Employment Agreement

                          Effective as of July 22, 1999

                                     Between

                           Compaq Computer Corporation

                                       And

                               Michael D. Capellas






<PAGE>
This  Employment Agreement, effective as of July 22, 1999 ("Effective Date"), is
by  and  between Compaq Computer Corporation ("Compaq"), a corporation organized
and  existing  under  the  laws of the State of Delaware, U.S.A., and Michael D.
Capellas  ("Executive").

WHEREAS  Compaq  is  desirous  of  employing Executive pursuant to the terms and
conditions  and for the consideration set forth in this Agreement, and Executive
is  desirous  of  being employed by Compaq pursuant to such terms and conditions
and  for  such  consideration.

NOW,  THEREFORE, for and in consideration of the respective promises, covenants,
and  obligations  contained  herein,  Compaq  and  Executive  agree  as follows:

1.     Introduction.  Compaq  agrees  to  employ,  and  Executive  agrees  to be
       ------------
employed  by Compaq, subject to the terms and conditions of this Agreement.  The
employment  relationship  between Compaq and Employee shall be at-will, that is,
the  employment  relationship  may  be  terminated  at  any  time for any reason
whatsoever,  with or without Cause, subject to the provisions of this Agreement.

2.     Definitions.  Capitalized  terms  used  in  this Agreement shall have the
       -----------
meanings  set  forth  below  or  as  defined  throughout  this  Agreement.

     2.1.     "Agreement"  means  this  Employment Agreement effective as of the
               ---------
Effective  Date.

     2.2.     "Base  Compensation"  means  the sum of the annualized base salary
               ------------------
paid  hereunder  at  any  determination  date  and the annual bonus paid for the
calendar  year  preceding  any  determination date.  Base Compensation shall not
include  any  other forms of compensation including, but not limited to, bonuses
paid  under  Compaq's  Long-term  Bonus  program  (or  any  successor  program),
restricted stock grants, stock option grants, or stock option exercise proceeds.

     2.3.     "Board  of  Directors"  or "Board" means the Board of Directors of
               --------------------       -----
Compaq  or  any  successor  entity.

     2.4.     "Cause"  shall  mean  termination  due  to  any  of  the following
               -----
reasons:

          2.4.1. Executive's final conviction of a felony, or

          2.4.2.  Executive's  substantial  failure to perform  his duties  with
          Compaq (except by reason of incapacity due  to  illness  or accident),

          2.4.3. Executive's  breach of his obligations  under paragraph 6.2. of
          this Agreement, or

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<PAGE>
          2.4.4.  Upon a finding by a majority  of  Compaq's  Board of Directors
          that  Executive engaged in a willful fraud or  defalcation  either  of
          which  involved funds or other assets of Compaq.

     2.5.     "Change in Control" means and 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, as amended (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 Ruled
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 Effective Date of this Agreement), 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
lest  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 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 clause (i) through (iv) occur,
Compaq's  Board of Directors shall determine the effective date of the Change in
Control  resulting  therefrom  for  purposes  of  this  Agreement.

     2.6.     "Code"  means  the U.S. Internal Revenue Code of 1986, as amended.
               ----

     2.7.     "Confidential  Information"  means  any  confidential  or  private
               -------------------------
information,  not  generally  known  to  the  public, related to the business or
operations  (past,  present or future) of any member of the Group that Executive
has possession or knowledge of through his employment with Compaq or through his
association  with  the  Group.  The  parties agree that Confidential Information
encompasses  a  broad  scope  of  information that includes, without limitation:
business  plans  and  strategies;  information regarding the identities, skills,
qualities,  competencies,  characteristics,  expertise,  or  experience  of  the

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directors, officers, or employees of any Group member; information regarding the
compensation  practices  of,  or  payments  made  to  or  by, Group members; the
contents  of  communications,  oral  or  written, with, by or between directors,
officers,  employees,  or  agents of the Group; statements of fact or opinion or
mixed statements of fact and opinion if such statements are based on information
or events to which Executive had access as a result of his employment by Compaq;
and similar information related to third parties to whom any Group member owes a
duty  of  confidentiality  or  privacy.

     2.8.     "Disabled"  or  "Disability"  means a determination by independent
               --------        ----------
competent  medical  authority  that Executive is unable to perform his duties as
President  and  Chief  Executive Officer of Compaq and in all reasonable medical
likelihood  such  inability  will continue for a period in excess of one hundred
eighty  days.  Unless  otherwise agreed by Executive and the Board of Directors,
the independent medical authority shall be selected by Executive and Compaq each
selecting  a  board certified licensed physician and the two physicians selected
shall  designate  an  independent  medical  authority,  whose  determination  of
Disability  shall  be  binding  upon  Compaq  and  Executive.

     2.9. "Group" means Compaq, its subsidiaries, and other affiliated entities.
           -----

     2.10. "Intellectual Property" includes, without limitation, any and all
            ----------------------
information,  ideas,  concepts,  improvements, discoveries, designs, inventions,
trade  secrets,  know-how,  manufacturing  processes,  product  formulae, design
specifications,  writings  and other works of authorship, computer programs, and
business  methods, whether patentable or not, which are originated by, conceived
by,  created by, made by, developed by, invented by, learned by, or disclosed to
Executive,  individually  or  in  conjunction  with  others,  during Executive's
employment  by Compaq (whether during business hours or otherwise and whether on
Compaq's  premises or otherwise) which relate to the Group's business, products,
or  services  (including,  without  limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing and trading
terms,  evaluations,  opinions,  interpretations,  acquisition  prospects,  the
identity  of  customers or their requirements, the identity of key contacts with
in  the  customer's  organizations  or  within  the  organization of acquisition
prospects,  or  marketing  and  merchandising techniques, prospective names, and
marks).  The  term  "Intellectual Property" also includes all rights provided by
the  law  of  any  jurisdiction  throughout  the  world  with  respect  to  such
information,  ideas,  concepts,  improvements, discoveries, designs, inventions,
trade  secrets,  know-how,  manufacturing  processes,  product  formulae, design
specifications,  writings  and other works of authorship, computer programs, and
business  methods, including, without limitation, the right to maintain the same
as confidential information, the right to first publication, the right to obtain
patents  and  industrial  rights thereon, all rights of copyright, all trademark
rights,  and  the  right to protect the same against acts of unfair competition.

     2.11. "Release of Claims" or "Release," means a release of claims in
            -----------------      --------
substantially  the form of the document attached as Exhibit A to this Agreement.
Executive  acknowledges  and  agrees that Compaq retains the unilateral right to
amend  the  form  of  the  Release,  provided  that  any such amendment is found
necessary  as  determined  by  a  majority vote of the Board of Directors (a) to
protect  Compaq's  business  or then current business plans or (b) to conform to
any  applicable  law.

