Exhibit 10(a)(1)

 

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HEWLETT-PACKARD COMPANY

<PLAN>

CASH AWARD AGREEMENT (PERFORMANCE BASED)

 

                THIS AGREEMENT, dated <GRANT DATE> (“Grant Date”) between
HEWLETT-PACKARD COMPANY, a Delaware corporation (“Company”), and <EMPNO> <NAME>
(the “Employee”), is entered into as follows:

 

WITNESSETH:

 

                WHEREAS, the Company has established the <PLAN> (“Plan”), a copy
of which is available at the Stock Incentive Program Web Site at:
 http://hrpay11.corp.hp.com/Cash Awards/portal/stock/stok_opt.htm or by written
request to the Company Secretary, and which Plan is made a part hereof; and

 

                WHEREAS, the HR and Compensation Committee of the Board of
Directors of the Company or its delegate(s) (the “Committee”) has determined
that the Employee shall be granted a cash award agreement (“Agreement”) under
the Plan as hereinafter set forth;

 

                NOW THEREFORE, the parties hereby agree that the Company grants
the Employee a cash award underlying this Agreement (“Cash Award”) of [Insert
merge field for currency symbol][Insert merge field for amount] subject to the
terms and conditions set forth herein.

 

1.                                       This Agreement is granted under and
pursuant to the Plan and is subject to each and all of the provisions thereof.

 

2.                                       Vesting Schedule

 

The Employee’s Cash Award shall vest on the third anniversary of the Grant Date;
provided that the Employee satifies the milestones and performance conditions
set forth in paragraph 3 below, as determined by the Committee.  Notwithstanding
the foregoing, the Employee must remain in the employ of the Company on a
continuous, full-time basis through the close of business on the third
anniversary of the Grant Date, for such Cash Award to vest, subject to
paragraphs 6-9 of this Agreement.  The period of time between the Grant Date and
the date the Employee’s Cash Award becomes vested is referred to herein as the
“Restriction Period.”

 

3.             Milestones and Performance Conditions

 

(a)  The milestones and performance conditions associated with the Cash Award
have been established by the Committee, and are set forth in Appendix A attached
to this Agreement.

 

(b)  Milestones

 

•                                          If 100% of the associated milestone
are achieved for the one-year period ended on the last day of the fiscal quarter
ended prior to the anniversary of the Grant Date (the “Anniversary Period”), 33%
of the Cash Award (34% for the third Anniversary Period) will be credited in
accordance with paragraph 5.

 

•                                          If 90% of the associated milestones
are achieved at the end of the relevant Anniversary Period, 50% of 33% of the
Cash Award (34% for the third Anniversary Period) will be credited in accordance
with paragraph 5.

 

•                                          If greater than 90%, but less than
100%, of the associated milestones are achieved at the end of the relevant
Anniversary Period, then the percentage of the 33% of the Cash Award (34% for
the third Anniversary Period) to be credited in accordance with paragraph 5 will
be determined by the following formula (where X is the percentage of the
associated milestones are met): 5X-400.

 

•                                          If greater than 100% of the
associated milestones are achieved at the end of the Anniversary Period, then
the percentage of the 33% of the Cash Award (34% for the third Anniversary
Period) to be credited in accordance with paragraph 5 will be determined by the
following formula (where X is the percentage of the associated milestones are
met): (5/2)X-150); provided, however, that such percentage cannot exceed 150%.

 

•                                          If less than 90% of the associated
milestones are achieved, nothing will be credited.

 

                The total amount credited at the end of the Restriction Period
is the “Conditional Payout”.

 

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(c)  Following the completion of the third Anniversary Period with respect to
the Cash Award and if the Employee remains employed by the Company, subject to
paragraphs 6-9 of this Agreement, then the Conditional Payout will be adjusted
by a modifier to be determined by the Committee based on the performance
conditions set forth on Appendix A.  The modifier will be calculated as
indicated on Appendix A with respect to the Restriction Period.  Notwithstanding
the foregoing, the modifier will be equal to zero if the minimum threshold
indicated on Appendix A is not met, resulting in no payout under this Agreement,
and the modifier cannot exceed 2.

