{"id":43185,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-reorganization-hewlett-packard-co-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-reorganization-hewlett-packard-co-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-reorganization-hewlett-packard-co-and.html","title":{"rendered":"Agreement and Plan of Reorganization &#8211; Hewlett-Packard Co. and Compaq Computer Co."},"content":{"rendered":"<pre>\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                            HEWLETT-PACKARD COMPANY,\n\n                           HELOISE MERGER CORPORATION\n\n                                       AND\n\n                           COMPAQ COMPUTER CORPORATION\n\n\n                          Dated as of September 4, 2001\n\n\n\n\n\n\n                                TABLE OF CONTENTS\n\n\n\n                                                                         Page\n                                                                         ----\n                                                                               \nArticle I THE MERGER......................................2\n\n1.1      The Merger..............................2\n1.2      Effective Time; Closing.................2\n1.3      Effect of the Merger....................3\n1.4      Certificate of Incorporation and Bylaws.3\n1.5      Directors and Officers..................3\n1.6      Effect on Capital Stock.................3\n1.7      Surrender of Certificates...............5\n1.8      No Further Ownership Rights in Compaq Common Stock.8\n1.9      Lost, Stolen or Destroyed Certificates..9\n1.10     Tax Consequences........................9\n1.11     Further Action..........................9\n\nArticle II REPRESENTATIONS AND WARRANTIES OF COMPAQ.10\n\n2.1      Organization; Standing and Power; Charter Documents; Subsidiaries.10\n2.2      Capital Structure........................11\n2.3      Authority; Non-Contravention; Necessary Consents.14\n2.4      SEC Filings; Financial Statements........16\n2.5      Absence of Certain Changes or Events.....17\n2.6      Taxes....................................17\n2.7      Intellectual Property....................18\n2.8      Compliance; Permits......................19\n2.9      Litigation...............................20\n2.10     Brokers' and Finders' Fees...............20\n2.11     Transactions with Affiliates.............20\n2.12     Employee Benefit Plans...................21\n2.13     Environmental Matters....................25\n2.14     Contracts................................26\n2.15     Disclosure...............................27\n2.16     Board Approval...........................28\n2.17     Fairness Opinion.........................28\n2.18     Rights Plan..............................28\n2.19     Takeover Statutes........................28\n\n\n                                       -i-\n\n\nArticle III REPRESENTATIONS AND WARRANTIES OF HP AND MERGER SUB.............29\n\n3.1      Organization; Standing and Power; Charter Documents; Subsidiaries..29\n3.2      Capital Structure..................................................30\n3.3      Authority; Non-Contravention; Necessary Consents...................32\n3.4      SEC Filings; Financial Statements..................................34\n3.5      Absence of Certain Changes or Events...............................35\n3.6      Taxes..............................................................35\n3.7      Intellectual Property..............................................35\n3.8      Compliance; Permits................................................36\n3.9      Litigation.........................................................36\n3.10     Brokers' and Finders' Fees.........................................37\n3.11     Employee Benefit Plans.............................................37\n3.12     Environmental Matters..............................................39\n3.13     Contracts..........................................................40\n3.14     Disclosure.........................................................40\n3.15     Board Approval.....................................................41\n3.16     Fairness Opinion...................................................41\n3.17     Rights Plan........................................................41\n\nArticle IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................41\n\n4.1      Conduct of Business................................................41\n\nArticle V ADDITIONAL AGREEMENTS.............................................50\n\n5.1      Prospectus\/Proxy Statement; Registration Statement.................50\n5.2      Meetings of Stockholders; Board Recommendation.....................51\n5.3      Acquisition Proposals..............................................52\n5.4      Confidentiality; Access to Information; No Modification of\n                  Representations, Warranties or Covenants..................57\n5.5      Public Disclosure..................................................58\n5.6      Regulatory Filings; Reasonable Efforts.............................58\n5.7      Notification of Certain Matters....................................61\n5.8      Third-Party Consents...............................................61\n5.9      Equity Awards and Employee Benefits................................62\n5.10     Form S-8...........................................................64\n5.11     Indemnification....................................................65\n5.12     Board of Directors and Executive Officers of HP....................66\n\n\n                                      -ii-\n\n\n5.13     NYSE and PCX Listings..............................................66\n5.14     Compaq Affiliates; Restrictive Legend..............................67\n5.15     Treatment as Reorganization........................................67\n5.16     Rights Plans.......................................................67\n5.17     Section 16 Matters.................................................68\n5.18     Merger Sub Compliance..............................................68\n5.19     Conveyance Taxes...................................................68\n\nArticle VI CONDITIONS TO THE MERGER.........................................69\n\n6.1      Conditions to the Obligations of Each Party to Effect the Merger...69\n6.2      Additional Conditions to the Obligations of Compaq.................70\n6.3      Additional Conditions to the Obligations of HP.....................71\n\nArticle VII TERMINATION, AMENDMENT AND WAIVER...............................72\n\n7.1      Termination........................................................72\n7.2      Notice of Termination; Effect of Termination.......................75\n7.3      Fees and Expenses..................................................75\n7.4      Amendment..........................................................77\n7.5      Extension; Waiver..................................................78\n\nArticle VIII GENERAL PROVISIONS.............................................78\n\n8.1      Non-Survival of Representations and Warranties.....................78\n8.2      Notices............................................................78\n8.3      Interpretation; Knowledge..........................................80\n8.4      Counterparts.......................................................82\n8.5      Entire Agreement; Third-Party Beneficiaries........................82\n8.6      Severability.......................................................83\n8.7      Other Remedies; Specific Performance...............................83\n8.8      Governing Law......................................................83\n8.9      Rules of Construction..............................................83\n8.10     Assignment.........................................................84\n8.11     Waiver of Jury Trial...............................................84\n\n\n                                     -iii-\n\n\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n      This AGREEMENT AND PLAN OF REORGANIZATION (this \"AGREEMENT\") is made and\nentered into as of September 4, 2001, by and among Hewlett-Packard Company, a\nDelaware corporation (\"HP\"), Heloise Merger Corporation, a Delaware corporation\nand direct wholly-owned subsidiary of HP (\"MERGER SUB\"), and Compaq Computer\nCorporation, a Delaware corporation (\"COMPAQ\").\n\n                                    RECITALS\n\n      A. The respective Boards of Directors of HP, Merger Sub and Compaq have\ndeemed it advisable and in the best interests of their respective corporations\nand stockholders that HP and Compaq consummate the business combination and\nother transactions provided for herein in order to advance their respective\nlong-term strategic business interests.\n\n      B. The respective Boards of Directors of HP, Merger Sub and Compaq have\napproved, in accordance with applicable provisions of the laws of the state of\nDelaware (\"DELAWARE LAW\"), this Agreement and the transactions contemplated\nhereby, including the Merger (as defined in Section 1.1).\n\n      C. The Board of Directors of HP has resolved to recommend to its\nstockholders approval of the issuance of shares of HP Common Stock (as defined\nin Section 1.6(a)) in connection with the Merger (the \"STOCK ISSUANCE\").\n\n      D. The Board of Directors of Compaq has resolved to recommend to its\nstockholders approval and adoption of this Agreement and approval of the Merger.\n\n      E. HP, as the sole stockholder of Merger Sub, has approved and adopted\nthis Agreement and approved the Merger.\n\n      F. HP, Merger Sub and Compaq desire to make certain representations,\nwarranties and agreements in connection with the Merger and also to prescribe\ncertain conditions to the Merger.\n\n\n\n\n      G. For United States federal income tax purposes, the parties intend that\nthe Merger qualify as a reorganization under the provisions of Section 368(a) of\nthe Internal Revenue Code of 1986, as amended (the \"CODE\"), and the parties\nintend, by executing this Agreement, to adopt a plan of reorganization within\nthe meaning of Section 354(a) of the Code.\n\n      NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable consideration,\nthe receipt and sufficiency of which are hereby acknowledged, the parties agree\nas follows: \n\n                                   ARTICLE I\n                                   THE MERGER\n\n\n      1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and\nsubject to and upon the terms and conditions of this Agreement and the\napplicable provisions of Delaware Law, Merger Sub shall be merged with and into\nCompaq (the \"MERGER\"), the separate corporate existence of Merger Sub shall\ncease and Compaq shall continue as the surviving corporation. Compaq, as the\nsurviving corporation after the Merger, is hereinafter sometimes referred to as\nthe \"SURVIVING CORPORATION.\"\n\n      1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,\nthe parties hereto shall cause the Merger to be consummated by filing a\nCertificate of Merger with the Secretary of State of the State of Delaware in\naccordance with the relevant provisions of Delaware Law (the \"CERTIFICATE OF\nMERGER\") (the time of such filing with the Secretary of State of the State of\nDelaware (or such later time as may be agreed in writing by Compaq and HP and\nspecified in the Certificate of Merger) being the \"EFFECTIVE TIME\") as soon as\npracticable on or after the Closing Date (as defined below). The closing of the\nMerger (the \"CLOSING\") shall take place at the offices of Wilson Sonsini\nGoodrich &amp; Rosati, Professional Corporation, located at 650 Page Mill Road, Palo\nAlto, California, at a time and date to be specified by the parties, which shall\nbe no later than the second business day after the satisfaction or waiver of the\nconditions set forth in Article VI, or at such other time, date and location as\nthe parties hereto agree in writing (the \"CLOSING DATE\").\n\n\n                                      -2-\n\n\n      1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger\nshall be as provided in this Agreement and the applicable provisions of Delaware\nLaw.\n\n      1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time, the\nCertificate of Incorporation of Compaq shall be amended and restated in its\nentirety to be identical to the Certificate of Incorporation of Merger Sub, as\nin effect immediately prior to the Effective Time, until thereafter amended in\naccordance with Delaware Law and as provided in such Certificate of\nIncorporation; PROVIDED, HOWEVER, that at the Effective Time, Article I of the\nCertificate of Incorporation of the Surviving Corporation shall be amended and\nrestated in its entirety to read as follows: \"The name of the corporation is\nCompaq Computer Corporation.\" At the Effective Time, the Bylaws of Compaq shall\nbe amended and restated in their entirety to be identical to the Bylaws of\nMerger Sub, as in effect immediately prior to the Effective Time, until\nthereafter amended in accordance with Delaware Law and as provided in such\nBylaws.\n\n      1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving\nCorporation shall be the directors of Merger Sub immediately prior to the\nEffective Time, until their respective successors are duly elected or appointed\nand qualified. The initial officers of the Surviving Corporation shall be the\nofficers of Merger Sub immediately prior to the Effective Time, until their\nrespective successors are duly appointed.\n\n      1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of this\nAgreement, at the Effective Time, by virtue of the Merger and without any action\non the part of HP, Merger Sub, Compaq or the holders of any shares of capital\nstock of Compaq, the following shall occur:\n\n                (a) COMPAQ COMMON STOCK. Each share of the Common Stock, par\nvalue $0.01 per share, of Compaq (together with the associated Compaq Right (as\ndefined in Section 2.2(a)) under the Compaq Rights Agreement (as defined in\nSection 2.2(a)) (\"COMPAQ COMMON STOCK\") issued and outstanding immediately prior\nto the Effective Time, other than any shares of Compaq Common Stock to be\ncanceled pursuant to Section 1.6(c), will be canceled and extinguished and\nautomatically converted (subject to Section 1.6(f)) into the right to receive\n0.6325 of a validly issued, fully paid and nonassessable share (the \"EXCHANGE\nRATIO\") of the Common Stock, par value $0.01 per share,\n\n\n                                      -3-\n\n\nof HP (together with any associated HP Right (as defined in Section 3.2(a))\nunder the HP Rights Agreement (as defined in Section 3.2(a)) (\"HP COMMON STOCK\")\nupon surrender of the certificate representing such share of Compaq Common Stock\nin the manner provided in Section 1.7 (or in the case of a lost, stolen or\ndestroyed certificate, upon delivery of an affidavit (and bond, if required) in\nthe manner provided in Section 1.9).\n\n                (b) REPURCHASE RIGHTS. If any shares of Compaq Common Stock\noutstanding immediately prior to the Effective Time are unvested or are subject\nto a repurchase option, risk of forfeiture or other condition under any\napplicable restricted stock purchase agreement or other agreement with Compaq,\nthen the shares of HP Common Stock issued in exchange for such shares of Compaq\nCommon Stock will also be unvested and subject to the same repurchase option,\nrisk of forfeiture or other condition, and the certificates representing such\nshares of HP Common Stock may accordingly be marked with appropriate legends.\nCompaq shall take all action that may be necessary to ensure that, from and\nafter the Effective Time, the Surviving Corporation is entitled to exercise any\nsuch repurchase option or other right set forth in any such restricted stock\npurchase agreement or other agreement.\n\n                (c) CANCELLATION OF TREASURY AND HP OWNED STOCK. Each share of\nCompaq Common Stock held by Compaq or HP or any direct or indirect wholly-owned\nSubsidiary of Compaq or of HP immediately prior to the Effective Time shall be\ncanceled and extinguished without any conversion thereof.\n\n                (d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, par\nvalue $0.01, of Merger Sub (the \"MERGER SUB COMMON STOCK\") issued and\noutstanding prior immediately to the Effective Time shall be converted into one\nvalidly issued, fully paid and nonassessable shares of common stock, par value\n$0.01 per share, of the Surviving Corporation.\n\n                (e) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the\nEffective Time, all Compaq Options (as defined in Section 2.2(b)) outstanding\nunder each Compaq Stock Option Plan (as defined in Section 2.12(a) hereof) shall\nbe assumed by HP in accordance with Section 5.9. Rights outstanding under\nCompaq's Employee Stock Purchase Plan and any other employee stock purchase plan\nof Compaq (collectively, the \"COMPAQ PURCHASE PLANS\") shall be treated as set\nforth in Section 5.9(c).\n\n\n                                      -4-\n\n\n                (f) FRACTIONAL SHARES. No fraction of a share of HP Common Stock\nwill be issued by virtue of the Merger, but in lieu thereof each holder of\nshares of Compaq Common Stock who would otherwise be entitled to a fraction of a\nshare of HP Common Stock (after aggregating all fractional shares of HP Common\nStock that otherwise would be received by such holder) shall, upon surrender of\nsuch holder's Certificate(s) (as defined in Section 1.7(c)), receive from HP an\namount of cash (rounded to the nearest whole cent), without interest, equal to\nthe product of: (i) such fraction, multiplied by (ii) the average closing price\nof one share of HP Common Stock for the ten (10) most recent trading days that\nHP Common Stock has traded ending on the trading day one day prior to the\nEffective Time, as reported on the New York Stock Exchange, Inc. (\"NYSE\")\nComposite Transactions Tape.\n\n                (g) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be\nadjusted to reflect fully the appropriate effect of any stock split, reverse\nstock split, stock dividend (including any dividend or distribution of\nsecurities convertible into HP Common Stock or Compaq Common Stock),\nreorganization, recapitalization, reclassification or other like change with\nrespect to HP Common Stock or Compaq Common Stock having a record date on or\nafter the date hereof and prior to the Effective Time.\n\n      1.7 SURRENDER OF CERTIFICATES.\n\n                (a) EXCHANGE AGENT. HP shall select Computershare Investor\nServices LLC or another institution reasonably satisfactory to Compaq to act as\nthe exchange agent (the \"EXCHANGE AGENT\") in the Merger.\n\n                (b) HP TO PROVIDE COMMON STOCK. Promptly after the Effective\nTime, HP shall enter into an agreement with the Exchange Agent, reasonably\nsatisfactory to Compaq, which shall provide that HP shall make available to the\nExchange Agent for exchange in accordance with this Article I, the shares of HP\nCommon Stock issuable pursuant to Section 1.6(a) in exchange for outstanding\nshares of Compaq Common Stock. In addition, HP shall make available as necessary\nfrom time to time after the Effective Time as needed, cash in an amount\nsufficient for payment in lieu of fractional shares pursuant to Section 1.6(f)\nand any dividends or distributions which holders of shares of Compaq Common\nStock may be entitled pursuant to Section 1.7(d). Any cash\n\n\n                                      -5-\n\n\nand HP Common Stock deposited with the Exchange Agent shall hereinafter be\nreferred to as the \"EXCHANGE FUND.\"\n\n                (c) EXCHANGE PROCEDURES. Promptly after the Effective Time, HP\nshall cause the Exchange Agent to mail to each holder of record (as of the\nEffective Time) of a certificate or certificates (the \"CERTIFICATES\") which\nimmediately prior to the Effective Time represented outstanding shares of Compaq\nCommon Stock whose shares were converted into the right to receive shares of HP\nCommon Stock pursuant to Section 1.6(a), cash in lieu of any fractional shares\npursuant to Section 1.6(f) and any dividends or other distributions pursuant to\nSection 1.7(d): (i) a letter of transmittal (which shall specify that delivery\nshall be effected, and risk of loss and title to the Certificates shall pass,\nonly upon delivery of the Certificates to the Exchange Agent and shall be in\nsuch form and have such other provisions as HP may reasonably specify) and (ii)\ninstructions for use in effecting the surrender of the Certificates in exchange\nfor certificates representing whole shares of HP Common Stock, cash in lieu of\nany fractional shares pursuant to Section 1.6(f) and any dividends or other\ndistributions pursuant to Section 1.7(d). Upon surrender of Certificates for\ncancellation to the Exchange Agent or to such other agent or agents as may be\nappointed by HP, together with such letter of transmittal, duly completed and\nvalidly executed in accordance with the instructions thereto and such other\ndocuments as may reasonably be required by the Exchange Agent, the holder of\nsuch Certificates shall be entitled to receive in exchange therefor the number\nof whole shares of HP Common Stock (after taking into account all Certificates\nsurrendered by such holder) to which such holder is entitled pursuant to Section\n1.6(a) (which shall be in uncertificated book entry form unless a physical\ncertificate is requested or is otherwise required by applicable law or\nregulation), payment in lieu of fractional shares which such holder has the\nright to receive pursuant to Section 1.6(f) and any dividends or distributions\npayable pursuant to Section 1.7(d), and the Certificates so surrendered shall\nforthwith be canceled. Until so surrendered, outstanding Certificates will be\ndeemed from and after the Effective Time, for all corporate purposes, to\nevidence the ownership of the number of full shares of HP Common Stock into\nwhich such shares of Compaq Common Stock shall have been so converted and the\nright to receive an amount in cash in lieu of the issuance of any fractional\nshares in accordance with Section 1.6(f) and any dividends or distributions\npayable pursuant to Section 1.7(d).\n\n\n                                      -6-\n\n\n                (d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No\ndividends or other distributions declared or made after the date hereof with\nrespect to HP Common Stock with a record date after the Effective Time and no\npayment in lieu of fractional shares pursuant to Section 1.6(f) will be paid to\nthe holders of any unsurrendered Certificates with respect to the shares of HP\nCommon Stock represented thereby until the holders of record of such\nCertificates shall surrender such Certificates. Subject to applicable law,\nfollowing surrender of any such Certificates, the Exchange Agent shall deliver\nto the record holders thereof, without interest (i) promptly after such\nsurrender, the number of whole shares of HP Common Stock issued in exchange\ntherefor along with payment in lieu of fractional shares pursuant to Section\n1.6(f) and the amount of any such dividends or other distributions with a record\ndate after the Effective Time and theretofore paid with respect to such whole\nshares of HP Common Stock and (ii) at the appropriate payment date, the amount\nof dividends or other distributions with a record date after the Effective Time\nand a payment date subsequent to such surrender payable with respect to such\nwhole shares of HP Common Stock.\n\n                (e) TRANSFERS OF OWNERSHIP. If shares of HP Common Stock are to\nbe issued in a name other than that in which the Certificates surrendered in\nexchange therefor are registered, it will be a condition of the issuance thereof\nthat the Certificates so surrendered will be properly endorsed and otherwise in\nproper form for transfer and that the Persons (as defined in Section 8.3(d))\nrequesting such exchange will have paid to HP or any agent designated by it any\ntransfer or other Taxes (as defined in Section 2.6) required by reason of the\nissuance of shares of HP Common Stock in any name other than that of the\nregistered holder of the Certificates surrendered, or established to the\nsatisfaction of HP or any agent designated by it that such Tax has been paid or\nis not payable.\n\n                (f) REQUIRED WITHHOLDING. Each of the Exchange Agent and the\nSurviving Corporation shall be entitled to deduct and withhold from any\nconsideration payable or otherwise deliverable pursuant to this Agreement to any\nholder or former holder of Compaq Common Stock such amounts as may be required\nto be deducted or withheld therefrom under the Code or under any provision of\nstate, local or foreign Tax law or under any other applicable Legal Requirement\n(as defined in Section 2.2(d)). To the extent such amounts are so deducted or\nwithheld, the amount of such consideration shall be treated for all \n\n\n                                      -7-\n\n\npurposes under this Agreement as having been paid to the Person to whom such\nconsideration would otherwise have been paid.\n\n                (g) NO LIABILITY. Notwithstanding anything to the contrary in\nthis Section 1.7, neither the Exchange Agent, the Surviving Corporation nor any\nparty hereto shall be liable to a holder of shares of HP Common Stock or Compaq\nCommon Stock for any amount properly paid to a public official pursuant to any\napplicable abandoned property, escheat or similar law.\n\n                (h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest\nany cash included in the Exchange Fund as directed by HP on a daily basis;\nPROVIDED that no such investment or loss thereon shall affect the amounts\npayable to Compaq stockholders pursuant to this Article I. Any interest and\nother income resulting from such investment shall become a part of the Exchange\nFund, and any amounts in excess of the amounts payable to Compaq stockholders\npursuant to this Article I shall promptly be paid to HP.\n\n                (i) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange\nFund which remains undistributed to the holders of Certificates six (6) months\nafter the Effective Time shall, at the request of the Surviving Corporation, be\ndelivered to the Surviving Corporation or otherwise on the instruction of the\nSurviving Corporation, and any holders of the Certificates who have not\nsurrendered such Certificates in compliance with this Section 1.7 shall after\nsuch delivery to Surviving Corporation look only to the Surviving Corporation\nfor the shares of HP Common Stock pursuant to Section 1.6(a), cash in lieu of\nany fractional shares pursuant to Section 1.6(f) and any dividends or other\ndistributions pursuant to Section 1.7(d) with respect to the shares of Compaq\nCommon Stock formerly represented thereby. Any such portion of the Exchange Fund\nremaining unclaimed by holders of shares of Compaq Common Stock immediately\nprior to such time as such amounts would otherwise escheat to or become property\nof any Governmental Entity (as defined in Section 2.3(c)) shall, to the extent\npermitted by law, become the property of HP free and clear of any claims or\ninterest of any Person previously entitled thereto.\n\n      1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPAQ COMMON STOCK. All shares of HP\nCommon Stock issued upon the surrender for exchange of shares of Compaq Common\nStock in accordance with the terms hereof (including any cash paid in respect\nthereof pursuant to Section 1.6(f) and 1.7(d)) shall be deemed to \n\n\n                                      -8-\n\n\nhave been issued in full satisfaction of all rights pertaining to such shares of\nCompaq Common Stock, and there shall be no further registration of transfers on\nthe records of the Surviving Corporation of shares of Compaq Common Stock which\nwere outstanding immediately prior to the Effective Time. If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be canceled and exchanged as provided in this Article I.