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<PAGE>
     2.12.   "Separation Payment" means a payment equal to two times Executive's
              ------------------
Base  Compensation  (except  for  purposes  of  paragraph 9.1.6. under which the
payment  equals  three  times  Executive's  Base  Compensation).

     2.13.     "Stock  Option" means an option to purchase Compaq stock pursuant
                -------------
to  a  nonqualified  stock  option  agreement  between Executive and Compaq made
pursuant  to  any  of  Compaq's  various  employee  stock  option  plans.

     2.14.     "Termination Date" means the date on which Executive ceases to be
                ----------------
an  employee  irrespective  of the cause or manner in which the employment ends.

3.     Term  of Employment.  The initial term of this Agreement will commence on
       -------------------
the  Effective Date and, unless terminated at an earlier date in accordance with
paragraphs  9.1.  or 9.2., shall continue until July 22, 2002.  The term of this
Agreement  shall  automatically  extend  by  consecutive twelve-month increments
unless,  prior  to  March 15, 2002, and of each year thereafter, Compaq notifies
Executive  in  writing  of  Compaq's  intention to terminate this Agreement.  If
Compaq  so  notifies  Executive, then this Agreement shall terminate one hundred
and  twenty  days  after  the  date  Compaq's  written  notice  is  delivered to
Executive.

4.     Duties  and  Responsibilities.
       -----------------------------

     4.1.     Service.  Compaq  shall employ Executive as Compaq's President and
              -------
Chief  Executive  Officer.  Executive  shall  faithfully and diligently serve as
Compaq's  President  and  Chief  Executive  Officer.

     4.2.     Other  Activities.  Executive  shall  not  during the term of this
              -----------------
Agreement, without the consent of the Board of Directors, (a) act as an officer,
director,  partner,  consultant, advisor or in any other capacity for any entity
other  than  a  member  of  the  Group,  if such activity is for gain, profit or
pecuniary advantage, (b) engage in any other business activity whatsoever, other
than  business  activity  for  a  member of the Group, or (c) cause or allow any
member  of  the Group to participate in any transaction with Executive or any of
his  relatives or with any entity in which Executive or any of his relatives has
an  interest  other than holding less than five percent of an entity whose stock
is publicly traded.  Executive shall be entitled to make and manage his personal
investments,  provided  such  investments or other activities do not violate the
terms  of Articles 6 or 7 hereof and, further provided, that such investments do
not  violate  Compaq's policies on insider trading, conflict of interest, or any
trading  restriction  policy or program applicable to Compaq executive officers.

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<PAGE>
5.     Compensation  and  Benefits.
       ---------------------------

     5.1.     Benefits.  Executive shall receive all standard benefits generally
              --------
available  to  executive officers of Compaq.  Executive shall be entitled to one
physical each calendar year at Compaq's expense.  Executive shall be eligible to
participate  in  Compaq's  executive  officer  financial  counseling  and  tax

preparation  program  to the same extent and under the same terms and conditions
that  Compaq  makes  available  to its other executive officers.  Compaq, at its
expense,  shall  install,  and  provide  for  the monitoring of, a home security
system  in  Executive's  local  residence.

     5.2.     Compensation.  Commencing  on  the  Effective  Date,  Executive's
              ------------
annual  base  salary  shall  be eight hundred fifty thousand dollars ($850,000),
which shall be paid in installments in accordance with Compaq's standard payroll
practice.  Compaq and Executive may renegotiate Executive's base salary annually
in  good  faith.

     5.3.     Stock  Option  Eligibility.  During  the  term  of  his  Compaq
              --------------------------
employment,  Executive  shall  continue  to  be eligible to receive stock option
grants under the plans and programs applicable to Compaq executive officers.  On
the Effective Date, Compaq will grant to Executive a Stock Option on one million
shares  subject  to  the terms and conditions of the Compaq Computer Corporation
1998  Stock  Option  Plan.  The  exercise  price  will be equal to the Dow Jones
composite close for Compaq's stock on the Effective Date.  Executive understands
that  Compaq  will  issue  Executive  a grant notice conveying these options and
providing  the  terms  and  conditions  thereof.

     5.4.     Restricted Stock Grant.  On the Effective Date, Compaq shall grant
              ----------------------
Executive  two  hundred  thousand  shares  of  restricted stock (the "Restricted
Stock")  as  that term is defined in the Compaq Computer Corporation 1989 Equity
Incentive  Plan  (the  "Plan").

          5.4.1.  Terms and  Conditions.  The  Restricted  Stock shall be issued
                  ---------------------
          under the Plan.  Except as modified in this Agreement,  the Restricted
          Stock shall be subject to the terms and conditions of the Plan.

          5.4.2. Vesting.
                 -------

               5.4.2.1.   Performance   Incentive.   As  a  special  performance
                          -----------------------
               incentive to Executive,  the  Restricted  Stock shall vest in the
               quantities  listed below the first time after the Effective  Date
               and during Executive's  employment with Compaq,  that the closing
               price  of  Compaq's  stock  on  the  NYSE  (or  other  nationally
               recognized  stock  exchange  on which it is  listed  at the time)
               equals or exceeds each performance target listed below for thirty
               consecutive trading days.

               Quantity                          Performance Target
               -----------------------------------------------------
                50,000  shares                    $35.00  per  share
                50,000  shares                    $40.00  per  share
               100,000  shares                    $50.00  per  share

               Compaq shall adjust the  quantities  and  performance  targets in
               this  section  to reflect  any stock  dividend,  subdivision,  or
               combination of shares or  reclassification  that occurs under the
               Plan.

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<PAGE>
               5.4.2.2.  Regular  Vesting.  Except as  provided  for in  section
                         ----------------
               5.4.2.1.  and in paragraph 9.6., the Restricted  Stock shall vest
               on the fifth anniversary of the Effective Date provided Executive
               is an employee of Compaq on that date.

          5.4.3.  Cash  Dividends.  Cash  Dividends  on  unvested  shares of the
                  ---------------
          Restricted Stock shall inure to the benefit of Compaq.

     5.5.     Loan  to  Purchase  Shares.   Compaq  shall  loan  Executive  five
              --------------------------
million  dollars  on  a  full  recourse basis to enable Executive to immediately
purchase  Compaq  common stock with an equivalent value. The purchased shares of
Compaq common stock will secure the loan. The loan principal will become due and
payable  to Compaq on the earlier of the fifth anniversary of the Effective Date
or  one hundred twenty days after the termination of Executive's employment with
Compaq. In addition, the full proceeds of any sale of any of the shares securing
the  loan,  if  earlier  than  the above dates, must be used to retire principal
and/or  interest  on the loan. The loan will bear interest at a fixed rate which
will be the minimum rate required under Code section 7872 in order that the loan
is not considered a below market interest loan. Interest on the loan will be due
and  payable  at the same time as the principal amount of the loan. The loan and
security  agreement  on  the  purchased  shares  will be evidenced by a separate
written  agreement.

