SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 76-0011617
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
20555 S.H. 249
Houston, Texas 77070
(Address of Principal Executive Offices) (Zip Code)
Compaq Computer Corporation 1998 Stock Option Plan
(Full Title of the Plan)
Earl L. Mason
Senior Vice President and Chief Financial Officer
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
(Name and Address of Agent for Service)
(281) 370-0670
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
Proposed
Title of Maximum Proposed
Securities Amount Offering Maximum Amount of
to be to be Price Per Aggregate Registration
Registered Registered Share Offering Price (2) Fee (2)
- --------------- ----------- --------- ------------------- -------------
Common Stock,
$.01 par value 150,000,000 (2) $4,275,077,980.50 $1,261,148.00
per share shares (1)
(1) Plus such indeterminable number of additional shares as may be issued as a
result of an adjustment in the shares in the event of a stock split, stock
dividend or similar capital adjustment, as required by the Plan.
(2) Pursuant to Rule 457(h), the registration fee is computed based on (i) the
average exercise price of $28.81 for outstanding options to purchase
251,550 shares of Common Stock and (ii) with respect to the remaining
149,748,450 shares, the average of the high and low prices of the Common
Stock reported on the New York Stock Exchange Composite Transaction Tape
on June 8, 1998 of $28.50 per share.
<PAGE>
Part II
Information Required in the Registration Statement
Item 3. Incorporation of Documents By Reference
The following documents have been previously filed with the SEC and are
incorporated by reference into this Registration Statement:
1. Compaq's Annual Report on Form 10-K for the year ended December 31, 1997;
2. Compaq's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
3. Compaq's Current Reports on Form 8-K dated January 21, 1998, January 25,
1998 (2), March 6, 1998, April 15, 1998, June 3, 1998 and June 11, 1998;
and
4. The description of the Compaq's common stock contained in Compaq's
Registration Statement on Form 8-A.
Compaq is also incorporating by reference additional documents that we
may file with the SEC between the date of the Prospectus to which this
Registration Statement relates and the date of the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold.
Copies of the documents incorporated by reference above may be obtained
from Compaq without charge, except the exhibits (unless we have specifically
incorporated by reference an exhibit in this Prospectus), by writing to:
Compaq Computer Corporation
20555 SH 249
Houston, Texas 77070
Telephone: (800) 433-2391
Attention: Investor Relations
Item 5. Interests of Named Experts and Counsel.
The legality of the common stock offered by this Prospectus has been
passed upon for Compaq by Linda S. Auwers, Vice President and Associate
General Counsel of Compaq. Ms. Auwers has options to purchase Compaq common
stock, owns shares of Compaq common stock as a participant in an employee
benefit plan, and is eligible to participate in Compaq's 1998 Stock Option
Plan.
Item 6. Indemnification of Directors and Officers.
Exculpation. Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL") permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision may not
eliminate or limit the liability of a director for any breach of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for any unlawful payment of dividends, or unlawful
stock purchase or redemption, or for any transaction from which the director
derived an improper personal benefit.
Compaq's Restated Certificate of Incorporation limits the personal
liability of a director to Compaq and its stockholders for monetary damages
for a breach of fiduciary duty as a director to the fullest extent permitted
by the DGCL.
Indemnification. Section 145 of the DGCL permits a corporation to
indemnify any of its directors or officers who was or is a party or is
threatened to be made a party to any third party proceeding by reason of the
fact that such person is or was a director or officer of the corporation,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that such person's
conduct was unlawful. In a derivative action, i.e., one by or in the right of
a corporation, the corporation is permitted to indemnify any of its directors
or officers against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that such person is fairly and reasonably
entitled to indemnity for such expenses despite such adjudication of
liability.
Compaq's Bylaws provide for indemnification of directors and officers of
Compaq against liability they may incur in their capacities as such to the
fullest extent permitted by the DGCL.
Insurance. Compaq has in effect directors' and officers' liability
insurance with a limit of $100 million and and fiduciary liability insurance
with a limit of $25 million. The fiduciary liability insurance covers actions
of directors and officers as well as other employees with fiduciary
responsibilities under ERISA.
