{"id":40427,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/security-agreement-compaq-computer-corp-and-michael-d.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"security-agreement-compaq-computer-corp-and-michael-d","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/security-agreement-compaq-computer-corp-and-michael-d.html","title":{"rendered":"Security Agreement &#8211; Compaq Computer Corp. and Michael D. Capellas"},"content":{"rendered":"<pre><p align=\"CENTER\"><font size=\"2\"><b>SECURITY AGREEMENT<\/b><\/font><\/p>\n\n<p><font size=\"2\">        SECURITY AGREEMENT dated as of October 20, 2000, made and entered into by and among MICHAEL D. CAPELLAS (the \"Borrower\") and COMPAQ COMPUTER CORPORATION, a \nDelaware Corporation (\"Compaq\"). <\/font><\/p>\n\n<p align=\"CENTER\"><font size=\"2\"><b>PRELIMINARY STATEMENTS<\/b><\/font><\/p>\n\n<\/pre>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">A.<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower and Compaq have entered into a loan evidenced by a note dated as of October 20, 2000, (said loan as it may hereafter be amended or otherwise modified from time to<br \/>\ntime, being the &#8220;Loan&#8221; and said note as it may hereafter be amended or otherwise modified from time to time being the &#8220;Note&#8221;). <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">B.<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower has previously purchased 125,000 shares of common stock of Compaq (the &#8220;Shares&#8221;), which shares are held in Account<br \/>\nNo. 565-1B869-1-5-400 (the &#8220;Account&#8221;) in the name of Michael D. Capellas at the New York, New York offices of Salomon Smith Barney Inc (the<br \/>\n&#8220;Securities Intermediary&#8221;). <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">C.<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nShares were previously designated as collateral for a loan made by Compaq to Borrower on July 22, 1999, as evidenced by the Promissory Note and Security Agreement of the<br \/>\nsame date (the &#8220;1999 Loan&#8221;). Compaq relinquishes its prior security interest in the Shares with respect to the 1999 Loan. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">D.<\/font><\/dt>\n<dd><font size=\"2\">Compaq<br \/>\nhas appointed the Securities Intermediary for purposes of maintaining the Account and performing certain actions with respect thereto in accordance with the terms of an Account<br \/>\nControl Agreement. <\/font><\/dd>\n<\/dl>\n<\/ul>\n<p><font size=\"2\">        NOW,<br \/>\nTHEREFORE, in consideration of the premises and in order to induce Compaq to make the Loan, the Borrower hereby agrees with Compaq for the benefit of Compaq, as follows: <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n1.<\/font><font size=\"2\"><i>    Certain Defined Terms.<\/i><\/font><font size=\"2\">    Unless otherwise defined in this Section 1, (a) capitalized<br \/>\nterms used in this Agreement have the meanings specified herein, and (b) terms used in Article 8 or 9 of the Uniform Commercial Code from time to time in effect in the State of Texas<br \/>\n(the &#8220;TXUCC&#8221;) are used herein as therein defined. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the<br \/>\nplural forms of the terms defined): <\/font><\/p>\n<p><font size=\"2\">        &#8220;Book-Entry<br \/>\nSecurity&#8221; means a security maintained in the form of entries (including, without limitation the Security Entitlements in, and the financial assets based on, such<br \/>\nsecurity) in the commercial book-entry system of the Federal Reserve System. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Collateral&#8221;<br \/>\nhas the meaning specified in Section 2. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Entitlement<br \/>\nHolder&#8221; means a Person that (i) is an &#8220;entitlement holder&#8221; as defined in Section 8-102(a)(7) of the TXUCC (except in respect of a<br \/>\nBook-Entry Security); and (ii) in respect of any Book-Entry Security, is an &#8220;entitlement holder&#8221; as defined in 31 C.F.R. Section 357.2 (or, as applicable to such<br \/>\nBook-Entry Security, the corresponding Federal Book-Entry Regulations governing such Book-Entry Security) which, to the extent required or permitted by the Federal<br \/>\nBook-Entry Regulations, is also an &#8220;entitlement holder&#8221; as defined in Section 8-102(a)(7) of the TXUCC. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Event<br \/>\nof Default&#8221; means the failure to pay any amounts within fifteen days of when due under the Note, or failure to comply with any obligation herein within thirty days after receipt<br \/>\nof written notice. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Federal<br \/>\nBook-Entry Regulations&#8221; means (a) the federal regulations contained in Subpart B (&#8220;Treasury\/Reserve Automated Debt Entry System (TRADES)&#8221; governing<br \/>\nBook-Entry Securities consisting of U.S. Treasury bonds, notes and bills) and Subpart D (&#8220;Additional Provisions&#8221;) of 31 C.F.R. <\/font><\/p>\n<hr noshade>\n<p><\/p>\n<p><font size=\"2\"><br \/>\nPart 357, 31 C.F.R. Section 357.10 through Section 357.14 and Section 357.41 through Section 357.44 (including related defined terms in 31 C.F.R.