AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HEWLETT-PACKARD COMPANY,
HELOISE MERGER CORPORATION
AND
COMPAQ COMPUTER CORPORATION
Dated as of September 4, 2001
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TABLE OF CONTENTS
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Article I THE MERGER......................................2
1.1 The Merger..............................2
1.2 Effective Time; Closing.................2
1.3 Effect of the Merger....................3
1.4 Certificate of Incorporation and Bylaws.3
1.5 Directors and Officers..................3
1.6 Effect on Capital Stock.................3
1.7 Surrender of Certificates...............5
1.8 No Further Ownership Rights in Compaq Common Stock.8
1.9 Lost, Stolen or Destroyed Certificates..9
1.10 Tax Consequences........................9
1.11 Further Action..........................9
Article II REPRESENTATIONS AND WARRANTIES OF COMPAQ.10
2.1 Organization; Standing and Power; Charter Documents; Subsidiaries.10
2.2 Capital Structure........................11
2.3 Authority; Non-Contravention; Necessary Consents.14
2.4 SEC Filings; Financial Statements........16
2.5 Absence of Certain Changes or Events.....17
2.6 Taxes....................................17
2.7 Intellectual Property....................18
2.8 Compliance; Permits......................19
2.9 Litigation...............................20
2.10 Brokers' and Finders' Fees...............20
2.11 Transactions with Affiliates.............20
2.12 Employee Benefit Plans...................21
2.13 Environmental Matters....................25
2.14 Contracts................................26
2.15 Disclosure...............................27
2.16 Board Approval...........................28
2.17 Fairness Opinion.........................28
2.18 Rights Plan..............................28
2.19 Takeover Statutes........................28
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Article III REPRESENTATIONS AND WARRANTIES OF HP AND MERGER SUB.............29
3.1 Organization; Standing and Power; Charter Documents; Subsidiaries..29
3.2 Capital Structure..................................................30
3.3 Authority; Non-Contravention; Necessary Consents...................32
3.4 SEC Filings; Financial Statements..................................34
3.5 Absence of Certain Changes or Events...............................35
3.6 Taxes..............................................................35
3.7 Intellectual Property..............................................35
3.8 Compliance; Permits................................................36
3.9 Litigation.........................................................36
3.10 Brokers' and Finders' Fees.........................................37
3.11 Employee Benefit Plans.............................................37
3.12 Environmental Matters..............................................39
3.13 Contracts..........................................................40
3.14 Disclosure.........................................................40
3.15 Board Approval.....................................................41
3.16 Fairness Opinion...................................................41
3.17 Rights Plan........................................................41
Article IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................41
4.1 Conduct of Business................................................41
Article V ADDITIONAL AGREEMENTS.............................................50
5.1 Prospectus/Proxy Statement; Registration Statement.................50
5.2 Meetings of Stockholders; Board Recommendation.....................51
5.3 Acquisition Proposals..............................................52
5.4 Confidentiality; Access to Information; No Modification of
Representations, Warranties or Covenants..................57
5.5 Public Disclosure..................................................58
5.6 Regulatory Filings; Reasonable Efforts.............................58
5.7 Notification of Certain Matters....................................61
5.8 Third-Party Consents...............................................61
5.9 Equity Awards and Employee Benefits................................62
5.10 Form S-8...........................................................64
5.11 Indemnification....................................................65
5.12 Board of Directors and Executive Officers of HP....................66
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5.13 NYSE and PCX Listings..............................................66
5.14 Compaq Affiliates; Restrictive Legend..............................67
5.15 Treatment as Reorganization........................................67
5.16 Rights Plans.......................................................67
5.17 Section 16 Matters.................................................68
5.18 Merger Sub Compliance..............................................68
5.19 Conveyance Taxes...................................................68
Article VI CONDITIONS TO THE MERGER.........................................69
6.1 Conditions to the Obligations of Each Party to Effect the Merger...69
6.2 Additional Conditions to the Obligations of Compaq.................70
6.3 Additional Conditions to the Obligations of HP.....................71
Article VII TERMINATION, AMENDMENT AND WAIVER...............................72
7.1 Termination........................................................72
7.2 Notice of Termination; Effect of Termination.......................75
7.3 Fees and Expenses..................................................75
7.4 Amendment..........................................................77
7.5 Extension; Waiver..................................................78
Article VIII GENERAL PROVISIONS.............................................78
8.1 Non-Survival of Representations and Warranties.....................78
8.2 Notices............................................................78
8.3 Interpretation; Knowledge..........................................80
8.4 Counterparts.......................................................82
8.5 Entire Agreement; Third-Party Beneficiaries........................82
8.6 Severability.......................................................83
8.7 Other Remedies; Specific Performance...............................83
8.8 Governing Law......................................................83
8.9 Rules of Construction..............................................83
8.10 Assignment.........................................................84
8.11 Waiver of Jury Trial...............................................84
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made and
entered into as of September 4, 2001, by and among Hewlett-Packard Company, a
Delaware corporation ("HP"), Heloise Merger Corporation, a Delaware corporation
and direct wholly-owned subsidiary of HP ("MERGER SUB"), and Compaq Computer
Corporation, a Delaware corporation ("COMPAQ").
RECITALS
A. The respective Boards of Directors of HP, Merger Sub and Compaq have
deemed it advisable and in the best interests of their respective corporations
and stockholders that HP and Compaq consummate the business combination and
other transactions provided for herein in order to advance their respective
long-term strategic business interests.
B. The respective Boards of Directors of HP, Merger Sub and Compaq have
approved, in accordance with applicable provisions of the laws of the state of
Delaware ("DELAWARE LAW"), this Agreement and the transactions contemplated
hereby, including the Merger (as defined in Section 1.1).
C. The Board of Directors of HP has resolved to recommend to its
stockholders approval of the issuance of shares of HP Common Stock (as defined
in Section 1.6(a)) in connection with the Merger (the "STOCK ISSUANCE").
D. The Board of Directors of Compaq has resolved to recommend to its
stockholders approval and adoption of this Agreement and approval of the Merger.
E. HP, as the sole stockholder of Merger Sub, has approved and adopted
this Agreement and approved the Merger.
F. HP, Merger Sub and Compaq desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
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G. For United States federal income tax purposes, the parties intend that
the Merger qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), and the parties
intend, by executing this Agreement, to adopt a plan of reorganization within
the meaning of Section 354(a) of the Code.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Compaq (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and Compaq shall continue as the surviving corporation. Compaq, as the
surviving corporation after the Merger, is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing with the Secretary of State of the State of
Delaware (or such later time as may be agreed in writing by Compaq and HP and
specified in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as
practicable on or after the Closing Date (as defined below). The closing of the
Merger (the "CLOSING") shall take place at the offices of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, located at 650 Page Mill Road, Palo
Alto, California, at a time and date to be specified by the parties, which shall
be no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
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1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law.
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS. At the Effective Time, the
Certificate of Incorporation of Compaq shall be amended and restated in its
entirety to be identical to the Certificate of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, until thereafter amended in
accordance with Delaware Law and as provided in such Certificate of
Incorporation; PROVIDED, HOWEVER, that at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended and
restated in its entirety to read as follows: "The name of the corporation is
Compaq Computer Corporation." At the Effective Time, the Bylaws of Compaq shall
be amended and restated in their entirety to be identical to the Bylaws of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended in accordance with Delaware Law and as provided in such
Bylaws.
1.5 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of HP, Merger Sub, Compaq or the holders of any shares of capital
stock of Compaq, the following shall occur:
(a) COMPAQ COMMON STOCK. Each share of the Common Stock, par
value $0.01 per share, of Compaq (together with the associated Compaq Right (as
defined in Section 2.2(a)) under the Compaq Rights Agreement (as defined in
Section 2.2(a)) ("COMPAQ COMMON STOCK") issued and outstanding immediately prior
to the Effective Time, other than any shares of Compaq Common Stock to be
canceled pursuant to Section 1.6(c), will be canceled and extinguished and
automatically converted (subject to Section 1.6(f)) into the right to receive
0.6325 of a validly issued, fully paid and nonassessable share (the "EXCHANGE
RATIO") of the Common Stock, par value $0.01 per share,
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of HP (together with any associated HP Right (as defined in Section 3.2(a))
under the HP Rights Agreement (as defined in Section 3.2(a)) ("HP COMMON STOCK")
upon surrender of the certificate representing such share of Compaq Common Stock
in the manner provided in Section 1.7 (or in the case of a lost, stolen or
destroyed certificate, upon delivery of an affidavit (and bond, if required) in
the manner provided in Section 1.9).
(b) REPURCHASE RIGHTS. If any shares of Compaq Common Stock
outstanding immediately prior to the Effective Time are unvested or are subject
to a repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other agreement with Compaq,
then the shares of HP Common Stock issued in exchange for such shares of Compaq
Common Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of HP Common Stock may accordingly be marked with appropriate legends.
Compaq shall take all action that may be necessary to ensure that, from and
after the Effective Time, the Surviving Corporation is entitled to exercise any
such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.
(c) CANCELLATION OF TREASURY AND HP OWNED STOCK. Each share of
Compaq Common Stock held by Compaq or HP or any direct or indirect wholly-owned
Subsidiary of Compaq or of HP immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, par
value $0.01, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding prior immediately to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable shares of common stock, par value
$0.01 per share, of the Surviving Corporation.
(e) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLANS. At the
Effective Time, all Compaq Options (as defined in Section 2.2(b)) outstanding
under each Compaq Stock Option Plan (as defined in Section 2.12(a) hereof) shall
be assumed by HP in accordance with Section 5.9. Rights outstanding under
Compaq's Employee Stock Purchase Plan and any other employee stock purchase plan
of Compaq (collectively, the "COMPAQ PURCHASE PLANS") shall be treated as set
forth in Section 5.9(c).
