EXHIBIT 10.40
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 Xxxxxxx X. Xxxxxxxx (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
2
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".
3
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:
-----------------------------
Xxxxxxxx X. Xxxxxx, Xx.
Chairman - Human Resources Committee of
the Board of Directors
XXXXXXX X. XXXXXXXX
---------------------------------
4