\n\n      1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates\nshall have been lost, stolen or destroyed, the Exchange Agent shall issue in\nexchange for such lost, stolen or destroyed Certificates, upon the making of an\naffidavit of that fact by the holder thereof, such shares of HP Common Stock,\ncash for fractional shares, if any, as may be required pursuant to Section\n1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);\nPROVIDED, HOWEVER, that HP may, in its discretion and as a condition precedent\nto the issuance thereof, require the owner of such lost, stolen or destroyed\nCertificates to deliver a bond in such sum as it may reasonably direct as\nindemnity against any claim that may be made against HP, Compaq or the Exchange\nAgent with respect to the Certificates alleged to have been lost, stolen or\ndestroyed.\n\n      1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the\nMerger shall constitute a reorganization within the meaning of Section 368(a) of\nthe Code. The parties hereto adopt this Agreement as a plan of reorganization\nwithin the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).\n\n      1.11 FURTHER ACTION. At and after the Effective Time, the officers and\ndirectors of HP and the Surviving Corporation will be authorized to execute and\ndeliver, in the name and on behalf of Compaq and Merger Sub, any deeds, bills of\nsale, assignments or assurances and to take and do, in the name and on behalf of\nCompaq and Merger Sub, any other actions and things to vest, perfect or confirm\nof record or otherwise in the Surviving Corporation any and all right, title and\ninterest in, to and under any of the rights, properties or assets acquired or to\nbe acquired by the Surviving Corporation as a result of, or in connection with,\nthe Merger.\n\n\n                                      -9-\n\n\n                                   ARTICLE II\n                    REPRESENTATIONS AND WARRANTIES OF COMPAQ\n\n      Compaq represents and warrants to HP and Merger Sub, subject to the\nexceptions specifically disclosed in writing in the disclosure letter supplied\nby Compaq to HP dated as of the date hereof and certified by a duly authorized\nofficer of Compaq (the \"COMPAQ DISCLOSURE LETTER\"), as follows:\n\n      2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES.\n\n                (a) ORGANIZATION; STANDING AND POWER. Compaq and each of its\nSubsidiaries (as defined below) is a corporation or other organization duly\norganized, validly existing and in good standing under the laws of the\njurisdiction of its incorporation or organization, has the requisite power and\nauthority to own, lease and operate its properties and to carry on its business\nas now being conducted, except where the failure to be so organized, existing\nand in good standing would not reasonably be expected to have a Material Adverse\nEffect (as defined in Section 8.3(c)) on Compaq, and is duly qualified and in\ngood standing to do business in each jurisdiction in which the nature of its\nbusiness or the ownership or leasing of its properties makes such qualification\nnecessary other than in such jurisdictions where the failure to so qualify or to\nbe good standing, individually or in the aggregate, would not reasonably be\nexpected to have a Material Adverse Effect on Compaq. For purposes of this\nAgreement, \"SUBSIDIARY,\" when used with respect to any party, shall mean any\ncorporation or other organization, whether incorporated or unincorporated, at\nleast a majority of the securities or other interests of which having by their\nterms ordinary voting power to elect a majority of the Board of Directors or\nothers performing similar functions with respect to such corporation or other\norganization is directly or indirectly owned or controlled by such party or by\nany one or more of its Subsidiaries, or by such party and one or more of its\nSubsidiaries.\n\n                (b) CHARTER DOCUMENTS. Compaq has delivered or made available to\nHP: (i) a true and correct copy of the Certificate of Incorporation (including\nany Certificate of Designations) and Bylaws of Compaq, each as amended to date\n(collectively, the \"COMPAQ CHARTER DOCUMENTS\") and (ii) the certificate of\nincorporation and bylaws, or like organizational documents (collectively,\n\"SUBSIDIARY CHARTER DOCUMENTS\"), of each of its Significant \n\n\n                                      -10-\n\n\nSubsidiaries (as defined in Rule 1-02 of Regulation S-X of the Securities and\nExchange Commission (the \"SEC\")), and each such instrument is in full force and\neffect. Compaq is not in violation of any of the provisions of the Compaq\nCharter Documents and each Subsidiary is not in violation of its respective\nSubsidiary Charter Documents, except in the case of a Subsidiary, as would not\nreasonably be expected to have a Material Adverse Effect on Compaq.\n\n                (c) SUBSIDIARIES. Exhibit 21 to Compaq's Annual Report on Form\n10-K for the fiscal year ended December 31, 2000 includes all the Subsidiaries\nof Compaq which are Significant Subsidiaries. All the outstanding shares of\ncapital stock of, or other equity interests in, each such Significant Subsidiary\nhave been validly issued and are fully paid and nonassessable and are, except as\nset forth in such Exhibit 21, owned directly or indirectly by Compaq, free and\nclear of all pledges, claims, liens, charges, encumbrances, options and security\ninterests of any kind or nature whatsoever (collectively, \"LIENS\"), including\nany restriction on the right to vote, sell or otherwise dispose of such capital\nstock or other ownership interests, except for restrictions imposed by\napplicable securities laws.\n\n      2.2 CAPITAL STRUCTURE.\n\n                (a) CAPITAL STOCK. The authorized capital stock of Compaq\nconsists of: (i) 3,000,000,000 shares of Compaq Common Stock, par value $0.01\nper share and (ii) 10,000,000 shares of preferred stock, par value $0.01 per\nshare (the \"COMPAQ PREFERRED STOCK\"), 3,000,000 of which shares have been\ndesignated as Series A Junior Participating Preferred Stock, all of which will\nbe reserved for issuance upon exercise of preferred stock purchase rights (the\n\"COMPAQ RIGHTS\") issuable pursuant to the rights agreement approved by the Board\nof Directors of Compaq in connection with its approval of this Agreement\nsubstantially in the form previously provided to HP (the \"COMPAQ RIGHTS\nAGREEMENT\"). At the close of business on June 30, 2001: (i) 1,753,000,000 shares\nof Compaq Common Stock were issued and outstanding, (ii) 59,000,000 shares of\nCompaq Common Stock were issued and held by Compaq in its treasury, and (iii) no\nshares of Compaq Preferred Stock were issued and outstanding. All of the\noutstanding shares of capital stock of Compaq are, and all shares of capital\nstock of Compaq which may be issued as contemplated or permitted by this\nAgreement will be, when issued, duly authorized and validly issued, fully paid\nand nonassessable and not subject to any preemptive rights. \n\n\n                                      -11-\n\n\nUpon consummation of the Merger, (A) the shares of HP Common Stock issued in\nexchange for any shares of Compaq Common Stock that are subject to a Contract\n(as defined below) pursuant to which Compaq has the right to repurchase, redeem\nor otherwise reacquire any shares of Compaq Common Stock will, without any\nfurther act of HP, Merger Sub, Compaq or any other Person, become subject to the\nrestrictions, conditions and other provisions contained in such Contract and (B)\nHP will automatically succeed to and become entitled to exercise Compaq's rights\nand remedies under any such Contract. For purposes of this Agreement, \"CONTRACT\"\nshall mean any written, oral or other agreement, contract, subcontract,\nsettlement agreement, lease, binding understanding, instrument, note, option,\nwarranty, purchase order, license, sublicense, insurance policy, benefit plan or\nlegally binding commitment or undertaking of any nature, as in effect as of the\ndate hereof or as may hereinafter be in effect.\n\n                (b) STOCK OPTIONS. As of the close of business on August 14,\n2001: (i) 279,538,000 shares of Compaq Common Stock are subject to issuance\npursuant to outstanding options to purchase Compaq Common Stock under the Compaq\nStock Option Plans that are Compaq Broad Plans (equity or other equity-based\nawards, whether payable in cash, shares or otherwise granted under or pursuant\nto the Compaq Stock Option Plans (whether Compaq Broad Plans (as defined in\nSection 2.12(a)) or otherwise) are referred to in this Agreement as \"COMPAQ\nOPTIONS\"), (ii) as of the date hereof, 17,400,000 shares of Compaq Common Stock\nare reserved for future issuance under the Compaq Purchase Plans, and (iii)\n600,000 shares of Compaq Common Stock are subject to issuance pursuant to\noutstanding options to purchase Compaq Common Stock (A) which are issued other\nthan pursuant Compaq Broad Plans and (B) other than shares reserved for issuance\nunder the Compaq Purchase Plans. Section 2.2(b) of the Compaq Disclosure Letter\nsets forth a list of each outstanding Compaq Stock Option (excluding Compaq\nRights) issued other than pursuant to (1) Compaq Broad Plans and (2) the Compaq\nPurchase Plans, and (a) the name and location of the holder of the such Compaq\nOption, (b) the number of shares of Compaq Common Stock subject to such Compaq\nOption, (c) the exercise price of such Compaq Option, (4) the date on which such\nCompaq Option was granted, (d) the applicable vesting schedule, and the extent\nto which such Compaq Option is vested and exercisable as of June 30, 2001, and\n(e) the date on which such Compaq Option expires. All shares of Compaq Common\nStock subject to issuance under the Compaq Stock Option Plans and the Compaq\nPurchase Plan, upon issuance on the terms and conditions specified in the\ninstruments pursuant to \n\n\n                                      -12-\n\n\nwhich they are issuable, would be duly authorized, validly issued, fully paid\nand nonassessable. There are no commitments or agreements of any character to\nwhich Compaq is bound obligating Compaq to accelerate the vesting of any Compaq\nOption as a result of the Merger (whether alone or upon the occurrence of any\nadditional or subsequent events). Except as set forth on Section 2.2(b) of the\nCompaq Disclosure Letter, there are no outstanding or authorized stock\nappreciation, phantom stock, profit participation or other similar rights with\nrespect to Compaq.\n\n                (c) VOTING DEBT. No bonds, debentures, notes or other\nindebtedness having the right to vote on any maters on which stockholders may\nvote (\"VOTING DEBT\") of Compaq is issued or outstanding as of the date hereof.\n\n                (d) OTHER SECURITIES. Except as otherwise set forth in this\nSection 2.2, as of June 30, 2001, there are no securities, options, warrants,\ncalls, rights, commitments, agreements, arrangements or undertakings of any kind\nto which Compaq or any of its Subsidiaries is a party or by which any of them is\nbound obligating Compaq or any of its Subsidiaries to issue, deliver or sell, or\ncause to be issued, delivered or sold, additional shares of capital stock,\nVoting Debt or other voting securities of Compaq or any of its Subsidiaries, or\nobligating Compaq or any of its Subsidiaries to issue, grant, extend or enter\ninto any such security, option, warrant, call, right, commitment, agreement,\narrangement or undertaking. All outstanding shares of Compaq Common Stock, all\noutstanding Compaq Options, and all outstanding shares of capital stock of each\nSubsidiary of Compaq have been issued and granted in compliance in all material\nrespects with (i) all applicable securities laws and all other applicable Legal\nRequirements (as defined below) and (ii) all requirements set forth in\napplicable material Contracts. For purposes of this Agreement, \"LEGAL\nREQUIREMENTS\" shall mean any federal, state, local, municipal, foreign or other\nlaw, statute, constitution, principle of common law, resolution, ordinance,\ncode, order, edict, decree, rule, regulation, ruling or requirement issued,\nenacted, adopted, promulgated, implemented or otherwise put into effect by or\nunder the authority of any Governmental Entity.\n\n                (e) NO CHANGES. Since June 30, 2001 and through the date hereof,\nother than (i) pursuant to the exercise of Compaq Options outstanding as of June\n30, 2001 issued pursuant to the Compaq Stock Option Plans, (ii) under the Compaq\nPurchase Plan, (iii) pursuant to repurchases from Employees (as defined in\nSection 2.12(a)) following their termination pursuant to the terms of their\npre-\n\n\n                                      -13-\n\n\nexisting stock option or purchase agreements or (iv) pursuant to end of month\nstock option grants in July 2001 and August 2001 in the ordinary course of\nbusiness consistent with past practice under Stock Options Plans of Compaq that\nare Compaq Broad Plans, there has been no change in (A) the outstanding capital\nstock of Compaq, (B) the number of Compaq Options outstanding, or (C) the number\nof other options, warrants or other rights to purchase Compaq capital stock.\n\n      2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.\n\n                (a) AUTHORITY. Compaq has all requisite corporate power and\nauthority to enter into this Agreement and to consummate the transactions\ncontemplated hereby. The execution and delivery of this Agreement and the\nconsummation of the transactions contemplated hereby has been duly authorized by\nall necessary corporate action on the part of Compaq and no other corporate\nproceedings on the part of Compaq are necessary to authorize the execution and\ndelivery of this Agreement or to consummate the Merger and the other\ntransactions contemplated hereby, subject only to the approval and adoption of\nthis Agreement and the approval of the Merger by Compaq's stockholders and the\nfiling of the Certificate of Merger pursuant to Delaware Law. The affirmative\nvote of the holders of a majority of the outstanding shares of Compaq Common\nStock to approve and adopt this Agreement and approve the Merger is the only\nvote of the holders of any class or series of Compaq capital stock necessary to\napprove and adopt this Agreement, approve the Merger and consummate the Merger\nand the other transactions contemplated hereby. This Agreement has been duly\nexecuted and delivered by Compaq and, assuming due execution and delivery by HP\nand Merger Sub, constitutes the valid and binding obligation of Compaq,\nenforceable against Compaq in accordance with its terms.\n\n                (b) NON-CONTRAVENTION. The execution and delivery of this\nAgreement by Compaq does not, and performance of this Agreement by Compaq will\nnot: (i) conflict with or violate the Compaq Charter Documents or any Subsidiary\nCharter Documents of any Subsidiary of Compaq, (ii) subject to obtaining the\napproval and adoption of this Agreement and the approval of the Merger by\nCompaq's stockholders as contemplated in Section 5.2 and compliance with the\nrequirements set forth in Section 2.3(c), conflict with or violate any material\nLegal Requirement applicable to Compaq or any of its Subsidiaries or by which\nCompaq or any of its Subsidiaries or any of their respective properties is \n\n\n                                      -14-\n\n\nbound or affected, or (iii) result in any material breach of or constitute a\nmaterial default (or an event that with notice or lapse of time or both would\nbecome a material default) under, or impair Compaq's rights or alter the rights\nor obligations of any third party under, or give to others any rights of\ntermination, amendment, acceleration or cancellation of, or result in the\ncreation of a material Lien on any of the material properties or assets of\nCompaq or any of its Subsidiaries pursuant to, any Compaq Material Contract (as\ndefined in Section 2.14). Section 2.3(b) of the Compaq Disclosure Letter lists\nall consents, waivers and approvals under any of Compaq's or any of its\nSubsidiaries' Contracts required to be obtained in connection with the\nconsummation of the transactions contemplated hereby, which, if individually or\nin the aggregate not obtained, would result in a Material Adverse Effect on\nCompaq or the Surviving Corporation.\n\n                (c) NECESSARY CONSENTS. No consent, approval, order or\nauthorization of, or registration, declaration or filing with any supranational,\nnational, state, municipal, local or foreign government, any instrumentality,\nsubdivision, court, administrative agency or commission or other governmental\nauthority or instrumentality, or any quasi-governmental or private body\nexercising any regulatory, taxing, importing or other governmental or\nquasi-governmental authority (a \"GOVERNMENTAL ENTITY\") is required to be\nobtained or made by Compaq in connection with the execution and delivery of this\nAgreement or the consummation of the Merger and other transactions contemplated\nhereby, except for: (i) the filing of the Certificate of Merger with the\nSecretary of State of the State of Delaware and appropriate documents with the\nrelevant authorities of other states in which Compaq and\/or HP are qualified to\ndo business, (ii) the filing of the Prospectus\/Proxy Statement (as defined in\nSection 2.15) with the SEC in accordance with the Securities Exchange Act of\n1934, as amended (the \"EXCHANGE ACT\") and the effectiveness of the Registration\nStatement (as defined in Section 2.15), (iii) such consents, approvals, orders,\nauthorizations, registrations, declarations and filings as may be required under\napplicable federal, foreign and state securities (or related) laws and the\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the \"HSR ACT\")\nand Council Regulation No. 4064\/89 of the European Community, as amended (the\n\"EC MERGER REGULATION\"), (iv) the consents listed on Section 2.3(c) of the\nCompaq Disclosure Letter; (v) such consents, approvals, orders, authorizations,\nregistrations, declarations and filings as may be required under applicable\nstate securities or \"blue sky\" laws and the securities laws of any foreign\ncountry, and (vi) such other \n\n\n                                      -15-\n\n\nconsents, authorizations, filings, approvals and registrations which if not\nobtained or made would not be material to Compaq or HP or materially adversely\naffect the ability of the parties hereto to consummate the Merger within the\ntime frame in which the Merger would otherwise be consummated in the absence of\nthe need for such consent, approval, order, authorization, registration,\ndeclaration or filings. The consents, approvals, orders, authorizations,\nregistrations, declarations and filings set forth in (i) through (v) are\nreferred to herein as the \"NECESSARY CONSENTS.\"\n\n      2.4 SEC FILINGS; FINANCIAL STATEMENTS.\n\n                (a) SEC FILINGS. Compaq has filed all required registration\nstatements, prospectuses, reports, schedules, forms, statements and other\ndocuments (including exhibits and all other information incorporated by\nreference) required to be filed by it with the SEC since January 1, 1998. Compaq\nhas made available to HP all such registration statements, prospectuses,\nreports, schedules, forms, statements and other documents in the form filed with\nthe SEC. All such required registration statements, prospectuses, reports,\nschedules, forms, statements and other documents (including those that Compaq\nmay file subsequent to the date hereof), as amended, are referred to herein as\nthe \"COMPAQ SEC REPORTS.\" As of their respective dates, the Compaq SEC Reports\n(i) were prepared in accordance and complied in all material respects with the\nrequirements of the Securities Act of 1933, as amended (the \"SECURITIES ACT\"),\nor the Exchange Act, as the case may be, and the rules and regulations of the\nSEC thereunder applicable to such Compaq SEC Reports and (ii) did not at the\ntime they were filed contain any untrue statement of a material fact or omit to\nstate a material fact required to be stated therein or necessary in order to\nmake the statements therein, in the light of the circumstances under which they\nwere made, not misleading, except to the extent corrected prior to the date\nhereof by a subsequently filed Compaq SEC Report. None of Compaq's Subsidiaries\nis required to file any forms, reports or other documents with the SEC.\n\n                (b) FINANCIAL STATEMENTS. Each of the consolidated financial\nstatements (including, in each case, any related notes thereto) contained in the\nCompaq SEC Reports (the \"COMPAQ FINANCIALS\"), including each Compaq SEC Report\nfiled after the date hereof until the Closing: (i) complied as to form in all\nmaterial respects with the published rules and regulations of the SEC with\nrespect thereto, (ii) was prepared in accordance with United States generally\naccepted \n\n\n                                      -16-\n\n\naccounting principles (\"GAAP\") applied on a consistent basis throughout the\nperiods involved (except as may be indicated in the notes thereto or, in the\ncase of unaudited interim financial statements, as may be permitted by the SEC\non Form 10-Q, 8-K or any successor form under the Exchange Act), and (iii)\nfairly presented in all material respects the consolidated financial position of\nCompaq and its consolidated Subsidiaries as at the respective dates thereof and\nthe consolidated results of Compaq's operations and cash flows for the periods\nindicated. The balance sheet of Compaq contained in the Compaq SEC Reports as of\nDecember 31, 2000 is hereinafter referred to as the \"COMPAQ BALANCE SHEET.\"\nExcept as disclosed in the Compaq Financials, since the date of the Compaq\nBalance Sheet and through the date hereof, neither Compaq nor any of its\nSubsidiaries has any liabilities required under GAAP to be set forth on a\nconsolidated balance sheet (absolute, accrued, contingent or otherwise) which,\nindividually or in the aggregate, would be reasonably expected to have a\nMaterial Adverse Effect on Compaq, except for liabilities incurred since the\ndate of the Compaq Balance Sheet in the ordinary course of business consistent\nwith past practices and liabilities incurred pursuant to this Agreement.\n\n      2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Compaq\nBalance Sheet and through the date hereof there has not been: (i) any Material\nAdverse Effect on Compaq, (ii) any declaration, setting aside or payment of any\ndividend on, or other distribution (whether in cash, stock or property) in\nrespect of, any of Compaq's or any of its Subsidiaries' capital stock, or any\npurchase, redemption or other acquisition by Compaq or any of its Subsidiaries\nof any of Compaq's capital stock or any other securities of Compaq or its\nSubsidiaries or any options, warrants, calls or rights to acquire any such\nshares or other securities except for (A) repurchases from Employees following\ntheir termination pursuant to the terms of their pre-existing stock option or\npurchase agreements, or (B) the Compaq Rights Dividend, or (iii) any split,\ncombination or reclassification of any of Compaq's or any of its Subsidiaries'\ncapital stock.\n\n      2.6 TAXES. For the purposes of this Agreement, the term \"TAX\" or,\ncollectively, \"TAXES,\" shall mean any and all federal, state, local and foreign\ntaxes, assessments and other governmental charges, duties, impositions and\nliabilities, including taxes based upon or measured by gross receipts, income,\nprofits, sales, use and occupation, and value added, ad valorem, transfer,\nfranchise, withholding, payroll, recapture, employment, excise and property\ntaxes, together with all interest, penalties and additions imposed with respect\nto such \n\n                                      -17-\n\n\namounts, and any obligations with respect to such amounts arising as a result of\nbeing a member of an affiliated, consolidated, combined or unitary group for any\nperiod or under any agreements or arrangements with any other Person and\nincluding any liability for taxes of a predecessor entity. Compaq and each of\nits Subsidiaries have filed all material federal, state, local and foreign\nreturns, estimates, information statements and reports relating to Taxes (\"TAX\nRETURNS\") required to be filed by any of them and have paid, or have adequately\nreserved (in accordance with GAAP) for the payment of, all Taxes required to be\npaid (whether or not shown on any Tax Returns), and the most recent financial\nstatements contained in the Compaq SEC Reports reflect an adequate reserve (in\naccordance with GAAP) for all Taxes payable by Compaq and its Subsidiaries\nthrough the date of such financial statements. No material deficiencies for any\nTaxes have been asserted or assessed, or, to the Knowledge (as defined in\nSection 8.3(b)) of Compaq, proposed, against Compaq or any of its Subsidiaries\nthat are not subject to adequate reserves (in accordance with GAAP). No audit or\nother examination of any Tax Return of Compaq or any of its Subsidiaries is\npresently in progress, nor has Compaq or any of its Subsidiaries been notified\nof any request for such an audit or other examination. Neither Compaq nor any of\nits Subsidiaries has taken any action or knows of any fact, agreement or plan or\nother circumstance that is reasonably likely to prevent the Merger from\nqualifying as a reorganization within the meaning of Section 368(a) of the Code.\n\n      2.7 INTELLECTUAL PROPERTY.\n\n                (a) NO INFRINGEMENT. To the Knowledge as of the date hereof of\nCompaq, the products, services and operations of Compaq do not infringe or\nmisappropriate the Intellectual Property (as defined below) of any third party\nwhere such infringement or misappropriation, individually or in the aggregate,\nwould be reasonably expected to have a material adverse effect on any material\ndivision or business unit or other material operating group of product or\nservice offerings of Compaq or otherwise have a Material Adverse Effect on\nCompaq. \"INTELLECTUAL PROPERTY\" shall mean any or all of the following and all\nrights in, arising out of, or associated therewith: (i) all United States,\ninternational and foreign patents and applications therefor and all reissues,\ndivisions, renewals, extensions, provisionals, continuations and\ncontinuations-in-part thereof, (ii) all inventions (whether patentable or not),\ninvention disclosures, improvements, trade secrets, proprietary information,\nknow how, technology, technical data and customer lists, and all documentation\nrelating to any of the foregoing, (iii) all \n\n\n                                      -18-\n\n\ncopyrights, copyrights registrations and applications therefor, and all other\nrights corresponding thereto throughout the world, (iv) all industrial designs\nand any registrations and applications therefor throughout the world, (v) all\nmask works and any registrations and applications therefor throughout the world,\n(vi) all trade names, logos, URLs, common law trademarks and service marks,\ntrademark and service mark registrations and applications therefor throughout\nthe world, (vii) all databases and data collections and all rights therein\nthroughout the world, (viii) all moral and economic rights of authors and\ninventors, however denominated, throughout the world, and (ix) any similar or\nequivalent rights to any of the foregoing anywhere in the world.\n\n                (b) NO IMPAIRMENT. The Merger (including the assignment by\noperation of law of any Contract to the Surviving Corporation) will not result\nin: (i) HP or any Subsidiary of HP (other than Compaq and its Subsidiaries, but\nonly to the extent existing prior to the Merger) being bound by any material\nnon-compete or other material restriction on the operation of any business of HP\nor its Subsidiaries, (ii) HP or any Subsidiary of HP (other than Compaq and its\nSubsidiaries, but only to the extent existing prior to the Merger) granting any\nrights or licenses to any material Intellectual Property of HP or any Subsidiary\nof HP to any third party (including a covenant not to sue with respect to any\nmaterial Intellectual Property of HP or any Subsidiary of HP), or (iii) the\ntermination or breach of any Contract to which Compaq is a party, which\ntermination or breach would reasonably be expected to have a material adverse\neffect on any material division or business unit or other material operating\ngroup of product or service offerings of the Surviving Corporation or HP or\notherwise have a Material Adverse Effect on either of them.\n\n      2.8 COMPLIANCE; PERMITS.