News release

Compaq Reaches Settlement in Suit Against Stephen Pridemore and Creative Resources Group, Inc.

Suit Charged Defendants with Fraud, Breach of Contract, and Conspiracy as Part of Larger $20 Million Illegal Brokering Scheme

Compaq Computer Corporation (NYSE: CPQ) today announced it reached a settlement in the lawsuit the company filed against Creative Resources Group, Inc. (CRGI) and its president, Stephen Pridemore of South Carolina.

As in the case of earlier settlements reached with other defendants, details of the settlement are confidential but the company is very pleased with the settlement from the defendants in this case. Compaq's complaint stated that defendants Pridemore and CRGI conspired to defraud Compaq into paying millions of dollars in unearned rebates and special marketing support funds.

Thomas C. Siekman, Compaq senior vice president and general counsel framed the settlement in these terms: "As in previous cases, we are fighting to maintain the integrity of the Compaq brand. Compaq maintains its commitment to ensuring the highest 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 lawsuit was filed in the United States District Court for the Eastern District of Virginia in Alexandria in August 2001. According to the suit, defendants told Compaq that they had large United States government contracts that required significant rebates and discounts from Compaq. As outlined in 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.

Anti-Gray Market Alliance

Compaq is a founding member of the Anti-Gray Market Alliance (AGMA), a group of leading information technology companies committed to assuring their customers greater product satisfaction, to educating the marketplace about the illegal or deceptive diversion of products, and to addressing the unauthorized flow of products to the gray market.

"Being a founding member of AGMA is an important element of our efforts to protect our customers," said Bo McBee, vice president of Corporate Quality and Customer Satisfaction at Compaq. "Through this industrywide initiative, we can focus on developing real solutions to the potential quality problems customers face from gray market diversion in the marketplace. Our goal is to assure that every Compaq customer feels confident about the integrity of our products, and to enhance customer satisfaction for Compaq."

For more information, visit the AGMA Web site at http://www.agmatoday.org.

Company Background

Founded in 1982, Compaq Computer Corporation is a leading global provider of information technology products, services and solutions for enterprise customers. Compaq designs, develops, manufactures and markets information technology equipment, software, services and solutions, including industry-leading enterprise storage and computing solutions, fault-tolerant business-critical solutions, communication products, personal desktop and notebook computers, and personal entertainment and Internet access devices that are sold in more than 200 countries directly and through a network of authorized Compaq marketing partners. Information on Compaq and its products and services is available at http://www.compaq.com.