AGILENT TECHNOLOGIES INC, S-1, 1999-08-16

AGILENT TECHNOLOGIES INC
S-1, 1999-08-16

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<PAGE>

As filed with the Securities and Exchange Commission on August 16, 1999
Registration No. 333-

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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933

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AGILENT TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)

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Delaware 3825 77-0518772
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)

3000 Hanover Street
Palo Alto, California 94304
(650) 857-1501
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

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Edward W. Barnholt
President and Chief Executive Officer
Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, California 94304
(650) 857-1501
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies to:
Larry W. Sonsini, Esq. D. Craig Nordlund, Esq. William H. Hinman, Jr.,
Donna M. Petkanics, Marie Oh Huber, Esq. Esq.
Esq. Agilent Technologies, Inc. Shearman & Sterling
Wilson Sonsini Goodrich 3000 Hanover Street 1550 El Camino Real
& Rosati Palo Alto, California 94304 Menlo Park, California
Professional (650) 857-1501 94025
Corporation (650) 330-2200
650 Page Mill Road
Palo Alto, California
94304
(650) 493-9300
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

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CALCULATION OF REGISTRATION FEE
<TABLE>
- ---------------------------------------------------------------
- ---------------------------------------------------------------
<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
- ---------------------------------------------------------------
<S> <C> <C>
Common Stock, par value
$0.01 per share....... $100,000,000 $27,800
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) promulgated under the Securities
Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effectiveness until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

EXPLANATORY NOTE

This registration statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States and Canada of an
aggregate of shares of common stock. The second prospectus relates to a
concurrent offering outside the United States and Canada of an aggregate of
shares of common stock. The two prospectuses for inside and outside the
United States and Canada will be identical with the exception of an alternate
front cover page for the offering outside the United States and Canada. The
alternate page appears in this registration statement immediately following
the complete prospectus for the offering in the United States and Canada.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell securities and we are not soliciting offers to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued August 16, 1999

Shares
[Agilent Technologies, Inc. Logo]
COMMON STOCK

-----------

Agilent Technologies, Inc. is offering shares of common stock. This is
our initial public offering and no public market currently exists for our
shares. We anticipate that the initial public offering price will be between $
and $ per share.

After the offering, Hewlett-Packard will own approximately % of our common
stock, assuming no exercise of the underwriters' over-allotment option.
Hewlett-Packard has announced that it plans to complete its divestiture of
Agilent Technologies by the middle of calendar year 2000 by distributing all of
the shares of our common stock owned by Hewlett-Packard to holders of Hewlett-
Packard's common stock. See "Arrangements Between Agilent Technologies and
Hewlett-Packard."

-----------

Application has been made for listing of our common stock on [the New York
Stock Exchange/the Nasdaq Stock Market] under the trading symbol " ".

-----------

Investing in our common stock involves risks. See "Risk Factors" beginning on
page 9.

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PRICE $ A SHARE

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<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to Agilent
Price to Public Commissions Technologies
--------------- ------------- -------------------
<S> <C> <C> <C>
Per Share..................... $ $ $
Total......................... $ $ $
</TABLE>

The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

Agilent Technologies, Inc. has granted the U.S. underwriters the right to
purchase up to an additional shares of common stock to cover over-
allotments. Morgan Stanley & Co. Incorporated expects to deliver the shares of
common stock to purchasers on , 1999.

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MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.

, 1999
<PAGE>

Inside Front Cover

The following captions appear in the inside front cover:

"Agilent Technologies

Yesterday
A 60-year heritage of
innovation, contribution and
success at Hewlett-Packard

Today
Broad market leadership, rich technology
portfolio, global reach

Tomorrow
Focus, speed and agility,
opportunities in communications and
life sciences"

Three photographs, each one corresponds to descriptive material for Yesterday,
Today and Tomorrow: First photograph (Yesterday) depicts two male scientists
working in a laboratory setting, circa 1950; Second photograph shows a female
laboratory technician performing analysis using Agilent test equipment and
recording her findings in a notebook, circa 1999; Third photograph (Tomorrow)
is a montage print showing the Earth from the perspective of outer space: a
satellite and a cellular telephone radiate from the Earth; beneath them, in
relief, a photograph of a computer network appears.