\n\n                (a) COMPLIANCE. Neither Compaq nor any of its Subsidiaries is,\nin any material respect, in conflict with, or in default or in violation of any\nLegal Requirement applicable to Compaq or any of its Subsidiaries or by which\nCompaq or any of its Subsidiaries or any of their respective businesses or\nproperties is, or Compaq believes is reasonably likely to be, bound or affected,\nexcept, in each case, or in the aggregate, for conflicts, violations and\ndefaults that would not have a Material Adverse Effect on Compaq. As of the date\nhereof, no material investigation or review by any Governmental Entity is\npending or, to the Knowledge of Compaq, has been threatened in a writing\ndelivered to Compaq or \n\n\n\n                                      -19-\n\n\n\nany of its Subsidiaries, against Compaq or any of its Subsidiaries. There is no\nmaterial judgment, injunction, order or decree binding upon Compaq or any of its\nSubsidiaries which has or would reasonably be expected to have the effect of\nprohibiting or materially impairing any material business practice of Compaq or\nany of its Subsidiaries, any acquisition of material property by Compaq or any\nof its Subsidiaries or the conduct of business by Compaq and its Subsidiaries as\ncurrently conducted.\n\n                (b) PERMITS. Compaq and its Subsidiaries hold, to the extent\nlegally required, all permits, licenses, variances, exemptions, orders and\napprovals from Governmental Entities (\"PERMITS\") that are required for the\noperation of the business of Compaq, as currently conducted, the failure to hold\nwhich would reasonably be expected to have a Material Adverse Effect on Compaq\n(collectively, \"COMPAQ PERMITS\"). As of the date hereof, no suspension or\ncancellation of any of the Compaq Permits is pending or, to the Knowledge of\nCompaq, threatened. Compaq and its Subsidiaries are in compliance in all\nmaterial respects with the terms of the Compaq Permits.\n\n      2.9 LITIGATION. As of the date hereof, there are no claims, suits, actions\nor proceedings pending or, to the Knowledge of Compaq, overtly threatened\nagainst Compaq or any of its Subsidiaries, before any court, governmental\ndepartment, commission, agency, instrumentality or authority, or any arbitrator\nthat seeks to restrain or enjoin the consummation of the transactions\ncontemplated hereby or which would reasonably be expected, either singularly or\nin the aggregate with all such claims, actions or proceedings, to be material to\nthe Compaq.\n\n      2.10 BROKERS' AND FINDERS' FEES. Except for fees payable to Salomon Smith\nBarney pursuant to an engagement letter dated July 19, 2001, a copy of which has\nbeen provided to HP, Compaq has not incurred, nor will it incur, directly or\nindirectly, any liability for brokerage or finders' fees or agents' commissions\nor any similar charges in connection with this Agreement or any transaction\ncontemplated hereby.\n\n      2.11 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Compaq SEC\nReports, since the date of the Compaq's last proxy statement filed with the SEC,\nno event has occurred as of the date hereof that would be required to be\nreported by Compaq pursuant to Item 404 of Regulation S-K promulgated by the \n\n\n                                      -20-\n\n\nSEC (substituting, for the purposes of this representation and warranty, each\nappearance of $60,000 in Item 404 with $500,000). Section 2.11 of the Compaq\nDisclosure Letter identifies each Person who is an \"affiliate\" (as that term is\nused in Rule 145 promulgated under the Securities Act) of Compaq as of the date\nhereof.\n\n      2.12 EMPLOYEE BENEFIT PLANS.\n\n                (a) DOCUMENTS. Section 2.12(a) of the Compaq Disclosure Letter\nsets forth a list of the following: (i) all severance and employment agreements\nof Compaq with directors or executive officers, (ii) all material severance\nprograms and policies of each of Compaq or its Subsidiaries, (iii) all plans or\nagreement of Compaq or its Subsidiaries relating to any of its current or former\nemployees, consultants or directors (each, an \"EMPLOYEE\") pursuant to which\nbenefits would vest or an amount would become payable or the terms of which\nwould otherwise be altered, in any case by virtue of the transactions\ncontemplated hereby (whether alone or upon the occurrence of any additional or\nsubsequent events), (iv) each document embodying each Retirement Plan (as\ndefined in Section 2.12(c)) of Compaq (a \"COMPAQ RETIREMENT PLAN\"), (v) each\nCompaq Purchase Plan, and (vi) each stock option plan, stock award plan, stock\nappreciation right plan, phantom stock plan, stock option, other equity or\nequity-based compensation plan, equity or other equity based award to any Person\n(whether payable in cash, shares or otherwise) (to the extent not issued\npursuant to any of the foregoing plans) or other plan or Contract of any nature\nwith any Person (whether or not an Employee) pursuant to which any stock,\noption, warrant or other right to purchase or acquire capital stock of Compaq or\nright to payment based on the value of Compaq capital stock has been granted or\notherwise issued, but, in any case excluding the Compaq Purchase Plans\n(collectively, \"COMPAQ STOCK OPTION PLANS\"). Compaq has delivered or made\navailable to HP for review each of the items listed on Section 2.12(a) of the\nCompaq Disclosure Letter and a current actuarial valuation and\/or audited\nstatement of assets and liabilities for each Compaq Retirement Plan. Section\n2.12(a) of the Compaq Disclosure Letter also identifies whether each Compaq\nStock Option Plan (A) is a \"broadly-based\" plan, as defined in Section 312.04(h)\nof the NYSE Listed Company Manual or (B) has been approved by Compaq's\nstockholders (plans which are either \"broadly-based\" plans or approved by\nCompaq's stockholders (as identified on Section 2.12(a) of the Compaq Disclosure\nLetter) are referred to herein as \"COMPAQ BROAD PLANS\").\n\n                                      -21-\n\n\n\n                (b) BENEFIT PLAN COMPLIANCE.\n\n                        (i) With respect to each material collective bargaining\nagreement, bonus, pension, profit sharing, deferred compensation, incentive\ncompensation, stock ownership, stock purchase, stock option, phantom stock,\nstock-related or performance award, retirement, vacation, severance, disability,\ndeath benefit, hospitalization, medical, loan (other than travel allowances and\nrelocation packages), fringe benefit, disability, sabbatical and other plan,\narrangement or understanding providing benefits to any Employee, employment\nagreement, consulting agreement or severance agreement with any current or\nformer officer or director of Compaq or its Subsidiaries, or any material\nemployment agreement, consulting agreement or severance agreement for any\nEmployee (collectively, \"BENEFIT PLANS\") of Compaq or any of its Subsidiaries\n(\"COMPAQ BENEFIT PLANS\"), no material event has occurred and there exists no\nmaterial condition or set of circumstances, in connection with which Compaq or\nany of its Subsidiaries would be subject to any material liability under the\nEmployee Retirement Income Security Act of 1974, as amended (\"ERISA\"), the Code\nor any other applicable Legal Requirement.\n\n                        (ii) Each Compaq Benefit Plan has been, in all material\nrespects, administered and operated in accordance with its terms, with the\napplicable provisions of ERISA, the Code and all other applicable material Legal\nRequirements and the terms of all applicable collective bargaining agreements.\nEach Compaq Benefit Plan, including any material amendments thereto, that is\ncapable of approval by, and\/or registration for and\/or qualification for special\ntax status with, the appropriate taxation, social security and\/or supervisory\nauthorities in the relevant country, state, territory or the like (each, an\n\"APPROVAL\") has received such Approval or there remains a period of time in\nwhich to obtain such Approval retroactive to the date of any material amendment\nthat has not previously received such Approval.\n\n                        (iii) To the Knowledge of Compaq, no material oral or\nwritten representation or commitment with respect to any material aspect of any\nCompaq Benefit Plan has been made to an Employee of Compaq or any of its\nSubsidiaries by an authorized Compaq Employee that is not materially in\naccordance with the written or otherwise preexisting terms and provisions of\nsuch Compaq Benefit Plans. To the Knowledge of Compaq, neither Compaq nor any of\nits Subsidiaries has entered into any agreement, arrangement or understanding,\n\n\n                                      -22-\n\n\nwhether written or oral, with any trade union, works council or other Employee\nrepresentative body or any material number or category of its Employees which\nwould prevent, restrict or materially impede the implementation of any lay-off,\nredundancy, severance or similar program within its or their respective\nworkforces (or any part of them).\n\n                        (iv) There are no material unresolved claims or disputes\nunder the terms of, or in connection with, any Compaq Benefit Plan (other than\nroutine undisputed claims for benefits), and no action, legal or otherwise, has\nbeen commenced with respect to any material claim.\n\n                (c) RETIREMENT PLAN FUNDING. The latest actuarial valuation of\neach Funded Retirement Plan (as defined below) of Compaq or its Subsidiaries\ndiscloses that, as of the effective date of the valuation, the aggregate value\nof the assets of such Funded Retirement Plan is equal to or greater than the\naggregate value of its liabilities assessed on an ongoing and terminated basis\nand calculated in accordance with the actuarial methods and assumptions used in\nsuch valuation pursuant to such Funded Retirement Plan and applicable Legal\nRequirements and GAAP. In respect of each Retirement Plan of Compaq or its\nSubsidiaries that is not a Funded Retirement Plan, Compaq or its Subsidiaries\nhave made adequate provision for accrued liabilities in accordance with\napplicable Legal Requirements. For purposes of this Agreement, \"RETIREMENT PLAN\"\nshall mean a material arrangement for the provision of Retirement Benefit Rights\n(as defined below) to Employees (and, if applicable, beneficiaries thereof). For\npurposes of this Agreement, \"RETIREMENT BENEFIT RIGHTS\" shall mean, with respect\nto an entity, any pension, lump sum, gratuity, or a like benefit provided or\ngenerally intended to be provided on retirement or on death in respect of an\nEmployee's relationship as a service provider to an entity or its Subsidiaries.\nMaterial post-retirement health benefits and any other self-insured health\nbenefit arrangements are deemed to be \"Retirement Benefit Rights.\" Material\ndeferred compensation payments required to be made to an Employee in respect of\nthe termination of employment are also deemed to be \"Retirement Benefit Rights.\"\n\"FUNDED RETIREMENT PLAN\" means, with respect to party, a Retirement Plan under\nwhich the assets to satisfy the benefit obligations are legally segregated from\nthe general assets of such party or its Subsidiaries and are not subject to the\ncreditors of such party or its Subsidiaries.\n\n\n                                      -23-\n\n\n                (d) MULTIPLE EMPLOYER AND MULTIEMPLOYER PLANS. At no time has\nCompaq or any other person or entity under common control within the meaning of\nSection 414(b), (c), (m) or (o) of the Code (a \"CONTROLLED GROUP AFFILIATE\")\nwith Compaq participated in and\/or been obligated to contribute to any Compaq\nBenefit Plan in which any persons which are not or were not at the relevant\ntime, Controlled Group Affiliates of Compaq and\/or their Employees, have\nparticipated. No Compaq Benefit Plan is a \"multiemployer plan\" within the\nmeaning of Section 3(37) of ERISA.\n\n                (e) CONTINUATION COVERAGE. No Compaq Benefit Plan provides\nhealth benefits (whether or not insured), with respect to Employees after\nretirement or other termination of service (other than coverage mandated by\napplicable Legal Requirements or benefits, the full cost of which is borne by\nthe Employee) other than individual arrangements the amounts of which are not\nmaterial.\n\n                (f) EFFECT OF TRANSACTION. The execution of this Agreement and\nthe consummation of the transactions contemplated hereby will not (either alone\nor upon the occurrence of any additional or subsequent events) constitute an\nevent under any Compaq Benefit Plan that will or may result in any material\npayment (whether of severance pay or otherwise), acceleration of payment,\nforgiveness of indebtedness, vesting, distribution, increase in benefits or\nobligation to fund benefits with respect to any Employee. There is no contract,\nagreement, plan or arrangement with an Employee to which Compaq or any of its\nSubsidiaries is a party as of the date of this Agreement, that, individually or\ncollectively and as a result of the transaction contemplated hereby (whether\nalone or upon the occurrence of any additional or subsequent events), would\nreasonably be expected to give rise to the payment of any amount that would not\nbe deductible pursuant to Section 280G of the Code.\n\n                (g) LABOR. No collective bargaining agreement is being\nnegotiated or renegotiated in any material respect by Compaq or any of its\nSubsidiaries. As of the date of this Agreement, there is no material labor\ndispute, strike or work stoppage against Compaq or any of its Subsidiaries\npending or, to the Knowledge of Compaq, threatened which may materially\ninterfere with the respective business activities of Compaq or any of its\nSubsidiaries. As of the date of this Agreement, to the Knowledge of Compaq, none\nof Compaq, any of its Subsidiaries or any of their respective representatives or\nEmployees has \n\n\n                                      -24-\n\n\ncommitted any material unfair labor practice in connection with the operation of\nthe respective businesses of Compaq or any of its Subsidiaries, and there is no\nmaterial charge or complaint against Compaq or any of its Subsidiaries by the\nNational Labor Relations Board or any comparable governmental agency pending or\nthreatened in writing.\n\n      2.13 ENVIRONMENTAL MATTERS.\n\n                (a) HAZARDOUS MATERIAL. Except as would not result in a Material\nAdverse Effect on Compaq, no underground storage tanks and no amount of any\nsubstance that has been designated by any Governmental Entity or by applicable\nfederal, state or local law to be radioactive, toxic, hazardous or otherwise a\ndanger to health or the environment, including PCBs, asbestos, petroleum,\nurea-formaldehyde and all substances listed as hazardous substances pursuant to\nthe Comprehensive Environmental Response, Compensation, and Liability Act of\n1980, as amended, or defined as a hazardous waste pursuant to the United States\nResource Conservation and Recovery Act of 1976, as amended, and the regulations\npromulgated pursuant to said laws, but excluding office and janitorial supplies,\n(a \"HAZARDOUS MATERIAL\") are present, as a result of the actions of Compaq or\nany of its Subsidiaries or any affiliate of Compaq, or, to the Knowledge of\nCompaq, as a result of any actions of any third party or otherwise, in, on or\nunder any property, including the land and the improvements, ground water and\nsurface water thereof, that Compaq or any of its Subsidiaries has at any time\nowned, operated, occupied or leased.\n\n                (b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result\nin a Material Adverse Effect on Compaq: (i) neither Compaq nor any of its\nSubsidiaries has transported, stored, used, manufactured, disposed of, released\nor exposed its Employees or others to Hazardous Materials in violation of any\nlaw in effect on or before the Closing Date and (ii) neither Compaq nor any of\nits Subsidiaries has disposed of, transported, sold, used, released, exposed its\nEmployees or others to or manufactured any product containing a Hazardous\nMaterial (collectively, \"HAZARDOUS MATERIALS ACTIVITIES\") in violation of any\nrule, regulation, treaty or statute promulgated by any Governmental Entity in\neffect prior to or as of the date hereof to prohibit, regulate or control\nHazardous Materials or any Hazardous Material Activity.\n\n\n\n                                      -25-\n\n\n\n      2.14 CONTRACTS.\n\n                (a) MATERIAL CONTRACTS. For purposes of this Agreement, \"COMPAQ\nMATERIAL CONTRACT\" shall mean:\n\n                        (i) any \"material contracts\" (as such term is defined in\nItem 601(b)(10) of Regulation S-K of the SEC) with respect to Compaq and its\nSubsidiaries;\n\n                        (ii) any Contract containing any covenant: (A) limiting\nthe right of Compaq or its Subsidiaries to engage in any material line of\nbusiness, make use of any material Intellectual Property or compete with any\nPerson in any material line of business, (B) granting any exclusive distribution\nor supply rights, or (C) otherwise having an adverse effect on the right of\nCompaq and its Subsidiaries to sell, distribute or manufacture any material\nproducts or services or to purchase or otherwise obtain any material software,\ncomponents, parts or subassemblies;\n\n                        (iii) any Contract, or group of Contracts with a Person\n(or group of affiliated Persons), the termination or breach of which would be\nreasonably expected to have a material adverse effect on any material division\nor business unit or other material operating group of product or service\nofferings of Compaq or otherwise have a Material Adverse Effect on Compaq; and\n\n                        (iv) (A) all Contracts with the top two (2) providers\n(as measured by fees paid under such Contracts) pursuant to which Compaq\nlicenses operating system software for use in its end-user products, (B) all\nContracts with the top two (2) providers (as measured by fees paid under such\nContracts) pursuant to which Compaq purchases microprocessors, (C) all Contracts\nwith the top five (5) distributors of Compaq's end-user products (as measured by\nrevenues received under such Contracts) pursuant to which Compaq distributes its\nend-user products, and (D) all Contracts with the top five (5) third-party\nmanufacturers (as measured by fees paid under such Contracts) pursuant to which\nsuch Compaq products (or subassemblies thereof) are manufactured.\n\n                (b) SCHEDULE. Section 2.14(b) of the Compaq Disclosure Letter\nsets forth a list of all Compaq Material Contracts to which is a party or is\nbound by as of the date hereof which are described in Sections 2.14(a)(i) and\n2.14(a)(iv) hereof.\n\n\n                                      -26-\n\n\n                (c) NO BREACH. All Compaq Material Contracts are valid and in\nfull force and effect except to the extent they have previously expired in\naccordance with their terms or if the failure to be in full force and effect,\nindividually or in the aggregate, would not reasonably be expected to be\nmaterial to Compaq. Neither Compaq nor any of its Subsidiaries has violated any\nprovision of, or committed or failed to perform any act which, with or without\nnotice, lapse of time or both would constitute a default under the provisions\nof, any Compaq Material Contract, except in each case for those violations and\ndefaults which, individually or in the aggregate, would not reasonably be\nexpected to be material to Compaq.\n\n      2.15 DISCLOSURE. None of the information supplied or to be supplied by or\non behalf of Compaq for inclusion or incorporation by reference in the\nregistration statement on Form S-4 (or similar successor form) to be filed with\nthe SEC by HP in connection with the issuance of HP Common Stock in the Merger\n(including amendments or supplements thereto) (the \"REGISTRATION STATEMENT\")\nwill, at the time the Registration Statement becomes effective under the\nSecurities Act, contain any untrue statement of a material fact or omit to state\nany material fact required to be stated therein or necessary in order to make\nthe statements therein, in the light of the circumstances under which they are\nmade, not misleading. None of the information supplied or to be supplied by or\non behalf of Compaq for inclusion or incorporation by reference in the\nProspectus\/Proxy Statement to be filed with the SEC as part of the Registration\nStatement (the \"PROSPECTUS\/PROXY STATEMENT\"), will, at the time the\nProspectus\/Proxy Statement is mailed to the stockholders of Compaq or HP, at the\ntime of the HP Stockholders' Meeting or Compaq Stockholders' Meeting or as of\nthe Effective Time, contain any untrue statement of a material fact or omit to\nstate any material fact required to be stated therein or necessary in order to\nmake the statements therein, in the light of the circumstances under which they\nare made, not misleading. The Prospectus\/Proxy Statement will comply as to form\nin all material respects with the provisions of the Exchange Act and the rules\nand regulations promulgated by the SEC thereunder. Notwithstanding the\nforegoing, no representation or warranty is made by Compaq with respect to\nstatements made or incorporated by reference therein about HP supplied by HP for\ninclusion or incorporation by reference in the Registration Statement or the\nProspectus\/Proxy Statement.\n\n\n                                      -27-\n\n\n      2.16 BOARD APPROVAL. The Board of Directors of Compaq has, by resolutions\nduly adopted by unanimous vote at a meeting of all Directors duly called and\nheld and not subsequently rescinded or modified in any way (the \"COMPAQ BOARD\nAPPROVAL\") has duly (i) determined that the Merger is fair to, and in the best\ninterests of, Compaq and its stockholders and declared the Merger to be\nadvisable, (ii) approved this Agreement, and (iii) recommended that the\nstockholders of Compaq approve and adopt this Agreement and approve the Merger\nand directed that such matter be submitted to Compaq's stockholders at the\nCompaq Stockholders' Meeting.\n\n      2.17 FAIRNESS OPINION. Compaq's Board of Directors has received a written\nopinion from Salomon Smith Barney, dated as of September 3, 2001, to the effect\nthat, as of such date, the Exchange Ratio is fair, from a financial point of\nview, to Compaq stockholders and has delivered to HP a copy of such opinion.\n\n      2.18 RIGHTS PLAN. The Board of Directors of Compaq has approved the Compaq\nRights Agreement and has declared a dividend of one Compaq Right per share of\nCompaq Common Stock to each holder of Compaq Common Stock (the \"COMPAQ RIGHTS\nDIVIDEND\"). Compaq has (a) delivered to HP an accurate copy of the Compaq Rights\nAgreement approved by the Board of Directors of Compaq and proposed to be\nentered into with the Rights Agents named thereunder, (b) declared the Compaq\nRights Dividend, and (c) fixed the record date for the Compaq Rights Dividend as\nSeptember 17, 2001 and the payment date for the Compaq Rights Dividend no later\nthan September 27, 2001. Compaq has taken all action so that (i) HP shall not be\nan \"Acquiring Person\" thereunder and (ii) the entering into of this Agreement\nand the Merger and the other transactions contemplated hereby will not result in\nthe grant of any rights to any Person under the Compaq Rights Agreement or\nenable or require the Compaq Rights to be exercised, distributed or triggered.\n\n      2.19 TAKEOVER STATUTES. The Board of Directors of Compaq has taken all\nactions so that the restrictions contained in Section 203 of the Delaware\nGeneral Corporation Law applicable to a \"business combination\" (as defined in\nsuch Section 203), and any other similar Legal Requirement, will not apply to HP\nduring the pendency of this Agreement, including the execution, delivery or\nperformance of this Agreement and the consummation of the Merger and the other\ntransactions contemplated hereby.\n\n\n                                      -28-\n\n\n                                  ARTICLE III\n                      REPRESENTATIONS AND WARRANTIES OF HP\n                                 AND MERGER SUB\n\n      HP and Merger Sub represent and warrant to Compaq, subject to the\nexceptions specifically disclosed in writing in the disclosure letter supplied\nby HP and Merger Sub to Compaq dated as of the date hereof and certified by a\nduly authorized officer of each of HP and Merger Sub (the \"HP DISCLOSURE\nLETTER\"), as follows:\n\n      3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES.\n\n                (a) ORGANIZATION; STANDING AND POWER. HP and each of its\nSubsidiaries is a corporation or other organization duly organized, validly\nexisting and in good standing under the laws of the jurisdiction of its\nincorporation or organization, has the requisite power and authority to own,\nlease and operate its properties and to carry on its business as now being\nconducted, except where the failure to be so organized, existing and in good\nstanding would not reasonably be expected to have a Material Adverse Effect on\nHP, and is duly qualified and in good standing to do business in each\njurisdiction in which the nature of its business or the ownership or leasing of\nits properties makes such qualification necessary other than in such\njurisdictions where the failure to so qualify or to be good standing,\nindividually or in the aggregate, would not reasonably be expected to have a\nMaterial Adverse Effect on HP.\n\n                (b) CHARTER DOCUMENTS. HP has delivered or made available to\nCompaq (i) a true and correct copy of the Certificate of Incorporation\n(including any Certificate of Designations) and Bylaws of HP, each as amended to\ndate (collectively, the \"HP CHARTER DOCUMENTS\") and (ii) the Subsidiary Charter\nDocuments of each of its Significant Subsidiaries, and each such instrument is\nin full force and effect. HP is not in violation of any of the provisions of the\nHP Charter Documents and each Subsidiary is not in violation of its respective\nSubsidiary Charter Documents, except in the case of a Subsidiary, as would not\nreasonably be expected to have a Material Adverse Effect on HP.\n\n                (c) SUBSIDIARIES. Exhibit 21 to HP's Annual Report on Form 10-K\nfor the fiscal year ended October 31, 2000 includes all the Subsidiaries of HP\nwhich are Significant Subsidiaries. All the outstanding shares of capital stock\n\n\n                                      -29-\n\n\nof, or other equity interests in, each such Significant Subsidiary have been\nvalidly issued and are fully paid and nonassessable and are, except as set forth\nin such Exhibit 21, owned directly or indirectly by HP, free and clear of all\nLiens, including any restriction on the right to vote, sell or otherwise dispose\nof such capital stock or other ownership interests, except for restrictions\nimposed by applicable securities laws, except in the case of a Subsidiary, as\nwould not reasonably be expected to have a Material Adverse Effect on HP or a\nmaterial adverse effect on such Subsidiary.\n\n      3.2 CAPITAL STRUCTURE.\n\n                (a) CAPITAL STOCK. The authorized capital stock of HP consists\nof: (i) 4,800,000,000 shares of HP Common Stock, par value $0.01 per share and\n(ii) 300,000,000 shares of preferred stock, par value $0.01 per share the \"HP\nPREFERRED STOCK\"), of which 4,500,000 shares have been designated as Series A\nParticipating Preferred Stock, all of which will be reserved for issuance upon\nexercise of preferred stock purchase rights (the \"HP RIGHTS\") issuable pursuant\nto the rights agreement approved by the Board of Directors of HP in connection\nwith its approval of this Agreement substantially in the form previously\nprovided to Compaq (the \"HP RIGHTS AGREEMENT\"). At the close of business of July\n31, 2001: (i) 1,939,159,231 shares of HP Common Stock were issued and\noutstanding, (ii) no shares of HP Common Stock were issued and held by HP in its\ntreasury, and (iii) no shares of HP Preferred Stock were issued and outstanding.\nAll of the outstanding shares of capital stock of HP are, and all shares of\ncapital stock of HP which may be issued as contemplated or permitted by this\nAgreement will be, when issued, duly authorized and validly issued, fully paid\nand nonassessable and not subject to any preemptive rights.