Georgianna Hanrahan, IRA, et al. v. Hewlett-Packard

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Georgianna Hanrahan, IRA, et al. v. Hewlett-Packard Powered By Docstoc
					     Case 3:03-cv-01878-AWT         Document 1      Filed 11/03/2003     Page 1 of 23



                          UNITED STATES DISTRICT COURT
                            DISTRICT OF CONNECTICUT


 Georgianna Hanrahan, IRA, individually and
 on behalf of all others similarly situated,

                             Plaintiff,            Civil Action No.

               v.                                  JURY TRIAL DEMANDED

 HEWLETT-PACKARD COMPANY and
 CARLETON FIORINA

                             Defendants.           November 3, 2003


                              CLASS ACTION COMPLAINT

       Plaintiff, through its attorneys, alleges the following upon information and belief,

except as to the allegations which pertain to the Plaintiff and its counsel, which are

alleged upon personal knowledge. Plaintiff’s information and belief are based, inter

alia, on the investigation made by and through its attorneys.

                                     INTRODUCTION

       1.     This is a federal securities class action which is brought by the Plaintiff

against the Defendants Hewlett-Packard Company (“Hewlett-Packard” or “HP”) and

Carleton Fiorina on behalf of a class (the "Class") consisting of all persons or entities

who sold the common stock of Hewlett-Packard during the period September 4, 2001

through November 5, 2001, inclusive (the “Class Period”). Plaintiff seeks to recover

damages caused to the Class by Defendants’ violations of Section 10(b) of the

Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated

thereunder.

       2.     This action arises as a result of the announcement by the Defendants on
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September 3, 2001 of the proposed merger of Hewlett-Packard with the Compaq

Computer Corporation (“Compaq”) (the “Merger”) and subsequent public statements

and public filings by the Defendants from September 4, 2001 through November 5,

2001 regarding the Merger. Those statements by the Defendants regarding the Merger

were deceptive and misleading because they failed to disclose that Walter B. Hewlett

(“Hewlett”) was opposed to the Merger, as detailed herein.

       3.     As detailed herein, Hewlett, who is the son of the co-founder of HP, the

late William R. Hewlett and a Director of Hewlett-Packard, owns, controls the voting

rights of, and has substantial influence with respect to the voting of, hundreds of

millions of shares of Hewlett-Packard common stock. Hence, Hewlett’s opposition to

the Merger significantly decreased the likelihood that the Merger would be

consummated. Accordingly, the Defendants’ public statements and filings regarding

the Merger, from September 3, 2001 through November 5, 2001, deceived and misled

the marketplace as to the likelihood of the Merger being consummated, by failing to

disclose Hewlett’s opposition to the Merger, as detailed herein.

       4.     The Class Period begins on September 4, 2001, the first day of trading of

Hewlett-Packard stock after the Defendants announced the proposed Merger on

September 3, 2001. The Class Period ends on November 5, 2001, the last trading day

of Hewlett-Packard stock prior to it first becoming publicly known that Hewlett was

opposed to the Merger, as a result of a press release issued by Hewlett on

November 6, 2001.

       5.     As demonstrated herein, the Defendants’ misleading and deceptive public

statements regarding the Merger on September 3, 2001 and throughout the Class

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Period significantly artificially decreased and deflated the price of HP stock throughout

the Class Period.

                              JURISDICTION AND VENUE

       6.     This Court has jurisdiction of this action pursuant to Section 27 of the

Exchange Act [15 U.S.C. §78aa], and 28 U.S.C. §§1331 and 1337.

       7.     This action arises under and pursuant to Section 10(b) of the Exchange

Act [15 U.S.C. §78j(b)], Rule 10b-5 promulgated thereunder by the SEC [17 C.F.R.

§240.10b-5] and Section 20 of the Exchange Act [15 U.S.C.S. §78t(a)].

       8.     Venue is proper in this District pursuant to Section 27 of the Exchange Act

and 28 U.S.C. §1391(b). The Plaintiff’s principal place of business is located in this

District and acts complained of herein occurred in this District.

       9.     In connection with the acts alleged in this Complaint, Defendants, directly

or indirectly, used the means and instrumentalities of interstate commerce, including,

but not limited to, the mails, interstate telephonic communications and the facilities of

the New York Stock Exchange, a national securities exchange.