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(f) FRACTIONAL SHARES. No fraction of a share of HP Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Compaq Common Stock who would otherwise be entitled to a fraction of a
share of HP Common Stock (after aggregating all fractional shares of HP Common
Stock that otherwise would be received by such holder) shall, upon surrender of
such holder's Certificate(s) (as defined in Section 1.7(c)), receive from HP an
amount of cash (rounded to the nearest whole cent), without interest, equal to
the product of: (i) such fraction, multiplied by (ii) the average closing price
of one share of HP Common Stock for the ten (10) most recent trading days that
HP Common Stock has traded ending on the trading day one day prior to the
Effective Time, as reported on the New York Stock Exchange, Inc. ("NYSE")
Composite Transactions Tape.
(g) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be
adjusted to reflect fully the appropriate effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into HP Common Stock or Compaq Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to HP Common Stock or Compaq Common Stock having a record date on or
after the date hereof and prior to the Effective Time.
1.7 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. HP shall select Computershare Investor
Services LLC or another institution reasonably satisfactory to Compaq to act as
the exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) HP TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, HP shall enter into an agreement with the Exchange Agent, reasonably
satisfactory to Compaq, which shall provide that HP shall make available to the
Exchange Agent for exchange in accordance with this Article I, the shares of HP
Common Stock issuable pursuant to Section 1.6(a) in exchange for outstanding
shares of Compaq Common Stock. In addition, HP shall make available as necessary
from time to time after the Effective Time as needed, cash in an amount
sufficient for payment in lieu of fractional shares pursuant to Section 1.6(f)
and any dividends or distributions which holders of shares of Compaq Common
Stock may be entitled pursuant to Section 1.7(d). Any cash
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and HP Common Stock deposited with the Exchange Agent shall hereinafter be
referred to as the "EXCHANGE FUND."
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, HP
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time represented outstanding shares of Compaq
Common Stock whose shares were converted into the right to receive shares of HP
Common Stock pursuant to Section 1.6(a), cash in lieu of any fractional shares
pursuant to Section 1.6(f) and any dividends or other distributions pursuant to
Section 1.7(d): (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as HP may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing whole shares of HP Common Stock, cash in lieu of
any fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by HP, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificates shall be entitled to receive in exchange therefor the number
of whole shares of HP Common Stock (after taking into account all Certificates
surrendered by such holder) to which such holder is entitled pursuant to Section
1.6(a) (which shall be in uncertificated book entry form unless a physical
certificate is requested or is otherwise required by applicable law or
regulation), payment in lieu of fractional shares which such holder has the
right to receive pursuant to Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will be
deemed from and after the Effective Time, for all corporate purposes, to
evidence the ownership of the number of full shares of HP Common Stock into
which such shares of Compaq Common Stock shall have been so converted and the
right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.7(d).
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(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the date hereof with
respect to HP Common Stock with a record date after the Effective Time and no
payment in lieu of fractional shares pursuant to Section 1.6(f) will be paid to
the holders of any unsurrendered Certificates with respect to the shares of HP
Common Stock represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the record holders thereof, without interest (i) promptly after such
surrender, the number of whole shares of HP Common Stock issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(f) and the amount of any such dividends or other distributions with a record
date after the Effective Time and theretofore paid with respect to such whole
shares of HP Common Stock and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
and a payment date subsequent to such surrender payable with respect to such
whole shares of HP Common Stock.
(e) TRANSFERS OF OWNERSHIP. If shares of HP Common Stock are to
be issued in a name other than that in which the Certificates surrendered in
exchange therefor are registered, it will be a condition of the issuance thereof
that the Certificates so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the Persons (as defined in Section 8.3(d))
requesting such exchange will have paid to HP or any agent designated by it any
transfer or other Taxes (as defined in Section 2.6) required by reason of the
issuance of shares of HP Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of HP or any agent designated by it that such Tax has been paid or
is not payable.
(f) REQUIRED WITHHOLDING. Each of the Exchange Agent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Compaq Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign Tax law or under any other applicable Legal Requirement
(as defined in Section 2.2(d)). To the extent such amounts are so deducted or
withheld, the amount of such consideration shall be treated for all
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purposes under this Agreement as having been paid to the Person to whom such
consideration would otherwise have been paid.
(g) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 1.7, neither the Exchange Agent, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of HP Common Stock or Compaq
Common Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest
any cash included in the Exchange Fund as directed by HP on a daily basis;
PROVIDED that no such investment or loss thereon shall affect the amounts
payable to Compaq stockholders pursuant to this Article I. Any interest and
other income resulting from such investment shall become a part of the Exchange
Fund, and any amounts in excess of the amounts payable to Compaq stockholders
pursuant to this Article I shall promptly be paid to HP.
(i) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates six (6) months
after the Effective Time shall, at the request of the Surviving Corporation, be
delivered to the Surviving Corporation or otherwise on the instruction of the
Surviving Corporation, and any holders of the Certificates who have not
surrendered such Certificates in compliance with this Section 1.7 shall after
such delivery to Surviving Corporation look only to the Surviving Corporation
for the shares of HP Common Stock pursuant to Section 1.6(a), cash in lieu of
any fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d) with respect to the shares of Compaq
Common Stock formerly represented thereby. Any such portion of the Exchange Fund
remaining unclaimed by holders of shares of Compaq Common Stock immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity (as defined in Section 2.3(c)) shall, to the extent
permitted by law, become the property of HP free and clear of any claims or
interest of any Person previously entitled thereto.
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPAQ COMMON STOCK. All shares of HP
Common Stock issued upon the surrender for exchange of shares of Compaq Common
Stock in accordance with the terms hereof (including any cash paid in respect
thereof pursuant to Section 1.6(f) and 1.7(d)) shall be deemed to
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have been issued in full satisfaction of all rights pertaining to such shares of
Compaq Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Compaq Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of HP Common Stock,
cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
PROVIDED, HOWEVER, that HP may, in its discretion and as a condition precedent
to the issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against HP, Compaq or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.10 TAX CONSEQUENCES. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Code. The parties hereto adopt this Agreement as a plan of reorganization
within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).
1.11 FURTHER ACTION. At and after the Effective Time, the officers and
directors of HP and the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of Compaq and Merger Sub, any deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
Compaq and Merger Sub, any other actions and things to vest, perfect or confirm
of record or otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPAQ
Compaq represents and warrants to HP and Merger Sub, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by Compaq to HP dated as of the date hereof and certified by a duly authorized
officer of Compaq (the "COMPAQ DISCLOSURE LETTER"), as follows:
2.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES.
(a) ORGANIZATION; STANDING AND POWER. Compaq and each of its
Subsidiaries (as defined below) is a corporation or other organization duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing would not reasonably be expected to have a Material Adverse
Effect (as defined in Section 8.3(c)) on Compaq, and is duly qualified and in
good standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary other than in such jurisdictions where the failure to so qualify or to
be good standing, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Compaq. For purposes of this
Agreement, "SUBSIDIARY," when used with respect to any party, shall mean any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(b) CHARTER DOCUMENTS. Compaq has delivered or made available to
HP: (i) a true and correct copy of the Certificate of Incorporation (including
any Certificate of Designations) and Bylaws of Compaq, each as amended to date
(collectively, the "COMPAQ CHARTER DOCUMENTS") and (ii) the certificate of
incorporation and bylaws, or like organizational documents (collectively,
"SUBSIDIARY CHARTER DOCUMENTS"), of each of its Significant
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Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "SEC")), and each such instrument is in full force and
effect. Compaq is not in violation of any of the provisions of the Compaq
Charter Documents and each Subsidiary is not in violation of its respective
Subsidiary Charter Documents, except in the case of a Subsidiary, as would not
reasonably be expected to have a Material Adverse Effect on Compaq.
(c) SUBSIDIARIES. Exhibit 21 to Compaq's Annual Report on Form
10-K for the fiscal year ended December 31, 2000 includes all the Subsidiaries
of Compaq which are Significant Subsidiaries. All the outstanding shares of
capital stock of, or other equity interests in, each such Significant Subsidiary
have been validly issued and are fully paid and nonassessable and are, except as
set forth in such Exhibit 21, owned directly or indirectly by Compaq, free and
clear of all pledges, claims, liens, charges, encumbrances, options and security
interests of any kind or nature whatsoever (collectively, "LIENS"), including
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests, except for restrictions imposed by
applicable securities laws.
2.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK. The authorized capital stock of Compaq
consists of: (i) 3,000,000,000 shares of Compaq Common Stock, par value $0.01
per share and (ii) 10,000,000 shares of preferred stock, par value $0.01 per
share (the "COMPAQ PREFERRED STOCK"), 3,000,000 of which shares have been
designated as Series A Junior Participating Preferred Stock, all of which will
be reserved for issuance upon exercise of preferred stock purchase rights (the
"COMPAQ RIGHTS") issuable pursuant to the rights agreement approved by the Board
of Directors of Compaq in connection with its approval of this Agreement
substantially in the form previously provided to HP (the "COMPAQ RIGHTS
AGREEMENT"). At the close of business on June 30, 2001: (i) 1,753,000,000 shares
of Compaq Common Stock were issued and outstanding, (ii) 59,000,000 shares of
Compaq Common Stock were issued and held by Compaq in its treasury, and (iii) no
shares of Compaq Preferred Stock were issued and outstanding. All of the
outstanding shares of capital stock of Compaq are, and all shares of capital
stock of Compaq which may be issued as contemplated or permitted by this
Agreement will be, when issued, duly authorized and validly issued, fully paid
and nonassessable and not subject to any preemptive rights.
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Upon consummation of the Merger, (A) the shares of HP Common Stock issued in
exchange for any shares of Compaq Common Stock that are subject to a Contract
(as defined below) pursuant to which Compaq has the right to repurchase, redeem
or otherwise reacquire any shares of Compaq Common Stock will, without any
further act of HP, Merger Sub, Compaq or any other Person, become subject to the
restrictions, conditions and other provisions contained in such Contract and (B)
HP will automatically succeed to and become entitled to exercise Compaq's rights
and remedies under any such Contract. For purposes of this Agreement, "CONTRACT"
shall mean any written, oral or other agreement, contract, subcontract,
settlement agreement, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature, as in effect as of the
date hereof or as may hereinafter be in effect.