     5.6.     Reimbursement.  Compaq  shall  reimburse  Executive for reasonable
              -------------
business  expenses  that  he  incurs  in  the  course  of  his duties under this
Agreement  on  presentation  to Compaq or its designee of an itemized account of
such  expenses  together  with  supporting  documentation.

     5.7. Full Consideration.  Executive's  compensation and benefits under this
          ------------------
Agreement shall  constitute the full  consideration  to be paid to Executive for
any services rendered to the Group.  Compaq,  in its sole discretion,  may grant
additional  compensation or benefits to Executive in the form of bonuses,  stock
options, or other compensatory arrangements.

6.     Confidential  Information  and  Public  Remarks.
       -----------------------------------------------

     6.1.     Unique Position and Unique Harm.  Executive appreciates the unique
              -------------------------------
position  he  will  hold  as  Compaq's President and Chief Executive Officer and
understands  that  because  of  his  position Compaq will provide him unique and
broad  access  to  Confidential  Information,  including  matters related to all
members  of  the Group, the Group's business operations, and to third parties in
business  and  employment  relationships with the Group.  Executive acknowledges
that  the  business of the Group is highly competitive and that the Confidential
Information of the Group constitutes valuable, special, and unique assets of the
Group.  Executive  understands  that  in  his  position  with Compaq, investors,
business leaders, the media, the public, and governmental entities will view him
as  the  primary public representative of a corporate entity.  Executive further

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<PAGE>
understands  that  even  after his employment with Compaq ends, members of these
groups  will  continue  to perceive him as having unique information and insight
into  matters  involving  the  Group.  Executive acknowledges that his access to
Confidential  Information  and  the  public  attention  that  will attach to him
through his employment as President and Chief Executive Officer will, during and
after  the  termination  of  his  Compaq employment, place Executive in a unique
position  to  harm  Compaq,  its  employees,  officers,  directors, and entities
engaged in business with Compaq, through the disclosure of Compaq's Confidential
Information  or  through other public or private remarks.  Executive understands
the potentially significant negative financial and other impacts a former senior
executive's  remarks  can  cause  Compaq  as  a  publicly  held  corporation.

     6.2.     Therefore,  Executive  agrees  as  follows:

          6.2.1.  Disclosure and Misuse. Except in good faith furtherance of his
                  ----------------------
     duties to the Group, Executive shall not at any time directly or indirectly
     disclose  to  third  parties  or use  either  for  himself  or  others  any
     Confidential  Information  without first  obtaining the written  consent of
     Compaq.  Executive agrees that this prohibition applies to the Confidential
     Information of third parties that Executive obtains knowledge or possession
     of through his Compaq employment.  Any records of Confidential  Information
     prepared by Executive or that come into his  possession  or to which he has
     access  during his  employment  with Compaq  shall  remain the  property of
     Compaq. Upon termination of his employment with Compaq, Executive shall not
     remove any such records or copies thereof and shall deliver such records or
     copies in his personnel  possession to Compaq.  Executive  understands  and
     agrees that this duty of  non-disclosure  and proper use shall  survive the
     termination of his employment with Compaq.

          6.2.2.  Public Statement  Prohibition.  Executive shall refrain,  both
                  -----------------------------
     during the employment  relationship  and after the employment  relationship
     terminates,  from publishing or making any oral or written statements about
     any Group  member or any Group  member's  directors,  officers,  employees,
     agents or  representatives,  that are  derogatory or  disparaging,  or that
     constitute an intrusion into the seclusion or privacy of any Group member's
     directors,  officers,  employees,  agents or  representatives or that gives
     rise to publicity  about private  matters  concerning of any Group member's
     directors,  officers,  employees, agents or representatives,  or that place
     any Group  member or any Group  member's  directors,  officers,  employees,
     agents or representatives in a false or misleading light before the public.
     The  courts  may  enjoin  a  violation  or  threatened  violation  of  this
     prohibition.  The rights  afforded the Group  members and their  directors,
     officers,  employees,  agents and  representatives  in this  section are in
     addition to any and all rights and remedies otherwise afforded by law.

          6.2.3.  Liquidated Damages for Breach.  Executive agrees that a breach
                  -----------------------------
     of his paragraph 6.2. duties would likely  negatively impact Compaq's stock
     price, its business good will, its reputation with customers and investors,
     and its relationships  with partners,  suppliers,  vendors,  and employees.
     Executive agrees that while potentially  financially material to the Group,
     the damages he could cause the Group through a breach of the obligations he
     assumes in paragraphs 6.2.1. and 6.2.2.  would not be readily measurable in
     terms of legal  damages.  Therefore,  Executive  agrees  that if  Executive
     breaches  his  obligations  under  paragraphs  6.2.1.  or  6.2.2.  of  this
     Agreement,  Compaq  shall be  entitled to an amount of  liquidated  damages
     determined in accordance with this paragraph.

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<PAGE>
               6.2.3.1. The parties agree that,  except as to injunctive  relief
                    available under paragraph 6.2.2.,  this Article 6 is subject
                    to the parties'  agreement to arbitration set out in Article
                    11.  The  parties  agree  that if an  arbitrator  determines
                    Executive has breached his Article 6  obligations,  then the
                    arbitrator  shall  award  Compaq  liquidated  damages.   The
                    parties  agree  that  the  arbitrator  shall  determine  the
                    liquidated  damage award by multiplying the number of shares
                    of  Compaq  stock  then  outstanding  by  a  multiplier  the
                    arbitrator  selects  from a  range  with a  minimum  of five
                    one-hundredths of a cent ($0.0005) to a maximum of two cents
                    ($0.02) per  outstanding  share.  The parties agree that the
                    arbitrator shall select the multiplier from this range based
                    on the arbitrator's assessment of (a) the scope and severity
                    of  Executive's  breach,  and (b)  the  scope  and  probable
                    magnitude  of damage to  Compaq,  its  employees,  officers,
                    directors,  and  entities  engaged in business  with Compaq,
                    considering  the impact of  Executive's  breach on,  without
                    limitation,  Compaq's  stock price,  business good will, and
                    reputation  with  customers,  investors,  and other entities
                    engaged in business with Compaq.  The parties agree that for
                    purposes of this  paragraph the arbitrator  shall  determine
                    the number of  outstanding  shares by  reference to the then
                    most recently filed Quarterly  Report Pursuant to Section 13
                    or 15(d) of the Securities  Exchange Act of 1934 (Form 10Q).
                    Executive acknowledges that as of March 31, 1999, Compaq had
                    approximately  1,691,000,000  shares outstanding and that if
                    an arbitrator  awarded  Compaq a remedy under this paragraph
                    the minimum damages, based on the number foregoing number of
                    outstanding  shares,  would  equal one  million  six hundred
                    ninety-one thousand dollars ($845,000.00).  Executive agrees
                    that the above liquidated  damage range and calculations are
                    reasonably  related to the harm that he would  cause  Compaq
                    through a breach of his  paragraph  6.2.  duties.  Executive
                    further agrees that this liquidated damage calculation would
                    be an  appropriate  remedy  for  Compaq and is not a penalty
                    against him.

