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EXHIBIT 10.2
Amended and Restated Effective September 4, 2001
Section 2 "Fair Market Value" definition amended December 8, 1999
Adopted January 22, 1998
Sections 10(b) and (d) amended April 23, 1998
Approved by Stockholders and effective April 23, 1998
COMPAQ COMPUTER CORPORATION
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE. The Compaq Computer Corporation 1998 Stock Option Plan has
been established to promote the interests of Compaq Computer Corporation and its
stockholders by (i) attracting and retaining exceptional employees and directors
of Compaq and its Affiliates, as defined below; (ii) motivating such employees
and directors by means of performance-related incentives to achieve long-range
performance goals; and (iii) enabling such employees and directors to
participate in the long-term growth and financial success of Compaq.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the
meanings set forth below:
"AFFILIATE" shall mean (i) any entity that, directly or indirectly, is
controlled by Compaq and (ii) any entity in which Compaq has a significant
equity interest, in either case as determined by the Committee.
"AWARD" shall mean any Option or Stock Appreciation Right.
"BOARD" shall mean the Board of Directors of Compaq.
"CHANGE IN CONTROL" shall be deemed to have occurred if: (i) any "person" as
such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than
Compaq, any trustee or other fiduciary holding securities under any Compaq
employee benefit plan, or any entity owned, directly or indirectly, by Compaq
stockholders in substantially the same proportions as their ownership of Compaq
voting securities), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time), directly or indirectly, of Compaq securities
representing 30% or more of the combined voting power of Compaq's then
outstanding securities; (ii) during any period of two consecutive years (not
including any period prior to the adoption of the Plan), individuals who at the
beginning of such period constitute the Board of Directors, and any new director
(other than a director designated by a person who has entered into an agreement
with Compaq to effect a transaction described in clause (i), (iii), or (iv) of
this paragraph) whose election by the Board of Directors or nomination for
election by Compaq's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board of Directors; (iii) Compaq stockholders approve a merger or
consolidation of Compaq with any other corporation, other than a merger or
consolidation that would result in Compaq voting securities outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more
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than 50% of the combined voting power of voting securities of Compaq or such
surviving entity outstanding immediately after such merger or consolidation;
provided, however, that a merger or consolidation effected to implement a
recapitalization of Compaq (or similar transaction) in which no person
acquires more than 30% of the combined voting power of Compaq's then
outstanding securities shall not constitute a Change in Control; or (iv)
Compaq stockholders approve a plan of complete liquidation of Compaq or an
agreement for the sale or disposition by Compaq of all or substantially all
of Compaq's assets. If any of the events enumerated in clauses (i) through
(iv) occur, the Board shall determine the effective date of the Change in
Control resulting therefrom, for purposes of the Plan. For purposes of (1)
Awards granted on or after September 1, 2001 and (2) applying the proviso of
Section 7(a) to all Options and Stock Appreciation Rights under the Plan,
whenever granted, the definition of Change in Control set forth above shall
be revised by substituting the phrase "a merger or consolidation of Compaq
with any other corporation is consummated for the phrase the stockholders of
Compaq approve a merger or consolidation of Compaq with any other corporation
in clause (iii) of the definition in this Section.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" shall mean a committee of the Board designated by the Board to
administer the Plan and composed of persons who (i) to the extent necessary to
comply with Rule 16b-3 are "Non-Employee Directors" within the meaning of Rule
16b-3 and (ii) to the extent any Award granted hereunder is intended to qualify
as performance-based compensation under Section 162(m) of the Code, constitute
"outside directors" within the meaning of Section 162(m) of the Code and the
regulations thereunder. Until otherwise determined by the Board, the Human
Resources Committee designated by the Board shall be the Committee under the
Plan.
"COMPAQ" shall mean Compaq Computer Corporation, together with any successor
thereto.
"ELECTION DATE" shall mean with respect to an Option hereunder the date of the
appointment, election, or re-election of the director that prompted the grant of
such Option.
"ELIGIBLE DIRECTOR" shall mean each director of the Company who is not an
employee of the Company or any of the Company's subsidiaries (as defined in
Section 425(f) of the Code).
"EMPLOYEE" shall mean an employee of Compaq or of any Affiliate.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" shall mean, at any time, an individual who is an executive
officer of Compaq within the meaning of Exchange Act Rule 3b-7 as promulgated
and interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time, or who is an officer of
Compaq within the meaning of Exchange Act Rule 16a-1(f) as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
"FAIR MARKET VALUE" shall mean the fair market value of the property or other
item being valued, as determined by the Committee in its sole discretion.