<br \/>\nSection 357.2); and (b) to the extent substantially identical to the federal regulations referred to in clause (a) above (as in effect from time to time), the federal regulations<br \/>\ngoverning other Book-Entry Securities. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Obligations&#8221;<br \/>\nhas the meaning specified in Section 3. <\/font><\/p>\n<p><font size=\"2\">        &#8220;Pledged<br \/>\nShares&#8221; has the meaning specified in Section 2(a)(i). <\/font><\/p>\n<p><font size=\"2\">        &#8220;Securities<br \/>\nIntermediary&#8221; means a Person that (a) is a &#8220;securities intermediary&#8221; as defined in Section 8-102(a)(14) of the TXUCC and (b) in respect of<br \/>\nany Book-Entry Security, is also a &#8220;securities intermediary&#8221; as defined in 31 C.F.R. Section 357.2 (or, as applicable to such Book-Entry Security, the corresponding<br \/>\nFederal Book-Entry Regulations governing such Book-Entry Security). <\/font><\/p>\n<p><font size=\"2\">        &#8220;Security<br \/>\nEntitlement&#8221; means (a) &#8220;security entitlement&#8221; as defined in Section 8-102(a)(17) of the TXUCC (except in respect of a Book-Entry<br \/>\nSecurity); and (b) in respect of any Book-Entry Security, a &#8220;security entitlement&#8221; as defined in 31 C.F.R. Section 357.2 (or, as applicable to such Book-Entry<br \/>\nSecurity, the corresponding Federal Book-Entry Regulations governing such Book-Entry Security) which, to the extent required or permitted by the Federal Book-Entry<br \/>\nRegulations, is also a &#8220;security entitlement&#8221; as defined in Section 8-102(a)(17) of the TXUCC. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n2.<\/font><font size=\"2\"><i>    Grant of Security.<\/i><\/font><font size=\"2\">    The Borrower hereby pledges and assigns to Compaq and hereby grants to Compaq a<br \/>\ncontinuing security interest in and to all of Borrower&#8217;s right, title and interest in and to the following (whether consisting of investment securities, Book-Entry Securities or other<br \/>\nsecurities, Security Entitlements, financial assets or other investment property, accounts, general intangibles, instruments or documents, chattel paper, securities accounts or other property, assets<br \/>\nor rights), whether now owned or hereafter acquired, wherever located and whether now or hereafter existing (collectively, the &#8220;Collateral&#8221;): <\/font><\/p>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(a)<\/font><\/dt>\n<dd><font size=\"2\">the<br \/>\nshares and issued by Compaq, whether or not evidenced by certificates, and the certificates, if any, representing such shares, all security therefore, and all dividends,<br \/>\ndistributions, profits, bonuses, premiums, income, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of or in exchange for any<br \/>\nor all of such shares or other<br \/>\ninterests, together with all shares of stock which may hereafter be delivered by the Borrower; provided, however, that in no event shall such shares represent five percent (5%) or more of the<br \/>\noutstanding shares of any issuer (&#8220;Pledged Shares&#8221;); <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(b)<\/font><\/dt>\n<dd><font size=\"2\">the<br \/>\nAccount, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing the Account, all Securities Entitlements from time to<br \/>\ntime maintained or carried in the Account, and all financial assets held in or credited to the Account; <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(c)<\/font><\/dt>\n<dd><font size=\"2\">all<br \/>\nnotes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed, maintained or held by the<br \/>\nSecurities Intermediary and all interest, dividends, cash, instruments and other property and assets from time to time received, receivable or otherwise distributed in respect of the Account; and <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(d)<\/font><\/dt>\n<dd><font size=\"2\">all<br \/>\nproceeds (including cash proceeds) of any and all of the foregoing Collateral (including, but not limited to, proceeds that constitute property of the types described above in<br \/>\nthis Section 2). <\/font><\/dd>\n<\/dl>\n<\/ul>\n<p><font size=\"2\">        SECTION<br \/>\n3.<\/font><font size=\"2\"><i>    Security for Obligations.<\/i><\/font><font size=\"2\">    This Agreement secures the payment of all obligations of the Borrower, now<br \/>\nor hereafter existing, under the Loan, the Note, and this Agreement, whether for principal, interest, fees, expenses or otherwise (all such Obligations of Borrower being collectively the<br \/>\n&#8220;Obligations&#8221;). Without limiting the generality of the foregoing, this Agreement secures the payment of <\/font><\/p>\n<p align=\"CENTER\"><font size=\"2\">2<\/font><\/p>\n<hr noshade>\n<p><\/p>\n<p><font size=\"2\"><br \/>\nall amounts that constitute part of the Obligations and would be owed by Borrower to Compaq under the Loan and the Note but for the fact that they are unenforceable or not allowable due to the<br \/>\nexistence of a bankruptcy, reorganization, or similar proceeding involving the Borrower. