Document:

Exhibit 10(n)(n)

 

HP INC.

2005 EXECUTIVE DEFERRED COMPENSATION PLAN

(Amended and restated effective November 1, 2015)

 

The HP Inc. 2005 Executive Deferred Compensation Plan (formerly the Hewlett-Packard Company 2005 Executive Deferred Compensation Plan) is hereby amended and restated effective November 1, 2015 to permit Eligible Employees and Outside Directors to defer receipt of certain compensation and to provide matching contributions for certain employees who are not active participants in one of HP’s defined benefit retirement plans pursuant to the terms and provisions set forth below.

 

The Plan is intended: (1) to comply with Code section 409A and official guidance issued thereunder; and (2) with respect to the portion of the Plan covering Eligible Employees, to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.  Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

 

ARTICLE I:  DEFINITIONS

 

Wherever used herein the following terms shall have the meanings hereinafter set forth:

 

“Account” means a bookkeeping account established by HP for (i) each Participant electing to defer Eligible Income under the Plan, and (ii) each Rollover Participant.

 

“Actual Pay” means “Covered Compensation” as defined in the 2000 restatement of the HP Inc. 401(k) Plan (formerly known as the Hewlett-Packard Company 401(k) Plan), and “Eligible Pay” as to be defined in the 2006 restatement of the HP Inc. 401(k) Plan, as each is amended from time to time, without giving effect to the Code section 401(a)(17) limitation set forth in each definition and the exclusion of pay deferred under this Plan.

 

“Affiliate” means any corporation or other entity that is treated as a single employer with HP under Code section 414.

 

“Annual Rate of Pay” means the annual rate of pay, which is the sum of an employee’s base pay and targeted incentive amount, as reflected in the compensation data in HP’s global database for human resources information, and as adjusted for such employee’s employment status, including part-time status.

 

“Annual Retainer” means the cash portion of any annual retainer paid to an Outside Director.

 

“Beneficiary” means the person or persons or trust designated by a Participant to receive any amounts payable under the Plan in the event of the Participant’s death.  HP has established procedures governing the form and manner in which a Participant may designate a Beneficiary (the “2004 Procedures”).  Only a Beneficiary designation submitted in accordance with the 2004 Procedures and that is received by HP before the death of the Participant shall be a valid Beneficiary designation.  If there is no valid Beneficiary designation in effect upon the death of a Participant, any remaining Account balance shall be paid in the following order: (i) to that person’s spouse; (ii) if no spouse is living at the time of such payment, then to that person’s living children, in equal shares; (iii) if neither a spouse nor children are living, then to that person’s living parents, in equal shares; (iv) if neither spouse, nor children, nor parents are living, then to that person’s living brothers and sisters, in equal shares; and (v) if none of the individuals described in (i) through (iv) are living, to that person’s estate.  A person’s domestic partner

 

 

shall be considered a person’s spouse for purposes of this paragraph.  HP shall determine a person’s status as a domestic partner in a uniform and nondiscriminatory manner.

 

“Bonus Eligible Employee” means an individual who is an Employee on November 1 preceding the Plan Year within which deferrals are to be made (1) who satisfies both of the following conditions: (i) whose job position has a title of Director (or whose job function is, in the sole and absolute discretion of HP, equivalent to a ‘Director’ position) and (ii) whose Annual Rate of Pay is equal to or greater than the dollar limit for highly compensated employees as defined in Section 414(q)(1)(B)(i) of the Code plus $30,000, or (2) whose job position has a title of Executive Vice President or above, irrespective of such Employee’s Annual Rate of Pay.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Code Section 401(a)(17) Limit” means the amount specified under Code section 401(a)(17) in effect on January 1 of the Plan Year.

 

“Committee” means the HR and Compensation Committee of HP’s Board of Directors.

 

“Deferral Form” means a written or electronic form provided by HP pursuant to which an Eligible Employee or Outside Director may elect to defer amounts under the Plan.

 

“Director” means the title for an employee who has a job grade of DIR1 and above.

 

“EBP” means the Hewlett-Packard Company Excess Benefit Retirement Plan, as amended from time to time.

 

“Eligible Employee” means an individual who is (i) a Bonus Eligible Employee, (ii) a Match Eligible Employee (for Plan Years after 2005), (iii) an Employee whose Annual Rate of Pay, as of the first day of November preceding the Plan Year within which the deferral is to be made, exceeds the Code Section 401(a)(17) Limit for the Plan Year in which the deferral is to be made, or (iv) a combination or all of the foregoing.  An individual’s status as an Eligible Employee shall be determined by HP in its sole discretion.

 

Effective October 1, 2006 and solely for purposes of the October 2006 special enrollment period for Employees who participate in the 2004 and 2005 (Spring) Long-Term Performance Cash Programs and are otherwise eligible to participate in this Plan, the date to determine enrollment eligibility shall be September 15, 2006 rather than November 1, 2006.

 

An Eligible Employee shall also include a Newly Hired Employee and a Late Year Newly Hired Employee.

 

“Eligible Income” means Actual Pay, Annual Retainer and Incentive Awards.

 

“Employee” means an individual who is a regular employee on the U.S. payroll of HP or its Affiliates, other than a temporary or intermittent employee.  The term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant, or a person otherwise designated by HP or an Affiliate as not eligible to participate in the Plan, even if such person is determined to be an “employee” of HP or an Affiliate by any governmental or judicial authority.

 

“EPfR Plan” means the Hewlett-Packard Company Executive Pay-for-Results Plan, as amended from time to time.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“HP” means HP Inc. or any successor corporation or other entity.

 

“HP Matching Contributions” means the matching contributions as defined in Section 4.1.

 

“Incentive Award” means an amount payable to an Eligible Employee under a cash bonus or incentive compensation plan of HP or an Affiliate that the Committee has deemed eligible for deferral, including bonuses paid under the EPfR Plan, the PfR Plan, and the VPB Plan.

 

“Investment Options” means the investment options, as determined from time to time by HP, used to credit earnings, gains and losses on Account balances.

 

“Key Employee” means an Employee who at Termination of Employment is treated as a “specified employee” under Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of a corporation the stock of which is publicly traded on an established securities market or otherwise.  HP shall determine which Employees will be deemed a Key Employee for purposes of this Plan during a Plan Year based on the twelve-month period ending on the September 30 prior to the Plan Year.

 

“Late Year Newly Hired Employee” means an Employee (i) who is hired in November or December and (ii) who would have qualified as an Eligible Employee as of the November 1 preceding his date of hire based on his initial position and Annual Rate of Pay.

 

“Match Eligible Employee”  means an individual (i) who is eligible for a matching contribution under the HP Inc. 401(k) Plan, and (ii) whose Annual Rate of Pay, as of the first day of November preceding the Plan Year within which the deferral is to be made, exceeds the Code Section 401(a)(17) Limit for such Plan Year.

 

“Newly Hired Employee” means an Employee (i) who would have qualified as an Eligible Employee as of the November 1 preceding his date of hire based on his initial position and Annual Rate of Pay, and (ii) whose base salary payable in the year of hire is projected to exceed the Code section 401(a)(17) limit for such year; provided, however, that an individual who has previously worked for the Company or an Affiliate will only qualify as a “Newly Hired Employee” if he meets the requirements of Treas. Reg. § 1.409A-2(a)(7) or any successor thereto.  Generally, a re-hired individual will meet these requirements if (1) he has been paid any and all amounts due him under the Plan (and any plans required to be aggregated with the Plan under Code section 409A) prior to re-hire, or (2) he has not been eligible to participate, other than the accrual of earnings, in the Plan (or any other plan required to be aggregated with the Plan under Code section 409A) for at least 24 months.

 

“Outside Director” means an individual who is a member of HP’s Board of Directors and not an Employee of HP.

 

“Participant” means an Eligible Employee or Outside Director who elects or has elected to defer amounts under the Plan.

 

“PfR Plan” means the Hewlett-Packard Company Pay-for-Results Short-Term Bonus Plan, as amended from time to time.

 

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“Plan” means this HP Inc. 2005 Executive Deferred Compensation Plan, as set forth herein and as amended from time to time.

 

“Plan Committee” means the committee to which the Committee delegates certain authority to act on various compensation and benefit matters.

 

“Plan Year” means January 1 through December 31.

 

“Retirement Date” means the date on which a Participant has completed at least 15 years of service, as measured from such Participant’s last hire date, and has attained age 55.

 

“Rollover Participant” means an individual with an Account in the Plan transferred from either (i) a Rollover Plan in accordance with the provisions of Article IX or (ii) the EBP.  The term Rollover Participant may also refer to an individual who has previously been a Participant in the Plan, or an existing Participant at the time of transfer.

 

“Rollover Plan” means either (1) a nonqualified deferred compensation plan of a business entity acquired by HP or an Affiliate through acquisition of a majority of the voting interest in, or substantially all of the assets of, such entity, or (2) any plan or program of HP or an Affiliate pursuant to the termination of which an Account is established for a Participant or Rollover Participant.

 

“Termination Date” means the date on which the Participant experiences a “separation from service” as defined under Code section 409A.

 

“Termination of Employment” or “Terminates Employment” means a “separation from service” with HP and its Affiliates as defined under Code section 409A.

 

“VPB Plan” means the Hewlett-Packard Company Variable Performance Bonus Plan, as amended from time to time.

 

ARTICLE II:  PARTICIPATION

 

Participation in the Plan shall be limited to Eligible Employees and Outside Directors.  HP shall notify any Employee of his status as an Eligible Employee at such time and in such manner as HP shall determine.  An Eligible Employee or Outside Director shall become a Participant by making a deferral election under Article III.

 

ARTICLE III:  PARTICIPANT ACCOUNTS

 

3.1                               Employee Deferral Elections.  Deferrals may be made by an Eligible Employee with respect to the following types of Eligible Income, as permitted by HP:

 

(a)                                 Annual Rate of Pay.

 

(i)                                     An Eligible Employee whose Annual Rate of Pay, as of the first day of November preceding the Plan Year within which the deferral is to be made, exceeds the Code Section 401(a)(17) Limit for the Plan Year in which the deferral is to be made, may elect to defer a portion of his Actual Pay.  In order to elect to defer Annual Rate of Pay

 

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earned during a Plan Year, an Eligible Employee shall submit an irrevocable Deferral Form with HP before the beginning of such Plan Year.

