EXHIBIT 10.20

                                                        ADOPTED JANUARY 22, 1998





                           COMPAQ COMPUTER CORPORATION
                             1998 STOCK OPTION PLAN


SECTION  1.     Purpose.  The Compaq Computer Corporation 1998 Stock Option Plan
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has been established to promote the interests of Compaq Computer Corporation and
its  stockholders  by  (i)  attracting  and  retaining exceptional employees and
directors  of  Compaq and its Affiliates, as defined below; (ii) motivating such
employees  and  directors  by means of performance-related incentives to achieve
long-range performance goals; and (iii) enabling such employees and directors to
participate  in  the  long-term  growth  and  financial  success  of  Compaq.


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

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

"Award"  shall  mean  any  Option  or  Stock  Appreciation  Right.

"Board"  shall  mean  the  Board  of  Directors  of  Compaq.

"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 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 of Directors 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  of  Directors;  (iii)  Compaq  stockholders  approve a merger or
consolidation  of  Compaq  with  any  other  corporation, other than a merger or
consolidation  that  would  result  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 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.

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

"Committee"  shall  mean  a  committee  of  the Board designated by the Board to
administer  the  Plan and 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.  Until  otherwise  determined  by  the Board, the Human
Resources  Committee  designated  by  the Board shall be the Committee under the
Plan.

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

"Election  Date"  shall mean with respect to an Option hereunder the date of the
appointment,  election,  or  re-election of the director that prompted the grant
of  such  Option.

"Eligible  Director"  shall  mean  each  director  of  the Company who is not an
employee  of  the  Company  or  any of the Company's subsidiaries (as defined in
Section  425(f)  of  the  Code).

"Employee"  shall  mean  an  employee  of  Compaq  or  of  any  Affiliate.

"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, and
for purposes of determining the exercise price of an Award shall be equal to the
Dow  Jones  composite  close  for  the  Shares as reported on the Dow Jones news
retrieval  system  on the date of the Award  (or on the most recent business day
if  the  date  of  an  Award  is  a  holiday).

"Incentive  Stock Option" shall mean a right to purchase Shares from Compaq that
is intended to meet the requirements of Section 422 of the Code or any successor
provision  thereto.

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

"Non-Qualified  Stock  Option" shall mean a right to purchase Shares from Compaq
that  is  granted  under  Section  5  or  Section  7 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.

"Option"  shall  mean  a  Non-Qualified  Stock Option or Incentive Stock Option.

"Participant"  shall  mean any Employee or Director 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 1998 Stock Option Plan.

"Release  Date"  shall  mean  the  third  business  day occurring after Compaq's
earnings  release  for  the preceding fiscal period.  In calculating the Release
Date, the day of an earnings release shall be counted if the earnings release is
made  before the opening of trading on the New York Stock Exchange and shall not
be  counted  if  such  release  is  made  after  the  opening  of  trading.

"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 Compaq or
such  other securities of Compaq 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
Compaq  or  with  which  Compaq  combines.

"Window"  shall  mean a period of time beginning on a Release Date and ending at
the  end  of  the  second month of the fiscal quarter in which such Release Date
occurs.


SECTION  3.          Administration.
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(a)     Authority  of  Committee.  The  Committee  shall  administer  the  Plan.
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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; and (ix) make any other determination and take any
other  action  that  the  Committee  deems  necessary  or  desirable  for  the
administration  of  the  Plan.

(b)     Committee  and  Board  Discretion  Binding.  Unless  otherwise expressly
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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 any time, and
shall  be final, conclusive, and binding upon all Persons, including Compaq, any
Affiliate,  any  Participant,  any  holder  or  beneficiary  of  any  Award, any
stockholder,  any  Employee,  and  any  Director.


SECTION  4.          Shares  Available  for  Awards.
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(a)     Shares  Available.  Subject  to  adjustment as provided in Section 4(b),
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the  number of Shares with respect to which Awards may be granted under the Plan
shall  be  100  million;  provided,  however,  if  Compaq  or  its  wholly owned
subsidiary  merges  with Digital Equipment Corporation the number of Shares with
respect  to  which Awards may be granted under the Plan shall be increased by 50
million,  to a total of 150 million shares.  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 by Compaq, 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
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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 Compaq, issuance of
warrants  or  other  rights to purchase Shares or other securities of Compaq, 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  Compaq (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  Compaq  (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
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counted  against  the  Shares  available  for  Awards  under  the  Plan.

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


SECTION  5.          Employee  Stock  Options.
                     ------------------------

(a)     Eligibility  and  Limits on Awards.  Any Employee, including any officer
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or  employee-director  of  the Company or any Affiliate, shall be eligible to be
designated a Participant.  Subject to adjustment as provided in 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.  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.

(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.

(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.  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; provided, however,
that  no grant to an Executive Officer shall be exercisable until the earlier of
(i)  six  months after the date of grant or (ii) the Participant's ceasing to be
an  Executive  Officer.  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 federal or state securities laws, as it may deem
necessary  or  advisable.

(e)     Payment.  No  Shares  shall  be delivered pursuant to any exercise of an
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Option until payment in full of the option price therefor is received by Compaq.
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 Committee,  by surrendering all or part of
that  Option  or  any  other Option,  or (iv) 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 Compaq as of the date of such
tender  is  at  least  equal  to  such  option  price.

SECTION  6.          Stock  Appreciation  Rights.
                     ---------------------------

(a)     Grant.  The  grant  of  Stock  Appreciation  Rights  shall be limited to
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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.