               6.2.3.2.  The  parties  agree  that if an  arbitrator  finds that
                    Executive  engaged in conduct that  constitutes  a breach of
                    his  paragraph  6.2.  obligations  only,  and  provided  the
                    arbitrator awards Compaq liquidated damages hereunder, then,
                    except as to Compaq's rights under  paragraphs  9.4.,  9.5.,
                    9.6.,  9.7. and 9.8., the remedy  provided  under  paragraph
                    6.2.3.  shall be Compaq's  exclusive remedy in damages.  The
                    parties  further  agree  that if an  arbitrator  finds  that
                    Executive has breached his paragraph  6.2.  obligations  and
                    also finds that Executive has breached duties or obligations
                    under  other  Articles  of this  Agreement,  then the remedy
                    available to Compaq under this paragraph shall not be deemed
                    exclusive but shall be in addition to the remedies available
                    under such other Article(s).

                                        8
<PAGE>
7.     Intellectual  Property.
       ----------------------

     7.1.     Access, Protection, Disclosure and Misuse.  Executive acknowledges
              -----------------------------------------
that  the Group's Intellectual Property is confidential business information and
trade  secrets  that  are  valuable,  special,  and unique assets that the Group
members  use in their business to obtain competitive advantage over competitors.
Executive  further  acknowledges  that  protection of such Intellectual Property
against  unauthorized  disclosure  or use is of critical importance to the Group
members  in  maintaining  their  competitive position.  Executive agrees that he
will  not,  at  any  time  during  or  after  his employment by Compaq, make any
unauthorized disclosure of any Group member's Intellectual Property, or make any
use  thereof,  except  in  carrying  out  his employment responsibilities.  As a
result of Executive's employment by Compaq, Executive may from time to time have
access  to,  or  knowledge  of,  Intellectual Property of third parties, such as
customers,  suppliers,  partners, joint venturers, and the like.  Executive also
agrees  to  preserve  and  protect  the  confidentiality  of  such  third  party
Intellectual  Property  to  the  same extent, and on the same basis, as Compaq's
Intellectual  Property.  These  obligations  apply  irrespective  of whether the
information  has  been  reduced to a tangible medium of expression (e.g. is only
maintained in the minds of the Group's employees) and, if it has been reduced to
a  tangible  medium, irrespective of the form or medium in which the information
is  embodied.

     7.2.     Assignment.  During  the  term  of his employment, Executive shall
              ----------
promptly  disclose  in  writing  to  Compaq  any  Intellectual Property, whether
originated,  conceived, created, made, developed or invented in whole or in part
by  him,  and maintain adequate and current records thereof.  Executive assigns,
transfers,  and  conveys  to Compaq, or its designees or successors, Executive's
entire  right,  title  and  interest  in  any  Intellectual  Property  that  he
originates,  conceives,  creates,  makes,  develops  or  invents whether as sole
inventor,  creator,  developer  or  originator  or as a joint inventor, creator,
developer  or  originator  with others, whether made within or without the usual
working  hours  or  upon  the  premises  of  the  Group or elsewhere, during his
employment.

     7.3.     Cooperation.  The  parties  agree  that  if  after the Termination
              -----------
Date,  Executive  performs  an act at Compaq's request or direction, or provides
assistance  to  Compaq,  as  described  in  this  paragraph,  then  Compaq shall
compensate  Executive  for  his  time at a rate of one thousand dollars per day.
Either  during  or subsequent to Executive's employment, upon the request and at
the  expense  of  Compaq,  but  for  no  consideration  in  addition to that due
Executive  pursuant  to his employment with Compaq and this Agreement, Executive
shall  execute,  acknowledge,  and  deliver  to  Compaq  or  its  designee  any
instruments  that  in  the  judgement of Compaq may be necessary or desirable to

                                        9
<PAGE>
secure  or  maintain  for the benefit of Compaq or its designee adequate patent,
copyright,  and  other  property  rights  with  respect to Intellectual Property
within  the scope of this Agreement, including, but not limited to: (a) domestic
and  foreign  patent  and copyright applications, (b) any other applications for
securing,  protecting,  or  registering  property  rights,  and  (c)  powers  of
attorney,  assignments,  oaths,  affirmations,  supplemental  oaths  and  sworn
statements.  Executive  shall  also assist Compaq or its designee as required to
draft  such  instruments,  to  obtain  such  rights, and to enforce such rights,
provided  that  such  assistance  will not unreasonably interfere with his other
endeavors.

     7.4.  Enforcement.  Executive  acknowledges that money damages would not be
           -----------
sufficient  remedy for any  breach of this  Article 7 by  Executive,  and Compaq
shall be entitled to specific  performance and injunctive relief as remedies for
such breach or any  threatened  breach.  Such  remedies  shall not be deemed the
exclusive remedies for a breach of this Article, but shall be in addition to all
remedies  available  at law or in equity to Compaq  including  the  recovery  of
damages from Executive and his agent involved in such a breach.

8.     Non-Competition.  Compaq  shall disclose to Executive, or place Executive
       ---------------
in  a  position  to  have  access  to,  or  develop, Confidential Information or
Intellectual Property of the Group; and/or shall entrust Executive with business
opportunities  of  the  Group;  and/or  shall  place  Executive in a position to
develop  business  good will on behalf of the Group. Executive acknowledges that
he  will  require  such  access  to successfully perform his duties on behalf of
Compaq.

     8.1.     Consideration.  As  part of the consideration for the compensation
              -------------
and  benefits  to  be  provided  to  Executive  hereunder;  to  protect  the
confidentiality  of the Intellectual Property or Confidential Information of the
Group  that  will be disclosed or entrusted to Executive, the business good will
of  the Group that will be developed in Executive, or the business opportunities
that  the  Group  will  disclose  or  entrust to Executive; and as an additional
incentive for Compaq to enter into this Agreement, Compaq and Executive agree to
the  non-competition  provisions  of  this  Article  8.

