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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 2002
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEWLETT-PACKARD COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-1081436
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3000 HANOVER STREET, PALO ALTO, CALIFORNIA 94304
(650) 857-1501
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ANN O. BASKINS, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
3000 HANOVER STREET, PALO ALTO, CALIFORNIA 94304
(650) 857-1501
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
CHARLES N. CHARNAS, ESQ. MARTIN W. KORMAN, ESQ.
MELANIE D. VINSON, ESQ. BRADLEY L. FINKELSTEIN, ESQ.
HEWLETT-PACKARD COMPANY WILSON SONSINI GOODRICH & ROSATI
3000 HANOVER STREET PROFESSIONAL CORPORATION
PALO ALTO, CA 94304 650 PAGE MILL ROAD
(650) 857-1501 PALO ALTO, CA 94304
(650) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this registration statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /_______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /_______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
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TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED (1) OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per
share (2) 21,126,566 (3) $2.50 to $74.61 $656,824,760 $60,428 (4)
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</Table>
(1) This registration statement shall also cover any additional shares of our
common stock which become issuable under the rights to purchase HP stock by
reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without our receipt of consideration that
results in an increase in the number of the outstanding shares of our
common stock.
(2) Each share of common stock includes a right to purchase one one-thousandth
of a share of Series A Participating Preferred Stock.
(3) Represents the estimated maximum number of shares of common stock of the
Registrant to be issued upon the exercise of options and other rights to
acquire common stock of former employees and directors of Compaq Computer
Corporation ("Compaq") following the completion of the merger of a
wholly-owned subsidiary of the Registrant with and into Compaq (the
"Merger") based on the issuance of 0.6325 of a share of the Registrant's
common stock for one share of common stock of Compaq that the options and
rights were exercisable for immediately prior to the completion of the
Merger.
(4) Calculated solely for purposes of this offering under Rule 457(g) of the
Securities Act of 1933, as amended.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
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The information in this prospectus is not complete and may be changed. We
may not sell the securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
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Subject to Completion, Dated April 16, 2002
PROSPECTUS
HEWLETT-PACKARD COMPANY
21,126,566 Shares
COMMON STOCK
We are registering a total of up to 21,126,566 shares of our common
stock that are issuable to certain former employees and directors of Compaq
Computer Corporation upon their exercise of certain options and other rights to
purchase common stock that we assumed in connection with our merger transaction
involving Compaq. If all such former employees and directors purchase our common
stock subject to the assumed options and rights, we will receive aggregate
proceeds of up to approximately $656,824,760.
SEE "RISK FACTORS" ON PAGE 1 FOR INFORMATION YOU SHOULD CONSIDER BEFORE
BUYING THE SECURITIES.
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Our common stock is listed on the New York Stock Exchange Composite
Tape under the symbol "HWP." On April 15, 2002, the reported last sale price
of our common stock on the New York Stock Exchange Composite Tape was $17.88
per share.
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You should rely only on the information included in this prospectus. We
have not authorized anyone to provide you with different information. You should
not assume that the information in this prospectus is accurate as of any date
other than the date below.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This prospectus is dated _____, 2002
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TABLE OF CONTENTS
<Table>
<Caption>
PAGE
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Summary.................................................................1
Risk Factors............................................................1
The Company.............................................................1
Recent Developments.....................................................2
Compaq Computer Corporation Stock Plans.................................4
Overview.......................................................4
Eligibility....................................................7
Costs ......................................................7
Taxes....................................................7
U.S. taxes...............................................7
Nonqualified stock options and SARs......................7
Tax effects for HP.......................................8
Taxes outside the U.S....................................8
Dates and Deadlines............................................8
When to exercise.........................................9
Knowing HP's stock price................................10
Transactions..................................................10
How to exercise stock options...........................10
Exercise to buy/hold stock..............................12
Exercise to sell shares and cover costs.................13
Exercise to sell all shares.............................13
Paperless transactions..................................13
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How to exercise SARs....................................14
Rules and regulations.........................................14
Documentation.................................................16
Glossary......................................................17
Conclusion....................................................19
Where You Can Find More Information....................................20
Use Of Proceeds........................................................22
Plan Of Distribution...................................................22
Legal Matters..........................................................23
Experts ..............................................................23
</Table>
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SUMMARY
We are registering a total of up to 21,126,566 shares of our common
stock that are issuable to certain former employees and directors of Compaq
Computer Corporation ("Compaq") upon their exercise of certain options and other
rights to purchase common stock that we assumed in connection with our merger
transaction involving Compaq. Contained below are descriptions of the terms of
each of the Compaq stock plans to which these options or other rights to
purchase common stock may be subject. See "Compaq Computer Corporation Stock
Plans."
RISK FACTORS
Before acquiring any of the securities that may be offered hereby, you
should carefully consider the risks discussed in the section of our Form 10-Q,
filed March 12, 2002 for the fiscal quarter ended January 31, 2002, entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Factors That Could Affect Future Results," which is incorporated in
this document by reference.
THE COMPANY
We are a leading global provider of computing, printing and imaging
solutions and services for business and home, and are focused on making
technology and its benefits accessible to all. We currently organize our
operations into five major businesses.
o IMAGING AND PRINTING SYSTEMS provides printer hardware, supplies,
imaging products and related professional and consulting services.
Printer hardware consists of laser and inkjet printing devices,
which include color and monochrome printers for the business and
home, multi-function laser devices and wide- and large-format inkjet
printers. Supplies offer laser and inkjet printer cartridges and
other related printing media. Imaging products include all-in-one
inkjet devices, scanners, digital photography products, personal
color copiers and faxes. Professional and consulting services are
provided to customers on the optimal use of printing and imaging
assets.
o EMBEDDED AND PERSONAL SYSTEMS provides commercial personal computers
(PCs), home PCs, a range of handheld computing devices, digital
entertainment systems, calculators and other related accessories,
software and services for commercial and consumer markets.
Commercial PCs include the Vectra and e-PC desktop series, as well
as OmniBook notebook PCs. Home PCs include the Pavilion series of
multimedia consumer desktop PCs and notebook PCs. Digital
entertainment systems offer the DVD+RW drives as well as digital
entertainment center products. Handheld computing devices include
the Jornada handheld products which run on Pocket PC(R) software.
o COMPUTING SYSTEMS provides workstations, UNIX(R) servers, PC
servers, storage and software solutions. Workstations provide
UNIX(R), Windows and Linux-based systems. The UNIX(R) server
offering ranges from low-end servers to high-end scalable systems
such as the Superdome line, all of which run on our PA-RISC
architecture and the HP-UX operating system. PC servers offer
primarily low-end and mid-range products that run on the
Windows(R) and Linux(R) operating systems. Storage provides
mid-range and high-end array offerings, storage area networks and
storage area management and virtualization software, as well as
tape and optical libraries, tape drive mechanisms and tape media.
The software category offers OpenView and other solutions
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designed to manage large-scale systems and networks. In addition,
software includes telecommunications infrastructure solutions and
middleware.
o IT SERVICES provides customer support, consulting and outsourcing
delivered with the sales of HP solutions. Customer support offers a
range of high-value solutions from mission-critical and networking
services that span the entire IT environment to low-cost,
high-volume product support. Consulting provides industry-specific
business and IT consulting and system integration services in areas
such as financial services, telecommunications and manufacturing, as
well as cross-industry expertise in Customer Relationship Management
(CRM), e-commerce and IT infrastructure. Consulting also includes
complementary third party products delivered with the sales of HP
Solutions. Outsourcing offers a range of IT management services,
both comprehensive and selective, including transformational
infrastructure services, client computing managed services, managed
web services and application services to medium and large companies.
o FINANCING supports and enhances HP's global product and services
solutions. As a strategic enabler to HP, financing provides a broad
range of value-added financial services and computing and printing
utility offerings to large global and enterprise customers as well
as small and medium businesses and consumers. Financing offers
innovative, personalized and flexible alternatives to balance
individual customer cash flow, technology obsolescence and capacity
needs.
