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EXHIBIT 10(qq)    
  

 
 

AMENDMENT TO EMPLOYMENT AGREEMENT    
  

        This Agreement, executed on December    , 2001 (the "Agreement"), is made by and between Compaq Computer Corporation, a Delaware corporation (the
"Company"), and Michael D. Capellas (the "Executive"). The Agreement amends in certain respects the terms of the letter agreement dated October 20, 2000, as amended and restated
December 13, 2000, between the Company and the Executive (the "Letter Agreement"). 

        For
good and valuable consideration, the receipt of which is hereby acknowledged, the Letter Agreement is hereby amended as follows, effective as of November 1, 2001. 

	1.
	A
new paragraph shall be added following the last paragraph under the heading "RESTRICTED STOCK", to read as follows: 

You
acknowledge and agree that, notwithstanding the terms and conditions applicable to the 2000 Restricted Stock, the 1999 Restricted Stock (as hereinafter defined) or any other shares of restricted
Compaq common stock previously granted to you, the definition of the term "Change in Control" set forth on Exhibit A hereto, as amended, shall apply to all restricted shares held by you as of
September 3, 2001, and accordingly, in connection with the transaction (the "H-P Merger") contemplated by that certain Agreement and Plan of Reorganization, dated as of
September 4, 2001, as amended from time to time, by and between Hewlett-Packard Company, Heloise Merger Corporation and Compaq Computer Corporation, such shares shall vest on consummation of
such transaction. 

	2.
	The
following sentence shall be added at the end of the paragraph under the heading "SEPARATION PAYMENT": 

Notwithstanding
the foregoing, in the event of a Qualifying Termination within one year following a Change in Control, the Separation Payment shall be paid in a single lump sum within ten days
following the effective date of the Qualifying Termination. 

	3.
	The
following sentence shall be added at the end of the paragraph entitled "PRORATED ANNUAL INCENTIVE": 

Notwithstanding
the foregoing, in the event a Qualifying Termination occurs within one year following a Change in Control, the Prorated Annual Incentive for the measuring period in which such
Qualifying Termination occurs shall be paid in a lump sum within ten days following the date of such Qualifying Termination. 

	4.
	The
following sentence shall be added at the end of the paragraph entitled "STOCK OPTIONS" under the heading "QUALIFYING TERMINATION": 

If
you incur a Qualifying Termination within one year following a Change in Control, any outstanding options granted prior to the Change in Control which had not previously become exercisable shall
become fully exercisable and you shall have the right to exercise any outstanding stock option then held by you until the third anniversary of the effective date of such Qualifying Termination (in the
case of options granted prior to September 1, 2001) or the first anniversary of the effective date of such Qualifying Termination (in the case of options granted on or after September 1,
2001 and prior to the Change in Control). Notwithstanding the foregoing, if you retire, die or are disabled and the terms of the governing Equity Incentive Plan or grant notice for a particular option
provide that you have longer than the time period described above, you shall continue to have the longer period provided for under the Plan or notice to exercise that option. 

 

	5.
	The
second sentence of the paragraph entitled "HEALTH BENEFIT CONTINUATION" under the heading "QUALIFYING TERMINATION" is hereby deleted and replaced with the following: 

Compaq
will pay the COBRA premiums for continuation of healthcare benefits for you and your eligible dependents for so long as you are otherwise eligible for such coverage during the
24-month
period following a Qualifying Termination. You will be responsible for all other costs, such as co-payments and deductibles. 

	6.
	The
first sentence of clause (2) under the paragraph entitled "DEFINITION OF A QUALIFYING TERMINATION", is hereby deleted and replaced with the following:

	(2)
	Resignation
within 90 days of the occurrence of an event constituting Good Reason (or, if such Good Reason event occurs on or following a Change in Control, resignation prior
to the first anniversary of such Change in Control). For purposes of this Agreement, Good Reason shall mean: (a) removal from the position of Chief Executive Officer, (b) removal from,
or failure to be elected, Chairman of the Board, (c) assignment, by the Board, of duties inconsistent with the position of Chief Executive Officer, (d) receipt of a Notice of
Non-Renewal, or (e) the Board's approval of a material reduction in target compensation opportunities that is not part of an across-the-board reduction for
all executive officers of the Company. 

	7.
	The
paragraph entitled "INVOLUNTARY TERMINATION FOR CAUSE/ RESIGNATION WITHOUT GOOD REASON" is hereby amended in its entirety to read as follows: 

INVOLUNTARY
TERMINATION FOR CAUSE/RESIGNATION NOT CONSTITUTING A QUALIFYING TERMINATION: If you are involuntary terminated for Cause or resign your employment (other than a resignation constituting a
Qualifying Termination), you will not be entitled to any severance payment under this Agreement. Compaq will have no other obligations under this Agreement, and all compensation and benefits will be
determined by the terms of the governing plan or program. 