(b) STOCK OPTIONS. As of the close of business on August 14,
2001: (i) 279,538,000 shares of Compaq Common Stock are subject to issuance
pursuant to outstanding options to purchase Compaq Common Stock under the Compaq
Stock Option Plans that are Compaq Broad Plans (equity or other equity-based
awards, whether payable in cash, shares or otherwise granted under or pursuant
to the Compaq Stock Option Plans (whether Compaq Broad Plans (as defined in
Section 2.12(a)) or otherwise) are referred to in this Agreement as "COMPAQ
OPTIONS"), (ii) as of the date hereof, 17,400,000 shares of Compaq Common Stock
are reserved for future issuance under the Compaq Purchase Plans, and (iii)
600,000 shares of Compaq Common Stock are subject to issuance pursuant to
outstanding options to purchase Compaq Common Stock (A) which are issued other
than pursuant Compaq Broad Plans and (B) other than shares reserved for issuance
under the Compaq Purchase Plans. Section 2.2(b) of the Compaq Disclosure Letter
sets forth a list of each outstanding Compaq Stock Option (excluding Compaq
Rights) issued other than pursuant to (1) Compaq Broad Plans and (2) the Compaq
Purchase Plans, and (a) the name and location of the holder of the such Compaq
Option, (b) the number of shares of Compaq Common Stock subject to such Compaq
Option, (c) the exercise price of such Compaq Option, (4) the date on which such
Compaq Option was granted, (d) the applicable vesting schedule, and the extent
to which such Compaq Option is vested and exercisable as of June 30, 2001, and
(e) the date on which such Compaq Option expires. All shares of Compaq Common
Stock subject to issuance under the Compaq Stock Option Plans and the Compaq
Purchase Plan, upon issuance on the terms and conditions specified in the
instruments pursuant to
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which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. There are no commitments or agreements of any character to
which Compaq is bound obligating Compaq to accelerate the vesting of any Compaq
Option as a result of the Merger (whether alone or upon the occurrence of any
additional or subsequent events). Except as set forth on Section 2.2(b) of the
Compaq Disclosure Letter, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation or other similar rights with
respect to Compaq.
(c) VOTING DEBT. No bonds, debentures, notes or other
indebtedness having the right to vote on any maters on which stockholders may
vote ("VOTING DEBT") of Compaq is issued or outstanding as of the date hereof.
(d) OTHER SECURITIES. Except as otherwise set forth in this
Section 2.2, as of June 30, 2001, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Compaq or any of its Subsidiaries is a party or by which any of them is
bound obligating Compaq or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock,
Voting Debt or other voting securities of Compaq or any of its Subsidiaries, or
obligating Compaq or any of its Subsidiaries to issue, grant, extend or enter
into any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. All outstanding shares of Compaq Common Stock, all
outstanding Compaq Options, and all outstanding shares of capital stock of each
Subsidiary of Compaq have been issued and granted in compliance in all material
respects with (i) all applicable securities laws and all other applicable Legal
Requirements (as defined below) and (ii) all requirements set forth in
applicable material Contracts. For purposes of this Agreement, "LEGAL
REQUIREMENTS" shall mean any federal, state, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, order, edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Entity.
(e) NO CHANGES. Since June 30, 2001 and through the date hereof,
other than (i) pursuant to the exercise of Compaq Options outstanding as of June
30, 2001 issued pursuant to the Compaq Stock Option Plans, (ii) under the Compaq
Purchase Plan, (iii) pursuant to repurchases from Employees (as defined in
Section 2.12(a)) following their termination pursuant to the terms of their
pre-
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existing stock option or purchase agreements or (iv) pursuant to end of month
stock option grants in July 2001 and August 2001 in the ordinary course of
business consistent with past practice under Stock Options Plans of Compaq that
are Compaq Broad Plans, there has been no change in (A) the outstanding capital
stock of Compaq, (B) the number of Compaq Options outstanding, or (C) the number
of other options, warrants or other rights to purchase Compaq capital stock.
2.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. Compaq has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly authorized by
all necessary corporate action on the part of Compaq and no other corporate
proceedings on the part of Compaq are necessary to authorize the execution and
delivery of this Agreement or to consummate the Merger and the other
transactions contemplated hereby, subject only to the approval and adoption of
this Agreement and the approval of the Merger by Compaq's stockholders and the
filing of the Certificate of Merger pursuant to Delaware Law. The affirmative
vote of the holders of a majority of the outstanding shares of Compaq Common
Stock to approve and adopt this Agreement and approve the Merger is the only
vote of the holders of any class or series of Compaq capital stock necessary to
approve and adopt this Agreement, approve the Merger and consummate the Merger
and the other transactions contemplated hereby. This Agreement has been duly
executed and delivered by Compaq and, assuming due execution and delivery by HP
and Merger Sub, constitutes the valid and binding obligation of Compaq,
enforceable against Compaq in accordance with its terms.
(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Compaq does not, and performance of this Agreement by Compaq will
not: (i) conflict with or violate the Compaq Charter Documents or any Subsidiary
Charter Documents of any Subsidiary of Compaq, (ii) subject to obtaining the
approval and adoption of this Agreement and the approval of the Merger by
Compaq's stockholders as contemplated in Section 5.2 and compliance with the
requirements set forth in Section 2.3(c), conflict with or violate any material
Legal Requirement applicable to Compaq or any of its Subsidiaries or by which
Compaq or any of its Subsidiaries or any of their respective properties is
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bound or affected, or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or impair Compaq's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material Lien on any of the material properties or assets of
Compaq or any of its Subsidiaries pursuant to, any Compaq Material Contract (as
defined in Section 2.14). Section 2.3(b) of the Compaq Disclosure Letter lists
all consents, waivers and approvals under any of Compaq's or any of its
Subsidiaries' Contracts required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a Material Adverse Effect on
Compaq or the Surviving Corporation.
(c) NECESSARY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with any supranational,
national, state, municipal, local or foreign government, any instrumentality,
subdivision, court, administrative agency or commission or other governmental
authority or instrumentality, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority (a "GOVERNMENTAL ENTITY") is required to be
obtained or made by Compaq in connection with the execution and delivery of this
Agreement or the consummation of the Merger and other transactions contemplated
hereby, except for: (i) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which Compaq and/or HP are qualified to
do business, (ii) the filing of the Prospectus/Proxy Statement (as defined in
Section 2.15) with the SEC in accordance with the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and the effectiveness of the Registration
Statement (as defined in Section 2.15), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT")
and Council Regulation No. 4064/89 of the European Community, as amended (the
"EC MERGER REGULATION"), (iv) the consents listed on Section 2.3(c) of the
Compaq Disclosure Letter; (v) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities or "blue sky" laws and the securities laws of any foreign
country, and (vi) such other
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consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Compaq or HP or materially adversely
affect the ability of the parties hereto to consummate the Merger within the
time frame in which the Merger would otherwise be consummated in the absence of
the need for such consent, approval, order, authorization, registration,
declaration or filings. The consents, approvals, orders, authorizations,
registrations, declarations and filings set forth in (i) through (v) are
referred to herein as the "NECESSARY CONSENTS."
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) SEC FILINGS. Compaq has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the SEC since January 1, 1998. Compaq
has made available to HP all such registration statements, prospectuses,
reports, schedules, forms, statements and other documents in the form filed with
the SEC. All such required registration statements, prospectuses, reports,
schedules, forms, statements and other documents (including those that Compaq
may file subsequent to the date hereof), as amended, are referred to herein as
the "COMPAQ SEC REPORTS." As of their respective dates, the Compaq SEC Reports
(i) were prepared in accordance and complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Compaq SEC Reports and (ii) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except to the extent corrected prior to the date
hereof by a subsequently filed Compaq SEC Report. None of Compaq's Subsidiaries
is required to file any forms, reports or other documents with the SEC.
(b) FINANCIAL STATEMENTS. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Compaq SEC Reports (the "COMPAQ FINANCIALS"), including each Compaq SEC Report
filed after the date hereof until the Closing: (i) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) was prepared in accordance with United States generally
accepted
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accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q, 8-K or any successor form under the Exchange Act), and (iii)
fairly presented in all material respects the consolidated financial position of
Compaq and its consolidated Subsidiaries as at the respective dates thereof and
the consolidated results of Compaq's operations and cash flows for the periods
indicated. The balance sheet of Compaq contained in the Compaq SEC Reports as of
December 31, 2000 is hereinafter referred to as the "COMPAQ BALANCE SHEET."
Except as disclosed in the Compaq Financials, since the date of the Compaq
Balance Sheet and through the date hereof, neither Compaq nor any of its
Subsidiaries has any liabilities required under GAAP to be set forth on a
consolidated balance sheet (absolute, accrued, contingent or otherwise) which,
individually or in the aggregate, would be reasonably expected to have a
Material Adverse Effect on Compaq, except for liabilities incurred since the
date of the Compaq Balance Sheet in the ordinary course of business consistent
with past practices and liabilities incurred pursuant to this Agreement.
2.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Compaq
Balance Sheet and through the date hereof there has not been: (i) any Material
Adverse Effect on Compaq, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Compaq's or any of its Subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Compaq or any of its Subsidiaries
of any of Compaq's capital stock or any other securities of Compaq or its
Subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for (A) repurchases from Employees following
their termination pursuant to the terms of their pre-existing stock option or
purchase agreements, or (B) the Compaq Rights Dividend, or (iii) any split,
combination or reclassification of any of Compaq's or any of its Subsidiaries'
capital stock.
