Employment Agreement - Hewlett-Packard Co. and Robert P. Wayman


 
                             EMPLOYMENT AGREEMENT

     This Employment Agreement (the 'Agreement') is made and entered into
effective as of May 20, 1999 (the 'Effective Date') between Robert P. Wayman
(the 'Employee') and Hewlett-Packard Company, a Delaware corporation (the
'Company').

                                R E C I T A L S

     A.   The Employee is currently employed by the Company as Executive
Vice President, Finance and Administration and Chief Financial Officer.  In
addition, the Employee serves on the Company's Board of Directors.

     B.   The Company and the Employee desire to enter into this Agreement
to provide additional financial security and benefits to the Employee and to
encourage the Employee to continue his employment with the Company.

     C.   Capitalized terms used in the Agreement, to the extent not
otherwise defined, are defined in Section 5 below.

                               A G R E E M E N T

     In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of the Employee by the Company, the
parties agree as follows:

     1.   Term of Employment.

          (a)  Basic Rule.  The Company agrees to continue the Employee's
               ----------
employment, and the Employee agrees to remain in employment with the Company,
from the Effective Date until the second anniversary of the Effective Date,
subject to earlier termination pursuant to the provisions to this Agreement.

          (b)  Early Termination.  Subject to Section 4, the Company may
               -----------------
terminate the Employee's employment at any time by giving the Employee thirty
(30) days advance notice in writing.  If the Company terminates the Employee's
employment for any reason other than Cause, or if the Employee's employment
terminates as a result of Constructive Termination or by reason of his
Disability, the provisions of Section 4 shall apply.  The Employee may
terminate his employment at any time by giving the Company thirty (30) days
advance notice in writing.  If the Employee terminates his employment under the
preceding sentence, other than as a result of Constructive Termination or by
reason of his Disability, the Company shall have no obligation to pay or provide
any compensation or benefits under this Agreement on account of the Employee's
termination of employment, or for periods following such termination.  In such
event the Employee's rights under the benefit plans of the Company shall be
determined under the provisions of those plans.  Any 

 
waiver of notice shall be valid only if it is made in writing and expressly
refers to the applicable notice requirement of this Section 1.

          (c)  Death.  The Employee's employment shall terminate in the event
               -----
of his death.  The Company shall have no obligation to pay or provide any
compensation or benefits under this Agreement on account of the Employee's
death, or for periods following the Employee's death.  In such event the
Employee's rights under the benefit plans of the Company shall be determined
under the provisions of those plans.

          (d)  Cause.  The Company may terminate the Employee's employment for
               -----
Cause by giving the Employee thirty (30) days advance notice in writing.  No
compensation or benefits will be paid or provided to the Employee under this
Agreement on account of a termination for Cause, or for periods following the
date when such a termination is effective.  In such event the Employee's
rights under the benefit plans of the Company shall be determined under the
provisions of those plans.

          (e)  Retirement.  In the event the Employee's employment terminates
               ----------
by reason of Retirement (as defined in Section 5), the Company shall have no
obligation to pay or provide any compensation or benefits under this Agreement
on account of the Employee's Retirement, or for periods following the
Employee's Retirement.  In such event the Employee's rights under the benefit
plans of the Company shall be determined under the provisions of those plans.

          (f)  Termination of Agreement.  The terms of this Agreement
               ------------------------
shall terminate upon the earlier of (i) the date that all obligations of the
parties hereunder have been satisfied, or (ii) two (2) years after the
Effective Date.  A termination of the terms of this Agreement pursuant to the
preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to the
termination of the term of this Agreement.  Notwithstanding the foregoing, the
provisions of Sections 7, 8, 9, 10, 11 and 12 shall survive termination of this
Agreement.

     2.   Duties and Scope of Employment.
          ------------------------------

          (a)  Position.  The Company shall employ the Employee in the
               --------
position of Executive Vice President, Finance and Administration and Chief
Financial Officer.  The duties and responsibilities of the Employee shall
include the duties and responsibilities for the Employee's corporate office and
position as set forth in the Company's bylaws from time to time in effect and
such other duties and responsibilities as the Company's Chief Executive Officer
('CEO') may from time to time reasonably assign to the Employee, in all cases to
be consistent with the Employee's corporate offices and positions.