"INCENTIVE STOCK OPTION" shall mean a right to purchase Shares from Compaq that
is intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.
"NON-QUALIFIED STOCK OPTION" shall mean a right to purchase Shares from Compaq
that is granted under Section 5 or Section 7 of the Plan and that is not
intended to be an Incentive Stock Option.
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"NOTICE" shall mean any written notice, contract, or other instrument or
document evidencing any Award, which may, but need not, be executed or
acknowledged by a Participant.
"OPTION" shall mean a Non-Qualified Stock Option or Incentive Stock Option.
"PARTICIPANT" shall mean any Employee or Director selected to receive an Award
under the Plan.
"PERSON" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
"PLAN" shall mean this Compaq Computer Corporation 1998 Stock Option Plan.
"RELEASE DATE" shall mean the third business day occurring after Compaq's
earnings release for the preceding fiscal period. In calculating the Release
Date, the day of an earnings release shall be counted if the earnings release is
made before the opening of trading on the New York Stock Exchange and shall not
be counted if such release is made after the opening of trading.
"RULE 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SEC" shall mean the Securities and Exchange Commission or any successor thereto
and shall include the staff thereof.
"SHARES" shall mean shares of the common stock, $.0l par value, of Compaq or
such other securities of Compaq as may be designated by the Committee from time
to time.
"STOCK APPRECIATION RIGHT" shall mean any right granted under Section 6 of the
Plan.
"SUBSTITUTE AWARDS" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
Compaq or with which Compaq combines.
"WINDOW" shall mean a period of time beginning on a Release Date and ending at
the end of the second month of the fiscal quarter in which such Release Date
occurs.
SECTION 3. ADMINISTRATION.
(a) AUTHORITY OF COMMITTEE. The Committee shall administer the Plan.
Subject to the terms of the Plan and applicable law, the Committee shall have
full power and authority to: (i) designate Employee Participants; (ii) determine
the type or types of Awards to be granted to an eligible Employee; (iii)
determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards to Employees; (iv) determine the terms and conditions of any Award to
Employees; (v) determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited, or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what circumstances
cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or Notice relating to, or Award made
under, the Plan; (viii) establish, amend, suspend, or waive such rules and
regulations
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and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the Plan.
(b) COMMITTEE AND BOARD DISCRETION BINDING. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee or the Board, may be made at any time, and
shall be final, conclusive, and binding upon all Persons, including Compaq, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
stockholder, any Employee, and any Director.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b),
the number of Shares with respect to which Awards may be granted under the Plan
shall be 100 million; provided, however, if Compaq or its wholly owned
subsidiary merges with Digital Equipment Corporation the number of Shares with
respect to which Awards may be granted under the Plan shall be increased by 50
million, to a total of 150 million shares. If, after the effective date of the
Plan, any Shares covered by an Award granted under the Plan or to which such
Award relates, are forfeited, or if such an Award is settled for cash or
otherwise terminates or is canceled without the delivery of Shares, then the
Shares covered by such Award, or to which such Award relates, or the number of
Shares otherwise counted against the aggregate number of Shares with respect to
which Awards may be granted, to the extent of any such settlement, forfeiture,
termination or cancellation, shall again become Shares with respect to which
Awards may be granted. In the event that any Option or other Award granted
hereunder is exercised through the delivery of Shares or in the event that
withholding tax liabilities arising from such Award are satisfied by the
withholding of Shares by Compaq, the number of Shares available for Awards under
the Plan shall be increased by the number of Shares so surrendered or withheld.
(b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of Compaq, issuance of
warrants or other rights to purchase Shares or other securities of Compaq, or
other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number of Shares or other
securities of Compaq (or number and kind of other securities or property) with
respect to which Awards may be granted, (ii) the number of Shares or other
securities of Compaq (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any outstanding Award, or, if deemed appropriate, make provision for
a cash payment to the holder of an outstanding Award; provided, however, that
such adjustments shall be made by the Board with respect to Awards to Eligible
Directors.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards shall not
be counted against the Shares available for Awards under the Plan.
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
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SECTION 5. EMPLOYEE STOCK OPTIONS.