                                         PARTIES

       10.    Plaintiff Georgianna Hanrahan, IRA, (“Plaintiff”), is the IRA account of

Georgianna Hanrahan, a natural person who resides in Norwalk, Connecticut. As

detailed in the Certification of the Plaintiff, attached hereto (and incorporated herein by

reference), the Plaintiff sold 255 shares of Hewlett-Packard common stock, during the

Class Period. The Plaintiff did not purchase any Hewlett-Packard common stock during

the Class Period.

       11.    Defendant Hewlett-Packard is a Delaware corporation, with its

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headquarters in Palo Alto, California. It is located and does business throughout the

United States and internationally, including in this judicial district.

       12.    Defendant Carleton Fiorina (“Fiorina”) is, and at all relevant times was,

Chairman of the Board of Directors and Chief Executive Officer of Hewlett-Packard.

       13.    The Defendants Hewlett-Packard and Fiorina are collectively referred to

herein as the “Defendants.”

                              SUBSTANTIVE ALLEGATIONS

       The Defendants’ Public Statements and Filings Regarding the Merger On
       September 3, 2001 and Throughout the Class Period

       14.    On September 3, 2001, HP and Compaq issued a press release

announcing that HP and Compaq had agreed to merge. That press release, a copy of

which is attached hereto as Exhibit A (hereinafter the “September 3, 2001 Press

Release”) stated, inter alia, that the merger agreement had been “...unanimously

approved by both Boards of Directors....”

       15.    On September 4, 2001, commencing at 9:00 a.m., the Defendants, along

with Compaq and Michael Capellas, Compaq’s Chairman and Chief Executive Officer,

and others speaking on behalf of HP, held a meeting for the investment community, at

which Defendants and others discussed numerous aspects of the Merger and

answered questions from members of the investment community regarding the Merger.

This meeting was accessible to the investing public by telephone call-in, as well as via

audiocast through both HP and Compaq’s websites. The transcript of that meeting was

also posted on HP and Compaq’s websites and was filed by HP with the Securities and

Exchange Commission (“SEC”). A copy of that transcript is attached hereto as Exhibit


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B.

      16.    Thereafter, on September 4, 2001, at approximately 10:30 a.m. EDT,

Defendants and others held a question and answer session for the public media

regarding the Merger.

      17.    Thereafter, throughout the Class Period, the Defendants made numerous

public statements and public filings with the SEC regarding the Merger. An example of

those public statements was a speech by Fiorina, on behalf of herself and HP, on

September 17, 2001 before the IBC European IT Forum. In that speech, Fiorina

discussed numerous reasons for and advantages of the Merger. In that regard she

said, inter alia: “Trust me, this [Compaq and HP management] team is determined and

motivated to prove the skeptics around this combination wrong.” Copy of that speech

by Fiorina is attached hereto as Exhibit C.

      The Stock Market Responded Negatively to the Proposed Merger

      18.    The stock market responded negatively to the proposed Merger. The

price of HP stock had closed on August 31, 2001, the last trading day prior to the

September 3, 2001 announcement of the Merger, at $23.21 per share. The trading

volume on that day was just over 5 million shares. On September 4, 2001, the price of

HP common stock opened at $21.15 per share, traded as low at $18.75 per share and

closed at $19.00 per share, down $4.21 per share (18.1%) from its pre-merger

announcement close on August 31, 2001. Over 37 million shares of HP common stock

traded on September 4, 2001. The price of HP common stock declined on September

4, 2001, as described above, because of the market’s unfavorable reaction to the

Merger, coupled with its judgment, based upon the publicly available information, as to

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likelihood that the Merger would be consummated.

      19.    On September 5, 2001, the price of HP common stock traded as low as

$17.00 per share and closed at $18.21 per share, a decline of $.79 from its close on

September 4, 2001. Almost 40 million shares of HP common stock were traded on

September 5, 2001. The decline in the price of HP common stock on that day was,

again, caused by the stock market’s unfavorable reaction to the Merger, coupled with its

judgment, based upon the publicly available information, as to likelihood that the

Merger would be consummated.

      20.    On September 6, 2001, the price of HP common stock again declined. It

traded as low as $17.20 per share and closed at $17.70 per share, a decline of an

additional $.51 per share from the close on September 5, 2001. More than 18.5 million

shares of HP common stock were traded on September 6, 2001. The decline in the

price of HP stock on September 6, 2001 was, again, caused by the stock market’s

unfavorable reaction to the Merger, coupled with its judgment, based upon the publicly

available information, as to likelihood that the Merger would be consummated.

