September 29, 2010<\/p>\n<\/p>\n
Michael J. Holston, Esq.<\/p>\n
Executive Vice President and General Counsel<\/p>\n
Hewlett-Packard Company<\/p>\n<\/p>\n
Dear Mike:<\/p>\n<\/p>\n
Over the last several months, you have provided extremely valuable support to
\nboth HP and the HP Board of Directors, and we would like to ensure your
\ncontinued contribution to, and support of, HP and its new Chief Executive
\nOfficer in the future. As a result, we are pleased to enter into this Agreement
\nwith you:<\/p>\n<\/p>\n
Agreement Term:<\/u><\/p>\n<\/p>\n
The term of this Agreement shall be three years after which it may be renewed
\nby written agreement of the parties.<\/p>\n<\/p>\n
Compensation:<\/u><\/p>\n<\/p>\n
No immediate adjustments will be made to your base pay, annual incentive
\nopportunity or long-term incentive target award, but each of these elements of
\nyour compensation will be reviewed by the HR & Compensation Committee
\n(the”Committee”) during its review of all Section 16 officer compensation in the
\nregular timeframe. The Board will consider and determine, within a reasonable
\nperiod of time after the selection of the new CEO, a special cash bonus in
\nrespect of your service during this transition period.<\/p>\n<\/p>\n
Severance Benefits:<\/u><\/p>\n<\/p>\n
Severance benefits for Section 16 officers are determined under the HP
\nSeverance Plan for Executive Officers (“SPEO”). In your case, while this
\nAgreement remains in effect, a 2.0 multiplier (instead of a 1.5 multiplier)
\nshall apply to determine the amount of your cash severance benefit under the
\nSPEO. The other terms of the SPEO will continue to apply with respect to a
\ndetermination of whether you are entitled to these benefits, except that
\na”qualifying termination” shall also include your resignation following (a) the
\nrelocation of your principal place of business more than 50 miles from its
\ncurrent location, or (b) a material adverse change in your authority, duties or
\nresponsibilities, or a material reduction in your compensation, without your
\nprior written consent, but only if you have provided HP with notice of the
\nmaterial change within 60 days after the date of such change, and HP has failed
\nto cure the change within 30 days thereafter. A material adverse change in your
\nauthority, duties or responsibilities includes, without limitation, your ceasing
\nto be General Counsel of, or no longer reporting directly to the chief executive
\nofficer of, the top-tier parent company of the controlled group of corporations
\nof which HP is a part.<\/p>\n<\/p>\n
<\/p>\n
\n
In addition to the cash severance benefit payable under the SPEO, you will
\nreceive a pro-rata bonus under the annual Pay-for-Results Plan (or any
\nsuccessor) with respect to the fiscal year in which your termination occurs,
\nbased on your actual period of service through your date of termination, and
\nactual performance on applicable metrics, payable following the end of the
\nfiscal year during which your termination occurs and no later than March 15th of
\nthe following calendar year. In addition, the following treatment will apply to
\nyour outstanding equity awards in the event of a termination of your employment
\nentitling you to benefits under the SPEO, as modified by this Agreement (such
\ntreatment to apply at such time as the release you are required to sign under
\nthe SPEO becomes effective):<\/p>\n<\/p>\n
Stock Options:<\/u> Vesting shall be fully accelerated on all of your
\nunvested stock options, and you shall have one year from your termination date
\n(or the original expiration date, if earlier) to exercise all HP options;<\/p>\n<\/p>\n
Restricted Stock, RSU and PRU Awards:<\/u> All restrictions shall be
\nreleased on all time-based stock or stock unit awards. With respect to any PRUs
\nor other performance-based awards (collectively “PBRUs”), payout shall be
\ndetermined as if you had remained actively employed during the entire
\nperformance period, and calculated using actual performance with respect to
\ncompleted fiscal years, and maximum performance for all fiscal years not
\ncompleted as of the date of your termination. For purposes of compliance with
\nSection 409A of the Internal Revenue Code (the “Code”), such awards shall be
\npayable to you in shares at the following times:<\/p>\n<\/p>\n
(a) For PBRUs granted before the date of this Agreement, following the close
\nof the applicable performance period; and<\/p>\n<\/p>\n
(b) For PBRUs granted on or after the date of this Agreement, at the time
\nthat your cash severance benefit is paid.<\/p>\n<\/p>\n
Benefits Following a Change in Control of HP:<\/u><\/p>\n<\/p>\n
In the event of your termination within 12 months following a Change in
\nControl of HP (as defined in the Amended and Restated HP 2004 Stock Incentive
\nPlan) due to the same events that would qualify you for cash benefits under the
\nSPEO, as modified by this Agreement (e.g., a material adverse change in your
\nduties or compensation, without your prior written consent), you will be
\nentitled to receive:<\/p>\n<\/p>\n
(a) a cash severance benefit as calculated under the SPEO, using the 2.0
\nmultiplier;<\/p>\n<\/p>\n
(b) an annual incentive award under the HP Pay-for-Results Plan (or any
\nsuccessor program) for the fiscal year in which your termination occurs based on
\nyour actual service through your date of termination, and assuming continued
\naccruals with respect to such bonus at the rate in effect immediately prior to
\nHP entering into an agreement that results in the Change in Control; and<\/p>\n<\/p>\n
(c) equity treatment as described above, except that all PBRUs shall be
\ndetermined assuming maximum performance on all metrics and continuous service
\nduring the full performance period, and shall be settled in cash rather than
\nshares at the times as specified above for a non-CIC qualifying termination.\n<\/p>\n<\/p>\n
If your receipt of the cash and other benefits payable under this paragraph
\n(the “CIC Benefits”) would constitute an “excess parachute payment” for purposes
\nof Section 280G of the Code, then either (i) the CIC Benefits shall be reduced
\nby the minimum amount necessary to avoid any excise taxes under Code Section
\n4999 or (ii) you shall receive the full amount of the CIC Benefits without any
\nreduction, whichever results in your receipt, on an after-tax basis (including
\nafter the imposition of any excise<\/p>\n
\n
2<\/p>\n
<\/p>\n
\n
taxes under Code Section 4999), of the greatest amount of the CIC Benefits.