2.6 TAXES. For the purposes of this Agreement, the term "TAX" or,
collectively, "TAXES," shall mean any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such
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amounts, and any obligations with respect to such amounts arising as a result of
being a member of an affiliated, consolidated, combined or unitary group for any
period or under any agreements or arrangements with any other Person and
including any liability for taxes of a predecessor entity. Compaq and each of
its Subsidiaries have filed all material federal, state, local and foreign
returns, estimates, information statements and reports relating to Taxes ("TAX
RETURNS") required to be filed by any of them and have paid, or have adequately
reserved (in accordance with GAAP) for the payment of, all Taxes required to be
paid (whether or not shown on any Tax Returns), and the most recent financial
statements contained in the Compaq SEC Reports reflect an adequate reserve (in
accordance with GAAP) for all Taxes payable by Compaq and its Subsidiaries
through the date of such financial statements. No material deficiencies for any
Taxes have been asserted or assessed, or, to the Knowledge (as defined in
Section 8.3(b)) of Compaq, proposed, against Compaq or any of its Subsidiaries
that are not subject to adequate reserves (in accordance with GAAP). No audit or
other examination of any Tax Return of Compaq or any of its Subsidiaries is
presently in progress, nor has Compaq or any of its Subsidiaries been notified
of any request for such an audit or other examination. Neither Compaq nor any of
its Subsidiaries has taken any action or knows of any fact, agreement or plan or
other circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
2.7 INTELLECTUAL PROPERTY.
(a) NO INFRINGEMENT. To the Knowledge as of the date hereof of
Compaq, the products, services and operations of Compaq do not infringe or
misappropriate the Intellectual Property (as defined below) of any third party
where such infringement or misappropriation, individually or in the aggregate,
would be reasonably expected to have a material adverse effect on any material
division or business unit or other material operating group of product or
service offerings of Compaq or otherwise have a Material Adverse Effect on
Compaq. "INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing, (iii) all
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copyrights, copyrights registrations and applications therefor, and all other
rights corresponding thereto throughout the world, (iv) all industrial designs
and any registrations and applications therefor throughout the world, (v) all
mask works and any registrations and applications therefor throughout the world,
(vi) all trade names, logos, URLs, common law trademarks and service marks,
trademark and service mark registrations and applications therefor throughout
the world, (vii) all databases and data collections and all rights therein
throughout the world, (viii) all moral and economic rights of authors and
inventors, however denominated, throughout the world, and (ix) any similar or
equivalent rights to any of the foregoing anywhere in the world.
(b) NO IMPAIRMENT. The Merger (including the assignment by
operation of law of any Contract to the Surviving Corporation) will not result
in: (i) HP or any Subsidiary of HP (other than Compaq and its Subsidiaries, but
only to the extent existing prior to the Merger) being bound by any material
non-compete or other material restriction on the operation of any business of HP
or its Subsidiaries, (ii) HP or any Subsidiary of HP (other than Compaq and its
Subsidiaries, but only to the extent existing prior to the Merger) granting any
rights or licenses to any material Intellectual Property of HP or any Subsidiary
of HP to any third party (including a covenant not to sue with respect to any
material Intellectual Property of HP or any Subsidiary of HP), or (iii) the
termination or breach of any Contract to which Compaq is a party, which
termination or breach would reasonably be expected to have a material adverse
effect on any material division or business unit or other material operating
group of product or service offerings of the Surviving Corporation or HP or
otherwise have a Material Adverse Effect on either of them.
2.8 COMPLIANCE; PERMITS.
(a) COMPLIANCE. Neither Compaq nor any of its Subsidiaries is,
in any material respect, in conflict with, or in default or in violation of any
Legal Requirement applicable to Compaq or any of its Subsidiaries or by which
Compaq or any of its Subsidiaries or any of their respective businesses or
properties is, or Compaq believes is reasonably likely to be, bound or affected,
except, in each case, or in the aggregate, for conflicts, violations and
defaults that would not have a Material Adverse Effect on Compaq. As of the date
hereof, no material investigation or review by any Governmental Entity is
pending or, to the Knowledge of Compaq, has been threatened in a writing
delivered to Compaq or
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any of its Subsidiaries, against Compaq or any of its Subsidiaries. There is no
material judgment, injunction, order or decree binding upon Compaq or any of its
Subsidiaries which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any material business practice of Compaq or
any of its Subsidiaries, any acquisition of material property by Compaq or any
of its Subsidiaries or the conduct of business by Compaq and its Subsidiaries as
currently conducted.
(b) PERMITS. Compaq and its Subsidiaries hold, to the extent
legally required, all permits, licenses, variances, exemptions, orders and
approvals from Governmental Entities ("PERMITS") that are required for the
operation of the business of Compaq, as currently conducted, the failure to hold
which would reasonably be expected to have a Material Adverse Effect on Compaq
(collectively, "COMPAQ PERMITS"). As of the date hereof, no suspension or
cancellation of any of the Compaq Permits is pending or, to the Knowledge of
Compaq, threatened. Compaq and its Subsidiaries are in compliance in all
material respects with the terms of the Compaq Permits.
2.9 LITIGATION. As of the date hereof, there are no claims, suits, actions
or proceedings pending or, to the Knowledge of Compaq, overtly threatened
against Compaq or any of its Subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated hereby or which would reasonably be expected, either singularly or
in the aggregate with all such claims, actions or proceedings, to be material to
the Compaq.
2.10 BROKERS' AND FINDERS' FEES. Except for fees payable to Salomon Smith
Barney pursuant to an engagement letter dated July 19, 2001, a copy of which has
been provided to HP, Compaq has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.11 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Compaq SEC
Reports, since the date of the Compaq's last proxy statement filed with the SEC,
no event has occurred as of the date hereof that would be required to be
reported by Compaq pursuant to Item 404 of Regulation S-K promulgated by the
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SEC (substituting, for the purposes of this representation and warranty, each
appearance of $60,000 in Item 404 with $500,000). Section 2.11 of the Compaq
Disclosure Letter identifies each Person who is an "affiliate" (as that term is
used in Rule 145 promulgated under the Securities Act) of Compaq as of the date
hereof.
2.12 EMPLOYEE BENEFIT PLANS.
(a) DOCUMENTS. Section 2.12(a) of the Compaq Disclosure Letter
sets forth a list of the following: (i) all severance and employment agreements
of Compaq with directors or executive officers, (ii) all material severance
programs and policies of each of Compaq or its Subsidiaries, (iii) all plans or
agreement of Compaq or its Subsidiaries relating to any of its current or former
employees, consultants or directors (each, an "EMPLOYEE") pursuant to which
benefits would vest or an amount would become payable or the terms of which
would otherwise be altered, in any case by virtue of the transactions
contemplated hereby (whether alone or upon the occurrence of any additional or
subsequent events), (iv) each document embodying each Retirement Plan (as
defined in Section 2.12(c)) of Compaq (a "COMPAQ RETIREMENT PLAN"), (v) each
Compaq Purchase Plan, and (vi) each stock option plan, stock award plan, stock
appreciation right plan, phantom stock plan, stock option, other equity or
equity-based compensation plan, equity or other equity based award to any Person
(whether payable in cash, shares or otherwise) (to the extent not issued
pursuant to any of the foregoing plans) or other plan or Contract of any nature
with any Person (whether or not an Employee) pursuant to which any stock,
option, warrant or other right to purchase or acquire capital stock of Compaq or
right to payment based on the value of Compaq capital stock has been granted or
otherwise issued, but, in any case excluding the Compaq Purchase Plans
(collectively, "COMPAQ STOCK OPTION PLANS"). Compaq has delivered or made
available to HP for review each of the items listed on Section 2.12(a) of the
Compaq Disclosure Letter and a current actuarial valuation and/or audited
statement of assets and liabilities for each Compaq Retirement Plan. Section
2.12(a) of the Compaq Disclosure Letter also identifies whether each Compaq
Stock Option Plan (A) is a "broadly-based" plan, as defined in Section 312.04(h)
of the NYSE Listed Company Manual or (B) has been approved by Compaq's
stockholders (plans which are either "broadly-based" plans or approved by
Compaq's stockholders (as identified on Section 2.12(a) of the Compaq Disclosure
Letter) are referred to herein as "COMPAQ BROAD PLANS").
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(b) BENEFIT PLAN COMPLIANCE.
(i) With respect to each material collective bargaining
agreement, bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
stock-related or performance award, retirement, vacation, severance, disability,
death benefit, hospitalization, medical, loan (other than travel allowances and
relocation packages), fringe benefit, disability, sabbatical and other plan,
arrangement or understanding providing benefits to any Employee, employment
agreement, consulting agreement or severance agreement with any current or
former officer or director of Compaq or its Subsidiaries, or any material
employment agreement, consulting agreement or severance agreement for any
Employee (collectively, "BENEFIT PLANS") of Compaq or any of its Subsidiaries
("COMPAQ BENEFIT PLANS"), no material event has occurred and there exists no
material condition or set of circumstances, in connection with which Compaq or
any of its Subsidiaries would be subject to any material liability under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Code
or any other applicable Legal Requirement.
(ii) Each Compaq Benefit Plan has been, in all material
respects, administered and operated in accordance with its terms, with the
applicable provisions of ERISA, the Code and all other applicable material Legal
Requirements and the terms of all applicable collective bargaining agreements.
Each Compaq Benefit Plan, including any material amendments thereto, that is
capable of approval by, and/or registration for and/or qualification for special
tax status with, the appropriate taxation, social security and/or supervisory
authorities in the relevant country, state, territory or the like (each, an
"APPROVAL") has received such Approval or there remains a period of time in
which to obtain such Approval retroactive to the date of any material amendment
that has not previously received such Approval.