 

4.             Restrictions.

 

(a)  The Employee’s Cash Award granted hereunder may not be sold, pledged or
otherwise transferred until vested in accordance with paragraph 2.

 

(b)  Subject to paragraphs 6-9 of this Agreement, if the Employee’s employment
with the Company is terminated at any time prior to the expiration of the
Restriction Period, this Agreement granted hereunder shall terminate and any
interest in the Cash Award shall be forfeited by the Employee, and full
ownership will be retained by the Company.

 

5.             Credits.

 

As milestones are achieved, the applicable portion of the Cash Award, as set
forth in paragraph 3(b), shall be credited in the Employee’s name.  Such
credited amounts shall increase at a rate of 1.53%, compounded annually, which
is the AFR for May 2003. The credited amounts and any additional amounts, shall
be paid by the Company to the Employee, subject to the application of the
modifier as set forth in paragraph 3(c); provided, however, that the terms and
conditions set forth in this Agreement are fulfilled.  Notwithstanding the
foregoing, a portion of the Cash Award shall be surrendered in payment of
required withholding taxes in accordance with paragraph 10 below, unless the
Company establishes alternative procedures for the payment of required
withholding taxes.

 

The Company is under no obligation to transfer amounts credited to any trust or
escrow account, and the Company is under no obligation to secure any amount
credited by any specific assets of the Company or any other asset in which the
Company has an interest.  This Plan shall not be construed to require the
Company to fund any of the benefits provided hereunder nor to establish a trust
for such purpose.  The Company may make such arrangements as it desires to
provide for the payment of the Cash Award, including, but not limited to, the
establishment of a rabbi trust or such other equivalent arrangements as the
Company may decide.  No such arrangement shall cause the Plan to be a funded
plan within the meaning of Title I of ERISA, nor shall any such arrangement
change the nature of the obligation of the Company nor the rights of the
Employees under the Plan as provided in this Agreement.  Neither the Employee
nor his or her estate shall have any rights against the Company with respect to
any portion of the Cash Award except as a general unsecured creditor.  No
Employee has an interest in his or her Cash Award until the Employee actually
receives a payout.  The Employee’s rights in the Cash Award shall be no greater
than the rights of any other unsecured general creditor of the Company. 
Credited amounts of the Cash Award hereunder shall for all purposes be part of
the general funds of the Company.  Any payout to an Employee of amounts credited
is not due, nor is such payout ascertainable, until determined by the Committee.

 

6.             Retirement of the Employee.

 

If the Employee retires after attaining 55 years of age with 15 years of service
to the Company or 65 years of age or age under local law without regard to
service, in accordance with the Company’s retirement policy, the Employee shall
receive a pro rata amount of the Cash Award determined by multiplying the total
Cash Award due after such Cash Award is vested at the end of the Restriction
Period by a fraction equal to the number of whole months elapsed between the
Grant Date and the Employee’s retirement, divided by the number of whole months
between the Grant Date and the date the Cash Award would have vested in
accordance with paragraph 2 above, payable at the end of such period.  The
Company’s obligation to deliver the pro rata amount due under the Cash Award is
subject to the condition that for the entire Restriction Period:

 

(a)  The Employee shall render, as an independent contractor and not as an
employee, such advisory or consultative services to the Company as shall
reasonably be requested by the Company, consistent with the Employee’s health
and any other employment or other activities in which such Employee may be
engaged;

 

(b)  The Employee shall not render services for any organization or engage
directly or indirectly in any business which, in the opinion of the Company,
competes with or is in conflict with the interests of the Company;

 

(c)  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 or material relating to the
business of the Company, either during or after employment with the Company; and

 

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(d) The Employee shall disclose promptly and assign to the Company all right,
title and interest in any invention or idea, patentable or not, made or
conceived by the Employee during employment by the Company, relating in any
manner to the actual or anticipated business, anything reasonably necessary to
enable the Company to secure a patent where appropriate in the United States and
in foreign countries.