 

(ii)                                  The portion of his Annual Rate of Pay that an Eligible Employee elects to defer for a Plan Year shall be stated as a whole dollar amount.  The minimum amount of Annual Rate of Pay that an Eligible Employee may elect to defer in a Plan Year is $1,200.  The maximum amount is equal to the greater of $1,200 or the Eligible Employee’s Annual Rate of Pay that exceeds the Code Section 401(a)(17) Limit.  If the Internal Revenue Service does not publish the Code Section 401(a)(17) Limit for the Plan Year prior to enrollment, HP has the discretion to determine eligibility to elect to defer Annual Rate of Pay; provided, however, if a Participant is determined to be ineligible to elect to defer Annual Rate of Pay under paragraph (i) above for a Plan Year, any Annual Rate of Pay deferrals the Participant elected for the Plan Year shall be void (including, without limitation, deferrals made during the October 2006 special enrollment period).

 

(iii)                               The deferral amount designated by an Eligible Employee will be deducted in equal installments over the pay periods falling within the Plan Year to which the election pertains.

 

(b)                                 Incentive Awards.  A Bonus Eligible Employee may elect to defer any portion of an Incentive Award up to 95%, expressed as whole percentage points.  In order to elect to defer an Incentive Award, a Bonus Eligible Employee shall submit an irrevocable Deferral Form with HP before the beginning of the Plan Year in which the performance period to which Incentive Award pertains begins, in accordance with procedures that HP determines in its discretion.  Notwithstanding the foregoing, if HP determines that a Bonus Eligible Employee may elect to defer a portion of the Incentive Award at a later time under Code section 409A, a Bonus Eligible Employee may elect to defer a portion of the Incentive Award by filing an irrevocable Deferral Form at such later time as determined by HP in accordance with Code section 409A.

 

3.2                               New Hires.  A Newly Hired Employee may elect within 30 days of becoming an Employee to defer base salary earned subsequent to the deferral election becoming effective and in the year of hire.  Such an election shall become irrevocable and effective at the end of this 30-day period.

 

3.3                               Late Year New Hires.  A Late Year Newly Hired Employee may elect within the later of 30 days of becoming an Employee or the end of the calendar year in which he is hired to defer base salary earned in the Plan Year following his year of hire.  Such an election shall become irrevocable and effective at the end of this election period and shall apply to base salary earned subsequent to the deferral election’s becoming effective.

 

3.4                               Outside Director Deferral Elections.  In order to elect to defer a portion of his Annual Retainer earned during a Plan Year, an Outside Director shall submit an irrevocable Deferral Form with HP before the beginning of such Plan Year, but no earlier than the first day of November preceding the Plan Year within which the deferral is to be made.  The portion of his Annual Retainer that an Outside Director elects to defer for a Plan Year shall be stated as a whole dollar amount.  Any failure to make an election shall be deemed to be an election for the same deferral amount and the same distribution date and form of payment for the following Plan Year as were in effect for such Outside Director for the current Plan Year.

 

3.5                               Crediting of Deferrals.  Eligible Income deferred by a Participant under the Plan shall be credited to the Participant’s Account as soon as administratively practicable after the amounts would have otherwise been paid to the Participant.

 

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3.6                               Vesting on Eligible Income.  A Participant shall at all times be 100% vested in any Eligible Income deferred under this Plan and credited to his Account.

 

3.7                               Administrative Charges.  The administrative cost associated with this Plan may be debited to a Participant’s Account in a manner determined by the Plan Committee or its designee, in its sole discretion.

 

ARTICLE IV:  MATCH ON DEFERRALS

 

4.1                               HP Matching Contributions.  At the end of each Plan Year beginning with the 2006 Plan Year, HP shall credit a Match Eligible Employee’s Account with HP Matching Contributions.  The HP Matching Contributions shall be applied only to the extent that the Match Eligible Employee’s Actual Pay exceeds the Code Section 401(a)(17) Limit for the Plan Year, and the rate of HP Matching Contributions shall be equal to the weighted average of the various rates that applied (or would have applied) to such Employee under the HP Inc. 401(k) Plan for the Plan Year, determined as if such Employee had participated in the 401(k) Plan for the entire Plan Year.  Notwithstanding the foregoing, the maximum amount of HP Matching Contributions for a Plan Year for a Match Eligible Employee shall not exceed the maximum amount of match for which such Employee would be eligible under the HP Inc. 401(k) Plan for the Plan Year.

 

4.2                               Crediting of HP Matching Contributions.  HP Matching Contributions for a Plan Year shall be credited to the Accounts of Match Eligible Employees as soon as administratively practicable after the end of the Plan Year.  The Account of a Participant shall be credited with HP Matching Contributions for a Plan Year only if such Participant has not terminated employment with HP and its Affiliates prior to the end of the Plan Year, unless such termination is due to death, disability or is after Participant’s Retirement Date.

 

4.3                               Vesting of HP Matching Contributions.

 

(a)                                 Vesting Schedule.  A Participant’s interest in HP Matching Contributions shall vest as follows:

 

(i)                                     For Participants who were hired by HP or an Affiliate prior to January 1, 2006, the Participant will be fully vested in HP Matching Contributions credited to such Participant’s Account.

 

(ii)                                  For Participants who were hired by HP or its Affiliates on or after January 1, 2006, the Participant will be vested in HP Matching Contributions credited to such Participant’s Account when such Participant would be vested in HP Matching Contributions credited to his or her account under the HP Inc. 401(k) Plan.  Notwithstanding the foregoing, a Participant will be fully vested in HP Matching Contributions credited to his or her Account if the Participant’s employment with HP and its Affiliates is terminated (A) due to death or disability, (B) after the Participant has reached his or her Retirement Date, (C) if the Participant is a “Qualified Participant” as defined in the 2007 U.S. Enhanced Early Retirement Program (the “2007 EER Program”) and terminates employment in connection with all of the terms and conditions of the 2007 EER Program, or (D) if the Participant terminates employment from HP or an Affiliate in connection with a sale or other disposition by HP or the Affiliate of the business unit in which the Participant had been employed.

 

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(b)                                 Forfeiture of HP Matching Contributions.  Except as otherwise provided above, upon termination of employment with HP and its Affiliates, a Participant shall forfeit the nonvested portion of his or her Account and applicable earnings thereon.

 

ARTICLE V:  INVESTMENT OPTIONS, EARNINGS CREDITED AND DISTRIBUTION OF ACCOUNT BALANCE

 

5.1                               Investment Options and Earnings

 

(a)                                 Investment Options and Procedures.  HP shall select the Investment Options to be available under the Plan, and shall specify procedures by which a Participant may make an election as to the deemed investment of amounts credited to his Accounts among the Investment Options, as well as the procedures by which a Participant may change his investment selection.  Nothing in this Plan, however, will require HP to invest any amounts in such Investment Options or otherwise.

 

(b)                                 Earnings.  HP shall periodically credit gains, losses and earnings to a Participant’s Account, until the full balance of the Account has been distributed.  Amounts shall be credited to a Participant’s Account under this Section based on the results that would have been achieved had amounts credited to the Account been invested as soon as practicable after crediting into the Investment Options selected by the Participant.

 

Any portion of an Incentive Award that qualifies as “performance-based compensation” under Code section 162(m) and is deferred under the Plan by a Participant who qualifies as a “covered employee” under Code section 162(m) shall be credited with earnings and otherwise administered in a manner so that the ultimate payment(s) of the deferred amount remains so qualified.

 

5.2                               Time and Form of Payment Elections

 

(a)                                 The Deferral Form.  Each Deferral Form shall specify the date on which payment of the aggregate of the deferred amount and any HP Matching Contributions for the Plan Year (and earnings thereon) is to commence.  Such payment date shall be at least three (3) years after the Plan Year in which the deferrals are being made.  Each Deferral Form shall also specify the form for payment of the deferred amount and any HP Matching Contributions for the Plan Year (and earnings thereon).  A Participant may elect payment in the form of a single lump sum payment or annual installment payments for a period of not less than two (2) but no more than fifteen (15) years.  Annual installment payments will be paid once a year beginning on the date specified on the applicable Deferral Form or as otherwise provided herein.

 

(i)                                     Default Elections.  If a Participant fails to specify the date on which payment of the deferred amount and any HP Matching Contributions for the Plan Year (and earnings thereon) is to commence, then Participant will be deemed to have elected distribution at Participant’s Termination Date, subject to Sections 5.3 or 5.4 below.  If a Participant fails to make an effective payment form designation on a Deferral Form, the amount deferred and any HP Matching Contributions for the Plan Year (and earnings thereon) under such Deferral Form will be distributed in a single lump sum in the year elected.

 

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(b)                                 Payment shall be made in January of the year that a Participant elects for a distribution.

 

(c)                                  A Participant may also elect on a Deferral Form that payments of that Plan Year’s deferrals and any HP Matching Contributions (and earnings thereon) shall be paid in January of the year following the year in which the Participant’s Termination Date occurs (in the case of installment payments, the first installment shall be paid in the January following the Participant’s Termination Date, and subsequent installments shall be made each January thereafter), if the Participant’s Termination Date is after his Retirement Date or the Participant is an Outside Director.

 

(d)                                 Except for Participants who are Outside Directors, if a Participant’s Termination Date precedes his or her Retirement Date, such Participant shall be deemed to have elected on each Deferral Form that such Plan Year’s deferrals and any HP Matching Contributions (and earnings thereon) shall be paid in a single lump sum at the following time, subject to Section 5.3 below:  (i) with respect to amounts attributable to Plan Years commencing before January 1, 2008, in the month following the month in which the Participant Terminates Employment, and (ii) with respect to amounts attributable to Plan Years commencing on or after January 1, 2008, in January of the year following the year in which the Participant Terminates Employment.

 

5.3                               Automatic Distributions.  Notwithstanding any payment elections made on Deferral Forms and Section 5.2:

 

(a)                                 Distributions to Key Employees.  Distributions may not commence to a Key Employee upon a Termination of Employment before the date which is six months after the date of the Key Employee’s Termination of Employment.  If distributions are to be paid in a lump sum, such lump sum payment shall be distributed as follows:  (i) with respect to amounts attributable to Plan Years commencing before January 1, 2008, in the seventh month after the Termination of Employment, and (ii) with respect to amounts attributable to Plan Years commencing on or after January 1, 2008, in the later of (A) the seventh month after the Termination of Employment or (B) January of the year following the year of the Termination of Employment.  If distributions are to be paid in installments and the first installment is payable during this six-month period, such installment shall be distributed as follows:  (x) with respect to amounts attributable to Plan Years commencing before January 1, 2008, in the seventh month after the Termination of Employment, and (y) with respect to amounts attributable to Plan Years commencing on or after January 1, 2008, in the later of (I) the seventh month after the Termination of Employment or (II) January of the year following the year of the Termination of Employment, with subsequent installments to be made each January thereafter.

 

(b)                                 Distributions Upon Death.  If a Participant dies before full distribution of his Account balance, any balance shall be distributed in a lump sum payment to the Participant’s Beneficiary in the month following the month in which the Participant’s death occurs.