\n\n                (b) STOCK OPTIONS. As of the close of business on July 31, 2001:\n(i) 212,000,000 shares of HP Common Stock are subject to issuance pursuant to\noutstanding options to purchase HP Common Stock under the stock option, stock\naward, stock appreciation or phantom stock plans of HP (the \"HP STOCK OPTION\nPLANS\") (stock options, stock awards, stock appreciation rights, phantom stock\nawards, stock-related awards and performance awards granted by HP pursuant to\nthe HP Stock Option Plans are referred to in this Agreement as \"HP OPTIONS\"),\n(ii) ) 98,700,000 shares of HP Common Stock are reserved for future issuance\nunder the employee stock purchase plans of HP, and (iii) 80,000 shares of HP\nCommon Stock are subject to issuance pursuant to outstanding \n\n\n                                      -30-\n\n\n\noptions, rights or warrants to purchase HP Common Stock issued other than\npursuant to the HP Stock Option Plans and the HP employee stock purchase plans.\nAll shares of HP Common Stock subject to issuance as aforesaid, upon issuance on\nthe terms and conditions specified in the instruments pursuant to which they are\nissuable, would be duly authorized, validly issued, fully paid and\nnonassessable. There are no outstanding or authorized stock appreciation,\nphantom stock, profit participation or other similar rights with respect to HP.\n\n                (c) VOTING DEBT. No Voting Debt of HP is issued or outstanding\nas of the date hereof.\n\n\n                (d) OTHER SECURITIES. Except as otherwise set forth in this\nSection 3.2, as of July 31, 2001, there are no securities, options, warrants,\ncalls, rights, commitments, agreements, arrangements or undertakings of any kind\nto which HP or any of its Subsidiaries is a party or by which any of them is\nbound obligating HP or any of its Subsidiaries to issue, deliver or sell, or\ncause to be issued, delivered or sold, additional shares of capital stock,\nVoting Debt or other voting securities of HP or any of its Subsidiaries, or\nobligating HP or any of its Subsidiaries to issue, grant, extend or enter into\nany such security, option, warrant, call, right, commitment, agreement,\narrangement or undertaking. All outstanding shares of HP Common Stock, all\noutstanding HP Options, and all outstanding shares of capital stock of each\nSubsidiary of HP have been issued and granted in compliance in all material\nrespects with (i) all applicable securities laws and all other applicable Legal\nRequirements and (ii) all requirements set forth in applicable material\nContracts.\n\n                (e) NO CHANGES. Since July 31, 2001 and through the date hereof,\nother than (i) pursuant to the exercise of HP Options outstanding as of July 31,\n2001 issued pursuant to the HP Option Plans, (ii) under the HP employee stock\npurchase plans, (iii) repurchases of securities pursuant to HP's publicly\nannounced repurchase programs existing as of July 31, 2001, or (iv) repurchases\nfrom Employees following their termination pursuant to the terms of their\npre-existing stock option or purchase agreements, there has been no change in\n(A) the outstanding capital stock of HP, (B) the number of HP Options\noutstanding, or (C) the number of other options, warrants or other rights to\npurchase HP capital stock, which, individually or in the aggregate, would\nconstitute a material change in the capitalization of HP.\n\n\n                                      -31-\n\n\n                (f) MERGER SUB CAPITAL STOCK. The authorized capital stock of\nMerger Sub consists of 1,000 shares of common stock, par value $0.01 per share,\nof which 1,000 shares issued and outstanding. HP is the sole stockholder of\nMerger Sub and is the legal and beneficial owner of all 1,000 issued and\noutstanding shares. Merger Sub was formed by counsel to HP at the direction of\nHP on August 30, 2001, solely for purposes of effecting the Merger and the other\ntransactions contemplated hereby. Except as contemplated by this Agreement,\nMerger Sub does not hold, nor has it held, any material assets or incurred any\nmaterial liabilities nor has Merger Sub carried on any business activities other\nthan in connection with the Merger and the transactions contemplated by this\nAgreement. All of the outstanding shares of capital stock of Merger Sub have\nbeen duly authorized and validly issued, and are fully paid and nonassessable\nand not subject to any preemptive rights.\n\n      3.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.\n\n                (a) AUTHORITY. Each of HP and Merger Sub has all requisite\ncorporate power and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby. The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby has been duly\nauthorized by all necessary corporate action on the part of HP and Merger Sub\nand no other corporate proceedings on the part of HP or Merger Sub are necessary\nto authorize the execution and delivery of this Agreement or to consummate the\nMerger and the other transactions contemplated hereby, subject only to the\napproval of the Stock Issuance by HP's stockholders, the approval and adoption\nof this Agreement and the approval of the Merger by HP as Merger Sub's sole\nstockholder and the and the filing of the Certificate of Merger pursuant to\nDelaware Law. The affirmative vote of the holders of a majority of the\noutstanding shares of HP Common Stock present in person or by proxy in favor of\nthe Stock Issuance at a meeting duly called and held for approval of the Stock\nIssuance is the only vote of the holders of any class or series of HP capital\nstock necessary to approve the Stock Issuance, and no other vote of the holders\nof any class or series of HP Capital Stock is necessary to approve and adopt\nthis Agreement, approve the Merger and consummate the Merger and the other\ntransactions contemplated hereby. This Agreement has been duly executed and\ndelivered by HP and Merger Sub and, assuming due execution and delivery by\nCompaq, constitutes the valid and binding obligation of HP, enforceable against\nHP and Merger Sub in accordance with its terms.\n\n\n                                      -32-\n\n\n                (b) NON-CONTRAVENTION. The execution and delivery of this\nAgreement by HP and Merger Sub does not, and performance of this Agreement by HP\nwill not: (i) conflict with or violate the HP Charter Documents, the certificate\nof incorporation or bylaws of Merger Sub or any other Subsidiary Charter\nDocuments of any Subsidiary of HP, (ii) subject to obtaining the approval and\nadoption of this Agreement and the approval of the Stock Issuance by HP's\nstockholders as contemplated in Section 5.2 and compliance with the requirements\nset forth in Section 3.3(c), conflict with or violate any material Legal\nRequirement applicable to HP, Merger Sub or any of HP's other Subsidiaries or by\nwhich HP, Merger Sub or any of HP's other Subsidiaries or any of their\nrespective properties is bound or affected, or (iii) result in any material\nbreach of or constitute a material default (or an event that with notice or\nlapse of time or both would become a material default) under, or impair HP's\nrights or alter the rights or obligations of any third party under, or give to\nothers any rights of termination, amendment, acceleration or cancellation of, or\nresult in the creation of a material Lien on any of the material properties or\nassets of HP or any of its Subsidiaries pursuant to, any HP Material Contract\n(as defined in Section 3.13). Section 3.3(b) of the HP Disclosure Letter lists\nall consents, waivers and approvals under any of HP's or any of its\nSubsidiaries' Contracts required to be obtained in connection with the\nconsummation of the transactions contemplated hereby, which, if individually or\nin the aggregate not obtained, would result in a Material Adverse Effect on HP\nor the Surviving Corporation.\n\n                (c) NECESSARY CONSENTS. No consent, approval, order or\nauthorization of, or registration, declaration or filing with any Governmental\nEntity is required to be obtained or made by HP in connection with the execution\nand delivery of this Agreement or the consummation of the Merger and other\ntransactions contemplated hereby, except for (i) the Necessary Consents and (ii)\nsuch other consents, authorizations, filings, approvals and registrations which\nif not obtained or made would not be material to HP, Merger Sub or Compaq or\nmaterially adversely affect the ability of the parties hereto to consummate the\nMerger within the time frame in which the Merger would otherwise be consummated\nin the absence of the need for such consent, approval, order, authorization,\nregistration, declaration or filings.\n\n\n                                      -33-\n\n\n\n      3.4 SEC FILINGS; FINANCIAL STATEMENTS.\n\n                (a) SEC FILINGS. HP has filed all required registration\nstatements, prospectuses, reports, schedules, forms, statements and other\ndocuments (including exhibits and all other information incorporated by\nreference) required to be filed by it with the SEC since January 1, 1998. HP has\nmade available to Compaq all such registration statements, prospectuses,\nreports, schedules, forms, statements and other documents in the form filed with\nthe SEC. All such required registration statements, prospectuses, reports,\nschedules, forms, statements and other documents (including those that HP may\nfile subsequent to the date hereof), as amended, are referred to herein as the\n\"HP SEC REPORTS.\" As of their respective dates, the HP SEC Reports (i) were\nprepared in accordance and complied in all material respects with the\nrequirements of the Securities Act, or the Exchange Act, as the case may be, and\nthe rules and regulations of the SEC thereunder applicable to such HP SEC\nReports and (ii) did not at the time they were filed contain any untrue\nstatement of a material fact or omit to state a material fact required to be\nstated therein or necessary in order to make the statements therein, in the\nlight of the circumstances under which they were made, not misleading, except to\nthe extent corrected prior to the date hereof by a subsequently filed HP SEC\nReport. None of HP's Subsidiaries is required to file any forms, reports or\nother documents with the SEC.\n\n                (b) FINANCIAL STATEMENTS. Each of the consolidated financial\nstatements (including, in each case, any related notes thereto) contained in the\nHP SEC Reports (the \"HP FINANCIALS\"), including each HP SEC Report filed after\nthe date hereof until the Closing: (i) complied as to form in all material\nrespects with the published rules and regulations of the SEC with respect\nthereto, (ii) was prepared in accordance with GAAP applied on a consistent basis\nthroughout the periods involved (except as may be indicated in the notes thereto\nor, in the case of unaudited interim financial statements, as may be permitted\nby the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act), and\n(iii) fairly presented in all material respects the consolidated financial\nposition of HP and its consolidated Subsidiaries as at the respective dates\nthereof and the consolidated results of HP's operations and cash flows for the\nperiods indicated. The balance sheet of HP contained in the HP SEC Reports as of\nOctober 31, 2000 is hereinafter referred to as the \"HP BALANCE SHEET.\" Except as\ndisclosed in the HP Financials, since the date of the HP Balance Sheet and\nthrough the date hereof, neither HP nor any of its Subsidiaries has any\nliabilities required under GAAP to be set forth on a consolidated balance sheet\n(absolute, accrued, contingent or otherwise) which, individually or in the\naggregate, would be reasonably expected \n\n                                      -34-\n\n\nto have a Material Adverse Effect on HP, except for liabilities incurred since\nthe date of the HP Balance Sheet in the ordinary course of business consistent\nwith past practices and liabilities incurred pursuant to this Agreement.\n\n      3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the HP Balance\nSheet and through the date hereof there has not been: (i) any Material Adverse\nEffect on HP, (ii) any declaration, setting aside or payment of any dividend on,\nor other distribution (whether in cash, stock or property) in respect of, any of\nHP's or any of its Subsidiaries' capital stock, or any purchase, redemption or\nother acquisition by HP or any of its Subsidiaries of any of HP's capital stock\nor any other securities of HP or its Subsidiaries or any options, warrants,\ncalls or rights to acquire any such shares or other securities except for (A)\nrepurchases from Employees following their termination pursuant to the terms of\ntheir pre-existing stock option or purchase agreements or (B) repurchases\npursuant to HP's public stock repurchase programs existing as of July 31, 2001,\nor (C) the HP Rights Dividend, or (iii) any split, combination or\nreclassification of any of HP's or any of its Subsidiaries' capital stock.\n\n      3.6 TAXES. HP and each of its Subsidiaries have filed all material Tax\nReturns required to be filed by any of them and have paid, or have adequately\nreserved (in accordance with GAAP) for the payment of, all Taxes required to be\npaid (whether or not shown on any Tax Returns), and the most recent financial\nstatements contained in the HP SEC Reports reflect an adequate reserve (in\naccordance with GAAP) for all Taxes payable by HP and its Subsidiaries through\nthe date of such financial statements. No material deficiencies for any Taxes\nhave been asserted or assessed, or to the Knowledge of HP, proposed, against HP\nor any of its Subsidiaries that are not subject to adequate reserves (in\naccordance with GAAP). Neither the HP nor any of its Subsidiaries has taken any\naction or knows of any fact, agreement or plan or other circumstance that is\nreasonably likely to prevent the Merger from qualifying as a reorganization\nwithin the meaning of Section 368(a) of the Code.\n\n      3.7 INTELLECTUAL PROPERTY.\n\n                (a) NO INFRINGEMENT. To the Knowledge as of the date hereof of\nHP, the products, services and operations of HP do not infringe or\nmisappropriate the Intellectual Property of any third party where such\ninfringement or misappropriation, individually or in the aggregate, would be\n\n\n                                      -35-\n\n\nreasonably expected to have a material adverse effect on any material division\nor business unit or other material operating group of product or service\nofferings of HP or otherwise have a Material Adverse Effect on HP.\n\n                (b) NO IMPAIRMENT. The Merger will not result in the termination\nor breach of any Contract to which HP is a party, which termination or breach\nwould reasonably be expected to have a material adverse effect on any material\ndivision or business unit or other material operating group of product or\nservice offerings of HP or otherwise have a Material Adverse Effect on HP.\n\n      3.8 COMPLIANCE; PERMITS.\n\n                (a) COMPLIANCE. Neither HP nor any of its Subsidiaries is, in\nany material respect, in conflict with, or in default or in violation of any\nLegal Requirement applicable to HP or any of its Subsidiaries or by which HP or\nany of its Subsidiaries or any of their respective businesses or properties is,\nor HP believes is reasonably likely to be, bound or affected, except, in each\ncase, or in the aggregate, for conflicts, violations and defaults that would not\nhave a Material Adverse Effect on HP. As of the date hereof, no material\ninvestigation or review by any Governmental Entity is pending or, to the\nKnowledge of HP, has been threatened in a writing delivered to HP or any of its\nSubsidiaries, against HP or any of its Subsidiaries. There is no material\njudgment, injunction, order or decree binding upon HP or any of its Subsidiaries\nwhich has or would reasonably be expected to have the effect of prohibiting or\nmaterially impairing any material business practice of HP or any of its\nSubsidiaries, any acquisition of material property by HP or any of its\nSubsidiaries or the conduct of business by HP and its Subsidiaries as currently\nconducted.\n\n                (b) PERMITS. HP and its Subsidiaries hold, to the extent legally\nrequired, all Permits that required for the operation of the business of HP, as\ncurrently conducted, the failure to hold which would reasonably be expected to\nhave a Material Adverse Effect on HP (collectively, \"HP PERMITS\"). As of the\ndate hereof, no suspension or cancellation of any of the HP Permits is pending\nor, to the Knowledge of HP, threatened. HP and its Subsidiaries are in\ncompliance in all material respects with the terms of the HP Permits.\n\n                3.9 LITIGATION. As of the date hereof, there are no claims,\nsuits, actions or proceedings pending or, to the Knowledge of HP, overtly\nthreatened against HP or any of its Subsidiaries, before any court, governmental\ndepartment, \n\n\n                                      -36-\n\n\ncommission, agency, instrumentality or authority, or any arbitrator that seeks\nto restrain or enjoin the consummation of the transactions contemplated hereby\nor which would reasonably be expected, either singularly or in the aggregate\nwith all such claims, actions or proceedings, to be material to HP.\n\n      3.10 BROKERS' AND FINDERS' FEES. Except for fees payable to Goldman, Sachs\n&amp; Co. pursuant to an engagement letter dated July 25, 2001, a copy of which has\nbeen provided to Compaq, HP has not incurred, nor will it incur, directly or\nindirectly, any liability for brokerage or finders' fees or agents' commissions\nor any similar charges in connection with this Agreement or any transaction\ncontemplated hereby.\n\n      3.11 EMPLOYEE BENEFIT PLANS.\n\n                (a) BENEFIT PLAN COMPLIANCE.\n\n\n                        (i) With respect to the Benefit Plan of HP or any of its\nSubsidiaries (\"HP BENEFIT PLAN\"), no material event has occurred and there\nexists no material condition or set of circumstances, in connection with which\nHP or any of its Subsidiaries would be subject to any material liability under\nthe ERISA, the Code or any other applicable Legal Requirement.\n\n                        (ii) Each HP Benefit Plan has been, in all material\nrespects, administered and operated in accordance with its terms, with the\napplicable provisions of ERISA, the Code and all other applicable material Legal\nRequirements and the terms of all applicable collective bargaining agreements.\nEach HP Benefit Plan, including any material amendments thereto, that is capable\nof Approval has received such Approval or there remains a period of time in\nwhich to obtain such Approval retroactive to the date of any material amendment\nthat has not previously received such Approval.\n\n                        (iii) To the Knowledge of HP, no material oral or\nwritten representation or commitment with respect to any material aspect of any\nHP Benefit Plan has been made to an Employee of HP or any of its Subsidiaries by\nan authorized HP Employee that is not materially in accordance with the written\nor otherwise preexisting terms and provisions of such HP Benefit Plans. To the\nKnowledge of HP, neither HP nor any of its Subsidiaries has entered into any\nagreement, arrangement or understanding, whether written or oral, with any trade\nunion, works council or other Employee representative body or any material\n\n\n                                      -37-\n\n\nnumber or category of its Employees which would prevent, restrict or materially\nimpede the implementation of any lay-off, redundancy, severance or similar\nprogram within its or their respective workforces (or any part of them).\n\n                        (iv) There are no material unresolved claims or disputes\nunder the terms of, or in connection with, any HP Benefit Plan (other than\nroutine undisputed claims for benefits), and no action, legal or otherwise, has\nbeen commenced with respect to any material claim.\n\n                (b) RETIREMENT PLAN FUNDING. The latest actuarial valuation of\neach Funded Retirement Plan of HP or its Subsidiaries discloses that, as of the\neffective date of the valuation, the aggregate value of the assets of such\nFunded Retirement Plan is equal to or greater than the aggregate value of its\nliabilities assessed on an ongoing and terminated basis and calculated in\naccordance with the actuarial methods and assumptions used in such valuation\npursuant to such Funded Retirement Plan and applicable Legal Requirements and\nGAAP. In respect of each Retirement Plan of HP or its Subsidiaries that is not a\nFunded Retirement Plan, HP or its Subsidiaries have made adequate provision for\naccrued liabilities in accordance with applicable Legal Requirements.\n\n                (c) MULTIPLE EMPLOYER AND MULTIEMPLOYER PLANS. At no time has HP\nor Controlled Group Affiliate with HP participated in and\/or been obligated to\ncontribute to any HP Benefit Plan in which any persons which are not or were not\nat the relevant time, Controlled Group Affiliates of HP and\/or their Employees,\nhave participated. No HP Benefit Plan is a \"multiemployer plan\" within the\nmeaning of Section 3(37) of ERISA.\n\n                (d) CONTINUATION COVERAGE. No HP Benefit Plan provides health\nbenefits (whether or not insured), with respect to Employees after retirement or\nother termination of service (other than coverage mandated by applicable Legal\nRequirements or benefits, the full cost of which is borne by the Employee) other\nthan individual arrangements the amounts of which are not material.\n\n                (e) EFFECT OF TRANSACTION. The execution of this Agreement and\nthe consummation of the transactions contemplated hereby will not (either alone\nor upon the occurrence of any additional or subsequent events) constitute an\nevent under any HP Benefit Plan that will or may result in any material payment\n(whether of severance pay or otherwise), acceleration of payment, forgiveness of\n\n\n                                      -38-\n\n\nindebtedness, vesting, distribution, increase in benefits or obligation to fund\nbenefits with respect to any Employee. There is no contract, agreement, plan or\narrangement with an Employee to which HP or any of its Subsidiaries is a party\nas of the date of this Agreement, that, individually or collectively and as a\nresult of the transaction contemplated hereby (whether alone or upon the\noccurrence of any additional or subsequent events), would reasonably be expected\nto give rise to the payment of any amount that would not be deductible pursuant\nto Section 280G of the Code.\n\n                (f) LABOR. No collective bargaining agreement is being\nnegotiated or renegotiated in any material respect by HP or any of its\nSubsidiaries. As of the date of this Agreement, there is no material labor\ndispute, strike or work stoppage against HP or any of its Subsidiaries pending\nor, to the Knowledge of HP, threatened which may materially interfere with the\nrespective business activities of HP or any of its Subsidiaries. As of the date\nof this Agreement, to the Knowledge of HP, none of HP, any of its Subsidiaries\nor any of their respective representatives or Employees has committed any\nmaterial unfair labor practice in connection with the operation of the\nrespective businesses of HP or any of its Subsidiaries, and there is no material\ncharge or complaint against HP or any of its Subsidiaries by the National Labor\nRelations Board or any comparable governmental agency pending or threatened in\nwriting.\n\n      3.12 ENVIRONMENTAL MATTERS.\n\n                (a) HAZARDOUS MATERIAL. Except as would not result in a Material\nAdverse Effect on HP, no underground storage tanks and no amount of any\nHazardous Material are present, as a result of the actions of HP or any of its\nSubsidiaries or any affiliate of HP, or, to the Knowledge of HP, as a result of\nany actions of any third party or otherwise, in, on or under any property,\nincluding the land and the improvements, ground water and surface water thereof,\nthat HP or any of its Subsidiaries has at any time owned, operated, occupied or\nleased.\n\n                (b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result\nin a Material Adverse Effect on HP (i) neither HP nor any of its Subsidiaries\nhas transported, stored, used, manufactured, disposed of, released or exposed\nits Employees or others to Hazardous Materials in violation of any law in effect\non or before the Closing Date and (ii) neither HP nor any of its Subsidiaries\nhas engaged in any Hazardous Materials Activities in violation of any rule,\nregulation, \n\n\n                                      -39-\n\n\ntreaty or statute promulgated by any Governmental Entity in effect prior to or\nas of the date hereof to prohibit, regulate or control Hazardous Materials or\nany Hazardous Material Activity.\n\n      3.13 CONTRACTS. All HP Material Contracts (as defined below) are valid and\nin full force and effect except to the extent they have previously expired in\naccordance with their terms or if the failure to be in full force and effect,\nindividually or in the aggregate, would not reasonably be expected to be\nmaterial to HP. Neither HP nor any of its Subsidiaries has violated any\nprovision of, or committed or failed to perform any act which, with or without\nnotice, lapse of time or both would constitute a default under the provisions\nof, any HP Material Contract, except in each case for those violations and\ndefaults which, individually or in the aggregate, would not reasonably be\nexpected to be material to HP. For purposes of this Agreement, \"HP MATERIAL\nCONTRACT\" shall mean any Contract, or group of Contracts, with a Person (or\ngroup of affiliated Persons) the termination or breach of which would be\nreasonably expected to have a material adverse effect on any material division\nor business unit or other material operating group of product or service\nofferings of HP or otherwise have a Material Adverse Effect on HP.\n\n      3.14 DISCLOSURE. None of the information supplied or to be supplied by or\non behalf of HP or Merger Sub for inclusion or incorporation by reference in the\nRegistration Statement will, at the time the Registration Statement becomes\neffective under the Securities Act, contain any untrue statement of a material\nfact or omit to state any material fact required to be stated therein or\nnecessary in order to make the statements therein, in the light of the\ncircumstances under which they are made, not misleading. None of the information\nsupplied or to be supplied by or on behalf of HP and Merger Sub for inclusion or\nincorporation by reference in the Prospectus\/Proxy Statement, will, at the time\nthe Prospectus\/Proxy Statement is mailed to the stockholders of HP or Compaq, at\nthe time of the HP Stockholders' Meeting or Compaq Stockholders' Meeting or as\nof the Effective Time, contain any untrue statement of a material fact or omit\nto state any material fact required to be stated therein or necessary in order\nto make the statements therein, in the light of the circumstances under which\nthey are made, not misleading. The Prospectus\/Proxy Statement will comply as to\nform in all material respects with the provisions of the Exchange Act and the\nrules and regulations promulgated by the SEC thereunder. Notwithstanding the\nforegoing, no representation or warranty is made by HP with respect to\nstatements made or \n\n                                      -40-\n\n\nincorporated by reference therein about Compaq supplied by Compaq for inclusion\nor incorporation by reference in the Registration Statement or the\nProspectus\/Proxy Statement.\n\n      3.15 BOARD APPROVAL. The Board of Directors of HP has, by resolutions duly\nadopted by unanimous vote at a meeting of all Directors duly called and held and\nnot subsequently rescinded or modified in any way (the \"HP BOARD APPROVAL\") has\nduly (i) determined that the Merger is fair to, and in the best interests of, HP\nand its stockholders and declared the Merger to be advisable, (ii) approved this\nAgreement, and (iii) recommended that the stockholders of HP approve the Stock\nIssuance and directed that such matter be submitted to HP's stockholders at the\nHP Stockholders' Meeting.