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n4.<\/font><font size=\"2\"><i>    Delivery of Collateral.<\/i><\/font><font size=\"2\">    All certificates or instruments representing or evidencing the Collateral, if<br \/>\nany, shall be delivered to and held by the Securities Intermediary on behalf of Compaq pursuant to the Account Control Agreement and shall be in suitable form for transfer by delivery, or shall be<br \/>\naccompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Securities Intermediary. Compaq shall have the right at any time to exchange<br \/>\ncertificates or instruments representing or evidencing any of the Collateral for certificates or instruments of smaller or larger denominations. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n5.<\/font><font size=\"2\"><i>    <\/i><\/font><font size=\"2\">Omitted.    <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n6.<\/font><font size=\"2\"><i>    Representations and Warranties.<\/i><\/font><font size=\"2\">    The Borrower represents and warrants as follows: <\/font><\/p>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(a)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nPledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(b)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower is the sole legal owner of the Collateral free and clear of any lien, security interest, option, or other charge, encumbrance, or restriction (including, but not limited<br \/>\nto, any restriction (contractual or otherwise) on the transferability of the Pledged Shares) except for the security interest created by this Agreement and any remaining security interest created by<br \/>\nthe Security Agreement in association with the 1999 Loan. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(c)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\npledge and assignment of the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment of the<br \/>\nObligations. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(d)<\/font><\/dt>\n<dd><font size=\"2\">No<br \/>\nconsent of any other person or entity and no authorization, approval, consent or other action by, and no notice to or filing or registration with, any governmental authority or<br \/>\nregulatory body is required for (i) the pledge and assignment by the Borrower of the Pledged Shares pursuant to this Agreement, (ii) the execution, delivery or performance of this<br \/>\nAgreement by the Borrower, (iii) the creation, perfection or maintenance of the security interest created hereby (including, but not limited to, the first priority nature of such security<br \/>\ninterest) or (iv) the exercise by Compaq of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Shares pursuant to this Agreement (except as may<br \/>\nbe required in connection with any disposition of any portion of the Pledged Shares by laws affecting the offering and sale of securities generally). <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(e)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nPledged Shares do not constitute five percent or more of the issued and outstanding shares of stock of Compaq. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(f)<\/font><\/dt>\n<dd><font size=\"2\">There<br \/>\nare no legends or restrictions on the certificates representing any of the Pledged Shares. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(g)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nPledged Shares are either listed or admitted to trading on the New York Stock Exchange or the American Stock Exchange or are quoted on the NASDAQ National Market. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(h)<\/font><\/dt>\n<dd><font size=\"2\">No<br \/>\norder of the Securities and Exchange Commission and no provision of any federal or state securities laws or state &#8220;Blue Sky&#8221; laws is or will be violated or contravened by any of<br \/>\n(i) the making of the Loan to the Borrower, (ii) the application of the proceeds of the Loan, (iii) the repayment by the Borrower of all or any portion of the Loan,<br \/>\n(iv) the payment by the Borrower of any interest on the Loan, (v) the pledge and assignment by the Borrower of the Pledged Shares pursuant to this Agreement, (vi) the execution,<br \/>\ndelivery, or performance of this Agreement by the Borrower or (vii) the creation, perfection, or maintenance of the security interest created hereby. <\/font><\/dd>\n<\/dl>\n<\/ul>\n<p align=\"CENTER\"><font size=\"2\">3<\/font><\/p>\n<hr noshade>\n<ul>\n<ul>\n<\/ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(i)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower&#8217;s social security number is                        . <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(j)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower, independently and without reliance upon Compaq and based on such documents and information as the Borrower has deemed appropriate, has made his own credit analysis and<br \/>\ndecision to enter into this Agreement. <\/font><\/dd>\n<\/dl>\n<\/ul>\n<p><font size=\"2\">        SECTION<br \/>\n7.