<PAGE>
Item 8. Exhibits
Exhibit No.
- ------------
4.1 Compaq Computer Corporation 1998 Stock Option Plan.
5.1 Opinion of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, as to the legality of the
securities being registered.
23.1 Consent of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, is included in the opinion
filed as Exhibit 5.1 to this Registration Statement.
23.2 Consent of Price Waterhouse LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of
this Registration Statement.
Item 9. Undertakings.
Compaq hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the provisions described in Item 15 above, or
otherwise, Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or controlling
person of 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, Registrant will, unless in
the opinion of its 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.
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, and the State of Texas, on
this 11th day of June, 1998.
COMPAQ COMPUTER CORPORATION
By: /s/ J. David Cabello
-----------------------------
J. David Cabello, Senior Vice
President and General Counsel
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Compaq Computer
Corporation, do hereby constitute and appoint Eckhard Pfeiffer, Earl L. Mason
and J. David Cabello, or any one of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers, and to execute any and all instruments
for us and in our names in the capacities indicated below, which said
attorneys and agents, or any one of them, may deem necessary or advisable to
enable said corporation to comply with the Securities Act of 1933, as amended,
and any rules, regulations, and requirements of the Securities and Exchange
Commission, in connection with the Company's registration statements on Form
S-8 regarding the Compaq Computer Corporation Stock Option Plan, including
specifically, but without limitation, power and authority to sign for us or
any of us, in our names in the capacities indicated below, such registration
statement on Form S-8 and any and all amendments thereto; and we do each
hereby ratify and confirm all that the said attorneys and agents, or either of
them, shall do or cause to be done by virtue hereof. The following persons
executed this power of attorney in the capacities and on the dates indicated
below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below.
Signature Title Date
- --------- ----- ----
/s/ Eckhard Pfeiffer President, Chief Executive Officer June 11, 1998
- -------------------- and Director (principal executive
(Eckhard Pfeiffer) officer)
/s/ Earl L.Mason Senior Vice President and Chief June 11, 1998
- ------------------- Financial Officer (principal
(Earl L. Mason) financial and accounting officer)
/s/ Benjamin M. Rosen Chairman of the Board of Directors June 11, 1998
- ---------------------
(Benjamin M. Rosen)
/s/ Lawrence T. Babbio Director June 11, 1998
- ----------------------
(Lawrence T. Babbio)
/s/ Robert Ted Enloe III Director June 11, 1998
- ------------------------
(Robert Ted Enloe, III)
/s/ George H. Heilmeier Director June 11, 1998
- -----------------------
(George H. Heilmeier)
/s/ Peter N. Larson Director June 11, 1998
- -------------------
(Peter N. Larson)
/s/ Kenneth L. Lay Director June 11, 1998
- ------------------
(Kenneth L. Lay)
/s/ Thomas J. Perkins Director June 11, 1998
- ---------------------
(Thomas J. Perkins)
/s/ Kenneth Roman Director June 11, 1998
- -----------------
(Kenneth Roman)
/s/ Lucille S. Salhany Director June 11, 1998
- ----------------------
(Lucille S. Salhany)
/s/ Frank P. Doyle Director June 12, 1998
- ------------------
(Frank P. Doyle)
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
4.1 Compaq Computer Corporation 1998 Stock Option Plan.
5.1 Opinion of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, as to the legality of the
securities being registered.
23.1 Consent of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, is included in the opinion
filed as Exhibit 5.1 to this Registration Statement.
23.2 Consent of Price Waterhouse LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of
this Registration Statement.