 

7.             Total and Permanent Disability of the Employee.

 

In the event of total and permanent disability of the Employee, the Employee
shall receive a pro rata amount of the Cash Award determined by multiplying the
total Cash Award due after such Cash Award is vested at the end of the
Restriction Period by a fraction equal to the number of whole months elapsed
between the Grant Date and the Employee’s termination date due to the total and
permanent disability, divided by the number of whole months between the Grant
Date and the date the Cash Award would have vested in accordance with paragraph
2 above, payable at the end of such period.  Any unpaid but vested portion of
the Cash Award shall be paid to the Employee if legally competent or to a
legally designated guardian or representative if the Employee is legally
incompetent.

 

8.             Death of the Employee.

 

In the event of the Employee’s death prior to the end of the Restriction Period,
the Employee’s estate or designated beneficiary shall receive a pro rata amount
of the Cash Award determined by multiplying the amount of the Cash Award due on
the date vested at the end of the Restriction Period by a fraction equal to the
number of whole months elapsed between the Grant Date and the Employee’s death,
divided by the number of whole months between the Grant Date and the date the
Cash Award would have vested in accordance with paragraph 2 above, payable at
the end of such period.  In the event of the Employee’s death after the vesting
dates but prior to the payment of cash, said cash shall be paid to the
Employee’s estate or designated beneficiary.

 

9.             Workforce Reduction.

 

In the event the Employee is placed in a workforce reduction program approved by
the Board of Directors or its delegate(s), the Employee shall receive a pro rata
amount of the Cash Award determined by multiplying the total Cash Award due
after such Cash Award is vested at the end of the Restriction Period by a
fraction equal to the number of whole months elapsed between the Grant Date and
the Employee’s termination date due to workforce reduction, divided by the
number of whole months between the Grant Date and the date the Cash Award would
have vested in accordance with paragraph 2 above, payable at the end of such
period.

 

10.           Taxes.

 

(a)  The Employee shall be liable for any and all taxes, including withholding
taxes, arising out of this grant of the Agreement or the vesting of the Cash
Award hereunder. The Employee authorizes the Company, its Affiliates and
Subsidiaries (as defined in the Plan), which are qualified to deduct tax at
source, to deduct all applicable required withholding taxes and social security
contributions from the Cash Award prior to remittance to the Employee, and, if
necessary from the Employee’s compensation.  The Employee agrees to pay any
amounts that cannot be satisfied from wages or other cash compensation, to the
extent permitted by law.

 

(b)  The Company will assess its requirements regarding tax, social insurance
and other payroll tax (“tax-related items”) withholding and reporting in
connection with this grant or the vesting of the Cash Award hereunder.  These
requirements may change from time to time as laws or interpretations change.
Regardless of the Company’s actions in this regard, the Employee acknowledges
and agrees that the ultimate liability for any and all tax-related items is and
remains the Employee’s responsibility and liability and that the Company (i)
makes no representations nor undertakings regarding the treatment of any
tax-related items in connection with any aspect of the Cash Award, including the
grant or vesting and the subsequent sale; and (ii) does not commit to structure
the terms or the grant or any aspect of the Cash Award to reduce or eliminate
the Employee’s liability regarding tax-related items.

 

11.                                 By accepting the grant of this Agreement,
the Employee acknowledges and agrees: (i) that the Plan is discretionary in
nature and may be amended, suspended or terminated by the Company at any time;
(ii) that the grant of this Agreement is a one-time benefit which does not
create any contractual or other right to receive future grants of cash awards,
or benefits in lieu of cash awards; (iii) that all determinations with respect
to any such future grants, including, but not limited to, the times when cash
awards shall be granted, the maximum number of cash subject to each cash award,
the cash award price, and the time or times when each cash award shall vest,
will be at the sole discretion of the Company; (iv) that participation in the
Plan is voluntary; (v) that the Employee’s participation in the Plan shall not
create a right to further or continued employment with the Employee’s employer
and shall not interfere with the ability of the Employee’s employer to terminate
the Employee’s employment relationship at any time with or without cause insofar
as permitted by law; (vi) that the value of the Cash Award is an extraordinary,
voluntary and discretionary item of compensation which is

 

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outside the scope of the Employee’s contractual remuneration and/or employment
contract, if any; (vii) that the Cash Award is not part of normal or expected
compensation, and will not be included for purposes of calculating any
severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments insofar
as permitted by law; (viii) that the vesting of the Cash Award ceases upon
termination of employment for any reason except as may otherwise be explicitly
provided in the Plan document or this Agreement; (ix) that this Agreement has
been granted to the Employee in the Employee’s status as an employee of his
employer; and (x) the Employee has no right or interest in any amount held in
Escrow, and such amount is not earned, unless the Committee determines that a
payout is due at the end of the Restriction Period.

