News release

Compaq Settles Suit Against The Baxter Group and Peter Mellon

Compaq Computer Corporation (NYSE: CPQ), a global provider of technology and solutions, today announced it has reached a settlement in the lawsuit the company filed against Ottawa, Canada-based The Baxter Group and Peter Mellon for alleged breach of contract and fraud. Although specific financial terms of the settlement are confidential, Compaq is very pleased with the settlement from the defendants in this case.

"Compaq is committed to maintaining the integrity of its products and the high levels of product quality and service that our customers have come to expect," said Thomas C. Siekman, Senior Vice President and General Counsel. "We are very pleased with the results of the settlement agreement in this case and will continue to hold accountable any companies or individuals who attempt to illegally divert Compaq products."

The lawsuit against The Baxter Group and its principal owner, Peter Mellon, was filed in the United States District Court for the Eastern District of Virginia in October 2000. The complaint stated that the defendants fraudulently misrepresented that they had a large contract to supply a substantial volume of computers and related equipment to U.S. airports under a contract with the U.S. Department of Transportation's Federal Aviation Administration (FAA). Compaq sought compensatory damages of more than $17 million, as well as costs and attorneys' fees.