EXHIBIT 4.1
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
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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
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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 than 50% of the combined voting power
of voting securities of Compaq or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a
merger or consolidation effected to implement a recapitalization of Compaq (or
similar transaction) in which no person acquires more than 30% of the combined
voting power of Compaq's then outstanding securities shall not constitute a
Change in Control; or (iv) Compaq stockholders approve a plan of complete
liquidation of Compaq or an agreement for the sale or disposition by Compaq of
all or substantially all of Compaq's assets. If any of the events enumerated
in clauses (i) through (iv) occur, the Board shall determine the effective
date of the Change in Control resulting therefrom, for purposes of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean a committee of the Board designated by the Board to
administer the Plan and composed of persons who (i) to the extent necessary to
comply with Rule 16b-3 are "Non-Employee Directors" within the meaning of Rule
16b-3 and (ii) to the extent any Award granted hereunder is intended to
qualify as performance-based compensation under Section 162(m) of the Code,
constitute "outside directors" within the meaning of Section 162(m) of the
Code and the regulations thereunder. Until otherwise determined by the Board,
the Human Resources Committee designated by the Board shall be the Committee
under the Plan.
"Compaq" shall mean Compaq Computer Corporation, together with any successor
thereto.
"Election Date" shall mean with respect to an Option hereunder the date of the
appointment, election, or re-election of the director that prompted the grant
of such Option.
"Eligible Director" shall mean each director of the Company who is not an
employee of the Company or any of the Company's subsidiaries (as defined in
Section 425(f) of the Code).
"Employee" shall mean an employee of Compaq or of any Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Executive Officer" shall mean, at any time, an individual who is an executive
officer of Compaq within the meaning of Exchange Act Rule 3b-7 as promulgated
and interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time, or who is an officer of
Compaq within the meaning of Exchange Act Rule 16a-1(f) as promulgated and
interpreted by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
"Fair Market Value" shall mean the fair market value of the property or other
item being valued, as determined by the Committee in its sole discretion, and
for purposes of determining the exercise price of an Award shall be equal to
the Dow Jones composite close for the Shares as reported on the Dow Jones news
retrieval system on the date of the Award (or on the most recent business day
if the date of an Award is a holiday).
"Incentive Stock Option" shall mean a right to purchase Shares from Compaq
that is intended to meet the requirements of Section 422 of the Code or any
successor provision thereto.
"Net After-Tax Amount" shall mean the net amount of compensation, assuming for
this purpose only that all vested Awards and other forms of compensation
subject to vesting upon such Change of Control are exercised upon such Change
in Control, to be received (or deemed to have been received) by such
Participant in connection with such Change of Control under any agreement and
under any other plan, arrangement or contract of Compaq to which such
Participant is a party, after giving effect to all income and excise taxes
applicable to such payments.
"Non-Qualified Stock Option" shall mean a right to purchase Shares from Compaq
that is granted under Section 5 or Section 7 of the Plan and that is not
intended to be an Incentive Stock Option.
"Notice" shall mean any written notice, contract, or other instrument or
document evidencing any Award, which may, but need not, be executed or
acknowledged by a Participant.
"Option" shall mean a Non-Qualified Stock Option or Incentive Stock Option.
"Participant" shall mean any Employee or Director selected to receive an Award
under the Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Plan" shall mean this Compaq Computer Corporation 1998 Stock Option Plan.
"Release Date" shall mean the third business day occurring after Compaq's
earnings release for the preceding fiscal period. In calculating the Release
Date, the day of an earnings release shall be counted if the earnings release
is made before the opening of trading on the New York Stock Exchange and shall
not be counted if such release is made after the opening of trading.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by the SEC
under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto and shall include the staff thereof.
"Shares" shall mean shares of the common stock, $.0l par value, of Compaq or
such other securities of Compaq as may be designated by the Committee from
time to time.
"Stock Appreciation Right" shall mean any right granted under Section 6 of the
Plan.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired
by Compaq or with which Compaq combines.
"Window" shall mean a period of time beginning on a Release Date and ending at
the end of the second month of the fiscal quarter in which such Release Date
occurs.
SECTION 3. Administration.
--------------
(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 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.
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; provided, however,
that no grant to an Executive Officer shall be exercisable until the earlier
of (i) six months after the date of grant or (ii) the Participant's ceasing to
be an Executive Officer. The Committee and the Board may impose such
conditions with respect to the exercise of options, including without
limitation, any relating to the application of federal or state securities
laws, as it may deem necessary or advisable.