\nIf the CIC Benefits are so reduced, such reductions shall first apply to cash
\npayments, with the last payment reduced first; next, to any equity or equity
\nderivatives that are included under Code Section 280G at full value rather than
\naccelerated value, with the highest value reduced first (applied first to
\nperformance-based awards and then to time-based awards); next to any non-cash,
\nnon-equity-based benefits, with the latest scheduled benefit reduced first;
\nfinally, to any equity or equity derivatives based on acceleration value, with
\nthe highest value reduced first (applied first to performance-based awards and
\nthen to time-based awards) (with all equity and equity derivative values to be
\ndetermined under Treasury Regulation Section 1.280G-1, Q&A 24)). If you
\nreceive the full amount of the CIC Benefits without any reduction and such
\namounts qualify as an “excess parachute payment,” you shall be liable for all
\ntaxes related to such payments.<\/p>\n<\/p>\n
Miscellaneous:<\/u><\/p>\n<\/p>\n
In the event of your termination for any reason, the usual executive officer
\nindemnification provisions will continue to apply, to the full extent permitted
\nunder Delaware law. Your receipt of severance or Change in Control benefits will
\nbe subject to your execution of a standard release of claims within 45 days
\nafter your termination of employment and, unless a later date is specified
\nabove, all cash payments described herein will be made net of required
\nwithholdings within 10 days after expiration of that 45-day period.
\nNotwithstanding the foregoing, in the event that any of the benefits described
\nin this Agreement would be subject to tax under Code Section 409A if paid within
\nsix months after your termination of employment (as the result of your status as
\na “specified employee” within the meaning of Code Section 409A), such amount
\nshall be withheld and paid to you on the first business day of the seventh month
\nfollowing your termination, or upon your death, if earlier. In addition, your
\nequity-based awards will be structured in compliance with this Agreement and
\nCode Section 409A. You will be reimbursed for attorneys153 fees you have incurred
\nin connection with negotiation of this Agreement, as well as any such fees you
\nreasonably incur for review of this Agreement in connection with a Change in
\nControl. All disputes regarding this Agreement will be submitted to arbitration
\nin accordance with standard AAA rules, and you will be reimbursed for any
\nattorneys153 fees you incur to obtain payment under this Agreement. All
\nreimbursements shall be made in accordance with Code Section 409A. For purposes
\nof HP153s policy regarding severance agreements for senior executives, any
\nbenefits realized with respect to your equity-based awards in connection with a
\ntermination of employment shall be treated as “permitted benefits” (as defined
\nin the resolutions adopting such policy, dated July 18, 2003).<\/p>\n<\/p>\n
Acceptance of Agreement:<\/u><\/p>\n<\/p>\n
We are extremely pleased to have confirmed the terms of your continued
\nservice to HP, and we look forward to your continued support to the Board and
\nHP153s new CEO. To indicate your agreement to these terms please sign and return a
\ncopy of this letter to me. The date of your acceptance of this Agreement will be
\nthe initial effective date of this Agreement.<\/p>\n<\/p>\n
| \n Sincerely,<\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | ||||||||||||
| <\/td>\n | <\/td>\n<\/tr>\n | ||||||||||||
| \n \/s\/ Lawrence T. Babbio, Jr.<\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | ||||||||||||
| \n Lawrence T. Babbio, Jr.<\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | ||||||||||||
| \n Chair, HR & Compensation Committee<\/p>\n<\/td>\n | <\/td>\n<\/tr>\n | ||||||||||||
| \n HP Board of Directors<\/p>\n<\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n \n 3<\/p>\n \n <\/p>\n \n
|