Exhibit 10(m)


 


Amended and restated November 21, 2002


Amended and restated September 12, 2002


Amended September 4, 2001


Amended November 23, 1994


Adjusted for Stock Splits in 1990, 1994 and 1997(2)


 


 


 


 


COMPAQ COMPUTER CORPORATION


 


1985 NONQUALIFIED STOCK OPTION PLAN


 


 


1.             Purpose
of the Plan. The purpose of the COMPAQ COMPUTER CORPORATION 1985
Nonqualified Stock Option Plan (“Plan”) is to provide compensation in the form
of ownership of the common stock, $.01 par value (“Common Stock”), of Compaq
Computer Corporation, a Delaware corporation, or any successor thereto
(“Company”), to certain selected employees of the Company and its subsidiaries.


2.             Administration
of the Plan. The Board of Directors of the Company (“Board”) shall have
full power and authority, subject to the provisions of the Plan, to designate
participants and to interpret the provisions and supervise the administration
of the Plan. All such decisions, selections and other actions shall be
conclusively binding for all purposes and upon all persons. All decisions and
selections made by the Board pursuant to the provisions of the Plan shall be
made by a majority of its members. Any decision reduced to writing and signed
by a majority of the members shall be fully effective as if it had been made by
a majority at a meeting duly held. The Board may, in its discretion, appoint a
Compensation Committee (“Committee”) to administer the Plan. If appointed, the
Committee shall consist of at least three directors, none of whom is eligible
to participate in the Plan or has been eligible to participate in the Plan for
at least one year prior to his appointment. The Committee shall serve at the
pleasure of the Board, and shall exercise all powers of the Board granted
herein, other than the power to amend the Plan.


3.             Stock
Reserved for the Plan. The shares subject to the Plan shall consist of
45,000,000 unissued shares of Common Stock or previously issued shares
reacquired and held by the Company, and such amount of shares shall be and is
hereby reserved for issuance pursuant to this Plan. Any of such shares which
may remain unsold and which are not subject to outstanding options at the
termination of the Plan shall cease to be reserved for the purpose of the Plan,
but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan. Should any
option expire or be canceled prior to its exercise in full, the shares
theretofore subject to such option may again be made subject to an option under
the Plan.


4.             (a)           Grant
of Options. The Board shall, from time to time, determine and designate
those persons who are to receive options under the Plan, the number of shares
to be covered by such options and the terms thereof. For options granted prior
to November 23, 1994, the Board shall thereupon grant options in accordance
with such determinations as evidenced by a written option agreement.


 


 


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Each Nonqualified Option
granted on or after November 23, 1994, shall be evidenced by a Nonqualified
Stock Option Agreement in the form of a written notice to the Participant
receiving an option, which notice shall set forth the applicable terms and
conditions provided in this Plan and such other provisions which the Board, in
its discretion may deem appropriate. The capitalized term “Nonqualified Stock
Option Agreement” as used herein shall mean any written notice, agreement, or
other instrument or document evidencing a Nonqualified Option and under which
the Optionee may purchase Common Stock pursuant to the terms of the Plan.


 


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


 


5.             Terms and Conditions. Each
option granted under the Plan shall be evidenced by an agreement, in a form
approved by the Board, pursuant to Section 4(a), which shall be subject to the
following express terms and conditions and to such other terms and conditions
as the Board may deem appropriate.


 


(a)           Option Period. Each option
agreement shall specify the period  for
which the option thereunder is granted (which in no event shall exceed  ten years and one day from the date of
grant) and shall provide that the 
option shall expire at the end of such period.


 


(b)           Option Price. The purchase
price of each share of Common Stock subject to each option granted pursuant to
the Plan shall be determined by the Board at the time the option is granted. In
the case of any option granted to an individual subject to Section 16 of the
Securities Exchange Act of 1934, such purchase price shall be not less than 50%
of the fair market value of such shares on such date. The term “fair market
value” as used in this paragraph shall mean the value of a share of Common
Stock as determined by the Board. The Board shall value as follows:


 


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


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


(c)           Exercise Period. The Board may
provide in any option agreement that an option may be exercised in whole
immediately or is to be exercisable  in
increments.


 


(d)           Procedure for Exercise.
Options shall be exercised by notice of intent to exercise the options
delivered to the Company at its principal office setting forth the number of
whole shares with respect to which the option is to be exercised. Such notice
shall be accompanied by cash or certified check, bank draft, postal or express
money order payable to the order of the Company, or, with the consent of the
Board, in whole or in part in Common Stock valued at Fair Market Value which is
owned by optionee, for an amount equal to the option price of such shares, and
specifying the address to which the certificates for such shares are to be
mailed. As promptly as practicable after receipt of such written 


 


 


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notification
and payment, the Company shall deliver to the Optionee certificates for the number
of shares with respect to which such option has been so exercised, issued in
the Optionee’s name; provided, however, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Optionee, at the address specified pursuant to this paragraph 5(d).


 


(e)           Effect of Termination and Leave
Without Pay.