(e) Payment. No Shares shall be delivered pursuant to any exercise of an
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Option until payment in full of the option price therefor is received by
Compaq. Such payment may be made (i) in cash, or its equivalent, (ii) if and
to the extent permitted by the Committee, by exchanging Shares owned by the
optionee (which are not the subject of any pledge or other security interest),
(iii) if and to the extent permitted by the Committee, by surrendering all or
part of that Option or any other Option, or (iv) by a combination of the
foregoing, provided that the combined value of all cash and cash equivalents
and the Fair Market Value of any such Shares so tendered to Compaq as of the
date of such tender is at least equal to such option price.
SECTION 6. Stock Appreciation Rights.
---------------------------
(a) Grant. The grant of Stock Appreciation Rights shall be limited to
------
Employees in those locations in which the law, including exchange control
regulations and taxation, unduly restricts the grant of Options. Subject to
the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Employees to whom Stock Appreciation Rights shall
be granted, the number of Shares to be covered by each Stock Appreciation
Right Award, and the conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights shall have a grant price equal to the Fair
Market Value of the related Shares on the day of the Award, and if granted to
Executive Officers, shall not be exercisable earlier than six months after
grant.
(b) Exercise and Payment. A Stock Appreciation Right shall entitle the
---------------------
Participant to receive an amount equal to the excess of the Fair Market Value
of a Share on the date of exercise of the Stock Appreciation Right over the
grant price thereof. The Committee shall determine whether a Stock
Appreciation Right shall be settled in cash, Shares or a combination of cash
and Shares.
(c) Other Terms and Conditions. Subject to the terms of the Plan, the
--------------------------
Committee shall determine, at or after the grant of a Stock Appreciation
Right, the term, methods of exercise, methods and form of settlement, and any
other terms and conditions of any Stock Appreciation Right. Any such
determination by the Committee may be changed by the Committee from time to
time and may govern the exercise of Stock Appreciation Rights granted or
exercised prior to such determination as well as Stock Appreciation Rights
granted or exercised thereafter. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.
SECTION 7. Termination or Suspension of Employment. The following
-----------------------------------------
provisions shall apply in the event of the Participant's termination of
employment unless the Committee shall have provided otherwise, either at the
time of the grant of the Award or thereafter.
(a) Termination of Employment. If a Participant's employment with Compaq
-------------------------
or its Affiliates is terminated for any reason other than death, permanent and
total disability, or retirement, the Participant's right to exercise any
Nonqualified Stock Option or Stock Appreciation Right shall terminate, and
such Option or Stock Appreciation Right shall expire, on the earlier of (i)
the first anniversary of such termination of employment or (ii) the date such
Option or Stock Appreciation Right would have expired had it not been for the
termination of employment. The Participant shall have the right to exercise
such Option or Stock Appreciation Right prior to such expiration to the extent
it was exercisable at the date of such termination of employment and shall not
have been exercised.
(b) Death, Disability or Retirement. If a Participant's employment with
-------------------------------
Compaq or its Affiliates is terminated by death, permanent and total
disability, or retirement, the Participant or his successor (if employment is
terminated by death) shall have the right to exercise any Nonqualified Stock
Option or Stock Appreciation Right to the extent it was exercisable at the
date of such termination of employment and shall not have been exercised, but
in no event shall such option be exercisable later than the date the Option
would have expired had it not been for the termination of such employment.
The meaning of the terms "total and permanent disability" and "retirement"
shall be determined by the Committee.
(c) Acceleration and Extension of Exercisability. Notwithstanding the
--------------------------------------------
foregoing, the Committee may, in its discretion, provide (i) that an Option
granted to an Employee Participant may terminate at a date earlier than that
set forth above, (ii) that an Option granted to an Employee Participant not
subject to Section 16 of the Exchange Act may terminate at a date later than
that set forth above, provided such date shall not be beyond the date the
Option would have expired had it not been for the termination of the
Participant's employment, and (iii) that an Option or Stock Appreciation Right
may become immediately exercisable when it finds that such acceleration would
be in the best interests of Compaq.