      21.    Thereafter, throughout the Class Period, the price of HP common stock

remained depressed because of the stock market’s unfavorable reaction to the Merger,

coupled with its judgment, based upon the publicly available information, as to

likelihood that the Merger would be consummated. From September 7, 2001, through

the end of the Class Period on November 5, 2001, HP’s common stock traded within

the range of $12.50 per share (which it hit on September 21, 2001) and $18.75 per

share (which it hit on October 17, 2001).

      22.    At the close of trading on November 5, 2001, the last day of the Class

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Period, HP common stock closed at $16.89 per share. The price of HP common stock

had declined $6.32 per share during the Class Period due to the stock market’s

unfavorable reaction to the Merger, coupled with its judgment, based upon the publicly

available information, as to the likelihood that the Merger would be consummated.

       23.    That decline in the price of HP stock during the Class Period constituted a

decline of 27.2% from the closing price just prior to the beginning of the Class Period.

The fact that that decline was attributable to the stock market’s negative reaction to the

Merger, and its assessment of the likelihood that the Merger would be consummated, is

seen from the fact that an index of the stock prices of eleven companies comparable to

HP, consisting of Accenture Ltd., Apple Computer, Inc., Computer Sciences

Corporation, Dell Computer Corporation, Electronic Data Systems Corporation, EMC

Corporation, Gateway, Inc., International Business Machines Corporation, KPMG

International, Network Appliance, Inc., and Sun Micro Systems, Inc., increased 9.9%

during the Class Period.

       Information Regarding Walter B. Hewlett

       24.    Hewlett is the son of the late William R. Hewlett, a co-founder of Hewlett-

Packard. Prior to the Merger, he had been a Director of HP for 14 years. As a result of

his personal ownership of HP shares; his relationship to and influence with persons who

own or control the voting rights of HP shares; and his positions with and influence with

entities that own substantial numbers of HP shares; Hewlett’s negative views regarding,

and opposition to the Merger, would have a significant impact on the marketplace’s

judgment as to the likelihood of the Merger being consummated.

       25.    Hewlett personally owned or had the sole power to vote or to direct the

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vote of 439,334 shares of HP stock.

       26.    Hewlett is, and at all times relevant hereto was, a co-Trustee of the

William R. Hewlett Revocable Trust (the “Trust”). The Trust owns 72,802,148 shares of

HP stock. Hewlett shares voting authority with respect to those shares with the co-

Trustee, Edwin E. van Bronkhorst. Hewlett’s views regarding the Merger would be

influential with Mr. van Bronkhorst.

       27.    Hewlett is a Director of the Public Policy Institute of California (“PPIC”)

which owns 768,520 shares of HP stock. He shares voting authority over those shares

with the other Directors of PPIC. His views regarding the Merger would be influential

with the other Directors of PPIC.

       28.    Hewlett is an Executor of the Estate of William R. Hewlett, which owns

1,720,885 shares of HP stock. Hewlett shares voting authority over those shares with

the co-Executor of that Estate, Edwin E. van Bronkhorst.

       29.    Hewlett is the Chairman of and a Director of the William and Flora Hewlett

Foundation (the “Hewlett Foundation”), which owns 36,457,840 shares of HP common

stock. While Hewlett does not have voting authority over those shares, which voting

authority is exercised by an independent stock committee, as Chairman and a Director

of the Hewlett Foundation, his views regarding the Merger would be influential with the

members of the independent stock committee.

       30.    Hewlett is a Director of the Packard Humanities Institute (the “Packard

Institute”), which owns 25,760,000 shares of HP common stock. As a Director, Hewlett

could share voting authority over those shares within the other Directors of the Packard

Institute. His views regarding the Merger would be influential with the other Directors of

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the Packard Institute.

       31.    Hewlett’s sister, Eleanor Hewlett Gimon, owns or has the shared power to

vote 2,191,800 shares of HP stock. His views regarding the Merger would be influential

with Ms. Gimon.

       32.    Hewlett’s sister, Mary Hewlett Jaffe, owns or has the shared power to vote

4,826,745 shares of HP stock. His views regarding the Merger would be influential with

Ms. Jaffe.