          (b)  Obligations.  During the term of the Employee's
               -----------
employment with the Company, the Employee shall devote substantially all of
his business efforts and time to the Company.  The foregoing, however, shall not
preclude the Employee from engaging in such activities and services as do not
materially interfere or conflict with the Employee's duties and
responsibilities to the Company.  The Employee shall comply with and be bound by
the Company's operating policies, procedures and practices from time to time in
effect during employment.

                                      -2-

 
     3.   Compensation.
          ------------

          (a)  Cash Compensation.  As compensation for his services the
               -----------------
Employee shall receive a base salary and shall be eligible to receive
additional variable compensation.  As of the Effective Date, the Employee's base
salary is $930,000, and his variable compensation amount is $270,000. During the
term of this Agreement, the Employee's base salary and variable amount for a
fiscal period of the Company ('Target Pay') shall be determined in accordance
with the Company's 1999 Variable Pay Plan as in effect as of the Effective Date,
as amended, or any successor plan (the 'Variable Pay Plan'). During the term of
this Agreement, the Compensation Committee of the Board (the 'Compensation
Committee') shall review the Employee's base salary and variable compensation
then in effect at least annually and shall increase such amounts as the
Compensation Committee may approve.  The Employee's base salary and variable
compensation shall be payable in accordance with the Company's normal payroll
practices and, in the case of the variable compensation, in accordance with the
terms of the Variable Pay Plan.

          (b)  Equity Compensation.  During the term of this Agreement, the
               -------------------
Employee shall receive stock options, stock and other equity-based
compensation awards under the Company's equity compensation plans and programs
at a level no less than the median level commensurate with the Employee's
responsibilities, subject in each case to the generally applicable terms and
conditions of the applicable plan or program in question.

          (c)  Employee Benefits.  During the term of this Agreement, the
               -----------------
Employee shall be eligible to participate in the employee benefit plans and
executive compensation programs maintained by the Company applicable to other
senior executives of the Company, including (without limitation) the Company's
Executive Deferred Compensation Plan, retirement plans, savings or
profit-sharing plans, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, vacation, sick leave, personal time off
and similar plans or programs, subject in each case to the generally applicable
terms and conditions of the applicable plan or program in question and to the
sole determination of the Board or any committee administering such plan or
program.

          (d)  Retirement Benefits.  The Employee is currently covered under
               -------------------
the Company's Excess Benefit Retirement Plan and its Officers Early Retirement
Plan (such programs referred to collectively herein as the 'Non-Qualified
Retirement Plans'), in addition to the Company's Retirement Plan and its
Deferred Profit-Sharing Plan.  Except as provided below with respect to the
Officers Early Retirement Plan, during the term of this Agreement the Company
shall continue to maintain such Non-Qualified Retirement Plans (or such
comparable alternative non-qualified retirement arrangements as the Company may,
in its discretion, determine to be sufficient to satisfy its obligations to the
Employee under this Section 3(d)), so as to provide benefits to the Employee
that are no less favorable than those available to the Employee under such Plans
as of the Effective Date, it being the Company's intention to deliver benefits
to the Employee at a level that is not less than that currently provided under
the Non-Qualified Retirement Plans.  Notwithstanding the preceding sentence, on
March 18, 1999, the Compensation Committee of the Board (the 'Compensation
Committee') terminated the Officers Early Retirement Plan effective November 1,
1999.  In connection with such termination, the Company will calculate a lump
sum equivalent benefit for the Employee, and will credit such amount to the
Employee's account under the Company's Executive Deferred Compensation Plan,
subject to the terms and conditions of that Plan.  

                                      -3-

 
Except as otherwise provided herein, the amount so credited to the Executive
Deferred Compensation Plan shall be subject to a vesting condition based upon
the Employee's continued employment with the Company.

          (e)  Transition Stock Award.  On or before May 20, 1999, the Company
               ----------------------
shall grant to the Employee a special restricted stock award (the 'Transition
Stock Award') under the Company's 1995 Incentive Compensation Plan (the '1995
Plan') for a number of shares of Company common stock determined by dividing
(i) three times the Employee's Target Pay as of the date of grant by (ii) the
per share fair market value of the Company's common stock as of the date of
grant.  The shares subject to the Transition Stock Award (the 'Award Shares')
shall be unvested and shall remain unvested unless and until the occurrence of a
'Vesting Event' (as defined in Section 5).  Upon a Vesting Event the Award
Shares shall vest in full.  In the event the Employee's employment with the
Company terminates for any reason prior to a Vesting Event, the Award Shares
shall be forfeited in their entirety without payment to the Employee.