We were incorporated in 1947 under the laws of the State of California
as the successor to a partnership founded in 1939 by William R. Hewlett and
David Packard. Effective in May 1998, we changed our state of incorporation from
California to Delaware. Our principal executive offices are located at 3000
Hanover Street, Palo Alto, California 94304. Our telephone number is (650)
857-1501.
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UNIX is a registered trademark of the Open Group; Windows is a
registered trademark of Microsoft Corporation in the United States and/or other
countries; Linux is a registered trademark of Linus Torvalds.
RECENT DEVELOPMENTS
An Agreement and Plan of Reorganization, dated as of September 4, 2001,
was entered into by and among HP, Heloise Merger Corporation, a wholly-owned
subsidiary of HP, and Compaq (the "Merger Agreement"). The Merger Agreement
provides that Heloise Merger Corporation will merge with and into Compaq (the
"Merger") and Compaq will survive the merger as a wholly-owned subsidiary of HP.
Compaq is a leading global provider of information technology products,
services and solutions for enterprise customers. Compaq designs, develops,
manufactures and markets information technology equipment, software, services
and solutions, including industry-leading enterprise storage and computing
solutions, fault-tolerant business-critical solutions, communication products,
personal desktop and notebook computers and personal entertainment and Internet
access devices.
The Merger Agreement provides that upon completion of the merger,
holders of Compaq common stock will be entitled to receive 0.6325 of a share of
HP common stock for each share of Compaq common stock they then hold. In
addition, upon completion of the merger, HP will assume outstanding stock
appreciation rights and options to acquire shares of Compaq common stock, each
at the exchange ratio
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referred to in the preceding sentence, and assume certain Compaq stock plans.
HP shareowners will continue to own their existing shares of HP common stock
after the merger. The shares of HP common stock issued in exchange for shares
of Compaq common stock in connection with the merger will represent
approximately 35.7% of the outstanding shares of HP common stock immediately
following the completion of the merger, based on the number of shares of HP
and Compaq common stock outstanding on January 28, 2002.
The Merger Agreement provides that completion of the merger is subject
to customary closing conditions that include, among others, receipt of required
approvals from HP shareowners and from Compaq shareowners, respectively, and
receipt of required antitrust approvals. The merger was subject to review by the
United States Federal Trade Commission under the Hart-Scott-Rodino Improvements
Act of 1976, the European Commission under Council Regulation No. 4064/89 of the
European Community and by the Canadian Competition Bureau under the Competition
Act (Canada), among other governmental authorities. On December 20, 2001, the
Canadian Competition Bureau completed its review of the proposed merger and
found no issues of competitive concern. On January 31, 2002, the European
Commission issued a formal decision clearing the merger. On March 6, 2002, the
U.S. Federal Trade Commission closed its review of the merger and the waiting
period under the Hart-Scott-Rodino Act was terminated.
On February 5, 2002 HP filed a registration statement on Form S-4 with
the Securities and Exchange Commission containing a definitive joint proxy
statement/prospectus regarding the merger. On March 19, 2002, HP held a special
meeting of shareowners in order to consider and vote upon a proposal to approve
the issuance of shares in connection with the proposed merger. On March 20,
2002, Compaq held a special meeting of shareowners in order to consider and vote
upon a proposal to approve and adopt the Merger Agreement and approve the
merger.
On March 28, 2002, Walter B. Hewlett, individually and as Trustee of
the William R. Hewlett Revocable Trust, and Edwin E. van Bronkhorst, as
co-Trustee of the William R. Hewlett Revocable Trust, filed suit against HP
in the Delaware Court of Chancery, New Castle County. Mr. Hewlett is a
director of HP. The complaint, which is brought pursuant to Section 225 of
the Delaware General Corporation Law, alleges that HP management engaged in
improper conduct in the solicitation of proxies in connection with HP's
proposal to issue shares in connection with the merger. In particular, the
complaint alleges that HP used corporate assets to entice and coerce
financial institutions to vote in favor of the merger and made materially
misleading public statements regarding the planned integration of the two
companies. The complaint seeks, among other things, a declaration that
certain proxies are invalid, a decree that the proposal to issue shares in
connection with the proposed Compaq merger was defeated (or, in the
alternative, requiring a new vote after the re-solicitation of proxies), and
a preliminary and permanent injunction against HP completing the issuance of
HP shares in connection with the merger. On April 8, 2002, the Chancellor
denied HP's motion to dismiss the complaint. The matter is scheduled for
trial beginning on April 23, 2002. HP believes that the complaint is without
merit and intends to defend itself vigorously.
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COMPAQ COMPUTER CORPORATION STOCK PLANS
OVERVIEW
THE MERGER WITH HEWLETT-PACKARD
Under the terms of the Merger Agreement, Compaq Computer Corporation
("Compaq") is to become a wholly-owned subsidiary of Hewlett-Packard Company
("HP") upon completion of the Merger. In connection with the Merger, certain
Compaq stock plans and unexpired stock options and Stock Appreciation Rights
(SARs) granted under the following plans (the "Plans") are to be assumed by
HP:
o Compaq Computer Corporation 2001 Stock Option Plan,
o Compaq Computer Corporation 1998 Stock Option Plan,
o Compaq Computer Corporation 1995 Equity Incentive Plan,
o Compaq Computer Corporation 1989 Equity Incentive Plan,
o Compaq Computer Corporation Nonqualified Stock Option Plan for
Non-Employee Directors,
o Compaq Computer Corporation 1985 Stock Option Plan,
o Compaq Computer Corporation 1985 Executive and Key Employee Stock
Option Plan,
o Compaq Computer Corporation 1985 Nonqualified Stock Option Plan, and
o Compaq Computer Corporation 1998 Former Nonemployee Replacement
Option Plan.
In the Merger all shares will be converted from shares of Compaq common
stock into shares of HP common stock. If you received a stock option or SAR
prior to the Merger, then the number of shares covered by your stock option or
SAR after the Merger is determined as follows:
The number of Compaq shares covered by your stock option or SAR at the
effective time of the Merger is multiplied by 0.6325 (the "Exchange
Ratio"). The result, rounded down to the nearest whole number, is the
number of shares of HP common stock covered by your assumed stock
option or SAR immediately after the Merger.
If you received a stock option or SAR prior to the Merger, then the
exercise price of your stock option or SAR will be adjusted as a result of the
Merger. The per share exercise price of each stock option or SAR is determined
as follows:
The original exercise price per Compaq share (as shown in your stock
option or SAR agreement) is divided by 0.6325. The result, rounded up
to the nearest whole cent, is the stock option or SAR's exercise price
per share of HP stock immediately after the Merger.
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Each assumed stock option or SAR will continue to have, and remain
subject to, substantially the same terms and conditions as in effect immediately
before the Merger, except as described in this prospectus and the letter to be
provided regarding the conversion of your stock option or SAR.
After the Merger, awards may be granted by HP to eligible service
providers from the following assumed plans:
o Compaq Computer Corporation 2001 Stock Option Plan (under which
stock options and SARs may be issued to eligible employees and
directors of HP and its affiliates and approximately 50,600,000
shares of HP common stock are reserved for issuance),
o Compaq Computer Corporation 1998 Stock Option Plan (under which
stock options and SARs may be issued to eligible employees and
directors of HP and its affiliates and approximately 63,250,000
shares of HP common stock are reserved for issuance),
o Compaq Computer Corporation 1995 Equity Incentive Plan (under which
stock options and SARs may be issued to eligible employees of HP and
its affiliates and approximately 41,544,180 shares of HP common
stock are reserved for issuance), and
o Compaq Computer Corporation 1989 Equity Incentive Plan (under which
stock options, SARs and restricted stock may be issued to eligible
employees of HP and its affiliates and approximately 169,531,191
shares of HP common stock are reserved for issuance).