       33.    Hewlett’s negative views regarding, and his opposition to, the Merger

would also have been, and would have been perceived by the marketplace to be,

significant to and influential to the Trustees of the David and Lucille Packard

Foundation (the “Packard Foundation”), which owns approximately 201,300,000 shares

(10.4%) of HP common stock. (On December 8, 2001, which is after the end of the

Class Period, the Packard Foundation announced its opposition to the Merger and its

intention to vote its 201.3 million shares of HP stock against the Merger.)

       34.    In light of all of the above-described aspects of Hewlett’s relationship to

HP and to persons and entities which own or control the voting power of the hundreds

of millions of shares of HP stock detailed above, Hewlett’s negative views regarding

and his opposition to the Merger would also have been significant to and influential with

numerous other institutional and individual holders of HP stock.

       35.    All of the above-described aspects of Hewlett’s relationship to HP and his

relationship to and influence with persons and entities which own or control the voting

power of hundreds of millions of shares of HP stock, was information that was publicly

known, and of course, was known to the Defendants, prior to and throughout the Class

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Period.

Walter B. Hewlett’s Negative Views Regarding, and His Opposition to, the Merger

      36.    Throughout the Class Period, it was known by the Defendants, but it was

not known by the investing public, including the Plaintiff and the members of the Class,

that during the several months prior to the September 3, 2001 announcement of the

Merger, Hewlett had repeatedly expressed his negative views regarding the Merger and

that he was opposed to the Merger.

      37.    The history of Hewlett’s opposition to the Merger and his numerous

communications with the Defendants, in which he advised them of his negative views

regarding the Merger and his opposition to the Merger, is detailed in a Proxy Statement

(Schedule 14A) filed by Hewlett, Edwin E. van Bronkhorst and the William R. Hewlett

Revocable Trust, with the SEC, on or about February 5, 2002 (the “Hewlett Proxy

Statement”). Copies of the relevant pages of the Hewlett Proxy Statement are attached

hereto as Exhibit D and are incorporated herein by reference thereto.

      38.    Hewlett first became aware that the Defendant Fiorina was discussing a

transaction with Compaq at a HP Board meeting in May, 2001. Thereafter, Hewlett

attended meetings of the HP Board, at which the proposed merger was discussed, on

May 18, June 24, July 20, August 6, August 25, August 31 and September 3, 2001. At

those Board meetings, Hewlett discussed his concerns about the proposed merger with

Compaq with Fiorina, the other members of HP’s Board of Directors, and the Board’s

advisors. At those meetings, Hewlett expressed his belief that the proposed Merger

would permanently destroy shareholder value. He expressed his view that HP should

not merge with Compaq because that Merger would dilute HP’s stockholders’

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ownership in HP’s imaging and printing business and increase HP’s stockholders’

exposure to the commodity personal computer business, which was currently

unprofitable for both HP and Compaq. He also expressed his belief that mergers

involving computing companies have consistently destroyed shareholder value and that

HP should not expose its stockholders to that risk.

      39.    Despite Hewlett’s vocal opposition to the merger, Fiorina and the rest of

the HP Board continued to pursue the proposed Merger, which culminated in HP Board

of Directors meetings at the end of August and beginning of September, 2001 to

approve the terms of the proposed Merger. At those meetings, Hewlett continued to

express his view that the proposed Merger was not the appropriate course for HP.

      40.    The Hewlett Proxy Statement also details communications between

Hewlett and the Defendants at the critical August 31 and September 3, 2001 HP Board

meetings, as follows:

                      On Friday, August 31, 2001, just three days before
             the HP board was asked to vote on the merger agreement,
             at an HP board meeting, Larry Sonsini, HP’s outside legal
             counsel, informed the HP board that the merger agreement
             being presented to the board required unanimous approval
             by the HP board. Mr. Hewlett then made clear to the entire
             board that the unanimous vote requirement put him in a very
             difficult position, as he was not persuaded that the proposed
             merger was in the best interests of HP or its stockholders.
             At this point in time, Mr. Hewlett understood that the only
             major open issue was the exchange ratio (that is, the price
             HP would pay for Compaq). Additionally, all of the directors
             were told that HP and Compaq were still vigorously
             negotiating over the exchange ratio.