(a) ELIGIBILITY AND LIMITS ON AWARDS. Any Employee, including any officer
or employee-director of the Company or any Affiliate, shall be eligible to be
designated a Participant. Subject to adjustment as provided in Section 4(b), no
Executive Officer may receive Awards under the Plan in any calendar year that
relate to more than 1,500,000 Shares. The limits on Awards to any Executive
Officer under this Plan shall be reduced by any other Award in the same calendar
year to such officer under any other Compaq equity incentive plan.
(b) GRANT. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options shall be
granted, the number of Shares to be covered by each Option, and the conditions
and limitations applicable to the exercise of the Option.
(c) EXERCISE PRICE. The exercise price for Options (other than Substitute
Awards) granted under the Plan shall be not less than the Fair Market Value of
the underlying Shares. Neither the Board nor the Committee may lower the
exercise price of outstanding options issued under the Plan. The Committee shall
determine the appropriate exercise prices for Substitute Awards based on the
terms and conditions of the transaction related to such Awards.
(d) EXERCISE. Each Employee Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Notice or thereafter. The Committee and
the Board may impose such conditions with respect to the exercise of options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.
(e) PAYMENT. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by Compaq.
Such payment may be made (i) in cash, or its equivalent, (ii) if and to the
extent permitted by the Committee, by exchanging Shares owned by the optionee
(which are not the subject of any pledge or other security interest), (iii) if
and to the extent permitted by the Committee, by surrendering all or part of
that Option or any other Option, or (iv) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any such Shares so tendered to Compaq as of the date of such
tender is at least equal to such option price.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) GRANT. The grant of Stock Appreciation Rights shall be limited to
Employees in those locations in which the law, including exchange control
regulations and taxation, unduly restricts the grant of Options. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Stock Appreciation Rights shall be granted, the
number of Shares to be covered by each Stock Appreciation Right Award, and the
conditions and limitations applicable to the exercise thereof. Stock
Appreciation Rights shall have a grant price equal to the Fair Market Value of
the related Shares on the day of the Award, and if granted to Executive
Officers, shall not be exercisable earlier than six months after grant.
(b) EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the grant
price thereof. The Committee shall determine whether a Stock Appreciation Right
shall be settled in cash, Shares or a combination of cash and Shares.
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(c) OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan, the
Committee shall determine, at or after the grant of a Stock Appreciation Right,
the term, methods of exercise, methods and form of settlement, and any other
terms and conditions of any Stock Appreciation Right. Any such determination by
the Committee may be changed by the Committee from time to time and may govern
the exercise of Stock Appreciation Rights granted or exercised prior to such
determination as well as Stock Appreciation Rights granted or exercised
thereafter. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.
SECTION 7. TERMINATION OR SUSPENSION OF EMPLOYMENT. The following provisions
shall apply in the event of the Participant's termination of employment unless
the Committee shall have provided otherwise, either at the time of the grant of
the Award or thereafter.
(a) TERMINATION OF EMPLOYMENT. If a Participant's employment with Compaq
or its Affiliates is terminated for any reason other than death, permanent and
total disability, or retirement, the Participant's right to exercise any
Nonqualified Stock Option or Stock Appreciation Right shall terminate, and such
Option or Stock Appreciation Right shall expire, on the earlier of (i) the first
anniversary of such termination of employment or (ii) the date such Option or
Stock Appreciation Right would have expired had it not been for the termination
of employment; provided, however, that if, within one year following a Change in
Control, the Participant's employment is terminated in a Qualifying Termination
(as defined in subparagraph (e) below), the Participant shall have the right to
exercise any outstanding Option or Stock Appreciation Right until the earlier of
(A) the third anniversary of such termination of employment (in the case of
Options or Stock Appreciation Rights granted prior to September 1, 2001) or the
first anniversary of the effective date of such Qualifying Termination (in the
case of Options or Stock Appreciation Rights granted on or after September 1,
2001 and prior to the Change in Control) or (B) the date such Option or Stock
Appreciation Right would have expired had it not been for such termination of
employment. The Participant shall have the right to exercise such Option or
Stock Appreciation Right prior to such expiration to the extent it was
exercisable at the date of such termination of employment and shall not have
been exercised.
(b) DEATH, DISABILITY OR RETIREMENT. If a Participant's employment with
Compaq or its Affiliates is terminated by death, permanent and total disability,
or retirement, the Participant or his successor (if employment is terminated by
death) shall have the right to exercise any Nonqualified Stock Option or Stock
Appreciation Right to the extent it was exercisable at the date of such
termination of employment and shall not have been exercised, but in no event
shall such option be exercisable later than the date the Option would have
expired had it not been for the termination of such employment. The meaning of
the terms "total and permanent disability" and "retirement" shall be determined
by the Committee.
