News release

Compaq Files Suit Against Harry Martin, Millennium Technology Group Inc., Shafiq Ahmad, Stephen Pridemore, and Creative Resources Group, Inc.

Compaq Computer Corporation (NYSE: CPQ) today announced it is filing suit in federal court against Harry Martin and Shafiq Ahmad, principals of Millennium Technology Group, Inc. of Virginia, to recover more than $20 million defrauded from Compaq through illegal brokering schemes. Compaq has also named Creative Resources Group, Inc. (CRGI) and its president, Stephen Pridemore of South Carolina as defendants.

Compaq's complaint states that defendants Martin, Ahmad, Millennium, Pridemore and CRGI conspired to defraud Compaq into paying millions of dollars in unearned rebates and special marketing support funds. According to the suit, defendants told Compaq that they had large United States government contracts that required significant rebates and discounts from Compaq. According to the complaint, no such contracts existed with the U.S. government agencies; instead, defendants collected payments from Compaq and diverted Compaq products into the brokering market. Compaq is bringing claims for conspiracy, fraud, breach of contract and tortious interference with its contractual relations.

"Compaq is committed to ensuring the integrity of Compaq products and protecting its customers and authorized distribution channels," said Thomas C. Siekman, senior vice president and general counsel, Compaq Computer Corporation. "We will show that the defendants created a scheme to defraud Compaq of millions of dollars based on non-existent United States government contracts. Companies and individuals who attempt to illegally divert Compaq products will be held accountable," concluded Siekman.

Compaq is seeking compensatory damages of more than $20 million as well as interest, costs, and attorneys' fees. The suit was filed in the United States District Court for the Eastern District of Virginia in Alexandria.

Company Background

Founded in 1982, Compaq Computer Corporation ("Compaq") is a leading global provider of enterprise technology and solutions. Compaq designs, develops, manufactures and markets hardware, software, solutions and services, including industry-leading enterprise storage and computing solutions, fault-tolerant business-critical solutions, communication products, and desktop and portable personal computers that are sold in more than 200 countries. Information on Compaq and its products and services is available at http://www.compaq.com.