                    Mr. Sonsini then asked to speak with Mr. Hewlett
             outside the presence of the rest of the board members.
             During this discussion, Mr. Sonsini informed Mr. Hewlett that
             HP was going to proceed with the proposed merger whether

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             or not Mr. Hewlett voted in favor of it as a director.
             Mr. Hewlett then asked Mr. Sonsini whether he could abstain
             from the director vote. Mr. Sonsini advised Mr. Hewlett that
             he could not abstain under the existing terms of the merger
             agreement. Mr. Sonsini also advised Mr. Hewlett that, even
             if he voted to approve the proposed merger as a board
             member, he could still vote against it as a stockholder.
             Mr. Hewlett knew that if he voted against the proposed
             merger as a director, the provision stating that the HP board
             had unanimously approved the proposed merger would have
             to be revised. Given Mr. Hewlett’s understanding that the
             exchange ratio was the only significant open issue and that
             HP and Compaq were vigorously negotiating over the
             exchange ratio, and in light of Mr. Hewlett’s conversation
             with Mr. Sonsini, Mr. Hewlett believed that if he voted
             against the proposed merger as a director, HP would have
             to pay a higher price for Compaq. Since, based on his
             conversation with Mr. Sonsini, Mr. Hewlett believed the
             proposed merger was certain to be approved by the board
             without his vote and because he believed it was in the best
             interests of HP stockholders to negotiate the best possible
             price for Compaq if the proposed merger were to be
             submitted to a stockholder vote, Mr. Hewlett determined to
             vote for the proposed transaction as a director and give
             stockholders the opportunity to make their own decision.

                   On Monday, September 3, 2001, during the
             telephone call in which the proposed merger was
             approved by the HP board, Mr. Hewlett informed the
             board that he might not support the proposed merger as a
             stockholder, and that, if the vote were to occur that day,
             he would vote against the proposed merger as a
             stockholder. Mr. Hewlett intended to oppose the
             proposed merger as a stockholder at that time due to
             his concerns as described above.

(Hewlett Proxy Statement at 3, emphasis added).

      41.    All of the facts detailed above and all of the facts disclosed and described

in the Hewlett Proxy Statement regarding Hewlett’s negative views regarding the

Merger and his opposition to the Merger are hereinafter collectively referred to as the



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“Omitted Material Facts.”

      The Defendants’ Omission of the Omitted Material Facts Caused The
      September 3, 2001 Press Release and the Defendants’ Other Statements
      and Filings Regarding the Merger During the Class Period to be Deceptive
      and Misleading.

      42.    All of the Omitted Material Facts constituted information which a

reasonable investor, making an investment decision as to whether to buy or sell

Hewlett-Packard common stock during the Class Period, would have wanted to know,

before making that investment decision.

      43.    All of the Omitted Material Facts constituted information that would have

affected the total mix of information known to the investing public during the Class

Period, about Hewlett-Packard, the Merger and the likelihood of the Merger being

consummated.

      44.    The Omitted Material Facts were known to the Defendants when they

issued the September 3, 2001 Press Release and were known to the Defendants

throughout the Class Period.

      45.    The Defendants had a duty to disclose the Omitted Material Facts when

they issued the September 3, 2001 Press Release because their failure to disclose the

Omitted Material Facts in the September 3, 2001 Press Release caused the September

3, 2001 Press Release, and in particular the portion of the September 3, 2001 Press

Release which stated that the merger agreement had been “...unanimously approved

by both Boards of Directors....” to deceive and mislead the investing public as to

Hewlett’s views regarding the Merger and as to the likelihood of the Merger being

consummated.


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       46.    Having issued the September 3, 2001 Press Release, without disclosing

the Omitted Material Facts, the Defendants had the duty to disclose the Omitted

Material Facts each time, thereafter, during the Class Period, when they made public

statements or filings regarding the Merger. The Defendants had that disclosure duty

because, having failed to disclose the Omitted Material Facts in the September 3, 2001

Press Release, the Defendants’ subsequent failure to disclose the Omitted Material

Facts in each of their subsequent public statements and filings during the Class Period

regarding the Merger, caused each of those subsequent public statements and filings

during the Class Period regarding the Merger to deceive and mislead the investing

public as to Hewlett’s views regarding the Merger and the likelihood of the Merger being

consummated.

       47.    For example, in the September 17, 2001 speech, attached hereto as

Exhibit C, Fiorina, when she referred to the “...the skeptics around this combination [of

HP and Compaq]...” did not disclose the Omitted Material Facts, including that Hewlett

was among those “skeptics.” Failing to do so made that speech deceptive and

misleading, in light of the fact that the Defendants had previously stated, in the

September 3, 2001 Press Release, that the merger agreement had been

“...unanimously approved by both Boards of Directors....”