(d) Leave Without Pay. In the event that an employee Participant takes a
-----------------
"leave without pay," all of such Participant's Awards or any portion thereof
shall, to the extent unvested immediately prior to such leave, cease to vest
during the period of such leave, and to the extent exercisable immediately
prior to such leave, shall remain exercisable during the period of such leave
in accordance with the terms thereof.
SECTION 8. Director Options.
------------------
(a) Initial Grants. Each Eligible Director who is first elected or
---------------
appointed to the Board shall be granted one Option to acquire 31,250 Shares.
In the event that the Election Date occurs during the Window, such Option
shall be granted on the Election Date with respect to such Option. In the
event that such Eligible Director's election or appointment does not occur
during the Window, then such Option shall be granted on the next Release Date.
(b) Annual Options.
----------------
(i) Each Eligible Director who is reelected to the Board at an annual
meeting of the Company's stockholders and who has not received a grant under
Section 8(a) during the period since the most recent previous annual meeting
of the Company's stockholders shall be granted an Option to acquire 25,000
Shares on each Election Date on which he is reelected.
(ii) Each Eligible Director who is elected or re-elected Chairman of the
Board by the Board at its meeting following an annual meeting of the Company's
stockholders and who has not received a grant under Section 8(a) during the
period since the most recent annual meeting of Compaq's stockholders shall be
granted on each Election Date on which he is elected or reelected Chairman of
the Board an Option to acquire 6,250 Shares in addition to any applicable
Option granted under Section 8(b)(i).
(c) Terms and Conditions. Any Option granted under this Section 8 shall
be subject to the following terms and conditions:
(i) Any Options granted under this Section 8 shall be Non-Qualified Stock
Options and the exercise price shall be not less than the Fair Market Value of
the underlying Shares.
(ii) Each Option granted under this Section 8 shall be exercisable at such
times and subject to such terms and conditions as the Board may, in its sole
discretion, specify in the applicable Notice or thereafter; provided, however,
that no grant shall be exercisable for six months after the date of grant.
(iii) Notwithstanding the provisions of this Section 8, Options shall not
be granted under this Section 8 to any Eligible Director in any year in which
such director receives an initial grant or annual grant under the Compaq
Computer Corporation Non-Qualified Stock Option Plan for Non-Employee
Directors.
SECTION 9. Change in Control. Notwithstanding any other provision of the
-----------------
Plan to the contrary, upon a Change in Control all outstanding Awards shall
vest, become immediately exercisable or payable or have all restrictions
lifted as may apply to the type of Award and no outstanding Stock Appreciation
Right may be terminated, amended, or suspended upon or after a Change in
Control; provided, however, that unless otherwise determined by the Committee
at the time of award or thereafter, if it is determined that the Net After-Tax
Amount to be realized by any Participant, taking into account the accelerated
vesting provided for by this Section as well as all other payments to be
received by such Participant in connection with such Change in Control, would
be higher if Awards did not vest in accordance with this Section, then and to
such extent the Awards shall not vest. The determination of whether any such
Award should not vest shall be made by a nationally recognized accounting firm
selected by Compaq, which shall be instructed to consider that (a) Awards and
other forms of compensation subject to vesting upon a Change of Control shall
be vested in the order in which they were granted and within each grant in the
order in which they would otherwise have vested and (b) unless and to the
extent any other plan, arrangement or contract of Compaq pursuant to which any
such payment is to be received provides to the contrary, such other payment
shall be deemed to have occurred after any acceleration of Awards or other
forms of compensation subject to vesting upon a Change of Control.
<PAGE>
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.
SECTION 11. General Provisions.
-------------------
(a) Nontransferability. No Award shall be assigned, alienated, pledged,
------------------
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution; provided, however, that an
Award may be transferable, to the extent set forth in the applicable Notice
and in accordance with procedures adopted by the Committee.
(b) No Rights to Awards. No Employee, Participant or other Person shall
-------------------
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need not be the
same with respect to each recipient.
(c) Share Certificates. All certificates for Shares or other securities
------------------
of Compaq or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
(d) Delegation. Subject to the terms of the Plan and applicable law, the
----------
Committee may delegate to one or more officers or managers of Compaq or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to
grant Awards to, or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by, Employees other than
Executive Officers.