     8.2.     Obligation.  Executive  agrees  that  during  the  period  of
              ----------
Executive's  non-competition obligations hereunder, Executive will not, directly
or  indirectly  for  Executive  or  for others, in any geographic area or market
where  a  Group  member is conducting any business as of the Termination Date or
have  during  the  previous  twelve  months  conducted  any  business:

          8.2.1. engage in any business  competitive with the business conducted
     by any Group member;

          8.2.2.  render advice or services to, or otherwise  assist,  any other
     person,  association,  or entity who is engaged, directly or indirectly, in
     any business  competitive with the business  conducted by any Group member;
     or

          8.2.3. solicit or induce any employee of any Group member to terminate
     his or her  employment  with the  Group  member,  or hire or  assist in the
     hiring of any such  employee  by any  person,  association,  or entity  not
     affiliated with the Group.

                                       10
<PAGE>
These  non-competition  obligations  shall  extend for so long as Compaq employs
Executive  or,  if  the  employment  terminates, for twenty-four months from the
Termination  Date.

     8.3.     Acknowledgement  of  Limitations  and  Remuneration.  Executive
              ---------------------------------------------------
understands  that  the foregoing restrictions may limit his ability to engage in
certain  businesses  anywhere in the world during the period provided for above,
but  acknowledges that Executive will receive sufficiently high remuneration and
other  benefits  (e.g. the right to receive a Separation Payment under paragraph
9.1)  under  this Agreement to justify such restriction.  Executive acknowledges
that money damages would not be sufficient remedy for any breach of this Article
8  by  Executive,  and  Compaq  shall  be  entitled  to specific performance and
injunctive  relief  to  enforce  these  provisions  or  to  remedy  a  breach or
threatened  breach  of  these provisions.  Such remedies shall not be deemed the
exclusive  remedies  for a breach of this Article, but shall be in additional to
all  remedies  available  at  law  or  in  equity  to Compaq, including, without
limitation,  the  recovery  of  damages from Executive and his agent involved in
such  breach.

     8.4.     Modification  by  Court.     It is expressly understood and agreed
              -----------------------
that  Compaq and Executive consider the restrictions contained in this Article 8
to  be  reasonable  and  necessary for the purposes of preserving and protecting
Compaq's Intellectual Property and other Confidential Information, business, and
goodwill.  Nevertheless,  if  any  of  the aforesaid restrictions are found by a
Court  having jurisdiction to be unreasonable or overbroad as to geographic area
or time, or otherwise unenforceable, the parties intend for the restrictions set
forth herein to be modified by such Court so as to be reasonable and enforceable
and,  as  so  modified  by  the  Court,  to  be fully enforced.  Compaq shall be
entitled to enforce the provisions of this Article 8 by resorting to appropriate
legal  and  equitable  action.

9.     Termination  of  Employment.
       ---------------------------

     9.1.     Separation  Payment.  Subject  to  Executive's  execution  of  a
              -------------------
Release,  Executive  shall be entitled to a Separation Payment in the event that
his employment with Compaq is terminated due to any one or more of the following
events:

          9.1.1. Compaq terminates Executive's employment without cause;

          9.1.2.   Executive   resigns  his  employment  and  all  positions  of
     responsibility  with the Group  within  ninety  days after he is removed as
     President or Chief Executive Officer or is assigned duties  inconsistent in
     a material respect with his position as Chief Executive Officer;

          9.1.3.  Executive  resigns  his  employment  within  ninety days after
     Compaq  notifies  Executive  in  writing  that the Board of  Directors  has
     decided to establish  Executive's annual base salary at an amount less than
     75% of his  highest  annual  base  salary from Compaq in effect at any time
     under this  Agreement  unless  such  reduction  occurs as part of a general
     reduction in base salary applicable to all of Compaq's executive  officers;
     or

                                       11
<PAGE>
          9.1.4.   Executive  resigns  his  employment  within  ninety  days  of
     receiving  notice from  Compaq of its intent to  terminate  this  Agreement
     pursuant to Article 3.

          9.1.5.  Executive  terminates his employment  under  circumstances  in
     clauses 9.1.1.  through  9.1.4.,  inclusive,  and such  termination  occurs
     within  ninety  days  after a Change in  Control.  In the  event  Executive
     resigns under this section  9.1.5.,  then,  subject to paragraph  9.3., the
     Separation   Payment  shall  be  equal  to  three  times  Executive's  Base
     Compensation.

     9.2.     No  Separation  Payment.  Executive  shall  not  be  entitled to a
              -----------------------
Separation  Payment in the event his employment with Compaq is terminated due to
any  of  the  following  events:

          9.2.1. Executive dies during the term of this Agreement;

          9.2.2.  Executive  resigns his  employment  at any time for any reason
     other than as specifically set forth in paragraph 9.1;

          9.2.3.  Executive  resigns his employment after he becomes Disabled or
     his employment is terminated after he becomes Disabled;

          9.2.4. Compaq terminates Executive's employment for Cause; or

          9.2.5. Executive's employment terminates for any reason after the term
     of this Agreement has expired.

Upon  termination  of  Executive's  employment  for  Cause under this Agreement,
Executive  shall  be  entitled  to receive the monthly installment of his annual
salary being paid at the time of such termination and any other reimbursement or
allowance  required  under  this  Agreement  through  the  Termination  Date.
Thereupon,  this  Agreement  shall terminate and Executive shall have no further
rights  under  or  be entitled to any other benefits of this Agreement, provided
that  (a)  the  provisions  of Articles 6, 7, 8, and 11 through 18 shall survive
such  termination  and  (b)  Executive's rights, claims, or causes of action, if
any,  under  (i)  stock  options  granted  by Compaq, (ii) any Compaq retirement
benefits  accrued  to  Executive,  and (iii) any other benefit program for which
Executive  is  eligible,  shall  survive  such  termination.

     9.3.     Release  of  Claims.  Executive agrees that his right to receive a
              -------------------
Separation  Payment is subject to his execution of a Release of Claims within 30
days  after  the  Termination  Date.

                                       12
<PAGE>
     9.4.     Payment  Schedule.
              -----------------

          9.4.1.  Initial and  Installment  Payments.  Within ten business  days
                  ----------------------------------
     after  Compaq's  receipt of  Executive's  executed  Release,  Compaq  shall
     deliver to Executive a cashier's  check or wire transfer in an amount equal
     to 25% of the Separation Payment.  Compaq shall pay Executive the remaining
     75% of the  Separation  Payment in equal  installments,  without  interest,
     commencing on Compaq's second  regularly  scheduled payday after receipt of
     Executive's  signed  Release  and  ending  twenty-four  months  later  (the
     "Separation Pay Period").  The Separation  Payment shall be subject to such
     deductions  and  other  withholding  as are  required  by  law.  Except  as
     otherwise set forth in this Agreement,  the Separation  Payment shall be in
     addition  to and shall not be offset or  reduced  by (a) any other  amounts
     that have  accrued or have  otherwise  become  payable to  Executive or his
     beneficiaries, but have not been paid by Compaq at the time such Separation
     Payment   becomes   payable   pursuant   to  this   section   and  (b)  any
     indemnification  payments  that may have  accrued but have not been paid or
     that may thereafter become payable to Executive  pursuant to the provisions
     of Compaq's Certificate of Incorporation,  as amended,  By-laws, or similar
     policy,  plan or agreement relating to the  indemnification of directors or
     officers of Compaq under certain circumstances.

