Mark Hurd Employment Agreement

MARK HURD EMPLOYMENT AGREEMENT

This Agreement is entered into as of March 29, 2005 by
and between Hewlett-Packard Company (the “Company”) and Mark Hurd (“Executive”).

1. Duties
and Scope of Employment.

(a) Positions
and Duties. As of April 1, 2005 (the
“Effective Date”), Executive will serve as President and Chief Executive
Officer, reporting to the Company’s Board of Directors (the “Board”). Executive will render such business and
professional services in the performance of his duties, consistent with
Executive’s position within the Company, as will reasonably be assigned to him
by the Board. The period Executive is
employed by the Company under this Agreement is referred to herein as the “Employment
Term”.

(b) Board
Membership. Executive will be
appointed to serve as a member of the Board as of the Effective Date. Thereafter, at each annual meeting of the
Company’s stockholders during the Employment Term, the Company will nominate
Executive to serve as a member of the Board.
Executive’s service as a member of the Board will be subject to any
required stockholder approval. Upon the
termination of Executive’s employment for any reason, Executive will be deemed
to have resigned from the Board (and any boards of subsidiaries) voluntarily,
without any further required action by the Executive, as of the end of the
Executive’s employment and Executive, at the Board’s request, will execute any
documents necessary to reflect his resignation.

(c) Obligations. During the Employment Term, Executive will
devote Executive’s full business efforts and time to the Company and will use
good faith efforts to discharge Executive’s obligations under this Agreement to
the best of Executive’s ability. For the
duration of the Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the Board (which approval will not
be unreasonably withheld); provided, however, that Executive may, without the
approval of the Board, serve in any capacity with any civic, educational, or
charitable organization, provided such services do not interfere with Executive’s
obligations to Company. This Agreement
will not take effect until Executive obtains an agreement, in a form acceptable
to the Company, from the Board of Directors of NCR Corporation (the “Current
Employer”) stating that any non-competition agreements entered into between
Executive and the Current Employer, including, but not limited to, the letter
agreement dated March 6, 2003 between Executive and the Current Employer will
not be enforced by the Current Employer during his employment with Company.

2. At-Will
Employment. Executive and the
Company agree that Executive’s employment with the Company constitutes “at-will”
employment. Executive and the Company
acknowledge that this employment relationship may be terminated at any time,
upon written notice to the other party, with or without good cause or for any
or no cause, at the option either of the Company or Executive. However, as described in this Agreement,
Executive may be entitled to severance benefits depending upon the
circumstances of Executive’s termination of employment.

3. Term
of Agreement. This Agreement will
have an initial term of four (4) years commencing on the Effective Date.

4. Compensation.

(a) Base
Salary. As of the Effective Date,
the Company will pay Executive an annual salary of $1,400,000 as compensation
for his services (such annual salary, as is then effective, to be referred to
herein as “Base Salary”). The Base
Salary will be paid periodically in accordance with the Company’s normal
payroll practices and be subject to the usual, required withholdings. Executive’s salary will be subject to review
by the HR/Compensation Committee of the Board, or any successor thereto (the “Committee”)
not less than annually, and adjustments will be made in the discretion of the
Committee. Notwithstanding the
foregoing, the Base Salary will not be reduced other than pursuant to a
reduction that also is applied to substantially all other executive officers of
the Company and that reduces the Base Salary by a percentage reduction that is
no greater than the percentage reduction applied to substantially all other
executive officers.