\n\n      3.16 FAIRNESS OPINION. HP's Board of Directors has received a written\nopinion from Goldman, Sachs &amp; Co., dated as of September 3, 2001, to the effect\nthat, as of such date, the Exchange Ratio is fair, from a financial point of\nview, to HP and has delivered to Compaq a copy of such opinion.\n\n      3.17 RIGHTS PLAN. The Board of Directors of HP has approved the HP Rights\nAgreement and has declared a dividend of one HP Right per share of HP Common\nStock to each holder of HP Common Stock (the \"HP RIGHTS DIVIDEND\"). HP has (a)\ndelivered to Compaq an accurate copy of the HP Rights Agreement approved by the\nBoard of Directors of HP and proposed to be entered into with the Rights Agents\nnamed thereunder, (b) declared the HP Rights Dividend, and (c) fixed the record\ndate for the HP Rights Dividend as September 17, 2001 and the payment date for\nthe HP Rights Dividend no later than September 27, 2001. HP has taken all action\nso that (i) Compaq shall not be an \"Acquiring Person\" thereunder and (ii) the\nentering into of this Agreement and the Merger and the other transactions\ncontemplated hereby will not result in the grant of any rights to any Person\nunder the HP Rights Agreement or enable or require the HP Rights to be\nexercised, distributed or triggered.\n\n                                   ARTICLE IV\n                       CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n      4.1 CONDUCT OF BUSINESS.\n\n                (a) ORDINARY COURSE. During the period from the date hereof and\ncontinuing until the earlier of the termination of this Agreement pursuant to\n\n\n                                      -41-\n\n\nits terms or the Effective Time, each of HP and Compaq, and each of its\nrespective Subsidiaries shall, except as otherwise expressly contemplated by\nthis Agreement or to the extent that the other party hereto shall otherwise\nconsent in writing, carry on its business, in all material respects, in the\nusual, regular and ordinary course, in substantially the same manner as\nheretofore conducted, and use all reasonable efforts consistent with past\npractices and policies to (i) preserve intact its present business organization,\n(ii) keep available the services of its present executive officers and key\nEmployees, and (iii) preserve its relationships with customers, suppliers,\nlicensors, licensees, and others with which it has business dealings.\n\n                (b) REQUIRED CONSENT. In addition, without limiting the\ngenerality of Section 4.1(a), except as permitted by the terms of this\nAgreement, and except as provided in Article IV of the Compaq Disclosure Letter\nor Article IV of the HP Disclosure Letter (as the case may be), without the\nprior written consent of the other party hereto, during the period from the date\nhereof and continuing until the earlier of the termination of this Agreement\npursuant to its terms or the Effective Time, each of HP and Compaq shall not do\nany of the following, and shall not permit their respective Subsidiaries to do\nany of the following:\n\n                        (i) Enter into any new line of business material to it\nand its Subsidiaries taken as a whole;\n\n                        (ii) Declare, set aside or pay any dividends on or make\nany other distributions (whether in cash, stock, equity securities or property)\nin respect of any capital stock or split, combine or reclassify any capital\nstock or issue or authorize the issuance of any other securities in respect of,\nin lieu of or in substitution for any capital stock, other than (A) declaration\nand payment of regular quarterly cash dividends on its Common Stock at a rate\nnot in excess of the regular quarterly cash dividend most recently declared\nprior to the date hereof with the usual record and payment dates for such\ndividends in accordance with its past practice, (B) any such transaction by a\nSubsidiary of it that remains a Subsidiary of it after consummation of such\ntransaction, in the ordinary course of business consistent with past practice,\nand (C) in the case of Compaq, the Compaq Rights Dividend and other securities\npursuant to the Compaq Rights Plan and in the case of HP, the HP Rights Dividend\nand other securities pursuant to the HP Rights Plan, in each case as\ncontemplated hereby and thereby;\n\n                                      -42-\n\n\n                        (iii) Purchase, redeem or otherwise acquire, directly or\nindirectly, any shares of its capital stock or the capital stock of its\nSubsidiaries, except (A) repurchases of unvested shares at cost in connection\nwith the termination of the employment relationship with any employee pursuant\nto stock option or purchase agreements in effect on the date hereof or entered\ninto the ordinary course of business consistent with past practice after the\ndate hereof and (B) repurchases by HP pursuant to HP's publicly announced\nrepurchase programs existing as of July 31, 2001, and (C) as set forth in\nSection 4.1(b)(iii) of the HP Disclosure Letter or Section 4.1(b)(iii) of the\nCompaq Disclosure Letter (as the case may be);\n\n                        (iv) Issue, deliver, sell, authorize, pledge or\notherwise encumber any shares of capital stock, Voting Debt or any securities\nconvertible into shares of capital stock or Voting Debt, or subscriptions,\nrights, warrants or options to acquire any shares of capital stock or Voting\nDebt or any securities convertible into shares of capital stock or Voting Debt,\nor enter into other agreements or commitments of any character obligating it to\nissue any such securities or rights, other than: (A) issuances of HP Common\nStock or Compaq Common Stock upon the exercise of HP Options or Compaq Options,\nrespectively, existing on the date hereof in accordance with their present terms\n(including cashless exercises) or granted pursuant to clause (F) hereof, (B)\nissuance of shares of Compaq Common Stock to participants in the Compaq Purchase\nPlan pursuant to the terms thereof and issuance of shares of HP Common Stock to\nparticipants in the HP employee stock purchase plans pursuant to the terms\nthereof, (C) issuances of HP Common Stock or Compaq Common Stock upon the\nexercise of other options, warrants or other rights of HP or Compaq,\nrespectively, in each case outstanding on the date hereof in accordance with\ntheir present terms (including cashless exercises), (D) in the case of Compaq,\nthe Compaq Rights Dividend and other securities pursuant to the Compaq Rights\nPlan and in the case of HP, the HP Rights Dividend and other securities pursuant\nto the HP Rights Plan, in each case as contemplated hereby and thereby, (E)\nissuances of shares of Compaq Common Stock in connection with Compaq Permitted\nAcquisitions (as defined below) and issuance of shares of HP Common Stock in\nconnection with HP Permitted Acquisitions (as defined below), (F) grants of\nstock options or other stock based awards of or to acquire, in the case of\nCompaq, Compaq Common Stock granted under the Compaq Stock Option Plans that are\nCompaq Broad Plans outstanding on the date hereof, and in the case of HP, HP\nCommon Stock granted under the HP Stock Option Plans \n\n\n                                      -43-\n\n\noutstanding on the date hereof, in each case in the ordinary course of business\nconsistent with past practices in connection with annual compensation reviews or\nordinary course promotions or to new hires and which options or stock based\nawards have a vesting schedule no more favorable than ratable monthly\ninstallments that vest over not less than three years and do not accelerate, or\nbecome subject to acceleration, directly or indirectly, as a result of the\napproval or consummation of the Merger and\/or termination of employment\nfollowing the Merger (other than, following the Merger, upon retirement, death\nor total and permanent disability or in connection with a reduction in force in\naccordance with HP's policies relating to formal reductions in force or similar\nworkforce management programs in effect from time to time following the Merger\nor as otherwise set forth in Section 4.1(b)(xiii) of the Compaq Disclosure\nSchedule with respect to Compaq's Chief Executive Officer and Tiers I, II and\nIII employees), but in no event shall the period for exercisability under such\noption following termination of employment be extended beyond one year following\na termination of employment for any reason other than retirement, death or total\nand permanent disability, and (G) as set forth in Section 4.1(b)(iv) of the HP\nDisclosure Letter or Section 4.1(b)(iv) of the Compaq Disclosure Letter (as the\ncase may be);\n\n                        (v) Cause, permit or propose any amendments to its\nCharter Documents or any of the Subsidiary Charter Documents of its\nSubsidiaries, except to the extent necessary to implement the HP Rights Plan or\nCompaq Rights Plan, and, in the case of HP, to the extent necessary to comply\nwith its obligations under Section 5.12;\n\n                        (vi) Acquire or agree to acquire by merging or\nconsolidating with, or by purchasing any equity interest in or a portion of the\nassets of, or by any other manner, any business or any Person or division\nthereof, or otherwise acquire or agree to acquire any assets which are material,\nindividually or in the aggregate, to its business, other than: (A) in the case\nof Compaq, Compaq Permitted Acquisitions (it being agreed that prior to entering\ninto any binding agreement, agreement in principle, letter of intent, memorandum\nof understanding or similar agreement with respect to any Compaq Permitted\nAcquisition, Compaq shall first consult with HP's Chief Executive Officer or\nChief Financial Officer or a designee thereof with respect to any such Compaq\nPermitted Acquisition with consideration in excess of fifty million dollars\n($50,000,000.00) individually and shall in good faith consider the advice of HP\n\n\n                                      -44-\n\n\nwith respect to such acquisition) and (B) in the case of HP, HP Permitted\nAcquisitions (it being agreed that prior to it being agreed that prior to\nentering into any binding agreement, agreement in principle, letter of intent,\nmemorandum of understanding or similar agreement with respect to any HP\nPermitted Acquisition, HP shall first consult with Compaq's Chief Executive\nOfficer or Chief Financial Officer or a designee thereof with respect to any\nsuch HP Permitted Acquisition with consideration in excess of fifty million\ndollars ($50,000,000.00) individually and shall in good faith consider the\nadvice of Compaq with respect to such acquisition);\n\n                        For purposes of this Agreement, \"COMPAQ PERMITTED\nACQUISITIONS\" shall mean any of transactions described in this subparagraph (vi)\nabove (1) (a) which are in the existing line of business, or a related line of\nbusiness, of Compaq and its Subsidiaries, (b) in which the fair market value of\nthe total consideration (including the value of indebtedness acquired or\nassumed) issued in exchange therefor shall not exceed one billion dollars\n($1,000,000,000.00) in the aggregate, (c) which do not present a material risk\nof delaying the Merger or making it more difficult to obtain any Necessary\nConsent, and (d) in which one or more of such transactions do not require\napproval of Compaq stockholders, (2) which are internal reorganizations solely\ninvolving existing wholly-owned (except for DE MINIMIS local ownership as\nrequired under applicable foreign Legal Requirements) Subsidiaries of Compaq, or\n(3) which are set forth in Section 4.1(b)(vi) of the Compaq Disclosure Letter\n(it being understood that items set forth on Section 4.1(b)(vi) of the Compaq\nDisclosure Letter shall not apply against the dollar limitation set forth in\nclause (b) of this sentence);\n\n                        For purposes of this Agreement, \"HP PERMITTED\nACQUISITIONS\" shall mean any of transactions described in this subparagraph (vi)\nabove (1) (a) which are in the existing line of business, or a related line of\nbusiness, of HP and its Subsidiaries, (b) in which the fair market value of the\ntotal consideration (including the value of indebtedness acquired or assumed)\nissued in exchange therefor shall not exceed one billion five hundred million\ndollars ($1,500,000,000.00) in the aggregate, (c) which do not present a\nmaterial risk of delaying the Merger or making it more difficult to obtain any\nNecessary Consent, and (d) in which one or more of such transactions do not\nrequire approval of HP stockholders, (2) which are internal reorganizations\nsolely involving existing wholly-owned (except for DE MINIMIS local ownership as\nrequired under \n\n\n                                      -45-\n\n\napplicable foreign Legal Requirements) Subsidiaries of HP, or (3) which are set\nforth in Section 4.1(b)(vi) of the HP Disclosure Letter (it being understood\nthat items set forth on Section 4.1(b)(vi) of the HP Disclosure Letter shall not\napply against the dollar limitation set forth in clause (b) of this sentence);\n\n                        (vii) Enter into any joint ventures, strategic\npartnerships or alliances that are material to any of its divisions or business\nunits if such entry would (A) present a material risk of delaying the Merger or\nmake it more difficult to obtain any Necessary Consent or (B) require a consent\nof the other party thereto to consummate the Merger;\n\n                        (viii) Except as previously disclosed in the HP SEC\nReports, in the case of HP, or the Compaq SEC Reports, in the case of Compaq, in\neach case prior to the date hereof, sell, lease, license, mortgage or otherwise\nencumber or dispose of any properties or assets which are material, individually\nor in the aggregate, to its business, except in the ordinary course of business\nconsistent with past practice;\n\n                        (ix) Make any loans, advances or capital contributions\nto, or investments in, any other Person, other than: (A) to finance, in the case\nof Compaq, Compaq Permitted Acquisitions or, in the case of HP, HP Permitted\nAcquisitions (it being understood in each case that any such loans, advances,\ncontributions or investments shall be considered consideration provided in\nexchange therefor), (B) loans or investments by it or a Subsidiary of it to or\nin it or any Subsidiary of it, (C) employee loans or advances made in the\nordinary course of business or (D) in the ordinary course of business consistent\nwith past practice which are not, individually or in the aggregate, material to\nit and its Subsidiaries taken as a whole (provided that none of such\ntransactions referred to in this clause (D) presents a material risk of delaying\nthe Merger or making it more difficult to obtain any Necessary Consent);\n\n                        (x) Except as required by GAAP or the SEC as concurred\nin by its independent auditors, make any material change in its methods or\nprinciples of accounting since the date of, in the case of Compaq, the Compaq\nBalance Sheet, and, in the case of HP, the HP Balance Sheet;\n\n                        (xi) In the case of Compaq, make or change any material\nTax election;\n\n\n                                      -46-\n\n\n                        (xii) Settle any material claim (including any Tax\nclaim), action or proceeding involving money damages, except (A) in the ordinary\ncourse of business consistent with past practice or (B) to the extent subject to\nreserves existing as of the date hereof in accordance with GAAP;\n\n                        (xiii) Except as required by Legal Requirements or\nContracts currently binding on Compaq or its Subsidiaries, (1) increase in any\nmanner the amount of compensation or fringe benefits of, pay any bonus to or\ngrant severance or termination pay to any executive officer or director of\nCompaq or key employee of Compaq or any material Subsidiary, division or\nbusiness unit of Compaq (collectively, \"COMPAQ KEY EMPLOYEES\") or materially\nincrease the foregoing with respect to Employees of Compaq and its Subsidiaries\ngenerally, (2) make any increase in or commitment to increase any Compaq Benefit\nPlan (including any severance plan), adopt or amend or make any commitment to\nadopt or amend any Compaq Benefit Plan or make any contribution, other than\nregularly scheduled contributions, to any Compaq Benefit Plan, (3) waive any\nstock repurchase rights, accelerate, amend or change the period of\nexercisability of Compaq Options or restricted stock, or reprice any Compaq\nOptions or authorize cash payments in exchange for any Compaq Options, (4) enter\ninto any employment, severance, termination or indemnification agreement with\nany Compaq Employee, (5) make any material oral or written representation or\ncommitment with respect to any material aspect of any Compaq Benefit Plan that\nis not materially in accordance with the existing written terms and provision of\nsuch Compaq Benefit Plan, (6) grant any stock appreciation right, phantom stock\naward, stock-related award or performance award (whether payable in cash, shares\nor otherwise) (each, a \"SAR\") to any Person (including any Compaq Employee), or\n(7) enter into any agreement with any Compaq Employee the benefits of which are\n(in whole or in part) contingent or the terms of which are materially altered\nupon the occurrence of a transaction involving Compaq of the nature contemplated\nhereby; PROVIDED, HOWEVER, that nothing herein shall be construed as prohibiting\nCompaq from (a) granting Compaq Options (including SARs) under the Compaq Stock\nOption Plans that are Compaq Broad Plans outstanding on the date hereof (or\nunder any deferred compensation plan existing as of the date hereof) in the\nordinary course of business consistent with past practices in connection with\nannual compensation reviews or ordinary course promotions or to new hires (or,\nin the case of SARs not granted under Compaq Broad Plans, in accordance with the\nterms of the applicable deferred compensation plans) and which options have a\nvesting schedule no more \n\n\n                                      -47-\n\n\nfavorable than ratable monthly installments that vest over not less than three\nyears and do not accelerate, or become subject to acceleration, directly or\nindirectly, as a result of the approval or consummation of the Merger and\/or\ntermination of employment following the Merger (other than, following the\nMerger, upon retirement, death or total and permanent disability or in\nconnection with a reduction in force in accordance with HP's policies relating\nto formal reductions in force or similar workforce management programs in effect\nfrom time to time following the Merger or as otherwise set forth in Section\n4.1(b)(xiii) of the Compaq Disclosure Schedule with respect to Compaq's Chief\nExecutive Officer and Tiers I, II and III employees), but in no event shall the\nperiod for exercisability under such option following termination of employment\nbe extended beyond one year following a termination of employment for any reason\nother than retirement, death or total and permanent disability, (b) increasing\ncompensation or fringe benefits and payment of bonuses to Employees of Compaq in\nthe ordinary course of business consistent with past practices in connection\nwith annual compensation reviews or ordinary course promotions, (c) granting\nseverance or termination pay to any Employee (other than any executive officer\nor director) of Compaq in the ordinary course of business consistent with past\npractices in connection with the termination of an Employee's employment in such\nreasonable amounts as Compaq deems advisable, in its good faith judgment, to\navoid a material risk of litigation, or (d) taking any action set forth in\nSection 4.1(b)(xiii) of the Compaq Disclosure Schedule; or (e) entering into any\nemployment, severance, termination or indemnification agreement with any Compaq\nEmployee in the ordinary course of business consistent with past practice and\n(i) solely with respect to Employees other than any Compaq Key Employee and (ii)\nwith respect to any Compaq Key Employee, if such employment is \"at-will\" and\ndoes not contain severance or termination payments (it being understood that at\nthe time of, and in connection with, the termination of any Compaq Key\nEmployee's employment, Compaq may enter into severance and\/or termination under\nthe circumstances set forth in clause (c) of this Section 4.1(b)(xiii));\n\n                        (xiv) Subject HP or the Surviving Corporation or any of\ntheir respective Subsidiaries to any non-compete or other material restriction\non any of their respective businesses following the Closing;\n\n                        (xv) In the case of Compaq, enter into any agreement or\ncommitment the effect of which would be to grant to a third party following the\n\n\n                                      -48-\n\n\nMerger any actual or potential right of license to any material Intellectual\nProperty owned by HP or any of its Subsidiaries; or\n\n                        (xvi) Agree in writing or otherwise to take any of the\nactions described in (i) through (xiv) above.\n\n                (c) CONSULTATION. In addition, without limiting the generality\nof Section 4.1(a) or Section 4.1(b), prior to taking any of the following\nactions, the party seeking to do so shall first consult with the other party's\nChief Executive Officer or Chief Financial Officer or a designee thereof and\nshall in good faith consider the advice of such party with respect to such\naction:\n\n                        (i) Enter into any binding agreement, agreement in\nprinciple, letter of intent, memorandum of understanding or similar agreement\nwith respect to any material joint venture, strategic partnership or alliance;\n\n                        (ii) Enter into, modify or amend in a manner adverse in\nany material respect to such party, or terminate any Compaq Material Contract,\nin the case of Compaq, or HP Material Contract, in the case of HP, or waive,\nrelease or assign any material rights or claims thereunder, in each case, in a\nmanner adverse in any material respect to such party, other than any\nmodification, amendment or termination of any such Compaq Material Contract or\nHP Material Contract, as the case may be, in the ordinary course of business,\nconsistent with past practice;\n\n                        (iii) Grant any exclusive rights with respect to any\nmaterial Intellectual Property of such party; or\n\n                        (iv) Incur any indebtedness for borrowed money or\nguarantee any such indebtedness of another Person, issue or sell any debt\nsecurities or options, warrants, calls or other rights to acquire any debt\nsecurities of it, guarantee any debt securities of another Person, enter into\nany \"keep well\" or other agreement to maintain any financial statement condition\nof any other Person (other than any wholly-owned Subsidiary of it) or enter into\nany arrangement having the economic effect of any of the foregoing\n(collectively, \"INDEBTEDNESS\") other than, in the case of Compaq, Permitted\nCompaq Indebtedness, and in the case of HP, Permitted HP Indebtedness (as\ndefined below);\n\n\n                                      -49-\n\n\n                        For purposes of this Agreement, \"PERMITTED COMPAQ\nINDEBTEDNESS\" shall mean the following Indebtedness: up to one billion dollars\n($1,000,000,000.00) additional Indebtedness under existing debt facilities or\nlike replacement debt facilities in excess of Indebtedness of Compaq outstanding\nas of the date hereof;\n\n                        For purposes of this Agreement, \"PERMITTED HP\nINDEBTEDNESS\" shall mean the following Indebtedness: shall mean the following\nIndebtedness: up to one billion five hundred million dollars ($1,500,000,000.00)\nadditional Indebtedness under existing debt facilities or like replacement debt\nfacilities in excess of Indebtedness of Compaq outstanding as of the date\nhereof;\n\n                        (v) Agree in writing or otherwise to take any of the\nactions described in (i) through (iv) above.\n\n                                   ARTICLE V\n                              ADDITIONAL AGREEMENTS\n\n      5.1 PROSPECTUS\/PROXY STATEMENT; REGISTRATION STATEMENT. As promptly as\npracticable after the execution of this Agreement, HP and Compaq will prepare\nand file with the SEC the Prospectus\/Proxy Statement, and HP will prepare and\nfile with the SEC the Registration Statement in which the Prospectus\/Proxy\nStatement is to be included as a prospectus. HP and Compaq will provide each\nother with any information which may be required in order to effectuate the\npreparation and filing of the Prospectus\/Proxy Statement and the Registration\nStatement pursuant to this Section 5.1. Each of HP and Compaq will respond to\nany comments from the SEC, will use all reasonable efforts to cause the\nRegistration Statement to be declared effective under the Securities Act as\npromptly as practicable after such filing and to keep the Registration Statement\neffective as long as is necessary to consummate the Merger and the transactions\ncontemplated hereby. Each of HP and Compaq will notify the other promptly upon\nthe receipt of any comments from the SEC or its staff in connection with the\nfiling of, or amendments or supplements to, the Registration Statement and\/or\nthe Prospectus\/Proxy Statement. Whenever any event occurs which is required to\nbe set forth in an amendment or supplement to the Prospectus\/Proxy Statement,\nthe Registration Statement, HP or Compaq, as the case may be, will promptly\ninform the other of such occurrence and cooperate in filing with the SEC or its\nstaff, and\/or mailing to stockholders of HP and\/or Compaq, such amendment or\n\n\n                                      -50-\n\n\nsupplement. Each of HP and Compaq shall cooperate and provide the other (and its\ncounsel) with a reasonable opportunity to review and comment on any amendment or\nsupplement to the Registration Statement and Prospect\/Proxy Statement prior to\nfiling such with the SEC, and will provide each other with a copy of all such\nfilings made with the SEC. Each of HP and Compaq will cause the Prospectus\/Proxy\nStatement to be mailed to its respective stockholders at the earliest\npracticable time after the Registration Statement is declared effective by the\nSEC. HP shall also use all reasonable efforts to take any action required to be\ntaken by it under any applicable state securities laws in connection with the\nissuance of HP Common Stock in the Merger and the conversion of Compaq Options\ninto options to acquire HP Common Stock, and Compaq shall furnish any\ninformation concerning Compaq and the holders of Compaq Common Stock and Compaq\nOptions as may be reasonably requested in connection with any such action.\n\n      5.2 MEETINGS OF STOCKHOLDERS; BOARD RECOMMENDATION.\n\n                (a) MEETING OF STOCKHOLDERS. Promptly after the Registration\nStatement is declared effective under the Securities Act, each of HP and Compaq\nwill take all action necessary in accordance with Delaware Law and its\nrespective Certificate of Incorporation and Bylaws to call, hold and convene a\nmeeting of its respective stockholders to consider, in the case of HP, the Stock\nIssuance, and, in the case of Compaq, adoption and approval of this Agreement\nand approval of the Merger (each, a \"STOCKHOLDERS' MEETING\") to be held as\npromptly as practicable (without limitation, within 60 days, if practicable)\nafter the declaration of effectiveness of the Registration Statement. Each of HP\nand Compaq will use all reasonable efforts to hold their respective\nStockholders' Meetings on the same date. Subject to Section 5.3(d), each of HP\nand Compaq will use all reasonable efforts to solicit from its respective\nstockholders proxies in favor of, in the case of HP, the Stock Issuance, and, in\nthe case of Compaq, the adoption and approval of this Agreement and the approval\nof the Merger, and will take all other action necessary or advisable to secure\nthe vote or consent of their respective stockholders required by the rules of\nNYSE or the Pacific Stock Exchange (\"PCX\") or Delaware Law to obtain such\napprovals. Notwithstanding anything to the contrary contained in this Agreement,\nHP or Compaq, as the case may be, may adjourn or postpone its Stockholders'\nMeeting to the extent necessary to ensure that any necessary supplement or\namendment to the Prospectus\/Proxy Statement is provided to its respective\nstockholders in advance of a vote on the \n\n\n\n                                      -51-\n\n\nMerger and this Agreement or, if as of the time for which the Stockholders'\nMeeting is originally scheduled (as set forth in the Prospectus\/Proxy Statement)\nthere are insufficient shares of Common Stock of HP or Compaq, as the case may\nbe, represented (either in person or by proxy) to constitute a quorum necessary\nto conduct the business of such Stockholders' Meeting. Each of HP and Compaq\nshall ensure that its respective Stockholders' Meeting is called, noticed,\nconvened, held and conducted, and that all proxies solicited by its in\nconnection with the Stockholders' Meeting are solicited in compliance with\nDelaware Law, its Certificate of Incorporation and Bylaws, the rules of the NYSE\nand PCX and all other applicable Legal Requirements.