          9.4.2.  Termination  of Payments.  Executive  agrees that his right to
                  ------------------------
     continued  payment  of  the  Separation  Payment  installments  during  the
     Separation  Pay Period is contingent  upon his  compliance  with all of the
     terms and  conditions of this  Agreement.  Executive  agrees that,  without
     prejudice to other rights  Compaq may have,  Compaq shall have the right to
     discontinue,  and  Executive  shall  forfeit all rights to,  payment of the
     remaining   Separation  Payment  installments  if  Executive  breaches  any
     provision,  duty, or obligation  Executive  has under this  Agreement.  The
     parties agree that Compaq shall exercise its rights under this paragraph by
     delivering a written notice to Executive  setting out the  circumstances of
     Executive's breach.

     9.5.     Stock  Options.
              --------------

          9.5.1. Vesting Period. In the event that Executive becomes entitled to
                 --------------
     a  Separation  Payment  under any  section of  paragraph  9.1.,  except for
     section  9.1.5.,  Executive  shall,  for the duration of the Separation Pay
     Period,  continue  vesting in any unvested stock options Compaq granted him
     prior to the  Termination  Date as if Executive had continued in employment
     during such period.  Executive's  vesting under this section shall cease if
     Compaq  terminates  payment of the Separation  Payment  installments  under
     paragraph 9.4.2.

          9.5.2.  Exercise Period.  In the event that Executive becomes entitled
                  ---------------
     to a Separation  Payment  under any section of paragraph  9.1.,  except for
     section  9.1.5.,  the period during which Executive shall have the right to
     exercise  vested stock  options  granted  under any stock option  agreement
     between  Compaq and  Executive  shall be extended to the earlier of (a) the
     expiration of the term of the option,  or (b) the twelve-month  anniversary
     of the  payment  of the final  Separation  Payment  installment.  If Compaq
     terminates payment of the Separation  Payment  installments under paragraph
     9.4.2.,  then the  exercise  period  shall  end on the  earlier  of (a) the
     expiration of the term of the option,  or (b) the twelve-month  anniversary
     of the date of the written notice provided for in paragraph 9.4.2.

                                       13
<PAGE>
     9.6.     Restricted  Stock  Vesting.  In  the  event that Executive becomes
              --------------------------
entitled  to  a Separation Payment under any paragraph of paragraph 9.1., except
for  section 9.1.5., then Compaq shall vest Executive in the Restricted Stock as
provided in this paragraph.  Vesting under this paragraph shall be effective one
hundred  eighty calendar days after the Termination Date, provided Executive has
remained  in  compliance  with  his obligations under this Agreement during that
period.  If  Executive  becomes  entitled  to vesting under this paragraph, then
Compaq  shall  vest  Executive  in  the number of shares of the Restricted Stock
determined  by  the  formula [(N/60 x 200,000) - Y] where N equals the number of
whole  calendar  months  in the period from the Effective Date to the end of the
calendar  year in which the Termination Date occurs (maximum of 60) and Y equals
the  number  of  shares  of  the Restricted Stock that have vested under section
5.4.2. of this Agreement as of the Termination Date.  The 200,000 in the formula
above shall be adjusted to the same extent that the original number of shares of
Restricted  Stock  is  adjusted  pursuant  to Section 4 (d) of the Plan due to a
stock  dividend,  subdivision,  or  combination  of  shares or reclassification.

     9.7.     Loan  to  Purchase Shares.     In the event that Executive becomes
              -------------------------
entitled to a Separation Payment under any paragraph of paragraph 9.1, or in the
event  of  termination of Executive's employment with Compaq under section 9.2.1
or  9.2.3,  Executive  may  satisfy  the  entire  outstanding balance, including
accrued  and  unpaid  interest,  of  the  loan  described  in  paragraph  5.5 by
transferring  to Compaq the shares which secure the loan. Except in the instance
of  termination  under  section 9.2.1 or 9.2.3, Executive's right to satisfy the
loan  in  the manner described in this section shall immediately cease if Compaq
terminates payment of the Separation Payment installments under paragraph 9.4.2.

     9.8.     Supplemental  Payment.  On  the ninety-day anniversary of Compaq's
              ---------------------
receipt  of  Executive's executed Release, and provided Executive is not then in
breach  of  his  obligations  and  duties under this Agreement, Compaq shall pay
Executive  a  supplemental  payment  equal  to  one  hundred  thousand  dollars
($100,000.00)  (the  "Supplemental Payment").  The Supplemental Payment shall be
subject  to  such deductions and other withholdings as are required by law.  The
Supplemental Payment shall be in lieu of any Compaq payment to Executive for tax
preparation  services,  financial  counseling,  security  system  monitoring,
accounting  or  legal  fees  necessitated  by  the  termination  of  Executive's
employment,  secretarial  services, outplacement services, and any other similar
purposes.

                                       14
<PAGE>
     9.9.     Health Benefit Continuation.  If Executive becomes  entitled  to a
              ---------------------------
Separation  Payment, Executive shall have the opportunity to continue his health
care  benefits,  and those of his eligible dependents, in accordance with COBRA.
The  parties  agree  that  during the six calendar months following the month in
which  the  Termination Date occurs, Compaq shall make any necessary payments or
adjustments  such  that  Executive  shall have the opportunity to continue these
health care benefits at the employee premium rate.  After this six-month period,
Executive  shall  have  the  opportunity  to continue such coverage at the COBRA
premium  rate.