(b) Annual
Incentive. Executive will be
eligible to receive annual cash incentives payable for the achievement of
performance goals established by the Committee.
Executive’s target annual incentive will be at least 200% of Base Salary,
with a maximum target opportunity of 600% of Base Salary assuming performance
goals are achieved. The actual earned annual
cash incentive, if any, payable to Executive for any performance period will
depend upon the extent to which the applicable performance goal(s) specified by
the Committee are achieved and will be decreased or increased for under- or
over-performance. Except as specifically
provided herein, Executive’s annual cash incentive will be subject to the terms
and conditions of the Company’s Pay for Results Plan or any successor thereto,
including payment date and continued employment obligations. Currently these incentives are calculated and
paid on a fiscal half-year basis. For
the second half of fiscal year 2005 and the first half of fiscal year 2006, all
performance goals will be deemed to have been achieved at target. Any incentive earned during the first half of
fiscal 2005 will be pro-rated based on the hire date (calculated by multiplying
any annual incentive earned by Executive by a fraction with a numerator equal
to the number of days between the Effective Date and the end of the calendar
year and a denominator equal to 365).

(c) Long-Term
Incentives.

(i) Long-Term
Ongoing Performance Cash Incentive.
Executive will be eligible to receive long-term performance cash incentives
at a level at least equal to 300% of Base Salary with a maximum award level of
900% of Base Salary, pro-rated for mid-plan entry in all existing cycles. Any long-term incentive will be subject to
terms and conditions of the Company’s Long-Term Cash Performance Plan (which is
part of the Company’s 2004 Stock Incentive Plan), or any successor thereto, and
the Committee’s standard terms and conditions for the applicable type of award,
including vesting criteria such as continued service or performance objectives. For the first year of the first full
performance cycle (that begins May 1, 2005), it will be assumed that any
applicable performance goals were achieved at target.

(ii) Stock
Options. Executive will be granted a
stock option to purchase 700,000 shares of Company common stock at an exercise
price equal to the average of the highest and lowest quoted sales price on the
New York Stock Exchange (“NYSE”) for the common stock of

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the
Company on the Effective Date (the “Initial
Option”). The Initial Option,
except as provided in this Agreement, will be subject to the terms, definitions
and provisions of the Company’s 2004 Stock Incentive Plan (the “2004 Plan”) and
will be scheduled to vest at a rate of twenty-five percent (25%) on each
anniversary of the grant over four (4) years assuming Executive’s continued
employment with the Company. If
Executive is terminated for reasons other than Cause, Executive’s Initial
Option will become fully vested and will remain exercisable until the earlier
of the date provided in the applicable stock option agreement or under any
applicable work force reduction policy adopted by the Company from time to time. The Initial Option will have a maximum term
of eight (8) years.

(d) One-Time
Make-Up Grants: Restricted Stock and Options. In order to make up for compensation
forfeited from his former employer when Executive joins the Company, Executive
will be granted a stock option and shares of restricted common stock of the
Company. The stock option will cover
450,000 shares of Company common stock at an exercise price equal to the
average of the highest and lowest quoted sales price on the NYSE for the common
stock of the Company on the Effective Date.
The restricted stock grant will be for 400,000 shares of Company common
stock. The restricted stock and option
will be granted under the Company’s 2004 Plan, and except as provided in this
Agreement will be governed by the terms of the 2004 Plan and will be scheduled
to vest at a rate of thirty-three and a third percent (33.3%) on each
anniversary of the grant over three (3) years assuming Executive’s continued
employment with the Company. The option
will have a maximum term of eight (8) years.

If Executive is terminated for reasons other than Cause, Executive’s
stock option will become fully vested and will remain exercisable until the
earlier of the date provided in the applicable stock option agreement or under
any applicable work force reduction policy adopted by the Company from time to
time. Upon his termination without
Cause, an additional number of shares of Executive’s unvested restricted stock
will vest on a pro-rata basis. This will
be calculated separately for each vesting tranche by (i) multiplying the number
of unvested shares in the tranche by a fraction with a numerator equaling the
number of whole months that have elapsed from the Effective Date to the Date of
Termination and a denominator equal to twelve (12) for those shares scheduled
to vest during the first year of the grant, a denominator equal to twenty-four
(24) for those shares scheduled to vest during the second year of the grant and
a denominator equal to thirty-six (36) for those shares scheduled to vest
during the third year of the grant and then (ii) subtracting the number of
shares in that tranche that previously vested.