     4.   Vesting Event.
          -------------

          (a)  Vesting Event.  Upon the occurrence of a Vesting Event on or
               -------------
before the second anniversary of the Effective Date, the Employee shall be
entitled to receive the following benefits, provided that in the case of a
Vesting Event that involves the termination of the Employee's employment with
the Company, to receive such benefits the Employee must execute and timely
deliver to the Company a release of claims in favor of the Company in the form
of the release attached hereto as Exhibit A (or such other form of release as
the Company determines to be appropriate):

               (i)   Options. The unvested portion of any stock option(s) held
                     -------
by the Employee under the Company's stock plans shall vest and become
exercisable in full.

               (ii)  Restricted Stock.  The unvested portion of any
                     ----------------
restricted stock granted to the Employee under the Company's stock plans other
than (i) the Transition Stock Award, and (ii) restricted stock that is subject
to vesting based upon attainment of performance targets ('Performance
Restricted Stock'), is referred to herein as the 'Unvested Restricted Stock.'
Upon the occurrence of a Vesting Event, the Unvested Restricted Stock shall vest
on a pro-rated basis by multiplying such unvested shares by a fraction, the
numerator of which is the number of calendar months (including for this purpose
any partial months) between the date of grant and the date of the Vesting Event,
and the denominator of which is the number of calendar months (including for
this purpose any partial months) between the date of grant and the originally
scheduled vesting date applicable to such shares.  In the event the Employee
remains employed following a Vesting Event, he shall continue to vest in any
shares of Unvested Restricted Stock that remain unvested after applying the pro-
rated vesting described in the preceding sentence, based upon the Employee's
continued employment and subject to the original terms of such Unvested
Restricted Stock. In the case of the Employee's unvested Performance Restricted
Stock, the Employee shall vest in accordance with the original terms applicable
to such Performance Restricted Stock, provided that in the event the Employee's
employment with the Company terminates for any reason after a Vesting Event,
other than by the Company for Cause, the Employee shall vest in a portion of the
unvested shares of Performance Restricted Stock and shall receive a number of
unrestricted shares, such portion and such number to be determined by the
Company in accordance with past practices 

                                      -4-

 
consistently applied with respect to unvested shares of Performance Restricted
Stock in the case of an employee whose employment terminates by reason of
retirement or permanent and total disability.

               (iii) Special Restricted Stock Award. The Special Restricted
                     ------------------------------
Stock Award shall vest in full.

               (iv)  Retiree Benefits.  The Employee shall be considered
                     ----------------
to have met the definition of 'Retirement' for purposes of the Company's
Continued Group Medical and SeniorMed Program, for purposes of the Company's
Officers Early Retirement Plan, and for purposes of the Company's stock option
plans.  In addition, any employment or other similar requirement applicable to
the Officers Early Retirement Plan termination amount (as credited to the
Employee's account under the Company's Executive Deferred Compensation Plan,
together with any earnings credited thereto) shall be waived.

               (v)   Health Plan Coverage and Financial Counseling.  In
                     ---------------------------------------------
connection with the Employee's termination of employment (other than by the
Company for Cause) at or after the Vesting Date, the Employee may elect, to the
extent eligible, to continue his group health insurance benefits pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA). The
Company shall also provide to the Employee for one year after such termination
professional financial counseling services comparable in scope and value to the
financial counseling services made available to the Employee immediately prior
to such termination.

          (b)  Other Termination.  If the Employee's employment terminates for
               -----------------
any reason after the second anniversary of the Effective Date, or if, prior to
a Vesting Event, (i) the Employee voluntarily resigns from the Company (other
than as a Constructive Termination), (ii) the Company terminates the Employee's
employment for Cause, or (iii) the Employee's employment terminates by reason of
his Retirement or Death, then the Employee shall not be entitled to receive
severance or other benefits under this Agreement and shall be entitled to
benefits (if any) only as may then be established under the Company's then
existing benefit plans and policies at the time of such resignation or
termination.

     5.   Definition of Terms.  The following terms referred to in this
          -------------------
Agreement shall have the following meanings:

          (a)  Board.  'Board' means the Board of Directors of the Company.
               -----
Where applicable, the term 'Board' shall include a committee of the Board.