(iii) To the Knowledge of Compaq, no material oral or
written representation or commitment with respect to any material aspect of any
Compaq Benefit Plan has been made to an Employee of Compaq or any of its
Subsidiaries by an authorized Compaq Employee that is not materially in
accordance with the written or otherwise preexisting terms and provisions of
such Compaq Benefit Plans. To the Knowledge of Compaq, neither Compaq nor any of
its Subsidiaries has entered into any agreement, arrangement or understanding,
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whether written or oral, with any trade union, works council or other Employee
representative body or any material number or category of its Employees which
would prevent, restrict or materially impede the implementation of any lay-off,
redundancy, severance or similar program within its or their respective
workforces (or any part of them).
(iv) There are no material unresolved claims or disputes
under the terms of, or in connection with, any Compaq Benefit Plan (other than
routine undisputed claims for benefits), and no action, legal or otherwise, has
been commenced with respect to any material claim.
(c) RETIREMENT PLAN FUNDING. The latest actuarial valuation of
each Funded Retirement Plan (as defined below) of Compaq or its Subsidiaries
discloses that, as of the effective date of the valuation, the aggregate value
of the assets of such Funded Retirement Plan is equal to or greater than the
aggregate value of its liabilities assessed on an ongoing and terminated basis
and calculated in accordance with the actuarial methods and assumptions used in
such valuation pursuant to such Funded Retirement Plan and applicable Legal
Requirements and GAAP. In respect of each Retirement Plan of Compaq or its
Subsidiaries that is not a Funded Retirement Plan, Compaq or its Subsidiaries
have made adequate provision for accrued liabilities in accordance with
applicable Legal Requirements. For purposes of this Agreement, "RETIREMENT PLAN"
shall mean a material arrangement for the provision of Retirement Benefit Rights
(as defined below) to Employees (and, if applicable, beneficiaries thereof). For
purposes of this Agreement, "RETIREMENT BENEFIT RIGHTS" shall mean, with respect
to an entity, any pension, lump sum, gratuity, or a like benefit provided or
generally intended to be provided on retirement or on death in respect of an
Employee's relationship as a service provider to an entity or its Subsidiaries.
Material post-retirement health benefits and any other self-insured health
benefit arrangements are deemed to be "Retirement Benefit Rights." Material
deferred compensation payments required to be made to an Employee in respect of
the termination of employment are also deemed to be "Retirement Benefit Rights."
"FUNDED RETIREMENT PLAN" means, with respect to party, a Retirement Plan under
which the assets to satisfy the benefit obligations are legally segregated from
the general assets of such party or its Subsidiaries and are not subject to the
creditors of such party or its Subsidiaries.
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(d) MULTIPLE EMPLOYER AND MULTIEMPLOYER PLANS. At no time has
Compaq or any other person or entity under common control within the meaning of
Section 414(b), (c), (m) or (o) of the Code (a "CONTROLLED GROUP AFFILIATE")
with Compaq participated in and/or been obligated to contribute to any Compaq
Benefit Plan in which any persons which are not or were not at the relevant
time, Controlled Group Affiliates of Compaq and/or their Employees, have
participated. No Compaq Benefit Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(e) CONTINUATION COVERAGE. No Compaq Benefit Plan provides
health benefits (whether or not insured), with respect to Employees after
retirement or other termination of service (other than coverage mandated by
applicable Legal Requirements or benefits, the full cost of which is borne by
the Employee) other than individual arrangements the amounts of which are not
material.
(f) EFFECT OF TRANSACTION. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Compaq Benefit Plan that will or may result in any material
payment (whether of severance pay or otherwise), acceleration of payment,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee. There is no contract,
agreement, plan or arrangement with an Employee to which Compaq or any of its
Subsidiaries is a party as of the date of this Agreement, that, individually or
collectively and as a result of the transaction contemplated hereby (whether
alone or upon the occurrence of any additional or subsequent events), would
reasonably be expected to give rise to the payment of any amount that would not
be deductible pursuant to Section 280G of the Code.
(g) LABOR. No collective bargaining agreement is being
negotiated or renegotiated in any material respect by Compaq or any of its
Subsidiaries. As of the date of this Agreement, there is no material labor
dispute, strike or work stoppage against Compaq or any of its Subsidiaries
pending or, to the Knowledge of Compaq, threatened which may materially
interfere with the respective business activities of Compaq or any of its
Subsidiaries. As of the date of this Agreement, to the Knowledge of Compaq, none
of Compaq, any of its Subsidiaries or any of their respective representatives or
Employees has
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committed any material unfair labor practice in connection with the operation of
the respective businesses of Compaq or any of its Subsidiaries, and there is no
material charge or complaint against Compaq or any of its Subsidiaries by the
National Labor Relations Board or any comparable governmental agency pending or
threatened in writing.
2.13 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in a Material
Adverse Effect on Compaq, no underground storage tanks and no amount of any
substance that has been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous or otherwise a
danger to health or the environment, including PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies,
(a "HAZARDOUS MATERIAL") are present, as a result of the actions of Compaq or
any of its Subsidiaries or any affiliate of Compaq, or, to the Knowledge of
Compaq, as a result of any actions of any third party or otherwise, in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that Compaq or any of its Subsidiaries has at any time
owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result
in a Material Adverse Effect on Compaq: (i) neither Compaq nor any of its
Subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its Employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date and (ii) neither Compaq nor any of
its Subsidiaries has disposed of, transported, sold, used, released, exposed its
Employees or others to or manufactured any product containing a Hazardous
Material (collectively, "HAZARDOUS MATERIALS ACTIVITIES") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
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2.14 CONTRACTS.
(a) MATERIAL CONTRACTS. For purposes of this Agreement, "COMPAQ
MATERIAL CONTRACT" shall mean:
(i) any "material contracts" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC) with respect to Compaq and its
Subsidiaries;
(ii) any Contract containing any covenant: (A) limiting
the right of Compaq or its Subsidiaries to engage in any material line of
business, make use of any material Intellectual Property or compete with any
Person in any material line of business, (B) granting any exclusive distribution
or supply rights, or (C) otherwise having an adverse effect on the right of
Compaq and its Subsidiaries to sell, distribute or manufacture any material
products or services or to purchase or otherwise obtain any material software,
components, parts or subassemblies;
(iii) any Contract, or group of Contracts with a Person
(or group of affiliated Persons), the termination or breach of which would be
reasonably expected to have a material adverse effect on any material division
or business unit or other material operating group of product or service
offerings of Compaq or otherwise have a Material Adverse Effect on Compaq; and
(iv) (A) all Contracts with the top two (2) providers
(as measured by fees paid under such Contracts) pursuant to which Compaq
licenses operating system software for use in its end-user products, (B) all
Contracts with the top two (2) providers (as measured by fees paid under such
Contracts) pursuant to which Compaq purchases microprocessors, (C) all Contracts
with the top five (5) distributors of Compaq's end-user products (as measured by
revenues received under such Contracts) pursuant to which Compaq distributes its
end-user products, and (D) all Contracts with the top five (5) third-party
manufacturers (as measured by fees paid under such Contracts) pursuant to which
such Compaq products (or subassemblies thereof) are manufactured.
(b) SCHEDULE. Section 2.14(b) of the Compaq Disclosure Letter
sets forth a list of all Compaq Material Contracts to which is a party or is
bound by as of the date hereof which are described in Sections 2.14(a)(i) and
2.14(a)(iv) hereof.
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(c) NO BREACH. All Compaq Material Contracts are valid and in
full force and effect except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, would not reasonably be expected to be
material to Compaq. Neither Compaq nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time or both would constitute a default under the provisions
of, any Compaq Material Contract, except in each case for those violations and
defaults which, individually or in the aggregate, would not reasonably be
expected to be material to Compaq.
2.15 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of Compaq for inclusion or incorporation by reference in the
registration statement on Form S-4 (or similar successor form) to be filed with
the SEC by HP in connection with the issuance of HP Common Stock in the Merger
(including amendments or supplements thereto) (the "REGISTRATION STATEMENT")
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by or
on behalf of Compaq for inclusion or incorporation by reference in the
Prospectus/Proxy Statement to be filed with the SEC as part of the Registration
Statement (the "PROSPECTUS/PROXY STATEMENT"), will, at the time the
Prospectus/Proxy Statement is mailed to the stockholders of Compaq or HP, at the
time of the HP Stockholders' Meeting or Compaq Stockholders' Meeting or as of
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. The Prospectus/Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations promulgated by the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by Compaq with respect to
statements made or incorporated by reference therein about HP supplied by HP for
inclusion or incorporation by reference in the Registration Statement or the
Prospectus/Proxy Statement.
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2.16 BOARD APPROVAL. The Board of Directors of Compaq has, by resolutions
duly adopted by unanimous vote at a meeting of all Directors duly called and
held and not subsequently rescinded or modified in any way (the "COMPAQ BOARD
APPROVAL") has duly (i) determined that the Merger is fair to, and in the best
interests of, Compaq and its stockholders and declared the Merger to be
advisable, (ii) approved this Agreement, and (iii) recommended that the
stockholders of Compaq approve and adopt this Agreement and approve the Merger
and directed that such matter be submitted to Compaq's stockholders at the
Compaq Stockholders' Meeting.
2.17 FAIRNESS OPINION. Compaq's Board of Directors has received a written
opinion from Salomon Smith Barney, dated as of September 3, 2001, to the effect
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to Compaq stockholders and has delivered to HP a copy of such opinion.
2.18 RIGHTS PLAN. The Board of Directors of Compaq has approved the Compaq
Rights Agreement and has declared a dividend of one Compaq Right per share of
Compaq Common Stock to each holder of Compaq Common Stock (the "COMPAQ RIGHTS
DIVIDEND"). Compaq has (a) delivered to HP an accurate copy of the Compaq Rights
Agreement approved by the Board of Directors of Compaq and proposed to be
entered into with the Rights Agents named thereunder, (b) declared the Compaq
Rights Dividend, and (c) fixed the record date for the Compaq Rights Dividend as
September 17, 2001 and the payment date for the Compaq Rights Dividend no later
than September 27, 2001. Compaq has taken all action so that (i) HP shall not be
an "Acquiring Person" thereunder and (ii) the entering into of this Agreement
and the Merger and the other transactions contemplated hereby will not result in
the grant of any rights to any Person under the Compaq Rights Agreement or
enable or require the Compaq Rights to be exercised, distributed or triggered.