(e) Signing
Bonus. Within thirty (30) days of
the Effective Date, Executive will receive a signing bonus equal to $2,000,000
(the “Signing Bonus”). If Executive is
terminated for Cause within two (2) years of the Effective Date, Executive will
return to the Company an amount equal to the Signing Bonus multiplied by a
fraction with the numerator equaling the number of whole months that have
elapsed from the Effective Date to the Date of Termination and a denominator
equal to twenty-four (24).

(f) Price
Protection. Executive will be
reimbursed for declines in the per share fair market value of the Current
Employer’s common stock (“Price Protection”).
The Price Protection will only apply to 850,184 shares covered by
Executive’s vested options issued by the Current Employer prior to March 24,
2005. The Price Protection is limited to
declines of value of twenty percent (20%) or less. If the decline of value is greater than
twenty percent (20%), Executive will be reimbursed only for the first twenty
percent (20%) of the common stock’s decline in value. For purposes of this section, “per share fair
market value” will mean the highest
closing price during the

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five (5) full trading days on the NYSE immediately
preceding the public announcement of Executive’s resignation from his current
position. The Price Protection will
end and be paid upon the earlier of Executive’s sale of the underlying shares
of common stock or ninety (90) days after Executive’s last day of employment
with the Current Employer.

(g) Relocation
Benefit. In accordance with Company’s
relocation policy, Executive will receive the standard Company relocation
package with the following adjustments: (i) temporary housing for up to one (1)
year; (ii) no limit on the weight of household goods shipped, and the number of
cars covered will be three (3); (iii) a four (4) year mortgage interest
subsidy; (iv) the storage of household goods for up to one (1) year, and (v) a
relocation allowance of $2,750,000 (the “Relocation Allowance”), with Executive
receiving such Relocation Allowance in lieu of the relocation allowance
otherwise provided for under the Company’s relocation policy.

5. Employee
Benefits.

(a) Generally. Executive will be eligible to participate in
accordance with the terms of all Company employee benefit plans, policies, and
arrangements that are applicable to other executive officers of the Company, as
such plans, policies, and arrangements may exist from time to time.

(b) Vacation. Executive will be entitled to receive paid
annual vacation in accordance with Company policy for other senior executive
officers. In no event will Executive
receive less than twenty-five (25) days of paid vacation time per calendar
year.

(c) Perquisites. Executive will receive Company perquisites on
at least the same level as the Company’s other senior executive officers.

(d) Security. The Company will provide Executive with
appropriate home security in accordance with standard market practice.

6. Expenses. The Company will reimburse Executive for
reasonable travel, entertainment, and other expenses incurred by Executive in
the furtherance of the performance of Executive’s duties hereunder, in
accordance with the Company’s expense reimbursement policy as in effect from
time to time.

7. Termination
of Employment. In the event
Executive’s employment with the Company terminates for any reason, Executive
will be entitled to any (a unpaid Base Salary accrued up to the effective
date of termination, (b unpaid, but earned and accrued annual incentive for
any completed fiscal year as of his termination of employment, (c pay for
accrued but unused vacation that the Company is legally obligated to pay
Executive, (d benefits or compensation as provided under the terms of any
employee benefit and compensation agreements or plans applicable to Executive,
(e unreimbursed business expenses required to be reimbursed to Executive,
and (f rights to indemnification Executive may have under the Company’s
Articles of Incorporation, Bylaws, the Employment Agreement, or separate
indemnification agreement, as applicable.

In addition, if the termination is by the Company without Cause,
Executive will be entitled to the amounts and benefits specified in
Section 8.

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8. Severance.

