


 


 


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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) Awards granted on or after September 1, 2001 and (2)
applying the proviso of Section 7(a)(i) to all Options and Stock Appreciation
Rights under the Plan, whenever granted, the definition of “Change in Control”
set forth above shall be revised by adding the phrase “there is consummated” at
the beginning of clause (iii) 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 persons who (i) to the
extent necessary to comply with Rule 16b-3 are “Non-Employee Directors” within
the meaning of Rule 16b-3 and (ii) to the extent any Award granted hereunder is
intended to qualify as performance-based compensation under Section 162(m) of
the Code, constitute “outside directors” within the meaning of Section 162(m)
of the Code and the regulations thereunder.


 


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


 


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


 


“Eligible Director” shall mean each director
of Compaq who is not an employee of Compaq or any of Compaq’s subsidiaries (as
defined in Section 424(f) of the Code).


 


“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 Compaq 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 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 5 of the Plan and that
is not intended to be an Incentive Stock Option.


 


“Notice” shall mean any written notice,
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.


 


 


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


 


“Participant” shall mean, prior to May 3,
2002, any Employee or director selected to receive an Award under the Plan and,
on or after May 3, 2002, any Employee selected 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 2001 Stock Option 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 6 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
Committee shall administer the Plan. 
Subject to the terms of the Plan and applicable law, the Committee shall
have full power and authority to: (i) designate Employee 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 to Employees; (iv) determine the terms and conditions of any Award to
Employees; (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 Notice 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 and
Board 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 or
the Board, may be made at 


 


 


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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, any
Employee, and any Director.


 


(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 80 million.  If, after the effective date of the Plan,
any Shares covered by an Award granted under the Plan or to which such Award
relates, are forfeited, or if such an Award is settled for cash or otherwise
terminates or is canceled without the delivery of Shares, then the Shares
covered by such Award, or to which such 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 is exercised through the delivery of Shares or
in the event that withholding tax liabilities arising from such 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.


 


(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 outstanding Award, or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, that such adjustments shall be made by
the Board with respect to Awards to Eligible Directors.


 


(c)                                  Substitute
Awards.  Any Shares underlying
Substitute Awards shall not be counted against the Shares available for Awards
under the Plan.


 


(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.           Employee Stock Options.


 


(a)                                  Eligibility and
Limits on Awards.  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.  Prior to May 3, 2002
and subject to adjustment as provided in 


 


 


4

















 


Section 4(b), no Executive Officer may
receive Awards under the Plan in any calendar year that relate to more than
1,500,000 Shares.  Prior to May 3, 2002,
the limits on Awards to any Executive Officer under this Plan shall be reduced
by any other Award in the same calendar year to such officer under any other
Compaq equity incentive plan.  In order
to satisfy regulatory and legal requirements, the Committee may grant Awards to
a trust or other legal entity on behalf of otherwise eligible Employees.


 


(b)                                 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, and the conditions and limitations applicable to the exercise of the
Option.  On or after May 3, 2002, no
Incentive Stock Options shall be granted or substituted under this Plan.


 


(c)                                  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.


 


(d)                                 Exercise.  Each Employee 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 Notice or thereafter.  The Committee and the Board 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.


 


(e)                                  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.


 


SECTION 6.           Stock Appreciation Rights.


 


(a)                                  Grant.


 


(i)                                     Prior to May 3,
2002, the grant of Stock Appreciation Rights shall be limited to Employees in
those locations in which the law, including exchange control regulations and
taxation, unduly restricts the grant of Options.  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, and the conditions and limitations
applicable to the exercise thereof. 
Stock Appreciation Rights shall have a grant price equal to the Fair
Market Value of the related Shares on the day of the Award, and if granted to
Executive Officers, shall not be exercisable earlier than six months after
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.  The
Committee shall determine whether a Stock Appreciation Right shall be settled
in cash, Shares or a combination of cash and Shares.


 


 


5

















 


(c)                                  Other Terms and
Conditions.  Subject to
the terms of the Plan, 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 7.           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)                                  Termination of
Employment.


 


(i)                                     For Awards
granted prior to May 3, 2002 and if a 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
Nonqualified 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 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 (f) below), the Participant
shall have the right to exercise any outstanding Option or Stock Appreciation
Right until the earlier of (a) 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
(b) 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.


 


(ii)                                  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.


 


(b)                                 Death,
Disability or Retirement.


 


(i)                                     For Awards
granted prior to May 3, 2002 and if a Participant’s employment with the
Company, Compaq or an Affiliate is terminated by death, total and permanent disability,
or retirement, the Participant or his successor (if employment is terminated by
death) shall have the right to exercise any Nonqualified 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.


 


(ii)                                  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, 


 


 


6

















 


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.


 


(iii)                               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 (g)
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.


 


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


 


(d)                                 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.


 


(e)                                  Definition of
Qualifying Termination.  For
purposes of subparagraph (a)(i) above, the term “Qualifying Termination” shall
have the meaning ascribed to such term in the Participant’s individual
employment or severance agreement with Compaq or its Affiliate.  If the Participant is not a party to an
individual employment or severance agreement with 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.


 


(f)                                    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.


 


 


7

















 


SECTION 8.           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 Rights 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 7(f)) 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 9.           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. The
Committee also 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, suspend, or terminate, any
Award, prospectively or retroactively; provided that (i) any waiver, amendment,
suspension, or termination that would adversely affect the rights of any
Participant or any holder or beneficiary of any outstanding Award shall not to
that extent be effective without the consent of the affected Participant,
holder, or beneficiary, and (ii) in accordance with Section 5(c) of this Plan
no amendment shall lower the exercise price of outstanding options issued under
the Plan.


 


(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.


 


 


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(d)                                 Cancellation.  Any provision of this Plan or any Notice to
the contrary notwithstanding, the Committee may cause any Award granted
hereunder to be canceled in consideration of an alternative Award or cash
payment made to the holder of such canceled Award equal in value to the Fair
Market Value of such canceled Award as of the effective date of such
cancellation.


 


(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, on the next vesting date following such status change, the vesting
schedule for all Awards previously granted to such employee and not yet vested
will be automatically amended to reduce the number of shares vesting each month
by one-half during the time that such employee is working on a part-time basis;
provided, however, that any Shares that remain unvested three months prior to
the expiration of the term of such Award shall vest as of such date three
months prior to the expiration of such term.


 


(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 10.         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 Notice 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 other than Executive Officers.


 


(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 


 


 


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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 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)                                    Notices.  Each Award hereunder shall be evidenced by a
Notice 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 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 Notice
shall be determined in accordance with the laws of the State of Delaware.


 


(k)                                  Severability.  Notwithstanding any other provision or
section of the Plan, 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 (but only to such extent necessary to
comply with such 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 


 


 


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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.


 


(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 11.         Term of the Plan.


 


(a)                                  Effective Date.  The Plan shall be effective on April 26,
2001.


 


(b)                                 Expiration Date.  Unless otherwise expressly provided in the
Plan or in an applicable 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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