 

5.4                               Withdrawals for Unforeseeable Emergency.  Upon approval by the Plan Committee, a Participant may withdraw all or any portion of his vested Account balance for an Unforeseeable Emergency.  The amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this Plan.  “Unforeseeable Emergency”

 

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means for this purpose a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  For the avoidance of doubt, a circumstance does not constitute an “Unforeseeable Emergency” for purposes of the Plan unless such circumstance constitutes an “unforeseeable emergency” as defined in Treas. Reg. § 1.409A-3(i)(3).  The amount withdrawn for an Unforeseeable Emergency is subject to a minimum of $10,000.

 

Notwithstanding Section 3.1, if the Plan Committee approves a distribution under this Section, the Participant’s deferrals under the Plan shall cease.  The Participant will be allowed to enroll if eligible at the beginning of the next enrollment period following six (6) months after the date of distribution.

 

5.5                               Effect of Taxation.  If the Internal Revenue Service or a court of competent jurisdiction determines that Plan benefits are includible in the gross income of a Participant under Code section 409A prior to actual receipt of the benefits, HP shall immediately distribute the benefits found to be so includible to the Participant.

 

ARTICLE VI:  ADMINISTRATION

 

6.1                               General Administration.  The Plan Committee shall be responsible for the operation and administration of the Plan and for carrying out the provisions hereof.  The Plan Committee shall have the full authority and discretion to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with this Plan.  Any such action taken by the Plan Committee shall be final and conclusive on any party.  The Plan Committee’s prior exercise of discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter.  The Committee and the Plan Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by HP with respect to the Plan.  The Committee and the Plan Committee may, from time to time, delegate to others, including employees of HP, such administrative duties as it sees fit.

 

6.2                               Claims for Benefits:  The following applies to Participants who are not Outside Directors:

 

(a)                                 Filing a Claim.  A Participant or his authorized representative may file a claim for benefits under the Plan.  Any claim must be in writing and submitted to the Plan Committee or its delegate at such address as may be specified from time to time.  Claimants will be notified in writing of approved claims, which will be processed as claimed.  A claim is considered approved only if its approval is communicated in writing to a claimant.

 

(b)                                 Denial of Claim. In the case of the denial of a claim respecting benefits paid or payable with respect to a Participant, a written notice will be furnished to the claimant within 90 days of the date on which the claim is received.  If circumstances (such as for a meeting) require a longer period, the claimant will be notified in writing, prior to the expiration of the 90-day period, of the reasons for an extension of time; provided, however, that no extensions will be permitted beyond 90 days after the expiration of the initial 90-day period.

 

(c)                                  Reasons for Denial.  A denial or partial denial of a claim will be dated and signed on behalf of the Plan Committee and will clearly set forth:

 

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(i)                                     the specific reason or reasons for the denial;

 

(ii)                                  specific reference to pertinent Plan provisions on which the denial is based;

 

(iii)                               a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

 

(iv)                              an explanation of the procedure for review of the denied or partially denied claim set forth below, including the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

 

(d)                                 Review of Denial.  Upon denial of a claim, in whole or in part, a claimant or his duly authorized representative will have the right to submit a written request to the Plan Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Plan Committee within 60 days of the receipt by the claimant of written notice of the denial of the claim.  A claimant or the claimant’s authorized representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits and may submit issues and comments in writing, except for privileged or confidential documentation.  The review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

If the claimant fails to file a request for review within 60 days of the denial notification, the claim will be deemed abandoned and the claimant precluded from reasserting it.  If the claimant does file a request for review, his request must include a description of the issues and evidence he deems relevant.  Failure to raise issues or present evidence on review will preclude those issues or evidence from being presented in any subsequent proceeding or judicial review of the claim.

 

(e)                                  Decision Upon Review.  The Plan Committee or its delegate will provide a written decision on review.  If the claim is denied on review, the decision shall set forth:

 

(i)                                     the specific reason or reasons for the adverse determination;

 

(ii)                                  specific reference to pertinent Plan provisions on which the adverse determination is based;

 

(iii)                               a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and

 

(iv)                              a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring a civil action under ERISA section 502(a).

 

A decision will be rendered no more than 60 days after the receipt of the request for review, except that such period may be extended for an additional 60 days if the Plan Committee determines that circumstances (such as for a meeting) require such extension.  If an

 

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extension of time is required, written notice of the extension will be furnished to the claimant before the end of the initial 60-day period.

 

(f)                                   Finality of Determinations; Exhaustion of Remedies.  To the extent permitted by law, decisions reached under the claims procedures set forth in this Section shall be final and binding on all parties. No legal action for benefits under the Plan shall be brought unless and until the claimant has exhausted his remedies under this Section. In any such legal action, the claimant may only present evidence and theories which the claimant presented during the claims procedure. Any claims which the claimant does not in good faith pursue through the review stage of the procedure shall be treated as having been irrevocably waived. Judicial review of a claimant’s denied claim shall be limited to a determination of whether the denial was an abuse of discretion based on the evidence and theories the claimant presented during the claims procedure. Any suit or legal action initiated by a claimant under the Plan must be brought by the claimant no later than one year following a final decision on the claim for benefits.  Notwithstanding the foregoing, in no event may a claimant initiate suit or legal action more than two years after the facts giving rise to the action occurred.  The foregoing limitations on suits or legal actions for benefits will apply in any forum where a claimant initiates such suit or legal action.

 

ARTICLE VII:  AMENDMENT AND TERMINATION

 

7.1                               Amendment or Termination.  HP reserves the right to amend or terminate the Plan when, in the sole discretion of HP, such amendment or termination is advisable, pursuant to a resolution or other action taken by the Committee.

 

Any amendment or termination of the Plan will not affect the entitlement of any Participant or the Beneficiary of a Participant whose Termination Date occurs before the amendment or termination.  All benefits to which any Participant or Beneficiary may be entitled shall be determined under the Plan as in effect at the time of the Participant’s Termination Date and shall not be affected by any subsequent change in the provisions of the Plan; provided, that HP reserves the right to change the Investment Options with respect to any Participant or Beneficiary.  Participants and Beneficiaries will be given notice prior to the discontinuance of the Plan, change in Investment Options available or reduction of any benefits provided by the Plan.

 

7.2                               Effect of Amendment or Termination.  No amendment or termination of the Plan shall adversely affect the rights of any Participant to amounts credited to his Account as of the effective date of such amendment or termination.  Upon termination of the Plan, distribution of balances in Accounts shall be made to Participants and Beneficiaries in the manner and at the time described in Article V, unless HP determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A.  Upon termination of the Plan, no further deferrals of Eligible Income shall be permitted; however, earnings, gains and losses shall continue to be credited to Account balances in accordance with Article V until the Account balances are fully distributed.

 

ARTICLE VIII:  GENERAL PROVISIONS

 

8.1                               Rights Unsecured.  The right of a Participant or his Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of HP, and neither the Participant nor his Beneficiary shall have any preferred rights in or against any amount credited to any Account or any other assets of HP.  The Plan at all times shall be considered entirely unfunded for tax purposes.  Any funds set

 

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aside by HP for the purpose of meetings its obligations under the Plan, including any amounts held by a trustee, shall continue for all purposes to be part of the general assets of HP and shall be available to its general creditors in the event of HP’s bankruptcy or insolvency.  HP’s obligation under this Plan shall be that of an unfunded and unsecured promise to pay money in the future.

 

8.2                               No Guarantee of Benefits.  Nothing contained in the Plan shall constitute a guarantee by HP or any other person or entity that the assets of HP will be sufficient to pay any benefits hereunder.

 

8.3                               No Enlargement of Rights.  No Participant or Beneficiary shall have any right to receive a distribution under the Plan except in accordance with the terms of the Plan.  Establishment of the Plan shall not be construed to give any Participant the right to continue to be employed by or provide services to HP.

 

8.4                               Transferability.  No interest of any person in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a distribution be taken, either voluntarily or involuntarily for the satisfaction of the debts of, or other obligations or claims against, such person.

 

8.5                               Applicable Law. To the extent not preempted by federal law, the Plan shall be governed by the laws of the State of Delaware.

 

8.6                               Incapacity of Recipient.  If any person entitled to a distribution under the Plan is deemed by HP to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, HP may provide for such payment or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person.  Any such payment shall be a payment for the account of such person and a complete discharge of any liability of HP and the Plan with respect to the payment.

 

8.7                               Taxes. HP or other payor may withhold from a benefit payment under the Plan or a Participant’s wages any federal, state, or local taxes required by law to be withheld with respect to a payment or accrual under the Plan, and shall report such payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

 

8.8                               Corporate Successors.  The Plan and the obligations of HP under the Plan shall become the responsibility of any successor to HP by reason of a transfer or sale of substantially all of the assets of HP or by the merger or consolidation of HP into or with any other corporation or other entity.

 

8.9                               Unclaimed Benefits.  Each Participant shall keep HP informed of his current address and the current address of his designated Beneficiary.  HP shall not be obligated to search for the whereabouts of any person if the location of a person is not made known to HP.

 

8.10                        Severability.  In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

 

8.11                        Words and Headings.  Words in the masculine gender shall include the feminine and the singular shall include the plural, and vice versa, unless qualified by the context.  Any headings used herein are included for ease of reference only, and are not to be construed so as to alter the terms hereof.

 

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8.12                        Liabilities Transferred to HPE.  HP distributed its interest in Hewlett Packard Enterprise Company (“HPE”) to its shareholders on or about November 1, 2015 (the “HPE Distribution Date”). Pursuant to an agreement between HP and HPE, on the HPE Distribution Date certain employees and former employees of HPE ceased to participate in the Plan and the liabilities for these participants’ benefits under the Plan were transferred to HPE. On and after the HPE Distribution Date, HP, the Plan, any directors, officers, or employees of HP, and any successors thereto, shall have no further obligation or liability to any such participant with respect to any benefit, amount, or right due under the Plan.

 

ARTICLE IX:  ROLLOVERS FROM OTHER PLANS

 

9.1                               Discretion to Accept.  The Committee shall have complete authority and discretion, but no obligation, to establish an Account for a Rollover Participant and credit the Account with the amount transferred from the Rollover Participant’s account in a Rollover Plan, except that the Committee shall establish an Account for a Rollover Participant for whom benefits and liabilities have been transferred to this Plan from the EBP.  Amounts credited to such Accounts are fully subject to the provisions of this Plan; provided, however, that a Rollover Participant from the EBP shall be deemed to have elected to invest his Account in the Stable Value Fund if such Rollover Participant fails to make an investment election.  Reference in the Plan to such a crediting as a “rollover” or “transfer” from a Rollover Plan or the EBP is nominal in nature, and confers no additional rights upon a Rollover Participant other than those specifically set forth in the Plan.

