News release

Compaq Reaches Quick Settlement of Suit Against Harry Martin, Millennium Technology Group Inc., and Shafiq Ahmad

Compaq Computer Corporation (NYSE: CPQ) today announced it reached a quick settlement of the lawsuit the company filed against Harry Martin and Shafiq Ahmad, principals of Millennium Technology Group, Inc. of Virginia. Although specific financial terms of the settlement are confidential, Compaq is very pleased with the settlement from the defendants in this case.

Compaq is continuing to press its legal actions against Creative Resources Group, Inc. (CRGI) and its president, Stephen Pridemore of South Carolina.

"We are very pleased with the results of the settlement agreement in this case," said Thomas C. Siekman, senior vice president and general counsel, Compaq Computer Corporation. "Compaq maintains its commitment to ensuring the integrity of its products and the high levels of product quality and service that our customers have come to expect. We will hold accountable any companies or individuals who attempt to illegally divert Compaq products."

The original suit was filed last week in the United States District Court for the Eastern District of Virginia in Alexandria. As a result of the settlement, Compaq has dismissed its claims against Harry Martin and Shafiq Ahmad, principals of Millennium Technology Group, Inc.

Compaq's complaint states that defendants 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 brought claims for conspiracy, fraud, breach of contract, and tortious interference with its contractual relations.

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.