After the Merger, no stock options or SARs will be granted under the
following plans:
o Compaq Computer Corporation Nonqualified Stock Option Plan for
Non-Employee Directors (under which approximately 1,054,353 shares
of HP common stock are subject to outstanding awards),
o Compaq Computer Corporation 1985 Stock Option Plan (under which
approximately 2,761,838 shares of HP common stock are subject to
outstanding awards),
o Compaq Computer Corporation 1985 Executive and Key Employee Stock
Option Plan (under which approximately 456,952 shares of HP common
stock are subject to outstanding awards),
o Compaq Computer Corporation 1985 Nonqualified Stock Option Plan
(under which approximately 448,241 shares of HP common stock are
subject to outstanding awards), and
o Compaq Computer Corporation 1998 Former Nonemployee Replacement
Option Plan (under which approximately 55,345 shares of HP common
stock are subject to outstanding awards).
The shares of HP common stock issued under the Plans are authorized but
unissued shares. Participants generally may continue to exercise their stock
options and SARs in accordance with their terms. All stock options and SARs
granted prior to September 1, 2001 became fully vested on March 20, 2002.
GENERAL INFORMATION
Receiving a grant of stock options or SARs is a significant event. It
means you have the opportunity to benefit from HP's future growth at no up-front
cost or risk to you. Stock options and SARs are granted to employees for two
important reasons:
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o First, stock options and SARs are a way to reward you for your
contribution to Compaq's, and now HP's, success. The grant is part
of a total reward package that includes pay and other benefits.
o Second, by owning stock options or SARs, you can benefit from the
future growth in our stock price.
This prospectus provides important information about your stock options
and SARs and explains many of the considerations involved in using or
"exercising" them. It also explains the tax implications, both at the time you
exercise your stock options or SARs and at the time you sell any stock you may
acquire through the Plans.
WHAT IS STOCK?
When you own stock - or shares - in a company, you own a portion of
that company. Companies sell stock as a way to raise money - money that is then
used for a wide range of business purposes, like constructing buildings, buying
equipment, or funding research and development.
Generally, people invest in stock because they believe they can make a
profit from owning it over a period of time. Owners of stock - who are called
shareowners - hope to make profits by selling it for more than they paid for it
or through the receipt of dividends.
WHAT IS A STOCK OPTION?
One way a company can reward its employees is to give them stock
options. A stock option is just that - a stock option, or a choice - to buy
stock. Your stock options now give you the opportunity to buy HP stock in the
future at a price set today. If the stock price goes up, your stock options can
be very valuable. If the stock price goes down, then you simply don't use your
stock options - there's no risk to you.
WHAT IS A STOCK APPRECIATION RIGHT (SAR)?
In a few countries, it is not possible or practical to grant stock
options because of local regulations. In those countries, Stock Appreciation
Rights (SARs) are granted. A Stock Appreciation Right has the same general terms
and conditions as a stock option. You benefit from any increase in the value of
HP stock. HOWEVER, WITH SARS, THE EMPLOYEE CANNOT EXERCISE AND TAKE POSSESSION
OF THE UNDERLYING SHARES. Instead, when employees exercise, they receive a cash
payment from the company equal to the amount the current stock price exceeds the
exercise price of the SAR.
WHAT IS RESTRICTED STOCK?
HP will have the ability to issue stock as restricted stock to eligible
employees under the Compaq 1989 Equity Incentive Plan. The compensation
committee of the HP Board of Directors (the "Compensation Committee") will be
able to impose whatever conditions to vesting (or forfeiture) it determines to
be appropriate and may issue restricted stock for little or no cash
consideration. Prior to vesting, participants holding shares of restricted stock
may exercise full voting rights with respect to the shares and may receive all
dividends and other distributions paid with respect to the shares, unless the
Compensation Committee determines otherwise.
If HP grants an award of restricted stock, HP will send the participant
a written agreement (a "restricted stock agreement") between HP and the
participant. The restricted stock agreement will show the
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number of shares of restricted stock granted, the vesting schedule, and any
other terms and conditions that the Compensation Committee determines in its
discretion.
ELIGIBILITY
WHO IS ELIGIBLE TO PARTICIPATE IN THE PLANS?
Employees and directors of Compaq and its affiliates were eligible to
receive stock options, SARs and restricted stock from the Plans. After the
Merger, employees and directors of HP and its affiliates are eligible to receive
stock options, SARs and restricted stock from the assumed Plans. For purposes of
the Plans, an "affiliate" is any corporation or other entity (for example,
partnerships and joint ventures) controlling, controlled by, or under common
control with HP or Compaq. The Compensation Committee will have complete
authority to determine which employees and directors will be selected for future
participation in the assumed Plans.
COSTS
Unless required by local laws and/or regulations, there is no cost to
you at the time you first receive a grant of stock options or SARs. However, any
time you sell shares, you may be charged commissions and other fees. The income
from the exercise of the stock options may be subject to local taxation and
withholding taxes.
TAXES
When you exercise stock options or SARs, you may be subject to income
and other taxes according to local tax laws. U.S. taxes generally apply if you
live in the United States; however, taxation could depend on where you lived
when the shares vested. HP strongly suggests that you consult with a tax advisor
prior to exercising your stock option or SAR. Information about taxes outside
the U.S. is also provided below.
The following discussion is intended only as a summary of the general
U.S. income tax laws that apply to stock options and SARs. However, the federal,
state and local tax consequences to you will depend upon your individual
circumstances.
The following discussion assumes that the per share exercise price of a
stock option or SAR is less than the fair market value of a share on the date of
exercise.
U.S. TAXES
This section does not cover any state or local income tax consequences
associated with exercising a stock option or SAR, and does not purport to be a
complete discussion of all relevant federal income tax rules. HP does not give
tax advice and you are strongly urged to consult with your own tax advisor about
your individual circumstances.
NONQUALIFIED STOCK OPTIONS AND SARS
If you are granted a nonqualified stock option or SAR, you will not be
required to include an amount in income at the time of grant. However, when you
exercise the nonqualified stock option or SAR, you will have ordinary income to
the extent the value of the HP's stock on the date of exercise (and any cash)
you receive is greater than the exercise price you pay.
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For example, if you exercise 200 stock options with an exercise (stock
option) price of $25 per share when the stock's market value is $30 per share,
your gain is calculated as follows:
<Table>
Market value: 200 shares x $30 per share $6,000
Your exercise price: 200 shares x $25 per share -$5,000
Your gain: $1,000
</Table>
The gain of $1,000 is taxable at ordinary income tax rates. This gain
will be added to your W-2 income, and the company is required to withhold taxes
on this amount.
In accordance with federal law, HP will withhold a percentage of your
gain for federal income tax. HP must also withhold an additional amount for FICA
taxes.
If you buy and hold shares, or buy and sell only enough shares to cover
costs, you should maintain records on the shares you are holding. The market
value of these shares when you exercise your stock option becomes your cost
basis for these shares. Any gain or loss you recognize upon the sale or exchange
of the stock that you acquire generally will be treated as capital gain or loss
and will be long-term or short-term depending on whether you held the stock for
more than one year. The holding period for the stock will begin just after the
time you recognize income. The amount of such gain or loss will be the
difference between:
o the amount you realize upon the sale or exchange of the stock, and
o the value of the stock at the time you exercised your stock option.
Consult your tax advisor for more information on the tax treatment of a
future sale of stock. If you decide to keep shares of HP stock after exercising
your stock options, the amount of additional tax you'll pay at the time of a
later sale will also depend, in part, on how long you hold the shares.