(a) Termination
Without Cause. If Executive’s employment
is terminated by the Company without Cause, then, subject to Section 9,
Executive will be eligible to participate in the then existing Severance
Program for Executives (the “Severance Program”), and will receive any “banked”
amounts in the Long-Term Cash Performance Plan.
It is understood that the Severance Program is reviewed annually by the
Committee. In addition, and
notwithstanding the terms of the Severance Program, if, (i) Executive’s duties
and responsibilities as Chief Executive Officer of the Company are
substantially reduced without his consent, or (ii) Executive is not reelected
to the Board during the Employment Term, then Executive will be deemed to have
been terminated without Cause. Notwithstanding the foregoing, the amount of
severance benefits received by Executive under this Section 8(a) will not
exceed 2.99 times the sum of Executive’s Base Salary and bonus, unless such
benefits are approved by the Company’s stockholders pursuant to the Company’s
established policy.

(b) Termination
for Cause. If Executive’s employment
is terminated for Cause by the Company, then, except as provided in Section 7,
(i all further vesting of Executive’s outstanding equity awards will
terminate immediately; (ii all payments of compensation by the Company to
Executive hereunder will terminate immediately, and (iii Executive will
be eligible for severance benefits only in accordance with the Company’s then
established plans, programs, and practices.

(c) Other
Termination Including due to Death or Disability. If Executive’s employment terminates for any
other reason, including but not limited to, by reason of death or Disability,
then, except as provided in Section 7, (i Executive’s outstanding equity
awards will terminate in accordance with the terms and conditions of the
applicable award agreement(s); (ii all payments of compensation by the
Company to Executive hereunder will terminate immediately, and
(iii Executive will be entitled to receive benefits only in accordance
with the Company’s then established plans, programs, and practices.

9. Conditions
to Receipt of Severance; No Duty to Mitigate.

(a) Nondisparagement. During the Employment Term and for the twelve
(12) months thereafter, Executive will not knowingly disparage, criticize, or
otherwise make any derogatory statements regarding the Company, its directors,
or its officers. The foregoing
restrictions will not apply to any statements that are made truthfully in
response to a subpoena or other compulsory legal process.

(b) Other
Requirements. Executive’s receipt of
continued severance payments will be subject to Executive continuing to comply
with the terms of the Confidential Information Agreement as amended by this
Agreement.

(c) No Duty to Mitigate.

Executive will not be required to mitigate the amount of any payment
contemplated by this Agreement, nor will any earnings that Executive may
receive from any other source reduce any such payment.

10. Definitions.

(a) Cause. For purposes of this Agreement, “Cause” will
have the same defined meaning as in the Severance Program.

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(b) Disability. For purposes of this Agreement, Disability will
mean Executive’s absence from his responsibilities with the Company on a
full-time basis for 180 calendar days in any consecutive twelve (12) months
period as a result of Executive’s mental or physical illness or injury.

11. Indemnification. Subject to applicable law, Executive will be
provided indemnification to the maximum extent permitted by the Company’s
bylaws and Certificate of Incorporation, including, if applicable, any
directors and officers insurance policies, with such indemnification to be on
terms determined by the Board or any of its committees, but on terms no less
favorable than provided to any other Company executive officer or director and
subject to the terms of any separate written indemnification agreement.

12. Confidential
Information. Executive will execute
the Company’s Agreement Regarding Confidential Information and Proprietary
Developments appended hereto as Exhibit A (the “Confidential Information
Agreement”).

13. Assignment. This Agreement will be binding upon and inure
to the benefit of (a the heirs, executors, and legal representatives of
Executive upon Executive’s death, and (b any successor of the
Company. Any such successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this
purpose, “successor” means any person, firm, corporation, or other business
entity which at any time, whether by purchase, merger, or otherwise, directly
or indirectly acquires all or substantially all of the assets or business of
the Company. None of the rights of
Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted
assignment, transfer, conveyance, or other disposition of Executive’s right to
compensation or other benefits will be null and void.

14. Notices. All notices, requests, demands, and other
communications called for hereunder will be in writing and will be deemed given
(a on the date of delivery if delivered personally, (b one (1) day
after being sent overnight by a well established commercial overnight service,
or (c four (4) days after being mailed by registered or certified mail,
return receipt requested, prepaid and addressed to the parties or their
successors at the following addresses, or at such other addresses as the parties
may later designate in writing:

If to the Company:

Attn: Chairman of the HR/Compensation Committee
c/o Corporate Secretary
Hewlett-Packard Company

If to Executive:

at the last residential address known by the Company.