\n\n                (b) BOARD RECOMMENDATION. Except to the extent expressly\npermitted by Section 5.3(d): (i) the Board of Directors of each of HP and Compaq\nshall recommend that the respective stockholders of HP and Compaq vote in favor\nof, in the case of HP, the Stock Issuance, and, in the case of Compaq, adoption\nand approval of this Agreement and approval of the Merger, at their respective\nStockholders' Meetings, (ii) the Prospectus\/Proxy Statement shall include a\nstatement to the effect that the Board of Directors of HP has recommended that\nHP's stockholders vote in favor of the Stock Issuance at the HP Stockholders'\nMeeting and the Board of Directors of Compaq has recommended that Compaq's\nstockholders vote in favor of adoption and approval of this Agreement and\napproval of the Merger at the Compaq Stockholders' Meeting, and (iii) neither\nthe Board of Directors of HP or Compaq nor any committee thereof shall withdraw,\namend or modify, or propose or resolve to withdraw, amend or modify in a manner\nadverse to the other party, the recommendation of its respective Board of\nDirectors that the respective stockholders of HP and Compaq vote in favor of, in\nthe case of HP, the Stock Issuance, and, in the case of Compaq, adoption and\napproval of this Agreement and the Merger.\n\n      5.3 ACQUISITION PROPOSALS.\n\n                (a) NO SOLICITATION. Each of HP and Compaq agrees that neither\nit nor any of its Subsidiaries nor any of the officers and directors of it or\nits Subsidiaries shall, and that it shall use all reasonable efforts to cause\nits and its Subsidiaries' Employees, agents and representatives (including any\ninvestment banker, attorney or accountant retained by it or any of its\nSubsidiaries) not to (and shall not authorize any of them to) directly or\nindirectly: (i) solicit, initiate, \n\n\n                                      -52-\n\n\nencourage, knowingly facilitate or induce any inquiry with respect to, or the\nmaking, submission or announcement of, any Acquisition Proposal (as defined in\nSection 5.3(g)) with respect to itself, (ii) participate in any discussions or\nnegotiations regarding, or furnish to any Person any nonpublic information with\nrespect to, or take any other action to facilitate any inquiries or the making\nof any proposal that constitutes or may reasonably be expected to lead to, any\nAcquisition Proposal with respect to itself, (iii) engage in discussions with\nany Person with respect to any Acquisition Proposal with respect to itself,\nexcept as to the existence of these provisions, (iv) approve, endorse or\nrecommend any Acquisition Proposal with respect to itself (except to the extent\nspecifically permitted pursuant to Section 5.3(d)), or (v) enter into any letter\nof intent or similar document or any contract agreement or commitment\ncontemplating or otherwise relating to any Acquisition Proposal or transaction\ncontemplated thereby with respect to itself. HP and Compaq, as the case may be,\nand their respective Subsidiaries will each immediately cease any and all\nexisting activities, discussions or negotiations with any third parties\nconducted heretofore with respect to any Acquisition Proposal with respect to\nitself.\n\n                (b) NOTIFICATION OF UNSOLICITED ACQUISITION PROPOSALS.\n\n                        (i) As promptly as practicable after receipt of any\nAcquisition Proposal or any request for nonpublic information or inquiry which\nit reasonably believes would lead to an Acquisition Proposal, HP or Compaq, as\nthe case may be, shall provide the other party hereto with oral and written\nnotice of the material terms and conditions of such Acquisition Proposal,\nrequest or inquiry, and the identity of the Person or group making any such\nAcquisition Proposal, request or inquiry and a copy of all written materials\nprovided in connection with such Acquisition Proposal, request or inquiry. The\nrecipient of the Acquisition Proposal, request or inquiry shall provide the\nother party hereto as promptly as practicable oral and written notice setting\nforth all such information as is reasonably necessary to keep the other party\ninformed in all material respects of the status and details (including material\namendments or proposed material amendments) of any such Acquisition Proposal,\nrequest or inquiry and shall promptly provide to the other party hereto a copy\nof all written materials subsequently provided in connection with such\nAcquisition Proposal, request or inquiry.\n\n                                      -53-\n\n\n                        (ii) HP or Compaq, as the case may be, shall provide the\nother party hereto with forty-eight (48) hours prior notice (or such lesser\nprior notice as is provided to the members of its Board of Directors) of any\nmeeting of the its Board of Directors at which its Board of Directors is\nreasonably expected to consider any Acquisition Proposal.\n\n                (c) SUPERIOR OFFERS. Notwithstanding anything to the contrary\ncontained in Section 5.3(a), in the event that HP or Compaq, as the case may be,\nreceives an unsolicited, bona fide written Acquisition Proposal with respect to\nitself from a third party that its Board of Directors has in good faith\nconcluded (following the receipt of the advice of its outside legal counsel and\nits financial advisor), is, or is reasonably likely to result in, a Superior\nOffer (as defined in Section 5.3(g)), it may then take the following actions\n(but only if and to the extent that its Board of Directors concludes in good\nfaith, following the receipt of advice of its outside legal counsel, that the\nfailure to do so is reasonably likely to result in a breach of its fiduciary\nobligations under applicable law):\n\n                        (i) Furnish nonpublic information to the third party\nmaking such Acquisition Proposal, PROVIDED that (A) (1) concurrently with\nfurnishing any such nonpublic information to such party, its gives the other\nparty hereto written notice of its intention to furnish nonpublic information\nand (2) it receives from the third party an executed confidentiality agreement\ncontaining customary limitations on the use and disclosure of all nonpublic\nwritten and oral information furnished to such third party on its behalf, the\nterms of which are at least as restrictive as the terms contained in the\nConfidentiality Agreement (as defined in Section 5.4) and (B) contemporaneously\nwith furnishing any such nonpublic information to such third party, it furnishes\nsuch nonpublic information to the other party hereto (to the extent such\nnonpublic information has not been previously so furnished); and\n\n                        (ii) Engage in negotiations with the third party with\nrespect to the Acquisition Proposal, PROVIDED that concurrently with entering\ninto negotiations with such third party, it gives the other party hereto written\nnotice of the its intention to enter into negotiations with such third party.\n\n                (d) CHANGES OF RECOMMENDATION. In response to the receipt of a\nSuperior Offer, the Board of Directors of HP or Compaq, as the case may be, may\nwithhold, withdraw, amend or modify its recommendation in favor of the \n\n                                      -54-\n\n\nMerger, and, in the case of a Superior Offer that is a tender or exchange offer\nmade directly to its stockholders, may recommend that its stockholders accept\nthe tender or exchange offer (any of the foregoing actions, whether by a Board\nof Directors or a committee thereof, a \"CHANGE OF RECOMMENDATION\"), if all of\nthe following conditions in clauses (i) through (v) are met:\n\n                        (i) A Superior Offer with respect to it has been made\nand has not been withdrawn;\n\n                        (ii) Its Stockholders' Meeting has not occurred;\n\n                        (iii) It shall have (A) provided to the other party\nhereto written notice which shall state expressly (1) that it has received a\nSuperior Offer, (2) the material terms and conditions of the Superior Offer and\nthe identity of the Person or group making the Superior Offer, and (3) that it\nintends to effect a Change of Recommendation and the manner in which it intends\nto do so, (B) provided to the other party hereto a copy of all written materials\ndelivered to the Person or group making the Superior Offer in connection with\nsuch Superior Offer, and (C) made available to the other party hereto all\nmaterials and information made available to the Person or group making the\nSuperior Offer in connection with such Superior Offer;\n\n                        (iv) Its Board of Directors has concluded in good faith,\nafter receipt of advice of its outside legal counsel, that, in light of such\nSuperior Offer, the failure of the Board of Directors to effect a Change of\nRecommendation is reasonably likely to result in a breach of its fiduciary\nobligations to its stockholders under applicable law; and\n\n                        (v) It shall not have breached in any material respect\nany of the provisions set forth in Section 5.2 or this Section 5.3.\n\n                (e) CONTINUING OBLIGATION TO CALL, HOLD AND CONVENE\nSTOCKHOLDERS' MEETING; NO OTHER VOTE. Notwithstanding anything to the contrary\ncontained in this Agreement, the obligation of HP or Compaq, as the case may be,\nto call, give notice of, convene and hold its Stockholders' Meeting shall not be\nlimited or otherwise affected by the commencement, disclosure, announcement or\nsubmission to it of any Acquisition Proposal with respect to it, or by any\nChange of Recommendation. Neither HP nor Compaq shall submit to the vote of its\nrespective stockholders any Acquisition Proposal, or propose to do so.\n\n\n                                      -55-\n\n\n                (f) COMPLIANCE WITH TENDER OFFER RULES. Nothing contained in\nthis Agreement shall prohibit either party or its respective Board of Directors\nfrom taking and disclosing to its stockholders a position contemplated by Rules\n14d-9 and 14e-2(a) promulgated under the Exchange Act; PROVIDED that the content\nof any such disclosure thereunder shall be governed by the terms of this\nAgreement. Without limiting the foregoing proviso, neither party shall effect a\nChange of Recommendation unless specifically permitted pursuant to the terms of\nSection 5.3(d).\n\n                (g) CERTAIN DEFINITIONS. For purposes of this Agreement, the\nfollowing terms shall have the following meanings:\n\n                        (i) \"ACQUISITION PROPOSAL,\" with respect to a party,\nshall mean any offer or proposal, relating to any transaction or series of\nrelated transactions involving: (A) any purchase from such party or acquisition\nby any Person or \"group\" (as defined under Section 13(d) of the Exchange Act and\nthe rules and regulations thereunder) of more than a ten percent (10%) interest\nin the total outstanding voting securities of such party or any of its\nSubsidiaries or any tender offer or exchange offer that if consummated would\nresult in any Person or group beneficially owning ten percent (10%) or more of\nthe total outstanding voting securities of such party or any of its Subsidiaries\nor any merger, consolidation, business combination or similar transaction\ninvolving such party or any of its Subsidiaries, (B) any sale, lease (other than\nin the ordinary course of business), exchange, transfer, license (other than in\nthe ordinary course of business), acquisition or disposition of more than ten\npercent (10%) of the assets of such party (including its Subsidiaries taken as a\nwhole), or (C) any liquidation or dissolution of such party (PROVIDED, HOWEVER,\na HP Permitted Acquisition shall not be deemed an Acquisition Proposal with\nrespect to HP and a Compaq Permitted Acquisition shall not be deemed an\nAcquisition Proposal with respect to Compaq and the transactions contemplated\nhereby shall not be deemed an Acquisition Proposal in any case); and\n\n                        (ii) \"SUPERIOR OFFER,\" with respect to party, shall mean\nan unsolicited, bona fide written offer made by a third party to acquire,\ndirectly or indirectly, pursuant to a tender offer, exchange offer, merger,\nconsolidation or other business combination, all or substantially all of the\nassets of such party or a majority of the total outstanding voting securities of\nsuch party and as a result of which the stockholders of such party immediately\n\npreceding such transaction \n\n                                      -56-\n\n\nwould hold less than fifty percent (50%) of the equity interests in the\nsurviving or resulting entity of such transaction or any direct or indirect\nparent or subsidiary thereof, on terms that the Board of Directors of such party\nhas in good faith concluded (following the receipt of advice of its outside\nlegal counsel and its financial adviser), taking into account, among other\nthings, all legal, financial, regulatory and other aspects of the offer and the\nPerson making the offer, to be more favorable, from a financial point of view,\nto such party's stockholders (in their capacities as stockholders) than the\nterms of the Merger and is reasonably capable of being consummated.\n\n      5.4 CONFIDENTIALITY; ACCESS TO INFORMATION; NO MODIFICATION OF\nREPRESENTATIONS, WARRANTIES OR COVENANTS.\n\n\n                (a) CONFIDENTIALITY. The parties acknowledge that Compaq and HP\nhave previously executed a Confidentiality Agreement dated June 29, 2001 (the\n\"CONFIDENTIALITY AGREEMENT\"), which Confidentiality Agreement will continue in\nfull force and effect in accordance with its terms and each of HP and Compaq\nwill hold, and will cause its respective directors, officers, Employees, agents\nand advisors (including attorneys, accountants, consultants, bankers and\nfinancial advisors) to hold, any Evaluation Material (as defined in the\nConfidentiality Agreement) confidential in accordance with the terms of the\nConfidentiality Agreement.\n\n                (b) ACCESS TO INFORMATION. Each of Compaq, Merger Sub and HP\nwill afford the other and the other's accountants, counsel and other\nrepresentatives reasonable access during normal business hours to its\nproperties, books, records and personnel during the period prior to the\nEffective Time to obtain all information concerning its business, including the\nstatus of product development efforts, properties, results of operations and\npersonnel, as such other party may reasonably request, and, during such period,\nupon request by the other party hereto, each of HP and Merger Sub, on the one\nhand, and Compaq, on the other hand, shall, and shall cause each of their\nrespective Subsidiaries to, furnish promptly to the other party a copy of any\nreport, schedule, registration statement and other document filed by it during\nsuch period pursuant to the requirements of federal or state securities laws;\nPROVIDED, HOWEVER, that any party may restrict the foregoing access to the\nextent that any law, treaty, rule or regulation of any Governmental Entity\napplicable to such party requires such party or its Subsidiaries to restrict or\nprohibit access to any such properties or information.\n\n                                      -57-\n\n\n                (c) NO MODIFICATION OF REPRESENTATIONS AND WARRANTIES OR \nCOVENANTS. No information or knowledge obtained in any investigation or \nnotification pursuant to this Section 5.4, Section 5.6 or Section 5.7 shall \naffect or be deemed to modify any representation or warranty contained \nherein, the covenants or agreements of the parties hereto or the conditions \nto the obligations of the parties hereto under this Agreement.\n\n      5.5 PUBLIC DISCLOSURE. Without limiting any other provision of this\nAgreement, HP and Compaq will consult with each other before issuing, and\nprovide each other the opportunity to review, comment upon and concur with, and\nuse all reasonable efforts to agree on any press release or public statement\nwith respect to this Agreement and the transactions contemplated hereby,\nincluding the Merger, and any Acquisition Proposal and will not issue any such\npress release or make any such public statement prior to such consultation and\n(to the extent practicable) agreement, except as may be required by law or any\nlisting agreement with the NYSE, PCX or any other applicable national or\nregional securities exchange. The parties have agreed to the text of the joint\npress release announcing the signing of this Agreement.\n\n\n      5.6 REGULATORY FILINGS; REASONABLE EFFORTS.\n\n                (a) REGULATORY FILINGS. Each of HP, Merger Sub and Compaq shall\ncoordinate and cooperate with one another and shall each use all reasonable\nefforts to comply with, and shall each refrain from taking any action that would\nimpede compliance with, all Legal Requirements, and as promptly as practicable\nafter the date hereof, each of HP, Merger Sub and Compaq shall make all filings,\nnotices, petitions, statements, registrations, submissions of information,\napplication or submission of other documents required by any Governmental Entity\nin connection with the Merger and the transactions contemplated hereby,\nincluding, without limitation: (i) Notification and Report Forms with the United\nStates Federal Trade Commission (the \"FTC\") and the Antitrust Division of the\nUnited States Department of Justice (\"DOJ\") as required by the HSR Act, (ii) a\nForm CO with the European Commission as required by the EC Merger Regulation,\n(iii) any other filing necessary to obtain any Necessary Consent, (iv) filings\nunder any other comparable pre-merger notification forms required by the merger\nnotification or control laws of any applicable jurisdiction, as agreed by the\nparties hereto, and (v) any filings required under the Securities Act, the\nExchange Act, any applicable state or securities or \"blue sky\" laws and the\n\n\n                                      -58-\n\n\nsecurities laws of any foreign country, or any other Legal Requirement relating\nto the Merger. Each of HP and Compaq will cause all documents that it is\nresponsible for filing with any Governmental Entity under this Section 5.6(a) to\ncomply in all material respects with all applicable Legal Requirements.\n\n                (b) EXCHANGE OF INFORMATION. HP, Merger Sub and Compaq each\nshall promptly supply the other with any information which may be required in\norder to effectuate any filings or application pursuant to Section 5.6(a).\nExcept where prohibited by applicable Legal Requirements, and subject to the\nConfidentiality Agreement, each of Compaq and HP shall consult with the other\nprior to taking a position with respect to any such filing, shall permit the\nother to review and discuss in advance, and consider in good faith the views of\nthe other in connection with any analyses, appearances, presentations,\nmemoranda, briefs, white papers, arguments, opinions and proposals before making\nor submitting any of the foregoing to any Governmental Entity by or on behalf of\nany party hereto in connection with any investigations or proceedings in\nconnection with this Agreement or the transactions contemplated hereby\n(including under any antitrust or fair trade Legal Requirement), coordinate with\nthe other in preparing and exchanging such information and promptly provide the\nother (and its counsel) with copies of all filings, presentations or submissions\n(and a summary of any oral presentations) made by such party with any\nGovernmental Entity in connection with this Agreement or the transactions\ncontemplated hereby, PROVIDED that with respect to any such filing, presentation\nor submission, each of HP and Compaq need not supply the other (or its counsel)\nwith copies (or in case of oral presentations, a summary) to the extent that any\nlaw, treaty, rule or regulation of any Governmental Entity applicable to such\nparty requires such party or its Subsidiaries to restrict or prohibit access to\nany such properties or information.\n\n                (c) NOTIFICATION. Each of HP, Merger Sub and Compaq will notify\nthe other promptly upon the receipt of: (i) any comments from any officials of\nany Governmental Entity in connection with any filings made pursuant hereto and\n(ii) any request by any officials of any Governmental Entity for amendments or\nsupplements to any filings made pursuant to, or information provided to comply\nin all material respects with, any Legal Requirements. Whenever any event occurs\nthat is required to be set forth in an amendment or supplement to any filing\nmade pursuant to Section 5.6(a), HP, Merger Sub or Compaq, as the case may be,\nwill promptly inform the other of such occurrence\n\n                                      -59-\n\n\nand cooperate in filing with the applicable Governmental Entity such amendment\nor supplement.\n\n                (d) REASONABLE EFFORTS. Subject to the express provisions of\nSection 5.2 and Section 5.3 hereof and upon the terms and subject to the\nconditions set forth herein, each of the parties agrees to use all reasonable\nefforts to take, or cause to be taken, all actions, and to do, or cause to be\ndone, and to assist and cooperate with the other parties in doing, all things\nnecessary, proper or advisable to consummate and make effective, in the most\nexpeditious manner practicable, the Merger and the other transactions\ncontemplated by this Agreement, including using all reasonable efforts to\naccomplish the following: (i) the taking of all reasonable acts necessary to\ncause the conditions precedent set forth in Article VI to be satisfied, (ii) the\nobtaining of all necessary actions or nonactions, waivers, consents, approvals,\norders and authorizations from Governmental Entities and the making of all\nnecessary registrations, declarations and filings (including registrations,\ndeclarations and filings with Governmental Entities, if any) and the taking of\nall reasonable steps as may be necessary to avoid any suit, claim, action,\ninvestigation or proceeding by any Governmental Entity, (iii) the obtaining of\nall necessary consents, approvals or waivers from third parties, including all\nNecessary Consents, (iv) the defending of any suits, claims, actions,\ninvestigations or proceedings, whether judicial or administrative, challenging\nthis Agreement or the consummation of the transactions contemplated hereby,\nincluding seeking to have any stay or temporary restraining order entered by any\ncourt or other Governmental Entity vacated or reversed, and (v) the execution or\ndelivery of any additional instruments necessary to consummate the transactions\ncontemplated by, and to fully carry out the purposes of, this Agreement. In\nconnection with and without limiting the foregoing, Compaq and its Board of\nDirectors shall, if any takeover statute or similar Legal Requirement is or\nbecomes applicable to the Merger, this Agreement or any of the transactions\ncontemplated by this Agreement, use all reasonable efforts to ensure that the\nMerger and the other transactions contemplated by this Agreement may be\nconsummated as promptly as practicable on the terms contemplated by this\nAgreement and otherwise to minimize the effect of such Legal Requirement on the\nMerger, this Agreement and the transactions contemplated hereby.\n\n                (e) LIMITATION ON DIVESTITURE. Notwithstanding anything in this\nAgreement to the contrary, nothing contained in this Agreement shall be deemed\nto require HP or Compaq or any Subsidiary or affiliate thereof to take or \n\n\n                                      -60-\n\n\nagree to take any Action of Divestiture (as defined below) which would be\nreasonably likely materially adversely impact the benefits expected to be\nderived by HP and its Subsidiaries (on a combined basis with Compaq and its\nSubsidiaries) as a result of the transactions contemplated hereby or would be\nreasonably likely to materially adversely affect HP and its Subsidiaries (on a\ncombined basis with Compaq and its Subsidiaries) following the Merger (a\n\"RESTRICTED DIVESTITURE\"). For purposes of this Agreement, an \"ACTION OF\nDIVESTITURE\" shall mean (i) making proposals, executing or carrying out\nagreements or submitting to Legal Requirements providing for the license, sale\nor other disposition or holding separate (through the establishment of a trust\nor otherwise) of any assets or categories of assets that are material to HP,\nCompaq or any of their respective Subsidiaries or the holding separate of Compaq\ncapital stock or imposing or seeking to impose any limitation on the ability of\nHP, Compaq or any of their respective Subsidiaries, to conduct their respective\nbusinesses or own such assets or to acquire, hold or exercise full rights of\nownership of Compaq's business or (ii) otherwise taking any step to avoid or\neliminate any impediment which may be asserted under any Legal Requirement\ngoverning competition, monopolies or restrictive trade practices.\n\n      5.7 NOTIFICATION OF CERTAIN MATTERS.\n\n                (a) BY COMPAQ. Compaq shall give prompt notice to HP and Merger\nSub of any representation or warranty made by it contained in this Agreement\nbecoming untrue or inaccurate, or any failure of Compaq to comply with or\nsatisfy in any material respect any covenant, condition or agreement to be\ncomplied with or satisfied by it under this Agreement, in each case, such that\nthe conditions set forth in Section 6.3(a) or 6.3(b) would not be satisfied.\n\n                (b) BY HP. HP and Merger Sub shall give prompt notice to Compaq\nof any representation or warranty made by it contained in this Agreement\nbecoming untrue or inaccurate, or any failure of HP to comply with or satisfy in\nany material respect any covenant, condition or agreement to be complied with or\nsatisfied by it under this Agreement, in each case, such that the conditions set\nforth in Section 6.2(a) or 6.2(b) would not be satisfied.\n\n      5.8 THIRD-PARTY CONSENTS. As soon as practicable following the date\nhereof, HP and Compaq will each use all reasonable efforts to obtain any\nmaterial consents, waivers and approvals under any of its or its Subsidiaries'\nrespective \n\n\n                                      -61-\n\n\nContracts required to be obtained in connection with the consummation\nof the transactions contemplated hereby.\n\n      5.9 EQUITY AWARDS AND EMPLOYEE BENEFITS.\n\n                (a) ASSUMPTION OF STOCK OPTIONS. At the Effective Time, each\nthen outstanding Compaq Option (including each Compaq SAR), whether or not\nexercisable at the Effective Time and regardless of the respective exercise (or\nbase) prices thereof, will be assumed by HP. Each Compaq Option so assumed by HP\nunder this Agreement will continue to have, and be subject to, the same terms\nand conditions set forth in the applicable Compaq Option (including any\napplicable stock option agreement or other document evidencing such Compaq\nOption) immediately prior to the Effective Time (including any repurchase rights\nor vesting provisions), except that (i) each Compaq Option will be exercisable\n(or will become exercisable in accordance with its terms) for (or will relate\nto, in the case of a Compaq SAR)) that number of whole shares of HP Common Stock\nequal to the product of the number of shares of Compaq Common Stock that were\nissuable upon exercise of such Compaq Option (or, in the case of Compaq SARs,\nthe number of shares of Compaq Common Stock subject to such Compaq SAR)\nimmediately prior to the Effective Time multiplied by the Exchange Ratio,\nrounded down to the nearest whole number of shares of HP Common Stock and (ii)\nthe per share exercise price for the shares of HP Common Stock issuable upon\nexercise of such assumed Compaq Option (or the base price to which the assumed\nCompaq SAR relates) will be equal to the quotient determined by dividing the\nexercise price per share of Compaq Common Stock at which such Compaq Option was\nexercisable (or the base price subject to the Compaq SAR) immediately prior to\nthe Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.