TAX EFFECTS FOR HP
HP generally will receive a deduction for federal income tax purposes
in connection with a stock option or SAR equal to the ordinary income you
realize. HP will be entitled to its deduction at the time that you recognize the
ordinary income.
TAXES OUTSIDE THE U.S.
If you live outside the United States, please contact your local Stock
Option Administrator regarding tax withholding requirements. In many countries,
you are subject to local taxes on the income from stock option and SAR
transactions and the income may be subject to withholding taxes.
DATES AND DEADLINES
There are a number of key dates, deadlines and timing issues that
affect stock options and SARs.
o The grant date is the date on which you were granted your stock
options or SARs. Compaq or HP sets this date ahead of time.
o On the grant date, Compaq or HP determines:
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- How many shares you have the right to buy with your stock option
grant, or how many shares for which you will receive Stock
Appreciation Rights,
- The exercise price you will pay if you decide to buy shares
through your stock options, or that will be used to calculate
your gain for SARs,
- The vesting schedule, and
- The exercise period.
o You typically VEST in your stock options or SARs (which means
earning the right to exercise them) over a period of four years,
depending on the date of your grant.
Once you're vested, you have earned the right to buy shares, or receive
SAR gains, based on the market price on the grant date. Your grant notice will
specify the vesting schedule that applies to your grant.
ALL COMPAQ STOCK OPTIONS AND SARS GRANTED PRIOR TO SEPTEMBER 1, 2001
BECAME FULLY VESTED ON MARCH 20, 2002.
o When you exercise your stock options, you buy HP shares at the
exercise price determined on the grant date. The decision to
exercise is up to you. You may exercise all or part of your vested
stock options. After exercise, you can keep your shares, or sell
them at any time.
o Your exercise period - the period during which you have the right to
exercise your stock options - is generally 10 years, provided you
remain an employee. You must exercise your stock options or SARs
before they expire. Once the 10-year exercise period has passed, the
stock options and SARs are no longer valid. Please refer to the
employment status information below for more details.
WHEN TO EXERCISE
You should exercise your stock options or SARs when it makes the most
sense to do so, given your overall financial objectives. Only you and your
financial advisors can make that determination. Once you are vested, the
decision to exercise your outstanding stock options or SARs is always yours.
Exercising them is an important financial matter that should be considered as
carefully as any other long-term investment decision you make - like buying a
house, taking out a life insurance policy, or buying stock.
HP can't - and won't - tell you when to exercise, or when to sell any
stock you may acquire through your stock options. You must develop your own
strategy based on your financial goals. Before you exercise your stock options
or SARs, you may want to seek advice from a personal financial counselor or a
tax advisor.
You can exercise your stock options or SARs at any time after they
become vested, but before their expiration date. Please refer to the employment
status information below for more details.
If you originally received a stock option grant from another company
that was converted to an HP stock option, your grant will expire on its original
expiration date as long as you remain an employee. If you terminate employment
for any reason, the original terms of your grant will generally apply.
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You aren't required to exercise a stock option or SAR as soon as it
becomes vested. To the extent that HP's share price increases, so does the value
of your stock options or SARs. Remember, your exercise price does not change, so
if you wait to exercise and the stock price increases above your exercise (stock
option) price, you benefit from the increased value of HP's stock price. If the
stock price decreases below your exercise (stock option) price, you will not
recognize a benefit.
KNOWING HP'S STOCK PRICE
You can follow the daily price of HP stock in many newspapers and
through online resources. Depending on the resource used, the stock will be
listed under the New York Stock Exchange (NYSE) as "HWP."
No one can predict how any company's stock will perform. Many factors
can influence a stock's price, including the world's economy, our industry, the
company's recent performance, and the confidence of investors. If you consider
your HP stock as a long-term investment, you may be more concerned about the
stock's performance over longer periods of time, rather than daily fluctuations
in the stock price.
TRANSACTIONS
There are a number of different types of transactions involved with
stock options and SARs.
HOW TO EXERCISE STOCK OPTIONS
HP has arranged for employees to use a captive broker, currently
Salomon Smith Barney (SSB), a full-service stock brokerage firm, to exercise
stock options and sell shares on your behalf. This agreement includes three
different types of transactions:
o exercise to buy shares and hold the stock;
o exercise and sell enough shares to cover costs; and
o exercise to sell all shares.
Please refer to the buy/hold form and general instructions at Inline,
the Intranet website for employees.
Employees in participating countries can view, manage and execute a
sale of stock options on the Web using Benefit Access, a secure Internet site
managed by Salomon Smith Barney. Internet access to stock option accounts is
available at this time only to optionees in Canada, Czech Republic, Denmark,
Egypt, France, Hong Kong, Hungary, Ireland, Luxembourg, Malaysia, Morocco, New
Zealand, Saudi Arabia, Singapore, Slovakia, Spain, Sweden, United Arab Emirates,
and the United States. HP will offer this service to other countries as allowed
by local rules and regulations, through a phased rollout.
Please note that before you can access your account online, you MUST
REGISTER AND ACTIVATE YOUR ACCOUNT ONLINE, using security identifiers provided
by SSB. To register, follow the instructions on SSB's web site:
www.benefit.access.
Employees in participating countries may also access their stock option
accounts through Salomon Smith Barney's interactive telephone system at
1-877-636-7496 or 212-615-7835 if calling from outside the
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U.S. The automated phone system is available 24 hours, 7 days a week, and a
stock option to speak to a Customer Service Representative is available from 8
a.m. to 6 p.m. Eastern Time, Monday through Friday.
Employees outside the participating countries may request a statement
of your stock option/SAR account by contacting Employee Stock Services at
EmpEqtySvcs@Compaq.com or by calling 1-248-637-7780. For more information about
stock option grants please go to Inline.
Employees outside the participating countries must complete an exercise
form and fax it to SSB. The form and instructions can be found on Inline. If you
need assistance, call SSB at (650) 493-5335 for further information on
exercising your stock options. If SSB is not able to answer your question, ask
your local Stock Option Administrator or send an email to
EmpEqtySvcs@Compaq.com. If you do not have access to e-mail, you may call
Employee Stock Services at (248) 637-7780.
In addition to the exercise form, all employees outside the U.S. are
required to have an IRS Form W8-BEN on file with SSB prior to exercising your
stock options. A new form must be certified with SSB every three years.
More information about how to certify this form is available online at
Inline, or contact your local Stock Option Administrator.
Exercising your stock options through this arrangement offers several
advantages:
o SSB can instantly exercise your stock options and sell shares,
saving you time and money.
o SSB's services are provided by a group of brokers specially trained
in employee stock option plans. These services are not available
through local SSB brokerage offices.
o SSB automatically opens an account for you without any paperwork.
Your account information will not be used by any local SSB broker to
contact you for selling other services.
There are three ways you can exercise your stock options. The method
you select will depend on how you plan to use the stock you purchase. You may
want to hold your HP stock as a long-term investment or sell the stock and use
the cash for another purpose. You may exercise your vested stock options any
time before their expiration date. You do not have to exercise all of your
vested stock options at one time. You may exercise some, and wait to exercise
others.
You can choose from two methods to pay for your exercise:
o You may use your own money and pay cash, or
o You may sell some of the HP stock at the time you exercise your
stock options to cover the cost of buying the stock (plus applicable
fees and taxes) in a "cashless exercise."
The table below provides a brief summary of the methods for exercising
your stock options.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------------
METHOD OF EXERCISE HOW IT WORKS CONSIDERATIONS
- ---------------------------------------------------------------------------------------------------------------------------
Exercise to buy shares and hold the stock You pay cash to exercise the stock You pay the cash required to
option. exercise your stock option and
- ---------------------------------------------------------------------------------------------------------------------------
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- ---------------------------------------------------------------------------------------------------------------------------
cover taxes (if applicable). You
then fully own the shares and have
an investment in HP's future.