          (b)  Cause.  'Cause' means (i) the Employee's willful failure to
               -----
substantially perform his material duties (other than as a failure resulting
from the Employee's complete or partial incapacity due to physical or mental
illness or impairment) for a period of thirty (30) days after a written demand
for substantial performance is delivered to the Employee by the Board that
specifically identifies the manner in which the Board believes that the Employee
has not substantially performed his duties, (ii) a material and willful
violation of a federal or state law or regulation applicable to the business of
the Company, and (iii) a willful act by the Employee that constitutes gross
misconduct and that is injurious to the Company. No act, or failure to act, by
the Employee shall be considered 'willful' unless committed without good faith
and without a reasonable belief that the act or omission was in the Company's
best interests.

                                      -5-

 
          (c)  Constructive Termination.  The Employee's employment may be
               ------------------------
terminated by reason of Constructive Termination.  For purposes of this
Agreement, 'Constructive Termination' means the Employee terminates his
employment with the Company as a result of one or more of the following events
(unless, in the case of (i), (ii) and (iii) below, such event(s) applies
generally to all officers of the Company): (i) without the Employee's express
written consent, a reduction by the Company in the Employee's annualized Target
Pay relative to his annualized Target Pay as in effect immediately prior to such
reduction; (ii) a reduction in the Employee's annualized base salary relative to
his annualized base salary as in effect immediately prior to such reduction
(other than a reduction under the Variable Pay Plan in accordance with its terms
as consistently applied); (iii) without the Employee's express written consent,
a material reduction by the Company in the kind or level of employee benefits to
which the Employee is entitled immediately prior to such reduction with the
result that the Employee's overall benefits package is significantly reduced;
and (iv) without the Employee's express written consent, the Company fails to
retain the Employee as its Executive Vice President, Finance and Administration
and Chief Financial Officer.

          (d)  Disability.  'Disability' means a disability under the
               ----------
Company's Income Protection Plan that entitles the Employee to benefits under
such Plan for a period of at least twenty-six (26) weeks.

          (e)  Distribution.  'Distribution' means the Company's distribution
               ------------
of its shares in the Distribution Company to the Company's stockholders.

          (f)  Distribution Company.  'Distribution Company' means the
               --------------------
subsidiary of the Company comprising its testing and measurement business and
established by the Company for the purpose of giving effect to the
Distribution.

          (g)  Retirement.  'Retirement' means the Employee's resignation from
               ----------
the Company after attaining age fifty-five (55) years of age with fifteen (15)
or more 'full-time equivalent years of service' (within the meaning of the
Company's Continued Group Medical and SeniorMed Program as in effect on the
Effective Date).

          (h)  Termination Date.  'Termination Date' means (i) the date on
               ----------------
which the Company delivers notice of termination to the Employee or such later
date, not to exceed ninety (90) days, specified in the notice of termination,
(ii) in the event the term of employment ends by reason of the Employee's death,
the date of death, or (iii) if the Agreement is terminated by the Employee, the
date on which the Employee delivers notice of termination to the Company.

          (i)  Vesting Event.  'Vesting Event' means (i) a termination of the
               -------------
Employee's employment on or before the second anniversary of the Effective Date
by the Company other than for Cause or by the Employee as a result of
Constructive Termination, or (ii) the Distribution, provided the Employee is an
employee on the Distribution date and provided further that the Distribution
occurs on or before the Second Anniversary of the Effective Date.

     6.   Golden Parachute Payments.  In the event it shall be determined that
          -------------------------
any payment by the Company to or for the benefit of the Employee, whether paid
or payable under this Agreement or otherwise but determined without regard to
any additional payments required under this Section 6 (a 'Payment'), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the 'Code'), or any comparable federal, state or local
excise tax (such 

                                      -6-

 
excise tax, together with any interest and penalties, are hereinafter
collectively referred to as the 'Excise Tax'), then the Employee shall be
entitled to receive an additional payment from the Company (a 'Gross-Up
Payment') in such an amount that after the payment of all taxes (including,
without limitation, any interest and penalties on such taxes and the Excise Tax)
on the payment and on the Gross-Up Payment, the Employee shall retain an amount
equal to the Payment minus all applicable taxes on the Payment. The intent of
the parties is that the Company shall be solely responsible for, and shall pay,
any Excise Tax on the Payment and Gross-Up Payment and any income and employment
taxes (including without limitation, penalties and interest) imposed on any
Gross-Up Payment (as well as any loss of tax deduction caused by the Gross-Up
Payment. Unless the Company and the Employee otherwise agree in writing, all
determinations required to be made under this Section and the assumptions to be
utilized in arriving at such determinations, shall be made in writing in good
faith by the accounting firm serving as the Company's independent public
accountants immediately prior to the event giving rise to such Payment (the
'Accountants'). For purposes of making the calculations required by this Section
6, the accountants may make reasonable assumptions and approximations concerning
the application of Sections 280G and 4999 of the Code. The Company and the
Employee shall furnish to the Accountants such information and documents as the
Accountants may reasonably request to make a determination under this Section.
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section.