 

12.                                 By accepting the grant of this Agreement,
the Employee explicitly and unambiguously consents to the collection, use,
processing and transfer, in electronic or other form, of personal data by and
among, as applicable, the Company, its Subsidiaries, its Affiliates and certain
third parties, for the exclusive purpose of implementing, administering and
managing the Employee’s participation in the Plan. The Employee understands that
the Company, its Affiliates, its Subsidiaries and the Employee’s employer hold
certain personal information about the Employee, including, but not limited to,
name, home address and telephone number, date of birth, social security number
or other employee identification number, salary, nationality, job title, any
cash or shares of stock or directorships held in the Company, details of this
Agreement or any other entitlement to cash or shares of stock awarded, canceled,
purchased, exercised, vested, unvested or outstanding in the Employee’s favor,
that may be used for the purpose of implementing, managing and administering the
Plan (“Data”). The Employee further understands that the Company and/or its
Affiliates and/or its Subsidiaries will transfer Data amongst themselves or to
third parties as necessary for the purpose of implementation, administration and
management of the Employee’s participation in the Plan. The Employee understands
that these recipients may be located in the European Economic Area, or
elsewhere, such as the United States and that the recipient country may have
different data privacy laws and protections than the Employee’s country. The
Employee authorizes them to receive, possess, use, retain and transfer the Data,
in electronic or other form, for the purposes of implementing, administering and
managing the Employee’s participation in the Plan, including any requisite
transfer of such Data, as may be required for the administration of the Plan, to
a broker or other third party with whom the Employee may elect to deposit any
cash or shares of stock acquired pursuant to the Plan.  The Employee understands
that Data will be held only as long as is necessary to implement, administer and
manage participation in the Plan. The Employee understands that he may, at any
time, review Data, require any necessary amendments to it or refuse or withdraw
the consents herein, in any case without cost, by contacting the Company in
writing. The Employee understands that withdrawing consent may affect the
Employee’s ability to participate in the Plan.  For more information on the
consequences of refusing to consent or withdrawing consent, the Employee
understands that he may contact an HP local human resources representative.

 

13.                                 The Employee agrees to receive copies of the
Plan, the Plan prospectus and other Plan information, including information
prepared to comply with laws outside the United States, from the Stock Incentive
Program Web Site referenced above and stockholder information, including copies
of any annual report, proxy and Form 10-K, from the investor relations section
of the HP web site at www.hp.com.  The Employee acknowledges that copies of the
Plan, Plan prospectus, Plan information and stockholder information are
available upon written request to the Company Secretary.

 

The Plan is incorporated herein by reference. The Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Employee with respect to the subject matter
hereof, and may not be modified adversely to the Employee’s interest except by
means of a writing signed by the Company and the Employee.  This Agreement is
governed by the laws of Delaware.

 

14.           Miscellaneous.

 

(a)  The parties agree to execute such further instruments and to take such
action as may reasonably be necessary to carry out the intent of this Agreement.

 

(b)  Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon delivery to the Employee at his address
then on file with the Company.

 

(c)  The Committee shall have the discretion to increase or decrease cash payout
subject to this Agreement for those Employees who terminate employment in
situations covered by paragraphs 6-9 above during the Restriction Period, and
for exceptional circumstances, except that such payout cannot be increased for
Covered Employees as defined in Section 162(m) of the Internal Revenue Code of
1986, as amended.

 

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15.                                 Neither the Plan nor this Agreement nor any
provision under either shall be construed so as to grant the Employee any right
to employment, and it is expressly agreed and understood that employment is
terminable at the will of either party.

 

 

HEWLETT-PACKARD COMPANY

 

 

 

 

By

 

 

 

Carleton S. Fiorina

 

 

Chairman and CEO

 

 

 

 

By

 

 

 

Ann O. Baskins

 

 

Senior Vice President, General Counsel and Secretary

 

RETAIN THIS AGREEMENT FOR YOUR RECORDS

 

 

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