 

9.2                               Status of Rollover Participants.  A Rollover Participant and his Beneficiary are fully subject to the provisions of this Plan, except as otherwise expressly set forth herein.  A Rollover Participant who is not already a Participant in the Plan and is not otherwise eligible to participate in the Plan at the time of rollover, shall not be entitled to make any additional deferrals under the Plan unless and until he has become eligible to do so under the terms of the Plan.

 

9.3                               Payments to Rollover Participants.  Payments from a Rollover Participant’s Account shall be made in accordance with the form and timing of payment provisions of the Rollover Plan or the EBP, as applicable.

 

IN WITNESS WHEREOF, HP INC. has caused this HP Inc. 2005 Executive Deferred Compensation Plan, as amended and restated effective November 1, 2015, to be executed on this        day of                   , 2015.

 

	
HP   INC.
    	
 
    
	
 
    	
 
    
	
/s/ Tracy Keogh
    	
 
    
	
Tracy Keogh
    	
 
    
	
Chief Human Resources Officer
    	
 
    

 

13Exhibit 10(o)(o)

 

HP Inc.
 Severance and
 Long-Term Incentive Change in Control Plan
 for Executive Officers
 As amended and restated effective November 1, 2015

 

1.              Eligibility.  This Severance and Long-Term Incentive Change in Control Plan for Executive Officers (“Plan”) is applicable to individuals who are Executive Officers (as defined below), effective for terminations and Changes in Control occurring on or after November 1, 2015.  “Executive Officer” means a person who is employed by HP Inc. or a subsidiary (“HP”) and who (a) is an executive officer of HP within the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended (“Section 16 Officer”) or a Participating EC Member (as defined below) on, or was a Section 16 Officer or a Participating EC Member within 90 days before, his or her termination of employment, or (b) is a Section 16 Officer or a Participating EC Member upon the occurrence of, or was a Section 16 Officer or a member of the Executive Committee within 90 days prior to, a Change in Control, as defined below.  A “Participating EC Member” is an individual who is (and remains) a member of the Executive Council but is not a Section 16 Officer, who is designated as eligible for the Plan by the Chief Executive Officer of HP and whose eligibility is approved by the HR & Compensation Committee of the Board of Directors of HP (such Board the “Board” and such Committee the “Committee”).

 

2.              Severance Benefits outside a Change in Control.  In the event of a Qualifying Termination (as defined below) prior to or more than 24 months following a Change in Control, and subject to the Executive Officer’s execution of a full release of claims in a form satisfactory to HP (“Release of Claims”) within 45 days following termination of employment, and provided there has been no revocation or attempted revocation of the Release of Claims during the statutory revocation period (the date after the lapse of such revocation period without a revocation or attempted revocation, the “Release Effective Date”) and subject to the terms of this Plan, an Executive Officer will be eligible for severance benefits consisting of (a) a cash severance payment, (b) a pro-rata annual bonus payment, (c) pro-rata vesting on any outstanding awards under a long-term incentive plan (“LTIP”)(each, an “Award”), and (d) a health benefit stipend, all as more fully described below.

 

(a)         Cash Severance:  The cash severance payment shall be calculated as a multiple of the sum of the Executive Officer’s (i) annual base salary as in effect immediately before termination of employment, and (ii) the average of the actual annual cash bonuses paid under the applicable annual bonus plan for the three fiscal years most recently completed (or actual completed fiscal years, if less) prior to termination of employment.

 

(i)            For an Executive Officer whose highest title held within 90 days before termination was Chief Executive Officer, the multiple shall be two; and

 

(ii)         For an Executive Officer whose highest title held within 90 days before termination was Executive 1, the multiple shall be 1.5. For avoidance of doubt the Executive 1 must also have been a Section 16 Officer or a Participating EC Member; and

 

(iii)      For an Executive Officer whose highest title held within 90 days before termination was Executive 2, the multiple shall be one.  For avoidance of doubt the Executive 2 must also have been a Section 16 Officer or a Participating EC Member.

 

(b)         Pro-Rata Annual Bonus:  The pro-rata annual bonus payment shall be calculated as a pro-rata portion of the annual (short-term) bonus for the fiscal year in which termination occurs, based on the number of days worked in the fiscal year in which termination occurs through the date of termination, divided by 365, and subject to actual performance on the applicable metrics, and to discretionary adjustments permitted under the applicable plan, as certified by the Committee following the end of the fiscal year.

 

 

(c)          Long-Term Incentive Awards:

 

(i)             Each separately-granted Award held by an Executive Officer at the time of his or her Qualifying Termination that vests solely based on service will receive pro-rata vesting based on the number of full months worked during the vesting period applicable to such Award.  Pro-rata vesting, where applicable, shall be applied separately to each separately-granted Award in its entirety and thus shall take into account amounts previously vested.

 

(ii)          Each separately-granted Award held by an Executive Officer at the time of his or her Qualifying Termination that vests solely based on performance will be deemed earned as of the end of the applicable performance period based on actual results as certified by the Committee, and subject to discretionary adjustments permitted under the applicable plan, if any, and will receive pro-rata vesting as described in the preceding sentence and application of the pro-rata vesting to the entire separately-granted Award, taking into account amounts, if any, previously vested.

 

(iii)       Vesting for Awards not specifically addressed above, including Awards subject to both time-based and performance-based vesting, may be illustrated in Appendix A, as amended from time to time.  Awards not specifically illustrated in Appendix A will be pro-rated by analogy to those illustrations.

 

(iv)      Vested stock options (including those becoming vested pursuant to Paragraph 2(c)(i), (ii), or (iii)) may be exercised until one year after the later of (A) termination of employment or (B) if under the terms of the option, performance after termination of employment will be applied to determine the amount of pro ration, the first business day following the date the applicable performance is certified; but in any case no later than the applicable expiration date.

 

(v)         Pro-rata vesting is based on the number of full calendar months worked during the vesting period applicable to such Award, counting the month of grant as one full month (i.e., January 15-March 31 is three months).

 

(vi)      The provisions of this Paragraph 2(c) shall be deemed incorporated into the Award agreement for the applicable Award, except to the extent it would be deemed an amendment violating Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) by accelerating payment or settlement of an Award, in which case the Award shall become vested as described above, but settlement shall not be accelerated, and settlement shall occur as initially provided in the Award agreement.  If an Executive Officer ceases to be an Executive Officer (including, in the case of a Participating EC Member, by ceasing to be a member of the EC) prior to termination of employment, the provisions of this Paragraph 2(c) shall be deemed removed from the Award agreement for the applicable Award on the 91st day after the individual ceases to be an Executive Officer, without the need for consent of the grantee, except to the extent such removal would be deemed an amendment violating Section 409A, in which case the provisions of this Paragraph 2(c) shall remain in effect with respect to such Award.

 

(d)         Health Benefit Stipend:  The health benefit stipend shall consist of the payment in a lump sum of an amount equal to the excess of 18 times one months’ COBRA premiums for continued group medical coverage at the rate in effect on the date of termination of employment (for the Executive Officer and his or her eligible dependents covered by the applicable HP group medical plan immediately prior to termination of employment) over 18 times the monthly amount payable by an active employee in the same plan as of the date of the Executive Officer’s termination of employment and with the same level of coverage.

 

3.              Severance Benefits in the event of a Change in Control. In the event of a Qualifying Termination, including a voluntary termination for Good Reason (each as defined below) within 24 months after a Change in Control (as defined below), and subject to his or her execution of a Release of Claims within

 

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45 days following such termination of employment, and provided there occurs a Release Effective Date, and subject to the terms of this Plan, an Executive Officer will be eligible for severance benefits consisting of the following:

 

(a)         Severance Benefits.  (i) a cash severance payment, (ii) a pro-rata annual bonus payment, (iii) a health benefit stipend (each in the amounts described in Paragraph 2 above, except that the amount of the pro rata annual bonus payment will be calculated based on actual performance through the date of the Qualifying Termination; and (iv) vesting in accordance with sub-paragraph 3(b) of any then-outstanding Award granted after the Change in Control and any Replacement Award as defined in Paragraph 4(b), and settlement thereof in accordance with Paragraph 8.

 

(b)         Vesting.

 

(i)             Any such Award or Replacement Award of Options or stock appreciation rights (“SARs”) not subject to Section 409A, to the extent subject to time-based vesting shall become 100% vested upon the Qualifying Termination and to the extent subject, in whole or in part to performance-based vesting, shall become 100% vested at the target level of performance and in either event shall remain exercisable for 1 year after the Qualifying Termination, but in no event after the stated expiration date of the Award or Replacement Award.

 

(ii)          Any such Award or Replacement Award (other than Options or SARs, and whether or not subject to Section 409A) (A) that vests and is settled solely based on the performance of service will become 100% vested upon the Qualifying Termination; and (B) that vests in whole or in part based on performance, shall become 100% vested at the target level of performance.

 

4.              Effect of a Change in Control on Outstanding Long-Term Incentive Awards.  This Paragraph 4 provides for the treatment of long-term incentive awards that are outstanding on the date on which a Change in Control occurs.  Treatment depends, in part, on whether the Award is a “Replaceable 409A Award” (which is an Award (A) that is subject to Section 409A and that was granted either prior to November 1, 2015 or on or after November 1, 2015 but prior to the grantee’s becoming an Executive Officer, or (B) that is subject to 409A and the applicable Change in Control is not described in Section 6(e) (i.e., does not qualify under Section 409A));  a “409A Award” (which is an Award granted on or after November 1, 2015 that is subject to Section 409A and the Change in Control is described in Paragraph 6(e)); or a “Non-409A Award” (which is an Award that is not subject to Section 409A, regardless of when granted).  In general, subject to the specific terms of this Paragraph 4, (x) Non-409A Awards will receive accelerated vesting and be settled on the occurrence of a Change in Control unless a Replacement Award is granted, in which case the terms of the Replacement Award will apply; (y)  Replaceable 409A Awards will receive accelerated vesting and will be settled at the time and in the form provided under the terms of such Awards in effect prior to the Change in Control unless a Replacement Award is granted, in which case the terms of the Replacement Award will apply; and (z)  409A Awards will receive accelerated vesting and be settled on the occurrence of the Change in Control as described in Section 4(c), and will not be eligible to be replaced by Replacement Awards.

 

(a)         Immediate Vesting of Long-Term Incentive Awards that Are Not Assumed or Replaced. Notwithstanding any provision to the contrary under this Plan or any equity plan or LTIP maintained by HP, upon a Change in Control any then-outstanding Award held by an Executive Officer, other than a 409A Award, whether such Award is denominated and/or payable in equity securities of HP or denominated and/or payable in cash, shall be treated in accordance with sub-paragraph 4(a)(i), (ii), or (iii) below, except to the extent that another Award meeting the requirements of Paragraph 4(b) below (a “Replacement Award”) is provided to the Executive Officer to replace such Award (the “Replaced Award”).  For avoidance of doubt, Replacement Awards shall not be treated as provided in this paragraph 4(a).