(c) ACCELERATION AND EXTENSION OF EXERCISABILITY. Notwithstanding the
foregoing, the Committee may, in its discretion, provide (i) that an Option
granted to an Employee Participant may terminate at a date earlier than that set
forth above, (ii) that an Option granted to an Employee Participant may
terminate at a date later than that set forth above, provided such date shall
not be beyond the date the Option would have expired had it not been for the
termination of the Participant's employment, and (iii) that an Option or Stock
Appreciation Right may become immediately exercisable when it finds that such
acceleration would be in the best interests of Compaq.
(d) LEAVE WITHOUT PAY. In the event that an employee Participant takes a
"leave without pay," all of such Participant's Awards or any portion thereof
shall, to the extent unvested immediately prior to such leave, cease to vest
during the period of such leave, and to the extent exercisable
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immediately prior to such leave, shall remain exercisable during the period of
such leave in accordance with the terms thereof.
(e) DEFINITION OF QUALIFYING TERMINATION. For purposes of subparagraph (a)
above, the term "Qualifying Termination" shall have the meaning ascribed to such
term in the Participant's individual employment or severance agreement with
Compaq or its Affiliates. If the Participant is not a party to an individual
employment or severance agreement with Compaq or its Affiliates, the term
"Qualifying Termination" shall have the meaning ascribed to the term "Qualified
Termination" in the Compaq Computer Corporation employee severance plan, as may
be amended from time to time, in which such Participant is eligible to
participate.
SECTION 8. DIRECTOR OPTIONS.
(a) INITIAL GRANTS. Each Eligible Director who is first elected or
appointed to the Board shall be granted one Option to acquire 31,250 Shares. In
the event that the Election Date occurs during the Window, such Option shall be
granted on the Election Date with respect to such Option. In the event that such
Eligible Director's election or appointment does not occur during the Window,
then such Option shall be granted on the next Release Date.
(b) ANNUAL OPTIONS.
(i) Each Eligible Director who is reelected to the Board at an annual
meeting of the Company's stockholders and who has not received a grant under
Section 8(a) during the period since the most recent previous annual meeting of
the Company's stockholders shall be granted an Option to acquire 25,000 Shares
on each Election Date on which he is reelected.
(ii) Each Eligible Director who is elected or re-elected Chairman of
the Board by the Board at its meeting following an annual meeting of the
Company's stockholders and who has not received a grant under Section 8(a)
during the period since the most recent annual meeting of Compaq's stockholders
shall be granted on each Election Date on which he is elected or reelected
Chairman of the Board an Option to acquire 6,250 Shares in addition to any
applicable Option granted under Section 8(b)(i).
(c) TERMS AND CONDITIONS. Any Option granted under this Section 8 shall be
subject to the following terms and conditions:
(i) Any Options granted under this Section 8 shall be Non-Qualified
Stock Options and the exercise price shall be not less than the Fair Market
Value of the underlying Shares.
(ii) Each Option granted under this Section 8 shall be exercisable at
such times and subject to such terms and conditions as the Board may, in its
sole discretion, specify in the applicable Notice or thereafter; provided,
however, that no grant shall be exercisable for six months after the date of
grant.
(iii) Notwithstanding the provisions of this Section 8, Options shall
not be granted under this Section 8 to any Eligible Director in any year in
which such director receives an initial grant or annual grant under the Compaq
Computer Corporation Non-Qualified Stock Option Plan for Non-Employee Directors.
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SECTION 9. CHANGE IN CONTROL. Notwithstanding any other provision of the Plan to
the contrary, (a) all Awards granted prior to September 1, 2001 shall vest and
become immediately exercisable or payable or have all restrictions lifted as may
apply to the type of Award, and no outstanding Stock Appreciation Rights may be
terminated, amended, or suspended upon or after a Change in Control and (b) all
Awards granted on or after September 1, 2001 shall vest and become immediately
exercisable or payable, or have all restrictions lifted as may apply to the type
of Award, upon a Qualifying Termination (as defined in Section 7(e)) within one
year following a Change in Control.