     7.   Non-Compete; Non-Solicit.
          ------------------------

          (a)  The parties hereto recognize that the Employee's services are
special and unique and that the level of compensation and the provisions herein
are partly in consideration of and conditioned upon the Employee's not competing
with the Company, and that the Employee's covenant not to compete or solicit as
set forth in this Section 7 during and after employment is essential to protect
the business and good will of the Company.

          (b)  The Employee agrees that during the term of employment with the
Company and for a period of eighteen (18) months following the Termination Date
(the 'Covenant Period'), the Employee shall not render services for any
organization or engage directly or indirectly in any business that, in the
opinion of the Company, competes with or is in conflict with the interests of
the Company.

          (c)  During the Covenant Period, the Employee shall not, directly
or indirectly, induce or attempt to influence any employee of the Company to
leave its employ.

          (d)  During the Covenant Period, the Employee shall not, without
prior written authorization from the Company, disclose to anyone outside the
Company, or use in other than the Company's business, any confidential
information and material relating to the business of the Company.

          (e)  The Employee agrees that the Company would suffer an
irreparable injury if the Employee were to breach the covenants contained in
Sections 7(b), (c) or (d) and that the Company would by reason of such breach or
threatened breach be entitled to injunctive relief in a court of appropriate
jurisdiction and the Employee hereby stipulates to the entering of such
injunctive relief prohibiting the Employee from engaging in such breach.

                                      -7-

 
          (f)  If any of the restrictions contained in this Section 7 shall
be deemed to be unenforceable by reason of the extent, duration or geographical
scope or other provisions thereof, then the parties hereto contemplate that the
court shall reduce such extent, duration, geographical scope or other provision
hereof and enforce this Section 7 in its reduced form for all purposes in the
manner contemplated hereby.

     8.   Successors.
          ----------

          (a)  Company's Successors.  Any successor to the Company (whether
               --------------------
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and assets shall assume the obligations under this Agreement and agree expressly
to perform the obligations under this Agreement in the same manner and to the
same extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
'Company' shall include any successor to the Company's business and assets that
executes and delivers the assumption agreement described in this Section 8(a) or
that becomes bound by the terms of this Agreement by operation of law.

          (b)  Employee's Successors.  The terms of this Agreement and all
               ---------------------
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, devisees and legatees.

     9.   Notice.
          ------

          (a)  General.  Notices and all other communications contemplated by
               -------
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid.  In the case of the Employee,
mailed notices shall be addressed to him at the home address that he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its General Counsel.

          (b)  Notice of Termination.  Any termination by the Company or by
               ---------------------
the Employee shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 9(a) of this Agreement. Such notice
shall indicate the specific termination provision in this Agreement relied upon,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated, and shall
specify the Termination Date (which shall be not more than ninety (90) days
after the giving of such notice). The failure by the Employee to include in the
notice any fact or circumstance that contributes to a showing of Constructive
Termination shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.

     10.  Information.  The Employee agrees not to disclose to others, or to
          -----------
take or use for the Employee's own purposes or for the purposes of others,
during or after the Employee's employment, any Information owned or controlled
by the Company or any of its subsidiary or affiliated companies. The Employee
agrees that these restrictions shall also apply to all (i) Information in the
Company's possession belonging to third parties, and (ii) Information conceived,
originated, discovered or developed, in whole or in part, by the Employee while
an employee of the Company. 