       48.    The Omitted Material Facts, had they been known by the investing public

during the Class Period, would have significantly affected the investing public’s

judgment as to the likelihood of the Merger being consummated and, specifically, would

have caused the investment public, during the Class Period, to have believed that the

likelihood of the Merger being consummated was significantly less than the investing

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public believed during the Class Period, without knowledge of the Omitted Material

Facts.

         49.   As detailed herein, the market price of HP common stock, throughout the

Class Period, was substantially and significantly influenced by the investment

community’s judgment as to the likelihood of the Merger being consummated.

         50.   Since, as described above, the stock market’s reaction to the proposed

Merger was negative, as reflected in the substantial decline in the price of HP stock

when the Merger was announced and throughout the Class Period, the Defendants’

failure to disclose the Omitted Material Facts in their public statements and filings

during the Class Period caused the price of HP common stock throughout the Class

Period to be artificially deflated, or lower than it would have been had the Omitted

Material Facts been disclosed by the Defendants and publicly known.

         Hewlett’s Opposition to the Merger is Publicly Disclosed by Hewlett on
         November 6, 2001

         51.   On November 6, 2001, Hewlett issued a press release, a copy of which is

attached hereto as Exhibit E (the “Hewlett Press Release”).

         52.   Through the Hewlett Press Release, the investing public learned, for the

first time, that Hewlett was opposed to the Merger and that the shares owned by

Hewlett, Hewlett’s sisters (Eleanor Hewlett Gimon and Mary Hewlett Jaffe) and the

William R. Hewlett Revocable Trust would be voted against the proposed Merger. The

Hewlett Press Release also advised that the William and Flora Hewlett Foundation had

reached a preliminary conclusion to vote its HP shares against the Merger.

         53.   In the Hewlett Press Release, Hewlett explained his reasons for voting


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against the Merger, including the same reasons Hewlett had previously, as detailed

above, expressed to the Defendants prior to the Class Period. As stated in the Hewlett

Press Release:

             (a)    “The combination would dramatically increase Hewlett-Packard’s
                    exposure to the unattractive PC business and dilute current
                    shareholders’ interest in Hewlett-Packard’s profitable printer
                    business. Given the lack of stockholder benefits, I believe the
                    extensive integration risks associated with this transaction are not
                    worth taking.”

             (b)    “acquiring Compaq would significantly increase Hewlett-Packard’s
                    exposure to PCs – an area that is neither growing nor profitable”;
                    and

             (c)    “The merger would substantially dilute the current stockholders’
                    interest in Hewlett-Packard’s profitable printer and imaging
                    business.”

      54.    The Hewlett Press Release observed that the combined holdings of

Hewlett, his sisters, the Trust and the Foundation were more than 100 million HP

shares.

      55.    The Hewlett Press Release caused the investing public to reduce its

estimation of the likelihood that the Merger would be consummated. Accordingly, since

the stock market viewed the prospect of the Merger being consummated negatively, the

price of HP stock rose significantly on November 6, 2001 in response to the Omitted

Material Facts contained in the Hewlett Press Release. Specifically, on November 6,

2001, HP common stock closed at $19.81 per share, up $2.92 per share from its close

on November 5, 2001, the last day of the Class Period. Almost 35 million shares of HP

stock traded on November 6, 2001. Within days of the investing public learning of

Hewlett’s opposition to the Merger from the Hewlett Press Release, the price of HP


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stock traded as high as $23.34 per share, slightly higher than the price at which it had

closed on August 31, 2001, last trading day prior to announcement of the Merger and

the beginning of the Class Period.

       56.   The stock market’s reaction to learning of Hewlett’s opposition to the

Merger from the Hewlett Press Release demonstrates the materiality of the Omitted

Material Facts which the Defendants knew, and failed to disclose, on September 3,

2001 and throughout the Class Period. The significant rise in the price of HP stock, on

extremely high volume, as a result of Hewlett’s announcement in the Hewlett Press

Release of his opposition to the Merger, demonstrates that prior thereto the market did

not know or understand that Hewlett was opposed to the Merger and demonstrates that

the announcement by Hewlett, in the Hewlett Press Release, that he was opposed to

the Merger surprised (and pleased) the marketplace.

