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SECURITY AGREEMENT dated as of October 20, 2000, made and entered into by and among MICHAEL D. CAPELLAS
(the "Borrower") and COMPAQ COMPUTER CORPORATION, a Delaware Corporation ("Compaq").
The Borrower and Compaq have entered into a loan evidenced by a note dated as of October 20, 2000, (said loan
as it may hereafter be amended or otherwise modified from time to time, being the "Loan" and said note as it may
hereafter be amended or otherwise modified from time to time being the "Note").
The Borrower has previously purchased 125,000 shares of common stock of Compaq (the "Shares"), which
shares are held in Account No. 565-1B869-1-5-400 (the "Account") in the name of Michael D. Capellas at the
New York, New York offices of Salomon Smith Barney Inc (the "Securities Intermediary").
The Shares were previously designated as collateral for a loan made by Compaq to Borrower on July 22, 1999, as
evidenced by the Promissory Note and Security Agreement of the same date (the "1999 Loan"). Compaq
relinquishes its prior security interest in the Shares with respect to the 1999 Loan.
Compaq has appointed the Securities Intermediary for purposes of maintaining the Account and performing
certain actions with respect thereto in accordance with the terms of an Account Control Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce Compaq to make the Loan, the Borrower
hereby agrees with Compaq for the benefit of Compaq, as follows:
SECTION 1. Certain Defined Terms. Unless otherwise defined in this Section 1, (a) capitalized terms used in this
Agreement have the meanings specified herein, and (b) terms used in Article 8 or 9 of the Uniform Commercial Code from time to
time in effect in the State of Texas (the "TXUCC") are used herein as therein defined. As used in this Agreement, the followin