                                      -8-

 
As used herein, 'Information' includes trade secrets and other confidential or
proprietary business, technical, personnel or financial information, whether or
not the Employee's work product, in written, graphic, oral or other tangible or
intangible forms, including but not limited to specifications, samples, records,
data, computer programs, drawings, diagrams, models, customer names, business or
marketing plans, studies, analyses, projections and reports, communications by
or to attorneys (including attorney-client privileged communications), memos and
other materials prepared by attorneys or under their direction (including
attorney work product), and software systems and processes. Any Information
which is not readily available to the public shall be considered to be a trade
secret and confidential property, even if it is not specifically marked as such,
unless the Company advises the Employee otherwise in writing. The Employee
agrees that on termination of employment, the Employee will return to the
Company all property (including any copies thereof) belonging to the Company,
including all documents or other media in the Employee's possession or control
which in any way incorporate or reflect any Information.

     11.  Arbitration.
          -----------

          (a)  Agreement.  The Company and The Employee agree that any dispute
               ---------
or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof shall be settled by binding arbitration, unless otherwise
required by law, to be held in Santa Clara County, California, in accordance
with the National Rules for the Resolution of Employment Disputes then in effect
of the American Arbitration Association (the 'Rules'). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.

          (b)  Governing Law.  The arbitrators shall apply California law to
               -------------
the merits of dispute or claim, without reference to rules of conflicts of law.
The Employee hereby expressly consents to the personal jurisdiction of the state
and federal courts located in California for any action or proceeding arising
form or relating to this Agreement or relating to any arbitration in which the
parties are participants.

          (c)  Costs and Fees of Arbitration.  The Employee shall pay the
               -----------------------------
initial arbitration filing (not to exceed $200.00), and the Company shall pay
the remaining costs and expenses of such arbitration (unless the Employee
requests that each party pay one-half of the costs and expenses of such
arbitration or unless otherwise required by law). The Company and the Employee
shall each pay separately its counsel fees and expenses unless otherwise
required by law.

          (d)  Equitable Relief.  The parties may apply to any court of
               ----------------
competent jurisdiction for a temporary restraining order, preliminary
injunction, or other interim or conservatory relief, as necessary, without
breach of this arbitration agreement and without abridgment of the powers of the
arbitrator.

          (e)  Employee's Representation.  THE EMPLOYEE HAS READ AND
               -------------------------
UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. THE EMPLOYEE UNDERSTANDS
THAT BY SIGNING THIS AGREEMENT, HE AGREES TO SUBMIT ANY FUTURE CLAIMS ARISING
OUT OF, RELATING TO, OR IN CONNECTION WITH THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE OR BREACH OF THIS 

                                      -9-

 
AGREEMENT, TO BINDING ARBITRATION, UNLESS OTHERWISE REQUIRED BY LAW, AND THAT
THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF HIS RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO THIS AGREEMENT.

     12.  Miscellaneous Provisions.
          ------------------------

          (a)  No Duty to Mitigate.  The Employee shall not be required to
               -------------------
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking new employment or in any other manner), nor shall any such payment be
reduced by any earnings that the Employee may receive from any other source.

          (b)  Waiver.  No provision of this Agreement shall be modified,
               ------
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.

          (c)  Whole Agreement.  No agreements, representations or
               ---------------
understandings (whether oral or written and whether express or implied) that are
not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

          (d)  Choice of Law.  The validity, interpretation, construction and
               -------------
performance of this Agreement shall be governed by the laws of the State of
California.

          (e)  Severability.  The invalidity or unenforceability of any
               ------------
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

          (f)  Employment At Will; Limitation of Remedies.  The Company and
               ------------------------------------------
the Employee acknowledge that the Employee's employment is at will, as defined
in the applicable law. If the Employee's employment terminates for any reason,
the Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement.

          (g)  No Assignment of Benefits.  The rights of any person to payments
               -------------------------
or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 12(g) shall be
void.

          (h)  Taxes.  All payments made pursuant to this Agreement will be
               -----
subject to all applicable reporting obligations and any tax or other
contributions required to be withheld under Federal, state or local law, as
interpreted by the Company.

          (i)  Assignment by Company.  The Company may assign its rights under
               ---------------------
this Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the Company. In the
case of any such assignment, the term 

                                      -10-

 
'Company' when used in a section of this Agreement shall mean the corporation
that actually employs the Employee.

          (j)  Counterparts.  This Agreement may be executed in counterparts,
               ------------
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.

    IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.