10.     Gross-up  for  Excise Tax.  Compaq, at its sole expense, shall cause its
        -------------------------
independent auditors promptly to review all payments, distributions and benefits
that  have  been  made  to or provided to, and are to be made to or provided to,
Executive  under  this  Agreement,  and  any other agreement and plan benefiting
Executive,  to determine the applicability of Section 4999 of the Code.  If such
auditors determine that any such payments, distributions or benefits are subject
to  excise  taxes as provided under Section 4999 of the Code, then such payment,
distributions,  or benefits (the "Original Payment(s)") shall be increased by an
amount  (the "Gross-up Amount") such that, after the Company withholds all taxes
due,  including  any excise and employment taxes imposed on the Gross-up Amount,
Executive  will retain a net amount equal to the Original Payment(s) less income
and employment taxes, if any, imposed on the Original Payment(s).  To facilitate
the  calculation  of  the  applicable  excise  tax,  Executive agrees to provide
Compaq's  auditors  with  copies of Executive's Forms W-2 for the tax years they
deem  necessary for their use in determining the application of Section 4999 and
calculating  any  amounts  payable  under  this Article.  Compaq's auditors will
perform  the  calculations  in  conformance  with  the  foregoing provisions and
provide  Executive  with a copy of their calculation.  The intent of the parties
is that Compaq shall be solely responsible for, and shall pay, any Excise Tax on
the  Original Payment(s) and Gross-up Amount and any income and employment taxes
(including,  without limitation, penalties and interest) imposed on any Gross-up
Amount.  If  no  determination  by  Compaq's  auditors is made prior to the time
Executive  is  required  to  file  a  tax  return  reflecting any portion of the
Original  Payment(s),  Executive  will  be entitled to receive a Gross-up Amount
calculated on the basis of the Original Payment(s) Executive reports in such tax
return, within 30 days of the filing of such tax return.  Executive agrees that,
for  the purposes of the foregoing sentence, Executive is not required to file a
tax  return until Executive has obtained the maximum number and length of filing
extensions  available.  If  any  tax authority finally determines that a greater
Excise  Tax should be imposed upon the Original Payment(s) than is determined by
Compaq's independent auditors or reflected in Executive's tax returns, Executive
shall be entitled to receive the full Gross-up Amount calculated on the basis of
the  additional  amount  of  Excise  Tax  determined  to  be payable by such tax
authority  (including related penalties and interest) from Compaq within 30 days
of  such  determination as long as Executive has taken all reasonable actions to
minimize  any  such  amounts.  If  any tax authority finally determines that the
Excise  Tax  to  be  less  than  the  amount  taken  into  account  hereunder in
calculating  the Gross-up Amount, Executive shall repay to the Compaq, within 30
days  of  that determination, the portion of the Gross-up Amount attributable to
such  reduction (plus that portion of Gross-up Amount attributable to the Excise
Tax  and  federal,  state  and  local income and employment taxes imposed on the
Gross-up  Amount  being  repaid).

                                       15
<PAGE>
11.     Arbitration.
        -----------

     11.1.     The  parties  have agreed in various provisions of this Agreement
that Compaq shall be entitled to seek specific performance and injunctive relief
("Equitable  Relief")  to  enforce  or  remedy  breach  of  certain  obligations
Executive  has  assumed  herein.  The  parties  agree that Compaq shall exercise
these rights by seeking redress in a judicial forum possessing jurisdiction over
the  parties  and  the  subject  matter.

     11.2.     Except  for  actions  to  obtain  Equitable  Relief,  all claims,
demands,  causes  of  action, disputes, controversies, and other matters arising
out  of  or relating to this Agreement, any provision hereof, the alleged breach
hereof,  or  related  in  any  way  to  Executive's  employment  or the parties'
relationship,  even  though  some  or  all  of  such  claims  allegedly  are
extra-contractual  in  nature,  whether  such claims sound in contract, tort, or
otherwise,  at law or in equity, under state or federal law, whether provided by
statute  or  common  law, for damages or any other relief ("Arbitrable Claims"),
shall  be resolved by final and binding arbitration in Houston, Texas, under the
Federal  Arbitration  Act  in  accordance with the Employment Dispute Resolution
Rules  then in effect with the American Arbitration Association.  This paragraph
shall  apply  both  during  and  after termination of the parties' relationship.
Either  party  shall  have  the  right to enforce this agreement to arbitrate in
either  federal  or  state  court.

     11.3.     All  proceedings  and  documents  prepared  in  connection  with
any Arbitrable  Claim shall be Confidential  Information  and, unless  otherwise
required by law, the contents or subject  matter  thereof shall not be disclosed
to any  person  other  than  the  parties  to the  proceedings,  their  counsel,
witnesses  and  experts,  the  arbitrator,  and,  if  court  enforcement  of  an
arbitration award is sought, the court and court staff hearing such matter.

     11.4.     If any party to this Agreement institutes a proceeding to enforce
this agreement to arbitration, or institutes arbitration to enforce the terms of
this  Agreement,  the party who  prevails  in such  proceeding  or  arbitration,
whether plaintiff or defendant,  in addition to the remedy or relief obtained in
such  proceeding  or  arbitration  shall be entitled  to recover the  reasonable
expenses such  prevailing  party incurred in connection  with such proceeding or
arbitration, including, without limitation, attorneys fees and arbitrators fees.

12.     Notices.  For  purposes  of  this  Agreement,  notices  and  all  other
        -------
communications  provided  for  herein shall be in writing and shall be deemed to
have  been  duly given when personally delivered or when mailed by United States
registered  or  certified  mail,  return  receipt  requested,  postage  prepaid,
addressed  as  follows:

     12.1.  Compaq.
            ------
            Corporate  Secretary
            Compaq  Computer  Corporation
            20555  SH  249
            Houston,  TX  77070-2698

                                       16
<PAGE>
     12.2.  Executive.
            ---------
            Michael  D.  Capellas
            4011  Fulford  Court
            Katy,  TX  77450

Either  Compaq  or  Executive  may  furnish  a change of address to the other in
writing  except  that notices of changes of address shall be effective only upon
receipt.

13.     Controlling  Law.  Except  where  otherwise  provided  for  herein, this
        ----------------
Agreement  shall  be governed in all respects by the laws of the State of Texas,
excluding  any  conflict-of-law  rule  or  principle  that  might  refer  the
construction  of  the  Agreement  to  the  laws  of  another  State  or country.

14.     Separability  and  Construction.  It  is  the  desire  and intent of the
        -------------------------------
parties  that  the  terms, provisions, covenants, and remedies contained in this
Agreement  shall  be enforceable to the fullest extent permitted by law.  If any
such  term,  provision, or covenant of this Agreement or the application thereof
to  any person, association, or entity or circumstances shall, to any extent, be
construed by an arbitrator or a court to be invalid or unenforceable in whole or
in  part,  then such term, provision, or covenant shall be construed in a manner
so  as  to  permit  its  enforceability  under the applicable law to the fullest
extent  permitted  by  law.  If  an  arbitrator or a court shall declare void or
unenforceable  any  remedy  provided  in  any  part  of this Agreement, then the
arbitrator  or court shall award, instead of the invalid remedy, such damages or
other remedy as would ordinarily be available at law or equity. In any case, the
remaining provisions of this Agreement or the application thereof to any person,
association,  or  entity  or  circumstances, other than those to which they have
been  held  invalid  or  unenforceable,  shall  remain in full force and effect.

15.     Waiver of Breach.  No failure by either party hereto at any time to give
        ----------------
notice  of  any breach by the other party of, or to require compliance with, any
condition  or provision of this Agreement shall be deemed a waiver of similar or
dissimilar  provisions  or  conditions  at  the  same  time  or  at any prior or
subsequent  time.