	8.
	The
paragraph entitled "NON-COMPETITION AND NO SOLICITATION" is hereby amended by adding the following sentence after the second sentence thereof, to read as follows: 

Provided,
however, that, in the event of a Qualifying Termination within one year following a Change in Control, the restrictions described in clauses (1) and (2) of the preceding
sentence shall be inapplicable and the restrictions described in clause (3) of the preceding sentence shall only be applicable for a period of one year following such Qualifying Termination. 

	9.
	The
last paragraph under the heading "ARBITRATION" is hereby amended by adding the following: 

Notwithstanding
the foregoing, Compaq shall promptly pay or reimburse you for all reasonable legal fees incurred by you in seeking in good faith to obtain or enforce any benefit or right provided by
this Agreement relating to the termination of your employment within one year following a Change in
Control or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code. 

	10.
	Exhibit A,
Definition of Change in Control, is hereby amended by deleting the words "the stockholders of the Company approve a merger or consolidation of the Company with any
other corporation" in clause (iii) thereof and replacing them with the words "a merger or consolidation of the Company with any other corporation is consummated". 

2

 

        IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement on the date and year first set forth above. 

	 	 	COMPAQ COMPUTER CORPORATION
	

 	
 	

By:	
 	

 Lawrence T. Babbio, Jr.

Chairman – Human Resources Committee of

the Board of Directors
	

 	
 	

 	
 	

MICHAEL D. CAPELLAS

3

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EXHIBIT 10(rr)    
  

 
 

PROMISSORY NOTE    
  

	$2,500,000.00	 	October 20, 2000

        For Value received, MICHAEL D. CAPELLAS ("Maker"), promises to pay to the order of COMPAQ COMPUTER CORPORATION, a Delaware Corporation ("Payee"), at 20555 State
Highway 249, Houston, Texas 77070 (or at such other place which may be hereafter designated by written notice to the Maker from the Payee) in lawful money of the United States of America: 

	(a)
	the
principal sum of Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00),

	(b)
	interest
from the date of this Note until the maturity (howsoever such maturity may be brought about) upon the unpaid principal balance at the rate of 6.09% per annum, compounded
annually, and

	(c)
	interest
on past due principal and interest at the rate of eighteen percent (18%) per annum. 

        This
Note shall be payable in full in a single installment of principal and accrued interest on the date that is the earlier of (i) October 1, 2005 and (ii) one
hundred twenty (120) days following the termination of employment of the Maker with the Payee, provided such termination is other than a Qualifying Termination (as defined in the Employment
Agreement dated October 20, 2000 between Maker and Payee (the "Employment Agreement")) and a separation due to death or Disability (as defined in the Employment Agreement). 

        The
Maker shall have the right and privilege of prepaying, without notice or penalty, at any time and from time to time, all or any part of this Note. All prepayments shall be applied
first to accrued interest and then to installments of principal. 

        In
the event of default in the payment of either principal or interest hereon, in whole or in part, or in the performance of any agreement or covenant contained in any instrument
securing the payment hereof or executed in connection herewith, the owner hereof shall have the right and option, without notice or demand, to declare the principal and accrued interest on this Note
at once due and payable, and to foreclose or require foreclosure of any and all liens or security interests securing the payment hereof. Failure to exercise such right upon any default shall not
constitute a waiver of the right to exercise it in the event of any subsequent default. If this Note is placed in the hands of an attorney for collection, or if collected through the probate court,
bankruptcy court, or by any other legal or judicial proceedings, the undersigned agrees and is to pay reasonable costs and expenses of collection, including, but not limited to, reasonable attorney's
fees and court costs. 

        Each
Maker, co-maker, surety, guarantor, endorser or other party liable for the payment of any sums of money payable on this Note severally waive presentment, notice of
dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity, protest and notice of protest and nonpayment, bringing of suit, and diligence in taking any action to collect
sums owing hereunder, and agree that their liability on this Note shall not be affected by any release or change in any security for the payment of this Note. 

        It
is the intention of Maker and Payee to conform strictly to applicable usury laws. Accordingly, if the transactions contemplated hereby would be usurious under applicable law
(including the laws of the State of Texas and the laws of the United States of America), then, in that event, notwithstanding anything to the contrary in any agreement entered into in connection with
or as security for this Note, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under applicable law that is taken, reserved, contracted for, charged or
received under this Note or under any of the 

1

 

other aforesaid agreements or otherwise in connection with this Note shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited on
the Note by the holder thereof (or, if this Note shall have been paid in full, refunded to the Maker); and (ii) in the event that maturity of this Note is accelerated by reason of an election
by the holder thereof resulting from any default hereunder or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if any, provided for in this Note or otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited on this Note (or if this Note shall have been paid in full, refunded to the Maker). 

        This
Note is secured by a Security Agreement effective as of the date hereof, covering certain common stock owned by Maker, and is entitled to the benefits set forth therein. 

	

 	
 	

 MICHAEL D. CAPELLAS

2

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EXHIBIT 10(rr)

PROMISSORY NOTE

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