- ---------------------------------------------------------------------------------------------------------------------------
Exercise and sell enough shares to You buy the stock and sell a You do not use your own cash,
cover costs (cashless exercise) portion of it immediately to but you do end up holding HP
cover the full cost of the shares (but not the full
transaction (including the number of shares you exercised).
purchase price, applicable You fully own any remaining shares
withholding taxes, brokerage and have an investment in HP's
commissions, and fees). future.
- ---------------------------------------------------------------------------------------------------------------------------
Exercise to sell all shares (cashless You buy the stock and then You do not use your own cash,
exercise) sell all of it. The proceeds and you do not hold any HP
cover the full cost of the shares. You receive your
transaction (including the proceeds in cash. You have
purchase price, applicable given up any potential future
withholding taxes, brokerage gain from owning HP stock.
commissions, and fees).
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
As a stock option holder, you don't have voting rights or receive
dividends - to get these, you must exercise your stock options and keep the HP
stock you purchase. When you own HP stock, you have the same voting privileges
as other shareowners. You also share in HP's future success through dividends
and any increased value in stock price.
Some exercise methods may not be available in countries whose laws
prohibit them. The exercise methods described below are available in the United
States. For more information on local exercise restrictions, ask your local
Stock Option Administrator, contact Employee Stock Services, or send an e-mail
to EmpEqtySvcs@Compaq.com.
EXERCISE TO BUY/HOLD STOCK
If you want to keep all the shares from your exercise as an investment
in HP's future, you may want to choose a cash purchase exercise. You will pay
the total stock option price and applicable taxes and fees with your own money.
A cash purchase exercise means you use your own money to exercise your stock
option and buy HP stock at the exercise price.
With this method, you write a check or send the funds by wire transfer
to pay the purchase price for the shares. Your payment must be drawn from a U.S.
bank, must be in U.S. dollars and must include fees and taxes. The shares are
then transferred to an account in your name. In the U.S., you pay taxes on the
difference between your exercise price and the current market price of HP's
stock. The market value is set by using the closing price on the date the funds
are received by the broker. Because you are not selling any shares when you
exercise to buy/hold, you don't pay any brokerage commissions.
Here are the steps to execute a buy/hold:
o Complete the Stock Option Exercise Notice (available on Inline) to
tell the company how many stock options you want to exercise, your
exercise price per share (listed on your Stock Option Notice), and
the total purchase price for the stock options. Then send SSB your
Exercise Notice with a check or wire transfer for the amount of your
purchase plus applicable taxes and fees.
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o When SSB receives your request and payment, they will purchase the
shares on your behalf and transfer them to your account. The Fair
Market Value on the date funds are received will be used to process
your Buy/Hold exercise.
o You will receive an Option Exercise Confirmation Statement from SSB
and HP.
If you want to pay cash for your purchase (that is, the exercise price
times the number of stock options you are exercising), but don't want to pay
cash for taxes and fees, SSB can sell some shares from your exercise to cover
any required taxes and fees. The remaining shares will be transferred to your
account.
EXERCISE TO SELL SHARES AND COVER COSTS
If you don't want to pay cash to exercise your stock options, you may
choose a cashless exercise. In a cashless exercise, SSB immediately sells some
of the shares you exercise to pay for the shares you purchase plus taxes and
fees.
Of course, the current price for HP stock should be higher than your
exercise price for any exercise of stock options to make financial sense. The
broker sells only enough shares to cover the exercise price, commissions, fees,
and any applicable taxes, leaving you with the remaining shares to hold in your
account and benefit from any future increase in HP's stock price.
You can decide the price you are willing to accept for the shares you
are selling by placing a market order or a limit order with SSB.
o MARKET ORDER is when you exercise a stock option and then sell
shares at the current price of HP stock on the New York Stock
Exchange.
o LIMIT ORDER is when you exercise a stock option and then sell shares
only if your HP stock can be sold at a specified price (usually a
higher price than the price at which HP shares are currently
trading). If you place a limit order, you can change or remove it at
any time.
EXERCISE TO SELL ALL SHARES
When you exercise your stock options with this method, the broker sells
all your shares, withholds applicable taxes, commissions, and fees, and gives
you the remaining money in cash. You will not benefit from any future increase
in HP's stock price. You will receive a broker's confirmation statement when the
shares are sold.
As with the exercise and sell to cover costs method, you decide the
price you are willing to accept for the shares you are selling. You can place a
market order or a limit order with SSB.
PAPERLESS TRANSACTIONS (U.S. EMPLOYEES AND PARTICIPATING COUNTRIES ONLY)
Employees are generally not required to complete any forms when they
use the SSB automated system to do a cashless exercise. Instructions by
telephone or the Internet will serve as notice of exercise and agreement to the
terms and conditions of the stock option plan under which the stock options were
granted. Employees are responsible for verifying with SSB the address to which
their proceeds should be mailed.
If you place a cashless exercise order through SSB, they will notify HP
on your behalf. Effective the date of your sale, Employee Stock Services will
process your exercise and deliver the shares to SSB. When
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SSB receives the shares, they will send you the net proceeds and will send HP
money to cover the cost of the shares and any required withholding taxes. The
proceeds usually will be sent within 5 to 10 days of your sale.
If you are an employee based outside the U.S., please contact your
local Stock Option Administrator for information on how to exercise your stock
options.
HOW TO EXERCISE SARS
You may exercise your Stock Appreciation Rights by following these
steps:
o You may exercise your Stock Appreciation Rights as they become
vested. You do not have to exercise all of your vested rights. You
may exercise some and wait to exercise others.
o If you decide to exercise your Stock Appreciation Rights, contact
your local Stock Option Administrator or send an e-mail to
EmpEqtySvcs@Compaq.com to obtain vesting information. Employee Stock
Services will confirm your vested rights. You will need to deliver a
properly executed Stock Appreciation Rights exercise form to Salomon
Smith Barney and provide a copy of the form to your local Stock
Option Administrator. The form can be found on Inline under the
Employee Stock Services web site at Inline. Upon the brokers'
receipt of a properly executed notice, your request will be
processed. Your local subsidiary will be advised to deliver the
proceeds to you and will collect and report any applicable taxes.
RULES AND REGULATIONS
There are several key rules and regulations that affect stock options
and Stock Appreciation Rights (SARs), including employment status, stock splits
and what happens in the event of a company takeover.
EMPLOYMENT STATUS
If your employment is terminated, your vesting and the exercise period
of your stock options will be affected. Some of the most common status changes
are discussed here. Stock options and SARs from another company that were
converted to Compaq stock options or SARs may be affected differently. Please
note that you can never exercise a stock option or SAR after the date it
normally would have expired had it not been for your termination of employment.
o LEAVE OF ABSENCE WITHOUT PAY. You may exercise your vested stock
options or SARs until they expire, but you do not earn vesting
credit while on leave.
o RETIREMENT. You do not earn vesting credit after you retire.
However, you may still be able to exercise your vested stock options
or SARs for a period of time following retirement, as specified in
your grant notice.
o TERMINATION OF EMPLOYMENT. You stop accruing vesting on your
termination date, but you may still be able to exercise vested stock
options or SARs for a period of time following termination, as
specified in your grant notice or as provided by an amendment to
your stock option or SAR. Generally, if you were granted a Compaq
stock option or SAR after April 27, 2000 and your termination
occurred after September 1, 2001 then you will have 1 year to
exercise your vested stock option or SARs.
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If you are rehired by HP, previously granted stock options will not be
reinstated.
If your stock option or SAR expiration date falls on a non-trading day
(Saturday, Sunday, or holiday), the exercise must be executed before 3:00 p.m.