 

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Where no Replacement Award is granted or is to be granted, the following shall apply to an Award other than a 409A Award outstanding upon a Change in Control:

 

(i)             Outstanding Options and SARs.

 

A.            Not a Corporate Transaction or Corporate Transaction in which HP is the Survivor.  Upon a Change in Control that does not involve a Corporate Transaction or that does involve a Corporate Transaction in which HP is the surviving corporation, an Executive Officer’s then-outstanding Options and SARs that are not vested shall immediately become fully vested (and, to the extent applicable, all performance conditions shall be deemed satisfied as if target performance were achieved) and, if the Executive Officer does not have a Qualifying Termination, shall remain exercisable for the exercise period described in Paragraph 2(c)(iv) above.

 

B.            Corporate Transaction, HP Not the Survivor.  Upon a Change in Control that involves a Corporate Transaction in which HP is not the surviving corporation, one of the following shall apply, as the Committee shall determine in its discretion, provided, however, that all Executive Officers shall be treated the same with respect to similar Awards:

 

(I)              an Executive Officer’s then-outstanding Options and SARs shall become fully vested and shall be exercisable for such limited period of time prior to the Corporate Transaction as is deemed fair and equitable by the Committee and shall terminate at the effective time of the Corporate Transaction.  For performance-based Awards, all performance conditions shall be deemed satisfied as if target performance were achieved.  The Committee shall provide written notice of the limited period of accelerated exercisability of Options and SARs to all affected Executive Officers. The exercise of any Option or SAR whose exercisability is accelerated as provided in this Paragraph 4(a)(i)(B)(I) shall be conditioned upon the consummation of the Corporate Transaction and shall be effective only immediately before such consummation; or

 

(II)         an Executive Officer’s Options and SARs shall become fully vested (and in the case of Options and SARs subject in whole or in part to performance-based vesting all performance conditions shall be deemed satisfied as if target performance were achieved) and such Options and SARs shall be cancelled in exchange for the payment of an amount of cash (less normal withholding taxes) equal to the excess of (A) the value, as determined by the Committee, of the consideration (including cash) received by the holder of a share of common stock of HP (“Share”) as a result of the Change in Control (or if HP shareholders do not receive any consideration as a result of the Change in Control, the fair market value, as determined by the Committee in its sole discretion, of a Share on the day immediately prior to the Change in Control) over (B) the exercise price of such Option or the grant price of the SAR, multiplied by the number of Shares subject to such Award.  No payment shall be made to an Executive Officer for any Option or SAR if the exercise price or grant price for such Option or SAR exceeds the value, as determined by the Committee, of the consideration (including cash) received by the holder of a Share as a result of Change in Control that involves a Corporate Transaction (or if HP shareholders do not receive any consideration as a result of the Change in Control, the fair market value, as determined by the Committee in its sole discretion, of a Share on the day immediately prior to the Change in Control).

 

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(III)    Notwithstanding the foregoing, for any Options or SARs that are Replaceable 409A Awards, if the foregoing treatment would violate Section 409A, such Options and SARs shall become fully vested (with any applicable performance measure deemed to be satisfied at the target level) and shall be converted, as of the date of the Change in Control, to a right to receive a cash payment on the required date of exercise, which payment shall be made on the required date of exercise under the terms of such Award as in effect prior to the Change in Control, equal to the amount described in Paragraph 4(a)(i)(B)(II) above.

 

(ii)         Outstanding Awards (other than Options and SARs) Subject Solely to Service-Based Vesting. Upon a Change in Control, an Executive Officer’s then-outstanding Awards (other than Options and SARs) that are not vested and as to which vesting depends solely on the satisfaction of a service obligation by the Executive Officer (“Service-based Awards”)  shall become fully vested and shall be settled in cash, Shares or a combination thereof, as determined by the Committee, within thirty (30) days following such Change in Control; provided that in the case of a Replaceable 409A Award, settlement shall be made at the time and in the form provided under the terms of such Award in effect prior to the Change in Control.

 

(iii)      Outstanding Awards (other than Options and SARs) Subject to Performance-Based Vesting. Upon a Change in Control, an Executive Officer’s then-outstanding Awards (other than Options and SARs) that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions (“Performance-based Awards) shall immediately vest and all performance conditions shall be deemed satisfied with respect to the greater of (X) 100% of the Shares earned based on actual performance or (Y) the number of the Shares earned based on assumed target performance pro-rated based on the number of full calendar months the Executive Officer was employed by HP during the performance period applicable to such Award, counting the month of grant as one full month (i.e., January 15-March 31 is three months) and shall be settled in cash, Shares or a combination thereof, as determined by the Committee, within thirty (30) days following such Change in Control; provided that in the case of a Replaceable 409A Award, settlement shall be made at the time and in the form provided under the terms of such Award in effect prior to the Change in Control.

 

(b)         Definition of Replacement Award. An Award shall meet the conditions of this Paragraph 4(b) (and hence qualify as a Replacement Award) if: (i) it is of the same type of instrument as the Replaced Award; (ii) it has an intrinsic value at least equal to the value of the Replaced Award; (iii) it relates to publicly traded equity securities of HP or its successor in the Change in Control or another entity that is affiliated with HP or its successor following the Change in Control; (iv) its terms and conditions comply with applicable regulations under Section 409A regarding substitutions and assumptions by reason of a corporate transaction; and (v) its other terms and conditions are not less favorable to the holder of the Award than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation or assumption of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Paragraph 4(b) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion. Notwithstanding the foregoing, the Committee may determine the value of Awards and Replacement Awards that are stock options by reference to either their intrinsic value or their fair value.

 

(c)          Treatment of 409A Awards.  This Paragraph 4(c) shall apply to 409A Awards (i.e., Awards subject to Section 409A when the applicable Change in Control is defined in Section 6(e)).  409A Awards shall be treated, in the case of Options or SARs, as described in Paragraph 4(a)(i)(B)(I) or (II)(regardless of whether HP is the survivor).  In the case of 409A Awards other than Options or

 

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SARs, such 409A Awards shall become vested (with any applicable performance conditions being deemed satisfied with respect to the greater of (X) 100% of the Shares earned based on actual performance or (Y) the number of the Shares earned based on assumed target performance pro-rated based on the number of full calendar months the Executive Officer was employed by HP during the performance period applicable to such Award, counting the month of grant as one full month (i.e., January 15-March 31 is three months) and shall be settled in cash, Shares or a combination thereof, as determined by the Committee, within thirty (30) days following the Change in Control.  Awards subject to this Paragraph 4(c) shall not be eligible to be replaced by Replacement Awards or to be continued or assumed in connection with the Change in Control.

 

5.              Qualifying Termination and Good Reason.

 

(a)         An Executive Officer will be deemed to have incurred a Qualifying Termination for purposes of this plan if he or she is involuntarily terminated, as determined by the Committee, other than for Cause while holding Executive Officer status or within 90 days after having held Executive Officer status.  For purposes of this Plan, the term “Cause” shall mean an Executive Officer’s:

 

(i)             Material neglect (other than as a result of illness or disability) of his or her duties or responsibilities to HP; or

 

(ii)          Conduct (including action or failure to act) that is not in the best interest of, or is injurious to, HP.

 

An Executive Officer shall not be deemed to have engaged in conduct constituting Cause under this plan except by a majority vote of the members of the Board or an independent committee thereof.

 

(b)         For purposes of this plan, “Qualifying Termination” shall also include an Executive Officer’s voluntary termination of employment for “Good Reason” provided such termination occurs within 24 months after a Change in Control, where “Good Reason” means:

 

(i)             a material reduction in the Executive Officer’s position, authority, duties or responsibilities relative to such position, authority, duties or responsibilities immediately prior to the Change in Control; or

 

(ii)          a material reduction in the Executive Officer’s base salary or target bonus opportunity as in effect immediately prior to the Change in Control; or

 

(iii)       receipt of notice by the Executive Officer with regard to the mandatory relocation (other than by mutual agreement) of the office at which the Executive Officer is to perform the majority of his or her duties following the Change in Control to a location more than 50 miles from the location at which the Executive Officer performed such duties prior to the Change in Control; or

 

(iv)      the failure at any time of a successor to HP explicitly to assume and agree to be bound by this Plan.

 

(c)          Notwithstanding anything in this Plan to the contrary, no act, omission or event shall constitute grounds for a voluntary termination due to “Good Reason” unless:

 

(i)             the Executive Officer provides HP thirty (30) day advance written notice of his or her intent to termination employment for Good Reason which notice must describe the claimed act, omission or event giving rise to Good Reason (“Notice of Termination”); and

 

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(ii)          The Notice of Termination is given within ninety (90) days of Executive Officer’s first actual knowledge of such act, omission or event;

 

(iii)      HP fails to cure such act, omission or event within the thirty (30) day period after receiving the Notice of Termination; and

 

(iv)      the Executive Officer’s termination of employment for Good Reason actually occurs at the end of such 30-day cure period if the Good Reason is not cured.

 

6.              Change in Control.  A Change in Control means the first to occur of any of the following:

 

(a)         A direct or indirect acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership of shares which, together with other direct or indirect acquisitions or beneficial ownership by such Person, results in aggregate beneficial ownership by such Person of thirty percent (30%) or more of either (1) the then outstanding shares of common stock (the “Outstanding HP Common Stock”) of HP, or (2) the combined voting power of the then outstanding voting securities of HP (the “Outstanding HP Voting Securities”); excluding, however, the following: (i) any acquisition directly from HP, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from HP, (ii) any acquisition by HP or a wholly owned Subsidiary, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by HP or any entity controlled by HP, or (iv) any acquisition by any entity pursuant to a transaction which complies with Paragraphs 6 (c)(i), (ii) or (iii); or

 

(b)         A change in the composition of the Board over a 12-month period such that the individuals who, as of the date of the beginning of the period (the “Effective Incumbency Date”), constitute the Board (the “Incumbent Board”) cease for any reason to constitute a majority of the Board; provided, however, that any individual who becomes a member of the Board subsequent to the Effective Incumbency Date, whose election, or nomination for election by HPs stockholders, was approved by a vote of a majority of those individuals then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board; or

 

(c)          The consummation of a Corporate Transaction; excluding, however, such a Corporate Transaction pursuant to which (i) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding HP Common Stock and Outstanding HP Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities of the surviving or acquiring entity resulting from such Corporate Transaction or a direct or indirect parent entity of the surviving or acquiring entity (including, without limitation, an entity which as a result of such transaction owns HP or all or substantially all of HP’s assets either directly or through one or more subsidiaries) in substantially the same proportions (as compared to each other) as their ownership, immediately prior to such Corporate Transaction, of the Outstanding HP Common Stock and Outstanding HP Voting Securities, as the case may be, (ii) no Person (other than HP, any wholly owned subsidiary, any employee benefit plan (or related trust)) sponsored or maintained by HP, any entity controlled by HP, such surviving or acquiring entity resulting from such Corporate Transaction or any entity controlled by such surviving or acquiring entity or a direct or indirect parent entity of the surviving or acquiring entity that, after giving effect to the Corporate Transaction, beneficially owns, directly or indirectly, 100% of the outstanding voting securities of the surviving or acquiring entity) will beneficially own, directly or indirectly, twenty percent (30%) or more of, respectively, the outstanding shares of common stock (or comparable equity interests) of the entity resulting from such Corporate Transaction or the combined voting power of

 

7

 

the outstanding voting securities of such entity except to the extent that such ownership existed prior to the Corporate Transaction or (iii) individuals who were members of the Incumbent Board will constitute a majority of the members of the board of directors (or similar governing body) of the surviving or acquiring entity resulting from such Corporate Transaction or a direct or indirect parent entity of the surviving or acquiring entity. “Corporate Transaction” means (w) a dissolution or liquidation of HP, (x) a sale of all or substantially all of the assets of HP, (y) a merger or consolidation of HP with or into any other corporation, regardless of whether t HP is the surviving corporation, or (z) a statutory share exchange involving capital stock of HP.