<\/font><font size=\"2\"><i>    Further Assurances.<\/i><\/font><font size=\"2\">    The Borrower agrees that at any time and from time to time, at its sole expense,<br \/>\nBorrower will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable or that Compaq, may reasonably request, in order to<br \/>\nperfect and protect any security interest granted or purported to be granted by it hereunder or to enable Compaq to exercise and enforce its rights and remedies hereunder with respect to any of the<br \/>\nCollateral. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n8.<\/font><font size=\"2\"><i>    Compaq Appointed Attorney-in-Fact.<\/i><\/font><font size=\"2\">    The Borrower hereby appoints Compaq the<br \/>\nBorrower&#8217;s attorney-in-fact, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in Compaq&#8217;s discretion<br \/>\nto take any action and to execute any instrument which Compaq may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Borrower under<br \/>\nSection 11), including, without limitation, to receive, indorse and collect all instruments made payable to the Borrower representing any dividend or other distribution in respect of the<br \/>\nPledged Shares or any part thereof and to give full discharge for the same and to file any reports or other filings required by Rule 144 or any other governmental authority or regulatory body<br \/>\nthat may be substituted therefore or with any national securities exchange. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n9.<\/font><font size=\"2\"><i>    Compaq May Perform.<\/i><\/font><font size=\"2\">    If the Borrower fails to perform any agreement contained herein, Compaq may<br \/>\nitself perform, or cause performance of, such agreement, and the expenses of Compaq incurred in connection therewith shall be payable by the Borrower under Section 15. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n10.<\/font><font size=\"2\"><i>    No Assumption of Duties; Reasonable Care.<\/i><\/font><font size=\"2\">    The powers conferred on Compaq hereunder are solely to<br \/>\nprotect Compaq&#8217;s interest in the Collateral and shall not impose any duty upon Compaq to exercise any such powers. Compaq shall not have any duty as to any of the Collateral, as to ascertaining or<br \/>\ntaking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any of the Collateral, whether or not Compaq has or is deemed to have knowledge of such<br \/>\nmatters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any of the Collateral. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n11.<\/font><font size=\"2\"><i>    Voting Rights; Dividends; Etc.<\/i><\/font><font size=\"2\">    <\/font><\/p>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(a)<\/font><\/dt>\n<dd><font size=\"2\">So<br \/>\nlong as no Event of Default or event which, with the giving of notice or the lapse of time, or both, would become an Event of Default shall have occurred and be continuing: <\/p>\n<p><\/font><\/p>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(i)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral or any<br \/>\npart thereof for any purpose not inconsistent with the terms of this Agreement or the Loan. <\/font><\/dd>\n<\/dl>\n<\/dd>\n<\/dl>\n<\/ul>\n<p align=\"CENTER\"><font size=\"2\">4<\/font><\/p>\n<hr noshade>\n<ul>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(ii)<\/font><\/dt>\n<dd><font size=\"2\">The<br \/>\nBorrower shall be entitled to receive and retain any and all dividends paid in respect of the Collateral; provided that any and all <\/font><\/dd>\n<\/dl>\n<\/ul>\n<\/ul>\n<table width=\"100%\" border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"5%\"><font size=\"2\">(A).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"82%\"><font size=\"2\">dividends (including, but not limited to, stock dividends) paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange<br \/>\nfor, any of the Collateral for any reason, including, but not limited to, any change in the number or kind of outstanding shares of any securities of any issuer of any of the Pledged Shares, or any successor to any such issuer, by reason of any<br \/>\nrecapitalization, merger, consolidation, reorganization, separation, liquidation, stock split, stock dividend, combination of shares, or other similar corporate event,<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"5%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"1%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"82%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"5%\"><font size=\"2\">(B).