       57.   Significantly, in a press release which the Defendants issued on

November 6, 2001, in response to the Hewlett Press Release, the Defendants publicly

admitted that they had previously known of Hewlett’s negative views regarding the

Merger and that they had expected Hewlett to oppose the Merger. Specifically, the

Defendants said:

             “While we regret very much the Hewlett family’s decision [to
             vote their shares against the Merger] we are not
             surprised....” (Emphasis added)

A copy of the Defendants’ November 6, 2001 press release is attached hereto as

Exhibit F.
                            CLASS ACTION ALLEGATIONS

       58.   The Plaintiff brings this action as a class action pursuant to Federal Rule


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of Civil Procedure 23(a) and (b)(3) on behalf of a Class consisting of all persons or

entities who sold shares of Hewlett-Packard common stock from September 4, 2001

through November 5, 2001, and who were damaged thereby. Excluded from the Class

are Defendants; members of the individual defendant’s immediate family; any director,

officer, subsidiary, or affiliate of HP or Compaq; any entity in which any excluded

person or entity has a controlling interest; and their legal representatives, heirs,

successors and assigns.

        59.   The members of the Class are so numerous that joinder of all members is

impracticable. While the exact number of Class members is unknown to Plaintiff at this

time and can only be ascertained through appropriate discovery, Plaintiff believes that

there are many thousands of members of the Class located throughout the United

States. Throughout the Class Period, HP common stock was actively traded in an

efficient market on the New York Stock Exchange. Record owners and other members

of the Class may be identified from records maintained by HP and/or its transfer agent

and may be notified of the pendency of this action by mail and publication, using forms

of notice similar to those customarily used in securities class actions.

        60.   Plaintiff’s claims are typical of the claims of other members of the Class

as all members of the Class were similarly affected by Defendants' wrongful conduct in

violation of federal law that is complained of herein.

        61.   Plaintiff will fairly and adequately protect the interests of the members of

the Class and has retained counsel competent and experienced in class and securities

litigation.

        62.   Common questions of law and fact exist as to all members of the Class

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and predominate over any questions solely affecting individual members of the Class.

Among the questions of law and fact common to the Class are:

              (a)    Whether the federal securities laws were violated by Defendants’
                     acts and omissions as alleged herein;

              (b)    Whether Defendants participated in and pursued the illegal course
                     of conduct complained of herein;

              (c)    Whether statements disseminated to the investing public during the
                     Class Period were misrepresentations and/or suffered from
                     omissions of material information as alleged herein;

              (d)    Whether the market price of HP common stock during the Class
                     Period was artificially deflated due to the material
                     misrepresentations and omissions complained of herein;

              (e)    To what extent the members of the Class have sustained damages
                     and the proper measure of damages.

       63.    A class action is superior to all other available methods for the fair and

efficient adjudication of this controversy since joinder of all members is impracticable.

As the damages suffered by individual Class members may be relatively small, the

expense and burden of individual litigations make it impossible for members of the

Class individually to seek redress for the wrongs done to them. There will be no

difficulty in the management of this suit as a class action.

                                         COUNT I

       AGAINST DEFENDANTS HEWLETT-PACKARD AND FIORINA FOR
       VIOLATIONS OF SECTION 10(b) OF THE EXCHANGE ACT AND RULE
       10b-5 PROMULGATED THEREUNDER.

       64.    Plaintiff repeats and realleges each and every allegation set forth above.

       65.    During the Class Period, Defendants, and each of them, carried out a

plan, scheme and course of conduct that was intended to and/or did: (i) deceive the


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investing public, including Plaintiff and other Class members, as alleged herein; (ii)

artificially deflate the market price of HP common stock; and (iii) cause Plaintiff and

other members of the Class to sell HP stock at artificially deflated prices. In furtherance

of this unlawful scheme, plan, and course of conduct, Defendants, and each of them,

took the actions set forth herein.

       66.    These Defendants: (a) employed devices, schemes and artifices to

defraud; (b) made untrue statements of material fact and/or omitted to state material

facts necessary to make the statements not misleading; and (c) engaged in acts,

practices and a course of business which operated as a fraud and deceit upon the

sellers of HP common stock in violation of Section 10(b) of the Exchange Act and

Rule 10b-5 promulgated thereunder.

       67.    Defendants' material misrepresentations and/or omissions were done

knowingly or recklessly.