COMPANY:                       By: /s/ S.T. Jack Brigham III
                                  --------------------------------------------
                                   June 15, 1999

                               Title: Senior Vice President Corporate Affairs,
                                     -----------------------------------------
                                      General Counsel


EMPLOYEE:                          /s/ Robert P. Wayman
                                  --------------------------------------------
                                   Robert P. Wayman

                                      -11-

 

                                   EXHIBIT A
                                   ---------


                          RELEASE OF CLAIMS AGREEMENT

     This Release of Claims Agreement ('Agreement') is made by and between 
Hewlett-Packard Company (the 'Company') and Robert P. Wayman ('Employee').

     WHEREAS, Robert P. Wayman was employed by the Company;

     WHEREAS, the Company and Employee have entered into an Employment Agreement
effective as of May 20, 1999 (the 'Employment Agreement');

     NOW THEREFORE, in consideration of the mutual promises made herein, the 
Company and Employee (collectively referred to as 'the Parties') hereby agree as
follows:

     1.    Termination.   Employee's employment from the Company terminated on 
           -----------
________________.

     2.    Consideration. Subject to and in consideration of Employee's release 
           -------------
of claims as provided herein, the Company has agreed to pay Employee certain 
benefits as set forth in the Employment Agreement.

     3.    Payment of Salary. Employee acknowledges and represents that the 
           -----------------
Company has paid all salary, wages, bonuses, accrued vacation, commissions and 
any and all other benefits due to Employee.


     4.    Release of Claims. Employee agrees that the foregoing consideration 
           -----------------
represents settlement in full of all outstanding obligations owed to Employee by
the Company. Employee, on behalf of himself, and his respective heirs, family 
members, executors and assigns, hereby fully and forever releases the Company 
and its past, present and future officers, agents, directors, employees, 
investors, shareholders, administrators, affiliates, divisions, subsidiaries, 
parents, predecessor and successor corporations, and assigns, from, and agrees 
not to sue or otherwise institute or cause to be instituted any legal or 
administrative proceedings concerning any claim, duty, obligation or cause of 
action relating to any matters of any kind, whether presently known or unknown, 
suspected or unsuspected, that he may possess arising from any omissions, acts 
or facts that have occurred up until and including the Effective Date of this 
Agreement including, without limitation.

          (a)   any and all claims relating to or arising from Employee's 
employment relationship with the Company and the termination of that 
relationship;

          (b)   any and all claims relating to, or arising from, Employee's 
right to purchase, or actual purchase of shares of stock of the Company, 
including, without limitation, any claims for fraud, misrepresentation, breach
of fiduciary duty, breach of duty under applicable state corporate law, and 
securities fraud under any state or federal law;

          (c)   any and all claims for wrongful discharge of employment; 
termination in violation of public policy; discrimination; breach of contract, 
both express and implied; breach of a covenant of good faith and fair dealing, 
both express and implied; promissory estoppel; negligent or intentional 
infliction of emotional distress; negligent or intentional misrepresentation; 
negligent or


 
intentional interference with contract or prospective economic advantage; unfair
business practices; defamation; libel; slander; negligence; personal injury; 
assault; battery; invasion of privacy; false imprisonment; and conversion:

          (d)   any and all claims for violation of any federal, state or 
municipal statute, including, but not limited to, Title VII of the Civil Rights 
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment 
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor 
Standards Act, the Employee Retirement Income Security Act of 1974, The Worker 
Adjustment and Retraining Notification Act, the California Fair Employment and 
Housing Act, and Labor Code section 201, et seq. and section 970, et seq. and 
all amendments to each such Act as well as the regulations issued thereunder;

          (e)  any and all claims for violation of the federal, or any state, 
constitution;

          (f)  any and all claims arising out of any other laws and regulations 
relating to employment or employment discrimination; and

          (g)  any and all claims for attorneys' fees and costs.

Employee agrees that the release set forth in this section shall be and remain 
in effect in all respects as a complete general release as to the matters 
released. This release does not extend to any obligations incurred under this 
Agreement.

     5.   Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges 
          ---------------------------------------------
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ('ADEA') and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
the ADEA after the Effective Date of this Agreement. Employee acknowledges that
the consideration given for this waiver and release Agreement is in addition to
anything of value to which Employee was already entitled. Employee further
acknowledges that he has been advised by this writing that (a) he should consult
with an attorney prior to executing this Agreement; (b) he has at least twenty-
                 -----
one (21) days within which to consider this Agreement; (c) he has seven (7) days
following the execution of this Agreement by the parties to revoke the
Agreement; and (d) this Agreement shall not be effective until the revocation
period has expired. Any revocation should be in writing and delivered to the
General Counsel at Hewlett-Packard Company, 3000 Hanover street, Palo Alto,
California 94304, by close of business on the seventh day from the date that
Employee signs this Agreement.