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"82%\"><font size=\"2\">dividends and other distributions paid or payable in cash in respect of any of the Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus<br \/>\nor paid-in-surplus, and<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"5%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"1%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"82%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"5%\"><font size=\"2\">(C).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"82%\"><font size=\"2\">cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any of the Collateral,<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"12%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td colspan=\"3\"><font size=\"2\"><br \/>\nshall be, and shall be forthwith delivered to Compaq on behalf of Compaq, as applicable, to hold as Collateral and shall, if received by the Borrower, be received in trust for the benefit of Compaq, be segregated from the other property or funds of<br \/>\nthe Borrower, and be forthwith delivered to Compaq as Collateral in the same form as so received (with any necessary indorsement or assignment).<\/font><\/td>\n<\/tr>\n<\/table>\n<ul>\n<ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(iii)<\/font><\/dt>\n<dd><font size=\"2\">Compaq<br \/>\nshall cause to be executed and delivered to the Borrower all such proxies and other instruments as the Borrower may reasonably<br \/>\nrequest for the purpose of enabling the Borrower to exercise the voting and other rights which the Borrower is entitled to exercise pursuant to Section 11(a)(i) and to receive the<br \/>\ndividends which the Borrower is authorized to receive and retain pursuant to Section 11(a)(ii). <\/font><\/dd>\n<\/dl>\n<p>\n<\/ul>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(b)<\/font><\/dt>\n<dd><font size=\"2\">Upon<br \/>\nthe occurrence and during the continuance of an Event of Default or an event which, with the giving of notice or the lapse of time, or both, would become an Event of Default: <\/p>\n<p><\/font><\/p>\n<dl compact>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(i)<\/font><\/dt>\n<dd><font size=\"2\">All<br \/>\nrights of the Borrower (A) to exercise or refrain from exercising the voting and other consensual rights which the Borrower would otherwise<br \/>\nbe entitled to exercise pursuant to Section 11(a)(i) shall, upon notice to the Borrower by Compaq, cease and (B) to receive the dividends which the Borrower would otherwise be<br \/>\nauthorized to receive and retain pursuant to Section 7(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in Compaq which shall thereupon have the sole<br \/>\nright to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Collateral such dividends. <\/p>\n<p><\/font><\/dd>\n<dt style=\"margin-bottom:-11pt;\"><font size=\"2\">(ii)<\/font><\/dt>\n<dd><font size=\"2\">All<br \/>\ndividends which are received by the Borrower contrary to the provisions of Section 11(b)(i) shall be received in trust for the<br \/>\nbenefit of Compaq, shall be segregated from other property and funds of the Borrower and shall be forthwith paid over to Compaq as Collateral in the same form as so received (with any necessary<br \/>\nindorsement). <\/font><\/dd>\n<\/dl>\n<\/dd>\n<\/dl>\n<\/ul>\n<p><font size=\"2\">        SECTION 12.<\/font><font size=\"2\"><i>    Transfers and Other Liens.<\/i><\/font><font size=\"2\">    The Borrower will not (a) sell, assign (by<br \/>\noperation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, or (b) create or permit to exist any lien, security interest, option, right<br \/>\nof first refusal, or other charge or encumbrance upon or with respect to any of the Collateral, except for the security interest under this Agreement. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n13.<\/font><font size=\"2\"><i>    Continuing Security Interest; Assignment under Credit Agreement.<\/i><\/font><font size=\"2\">    This Agreement shall create a<br \/>\ncontinuing security interest in the Collateral and shall (a) remain in full force and effect <\/font><\/p>\n<p align=\"CENTER\"><font size=\"2\">5<\/font><\/p>\n<hr noshade>\n<p><\/p>\n<p><font size=\"2\"><br \/>\nuntil the later of (i) the payment in full in cash of the Obligations and all other amounts payable under this Agreement and (ii) the expiration or termination of the Commitment,<br \/>\n(b) be binding upon the Borrower and the heirs, executors, administrators, legal representatives, successors and assigns of the Borrower, and (c) inure to the benefit of, and be<br \/>\nenforceable by, Compaq and the successors, transferees, and assigns of Compaq. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n14.<\/font><font size=\"2\"><i>    Remedies.<\/i><\/font><font size=\"2\">    If an Event of Default shall have occurred and be continuing: <\/font><\/p>\n<table width=\"100%\" border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"4%\"><font size=\"2\">(a).