2.19 TAKEOVER STATUTES. The Board of Directors of Compaq has taken all
actions so that the restrictions contained in Section 203 of the Delaware
General Corporation Law applicable to a "business combination" (as defined in
such Section 203), and any other similar Legal Requirement, will not apply to HP
during the pendency of this Agreement, including the execution, delivery or
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HP
AND MERGER SUB
HP and Merger Sub represent and warrant to Compaq, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by HP and Merger Sub to Compaq dated as of the date hereof and certified by a
duly authorized officer of each of HP and Merger Sub (the "HP DISCLOSURE
LETTER"), as follows:
3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS; SUBSIDIARIES.
(a) ORGANIZATION; STANDING AND POWER. HP and each of its
Subsidiaries is a corporation or other organization duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has the requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing would not reasonably be expected to have a Material Adverse Effect on
HP, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failure to so qualify or to be good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on HP.
(b) CHARTER DOCUMENTS. HP has delivered or made available to
Compaq (i) a true and correct copy of the Certificate of Incorporation
(including any Certificate of Designations) and Bylaws of HP, each as amended to
date (collectively, the "HP CHARTER DOCUMENTS") and (ii) the Subsidiary Charter
Documents of each of its Significant Subsidiaries, and each such instrument is
in full force and effect. HP is not in violation of any of the provisions of the
HP Charter Documents and each Subsidiary is not in violation of its respective
Subsidiary Charter Documents, except in the case of a Subsidiary, as would not
reasonably be expected to have a Material Adverse Effect on HP.
(c) SUBSIDIARIES. Exhibit 21 to HP's Annual Report on Form 10-K
for the fiscal year ended October 31, 2000 includes all the Subsidiaries of HP
which are Significant Subsidiaries. All the outstanding shares of capital stock
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of, or other equity interests in, each such Significant Subsidiary have been
validly issued and are fully paid and nonassessable and are, except as set forth
in such Exhibit 21, owned directly or indirectly by HP, free and clear of all
Liens, including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests, except for restrictions
imposed by applicable securities laws, except in the case of a Subsidiary, as
would not reasonably be expected to have a Material Adverse Effect on HP or a
material adverse effect on such Subsidiary.
3.2 CAPITAL STRUCTURE.
(a) CAPITAL STOCK. The authorized capital stock of HP consists
of: (i) 4,800,000,000 shares of HP Common Stock, par value $0.01 per share and
(ii) 300,000,000 shares of preferred stock, par value $0.01 per share the "HP
PREFERRED STOCK"), of which 4,500,000 shares have been designated as Series A
Participating Preferred Stock, all of which will be reserved for issuance upon
exercise of preferred stock purchase rights (the "HP RIGHTS") issuable pursuant
to the rights agreement approved by the Board of Directors of HP in connection
with its approval of this Agreement substantially in the form previously
provided to Compaq (the "HP RIGHTS AGREEMENT"). At the close of business of July
31, 2001: (i) 1,939,159,231 shares of HP Common Stock were issued and
outstanding, (ii) no shares of HP Common Stock were issued and held by HP in its
treasury, and (iii) no shares of HP Preferred Stock were issued and outstanding.
All of the outstanding shares of capital stock of HP are, and all shares of
capital stock of HP which may be issued as contemplated or permitted by this
Agreement will be, when issued, duly authorized and validly issued, fully paid
and nonassessable and not subject to any preemptive rights.
(b) STOCK OPTIONS. As of the close of business on July 31, 2001:
(i) 212,000,000 shares of HP Common Stock are subject to issuance pursuant to
outstanding options to purchase HP Common Stock under the stock option, stock
award, stock appreciation or phantom stock plans of HP (the "HP STOCK OPTION
PLANS") (stock options, stock awards, stock appreciation rights, phantom stock
awards, stock-related awards and performance awards granted by HP pursuant to
the HP Stock Option Plans are referred to in this Agreement as "HP OPTIONS"),
(ii) ) 98,700,000 shares of HP Common Stock are reserved for future issuance
under the employee stock purchase plans of HP, and (iii) 80,000 shares of HP
Common Stock are subject to issuance pursuant to outstanding
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options, rights or warrants to purchase HP Common Stock issued other than
pursuant to the HP Stock Option Plans and the HP employee stock purchase plans.
All shares of HP Common Stock subject to issuance as aforesaid, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or other similar rights with respect to HP.
(c) VOTING DEBT. No Voting Debt of HP is issued or outstanding
as of the date hereof.
(d) OTHER SECURITIES. Except as otherwise set forth in this
Section 3.2, as of July 31, 2001, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which HP or any of its Subsidiaries is a party or by which any of them is
bound obligating HP or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock,
Voting Debt or other voting securities of HP or any of its Subsidiaries, or
obligating HP or any of its Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. All outstanding shares of HP Common Stock, all
outstanding HP Options, and all outstanding shares of capital stock of each
Subsidiary of HP have been issued and granted in compliance in all material
respects with (i) all applicable securities laws and all other applicable Legal
Requirements and (ii) all requirements set forth in applicable material
Contracts.
(e) NO CHANGES. Since July 31, 2001 and through the date hereof,
other than (i) pursuant to the exercise of HP Options outstanding as of July 31,
2001 issued pursuant to the HP Option Plans, (ii) under the HP employee stock
purchase plans, (iii) repurchases of securities pursuant to HP's publicly
announced repurchase programs existing as of July 31, 2001, or (iv) repurchases
from Employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, there has been no change in
(A) the outstanding capital stock of HP, (B) the number of HP Options
outstanding, or (C) the number of other options, warrants or other rights to
purchase HP capital stock, which, individually or in the aggregate, would
constitute a material change in the capitalization of HP.
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(f) MERGER SUB CAPITAL STOCK. The authorized capital stock of
Merger Sub consists of 1,000 shares of common stock, par value $0.01 per share,
of which 1,000 shares issued and outstanding. HP is the sole stockholder of
Merger Sub and is the legal and beneficial owner of all 1,000 issued and
outstanding shares. Merger Sub was formed by counsel to HP at the direction of
HP on August 30, 2001, solely for purposes of effecting the Merger and the other
transactions contemplated hereby. Except as contemplated by this Agreement,
Merger Sub does not hold, nor has it held, any material assets or incurred any
material liabilities nor has Merger Sub carried on any business activities other
than in connection with the Merger and the transactions contemplated by this
Agreement. All of the outstanding shares of capital stock of Merger Sub have
been duly authorized and validly issued, and are fully paid and nonassessable
and not subject to any preemptive rights.
3.3 AUTHORITY; NON-CONTRAVENTION; NECESSARY CONSENTS.
(a) AUTHORITY. Each of HP and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby has been duly
authorized by all necessary corporate action on the part of HP and Merger Sub
and no other corporate proceedings on the part of HP or Merger Sub are necessary
to authorize the execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby, subject only to the
approval of the Stock Issuance by HP's stockholders, the approval and adoption
of this Agreement and the approval of the Merger by HP as Merger Sub's sole
stockholder and the and the filing of the Certificate of Merger pursuant to
Delaware Law. The affirmative vote of the holders of a majority of the
outstanding shares of HP Common Stock present in person or by proxy in favor of
the Stock Issuance at a meeting duly called and held for approval of the Stock
Issuance is the only vote of the holders of any class or series of HP capital
stock necessary to approve the Stock Issuance, and no other vote of the holders
of any class or series of HP Capital Stock is necessary to approve and adopt
this Agreement, approve the Merger and consummate the Merger and the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by HP and Merger Sub and, assuming due execution and delivery by
Compaq, constitutes the valid and binding obligation of HP, enforceable against
HP and Merger Sub in accordance with its terms.
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(b) NON-CONTRAVENTION. The execution and delivery of this
Agreement by HP and Merger Sub does not, and performance of this Agreement by HP
will not: (i) conflict with or violate the HP Charter Documents, the certificate
of incorporation or bylaws of Merger Sub or any other Subsidiary Charter
Documents of any Subsidiary of HP, (ii) subject to obtaining the approval and
adoption of this Agreement and the approval of the Stock Issuance by HP's
stockholders as contemplated in Section 5.2 and compliance with the requirements
set forth in Section 3.3(c), conflict with or violate any material Legal
Requirement applicable to HP, Merger Sub or any of HP's other Subsidiaries or by
which HP, Merger Sub or any of HP's other Subsidiaries or any of their
respective properties is bound or affected, or (iii) result in any material
breach of or constitute a material default (or an event that with notice or
lapse of time or both would become a material default) under, or impair HP's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a material Lien on any of the material properties or
assets of HP or any of its Subsidiaries pursuant to, any HP Material Contract
(as defined in Section 3.13). Section 3.3(b) of the HP Disclosure Letter lists
all consents, waivers and approvals under any of HP's or any of its
Subsidiaries' Contracts required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a Material Adverse Effect on HP
or the Surviving Corporation.
(c) NECESSARY CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with any Governmental
Entity is required to be obtained or made by HP in connection with the execution
and delivery of this Agreement or the consummation of the Merger and other
transactions contemplated hereby, except for (i) the Necessary Consents and (ii)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not be material to HP, Merger Sub or Compaq or
materially adversely affect the ability of the parties hereto to consummate the
Merger within the time frame in which the Merger would otherwise be consummated
in the absence of the need for such consent, approval, order, authorization,
registration, declaration or filings.