Houston time (4:00 p.m. EST) on the last trading day before your expiration
date.
o SHORT-TERM DISABILITY. You continue to accrue vesting in your stock
options or SARs while you are on a short-term disability or sick
leave and you may exercise them while on short-term disability or
sick leave.
o LONG-TERM OR PERMANENT DISABILITY. The Plan under which your stock
options or SARs were granted will tell you when you may exercise
them if you become permanently disabled. Please refer to the
appropriate Plan, consult your local Stock Option Administrator or
Employee Stock Services, or send an e-mail to
EmpEqtySvcs@Compaq.com.
o DEATH. The period during which your estate may exercise your vested
stock options or SARs following your death is described in the Plan
under which they were granted. Please refer to the appropriate Plan,
consult with your local Stock Option Administrator, contact Employee
Stock Services, or send an e-mail to EmpEqtySvcs@Compaq.com.
All stock options and SARs are transferable to family members for
estate planning purposes (subject to certain limitations), except Tandem and
Digital Substitute Options, which cannot be assigned or transferred except by
will or the laws of descent and distribution. To find out more about
transferring your stock options, call your local Stock Option Administrator or
send an email to EmpEqtySvcs@Compaq.com.
Generally, you may transfer shares of stock after you purchase the
shares. You should consult with your tax advisor before transferring any stock
options or shares.
STOCK SPLITS
If HP stock splits, your stock options or SARs will split in the same
manner. For example, if the stock splits two for one, then any stock options or
SARs will double and the exercise price will be cut in half.
CHANGE IN CONTROL
All Compaq stock options and SARs granted prior to September 1, 2001
became exercisable in full on March 20, 2002, subject to the limitations
described in the Plan, as amended, under which your stock options or SARs were
granted. The effect of a change in control on all other stock options and SARs
is governed by the Plan, as amended, under which your stock options or SARs were
granted. A change in control is defined in the Plan, as amended, under which
your stock option or SAR was granted.
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DOCUMENTATION
This section:
o provides you with information about whom to contact and where to go
for more information or documentation about stock options and Stock
Appreciation Rights (SARs), and
o covers important laws concerning inside information.
CONTACT ADMINISTRATORS
The Compensation Committee of the HP Board of Directors, or its
delegate administers HP's employee stock option and SAR program. The
Compensation Committee serves at the discretion of the Board.
The Compensation Committee or its delegate establishes:
o Who may participate in the stock option program,
o How many shares are granted,
o What exercise price is specified,
o What exercise period is offered, and
o Other terms of the grant.
If you have questions about your grant or the program, you may contact:
Employee Stock Services
20555 S.H. 249, MC 110414
Houston, Texas 77070
PHONE: through HR Connect 800-890-3100, menu selection #5
PHONE: (248) 637-7780 outside the U.S.
EMAIL: EmpEqtySvcs@Compaq.com
PLAN DOCUMENT GOVERNS
The content regarding stock options, SARs and restricted stock in this
prospectus provides a basic explanation of the Plans. Each Plan has a formal
Plan document that describes its legal details. In the event of a conflict
between the information herein and the Plan document, the legal Plan document
governs.
HP reserves the right to amend or terminate the Plans at any time.
The information in this prospectus is neither a contract of employment
nor a guarantee of future benefits.
The Plans that comprise our stock program are not subject to the
Employee Retirement Income Security Act of 1974, as amended (ERISA), nor are
they qualified under Section 401(a) of the Internal Revenue Code. Benefits are
not protected by the Pension Benefit Guaranty Corporation.
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INSIDE INFORMATION
Except as described below, the Plans generally place no limitations
upon a participant's ability to sell shares acquired under the Plans. HP will
not receive any part of the proceeds of any such sales.
HP's insider trading policy applies to all employees and directors of
HP and its affiliates. The insider trading policy prohibits a participant from
buying or selling shares when he or she has "inside information." Inside
information is material information about HP that is not yet public but that a
reasonable investor would consider important in deciding whether to buy or sell
shares.
A participant who is an "affiliate" of HP (within the meaning of Rule
405 under the Securities Act of 1933, as amended (the "Securities Act")), may
not resell under this prospectus any shares he or she purchases or receives
under the Plans. (HP's executive officers and members of the Board of Directors
are considered to be "affiliates" for this purpose.) Any such resales must be
either described in a separate prospectus, or, in certain instances, registered
in a separate registration statement, or sold in accordance with the
requirements of Rule 144 under the Securities Act or another exemption available
under the Securities Act.
Also, Section 16(b) of the Securities Act of 1933 permits HP to recover
any profit realized by certain officers, directors, and principal stockholders
of HP through the sale and purchase, or purchase and sale (as defined), of HP's
common stock within any period of less than six months.
GLOSSARY
COMMISSIONS
Payments to a stock broker for assistance with the sale of stock.
Commissions are based on the number of shares being sold.
COST BASIS
Generally, the actual amount you paid for shares. The cost basis is
used in determining your gain for U.S. income tax purposes when you sell shares.
DIVIDENDS
A sum of money paid to shareowners at the discretion of the Board of
Directors, subject to applicable law.
EXERCISE
When you decide to use your stock option to buy HP stock at your
exercise price.
EXERCISE PRICE
The exercise price is set on the grant date and listed on your Stock
Option Notice. It is the amount you pay for shares of HP stock at the time you
exercise a stock option, regardless of the stock's price on the New York Stock
Exchange.
EXPIRATION DATE
A date set generally 10 years from the stock option's grant date, when
your stock options will expire. If you do not exercise your stock options by the
expiration date, you will lose them. You may exercise vested stock options any
time before they expire. Your stock option's expiration date may be affected
upon your termination of employment.
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FEES
Any charges by the broker, other than commissions, for services
provided by the brokerage. Examples of fees include: charges for wire transfers,
overnight deliveries, and stock registration.
GAIN
The difference between your exercise (stock option) price and the
market value of HP stock when you exercise your stock option.
LIMIT ORDER
Your instruction to a stockbroker to sell shares only if your stock can
be sold at a price you specify (usually a higher price than the current market
price). Generally, the limit order remains in effect until the purchase or sale
takes place or the order is canceled. However, if you are a member of the
Restricted Trading Group, your order is automatically canceled when the trading
window is closed. You will need to resubmit your limit order when the trading
window opens.
MARKET ORDER
Your instruction to a stock broker to sell stock immediately at the
current market price.
MARKET PRICE OR MARKET VALUE
The closing price of HP's stock on the New York Stock Exchange on the
day you exercise a stock option or SAR. It is the actual sales price in the case
of a cashless exercise.
NONQUALIFIED STOCK OPTIONS
Stock options that do not receive preferential tax treatment under U.S.
federal tax law, so the gain from exercise is taxable when it becomes income to
you.
PLANS
The stock option plans listed above.
PUBLIC COMPANY
A corporation whose stock is registered under federal securities laws
and may be sold to the public. HP is a public company.
SHARE OF STOCK
A piece of ownership in a public company. Ownership of a corporation is
divided into many pieces, or "shares." The grant of a stock option entitles you
to purchase a specified number of shares of HP common stock.
SHAREOWNERS OR STOCKHOLDERS
Owners of a public company, such as HP.
STOCK APPRECIATION RIGHTS
The right for a specified period of time to receive cash proceeds equal
to the excess of the market price of HP stock over a specified price set forth
in the grant notice.
STOCK EXCHANGE
The market where shares of the stock of public companies are bought and
sold. Shares of HP stock are sold on the New York Stock Exchange. The HP trading
symbol is HWP.
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STOCK OPTION
The right to buy HP stock at a set price for a certain period of time.
STREET NAME
Shares of stock that you own but which are registered in the broker's
name rather than your name. The broker tracks the number of shares for you,
rather than sending you a stock certificate.
