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To: Night Writer who wrote (97313)	4/23/2002 7:23:12 AM
From: PCSS	Respond to of 97611

H-P set to defend merger fight in court Suit over Compaq proxy fight goes to trial Tuesday By Mike Tarsala, CBS.MarketWatch.com Last Update: 7:22 PM ET April 22, 2002 WILMINGTON, Del. (CBS.MW) - The fate of the tech industry's largest merger ever could rest with a Delaware judge who is set to hear a suit Tuesday alleging shareholder vote-buying by Hewlett-Packard's management in its fight to acquire Compaq Computer. Attorneys for the computer and printer maker will defend the company against a suit brought by dissident shareholder Walter Hewlett that threatens to derail the $19.4 billion deal. The suit accuses company management of misleading shareholders about the potential gains and costs of the merger, and financially strong-arming one of its key investors to back the acquisition. Judge William Chandler III, who will hear the case, has said that Hewlett's allegations are troubling, if they are true. But in order to block the merger or force a re-count, lawyers for Hewlett must provide substantial evidence of H-P's alleged wrongdoing. "Now it's crunch time: Hewlett has to come up with the goods," said Mark Davidson, senior counsel with Proskauer Rose LLP in New York. "The charge everyone has been focused on is the voting improprieties, and the burden of proof there is pretty high. He has to come up with some convincing evidence that something bad happened that was outside the realm of normal corporate activity." So far, the only known evidence Hewlett will use in the trial is an e-mail from Hewlett-Packard's CEO Carly Fiorina to the company's CFO, in which she speaks of doing something "extraordinary" to win the approval of two key shareholders. Fiorina explained in the voicemail that she was "very nervous" about the voting intentions of Deutsche Bank and Northern Trust - two large shareholders. It's not clear what Fiorina meant by the word "extraordinary," academics and lawyers not affiliated with the case have said, so the voicemail by itself carries little to no legal weight. For its part, H-P's management has said Fiorina was suggesting an additional in-person pitch for the deal. But when added to additional evidence Hewlett may have, the voicemail could be damaging to H-P and its merger intentions. "Standing alone, it doesn't establish much," said Mark Sargent, dean of the University of Villanova School of Law, in an interview earlier this month. "But it might be of some use in establishing intent or motive, if you have evidence that H-P actually did something extraordinary and questionable." The suit by Walter Hewlett, son of H-P co-founder William Hewlett, has gained attention in Washington and New York, as well as California's Silicon Valley. The Securities and Exchange Commission and federal prosecutors in New York are separately investigating actions by H-P's management in the days before the March 19 merger vote. According to the suit, Deutsche Asset Management's proxy committee had decided to vote its 25 million shares against the merger nearly a week before the shareholder meeting. Under continued pressure, the suit says Deutsche Asset Management cast 17 million shares for the merger while the shareholder meeting was under way. Hewlett alleges that H-P's management promptly closed the polls after receiving word that Deutsche Asset Management's changed proxies had been received. Deutsche Bank was one of the institutions that helped arrange a $4 billion revolving-credit line for H-P just a week before the crucial vote took place. H-P won the vote by 45 million shares, or about 3 percent, according to a preliminary tally released last week by a third party hired to count the votes.

To: Night Writer who wrote (97313)	4/23/2002 7:25:59 AM
From: PCSS	Read Replies (2) \| Respond to of 97611

False release says Hewlett renominated By Ian Fried Staff Writer, CNET News.com 4/22/02, 4:05 PM PT A press release purportedly from Hewlett-Packard was issued Monday claiming that Walter Hewlett had been renominated to the company's board of directors. HP immediately dismissed the release as "unauthorized" and false. The release, which apparently was initially distributed by a European service called M2 PressWire, claimed that Hewlett was among 12 people who would be nominated to the HP board, assuming the merger is completed. In fact, HP's board decided on March 31 not to renominate Hewlett, the son of HP co-founder William Hewlett. HP spokeswoman Rebeca Robboy said that the company has not reversed its decision and that the release was not authorized by the company. Although M2 is less well known than BusinessWire or PR Newswire, the organization does distribute news through a number of well-known outlets, including Lexis-Nexis. The purported HP release did appear on the Lexis-Nexis Web site and was labeled as having come from M2. It also was posted on Wall Street Research Net, a site run by Internet.com. An M2 representative was not immediately available for comment. Internet.com Editor in Chief Augustine Venditto said he is looking into the matter. Hewlett, a 15-year board member, has led the fight against HP's proposed merger with Compaq Computer. HP said it had planned to renominate Hewlett despite his opposition to the deal. However, the company's board changed its mind after Hewlett sued the company in a Delaware court, seeking to overturn the results of a March 19 shareholder vote on the deal. Monday's purported release lists Hewlett along with other current Compaq and HP nominees. The release includes a quote attributed to Fiorina on Hewlett's renomination. "Commenting specifically on the re-nomination of Walter Hewlett, Fiorina noted, 'As we complete the merger, our imperative is to minimize distraction and disruption so that all our employees can focus their energies on serving our customers,'" the release says. "'We expect Walter Hewlett to join the rest of the new board in embracing both our management team and our strategy.'" The incident is reminiscent of a scandal in August 2000, when a fake press release was distributed on Internet Wire claiming that the CEO of networking company Emulex had resigned. That release, which was carried by a number of major news organizations, briefly cut $2.5 billion in market capitalization from the company. The release also comes just four days before the meeting at which HP shareholders will, in fact, vote on a slate of directors that does not include Hewlett. It also comes on the eve of a Delaware trial on Hewlett's lawsuit against the company.