\nEach assumed Compaq Option (including each Compaq SAR) shall be vested\nimmediately following the Effective Time as to the same percentage of the total\nnumber of shares subject thereto as it was vested as to immediately prior to the\nEffective Time, except to the extent such Compaq Option (or Compaq SAR) by its\nterms in effect prior to the date hereof provides for acceleration of vesting.\nAs soon as reasonably practicable, HP will issue to each Person who holds an\nassumed Compaq Option (including each Compaq SAR) a document evidencing the\nforegoing assumption of such Compaq Option (including each Compaq SAR) by HP.\n\n                                      -62-\n\n\n                (b) INCENTIVE STOCK OPTIONS. The conversion of Compaq Options\nprovided for in Section 5.9(a), with respect to any options which are intended\nto be \"incentive stock options\" (as defined in Section 422 of the Code) shall be\neffected in a manner consistent with Section 424(a) of the Code.\n\n                (c) TERMINATION OF COMPAQ EMPLOYEE STOCK PURCHASE PLANS. Prior\nto the Effective Time, each of the Compaq Purchase Plans shall be terminated.\nThe rights of participants in each Compaq Purchase Plan with respect to any\noffering period then underway under such Compaq Purchase Plan shall be\ndetermined by treating the last business day prior to, or if more\nadministratively advisable, the last payroll date of Compaq immediately prior\nto, the Effective Time, as the last day of such offering period and by making\nsuch other pro-rata adjustments as may be necessary to reflect the shortened\noffering period but otherwise treating such shortened offering period as a fully\neffective and completed offering period for all purposes under such Compaq\nPurchase Plan. Prior to the Effective Time, Compaq shall take all actions\n(including, if appropriate, amending the terms of such Compaq Purchase Plan that\nare necessary to give effect to the transactions contemplated by this Section\n5.9(c).\n\n                (d) EMPLOYEE COMPENSATION. For a twelve (12) month period\nfollowing the Effective Time, HP will use all reasonable efforts to provide\ngenerally to those of its employees and employees of the Surviving Corporation\nwho shall have been employees of Compaq immediately prior to the Effective Time\n(\"CONTINUING EMPLOYEES\"), a total compensation (including benefits) package\nthat, in the aggregate, is generally comparable to the total compensation\n(including benefits) package provided to those employees prior to the execution\nof this Agreement.\n\n                (e) SERVICE CREDIT. Following the Effective Time, HP will use\nall reasonable efforts to give each Continuing Employee full credit for prior\nservice with Compaq or its Subsidiaries for purposes of (i) eligibility and\nvesting under any HP Benefit Plan, (ii) determination of benefits levels under\nany vacation or severance HP Benefit Plan and (iii) determination of \"retiree\"\nstatus under any equity compensation HP Benefit Plan, for which the Continuing\nEmployee is otherwise eligible and in which the Continuing Employee is offered\nparticipation, in each case except where such crediting would (A) result in a\nduplication of benefits or (B) otherwise cause HP or its Subsidiaries or any HP\nBenefit Plan or trust relating thereto to accrue or pay for benefits that relate\nto any \n\n\n                                      -63-\n\n\ntime period prior to the Continuing Employee's participation in the HP Benefit\nPlan.\n\n                (f) EMPLOYEE COMMUNICATIONS. With respect to matters described\nin Section 5.9, Compaq will use all reasonable efforts to consult with HP (and\nconsider in good faith the advice of HP) prior to sending any notices or other\ncommunication materials to its Employees.\n\n                (g) PLAN DOCUMENTS. Without limiting the generality of Section\n5.4(b), as promptly as practicable following the date hereof (if practicable,\nwith thirty (30) days from the date hereof), Compaq shall provide access to HP\nto copies of: (i) all documents embodying all Compaq Benefit Plans, (ii) the\nmost recent annual actuarial valuations and\/or audited statement of assets and\nliabilities for each Compaq Retirement Plan, if any, for each Compaq Benefit\nPlan, (iii) the three (3) most recent annual reports, returns, securities\nregistration statements or other filings, if any, required to be filed with any\nGovernmental Entity under applicable Legal Requirement in connection with each\nCompaq Benefit Plan, (iv) the most recent Approval for each Compaq Benefit Plan,\nas applicable, (v) all material correspondence to or from any Governmental\nEntity relating to any Compaq Benefit Plan, (vi) all material communications to\nEmployees regarding in each case, relating to any amendments, terminations,\nestablishments, increases or decreases in benefits, acceleration of payments or\nvesting schedules or other events which would result in any material liability\nunder any Compaq Benefit Plan or proposed Compaq Benefit Plan, and (vii) a\nsummary with respect to each Compaq Option outstanding as of the date of this\nAgreement of: (a) the particular Compaq Stock Option Plan (if any) pursuant to\nwhich such Compaq Option was granted, (b) the name and location of the holder or\nreceipt of such Compaq Option, (c) the number of shares of Compaq Common Stock\nsubject to such Compaq Option or value covered thereby, (d) the exercise or base\nprice of such Compaq Option, (e) the date on which such Compaq Option was\ngranted, (f) the applicable vesting schedule and the extent to which such Compaq\nOption is vested and exercisable as of the date of this Agreement, and (g) the\ndate on which such Compaq Option expires.\n\n      5.10 FORM S-8. HP agrees to file a registration statement on Form S-8 for\nthe shares of HP Common Stock issuable with respect to assumed Compaq Options to\nthe extent Form S-8 is available as soon as is reasonably practicable \n\n\n                                      -64-\n\n\nafter the Effective Time and shall maintain the effectiveness of such\nregistration statement thereafter for so long as any of such options or other\nrights remain outstanding.\n\n      5.11 INDEMNIFICATION.\n\n                (a) INDEMNITY. From and after the Effective Time, HP will, and\nwill cause the Surviving Corporation to, fulfill and honor in all respects the\nobligations of Compaq pursuant to any indemnification agreements between Compaq\nand its directors and officers immediately prior to the Effective Time (the\n\"INDEMNIFIED PARTIES\"), subject to applicable law. The Certificate of\nIncorporation and Bylaws of the Surviving Corporation will contain provisions\nwith respect to exculpation and indemnification that are at least as favorable\nto the Indemnified Parties as those contained in the Certificate of\nIncorporation and Bylaws of the Company as in effect on the date hereof, which\nprovisions will not be amended, repealed or otherwise modified for a period of\nsix years from the Effective Time in any manner that would adversely affect the\nrights thereunder of individuals who, immediately prior to the Effective Time,\nwere directors, officers, employees or agents of Compaq, unless such\nmodification is required by law.\n\n                (b) INSURANCE. For a period of six years after the Effective\nTime, HP will cause the Surviving Corporation to use all reasonable efforts to\ncause to be maintained in directors' and officers' liability insurance\nmaintained by Compaq covering those persons who are covered by Compaq's\ndirectors' and officers' liability insurance policy as of the date hereof on\nterms comparable to those applicable to the current directors and officers of\nCompaq for a period of six (6) years; PROVIDED, HOWEVER, that in no event will\nthe Surviving Corporation be required to expend in excess of one hundred fifty\npercent (150%) of the annual premium currently paid by Compaq for such coverage\n(and to the extent annual premium would exceed one hundred fifty percent (150%)\nof the annual premium currently paid by Compaq for such coverage, the Surviving\nCorporation shall use all reasonable efforts to cause to be maintained the\nmaximum amount of coverage as is available for such one hundred fifty percent\n(150%) of such annual premium).\n\n                (c) THIRD-PARTY BENEFICIARIES. This Section 5.11 is intended to\nbe for the benefit of, and shall be enforceable by the Indemnified Parties and\ntheir heirs and personal representatives and shall be binding on HP and the\nSurviving \n\n\n                                      -65-\n\n\nCorporation and its successors and assigns. In the event HP or the Surviving\nCorporation or its successor or assign (i) consolidates with or merges into any\nother Person and shall not be the continuing or surviving corporation or entity\nin such consolidation or merger or (ii) transfers all or substantially all of\nits properties and assets to any Person, then, and in each case, proper\nprovision shall be made so that the successor and assign of HP or the Surviving\nCorporation, as the case may be, honor the obligations set forth with respect to\nHP or the Surviving Corporation, as the case may be, in this Section 5.11.\n\n      5.12 BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF HP.\n\n                (a) COMPAQ DESIGNATED DIRECTORS. The Board of Directors of HP\nwill take all actions necessary such that effective as of immediately following\nthe Effective Time, five (5) directors of Compaq reasonably acceptable to HP,\nincluding Michael D. Capellas, shall become members of the Board of Directors of\nHP (the \"COMPAQ DESIGNATED DIRECTORS\") and the Board of Directors of HP will\nhave no more than two directors who are employees of HP immediately following\nthe Effective Time (it being understood that in the event that at the Effective\nTime Michael D. Capellas is unable or unavailable to serve as a director of HP,\nCompaq shall be entitled to designate an alternative person reasonably\nacceptable to HP serve as a member of the HP Board of Directors in lieu of\nMichael D. Capellas.\n\n                (b) BOARD COMMITTEES. It is the intention of the Board of\nDirectors of HP that (i) there will be at least one Compaq Designated Director\non each committee of the Board of Directors of HP and (ii) the chairman of at\nleast one of the following committees of the Board of Directors of HP will be a\nCompaq Designated Director: (A) Audit, (B) Compensation, (C) Finance and\nInvestment, and (D) Nominating and Governance.\n\n                (c) EXECUTIVE OFFICERS. HP will negotiate in good faith with\ncertain persons who are current senior executives of HP and Compaq who are\nexpected to become (or continue to be) senior executives of HP following the\nMerger for such persons to accept the positions and the terms of employment\npreviously discussed between Compaq and HP.\n\n      5.13 NYSE AND PCX LISTINGS. Prior to the Effective Time, HP agrees to use\nall reasonable efforts to authorize for listing on NYSE and PCX the shares \n\n\n                                      -66-\n\n\nof HP Common Stock issuable, and those required to be reserved for issuance, in\nconnection with the Merger, subject to official notice of issuance.\n\n      5.14 COMPAQ AFFILIATES; RESTRICTIVE LEGEND. Compaq will use all reasonable\nefforts to deliver or cause to be delivered to HP, as promptly as practicable on\nor following the date hereof, from each person who may reasonably be deemed to\nbe an affiliate of Compaq for purposes of Rule 145 promulgated under the\nSecurities Act an executed affiliate agreement pursuant to which such affiliate\nshall agree to be bound by the provision of Rule 145 promulgated under the\nSecurities Act in a form provided by HP and reasonably acceptable to Compaq. HP\nwill give stop transfer instructions to its transfer agent with respect to any\nHP Common Stock received pursuant to the Merger by any stockholder of Compaq who\nmay reasonably be deemed to be an affiliate of Compaq for purposes of Rule 145\npromulgated under the Securities Act and there will be placed on the\ncertificates representing such HP Common Stock, or any substitutions therefor, a\nlegend stating in substance that the shares were issued in a transaction to\nwhich Rule 145 promulgated under the Securities Act applies and may only be\ntransferred (i) in conformity with Rule 145 or (ii) in accordance with a written\nopinion of counsel, reasonably acceptable to HP, in form and substance that such\ntransfer is exempt from registration under the Securities Act.\n\n      5.15 TREATMENT AS REORGANIZATION. None of HP, Merger Sub or Compaq shall,\nand they shall not permit any of their respective Subsidiaries to, take any\naction prior to or following the Closing that would reasonably be expected to\ncause the Merger to fail to qualify as a reorganization with the meaning of\nSection 368(a) of the Code.\n\n      5.16 RIGHTS PLANS.\n\n                (a) COMPAQ RIGHTS PLAN. Compaq shall, and shall cause its\ntransfer agent, as rights agent, to, enter into the Compaq Rights Agreement as\npromptly as practicable after the date hereof (but in no event later than three\n(3) business days following the date hereof). Compaq shall set the record date\nfor the Compaq Rights Dividend as September 17, 2001 and shall pay the Compaq\nRights Dividend not later than September 27, 2001. Compaq shall not redeem the\nCompaq Rights or amend or modify (including by delay of the \"Distribution Date\"\nthereunder) or terminate the Compaq Rights Plan prior to the Effective Time\nunless, and only to the extent that: (i) it is required to do so by order of a\n\n\n                                      -67-\n\n\ncourt of competent jurisdiction or (ii) its Board of Directors has concluded in\ngood faith, after receipt of advice of its outside legal counsel, that, in light\nof a Superior Offer with respect to it, the failure to effect such amendment,\nmodification or termination is reasonably likely to result in a breach of its\nBoard of Directors' fiduciary obligations to its stockholders under applicable\nlaw.\n\n                (b) HP RIGHTS PLAN. HP shall, and shall cause its transfer\nagent, as rights agent, to, enter into the HP Rights Agreement as promptly as\npracticable after the date hereof (but in no event later than three (3) business\ndays following the date hereof). HP shall set the record date for the HP Rights\nDividend as September 17, 2001 and shall pay the HP Rights Dividend not later\nthan September 27, 2001. HP shall not redeem the HP Rights or amend or modify\n(including by delay of the \"Distribution Date\" thereunder) or terminate the HP\nRights Plan prior to the Effective Time unless, and only to the extent that: (i)\nit is required to do so by order of a court of competent jurisdiction or (ii)\nits Board of Directors has concluded in good faith, after receipt of advice of\nits outside legal counsel, that, in light of a Superior Offer with respect to\nit, the failure to effect such amendment, modification or termination is\nreasonably likely to result in a breach of its Board of Directors' fiduciary\nobligations to its stockholders under applicable law.\n\n      5.17 SECTION 16 MATTERS. Prior to the Effective Time, HP and Compaq shall\ntake all such steps as may be required (to the extent permitted under applicable\nlaw) to cause any dispositions of Compaq Common Stock (including derivative\nsecurities with respect to Compaq Common Stock) or acquisitions of HP Common\nStock (including derivative securities with respect to HP Common Stock)\nresulting from the transactions contemplated by Article I of this Agreement by\neach individual who is subject to the reporting requirements of Section 16(a) of\nthe Exchange Act with respect to Compaq to be exempt under Rule 16b-3\npromulgated under the Exchange Act.\n\n      5.18 MERGER SUB COMPLIANCE. HP shall cause Merger Sub to comply with all\nof Merger Sub's obligations under or relating to this Agreement. Merger Sub\nshall not engage in any business which is not in connection with the merger with\nand into Compaq pursuant to this Agreement.\n\n      5.19 CONVEYANCE TAXES. HP, Merger Sub and Compaq shall cooperate in the\npreparation, execution and filing of all returns, questionnaires, applications\n\n\n                                      -68-\n\n\nor other documents regarding any real property transfer or gains, sales, use,\ntransfer, value added, stock transfer or stamp taxes, any transfer, recording,\nregistration or other fees or any similar taxes which become payable in\nconnection with the transactions contemplated by this Agreement that are\nrequired or permitted to be filed on or before the Effective Time. All such\ntaxes will be paid by the party bearing the legal responsibility for such\npayment; PROVIDED, HOWEVER, that, as between HP and Compaq, Compaq shall pay on\nbehalf of those Persons holding Compaq Common Stock immediately prior to the\nEffective Time any real estate transfer or similar Taxes payable by such Person\nin connection with Merger.\n\n                                   ARTICLE VI\n                            CONDITIONS TO THE MERGER\n\n      6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The\nrespective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Closing Date of the\nfollowing conditions:\n\n                (a) STOCKHOLDER APPROVAL. This Agreement shall have been\napproved and adopted, and the Merger shall have been duly approved, by the\nrequisite vote under applicable law, by the stockholders of Compaq and the Stock\nIssuance shall have been approved by the stockholders of HP.\n\n                (b) NO ORDER. No Governmental Entity of competent jurisdiction\nshall have enacted, issued, promulgated, enforced or entered any statute, rule,\nregulation, executive order, decree, injunction or other order (whether\ntemporary, preliminary or permanent) which (i) is in effect and (ii) has the\neffect of making the Merger illegal or otherwise prohibiting consummation of the\nMerger (which illegality or prohibition would have a material impact on HP and\nits Subsidiaries, on a combined basis with Compaq and its Subsidiaries, if the\nMerger were consummated notwithstanding such statute, rule, regulation,\nexecutive order, decree, injunction or other order).\n\n                (c) REGISTRATION STATEMENT EFFECTIVE; PROSPECTUS\/PROXY\nSTATEMENT. The SEC shall have declared the Registration Statement effective. No\nstop order suspending the effectiveness of the Registration Statement or any\npart thereof shall have been issued and no proceeding for that purpose, and no\nsimilar \n\n\n                                      -69-\n\n\nproceeding in respect of the Prospectus\/Proxy Statement, shall have been\ninitiated or threatened in writing by the SEC.\n\n                (d) HSR ACT; EC MERGER REGULATION. All waiting periods (and any\nextension thereof) under the HSR Act relating to the transactions contemplated\nhereby will have expired or terminated early. Any required approval of the\nMerger of the European Commission shall have been obtained pursuant to the EC\nMerger Regulation, respectively. All other material foreign antitrust approvals\nrequired to be obtained prior to the Merger in connection with the transactions\ncontemplated hereby shall have been obtained.\n\n                (e) NO GOVERNMENTAL RESTRICTION. There shall not be any pending\nor overtly threatened suit, action or proceeding asserted by any Governmental\nAuthority (i) challenging or seeking to restrain or prohibit the consummation of\nthe Merger or any of the other transactions contemplated by this Agreement, the\neffect of which restraint or prohibition if obtained would cause the condition\nset forth in Section 6.1(b) to not be satisfied or (ii) seeking to require HP or\nCompaq or any Subsidiary or affiliate to effect a Restricted Divestiture.\n\n                (f) TAX OPINIONS. HP and Compaq shall each have received written\nopinions from Wilson Sonsini Goodrich &amp; Rosati, Professional Corporation and\nSkadden, Arps, Slate, Meagher &amp; Flom, LLP, respectively, in form and substance\nreasonably satisfactory to them, to the effect that the Merger will constitute a\nreorganization within the meaning of Section 368(a) of the Code and such\nopinions shall not have been withdrawn.\n\n                (g) NYSE AND PCX LISTING. The shares of HP Common Stock to be\nissued in the Merger and the transactions contemplated hereby shall have been\nauthorized for listing on each of the NYSE and PCX, subject to official notice\nof issuance.\n\n      6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF COMPAQ. The obligation of\nCompaq to consummate and effect the Merger shall be subject to the satisfaction\nat or prior to the Closing Date of each of the following conditions, any of\nwhich may be waived, in writing, exclusively by Compaq:\n\n                (a) REPRESENTATIONS AND WARRANTIES. The representations and\nwarranties of HP and Merger Sub contained in this Agreement shall be true and\n\n\n                                      -70-\n\n\ncorrect on the date hereof and as of the Closing Date with the same force and\neffect as if made on the Closing Date (except that those representations and\nwarranties which address matters only as of a particular date shall have been\ntrue and correct only on such date), except, in each case, or in the aggregate,\nas does not constitute a Material Adverse Effect on HP at the Closing Date (it\nbeing understood that, for purposes of determining the accuracy of such\nrepresentations and warranties, any update of or modification to the HP\nDisclosure Letter made or purported to have been made after the execution of\nthis Agreement shall be disregarded). Compaq shall have received a certificate\nwith respect to the foregoing signed on behalf of HP, with respect to the\nrepresentations and warranties of HP, by an authorized senior executive officer\nof HP and a certificate with respect to the foregoing signed on behalf of Merger\nSub, with respect to the representations and warranties of Merger Sub, by an\nauthorized officer of Merger Sub.\n\n                (b) AGREEMENTS AND COVENANTS. HP and Merger Sub shall have\nperformed or complied in all material respects with all agreements and covenants\nrequired by this Agreement to be performed or complied with by it on or prior to\nthe Closing Date, and Compaq shall have received a certificate with respect to\nthe foregoing signed on behalf of HP, with respect to the covenants of HP, by an\nauthorized senior executive officer of HP and a certificate with respect to the\nforegoing signed on behalf of Merger Sub, with respect to the covenants of\nMerger Sub, by an authorized officer of Merger Sub.\n\n                (c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect on HP\nshall have occurred since the date hereof and be continuing.\n\n      6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF HP. The obligations of HP\nand Merger Sub to consummate and effect the Merger shall be subject to the\nsatisfaction at or prior to the Closing Date of each of the following\nconditions, any of which may be waived, in writing, exclusively by HP and Merger\nSub:\n\n                (a) REPRESENTATIONS AND WARRANTIES. The representations and\nwarranties of Compaq contained in this Agreement shall be true and correct on\nthe date hereof and as of the Closing Date with the same force and effect as if\nmade on the Closing Date (except that those representations and warranties which\naddress matters only as of a particular date shall have been true and correct\nonly on such date), except, in each case, or in the aggregate, as does not\nconstitute a \n\n\n\n                                      -71-\n\n\nMaterial Adverse Effect on Compaq at the Closing Date (it being understood that,\nfor purposes of determining the accuracy of such representations and warranties,\nany update of or modification to the Compaq Disclosure Letter made or purported\nto have been made after the execution of this Agreement shall be disregarded).\nHP and Merger Sub shall have received a certificate with respect to the\nforegoing signed on behalf of Compaq by an authorized senior executive officer\nof Compaq.\n\n                (b) AGREEMENTS AND COVENANTS. Compaq shall have performed or\ncomplied in all material respects with all agreements and covenants required by\nthis Agreement to be performed or complied with by it at or prior to the Closing\nDate, and HP and Merger Sub shall have received a certificate to such effect\nsigned on behalf of Compaq by an authorized senior executive officer of Compaq.\n\n                (c) MATERIAL ADVERSE EFFECT. No Material Adverse Effect on\nCompaq shall have occurred since the date hereof and be continuing.\n\n                                  ARTICLE VII\n                        TERMINATION, AMENDMENT AND WAIVER\n\n      7.1 TERMINATION. This Agreement may be terminated at any time prior to the\nEffective Time, by action taken or authorized by the Board of Directors of the\nterminating party or parties, and except as provided below, whether before or\nafter the requisite approvals of the stockholders of Compaq or HP:\n\n                (a) by mutual written consent duly authorized by the Boards of\nDirectors of HP and Compaq;\n\n                (b) by either Compaq or HP if the Merger shall not have been\nconsummated by May 31, 2002 (which date shall be extended to August 30, 2002, if\nthe Merger shall not have been consummated as of the result of a failure to\nsatisfy the conditions set forth in Section 6.1(b), Section 6.1(d) or Section\n6.1(e)) (as appropriate, the \"END DATE\"); PROVIDED, HOWEVER, that the right to\nterminate this Agreement under this Section 7.1(b) shall not be available to any\nparty whose action or failure to act has been a principal cause of or resulted\nin the failure of the Merger to occur on or before such date and such action or\nfailure to act constitutes a material breach of this Agreement;\n\n                (c) by either Compaq or HP if a Governmental Entity shall have\nissued an order, decree or ruling or taken any other action (including \n\n\n                                      -72-\n\n\nthe failure to have taken an action), in any case having the effect of\npermanently restraining, enjoining or otherwise prohibiting the Merger, which\norder, decree, ruling or other action is final and nonappealable;\n\n                (d) by either Compaq or HP if the required approval of the\nstockholders of HP contemplated by this Agreement shall not have been obtained\nby reason of the failure to obtain the required vote at a meeting of HP\nstockholders duly convened therefor or at any adjournment thereof; PROVIDED,\nHOWEVER, that the right to terminate this Agreement under this Section 7.1(d)\nshall not be available to HP where the failure to obtain HP stockholder approval\nshall have been caused by the action or failure to act of HP and such action or\nfailure to act constitutes a material breach by HP of this Agreement;\n\n                (e) by either Compaq or HP if the required approval of the\nstockholders of Compaq contemplated by this Agreement shall not have been\nobtained by reason of the failure to obtain the required vote at a meeting of\nthe Compaq stockholders duly convened therefore or at any adjournment thereof;\nPROVIDED, HOWEVER, that the right to terminate this Agreement under this Section\n7.1(e) shall not be available to Compaq where the failure to obtain Compaq\nstockholder approval shall have been caused by the action or failure to act of\nCompaq and such action or failure to act constitutes a material breach by Compaq\nof this Agreement;\n\n                (f) by HP (at any time prior to the adoption and approval of\nthis Agreement and the Merger by the required vote of the stockholders of\nCompaq) if a Triggering Event (as defined below in this Section 7.1) with\nrespect to Compaq shall have occurred;\n\n                (g) by Compaq (at any time prior to the adoption and approval of\nthis Agreement and the Merger by the required vote of the stockholders of HP) if\na Triggering Event with respect to HP shall have occurred;\n\n                (h) by Compaq, upon a breach of any representation, warranty,\ncovenant or agreement on the part of HP set forth in this Agreement, or if any\nrepresentation or warranty of HP shall have become untrue, in either case such\nthat the conditions set forth in Section 6.2(a) or Section 6.2(b) would not be\nsatisfied as of the time of such breach or as of the time such representation or\nwarranty shall have become untrue, PROVIDED that if such inaccuracy in HP's\nrepresentations and warranties or breach by HP is curable by HP prior to the End\n\n\n                                      -73-\n\n\nDate through the exercise of reasonable efforts, then Compaq may not terminate\nthis Agreement under this Section 7.1(h) prior to sixty (60) days following the\nreceipt of written notice from Compaq to HP of such breach, PROVIDED that HP\ncontinues to exercise all reasonable efforts to cure such breach through such\nsixty (60) day period (it being understood that Compaq may not terminate this\nAgreement pursuant to this paragraph (h) if it shall have materially breached\nthis Agreement or if such breach by HP is cured within such sixty (60) day\nperiod);\n\n                (i) by HP, upon a breach of any representation, warranty,\ncovenant or agreement on the part of Compaq set forth in this Agreement, or if\nany representation or warranty of Compaq shall have become untrue, in either\ncase such that the conditions set forth in Section 6.3(a) or Section 6.3(b)\nwould not be satisfied as of the time of such breach or as of the time such\nrepresentation or warranty shall have become untrue, PROVIDED, that if such\ninaccuracy in Compaq's representations and warranties or breach by Compaq is\ncurable by Compaq prior to the End Date through the exercise of reasonable\nefforts, then HP may not terminate this Agreement under this Section 7.1(i)\nprior to the End Date sixty (60) days following the receipt of written notice\nfrom HP to Compaq of such breach, PROVIDED that Compaq continues to exercise all\nreasonable efforts to cure such breach through such sixty (60) day period (it\nbeing understood that HP may not terminate this Agreement pursuant to this\nparagraph (i) if it shall have materially breached this Agreement or if such\nbreach by Compaq is cured within such sixty (60) day period);\n\n                (j) by HP, if a Material Adverse Effect on Compaq shall have\noccurred since the date hereof; and\n\n                (k) by Compaq, if a Material Adverse Effect on HP shall have\noccurred since the date hereof.