15. Severability. If any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable, or
void, this Agreement will continue in full force and effect without said
provision.

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16. Arbitration. The Parties agree that any and all disputes
arising out of the terms of this Agreement, Executive’s employment by the
Company, Executive’s service as an officer or director of the Company, or
Executive’s compensation and benefits, their interpretation, and any of the
matters herein released, will be subject to binding arbitration in Santa Clara,
California before the Judicial Arbitration and Mediation Services, Inc. under the
American Arbitration Association’s National Rules for the Resolution of
Employment Disputes, supplemented by the California Rules of Civil
Procedure. The Parties agree that the
prevailing party in any arbitration will be entitled to injunctive relief in
any court of competent jurisdiction to enforce the arbitration award. The Parties hereby agree
to waive their right to have any dispute between them resolved in a court of
law by a judge or jury. This
paragraph will not prevent either party from seeking injunctive relief (or any
other provisional remedy) from any court having jurisdiction over the Parties
and the subject matter of their dispute relating to Executive’s obligations
under this Agreement and the Confidential Information Agreement.

17. Legal
and Tax Expenses. The Company will
reimburse Executive for reasonable legal and tax advice expenses incurred by
him in connection with the negotiation, preparation, and execution of this
Agreement and the termination of his employment with the Current Employer. In addition, in the event of a dispute
relating to any provision of this Agreement following the Effective Date, the
Company will reimburse Executive’s fees and expenses as incurred quarterly,
including reasonable attorneys’ fees, in connection with such dispute, provided
Executive prevails on at least one material issue in such dispute, or provided
an arbitrator does not determine that Executive’s legal positions were
frivolous or without legal foundation.
In the event Executive does not so prevail or in the event of such
determination, Executive will repay to the Company any amounts previously
reimbursed by it, and Executive will reimburse the Company for its fees and
expenses, including reasonable attorneys’ fees, incurred in connection with the
dispute.

18. Integration. This Agreement, together with the
Confidential Information Agreement and the standard forms of equity award grant
that describe Executive’s outstanding equity awards, represents the entire
agreement and understanding between the parties as to the subject matter herein
and supersedes all prior or contemporaneous agreements whether written or
oral. No waiver, alteration, or
modification of any of the provisions of this Agreement will be binding unless
in a writing and is signed by duly authorized representatives of the parties
hereto. In entering into this Agreement,
no party has relied on or made any representation, warranty, inducement,
promise or understanding that is not in this Agreement. Executive acknowledges that Executive is not
subject to any contract, obligation or understanding (whether written or not),
other than the obligations under Executive’s resignation letter with the
Current Employer, that would in any way restrict the performance of Executive’s
duties as set forth in this Agreement.

19. Waiver
of Breach. The waiver of a breach of
any term or provision of this Agreement, which must be in writing, will not
operate as or be construed to be a waiver of any other previous or subsequent
breach of this Agreement.

20. Survival. The Confidential Information Agreement, the
Company’s and Executive’s responsibilities under Section 9 will survive the
termination of this Agreement.

21. Headings. All captions and Section headings used in
this Agreement are for convenient reference only and do not form a part of this
Agreement.

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22. Tax
Withholding. All payments made
pursuant to this Agreement will be subject to withholding of applicable taxes.

23. Governing
Law. This Agreement will be governed
by the laws of the State of California.

24. Acknowledgment. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

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

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

COMPANY:
HEWLETT-PACKARD COMPANY
/s/Patricia C. Dunn		Date: March 29, 2005
Patricia C. Dunn
Non-executive Chairman of the Board of Directors
EXECUTIVE:
/s/ Mark Hurd		Date: March 29, 2005
Mark Hurd

[SIGNATURE PAGE TO M. HURD
EMPLOYMENT AGREEMENT]

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