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3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) SEC FILINGS. HP has filed all required registration
statements, prospectuses, reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated by
reference) required to be filed by it with the SEC since January 1, 1998. HP has
made available to Compaq all such registration statements, prospectuses,
reports, schedules, forms, statements and other documents in the form filed with
the SEC. All such required registration statements, prospectuses, reports,
schedules, forms, statements and other documents (including those that HP may
file subsequent to the date hereof), as amended, are referred to herein as the
"HP SEC REPORTS." As of their respective dates, the HP SEC Reports (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such HP SEC
Reports and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except to
the extent corrected prior to the date hereof by a subsequently filed HP SEC
Report. None of HP's Subsidiaries is required to file any forms, reports or
other documents with the SEC.
(b) FINANCIAL STATEMENTS. Each of the consolidated financial
statements (including, in each case, any related notes thereto) contained in the
HP SEC Reports (the "HP FINANCIALS"), including each HP SEC Report filed after
the date hereof until the Closing: (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, (ii) was prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 10-Q, 8-K or any successor form under the Exchange Act), and
(iii) fairly presented in all material respects the consolidated financial
position of HP and its consolidated Subsidiaries as at the respective dates
thereof and the consolidated results of HP's operations and cash flows for the
periods indicated. The balance sheet of HP contained in the HP SEC Reports as of
October 31, 2000 is hereinafter referred to as the "HP BALANCE SHEET." Except as
disclosed in the HP Financials, since the date of the HP Balance Sheet and
through the date hereof, neither HP nor any of its Subsidiaries has any
liabilities required under GAAP to be set forth on a consolidated balance sheet
(absolute, accrued, contingent or otherwise) which, individually or in the
aggregate, would be reasonably expected
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to have a Material Adverse Effect on HP, except for liabilities incurred since
the date of the HP Balance Sheet in the ordinary course of business consistent
with past practices and liabilities incurred pursuant to this Agreement.
3.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the HP Balance
Sheet and through the date hereof there has not been: (i) any Material Adverse
Effect on HP, (ii) any declaration, setting aside or payment of any dividend on,
or other distribution (whether in cash, stock or property) in respect of, any of
HP's or any of its Subsidiaries' capital stock, or any purchase, redemption or
other acquisition by HP or any of its Subsidiaries of any of HP's capital stock
or any other securities of HP or its Subsidiaries or any options, warrants,
calls or rights to acquire any such shares or other securities except for (A)
repurchases from Employees following their termination pursuant to the terms of
their pre-existing stock option or purchase agreements or (B) repurchases
pursuant to HP's public stock repurchase programs existing as of July 31, 2001,
or (C) the HP Rights Dividend, or (iii) any split, combination or
reclassification of any of HP's or any of its Subsidiaries' capital stock.
3.6 TAXES. HP and each of its Subsidiaries have filed all material Tax
Returns required to be filed by any of them and have paid, or have adequately
reserved (in accordance with GAAP) for the payment of, all Taxes required to be
paid (whether or not shown on any Tax Returns), and the most recent financial
statements contained in the HP SEC Reports reflect an adequate reserve (in
accordance with GAAP) for all Taxes payable by HP and its Subsidiaries through
the date of such financial statements. No material deficiencies for any Taxes
have been asserted or assessed, or to the Knowledge of HP, proposed, against HP
or any of its Subsidiaries that are not subject to adequate reserves (in
accordance with GAAP). Neither the HP nor any of its Subsidiaries has taken any
action or knows of any fact, agreement or plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
3.7 INTELLECTUAL PROPERTY.
(a) NO INFRINGEMENT. To the Knowledge as of the date hereof of
HP, the products, services and operations of HP do not infringe or
misappropriate the Intellectual Property of any third party where such
infringement or misappropriation, individually or in the aggregate, would be
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reasonably expected to have a material adverse effect on any material division
or business unit or other material operating group of product or service
offerings of HP or otherwise have a Material Adverse Effect on HP.
(b) NO IMPAIRMENT. The Merger will not result in the termination
or breach of any Contract to which HP is a party, which termination or breach
would reasonably be expected to have a material adverse effect on any material
division or business unit or other material operating group of product or
service offerings of HP or otherwise have a Material Adverse Effect on HP.
3.8 COMPLIANCE; PERMITS.
(a) COMPLIANCE. Neither HP nor any of its Subsidiaries is, in
any material respect, in conflict with, or in default or in violation of any
Legal Requirement applicable to HP or any of its Subsidiaries or by which HP or
any of its Subsidiaries or any of their respective businesses or properties is,
or HP believes is reasonably likely to be, bound or affected, except, in each
case, or in the aggregate, for conflicts, violations and defaults that would not
have a Material Adverse Effect on HP. As of the date hereof, no material
investigation or review by any Governmental Entity is pending or, to the
Knowledge of HP, has been threatened in a writing delivered to HP or any of its
Subsidiaries, against HP or any of its Subsidiaries. There is no material
judgment, injunction, order or decree binding upon HP or any of its Subsidiaries
which has or would reasonably be expected to have the effect of prohibiting or
materially impairing any material business practice of HP or any of its
Subsidiaries, any acquisition of material property by HP or any of its
Subsidiaries or the conduct of business by HP and its Subsidiaries as currently
conducted.
(b) PERMITS. HP and its Subsidiaries hold, to the extent legally
required, all Permits that required for the operation of the business of HP, as
currently conducted, the failure to hold which would reasonably be expected to
have a Material Adverse Effect on HP (collectively, "HP PERMITS"). As of the
date hereof, no suspension or cancellation of any of the HP Permits is pending
or, to the Knowledge of HP, threatened. HP and its Subsidiaries are in
compliance in all material respects with the terms of the HP Permits.
3.9 LITIGATION. As of the date hereof, there are no claims,
suits, actions or proceedings pending or, to the Knowledge of HP, overtly
threatened against HP or any of its Subsidiaries, before any court, governmental
department,
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commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated hereby
or which would reasonably be expected, either singularly or in the aggregate
with all such claims, actions or proceedings, to be material to HP.
3.10 BROKERS' AND FINDERS' FEES. Except for fees payable to Goldman, Sachs
& Co. pursuant to an engagement letter dated July 25, 2001, a copy of which has
been provided to Compaq, HP has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.11 EMPLOYEE BENEFIT PLANS.
(a) BENEFIT PLAN COMPLIANCE.
(i) With respect to the Benefit Plan of HP or any of its
Subsidiaries ("HP BENEFIT PLAN"), no material event has occurred and there
exists no material condition or set of circumstances, in connection with which
HP or any of its Subsidiaries would be subject to any material liability under
the ERISA, the Code or any other applicable Legal Requirement.
(ii) Each HP Benefit Plan has been, in all material
respects, administered and operated in accordance with its terms, with the
applicable provisions of ERISA, the Code and all other applicable material Legal
Requirements and the terms of all applicable collective bargaining agreements.
Each HP Benefit Plan, including any material amendments thereto, that is capable
of Approval has received such Approval or there remains a period of time in
which to obtain such Approval retroactive to the date of any material amendment
that has not previously received such Approval.
(iii) To the Knowledge of HP, no material oral or
written representation or commitment with respect to any material aspect of any
HP Benefit Plan has been made to an Employee of HP or any of its Subsidiaries by
an authorized HP Employee that is not materially in accordance with the written
or otherwise preexisting terms and provisions of such HP Benefit Plans. To the
Knowledge of HP, neither HP nor any of its Subsidiaries has entered into any
agreement, arrangement or understanding, whether written or oral, with any trade
union, works council or other Employee representative body or any material
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number or category of its Employees which would prevent, restrict or materially
impede the implementation of any lay-off, redundancy, severance or similar
program within its or their respective workforces (or any part of them).
(iv) There are no material unresolved claims or disputes
under the terms of, or in connection with, any HP Benefit Plan (other than
routine undisputed claims for benefits), and no action, legal or otherwise, has
been commenced with respect to any material claim.
(b) RETIREMENT PLAN FUNDING. The latest actuarial valuation of
each Funded Retirement Plan of HP or its Subsidiaries discloses that, as of the
effective date of the valuation, the aggregate value of the assets of such
Funded Retirement Plan is equal to or greater than the aggregate value of its
liabilities assessed on an ongoing and terminated basis and calculated in
accordance with the actuarial methods and assumptions used in such valuation
pursuant to such Funded Retirement Plan and applicable Legal Requirements and
GAAP. In respect of each Retirement Plan of HP or its Subsidiaries that is not a
Funded Retirement Plan, HP or its Subsidiaries have made adequate provision for
accrued liabilities in accordance with applicable Legal Requirements.
(c) MULTIPLE EMPLOYER AND MULTIEMPLOYER PLANS. At no time has HP
or Controlled Group Affiliate with HP participated in and/or been obligated to
contribute to any HP Benefit Plan in which any persons which are not or were not
at the relevant time, Controlled Group Affiliates of HP and/or their Employees,
have participated. No HP Benefit Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(d) CONTINUATION COVERAGE. No HP Benefit Plan provides health
benefits (whether or not insured), with respect to Employees after retirement or
other termination of service (other than coverage mandated by applicable Legal
Requirements or benefits, the full cost of which is borne by the Employee) other
than individual arrangements the amounts of which are not material.
(e) EFFECT OF TRANSACTION. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any HP Benefit Plan that will or may result in any material payment
(whether of severance pay or otherwise), acceleration of payment, forgiveness of
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indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee. There is no contract, agreement, plan or
arrangement with an Employee to which HP or any of its Subsidiaries is a party
as of the date of this Agreement, that, individually or collectively and as a
result of the transaction contemplated hereby (whether alone or upon the
occurrence of any additional or subsequent events), would reasonably be expected
to give rise to the payment of any amount that would not be deductible pursuant
to Section 280G of the Code.