(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.

(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
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provisions  shall  apply  in  the  event  of  the  Participant's  termination of
employment  unless  the  Committee  shall have provided otherwise, either at the
time  of  the  grant  of  the  Award  or  thereafter.

(a)     Termination of Employment.  If a Participant's employment with Compaq or
        -------------------------
its  Affiliates  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 (i) the first
anniversary  of  such  termination of employment or (ii) the date such Option or
Stock  Appreciation Right would have expired had it not been for the 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)     Death,  Disability  or  Retirement.  If  a Participant's employment with
---     ----------------------------------
Compaq or its Affiliates 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 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.

(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 not subject
to  Section  16  of the Exchange Act 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  Compaq.

(d)     Leave  Without  Pay.  In  the event that an employee Participant takes a
        -------------------
"leave  without  pay,"  all  of such Participant's Awards or any portion thereof
shall,  to  the  extent  unvested immediately prior to such leave, cease to vest
during the period of such leave, and to the extent exercisable immediately prior
to  such  leave,  shall  remain  exercisable  during the period of such leave in
accordance  with  the  terms  thereof.

SECTION  8.    Director  Options.
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(a)     Initial  Grants.  Each  Eligible  Director  who  is  first  elected  or
---     ---------------
appointed to the Board shall be granted one Option to acquire 31,250 Shares.  In
the  event that the Election Date occurs during the Window, such Option shall be
granted  on  the  Election  Date with respect to such Option.  In the event that
such  Eligible  Director's  election  or  appointment  does not occur during the
Window,  then  such  Option  shall  be  granted  on  the  next  Release  Date.

(b)          Annual  Options.
             ----------------
(i)     Each  Eligible  Director  who  is  reelected  to  the Board at an annual
meeting  of  the  Company's  stockholders and who has not received a grant under
Section  8(a) during the period since the most recent previous annual meeting of
the  Company's  stockholders shall be granted an Option to acquire 25,000 Shares
on  each  Election  Date  on  which  he  is  reelected.

(ii)     Each  Eligible  Director  who  is elected or re-elected Chairman of the
Board  by  the Board at its meeting following an annual meeting of the Company's
stockholders  and  who  has  not  received a grant under Section 8(a) during the
period  since  the  most recent annual meeting of Compaq's stockholders shall be
granted  on  each  Election Date on which he is elected or reelected Chairman of
the Board an Option to acquire 6,250 Shares in addition to any applicable Option
granted  under  Section  8(b)(i).

(c)     Terms  and Conditions.  Any Option granted under this Section 8 shall be
subject  to  the  following  terms  and  conditions:

(i)     Any  Options  granted  under this Section 8 shall be Non-Qualified Stock
Options  and  the exercise price shall be not less than the Fair Market Value of
the  underlying  Shares.

(ii)     Each  Option  granted under this Section 8 shall be exercisable at such
times  and  subject  to  such terms and conditions as the Board may, in its sole
discretion,  specify  in the applicable Notice or thereafter; provided, however,
that  no  grant  shall  be  exercisable  for six months after the date of grant.

(iii)     Notwithstanding the provisions of this Section 8, Options shall not be
granted  under this Section 8 to any Eligible Director in any year in which such
director  receives  an  initial  grant or annual grant under the Compaq Computer
Corporation  Non-Qualified  Stock  Option  Plan  for  Non-Employee  Directors.

SECTION  9.     Change  in  Control.  Notwithstanding any other provision of the
                -------------------
Plan  to  the  contrary,  upon  a Change in Control all outstanding Awards shall
vest,  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;
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  Participant,  taking  into  account  the  accelerated vesting
provided  for  by  this  Section as well as all other payments to be received by
such  Participant  in connection with such Change in Control, would be higher if
Awards did not vest in accordance with this Section, then and to such extent the
Awards  shall  not vest.  The determination of whether any such Award should not
vest  shall  be  made  by  a  nationally  recognized accounting firm selected by
Compaq, which shall be instructed to consider that (a) Awards and other forms of
compensation  subject to vesting upon a Change of Control 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 (b) unless and to the extent any other
plan, arrangement or contract of Compaq 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 Awards or other forms of compensation subject
to  vesting  upon  a  Change  of  Control.


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. 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 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.

(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  Compaq,  any Affiliate, or the
financial  statements  of  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 Notice to the contrary
        ------------
notwithstanding,  the  Committee  may  cause  any  Award granted hereunder to be
canceled  in  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  as  of  the  effective  date  of  such  cancellation.

(e)     Employee  Status  Change  to  Part-Time.  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.

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  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
        -------------------
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 Securities and Exchange Commission,
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 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 Compaq or any
        -----------
Affiliate  and  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 Compaq to satisfy
all  obligations  for  the payment of such taxes.  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 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 Compaq or any
Affiliate.  Further,  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 Compaq
to  recover  the  same  under Section 16(b) of the Exchange Act, and any payment
tendered  to  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  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  Compaq  or  any  Affiliate and a Participant or any other
Person.  To the extent that any Person acquires a right to receive payments from
Compaq  or  any  Affiliate  pursuant to an Award, such right shall be no greater
than  the  right  of  any unsecured general creditor of 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  12.    Term  of  the  Plan.
                -------------------

(a)     Effective  Date.  The  Plan  shall  be  effective  upon  approval by the
        ---------------
stockholders  of  Compaq.

(b)     Expiration  Date.  No  Incentive Stock Option shall be granted under the
        ----------------
Plan more than ten years after the effective date of the Plan.  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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