\n\n      For the purposes of this Agreement, a \"TRIGGERING EVENT,\" with respect to\na party hereto, shall be deemed to have occurred if: (i) its Board of Directors\nor any committee thereof shall for any reason have withdrawn or shall have\namended or modified in a manner adverse to the other party hereto its\nrecommendation in favor of, the adoption and approval of the Agreement or the\napproval of the Merger, (ii) it shall have failed to include in the\nProspectus\/Proxy Statement the recommendation of its Board of Directors in favor\nof the adoption and approval of the Agreement and the approval of the Merger,\n(iii) its Board of Directors fails to \n\n\n                                      -74-\n\n\nreaffirm (publicly, if so requested) its recommendation in favor of the adoption\nand approval of the Agreement and the approval of the Merger within ten (10)\ncalendar days after the other party hereto requests in writing that such\nrecommendation be reaffirmed, (iv) its Board of Directors or any committee\nthereof shall have approved or recommended any Acquisition Proposal, or (v) a\ntender or exchange offer relating to its securities shall have been commenced by\na Person unaffiliated with the other party hereto and it shall not have sent to\nits securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,\nwithin ten (10) business days after such tender or exchange offer is first\npublished, sent or given, a statement disclosing that the Board of Directors of\nsuch party recommends rejection of such tender or exchange offer.\n\n      7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of this\nAgreement under Section 7.1 above will be effective immediately upon the\ndelivery of a valid written notice of the terminating party to the other party\nhereto. In the event of the termination of this Agreement as provided in Section\n7.1, this Agreement shall be of no further force or effect, except (i) as set\nforth in Section 5.4(a), this Section 7.2, Section 7.3 and Article VIII, each of\nwhich shall survive the termination of this Agreement and (ii) nothing herein\nshall relieve any party from liability for any willful breach of this Agreement.\nNo termination of this Agreement shall affect the obligations of the parties\ncontained in the Confidentiality Agreement, all of which obligations shall\nsurvive termination of this Agreement in accordance with their terms.\n\n      7.3 FEES AND EXPENSES.\n\n                (a) GENERAL. Except as set forth in this Section 7.3, all fees\nand expenses incurred in connection with this Agreement and the transactions\ncontemplated hereby shall be paid by the party incurring such expenses whether\nor not the Merger is consummated; PROVIDED, HOWEVER, that HP and Compaq shall\nshare equally (i) all fees and expenses, other than attorneys' and accountants'\nfees and expenses which fees shall be paid for by the party incurring such\nexpense, incurred in relation to the printing and filing (with the SEC) of the\nProspectus\/Proxy Statement (including any preliminary materials related thereto)\nand the Registration Statement (including financial statements and exhibits) and\nany amendments or supplements thereto and (ii) the filing fee for the\nNotification and Report Forms filed with the FTC and DOJ under the HSR Act, the\nForm CO filed with the European Commission under the EC Merger Regulation and\n\n                                      -75-\n\n\npremerger notification and reports forms under similar applicable laws of other\njurisdictions, in each case pursuant to Section 5.6(a).\n\n                (b) PAYMENTS.\n\n                        (i) PAYMENT BY COMPAQ. In the event that this Agreement\nis terminated by HP or Compaq, as applicable, pursuant to Sections 7.1(b), (e),\nor (f), Compaq shall promptly, but in no event later than two (2) business days\nafter the date of such termination, pay HP a fee equal to six hundred seventy\nfive million dollars ($675,000,000.00) in immediately available funds (the\n\"COMPAQ TERMINATION FEE\"); PROVIDED, that in the case of termination under\nSection 7.1(b) or 7.1(e): (A) such payment shall be made only if following the\ndate hereof and prior to the termination of this Agreement, there has been\npublic disclosure of an Acquisition Proposal with respect to Compaq and (1)\nwithin twelve (12) months following the termination of this Agreement an\nAcquisition (as defined in Section 7.3(b)(iv)) of Compaq is consummated or (2)\nwithin twelve (12) months following the termination of this Agreement Compaq\nenters into an agreement providing for an Acquisition of Compaq and an\nAcquisition of Compaq is consummated within twenty-four (24) months of the\ntermination of this Agreement and (B) such payment shall be made promptly, but\nin no event later than two (2) business days after the consummation of such\nAcquisition of Compaq.\n\n                        (ii) PAYMENT BY HP. In the event that this Agreement is\nterminated by HP or Compaq, as applicable, pursuant to Sections 7.1(b), (d), or\n(g), HP shall promptly, but in no event later than two (2) business days after\nthe date of such termination, pay Compaq a fee equal to six hundred seventy five\nmillion dollars ($675,000,000.00) in immediately available funds (the \"HP\nTERMINATION FEE\"); PROVIDED, that in the case of termination under Section\n7.1(b) or 7.1(d): (A) such payment shall be made only if following the date\nhereof and prior to the termination of this Agreement, there has been public\ndisclosure of an Acquisition Proposal with respect to HP and (1) within twelve\n(12) months following the termination of this Agreement an Acquisition of HP is\nconsummated or (2) within twelve (12) months following the termination of this\nAgreement HP enters into an agreement providing for an Acquisition of HP and an\nAcquisition of HP is consummated within twenty-four (24) months following the\ntermination of this Agreement; and (B) such payment shall be made promptly, \n\n\n                                      -76-\n\n\nbut in no event later than two (2) business days after the consummation of such\nAcquisition of HP.\n\n                        (iii) INTEREST AND COSTS; OTHER REMEDIES. Each of HP and\nCompaq acknowledges that the agreements contained in this Section 7.3(b) are an\nintegral part of the transactions contemplated by this Agreement, and that,\nwithout these agreements, the other party hereto would not enter into this\nAgreement; accordingly, if HP or Compaq, as the case may be, fails to pay in a\ntimely manner the amounts due pursuant to this Section 7.3(b), and, in order to\nobtain such payment, the other party hereto makes a claim that results in a\njudgment against the party failing to pay for the amounts set forth in this\nSection 7.3(b), the party so failing to pay shall pay to the other party its\nreasonable costs and expenses (including reasonable attorneys' fees and\nexpenses) in connection with such suit, together with interest on the amounts\nset forth in this Section 7.3(b) at the prime rate of Citibank, N.A. in effect\non the date such payment was required to be made. Payment of the fees described\nin this Section 7.3(b) shall not be in lieu of damages incurred in the event of\nbreach of this Agreement.\n\n                        (iv) CERTAIN DEFINITIONS. For the purposes of this\nSection 7.3(b) only, \"ACQUISITION,\" with respect to a party hereto, shall mean\nany of the following transactions (other than the transactions contemplated by\nthis Agreement): (i) a merger, consolidation, business combination,\nrecapitalization, liquidation, dissolution or similar transaction involving the\nparty pursuant to which the stockholders of the party immediately preceding such\ntransaction hold less than sixty percent (60%) of the aggregate equity interests\nin the surviving or resulting entity of such transaction or any direct or\nindirect parent thereof, (ii) a sale or other disposition by the party of assets\nrepresenting in excess of forty percent (40%) of the aggregate fair market value\nof the party's business immediately prior to such sale, or (iii) the acquisition\nby any Person or group (including by way of a tender offer or an exchange offer\nor issuance by the party or such Person or group), directly or indirectly, of\nbeneficial ownership or a right to acquire beneficial ownership of shares\nrepresenting in excess of forty percent (40%) of the voting power of the then\noutstanding shares of capital stock of the party.\n\n      7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by\nthe parties hereto, by action taken or authorized by their respective \n\n\n                                      -77-\n\n\nBoards of Directors, at any time before or after approval of the matters\npresented in connection with the Merger by the stockholders of HP and Compaq,\nPROVIDED, after any such approval, no amendment shall be made which by law or in\naccordance with the rules of any relevant stock exchange requires further\napproval by such stockholders without such further stockholder approval. This\nAgreement may not be amended except by execution of an instrument in writing\nsigned on behalf of each of HP, Merger Sub and Compaq.\n\n      7.5 EXTENSION; WAIVER. At any time prior to the Effective Time either\nparty hereto, by action taken or authorized by their respective Board of\nDirectors, may, to the extent legally allowed: (i) extend the time for the\nperformance of any of the obligations or other acts of the other parties hereto,\n(ii) waive any inaccuracies in the representations and warranties made to such\nparty contained herein or in any document delivered pursuant hereto, and (iii)\nwaive compliance with any of the agreements or conditions for the benefit of\nsuch party contained herein. Any agreement on the part of a party hereto to any\nsuch extension or waiver shall be valid only if set forth in an instrument in\nwriting signed on behalf of such party. Delay in exercising any right under this\nAgreement shall not constitute a waiver of such right.\n\n                                  ARTICLE VIII\n                               GENERAL PROVISIONS\n\n      8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations\nand warranties of Compaq, HP and Merger Sub contained in this Agreement, or any\ninstrument delivered pursuant to this Agreement, shall terminate at the\nEffective Time, and only the covenants that by their terms survive the Effective\nTime and this Article VIII shall survive the Effective Time.\n\n      8.2 NOTICES. All notices and other communications hereunder shall be in\nwriting and shall be deemed duly given (i) on the date of delivery if delivered\npersonally, (ii) on the date of confirmation of receipt (or, the first business\nday following such receipt if the date is not a business day) of transmission by\ntelecopy or telefacsimile, or (iii) on the date of confirmation of receipt (or,\nthe first business day following such receipt if the date is not a business day)\nif delivered by a nationally recognized courier service. All notices hereunder\nshall be delivered as set forth below, or pursuant to such other instructions as\nmay be designated in writing by the party to receive such notice:\n\n\n                                      -78-\n\n\n                (a)      if to HP or Merger Sub, to:\n\n                         Hewlett-Packard Company\n                         3000 Hanover Street\n                         Palo Alto, California 94304\n                         Attention:  Chief Executive Officer\n                         Telephone No.:  (650) 857-1501\n                         Telecopy No.:  (650) 852-2977\n\n                         with copies to:\n\n                         Hewlett-Packard Company\n                         3000 Hanover Street\n                         Palo Alto, California 94304\n                         Attention:  General Counsel\n                         Telephone No.:  (650) 857-1501\n                         Telecopy No.:  (650) 857-4837\n\n                         Wilson Sonsini Goodrich &amp; Rosati\n                         Professional Corporation\n                         650 Page Mill Road\n                         Palo Alto, California 94304-1050\n                         Attention: Larry W. Sonsini\n                                    Martin W. Korman\n                                    Bradley L. Finkelstein\n                         Telephone No.:  (650) 493-9300\n                         Telecopy No.:  (650) 493-6811\n\n                         Wilson Sonsini Goodrich &amp; Rosati\n                         Professional Corporation\n                         Lancaster Building WestPark\n                         7927 Jones Branch Drive #400\n                         McLean, Virgnia 22102-3322\n                         Attention: Robert D. Sanchez\n                         Telephone No.:  (703) 734-3100\n                         Telecopy No.:  (703) 734-3199\n\n\n                                      -79-\n\n\n                (b)      if to Compaq, to:\n\n                         Compaq Computer Corporation\n                         20555 SH 249\n                         Houston, Texas 77070\n                         Attention: Chief Executive Officer\n                         Telephone No.:  (281) 514-8705\n                         Telecopy No.:  (281) 518-6807\n\n                         with copies to:\n\n                         Compaq Computer Corporation\n                         20555 SH 249\n                         Houston, Texas 77070\n                         Attention:  General Counsel\n                         Telephone No.:  (281) 518-4422\n                         Telecopy No.:  (281) 518-6807\n\n                         Skadden, Arps, Slate, Meagher &amp; Flom LLP\n                         Four Times Square\n                         New York, New York 10036\n                         Attention: Roger S. Aaron\n                         Telephone No.:  (212) 735-3000\n                         Telecopy No.:  (212) 735-2000\n\n                         Skadden, Arps, Slate, Meagher &amp; Flom LLP\n                         525 University Avenue, Suite 1100\n                         Palo Alto, California 94301\n                         Attention: Kenton J. King\n                                    Celeste E. Greene\n                         Telephone No.:  (650) 470-4500\n                         Telecopy No.:  (650) 470-4570\n\n      8.3 INTERPRETATION; KNOWLEDGE.\n\n                (a) When a reference is made in this Agreement to Exhibits, \nsuch reference shall be to an Exhibit to this Agreement unless otherwise \nindicated. When a reference is made in this Agreement to Sections, such \nreference shall be to a section of this Agreement unless otherwise indicated. \nFor \n\n                                      -80-\n\n\npurposes of this Agreement, the words \"INCLUDE,\" \"INCLUDES\" and\n\"INCLUDING,\" when used herein, shall be deemed in each case to be followed by\nthe words \"without limitation.\" The table of contents and headings contained in\nthis Agreement are for reference purposes only and shall not affect in any way\nthe meaning or interpretation of this Agreement. When reference is made herein\nto \"THE BUSINESS OF\" an entity, such reference shall be deemed to include the\nbusiness of all such entity and its Subsidiaries, taken as a whole. An exception\nor disclosure made in Compaq Disclosure Letter with regard to a representation\nof Compaq, or in the HP Disclosure Letter with regard to a representation of HP\nor Merger Sub, shall be deemed made with respect to any other representation by\nsuch party to which such exception or disclosure is clearly relevant.\n\n                (b) For purposes of this Agreement, the term \"KNOWLEDGE\" \nmeans, with respect to a party hereto, with respect to any matter in \nquestion, that any of the Chief Executive Officer, Chief Financial Officer or \nGeneral Counsel of such party, has actual knowledge of such matter, after \ninquiry of their respective direct reports.\n\n                (c) For purposes of this Agreement, the term \"MATERIAL \nADVERSE EFFECT,\" when used in connection with an entity, means any change, \nevent, violation, inaccuracy, circumstance or effect (any such item, an \n\"EFFECT\"), individually or when taken together with all other Effects that \nhave occurred prior to the date of determination of the occurrence of the \nMaterial Adverse Effect, that is or is reasonably likely to (i) be materially \nadverse to the business, assets (including intangible assets), \ncapitalization, financial condition or results of operations of such entity \ntaken as a whole with its Subsidiaries (or, if such entity is Compaq, Compaq \ntaken as a whole with its Subsidiaries or HP taken as a whole with its \nSubsidiaries) or (ii) materially impede the authority of such entity, or, in \nany case, HP, to consummate the transactions contemplated by this Agreement \nin accordance with the terms hereof and applicable Legal Requirements; \nPROVIDED, HOWEVER, that, for purposes of clause (i) above, in no event shall \nany of the following, alone or in combination, be deemed to constitute, nor \nshall any of the following be taken into account in determining whether there \nhas been or will be, a Material Adverse Effect on any entity: (A) any Effect \nresulting from compliance with the terms and conditions of this Agreement, \n(B) any Effect resulting from the announcement or pendency of the Merger \n(provided that the exception in this clause (B) shall not apply to the use of \nthe term \"Material Adverse Effect\" in Sections 6.2(a) and 6.3(a) with respect \nto the representations \n\n                                      -81-\n\n\nand warranties contained in Section 2.3, Section 2.7(b), Section 2.14, Section\n3.3 and Section 3.13), (C) any change in such entity's stock price or trading\nvolume, in and of itself, (D) any failure by such entity to meet published\nrevenue or earnings projections, in and of itself, (E) any Effect that results\nfrom changes affecting any of the industries in which such entity operates\ngenerally or the United States economy generally (which changes in each case do\nnot disproportionately affect such entity in any material respect), (F) any\nEffect that results from changes affecting general worldwide economic or capital\nmarket conditions (which changes in each case do not disproportionately affect\nsuch entity in any material respect), or (G) stockholder class action litigation\narising from allegations of a breach of fiduciary duty relating to this\nAgreement.\n\n                (d) For purposes of this Agreement, the term \"PERSON\" shall \nmean any individual, corporation (including any non-profit corporation), \ngeneral partnership, limited partnership, limited liability partnership, \njoint venture, estate, trust, company (including any limited liability \ncompany or joint stock company), firm or other enterprise, association, \norganization, entity or Governmental Entity.\n\n      8.4 COUNTERPARTS. This Agreement may be executed in two or more\ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n      8.5 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement and the\ndocuments and instruments and other agreements among the parties hereto as\ncontemplated by or referred to herein, including the Compaq Disclosure Letter\nand the HP Disclosure Letter (i) constitute the entire agreement among the\nparties with respect to the subject matter hereof and supersede all prior\nagreements and understandings, both written and oral, among the parties with\nrespect to the subject matter hereof, it being understood that the\nConfidentiality Agreement shall continue in full force and effect until the\nClosing and shall survive any termination of this Agreement and (ii) are not\nintended to confer upon any other Person any rights or remedies hereunder,\nexcept as specifically provided, following the Effective Time, in Section 5.11.\nWithout limiting the foregoing, it is expressly understood and agreed that the\nprovisions of Sections 5.9(d), 5.9(e), 5.12(b) and 5.12(c) are statements of\nintent and no Continuing Employee or other Person (including any party hereto)\nshall have any rights or remedies, including \n\n\n                                      -82-\n\n\nrights of enforcement, with respect thereto and no Continuing Employee or other\nPerson is or is intended to be a third-party beneficiary thereof.\n\n      8.6 SEVERABILITY. In the event that any provision of this Agreement or the\napplication thereof, becomes or is declared by a court of competent jurisdiction\nto be illegal, void or unenforceable, the remainder of this Agreement will\ncontinue in full force and effect and the application of such provision to other\nPersons or circumstances will be interpreted so as reasonably to effect the\nintent of the parties hereto. The parties further agree to replace such void or\nunenforceable provision of this Agreement with a valid and enforceable provision\nthat will achieve, to the greatest extent possible, the economic, business and\nother purposes of such void or unenforceable provision.\n\n      8.7 OTHER REMEDIES; SPECIFIC PERFORMANCE.\n\n                (a) OTHER REMEDIES. Except as otherwise provided herein, any and\nall remedies herein expressly conferred upon a party will be deemed cumulative\nwith and not exclusive of any other remedy conferred hereby, or by law or equity\nupon such party, and the exercise by a party of any one remedy will not preclude\nthe exercise of any other remedy. The parties hereto agree that irreparable\ndamage would occur in the event that any of the provisions of this Agreement\nwere not performed in accordance with their specific terms or were otherwise\nbreached.\n\n                (b) SPECIFIC PERFORMANCE. It is accordingly agreed that the\nparties shall be entitled to seek an injunction or injunctions to prevent\nbreaches of this Agreement and to enforce specifically the terms and provisions\nhereof in any court of the United States or any state having jurisdiction, this\nbeing in addition to any other remedy to which they are entitled at law or in\nequity.\n\n      8.8 GOVERNING LAW. This Agreement shall be governed by and construed in\naccordance with the laws of the State of Delaware, regardless of the laws that\nmight otherwise govern under applicable principles of conflicts of law thereof.\n\n      8.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been\nrepresented by counsel during the negotiation and execution of this Agreement\nand, therefore, waive the application of any law, regulation, holding or \n\n\n                                      -83-\n\n\nrule of construction providing that ambiguities in an agreement or other\ndocument will be construed against the party drafting such agreement or\ndocument.\n\n      8.10 ASSIGNMENT. No party may assign either this Agreement or any of its\nrights, interests, or obligations hereunder without the prior written approval\nof the other parties. Any purported assignment in violation of this Section 8.10\nshall be void. Subject to the preceding sentence, this Agreement shall be\nbinding upon and shall inure to the benefit of the parties hereto and their\nrespective successors and permitted assigns. \n\n      8.11 WAIVER OF JURY TRIAL. EACH OF HP, MERGER SUB AND COMPAQ HEREBY\nIRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR\nCOUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR\nRELATING TO THIS AGREEMENT OR THE ACTIONS OF HP, MERGER SUB OR COMPAQ IN THE\nNEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.\n\n                                      *****\n\n\n\n\n                                      -84-\n\n\n      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be\nexecuted by their duly authorized respective officers as of the date first\nwritten above.\n\n\n                                   HEWLETT-PACKARD COMPANY\n\n\n\n                                   By:  \/s\/ Carleton S. Fiorina\n                                        ---------------------------------------\n                                         Carleton S. Fiorina\n                                         Chairman and Chief Executive Officer\n\n\n                                   HELOISE MERGER CORPORATION\n\n\n\n                                   By:  \/s\/ Robert P. Wayman\n                                        ---------------------------------------\n                                         Robert P. Wayman\n                                         President\n\n\n                                   COMPAQ COMPUTER CORPORATION\n\n\n\n                                   By:  \/s\/ Michael D. Capellas\n                                        ---------------------------------------\n                                         Michael D. Capellas\n                                         Chairman and Chief Executive Officer\n\n\n\n\n\n\n\n\n\n\n                 ****AGREEMENT AND PLAN OF REORGANIZATION****\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7162,7770],"corporate_contracts_industries":[9508],"corporate_contracts_types":[9622,9626],"class_list":["post-43185","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-compaq-computer-corp","corporate_contracts_companies-hewlett-packard-co","corporate_contracts_industries-technology__hardware","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43185","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=43185"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43185"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43185"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43185"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}