(f) LABOR. No collective bargaining agreement is being
negotiated or renegotiated in any material respect by HP or any of its
Subsidiaries. As of the date of this Agreement, there is no material labor
dispute, strike or work stoppage against HP or any of its Subsidiaries pending
or, to the Knowledge of HP, threatened which may materially interfere with the
respective business activities of HP or any of its Subsidiaries. As of the date
of this Agreement, to the Knowledge of HP, none of HP, any of its Subsidiaries
or any of their respective representatives or Employees has committed any
material unfair labor practice in connection with the operation of the
respective businesses of HP or any of its Subsidiaries, and there is no material
charge or complaint against HP or any of its Subsidiaries by the National Labor
Relations Board or any comparable governmental agency pending or threatened in
writing.
3.12 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Except as would not result in a Material
Adverse Effect on HP, no underground storage tanks and no amount of any
Hazardous Material are present, as a result of the actions of HP or any of its
Subsidiaries or any affiliate of HP, or, to the Knowledge of HP, as a result of
any actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that HP or any of its Subsidiaries has at any time owned, operated, occupied or
leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Except as would not result
in a Material Adverse Effect on HP (i) neither HP nor any of its Subsidiaries
has transported, stored, used, manufactured, disposed of, released or exposed
its Employees or others to Hazardous Materials in violation of any law in effect
on or before the Closing Date and (ii) neither HP nor any of its Subsidiaries
has engaged in any Hazardous Materials Activities in violation of any rule,
regulation,
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treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
3.13 CONTRACTS. All HP Material Contracts (as defined below) are valid and
in full force and effect except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, would not reasonably be expected to be
material to HP. Neither HP nor any of its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or without
notice, lapse of time or both would constitute a default under the provisions
of, any HP Material Contract, except in each case for those violations and
defaults which, individually or in the aggregate, would not reasonably be
expected to be material to HP. For purposes of this Agreement, "HP MATERIAL
CONTRACT" shall mean any Contract, or group of Contracts, with a Person (or
group of affiliated Persons) the termination or breach of which would be
reasonably expected to have a material adverse effect on any material division
or business unit or other material operating group of product or service
offerings of HP or otherwise have a Material Adverse Effect on HP.
3.14 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of HP or Merger Sub for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of HP and Merger Sub for inclusion or
incorporation by reference in the Prospectus/Proxy Statement, will, at the time
the Prospectus/Proxy Statement is mailed to the stockholders of HP or Compaq, at
the time of the HP Stockholders' Meeting or Compaq Stockholders' Meeting or as
of the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading. The Prospectus/Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated by the SEC thereunder. Notwithstanding the
foregoing, no representation or warranty is made by HP with respect to
statements made or
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incorporated by reference therein about Compaq supplied by Compaq for inclusion
or incorporation by reference in the Registration Statement or the
Prospectus/Proxy Statement.
3.15 BOARD APPROVAL. The Board of Directors of HP has, by resolutions duly
adopted by unanimous vote at a meeting of all Directors duly called and held and
not subsequently rescinded or modified in any way (the "HP BOARD APPROVAL") has
duly (i) determined that the Merger is fair to, and in the best interests of, HP
and its stockholders and declared the Merger to be advisable, (ii) approved this
Agreement, and (iii) recommended that the stockholders of HP approve the Stock
Issuance and directed that such matter be submitted to HP's stockholders at the
HP Stockholders' Meeting.
3.16 FAIRNESS OPINION. HP's Board of Directors has received a written
opinion from Goldman, Sachs & Co., dated as of September 3, 2001, to the effect
that, as of such date, the Exchange Ratio is fair, from a financial point of
view, to HP and has delivered to Compaq a copy of such opinion.
3.17 RIGHTS PLAN. The Board of Directors of HP has approved the HP Rights
Agreement and has declared a dividend of one HP Right per share of HP Common
Stock to each holder of HP Common Stock (the "HP RIGHTS DIVIDEND"). HP has (a)
delivered to Compaq an accurate copy of the HP Rights Agreement approved by the
Board of Directors of HP and proposed to be entered into with the Rights Agents
named thereunder, (b) declared the HP Rights Dividend, and (c) fixed the record
date for the HP Rights Dividend as September 17, 2001 and the payment date for
the HP Rights Dividend no later than September 27, 2001. HP has taken all action
so that (i) Compaq shall not be an "Acquiring Person" thereunder and (ii) the
entering into of this Agreement and the Merger and the other transactions
contemplated hereby will not result in the grant of any rights to any Person
under the HP Rights Agreement or enable or require the HP Rights to be
exercised, distributed or triggered.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS.
(a) ORDINARY COURSE. During the period from the date hereof and
continuing until the earlier of the termination of this Agreement pursuant to
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its terms or the Effective Time, each of HP and Compaq, and each of its
respective Subsidiaries shall, except as otherwise expressly contemplated by
this Agreement or to the extent that the other party hereto shall otherwise
consent in writing, carry on its business, in all material respects, in the
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted, and use all reasonable efforts consistent with past
practices and policies to (i) preserve intact its present business organization,
(ii) keep available the services of its present executive officers and key
Employees, and (iii) preserve its relationships with customers, suppliers,
licensors, licensees, and others with which it has business dealings.
(b) REQUIRED CONSENT. In addition, without limiting the
generality of Section 4.1(a), except as permitted by the terms of this
Agreement, and except as provided in Article IV of the Compaq Disclosure Letter
or Article IV of the HP Disclosure Letter (as the case may be), without the
prior written consent of the other party hereto, during the period from the date
hereof and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, each of HP and Compaq shall not do
any of the following, and shall not permit their respective Subsidiaries to do
any of the following:
(i) Enter into any new line of business material to it
and its Subsidiaries taken as a whole;
(ii) Declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock, equity securities or property)
in respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for any capital stock, other than (A) declaration
and payment of regular quarterly cash dividends on its Common Stock at a rate
not in excess of the regular quarterly cash dividend most recently declared
prior to the date hereof with the usual record and payment dates for such
dividends in accordance with its past practice, (B) any such transaction by a
Subsidiary of it that remains a Subsidiary of it after consummation of such
transaction, in the ordinary course of business consistent with past practice,
and (C) in the case of Compaq, the Compaq Rights Dividend and other securities
pursuant to the Compaq Rights Plan and in the case of HP, the HP Rights Dividend
and other securities pursuant to the HP Rights Plan, in each case as
contemplated hereby and thereby;
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(iii) Purchase, redeem or otherwise acquire, directly or
indirectly, any shares of its capital stock or the capital stock of its
Subsidiaries, except (A) repurchases of unvested shares at cost in connection
with the termination of the employment relationship with any employee pursuant
to stock option or purchase agreements in effect on the date hereof or entered
into the ordinary course of business consistent with past practice after the
date hereof and (B) repurchases by HP pursuant to HP's publicly announced
repurchase programs existing as of July 31, 2001, and (C) as set forth in
Section 4.1(b)(iii) of the HP Disclosure Letter or Section 4.1(b)(iii) of the
Compaq Disclosure Letter (as the case may be);
(iv) Issue, deliver, sell, authorize, pledge or
otherwise encumber any shares of capital stock, Voting Debt or any securities
convertible into shares of capital stock or Voting Debt, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or Voting
Debt or any securities convertible into shares of capital stock or Voting Debt,
or enter into other agreements or commitments of any character obligating it to
issue any such securities or rights, other than: (A) issuances of HP Common
Stock or Compaq Common Stock upon the exercise of HP Options or Compaq Options,
respectively, existing on the date hereof in accordance with their present terms
(including cashless exercises) or granted pursuant to clause (F) hereof, (B)
issuance of shares of Compaq Common Stock to participants in the Compaq Purchase
Plan pursuant to the terms thereof and issuance of shares of HP Common Stock to
participants in the HP employee stock purchase plans pursuant to the terms
thereof, (C) issuances of HP Common Stock or Compaq Common Stock upon the
exercise of other options, warrants or other rights of HP or Compaq,
respectively, in each case outstanding on the date hereof in accordance with
their present terms (including cashless exercises), (D) in the case of Compaq,
the Compaq Rights Dividend and other securities pursuant to the Compaq Rights
Plan and in the case of HP, the HP Rights Dividend and other securities pursuant
to the HP Rights Plan, in each case as contemplated hereby and thereby, (E)
issuances of shares of Compaq Common Stock in connection with Compaq Permitted
Acquisitions (as defined below) and issuance of shares of HP Common Stock in
connection with HP Permitted Acquisitions (as defined below), (F) grants of
stock options or other stock based awards of or to acquire, in the case of
Compaq, Compaq Common Stock granted under the Compaq Stock Option Plans that are
Compaq Broad Plans outstanding on the date hereof, and in the case of HP, HP
Common Stock granted under the HP Stock Option Plans
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outstanding on the date hereof, in each case in the ordinary course of business
consistent with past practices in connection with annual compensation reviews or
ordinary course promotions or to new hires and which options or stock based
awards have a vesting schedule no more favorable than ratable monthly
installments that vest over not less than three years and do not accelerate, or
become subject to acceleration, directly or indirectly, as a result of the
approval or consummation of the Merger and/or termination of employment
following the Merger (other than, following the Merger, upon retirement, death
or total and permanent disability or in connection with a reduction in force in
accordance with HP's policies relating to formal reductions in force or similar
workforce management programs in effect from time to time following the Merger
or as otherwise set forth in Section 4.1(b)(xiii) of the Compaq Disclosure
Schedule with respect to Compaq's Chief Executive Officer and Tiers I, II and
III employees), but in no event shall the period for exercisability under such
option following termination of employment be extended beyond one year following
a termination of employment for any reason other than retirement, death or total
and permanent disability, and (G) as set forth in Section 4.1(b)(iv) of the HP
Disclosure Letter or Section 4.1(b)(iv) of the Compaq Disclosure Letter (as the
case may be);
(v) Cause, permit or propose any amendments to its
Charter Documents or any of the Subsidiary Charter Documents of its
Subsidiaries, except to the extent necessary to implement the HP Rights Plan or
Compaq Rights Plan, and, in the case of HP, to the extent necessary to comply
with its obligations under Section 5.12;