SECTION 10. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement that is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act, for which or with which the Board deems it necessary
or desirable to qualify or comply. The Committee also may amend the Plan in such
manner as may be necessary so as to have the Plan conform with local rules and
regulations in any jurisdiction outside the United States.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights
under, amend any terms of, suspend, or terminate, any Award, prospectively or
retroactively; provided that (i) any waiver, amendment, suspension, or
termination that would adversely affect the rights of any Participant or any
holder or beneficiary of any outstanding Award shall not to that extent be
effective without the consent of the affected Participant, holder, or
beneficiary, and (ii) in accordance with Paragraph 5(c) of this Plan no
amendment shall lower the exercise price of outstanding options issued under the
Plan.
(c) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting Compaq, any Affiliate, or the
financial statements of Compaq or any Affiliate, or of changes in applicable
laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan; provided that no such adjustment shall be authorized to the
extent that such authority would be inconsistent with the Plan's meeting the
requirements of Section 162(m) of the Code, as from time to time amended.
(d) CANCELLATION. Any provision of this Plan or any Notice to the contrary
notwithstanding, the Committee may cause any Award granted hereunder to be
canceled in consideration of an alternative Award or cash payment made to the
holder of such canceled Award equal in value to the Fair Market Value of such
canceled Award as of the effective date of such cancellation.
(e) EMPLOYEE STATUS CHANGE TO PART-TIME. At such time as a full-time
Employee becomes a part-time Employee, on the next vesting date following such
status change, the vesting schedule for all Awards previously granted to such
employee and not yet vested will be automatically amended to reduce the number
of shares vesting each month by one-half during the time that such employee is
working on a part-time basis; provided, however, that any Shares that remain
unvested three months prior to the expiration of the term of such Award shall
vest as of such date three months prior to the expiration of such term.
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SECTION 11. GENERAL PROVISIONS.
(a) NONTRANSFERABILITY. No Award shall be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution; provided, however, that an
Award may be transferable, to the extent set forth in the applicable Notice and
in accordance with procedures adopted by the Committee.
(b) NO RIGHTS TO AWARDS. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(c) SHARE CERTIFICATES. All certificates for Shares or other securities of
Compaq or any Affiliate delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
(d) DELEGATION. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of Compaq or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Employees other than
Executive Officers.
(e) WITHHOLDING. A participant may be required to pay to Compaq or any
Affiliate and Compaq or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount owing
to a Participant the amount (in cash, Shares, other securities, other Awards or
other property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of Compaq to satisfy
all obligations for the payment of such taxes. The Committee may provide for
additional cash payments to holders of Awards to defray or offset any tax
arising from the grant, vesting, exercise, or payments of any Award.
(f) NOTICES. Each Award hereunder shall be evidenced by a Notice that
shall be delivered to the Participant and shall specify the terms and conditions
of the Award and any rules applicable thereto.
(g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent Compaq or any Affiliate from adopting or continuing in effect
other compensation arrangements, which may, but need not, provide for the grant
of options, restricted stock, Shares and other types of Awards provided for
hereunder (subject to stockholder approval if such approval is required), and
such arrangements may be either generally applicable or applicable only in
specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of Compaq or any
Affiliate. Further, Compaq or an Affiliate may at any time dismiss a Participant
from employment, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Notice.
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(i) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Notice shall be
determined in accordance with the laws of the State of Delaware.
(k) SEVERABILITY. Notwithstanding any other provision or section of the
Plan, if any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform
to the applicable laws (but only to such extent necessary to comply with such
laws), or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle Compaq
to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to Compaq by a Participant, other holder or beneficiary in connection
with the exercise of such Award shall be promptly refunded to the relevant
Participant, holder, or beneficiary. Without limiting the generality of the
foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of Compaq, and no such offer shall be outstanding, unless and until
the Committee in its sole discretion has determined that any such offer, if
made, would be in compliance with all applicable requirements of the U.S.
federal securities laws and any other laws to which such offer, if made, would
be subject.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Compaq or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
Compaq or any Affiliate pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of Compaq or any Affiliate.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(o) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 12. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective upon approval by the
stockholders of Compaq.
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(b) EXPIRATION DATE. No Incentive Stock Option shall be granted under the
Plan more than ten years after the effective date of the Plan. Unless otherwise
expressly provided in the Plan or in an applicable Notice, any Award granted
hereunder may, and the authority of the Board or the Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under any such Award shall, continue after the authority
for grant of new Awards hereunder has been exhausted.
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