16.     Entire Agreement.  Except as provided in written Compaq policies dealing
        ----------------
with  issues  such  as securities trading, business ethics, governmental affairs
and  political  contributions,  delegation  of  authority,  compliance with law,
conflicts  of  interest,  and  the like, this Agreement, as amended from time to
time,  shall  constitute the entire understanding relating to the services to be
performed  by  Executive  for  the Group, and, except as to any agreements as to
indemnification, any previous employment or other agreements, whether written or
oral,  between  Compaq  and Executive shall be deemed to be revoked and canceled
for  all  purposes  as  of  the  Effective  Date.

17.     Modification  in  Writing.  No  addition  to,  or  modification of, this
        -------------------------
Agreement  shall  be  effective,  unless  it  is  in  writing and signed by both
parties.

                                       17
<PAGE>
18.     Paragraph  Headings.  The headings in this Agreement are for convenience
        -------------------
of reference and shall not be used in the interpretation or construction of this
Agreement.

19.     Assumption  of  Obligations.  Compaq agrees that it shall not enter into
        ---------------------------
any  merger,  reorganization,  sale  of  substantially  all  its assets or other
similar  agreement  or  transaction  without  specifically  providing  that  any
successor  entity  shall  assume the obligations of Compaq hereunder.  Executive
agrees  that  Compaq  may  assign  its rights hereunder to such successor entity
provided  that  such assignment shall not offset, reduce, or diminish any rights
that  shall  accrue  to  Executive as a result of any Change in Control that may
thereby  occur.  Except  as  set  forth  in  this Article 19, neither Compaq nor
Executive  shall  assign  their  rights under this Agreement without the written
consent  of  the  other  party.

20.     Execution.  The  parties  may  execute  this  Agreement  in  multiple
        ---------
counterparts,  each  of which shall be deemed an original and all of which shall
constitute  one  instrument.  Executive  agrees that he has read this Agreement,
had  the  opportunity to consult with an attorney of his choice, and understands
that  signing  this  Agreement  is  a  condition  of  employment.  Executive
acknowledges  that this Agreement contains a liquidated damages provision and an
arbitration  provision.

                                       18
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IN  WITNESS WHEREOF, executed this 30 day of July 1999 and  effective as of the
Effective  Date.

COMPAQ  COMPUTER  CORPORATION                  EXECUTIVE

By: /s/ Peter N. Larson                        /s/ Michael D. Capellas
   --------------------------                  -----------------------
   Peter N. Larson                             Michael  D.  Capellas
   Chairman, Human Resources
   Committee

                                       19
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Exhibit  A  to  Employment  Agreement  between  Compaq  Computer Corporation and
Michael  D.  Capellas

                                Release of Claims

I  acknowledge that I have had twenty-one days to decide whether to execute this
Release  of  Claims  ("  Release")  and  that  I have been advised in writing to
consult  an  attorney  before executing this Release.  I acknowledge that I have
seven  days  from  the  date  I  execute this Release to revoke my signature.  I
understand  that  if  I  choose to revoke this Release I must deliver my written
revocation  to  Compaq  before  the  end  of  the  seven-day  period.

     Excepts  as  to  rights  provided  me  in  the Employment Agreement, I, FOR
MYSELF,  MY  HEIRS, SUCCESSORS, AND ASSIGNS DO HEREBY SETTLE, WAIVE, AND RELEASE
COMPAQ COMPUTER CORPORATION ("COMPAQ") AND ANY OF ITS PAST AND PRESENT OFFICERS,
OWNERS,  STOCKHOLDERS,  PARTNERS,  DIRECTORS,  AGENTS,  EMPLOYEES,  SUCCESSORS,
PREDECESSORS,  ASSIGNS,  REPRESENTATIVES, ATTORNEYS, DIVISIONS, SUBSIDIARIES, OR
AFFILIATES  FROM  ANY  AND  ALL  CLAIMS,  CHARGES,  COMPLAINTS, RIGHTS, DEMANDS,
ACTIONS,  AND  CAUSES  OF ACTION OF ANY KIND OR CHARACTER, IN CONTRACT, TORT, OR
OTHERWISE,  BASED  ON ACTIONS OR OMISSIONS OCCURRING IN THE PAST AND/OR PRESENT,
AND  REGARDLESS  OF WHETHER KNOWN OR UNKNOWN TO ME AT THIS TIME, INCLUDING THOSE
NOT  SPECIFICALLY  MENTIONED  IN  THIS  RELEASE.  AMONG  THE RIGHTS, CLAIMS, AND
CAUSES  OF  ACTION  WHICH  I  GIVE  UP  UNDER  THIS RELEASE ARE THOSE ARISING IN
CONNECTION  WITH  MY  EMPLOYMENT AND THE TERMINATION OF MY EMPLOYMENT, INCLUDING
RIGHTS  OR  CLAIMS  UNDER  FEDERAL,  STATE AND LOCAL FAIR EMPLOYMENT PRACTICE OR
DISCRIMINATION  LAWS  (INCLUDING  THE  VARIOUS  CIVIL  RIGHTS  ACTS,  THE  AGE
DISCRIMINATION IN EMPLOYMENT ACT, THE EQUAL PAY ACT, AND THE TEXAS COMMISSION ON
HUMAN  RIGHTS  ACT),  LAWS PERTAINING TO BREACH OF EMPLOYMENT CONTRACT, WRONGFUL
TERMINATION  OR  OTHER WRONGFUL TREATMENT, AND ANY OTHER LAWS OR RIGHTS RELATING
TO  MY  EMPLOYMENT  WITH  COMPAQ  AND  THE  TERMINATION  OF  THAT EMPLOYMENT.  I
ACKNOWLEDGE  THAT  I  AM  AWARE  OF  MY  RIGHTS  UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT  ACT,  AND  THAT I AM KNOWINGLY AND VOLUNTARILY WAIVING AND RELEASING
ANY  CLAIM  OF AGE DISCRIMINATION WHICH I MAY HAVE UNDER THAT STATUTE AS PART OF
THIS  RELEASE.   THIS AGREEMENT DOES NOT WAIVE OR RELEASE ANY RIGHTS, CLAIMS, OR
CAUSES  OF ACTION THAT MAY ARISE FROM ACTS OR OMISSIONS OCCURRING AFTER THE DATE
I  EXECUTE  THIS  RELEASE.  I AGREE NOT TO BRING OR JOIN ANY LAWSUIT OR FILE ANY
CLAIM  AGAINST  COMPAQ IN ANY COURT RELATING TO MY EMPLOYMENT OR THE TERMINATION
OF  MY  EMPLOYMENT.

_________________________          Date:  ________________________
Michael  D.  Capellas


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