VESTING
Earning the right to exercise a stock option over a specified period of
time. Generally, stock options vest over a period of 48 months.
CONCLUSION
HP offers stock options and SARs to deserving employees around the
world. Stock Options and SARs are very valuable parts of a total rewards package
that gives you a real stake in the success you help generate for the company.
HP may update this prospectus in the future by furnishing to you an
appendix, memorandum, notice or replacement page containing updated information.
HP generally will not send you a new prospectus, except upon request.
Accordingly, you should keep this prospectus for future reference.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. HP has not authorized
anyone to provide you with different or additional information. HP is not making
an offer to sell any stock in any state or country where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of this document.
If you have any questions, please contact your local Stock Option
Administrator, or send an e-mail to EmpEqtySvcs@Compaq.com.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus incorporates documents by reference that are not
presented in or delivered with this prospectus. You should rely only on the
information contained in this prospectus and in the documents that we have
incorporated by reference into this prospectus. We have not authorized anyone to
provide you with information that is different from or in addition to the
information contained in this document and incorporated by reference into this
prospectus.
The following documents, which were filed by us with the Securities and
Exchange Commission, and any future filings made by us with the Securities and
Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
until our offering is complete, are incorporated by reference into this
prospectus:
o Annual report on Form 10-K for the fiscal year ended October 31,
2001, filed with the Securities and Exchange Commission on January
29, 2002 as amended on Form 10-K/A filed with the Securities and
Exchange Commission on January 30, 2002;
o Quarterly report on Form 10-Q for the quarter ended January 31,
2002, filed with the Securities and Exchange Commission on March 12,
2002;
o Current report on Form 8-K, dated November 5, 2001, filed with the
Securities and Exchange Commission on November 6, 2001;
o Current report on Form 8-K, dated November 14, 2001, filed with the
Securities and Exchange Commission on November 14, 2001;
o Current report on Form 8-K, dated November 15, 2001, filed with the
Securities and Exchange Commission on November 16, 2001;
o Current report on Form 8-K, dated November 29, 2001, filed with the
Securities and Exchange Commission on November 30, 2001 (modified by
current report on Form 8-K, dated February 14, 2002, filed with the
Securities and Exchange Commission on February 14, 2002);
o Current report on Form 8-K, dated December 7, 2001, filed with the
Securities and Exchange Commission on December 7, 2001;
o Current report on Form 8-K, dated February 13, 2002, filed with the
Securities and Exchange Commission on February 14, 2002;
o Current report on Form 8-K, dated February 14, 2002, filed with the
Securities and Exchange Commission on February 14, 2002;
o Current report on Form 8-K, dated February 27, 2002, filed with the
Securities and Exchange Commission on February 27, 2002;
o Current report on Form 8-K, dated March 14, 2002, filed with the
Securities and Exchange Commission on March 15, 2002;
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o Current report on Form 8-K, dated March 28, 2002, filed with the
Securities and Exchange Commission on March 29, 2002;
o Current report on Form 8-K, dated April 1, 2002, filed with the
Securities and Exchange Commission on April 3, 2002;
o Current report on Form 8-K, dated April 12, 2002, filed with the
Securities and Exchange Commission on April 15, 2002;
o The description of HP's common stock contained in our registration
statement on Form 8-A, filed with the Securities and Exchange
Commission on or about November 6, 1957 and any amendment or report
filed with the Securities and Exchange Commission for the purposes
of updating such description; and
o The description of HP's preferred share purchase rights contained in
our registration statement on Form 8-A, filed with the Securities
and Exchange Commission on September 4, 2001 and any amendment or
report filed with the Securities and Exchange Commission for the
purpose of updating such description.
In addition, all documents filed by us pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of the
initial registration statement and before the date of effectiveness of the
registration statement are deemed to be incorporated by reference into, and to
be a part of, this prospectus from the date of filing of those documents.
Any statement contained in this prospectus or in a document
incorporated or deemed to be incorporated by reference into this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or any other subsequently
filed document that is deemed to be incorporated by reference into this
prospectus modifies or supersedes the statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
The documents incorporated by reference into this prospectus are
available from us upon request. We will provide a copy of any and all of the
information that is incorporated by reference in this prospectus (not including
exhibits to the information unless those exhibits are specifically incorporated
by reference into this prospectus) to any person, without charge, upon written
or oral request. You may request a copy of information incorporated by reference
into this prospectus by contacting us in writing or by telephone at the
following address:
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304
Attention: Investor Relations
(650) 857-1501
In addition, you may obtain copies of our information by making a
request through our investor relations website,
http://www.hp.com/hpinfo/investor, or by sending an e-mail to
investor_relations@hp.com.
We file annual, quarterly and current reports, proxy and information
statements and other information with the Securities and Exchange Commission.
Copies of the reports, proxy and information statements and other information
filed by HP with the Securities and Exchange Commission may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission at:
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450 Fifth Street, N.W.
Washington, D.C. 20549
Reports, proxy and information statements and other information
concerning HP may be inspected at:
New York Stock Exchange
20 Broad Street
New York, New York 10005
Copies of these materials can also be obtained by mail at prescribed
rates from the Public Reference Section of the Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains a web site that contains reports, proxy statements
and other information regarding us. The address of the Securities and Exchange
Commission web site is http://www.sec.gov.
USE OF PROCEEDS
The exercise prices of the options and rights to acquire common stock
granted to former employees of Compaq range from approximately $2.50 to $74.61
per share of our common stock. If all of these options are exercised in full, we
will issue approximately 21,126,566 shares of our common stock for total cash
proceeds of approximately $656,824,760. We currently intend to use the net
proceeds from any exercises of these options for general corporate purposes,
which may include meeting working capital needs.
PLAN OF DISTRIBUTION
In connection with our acquisition of Compaq and pursuant to the Merger
Agreement, we have agreed to assume the outstanding options and other rights to
purchase common stock of Compaq, including options and other rights to purchase
common stock granted to former employees and directors of Compaq pursuant to
stock plans maintained by Compaq.
This prospectus covers the shares of HP common stock that are issuable
upon exercise of options and other rights to acquire common stock granted to
former employees and directors of Compaq pursuant to stock plans maintained by
Compaq. Former employees and directors include executors, administrators or
beneficiaries of the estates of deceased employees, guardians or members of a
committee for incompetent former employees, or similar persons duly authorized
by law to administer the estate or assets of former employees and directors. We
are offering these shares of HP common stock directly to the holders of these
options and other rights according to the terms of their option or rights
agreements. We are not using an underwriter in connection with this offering.
These shares will be listed for trading on the New York Stock Exchange and the
Pacific Exchange.
In order to facilitate the exercise of the options and other rights to
purchase common stock, we will furnish, at our expense, such reasonable number
of copies of this prospectus to each recordholder of options or other rights as
the holder may request, together with instructions that such copies be delivered
to the beneficial owners of these options and other rights to purchase common
stock.
The exercise price and other terms of the options and rights assumed
were determined by the Board of Directors or a committee of the Board of
Directors of Compaq at the time of grant. These options and rights
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shall continue to have, and be subject to, the same terms and conditions that
were in effect immediately before our merger with Compaq became effective,
except that these options and rights are now exercisable for shares of HP common
stock. Accordingly, these terms and conditions may not necessarily bear any
relationship to our assets or results of operations.
LEGAL MATTERS
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, will pass upon the validity of the issuance of the securities
offered by this prospectus for HP.