 

(d)         For avoidance of doubt, the separation of Hewlett-Packard Company into HP Inc. and Hewlett Packard Enterprise shall not be a Change in Control under the Plan.

 

(e)          A Change in Control is described in this Paragraph 6(e) only if it would also constitute a “change in ownership” of HP, a “change in effective control” of HP, or a “change in ownership of a substantial portion of assets” of HP under Section 409A.

 

7.              Form and Time of Payment for Severance Benefits Outside a Change in Control.  Subject to the timely execution of the required Release of Claims, and the occurrence of the Release Effective Date, severance benefits provided under Paragraph 2 shall be paid in accordance with the following provisions:

 

(a)         Cash severance benefits under Paragraph 2(a) shall be paid to an Executive Officer in installments as follows:  25% of such cash severance benefits shall be paid no later than the 75th day following the date of an Executive Officer’s Qualifying Termination, and then 25% of such cash severance benefit on the 6th, 12th and 18th month anniversary of the date of such Qualifying Termination.

 

(b)         The pro-rata annual bonus under Paragraph 2(b) shall be paid at the time such bonuses are otherwise paid to participants in the applicable bonus plan; provided that if the Release Effective Date is after the date that the bonus would otherwise have been paid, such payment shall be made as soon as administratively practicable after the Release Effective Date, but in no event later than March 15 of the year following the year in which the bonus performance period ended.

 

(c)          The health benefit stipend under Paragraph 2(d) shall be paid to an Executive Officer on the same date the Executive Officer is paid the first installment of his or her cash severance under Paragraph (a) above.

 

(d)         Any Award entitled to pro rata vesting that would have otherwise become vested and been settled solely based on the performance of service will be settled, or in the case of an Award that is an option or SAR, accelerated vesting will occur, no later than the 75th day following the date of an Executive Officer’s Qualifying Termination.

 

(e)          Any Award entitled to pro rata vesting that would otherwise have become vested and been settled, in whole or in part, based on performance for which the applicable performance period has not ended on or prior to the Executive Officer’s Qualifying Termination will be settled (or in the case of an Award of options or SAR, accelerated vesting will occur) at the time such Award is otherwise settled for (or vests) for other holders of such Awards; provided that if the Release Effective Date is after the date that the Award would otherwise have been settled, such settlement or vesting shall occur no later than the 75th day following the date of the Release Effective Date.

 

All payments and benefits under this plan shall be subject to, and made net of, applicable deductions and withholdings.  Any payments and benefits under this plan shall be reduced by any severance benefit payable to the Executive Officer under any other HP plan, program or agreement.

 

All payments and benefits are subject to the Executive Officer’s continuing compliance with HP Agreement Regarding Confidential Information and Proprietary Developments (as reflected in the Release of Claims), and to HP’s policies on recoupment, as in effect from time to time.

 

8

 

8.              Form and Time of Payment for Severance Benefits in the event of a Change in Control.  Subject to the timely execution of the required Release of Claims, and the occurrence of the Release Effective Date, severance benefits provided under Paragraph shall be paid in accordance with the following provisions:

 

(a)         Cash severance benefits the pro-rata annual bonus, and the health benefit stipend under Paragraph 3(a) shall be paid to the Executive Officer in a lump sum no later than the 75th day following the Qualifying Termination.

 

(b)         Any Award, including a Replacement Award (to the extent vested under Paragraph 3) shall be settled, or in the case of an option or SAR, accelerated vesting will occur, no later than the 75th day following the date of an Executive Officer’s Qualifying Termination.

 

All payments and benefits under this plan shall be subject to, and made net of, applicable deductions and withholdings.  Any payments and benefits under this plan shall be reduced by any severance benefit payable to the Executive Officer under any other HP plan, program or agreement.

 

All payments and benefits are subject to the Executive Officer’s continuing compliance with HP Agreement Regarding Confidential Information and Proprietary Developments (as reflected in the Release of Claims), and to HP’s policies on recoupment, as in effect from time to time.

 

9.              Section 409A Provisions.  The term “termination of employment,” “termination,” “separation from service” and similar terms shall mean a “separation from service” within the meaning of Section 409A.

 

Any amounts payable solely on account of an “involuntary” separation from service within the meaning of Section 409A shall be, to the maximum extent possible, excludible from the requirements of Section 409A, either as involuntary separation pay or as short-term deferral amounts.  For purposes of Section 409A, each payment of compensation under the plan shall be treated as a separate payment of compensation.

 

Any reimbursements or in-kind benefits provided under the plan shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (a) any reimbursement is for expenses incurred during the period of time specified in the Agreement, (b) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (c) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (d) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

If payment of any amount of nonqualified deferred compensation is triggered by a separation from service that occurs while the Executive Officer is a specified employee (as such term is defined in Section 409A), and if such amount is scheduled to be paid within six months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of the Executive Officer’s estate following the Executive Officer’s death.

 

If the maximum period within which the Executive Officer must sign and not revoke the Release of Claims would begin in one calendar year and expire in the following calendar year, then any payments contingent on the occurrence of the Release Effective Date shall be made in such following calendar year (regardless of the year of execution of such release) if payment in such following calendar year is required in order to comply with Section 409A.  If the Release Effective Date has not occurred by the 53rd day following termination of employment, the Executive Officer will not be entitled to any amounts or

 

9

 

accelerated vesting that are subject to the timely execution of the Release of Claims and the occurrence of the Release Effective Date.

 

For avoidance of doubt, if an Executive Officer’s Award or Replacement Award is subject to Section 409A, and the vesting or settlement acceleration provisions of the Plan would cause the Award to be subject to additional tax and interest penalties under Section 409A (including but not limited to the Award’s being deemed amended by the terms of the Plan after it was granted), then the Committee shall not settle such Award (or Replacement Award) on an accelerated basis.

 

Notwithstanding the foregoing, HP does not make any guarantees or other assurances of any kind with respect to the tax consequences or treatment of any amounts paid or payable to him under this plan.

 

10.       Effect on Other Benefits; At-Will Status.  Payments under this plan shall not be considered compensation for purposes of any other compensation or benefit plan, program, or agreement of HP or its affiliates.  All other compensation and benefit plans and programs shall be governed by the applicable HP plan or agreement. This plan does not create an employment relationship for any fixed term.

 

11.       Effective Date; Administration of Plan.  The Plan was originally effective October 31, 2003, was amended and restated effective for terminations occurring after November 1, 2011, and is further amended and restated as set forth herein, effective for terminations occurring after November 1, 2015.  The Plan may be amended or terminated at any time by the Committee or the Board, in their discretion; provided that (a) no right to payments or benefits in pay status may be cut back without the consent of the affected Executive Officer, and (b) no amendment that would have the effect of reducing payments or benefits under Paragraph 3 Severance Benefits in the event of a Change in Control may take effect prior to the second anniversary of a Change in Control.

 

The Committee shall have full authority, in its discretion to interpret and apply the provisions of the plan, to establish rules and procedures applicable to the Plan, to resolve any ambiguity, correct any defect or supply any omission; to make such adjustments or modifications as the Committee deems appropriate for Executive Officers who are working outside the United States as are advisable to fulfill the purposes of the plan or to comply with applicable local law’ and to take any other action it deems necessary or advisable for administration of the Plan.

 

This plan is intended to be consistent with the Board’s policy regarding severance agreements for senior executives, as adopted by resolutions dated July 18, 2003 (the “Resolutions”), and the benefits provided for hereunder, exclusive of “permitted benefits” (as defined in the Resolutions), do not exceed 2.99 times the sum of any eligible executive’s base salary plus bonus as in effect immediately prior to separation from employment.  The Committee may take such action as is necessary to implement and administer this plan consistent with such intent of the Board.

 

12.       Clawback.  Any amounts payable under the Plan are subject to any policy providing for clawback, recoupment or recovery of amounts that were paid to an Executive Officer as established from time to time by the Committee and adopted prior to a Change in Control or required by applicable law.  The HP shall make any determination for clawback, recoupment or recovery in its sole discretion and in accordance with any such policy and applicable law or regulation.

 

13.       Best Net. It is the object of this paragraph to provide for the maximum after-tax income to each Executive Officer with respect to any payment or distribution to or for the benefit of the Executive Officer, whether paid or payable or distributed or distributable pursuant to the Plan or any other plan, arrangement or agreement, that would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (“Code”) or any similar federal, state or local tax that may hereafter be imposed (a “Payment”) (Section 4999 of the Code or any similar federal, state or local tax are collectively referred to as the “Excise Tax”).  Accordingly, before any Payments are made under this Plan, a determination will be made as to

 

10

 

which of two alternatives will maximize such Executive Officer’s after-tax proceeds, and HP must notify the Executive Office in writing of such determination.  The first alternative is the payment in full of all Payments potentially subject to the Excise Tax.  The second alternative is the payment of only a part of the Executive Officer’s Payments so that the Executive Officer receives the largest payment and benefits possible without causing the Excise Tax to be payable by the Executive Officer.  This second alternative is referred to in this paragraph as “Limited Payment”.  The Executive Officer’s Payments shall be paid only to the extent permitted under the alternative determined to maximize the Executive Officer’s after-tax proceeds, and the Executive Officer shall have no rights to any greater payments on his or her Payments.  If Limited Payment applies, Payments shall be reduced in a manner that would not result in the Executive Officer incurring an additional tax under Section 409A.