     6.  Civil Code Section 1542. Employee represents that he is not aware of 
         -----------------------
any claims against the Company other than the claims that are released by this 
Agreement. Employee acknowledges that he has been advised by legal counsel and 
is familiar with the provisions of California Civil Code Section 1542, which 
provides as follows:

          A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
          NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
          RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
          SETTLEMENT WITH THE DEBTOR.

 
     Employee, being aware of said code section, agrees to expressly waive any
rights he may have thereunder, as well as under any other statute or common law
principles of similar effect.

     7.   No Pending or Future Lawsuits. Employee represents that he has no 
          -----------------------------  
lawsuits, claims, or actions pending in his name, or on behalf of any other 
person or entity, against the Company or any other person or entity referred to
herein. Employee also represents that he does not intend to bring any claims on 
his own behalf or on behalf of any other person or entity against the Company or
any other person or entity referred to herein.

     8.   Confidentiality. Employee agrees to use his best efforts to maintain
          ---------------
in confidence the existence of this Agreement, the contents and terms of this 
Agreement, and the consideration for this Agreement (hereinafter collectively 
referred to as 'Release Information'). Employee agrees to take every reasonable
precaution to prevent disclosure of any Release Information to third parties, 
and agrees that there will be no publicity, directly or indirectly, concerning 
any Release Information. Employee agrees to take every precaution to disclose 
Release Information only to those attorneys, accountants, governmental entities,
and family members who have a reasonable need to know of such Release 
Information.
 
     9.   No Cooperation. Employee agrees he will not act in any manner that 
          --------------
might damage the business of the Company. Employee agrees that he will not 
counsel or assist any attorneys or their clients in the presentation or 
prosecution of any disputes, differences, grievances, claims, charges, or 
complaints by any third party against the Company and/or any officer, director, 
employee, agent, representative, shareholder or attorney of the Company, unless 
under a subpoena or other court order to do so.

     10.  Costs. The Parties shall each bear their own costs, expert fees, 
          -----
attorneys' fees and other fees incurred in connection with this Agreement.

     11.  Authority. Employee represents and warrants that he has the capacity 
          ---------
to act on his own behalf and on behalf of all who might claim through him to
bind them to the terms and conditions of this Agreement.
 
     12.  No Representations. Employee represents that he has had the
          ------------------     
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement. 

     13.  Severability. In the event that any provision hereof becomes or is 
          ------------
declared by a court of competent jurisdiction to be illegal, unenforceable or 
void, this Agreement shall continue in full force and effect without said 
provision.

     14.  Entire Agreement. This Agreement and the Employment Agreement and the
          ----------------
agreements and plans referenced therein represent the entire agreement and 
understanding between the Company and Employee concerning Employee's separation
from the Company, and supersede and replace any and all prior agreements and
understandings concerning Employee's relationship with the Company and his
compensation by the Company. This Agreement may only be amended in writing
signed by Employee and executive officer of the Company.
    

 
     15.  Governing Law. This Agreement shall be governed by the internal 
          -------------
substantive laws, but not the choice of law rules, of the State of California.

     16.  Effective Date. This Agreement is effective eight (8) days after it 
          --------------
has been signed by both Parties.

     17.  Counterparts. This Agreement may be executed in counterparts, and each
          ------------
counterpart shall have the same force and effect as an original and shall 
constitute an effective, binding agreement on the part of each of the
undersigned.

     18.  Voluntary Execution of Agreement. This Agreement is executed 
          --------------------------------
voluntarily and without any duress or undue influence on the part or behalf of 
the Parties hereto, with the full intent of releasing all claims. The Parties 
acknowledge that:

          (a)  They have read this Agreement;

          (b)  They have been represented in the preparation, negotiation, and 
execution of this Agreement by legal counsel of their own choice or that they 
have voluntarily declined to seek such counsel;

          (c)  They understand the terms and consequences of this Agreement and
of the releases it contains;

          (d)  They are fully aware of the legal and binding effect of this 
Agreement.

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the 
respective dates set forth below.

                                                  HEWLETT-PACKARD COMPANY


Dated: ______________, _____                      By ___________________________


                                                  ______________, an individual


Dated: ______________, ____                       ______________________________
                                                  Robert P. Wayman