 


(i)          If the Optionee’s employment with the
Company is terminated for any reason other than death, disability, or
retirement, the Optionee’s right to exercise any Stock Option shall terminate,
and such Option shall expire, on the earlier of (A) the first anniversary of
such termination of employment or (B) the date such Option would have expired
had it not been for the termination of employment; provided, however that if, within one year following an
occurrence of a Change in Control, the Optionee’s employment is terminated in a
Qualifying Termination (as defined in subparagraph (v) below), the Optionee
shall have the right to exercise all outstanding Options until the earlier of
(1) the third anniversary of such termination of employment or (2) the date
such Options would have expired had it not been for such termination of
employment.  For purposes of applying
the immediately preceding proviso with respect to treatment of Options in the
event of a Qualifying Termination, the definition of a Change in Control set
forth in Section 9.(c) shall be revised by substituting the phrase “a merger or
consolidation of the Company with any other corporation is consummated” for the
phrase “the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation” in clause (iii) of said Section 9. (c). The Optionee shall have the
right to exercise such Option prior to such expiration to the extent it was
exercisable at the date of such termination of employment and shall not have
been exercised.


 


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


 


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


 


(iv)        In the event of the death of an Optionee
under the Plan prior to termination of his employment, the options previously
granted to him may be exercised (to the extent he would have been entitled to
do so at the date of his death) at any time and from time to time prior to
their expiration by the executor or administrator of his estate or by the
person or persons to whom his rights under the option shall pass by will or the
laws of descent and distribution, but in no event may the option be exercised
after its expiration.


 


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


 


 


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Termination” in the Compaq Computer
Corporation employee severance plan in which such Optionee is eligible to
participate.


 


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


 


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


 


(f)            Assignability. An option
shall not be assignable or otherwise transferable except by will or by the laws
of descent and distribution. Each option shall be exercisable during the
Optionee’s lifetime only by the Optionee.


 


(g)           No Rights as Stockholder. No
Optionee shall have any rights as a stockholder with respect to shares covered
by an option until the date of issuance of a stock certificate for such shares;
except as provided in paragraph 9, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
such certificate.


 


(h)           Investment Representation.
Each option agreement shall contain an agreement that, upon demand by the Board
for such a representation, the Optionee (or any person acting under paragraph
5(e) shall deliver to the Board at the time of any exercise of an option a
written representation that the shares to be acquired upon such exercise are to
be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior
to the delivery of any shares issued upon exercise of an option and prior to
the expiration of the option period shall be a condition precedent to the right
of the Optionee or such other person to purchase any shares.


 


(i)            Buyout Provisions.  At any time, the Committee may, but shall not be required
to, offer to buy out for a payment in cash or shares an option previously
granted based on such terms and conditions as the Committee shall establish and
communicate to the Optionee at the time that such offer is made.


 


6.             Amendments or Termination.  The Board may amend, alter or discontinue the
Plan, but no amendment or alteration shall be made which would impair the
rights of any participant under any option theretofore granted without his
consent.


 


7.             Compliance with Other Laws and
Regulations. The Plan, the grant and exercise of options thereunder, and
the obligation of the Company to sell and deliver shares under such options,
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any governmental or regulatory agency or
national securities exchange as may be required. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock prior
to the completion of any registration or qualification of such shares under any
federal or state law, or any ruling or regulation of any government body or
national securities exchange which the Company shall, in its sole discretion,
determine to be necessary.


 


 


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8.             Effectiveness and Expiration of
Plan. The Plan shall be effective on the date the Board adopts the Plan.
The Plan shall expire ten years and one day after the effective date of the
Plan and thereafter no option shall be granted pursuant the Plan.


 


9.             Adjustments and Change in
Control.


 


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


(b)           Immediate
Vesting. Notwithstanding any other provision of the Plan to the contrary,
upon a Change in Control, as defined below, all outstanding options shall vest
and become immediately exercisable or payable, or have all restrictions lifted
as may apply to the type of Award; provided, however, that unless otherwise
determined by the Committee at the time of award or thereafter, if it is
determined that the Net After-Tax Amount to be realized by any optionee, taking
into account the accelerated vesting provided for by this paragraph 9.(c) as
well as all other payments to be received by such optionee in connection with
such Change in Control, would be higher if options did not vest in accordance
with the foregoing paragraph 9.(c), then and to such extent the options shall
not vest. The determination of whether any such option should not vest shall be
made by a nationally recognized accounting firm selected by the Company, which
shall be instructed to consider that (i) stock options shall be vested in the
order in which they were granted and within each grant in the order in which
they would otherwise have vested and (ii) unless and to the extent any other
plan, arrangement or contract of the Company pursuant to which any such payment
is to be received provides to the contrary, such other payment shall be deemed
to have occurred after any acceleration of options.


(c)           Change in Control. A “Change
in Control” shall be deemed to have occurred if: (i) any “person” as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
(the “Exchange Act”) (other than the Company, an trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Stock of the Company),
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding securities; (ii) during any period of two consecutive years (not
including any period prior to January 18, 1989), individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (i) ,
(iii) , or (iv) of this paragraph whose election by the Board of Directors or
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the two year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors; (iii) the
stockholders of the Company approve merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding 


 


 


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or by
being converted into voting securities of the surviving entity) more than 50%
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires more than 30% of the combined voting power of the Company’s then
outstanding securities shall not constitute a Change in Control of the Company;
or (iv) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets.


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


 


10.           Miscellaneous.


 


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


 


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


 


(c)           Plan Binding on Successors.
The Plan shall be binding on the successors and assigns of the Company.


 


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


 


 


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