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\">Compaq may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to Compaq, all the rights and remedies of a secured party on default under the TXUCC<br \/>\n(whether or not the TXUCC applies to the affected Collateral), and may also, without notice except as specified below, sell the Pledged Shares or any part thereof in one or more parcels at public or private sale, at any exchange, at any broker&#8217;s<br \/>\nboard or at any of Compaq&#8217;s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Compaq may deem commercially reasonable which may include block transactions and\/or sales at prices which are below the current<br \/>\nprices quoted on any open market. The Borrower agrees that, to the extent notice of sale shall be required by law, at least three days notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be<br \/>\nmade shall constitute reasonable notification. Compaq shall not be obligated to make any sale of any of the Collateral regardless of notice of sale having been given. Compaq may adjourn any public or private sale from time to time by announcement at<br \/>\nthe time and place fixed therefore, and such sale may, without further notice, be made at the time and place to which it was so adjourned.<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"1%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"4%\"><font size=\"2\">(b).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\">All cash proceeds received by Compaq in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be held by Compaq as collateral for, and\/or then or at any time thereafter<br \/>\napplied (after payment of any amounts payable to Compaq pursuant to Section 15) in whole or in part by Compaq against, all or any part of the Obligations in such order as Compaq shall elect. Any surplus of such cash or cash proceeds held by<br \/>\nCompaq and remaining after payment in full of all the Obligations shall be paid over to the Borrower or to whomsoever else may be lawfully entitled to receive such surplus.<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"1%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"4%\"><font size=\"2\">(c).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\">Notwithstanding the foregoing, the Borrower and Compaq recognize that any disposition of Collateral must be made in accordance with any applicable federal or state securities laws. The Borrower recognizes that Compaq may<br \/>\ndeem it impracticable to effect a public sale of all or any part of the Collateral subject to such securities laws and that Compaq may, therefore, determine to make one or more private sales of any such Collateral to a restricted group of purchasers<br \/>\nwho will be obligated to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Borrower acknowledges that any such private sale may be at prices and<br \/>\non terms less favorable than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and that<br \/>\nCompaq shall have no obligation to delay sale of any such securities for the period of time necessary to permit Borrower to register such Collateral for public sale under the Securities Act of 1933, as amended.<\/font><\/td>\n<\/tr>\n<\/table>\n<p><font size=\"2\">        SECTION 15.<\/font><font size=\"2\"><i>    Expenses.<\/i><\/font><font size=\"2\">    The Borrower will upon demand pay to Compaq the amount of any and<br \/>\nall reasonable expenses, including, but not limited to, the reasonable fees and expenses of Compaq&#8217;s counsel and of any experts and agents, which Compaq or the Securities Intermediary may incur in<br \/>\nconnection with (a) the administration of this Agreement or the Account Control Agreement, (b) the custody or preservation of, or the sale of, collection from, or other realization upon,<br \/>\nany of the <\/font><\/p>\n<p align=\"CENTER\"><font size=\"2\">6<\/font><\/p>\n<hr noshade>\n<p><\/p>\n<p><font size=\"2\"><br \/>\nCollateral, (c) the exercise or enforcement of any of the rights of Compaq hereunder or (d) the failure by the Borrower to perform or observe any of the provisions hereof. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n16.<\/font><font size=\"2\"><i>    Amendments, Waivers, and Consents.<\/i><\/font><font size=\"2\">    No amendment or waiver of any provision of this Agreement, and no<br \/>\nconsent to any departure by the Borrower from any provision of this Agreement, shall in any event be effective unless the same shall be in writing and signed by Compaq, and then such waiver or consent<br \/>\nshall be effective only in the specific instance and for the specific purpose for which given. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n17.<\/font><font size=\"2\"><i>    Notices; Etc.<\/i><\/font><font size=\"2\">    All notices and other communications provided for hereunder shall be in writing<br \/>\n(including telecopier, telegraphic or cable communication) and, mailed, telecopied, cabled or delivered: <\/font><\/p>\n<table width=\"100%\" border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"4%\"><font size=\"2\">(a).