 

(a)         Accordingly, Payments not constituting nonqualified deferred compensation under Section 409A shall be reduced first, in this order but only to the extent that doing so avoids the Excise Tax (e.g., accelerated vesting or payment provisions in an Award will be ignored to the extent that such provisions would trigger the Excise Tax):

 

(i)             Payment of the severance amounts under Paragraph 3 hereof to the extent such payments do not constitute deferred compensation under Section 409A.

 

(ii)          Performance-based Awards, but excluding Performance-based Awards subject to Section 409A.

 

(iii)       Service-based Awards, but excluding Service-based Awards subject to Section 409A.

 

(iv)      Awards of Options and SARs under a HP LTIP.

 

(b)         Then, if the foregoing reductions are insufficient, Payments constituting deferred compensation under Section 409A shall be reduced, in this order:

 

(i)             Payment of the severance amounts under Paragraph 3 hereof to the extent such payments constitute deferred compensation under Section 409A.

 

(ii)          Performance-based Awards subject to Section 409A.

 

(iii)       Service-based Awards subject to Section 409A.

 

In the event of conflict between the order of reduction under this Plan and the order provided by any other HP document governing a Payment, then the order under this Plan shall control.

 

All determinations required to be made under this Paragraph 13 shall be made by HP’s external auditor (the “Accounting Firm”) which shall provide detailed supporting calculations both to HP and the Executive Officer within ten (10) business days of the termination of employment giving rise to benefits under the Plan, or such earlier time as is requested by HP.  All fees, costs and expenses (including, but not limited to, the costs of retaining experts) of the Accounting Firm shall be borne by HP.  In the event the Accounting Firm determines that the Payments shall be reduced, it shall furnish the Executive Officer with a written opinion to such effect.  The determination by the Accounting Firm shall be binding upon HP and the Executive Officer.

 

11

 

APPENDIX A

 

Vesting Examples for Specific Awards

 

Performance-Contingent Stock Options (PCSOs) With 2-Part Service Vesting

(Generally granted prior to September 18, 2013)

 

Assumptions regarding Award design:

 

The vesting terms of the PCSO are as follows:  50% of the PCSO will vest, if at all, on the later to occur of the second anniversary of the grant date, with continued service, or the satisfaction of a 20% share price increase within four years of the grant date, with continued service.

 

The remaining 50% of the PCSO will vest, if at all, on the later to occur of the third anniversary of the grant date, with continued service, or the satisfaction of a 40% share price increase within four years of the grant date, with continued service.

 

Upon termination of the Executive Officer’s employment prior to the PCSOs’ becoming 100% vested, the Executive Officer is entitled to “pro rata vesting” of the PCSO Award.

 

Assume an Executive Officer is granted 12,000 PCSOs.

 

The rules of proration are as follows:

 

1.                                      If, upon termination of the Executive Officer’s employment, neither share price component has been satisfied, none of the Stock Options vest, regardless of what portion of the service component has been satisfied.

 

2.                                      Assume both the 20% and 40% price share components are satisfied prior to the Executive Officer’s termination of employment.  Assume the Executive Officer has a Qualifying Termination prior to the third anniversary of the grant date.  The PCSOs will vest pro rata based on number of full months elapsed from the grant date to the date of termination of employment, divided by the number of months in the service period (in this example 36 months) taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

Pro-ration of PCSOs With 2-Part Service Vesting

 

Both 20% and 40% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
2,000 PCSOs become vested: 6/36 x 12,000 = 2,000.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
4,000 PCSOs become vested: 12/36 x 12,000 = 4,000
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
6,000 PCSOs become vested: 18/36 x 12,000 = 6,000
    

 

12

 

Pro-ration of PCSOs With 2-Part Service Vesting

 

Both 20% and 40% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 24/36 x 12,000 = 8,000   minus the 6,000 that became vested on the second anniversary of the grant   date.
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
4,000 additional PCSOs become vested: 30/36 x 12,000 = 10,000,   minus the 6,000 that vested on the second anniversary of the grant date.
    

 

3.                                      Assume the 20% share price component is satisfied 15 months after the grant date.  The 40% share price component has not been satisfied when the Executive Officer terminates employment. Upon termination of the Executive Officer’s employment, the PCSOs shall vest pro rata based on number of full months elapsed from the grant date to the date of termination of employment (not to exceed 36), divided by the number of months in the service period (in this example 36 months) taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

Pro-ration of PCSOs With 2-Part Service Vesting

 

Only the 20% Share Price Component is Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested under the pro ration rules because   neither share price component has been satisfied.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested under the pro ration rules because   neither share price component has been satisfied.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
3,000 PCSOs become vested under the proration rules: 18/36 of   the 6,000 PCSOs subject to the 20% share price component.
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested because the 6,000 PCSOs   eligible to vest on satisfaction of the 20% share price component   automatically vested on the second anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested: All of the 6,000 PCSOs   eligible to vest became vested on the second anniversary of the grant date.
    

 

13

 

Performance-Contingent Stock Options (PCSOs) With 3-Part Service Vesting

(Generally granted on or after September 18, 2013)

 

Assumptions regarding Award design:

 

The vesting terms of the PCSO are as follows:

 

One-third of the PCSO will vest, if at all, on the later to occur of the first anniversary of the grant date, with continued service, or the satisfaction of a 20% share price increase within four years of the grant date, with continued service.

 

One-third of the PCSO will vest, if at all, on the later to occur of the second anniversary of the grant date, with continued service, or the satisfaction of a 20% share price increase within four years of the grant date, with continued service.

 

The remaining one-third of the PCSO will vest, if at all, on the later to occur of the third anniversary of the grant date, with continued service, or the satisfaction of a 40% share price increase within four years of the grant date, with continued service.

 

Upon termination of the Executive Officer’s employment prior to the PCSOs’ becoming 100% vested, the Executive Officer is entitled to “pro rata vesting” of the PCSO Award.

 

Assume the Executive Officer is granted 12,000 PCSOs.

 

The rules of proration are as follows:

 

1.                                      If, upon termination of the Executive Officer’s employment, neither share price component has been satisfied, none of the Stock Options vest, regardless of what portion of the service component has been satisfied.

 

2.                                      Assume both the 20% and 40% price share components are satisfied prior to the Executive Officer’s termination of employment.  Assume the Executive Officer has a Qualifying Termination prior to the third anniversary of the grant date.  The PCSOs will vest pro rata based on number of full months elapsed from the grant date to the date of termination of employment, divided by the number of months in the service period (in this example 36 months) taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Both 20% and 40% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
2,000 PCSOs become vested: 6/36 x 12,000 = 2,000.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the pro ration   rules because the 4,000 PCSOs eligible to vest after 1 year if the 20% share   price component was satisfied automatically became vested on the first   anniversary of 
    

 

14

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Both 20% and 40% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
the Grant Date.
    
	
 
    	
 
    	
 
    
	
15 months after the Grant Date
    	
 
    	
1,000 additional PCSOs become vested: 15/36 x 12,000 = 5,000 minus   the 4,000 that vested on the first anniversary of the Grant Date.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 18/36 x 12,000 = 6,000   minus the 4,000 that vested on the first anniversary of the grant date
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested because 24/36 x 12,000 =   8,000 minus the 8,000 that vested on the first and second anniversaries grant   date (4,000 each anniversary).
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 30/36 x 12,000 = 10,000   minus the 8,000 that vested on the first and second anniversaries of the   grant date.
    

 

3.                                      Assume the 20% share price component is satisfied 15 months after the grant date.  The 40% share price component has not been satisfied when the Executive Officer terminates employment. Upon termination of the Executive Officer’s employment, the PCSOs shall vest pro rata based on number of full months elapsed from the grant date to the date of termination of employment (not to exceed 36), divided by the number of months in the service period (in this example 36 months) taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Only the 20% Share Price Component is Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested: Neither share price component has   been satisfied.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested: Neither share price component has   been satisfied.
    
	
 
    	
 
    	
 
    
	
15 months after the Grant Date
    	
 
    	
1,000 additional PCSOs become vested: 15/36 x 12,000 = 5,000   minus the 4,000 that vested upon the 20% share price component being met.
    

 

15

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Only the 20% Share Price Component is Satisfied

 

	
18 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 18/36 x 12,000 = 6,000   minus the 4,000 already vested.
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested: All of the 8,000 PCSOs   eligible to vest on satisfaction of the 20% share price component became   vested on the second anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested: All of the 8,000 PCSOs   eligible to vest became vested on the second anniversary of the grant date.
    

 

Performance-Contingent Stock Options (PCSOs) With 3-Part Service Vesting and 7-year TSR-Contingent Vesting

(Generally granted on or after December 11, 2013)

 

Assumptions regarding Award design:

 

The vesting terms of the PCSO are as follows:

 

One-third of the PCSO will vest on the later to occur of the first anniversary of the grant date, with continued service, or the satisfaction of a 10% share price increase within two years after the grant date, with continued service.  (“10% Tranche”)

 

One-third of the PCSO will vest on the later to occur of the second anniversary of the grant date, with continued service, or the satisfaction of a 20% share price increase within three years after the grant date, with continued service.  (“20% Tranche”)

 

The remaining one-third of the PCSO will vest on the later to occur of the third anniversary of the grant date, with continued service, or the satisfaction of a 30% share price increase within four years of the grant date, with continued service.  (“30% Tranche”)

 

Regardless of whether any of the share-price increases are timely satisfied, the PCSO will vest in full on the 7th anniversary of the grant date, with continued service, if HP’s 7-year TSR, measured from the first day of the year in which the grant was made to the 7th anniversary of such first day, meets or exceeds the 55th percentile of the S&P 500 TSR over the same period.

 

Upon a Qualifying Termination of the Executive Officer’s employment prior to the PCSOs becoming 100% vested, the Executive Officer is entitled to “pro rata vesting” of the PCSO Award.  The PCSO will be forfeited to the extent the share price performance has not been met.  There will be no pro ration based solely on a 7-year service period.  The proration, if any, will be in the proportion the number of months of service in the service period (not to exceed 36) bears to 36 months.

 

16

 

EXAMPLES:

 

Assume the Executive Officer is granted 12,000 PCSOs.

 

The rules of proration are as follows:

 

1.                                      No price components satisfied.  If, upon termination of the Executive Officer’s employment, none of the share price components has been satisfied, none of the PCSOs vest, regardless of what portion of the performance period has been served.