EXPERTS
Our consolidated financial statements and schedule at October 31, 2001
and 2000 and for each of the two years in the period ended October 31, 2001,
appearing in our Annual Report on Form 10-K, as amended January 30, 2002, for
the year ended October 31, 2001, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon incorporated herein
by reference and are incorporated in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
Our consolidated financial statements and schedule for the year ended
October 31, 1999 incorporated in this prospectus by reference to the Annual
Report on Form 10-K, as amended January 30, 2002, for the year ended October 31,
2001, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements and schedule of Compaq Computer
Corporation at December 31, 2001 and 2000 and for each of the two years in the
period ended December 31, 2001, appearing in our Current Report on Form 8-K
dated February 14, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon incorporated herein by reference
and are incorporated in reliance upon such reports given on the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Compaq Computer
Corporation for the year ended December 31, 1999 incorporated in this prospectus
by reference to Hewlett-Packard Company's Current Report on Form 8-K dated
February 14, 2002, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses, in connection with the
issuance and distribution of the securities being registered. All amounts
indicated are estimates (other than the registration fee):
<Table>
Registration fee................................... $ 60,428
Accounting fees and expenses....................... 60,000
Printing and engraving............................. 10,000
Transfer agent fees................................ 15,000
Legal fees and expenses of the registrant.......... 50,000
--------------
Total....................................... $ 195,428
==============
</Table>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms that are sufficiently broad
to permit indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
Our certificate of incorporation contains a provision eliminating the
personal liability of our directors to HP or its shareowners for breach of
fiduciary duty as a director to the fullest extent permitted by applicable law.
Our bylaws provide for the mandatory indemnification of our directors
and officers to the maximum extent permitted by Delaware law. Our bylaws also
provide:
(i) that we may expand the scope of the indemnification by individual
contracts with our directors and officers, and
(ii) that we shall not be required to indemnify any director or
officer unless the indemnification is required by law, if the
proceeding in which indemnification is sought was brought by a
director or officer, it was authorized in advance by our board of
directors, the indemnification is provided by us, in our sole
discretion pursuant to powers vested in us under the Delaware
law, or the indemnification is required by individual contract.
In addition, our bylaws give us the power to indemnify our employees and agents
to the maximum extent permitted by Delaware law.
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ITEM 16. EXHIBITS
The following exhibits are filed with this registration statement or
incorporated by reference herein:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Certificate of Incorporation. (1)
3.2 Amendment to the Certificate of Incorporation. (2)
3.3 Certificate of Designation of Rights, Preferences and Privileges of Series A Participating
Preferred Stock. (3)
3.4 Amended and Restated Bylaws. (4)
3.5 Amendment to Bylaws. (5)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1 Compaq Computer Corporation 2001 Stock Option Plan. (5)
10.2 Compaq Computer Corporation 1998 Stock Option Plan. (5)
10.3 Compaq Computer Corporation 1995 Equity Incentive Plan. (5)
10.4 Compaq Computer Corporation 1989 Equity Incentive Plan. (5)
10.5 Compaq Computer Corporation Nonqualified Stock Option Plan for Non-Employee Directors. (5)
10.6 Compaq Computer Corporation 1985 Stock Option Plan. (5)
10.7 Compaq Computer Corporation 1985 Executive and Key Employee Stock Option Plan. (5)
10.8 Compaq Computer Corporation 1985 Nonqualified Stock Option Plan. (5)
10.9 Compaq Computer Corporation 1998 Former Nonemployee Replacement Option Plan. (5)
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Ernst & Young LLP, independent auditors.
23.3 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.4 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.5 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit
5.1).
24.1 Power of Attorney of certain directors and officers of Hewlett-Packard Company. (See page
II-6).
</Table>
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(1) Incorporated by reference from exhibit 3(a) to the registrant's
quarterly report on Form 10-Q for the fiscal quarter ended April 30,
1998.
(2) Incorporated by reference from exhibit 3(b) to the registrant's
quarterly report on Form 10-Q for the fiscal quarter ended January 31,
2001.
(3) Incorporated by reference from Exhibit 3.4 to the registrant's
registration statement on Form 8-A dated September 4, 2001.
(4) Incorporated by reference from Exhibit 3.1 to the registrant's current
report on Form 8-K dated November 6, 2001.
(5) To be filed by amendment.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes:
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(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended, (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
shall not apply if the information required to be included in a post-effective
amendment by these clauses is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference
in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(2) The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its
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counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Palo Alto, State of California, on April 16,
2002.
HEWLETT-PACKARD COMPANY
By: /s/ CHARLES N. CHARNAS
-----------------------------------
Charles N. Charnas
Assistant Secretary
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ann O. Baskins and Charles N. Charnas,
and each of them individually, as his or her true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities to sign the
registration statement filed herewith and any or all amendments to said
registration statement (including post-effective amendments and registration
statements filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and otherwise), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission granting unto said attorneys-in-fact and agents, and each of them,
the full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or his
or her substitute, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
on April 16th, 2002 this registration statement has been signed by the
following persons in the capacities indicated:
<Table>
<Caption>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------------------
/s/ CARLETON S. FIORINA Chairman, President and Chief Executive Officer
- --------------------------------------------- (Principal Executive Officer)
Carleton S. Fiorina
/s/ ROBERT P. WAYMAN Vice President, Finance and Administration and Chief
- --------------------------------------------- Financial Officer (Principal Financial Officer) and
Robert P. Wayman Director
/s/ JON E. FLAXMAN Vice President and Controller (Principal Accounting
- --------------------------------------------- Officer)
Jon E. Flaxman
- --------------------------------------------- Director
Philip M. Condit
/s/ PATRICIA C. DUNN
- --------------------------------------------- Director
Patricia C. Dunn
/s/ SAM GINN
- --------------------------------------------- Director
Sam Ginn
/s/ RICHARD A. HACKBORN
- --------------------------------------------- Director
Richard A. Hackborn
- --------------------------------------------- Director
Walter B. Hewlett
- --------------------------------------------- Director
Dr. George A. Keyworth II
/s/ ROBERT E. KNOWLING, JR.
- --------------------------------------------- Director
Robert E. Knowling, Jr.
</Table>
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EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Certificate of Incorporation. (1)
3.2 Amendment to the Certificate of Incorporation. (2)
3.3 Certificate of Designation of Rights, Preferences and Privileges of Series A Participating
Preferred Stock. (3)
3.4 Amended and Restated Bylaws. (4)
3.5 Amendment to Bylaws. (5)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1 Compaq Computer Corporation 2001 Stock Option Plan. (5)
10.2 Compaq Computer Corporation 1998 Stock Option Plan. (5)
10.3 Compaq Computer Corporation 1995 Equity Incentive Plan. (5)
10.4 Compaq Computer Corporation 1989 Equity Incentive Plan. (5)
10.5 Compaq Computer Corporation Nonqualified Stock Option Plan for Non-Employee Directors. (5)
10.6 Compaq Computer Corporation 1985 Stock Option Plan. (5)
10.7 Compaq Computer Corporation 1985 Executive and Key Employee Stock Option Plan. (5)
10.8 Compaq Computer Corporation 1985 Nonqualified Stock Option Plan. (5)
10.9 Compaq Computer Corporation 1998 Former Nonemployee Replacement Option Plan. (5)
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Ernst & Young LLP, independent auditors.
23.3 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.4 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.5 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit
5.1).
24.1 Power of Attorney of certain directors and officers of Hewlett-Packard Company. (See page
II-6).
</Table>
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(1) Incorporated by reference from exhibit 3(a) to the registrant's quarterly
report on Form 10-Q for the fiscal quarter ended April 30, 1998.
(2) Incorporated by reference from exhibit 3(b) to the registrant's quarterly
report on Form 10-Q for the fiscal quarter ended January 31, 2001.
(3) Incorporated by reference from Exhibit 3.4 to the registrant's
registration statement on Form 8-A dated September 4, 2001.
(4) Incorporated by reference from Exhibit 3.1 to the registrant's current
report on Form 8-K dated November 6, 2001.
(5) To be filed by amendment.