(e) Withholding. A participant may be required to pay to Compaq or any
-----------
Affiliate and Compaq or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of
Compaq to satisfy all obligations for the payment of such taxes. The
Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise, or
payments of any Award.
(f) Notices. Each Award hereunder shall be evidenced by a Notice that
-------
shall be delivered to the Participant and shall specify the terms and
conditions of the Award and any rules applicable thereto.
(g) No Limit on Other Compensation Arrangements. Nothing contained in the
-------------------------------------------
Plan shall prevent Compaq or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for
the grant of options, restricted stock, Shares and other types of Awards
provided for hereunder (subject to stockholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(h) No Right to Employment. The grant of an Award shall not be construed
----------------------
as giving a Participant the right to be retained in the employ of Compaq or
any Affiliate. Further, Compaq or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Notice.
(i) No Rights as Stockholder. Subject to the provisions of the applicable
------------------------
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares.
(j) Governing Law. The validity, construction, and effect of the Plan and
-------------
any rules and regulations relating to the Plan and any Notice shall be
determined in accordance with the laws of the State of Delaware.
(k) Severability. Notwithstanding any other provision or section of the
------------
Plan, if any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any Person
or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws (but only to such extent necessary
to comply with such laws), or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(l) Other Laws. The Committee may refuse to issue or transfer any Shares
----------
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle Compaq
to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to Compaq by a Participant, other holder or beneficiary in connection
with the exercise of such Award shall be promptly refunded to the relevant
Participant, holder, or beneficiary. Without limiting the generality of the
foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of Compaq, and no such offer shall be outstanding, unless and until
the Committee in its sole discretion has determined that any such offer, if
made, would be in compliance with all applicable requirements of the U.S.
federal securities laws and any other laws to which such offer, if made, would
be subject.
(m) No Trust or Fund Created. Neither the Plan nor any Award shall create
------------------------
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Compaq or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments
from Compaq or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of Compaq or any
Affiliate.
(n) No Fractional Shares. No fractional Shares shall be issued or
----------------------
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any
rights thereto shall be canceled, terminated, or otherwise eliminated.
(o) Headings. Headings are given to the Sections and subsections of the
--------
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 12. Term of the Plan.
-------------------
(a) Effective Date. The Plan shall be effective upon approval by the
--------------
stockholders of Compaq.
(b) Expiration Date. No Incentive Stock Option shall be granted under the
---------------
Plan more than ten years after the effective date of the Plan. Unless
otherwise expressly provided in the Plan or in an applicable Notice, any Award
granted hereunder may, and the authority of the Board or the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award shall, continue after the
authority for grant of new Awards hereunder has been exhausted.
Exhibit 5.1
June 12, 1998
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
Ladies and Gentlemen:
I am the Vice President and Associate General Counsel of Compaq Computer
Corporation ("Compaq") and have acted in such capacity in connection with
Compaq's Registration Statement on Form S-8 to register under the Securities
Act of 1933, as amended, the offer and sale of 150,000,000 shares of Compaq's
common stock (the "Shares") pursuant to the Compaq Computer Corporation 1998
Stock Option Plan. In connection therewith, I (or attorneys under my
supervision) have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as I have deemed
necessary for the purpose of this opinion.
Upon the basis of the foregoing, I am of the opinion that the issuance of
the Shares has been duly authorized and, when and to the extent issued for
adequate consideration therefor in accordance with the Plan, will be validly
issued, fully paid and non-assessable shares of Compaq.
I consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ Linda S. Auwers
Linda S. Auwers
Vice President and
Associate General Counsel
EXHIBIT 23.2
CONSENT OF PRICE WATERHOUSE LLP,
INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Compaq Computer Corporation ("Compaq") of our report
dated January 21, 1998, except as to Note 11, which is as of January 26, 1998,
appearing on page 20 of Compaq's Annual Report on Form 10-K for the year ended
December 31, 1997.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Houston, Texas
June 12, 1998