 

2.                                      All price components satisfied.  Assume each of the 10%, 20% and 30% price components have been satisfied prior to the Executive Officer’s Qualifying Termination.  Assume the Executive Officer has a Qualifying Termination prior to the fourth anniversary of the grant date.  The PCSOs will vest pro rata based on the number of full months elapsed from the grant date to the date of the Qualifying Termination (not to exceed 36), divided by 36 months, taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

TABLE 1

 

Pro-ration of PCSOs With 3-Part Service Vesting and 7-Year TSR-Contingent Vesting

 

Each of 10%, 20%, and 30% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
2,000 PCSOs become vested: 6/36 x 12,000 shares = 2,000.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically become vested on the first anniversary of   the grant date because the 10% Tranche service and share price components were   met.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 18/36 x 12,000 shares =   6,000 minus the 4,000 that vested on the first anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
21 months after the Grant Date
    	
 
    	
3,000 additional PCSOs become vested: 21/36 x 12,000 = 7,000,   minus the 4,000 that vested on the first anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically become vested on the second anniversary of   the grant date because the 20% service and share price components were met.   (4,000 shares already vested on the first anniversary of the grant date.)
    

 

17

 

TABLE 1

 

Pro-ration of PCSOs With 3-Part Service Vesting and 7-Year TSR-Contingent Vesting

 

Each of 10%, 20%, and 30% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 30/36 x 12,000 = 10,000   minus the 8,000 that vested on the first and second anniversaries of the   grant date. (4,000 on each anniversary.)
    

 

3.                                      Some but not all share price components satisfied.  Assume the 10% share price component is satisfied 12 months after the grant date and the 20% share price component is satisfied 20 months after the grant date.  The 30% share price component has not been satisfied when the Executive Officer’s Qualifying Termination occurs. Upon the Qualifying Termination, the PCSOs shall vest pro rata (not more than 100%) based on number of full months elapsed from the grant date to the date of the Qualifying Termination (not to exceed 36), divided by 36 months, taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

TABLE 2

 

Pro-ration of PCSOs With 3-Part Service Vesting and 7-Year Contingent TSR Vesting

 

Only the 10% and 20% Share Price Components are Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested: No share price component has been   satisfied.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically become vested on the first anniversary of   the grant date because the 10% Tranche service and share price components   were met.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested because the 20% Tranche   share price component has not been met. (4,000 PCSOs became vested on the   first anniversary of the grant date.)
    
	
 
    	
 
    	
 
    
	
21 months after the Grant Date
    	
 
    	
3,000 additional PCSOs become vested: 21/36 x 12,000 = 7,000 minus   the 4,000 that vested on the first anniversary of the grant date.
    

 

18

 

TABLE 2

 

Pro-ration of PCSOs With 3-Part Service Vesting and 7-Year Contingent TSR Vesting

 

Only the 10% and 20% Share Price Components are Satisfied

 

	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically become vested on the second anniversary of   the grant date because the 20% service and share price components were met.   (4,000 shares already vested on the first anniversary of the grant date.)
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
No additional PCSOs become vested because the 30% Tranche share   price component has not been met.
    

 

Performance-Adjusted RSUs (PARSUs) With 3-Part Service Vesting

(Generally granted on or after December 11, 2013)

 

Assumptions regarding Award design:

 

The vesting terms of the PARSU Award are as follows:

 

A portion of Segment 1 of the PARSUs will vest when performance for that segment is certified at the end of the 2-year period, with continued service.  The portion becoming vested will depend on performance against 2-year ROIC and 2-year TSR targets, and will range from 0% to 200% of the target number of Segment 1 PARSUs.

 

A portion of Segment 2 of the PARSUs will vest when performance for that segment is certified at the end of the 3-year period, with continued service.  The portion becoming vested will depend on performance against 3-year ROIC and 3-year TSR targets, and will range from 0% to 200% of the target number of Segment 2 PARSUs.

 

Upon the Executive Officer’s Qualifying Termination prior to the PARSUs becoming 100% vested, the Executive Officer is entitled to “pro rata vesting” of the PARSU Award.  In this case, the service period and the performance period for each Segment are the same, as illustrated below:

 

	
Applicable Segment
    	
 
    	
Performance Period
    	
 
    	
Service Period
    
	
Segment 1
    	
 
    	
2 years
    	
 
    	
2 years
    
	
Segment 2
    	
 
    	
3 years
    	
 
    	
3 years
    

 

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The rules of proration are as follows:

 

1.                                      For each Segment, if the Executive Officer’s termination of employment occurs prior to the end of the applicable performance period, the PARSU will vest pro rata at the end of the relevant segment, based on the number of full months elapsed from the beginning of the relevant segment to the date of the Qualifying Termination, divided by the number of months in the relevant segment.

 

These rules can be illustrated as follows:

 

Pro-ration of PARSUs With 2-Segment Performance/Service Periods

 

Performance-Adjusted RSUs

 

	
Termination of Employment
    	
 
    	
Number of PARSUs Vested
    
	
 
    	
 
    	
 
    
	
6 months after the beginning of the performance period
    	
 
    	
Segment 1: 25% of the PARSUs that would have been earned become   vested (6/24) at the end of the 2-year performance period.

 

Segment 2: 16.66% of the PARSUs that would have been earned   become vested (6/36) at the end of the 3-year performance period.
    
	
 
    	
 
    	
 
    
	
12 months after the beginning of the performance period
    	
 
    	
Segment 1: 50% of the PARSUs that would have been earned become   vested (12/24) at the end of the 2-year performance period.

 

Segment 2: 33.33% of the PARSUs that would have been earned   become vested (12/36) at the end of the 3-year performance period.
    
	
 
    	
 
    	
 
    
	
24 months after the beginning of the performance period
    	
 
    	
Segment 1: Zero (0) additional PARSUs become vested because the   Segment 1 PARSUs earned became vested automatically at the end of the 2-year   performance period.

 

Segment 2: 66.67% of the PARSUs that would have been earned   become vested (24/36) at the end of the 3-year performance period.
    
	
 
    	
 
    	
 
    
	
30 months after the beginning of the performance period
    	
 
    	
Segment 1: Zero (0) additional PARSUs become vested because the   Segment 1 PARSUs earned became vested automatically at the end of the 2-year   performance period.

 

Segment 2: 83.33% of the PARSUs that would have been earned   become vested (30/36) at the end of the 3-year performance period.
    

 

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Performance-Contingent Stock Options (PCSOs) With 3-Part Service Vesting

(Generally granted on or after December 10, 2014)

 

Assumptions regarding Award design:

 

The vesting terms of the PCSO are as follows:

 

One-third of the PCSO will vest on the later to occur of the first anniversary of the grant date, with continued service, or the satisfaction of a 10% share price increase within two years after the grant date, with continued service.  (“10% Tranche”)

 

One-third of the PCSO will vest on the later to occur of the second anniversary of the grant date, with continued service, or the satisfaction of a 20% share price increase within three years after the grant date, with continued service.  (“20% Tranche”)

 

The remaining one-third of the PCSO will vest on the later to occur of the third anniversary of the grant date, with continued service, or the satisfaction of a 30% share price increase within four years of the grant date, with continued service.  (“30% Tranche”)

 

Upon a Qualifying Termination of the Executive Officer’s employment prior to the PCSOs becoming 100% vested, the Executive Officer is entitled to “pro rata vesting” of the PCSO Award;  provided the applicable share-price component has been satisfied prior to the Qualifying Termination.  The PCSO will be forfeited to the extent the share price performance has not been met.  The proration, if any, will be in the proportion the number of months of service in the service period (not to exceed 36) bears to 36 months.

 

EXAMPLES:

 

Assume the Executive Officer is granted 12,000 PCSOs.

 

The rules of proration are as follows:

 

1.                                      No price components satisfied.  If, upon termination of the Executive Officer’s employment, none of the share price components has been satisfied, none of the PCSOs vest, regardless of what portion of the performance period has been served.

 

2.                                      All price components satisfied.  Assume each of the 10%, 20% and 30% price components have been satisfied prior to the Executive Officer’s Qualifying Termination.  Assume the Executive Officer has a Qualifying Termination prior to the fourth anniversary of the grant date.  The PCSOs will vest pro rata based on the number of full months elapsed from the grant date (not to exceed 36) to the date of the Qualifying Termination, divided by 36 months, taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

TABLE 1

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Each of 10%, 20%, and 30% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
2,000 PCSOs become vested: 6/36 x 12,000 shares = 
    

 

21

 

TABLE 1

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Each of 10%, 20%, and 30% Share Price Components Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
2,000.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically became vested on the first anniversary of   the grant date because the 10% Tranche service and share price components   were met.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 18/36 x 12,000 shares =   6,000 minus the 4,000 that vested on the first anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
21 months after the Grant Date
    	
 
    	
3,000 additional PCSOs become vested: 21/36 x 12,000 = 7,000   minus the 4,000 that vested on the first anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically became vested on the second anniversary of   the grant date because the 20% Tranche service and share price components   were met. (4,000 shares already vested on the first anniversary of the grant   date.)
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
2,000 additional PCSOs become vested: 30/36 x 12,000 = 10,000   minus the 8,000 that vested on the first and second anniversaries of the   grant date. (4,000 on each anniversary.)
    

 

3.                                      Some but not all share price components satisfied.  Assume the 10% share price component is satisfied 12 months after the grant date and the 20% share price component is satisfied 20 months after the grant date.  The 30% share price component has not been satisfied when the Executive Officer’s Qualifying Termination occurs. Upon the Qualifying Termination, the PCSOs shall vest pro rata (not more than 100%) based on number of full months elapsed from the grant date to the date of the Qualifying Termination (not to exceed 36), divided by 36 months, taking into account the number of PCSOs previously vested, if any, as illustrated below:

 

22

 

TABLE 2

 

Pro-ration of PCSOs With 3-Part Service Vesting

 

Only the 10% and 20% Share Price Components are Satisfied

 

	
Termination of Employment
    	
 
    	
Number of Option Shares Vested
    
	
 
    	
 
    	
 
    
	
6 months after the Grant Date
    	
 
    	
Zero (0) PCSOs become vested: No share price component has been   satisfied.
    
	
 
    	
 
    	
 
    
	
12 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically became vested on the first anniversary of   the grant date because the 10% Tranche service and share price components   were met.
    
	
 
    	
 
    	
 
    
	
18 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested because the 20% Tranche   share price component has not been met. (4,000 PCSOs became vested on the   first anniversary of the grant date.)
    
	
 
    	
 
    	
 
    
	
21 months after the Grant Date
    	
 
    	
3,000 additional PCSOs become vested: 21/36 x 12,000 = 7,000   minus the 4,000 already vested on the first anniversary of the grant date.
    
	
 
    	
 
    	
 
    
	
24 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested under the proration   rules. 4,000 PCSOs automatically became vested on the second anniversary of   the grant date because the 20% Tranche service and share price components   were met. (An additional 4,000 PCSOs became vested on the first anniversary of   the grant date.)
    
	
 
    	
 
    	
 
    
	
30 months after the Grant Date
    	
 
    	
Zero (0) additional PCSOs become vested because the 30% Tranche   share price component has not been met.
    

 

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