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\">if to Borrower, to him at [Street Address, City, State, Zip]<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"4%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"1%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"4%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"4%\"><font size=\"2\">(b).<\/font><\/td>\n<td width=\"1%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"90%\"><font size=\"2\">if to Compaq, to it at 20555 State Highway 249, Houston, Texas 77070, Attention: Corporate Secretary;<\/font><\/td>\n<\/tr>\n<\/table>\n<p><font size=\"2\">or, as to any such party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this<br \/>\nSection. All such notices and communications shall, when mailed, telecopied or telegraphed, be effective when deposited in the mails, or telecopied, respectively, except that notices and<br \/>\ncommunications to Compaq shall not be effective until received by Compaq. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement to be executed<br \/>\nand delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n18.<\/font><font size=\"2\"><i>    Execution in Counterparts.<\/i><\/font><font size=\"2\">    This Agreement may be executed in any number of counterparts and by<br \/>\ndifferent parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.<br \/>\nDelivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n19.<\/font><font size=\"2\"><i>    Severability.<\/i><\/font><font size=\"2\">    Any provision of this Agreement which is prohibited or unenforceable in any<br \/>\njurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or<br \/>\nunenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n20.<\/font><font size=\"2\"><i>    Governing Law; Entire Agreement.<\/i><\/font><font size=\"2\">    This Agreement shall be governed by, and construed in accordance<br \/>\nwith, the laws of the State of Texas. This Agreement constitutes the entire understanding among the Borrower and Compaq with respect to the subject matter hereof and supersede any prior agreements,<br \/>\nwritten or oral, with respect thereto. <\/font><\/p>\n<p><font size=\"2\">        SECTION<br \/>\n21.<\/font><font size=\"2\"><i>    Resignation and Removal of the Securities Intermediary.<\/i><\/font><font size=\"2\">    Compaq may remove the Securities<br \/>\nIntermediary upon 30 days&#8217; prior written notice to the Borrower and the Securities Intermediary. Upon any such removal of the Securities Intermediary to act hereunder, Compaq shall appoint a<br \/>\nsuccessor Securities Intermediary which successor shall be a securities intermediary having a combined capital and surplus of at least $500,000,000. Notwithstanding the foregoing, no resignation,<br \/>\nremoval or replacement of the securities intermediary shall be effective until a successor Securities Intermediary has been appointed and has agreed in a manner reasonably satisfactory to Compaq to<br \/>\nact as Securities Intermediary hereunder. <\/font><\/p>\n<p align=\"CENTER\"><font size=\"2\">7<\/font><\/p>\n<hr noshade>\n<p><font size=\"2\">        IN<br \/>\nWITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. <\/font><\/p>\n<table width=\"100%\" border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td colspan=\"2\"><font size=\"2\"><br \/>\nBORROWER:<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td colspan=\"2\"><\/p>\n<hr noshade><font size=\"2\"> Michael D. Capellas<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td colspan=\"2\"><font size=\"2\"><br \/>\nCOMPAQ:<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td colspan=\"2\"><font size=\"2\"><br \/>\nCOMPAQ COMPUTER CORPORATION<\/font><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"><br \/>\n <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"><br \/> <\/font><\/td>\n<td width=\"13%\"><font size=\"2\"><br \/>\nBy:<\/font><\/td>\n<td width=\"39%\"><\/p>\n<hr noshade><\/td>\n<\/tr>\n<tr valign=\"TOP\">\n<td width=\"45%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"3%\"><font size=\"2\"> <\/font><\/td>\n<td width=\"13%\"><font size=\"2\">Name:<br \/>\nTitle:<br \/><\/font>\n<\/td>\n<td width=\"39%\"><font size=\"2\"> <\/font><\/td>\n<\/tr>\n<\/table>\n<p align=\"CENTER\"><font size=\"2\">8<\/font><\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7770],"corporate_contracts_industries":[9508],"corporate_contracts_types":[9539,9544],"class_list":["post-40427","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-hewlett-packard-co","corporate_contracts_industries-technology__hardware","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40427","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40427"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40427"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40427"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40427"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}