       68.    As a result of the Defendants’ dissemination of the deceptive and

misleading information regarding the Merger and their failure to disclose the Omitted

Material Facts, as set forth above, the market price of HP’s common stock was

artificially deflated during the Class Period. In ignorance of the fact that the market

price of HP’s shares was artificially deflated, and relying upon the integrity of the market

in which HP common stock trades, and/or on the absence of material information that

was known to and/or recklessly disregarded by Defendants but not disclosed in public

statements by Defendants during the Class Period, Plaintiff and the other members of

the Class sold HP common stock during the Class Period at artificially deflated prices

and were damaged thereby.

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      69.    At the time of said misrepresentations and omissions, Plaintiff and the

other members of the Class were ignorant of the Omitted Material Facts and believed

Defendants’ statements regarding the Merger to be completely truthful, candid and not

deceptive or misleading or suffering from omissions of material facts. Had Plaintiff and

the other members of the Class known of the Omitted Material Facts, Plaintiff and the

other members of the Class would not have sold their HP common stock during the

Class Period, or, if they had sold such stock during the Class Period, they would not

have done so at the artificially deflated prices which they received for their HP common

stock which they sold during the Class Period.

      70.    By virtue of the foregoing, each of the Defendants violated Section 10(b)

of the Exchange Act and Rule 10b-5 promulgated thereunder.

      71.    As a direct and proximate result of Defendants' wrongful conduct, Plaintiff

and the other members of the Class suffered damages in connection with their sales of

HP’s common stock during the Class Period.

                                       COUNT II

      AGAINST DEFENDANT FIORINA PURSUANT TO
      SECTION 20(a) OF THE EXCHANGE ACT

      72.    Plaintiff repeats and realleges each and every allegation set forth above.

      73.    This claim is asserted against Defendant Fiorina pursuant to Section 20(a)

of the Exchange Act, 15 U.S.C. § 78t(a), on behalf of all Class members who sold HP

common stock during the Class Period, and were damaged thereby.

      74.    During the entire Class Period, Defendant Fiorina was a “controlling

person” of Defendant HP, within the meaning of Section 20(a) of the Exchange Act.


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       75.    Fiorina was a “controlling person” of HP because she had the influence

and power over HP to cause, and she did cause, HP to engage in the wrongful conduct

complained of herein, and because she had the power to have prevented HP from

engaging in the unlawful conduct alleged herein, but she purposely and intentionally did

not use that power to do so.

       76.    As set forth above in Count I, HP violated Section 10(b) of the Exchange

Act and Rule 10b-5 promulgated thereunder by its acts and omissions as alleged in this

Complaint. By virtue of her status as a “controlling person” of HP, Fiorina is liable, to

the same extent as is HP, for HP's violations of Section 10(b) of the Exchange Act and

Rule 10b-5 promulgated thereunder, pursuant to Section 20(a) of the Exchange Act.

                                 PRAYERS FOR RELIEF

       WHEREFORE, Plaintiff, on behalf of itself and the Class, pray for judgment as

follows:

       A.     declaring this action to be a plaintiff class action properly maintained

pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure;

       B.     finding that the Defendants violated Section 10(b) of the Exchange Act

and Rule 10b-5 promulgated thereunder by their acts and omissions as alleged in this

Complaint;

       C.     awarding Plaintiff and the members of the Class damages, together with

interest thereon;

       D.     awarding Plaintiff and other members of the Class their costs and

expenses of this litigation, including reasonable attorneys' fees and experts' fees and

other costs and disbursements; and

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      E.     awarding Plaintiff and other members of the Class such other and further

relief as may be just and proper under the circumstances.

                                 JURY TRIAL DEMAND

      Plaintiff demands a trial by jury.

                                           Respectfully submitted,

                                           THE PLAINTIFF



                                      By: __________________________
                                          Andrew M. Schatz (ct 00603)
                                          Jeffrey S. Nobel (ct 04855)
                                          Patrick A. Klingman (ct 17813)
                                          SCHATZ & NOBEL, P.C.
                                          330 Main Street
                                          Hartford, Connecticut 06106
                                          (860) 493-6292

                                           Edward F. Haber
                                           Thomas G. Shapiro
                                           Shapiro Haber & Urmy LLP
                                           75 State Street
                                           Boston, MA 02109
                                           (617) 439-3939

                                           Martin D Chitwood
                                           Lauren S. Antonino
                                           Chitwood & Harley, LLP
                                           2300 Promenade II
                                           1230 Peachtree Street, N.E.
                                           Atlanta, GA 30309
                                           (404) 873-3900

                                           Attorneys for the Plaintiff




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