Foldout, Page One

The following captions appear on the foldout, page one:

"Enabling Next-Generation Communications

<TABLE>
<CAPTION>
Test and Measurement Semiconductor Products
-------------------- ----------------------

Our Business

<S> <C>
We help our customers design and We are a leading supplier of components,
deploy new technologies with our modules and assemblies to leaders in high
advanced test, measurement and speed communications and computing.
monitoring solutions.

Market Leadership

Number one position in 25 product Leading provider of fiber optic transceiver
categories in the test and modules; Fibre Channel protocol integrated
measurement market. circuits; infrared components;
optoelectronic components and displays.

Growth Opportunities

Next generation communications High speed communications networks and
networks and devices. wireless communications."
</TABLE>

One banner-type photograph atop narrative material below. The photograph is
rectangular in shape and is a montage. From left to right, the montage
comprises a cellular telephone, a computer screen displaying a communications
systems diagram and three light-emitting diodes against a colored background.
The title "Enabling Next Generation Communications" appears across the entire
photograph.
<PAGE>

Foldout, Page Two

The following captions appear on the foldout, page two:

"Our Business

<TABLE>
<S> <C>
We are a worldwide leader in We enable customers to identify, quantify,
clinical measurement and diagnostic analyze and test the chemical and
solutions for the healthcare biological properties of thousands of
marketplace. substances and products.

Market Leadership

Patient monitoring systems; Gas chromatography and liquid
cardiovascular ultrasound imaging chromotography instruments and systems.
systems; automatic external
defibrillators.

Growth Opportunities

Healthcare beyond the hospital, Drug development based on genetic origins
including in small clinics, of disease, microfluidics and other
doctors' offices and in patients' advanced pharmaceutical technologies."
homes.
</TABLE>

One banner-type photograph atop narrative material. The photograph is
rectangular in shape and is a montage. From left to right, the montage
comprises a chemical analysis measurement device, a black-and-white photograph
of a female scientist working in a laboratory and three chemical flasks in a
foreground against a background of a (different) female scientist analyzing a
test tube sample.
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 4
Risk Factors........................ 9
Our Separation From Hewlett-
Packard............................ 21
Use of Proceeds..................... 23
Dividend Policy..................... 23
Capitalization...................... 24
Selected Financial Data............. 25
Unaudited Pro Forma Condensed
Financial Statements............... 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 29
Business............................ 49
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Management.................................................................... 85
Arrangements Between Agilent Technologies and Hewlett-Packard................. 98
Principal Stockholder......................................................... 110
Description of Capital Stock.................................................. 110
Shares Eligible for Future Sale............................................... 112
Material United States Federal Tax Consequences to Non-United States Holders.. 113
Underwriters.................................................................. 116
Legal Matters................................................................. 119
Experts....................................................................... 119
Where You Can Find More Information........................................... 119
Index to Financial Statements................................................. F-1
</TABLE>

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock. In this prospectus, "Agilent
Technologies," "we," "us" and "our" each refers to Agilent Technologies, Inc.
and its subsidiaries, and not the underwriters or Hewlett-Packard Company, and
"Hewlett-Packard" refers to Hewlett-Packard Company and its subsidiaries.

Until , 1999 (25 days after the date of this prospectus), all dealers
that buy, sell or trade our common stock, whether or not participating in this
offering, may be required to deliver a prospectus. This delivery requirement
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

3
<PAGE>

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock being sold in this
offering and our historical consolidated financial statements and notes thereto
included elsewhere in this prospectus.

AGILENT TECHNOLOGIES, INC.

Agilent Technologies is a diversified technology company that provides
enabling solutions to high growth markets within the communications,
electronics, life sciences and healthcare industries. Our broad technology
portfolio and our experience in working with market-leading customers around
the world have allowed us to establish and continue to expand our leadership
across multiple markets.

We are a global leader in designing and manufacturing test, measurement and
monitoring instruments, systems and solutions and semiconductors and optical
components. Agilent Technologies includes the following businesses:

. test and measurement, which had fiscal 1998 revenue of $4.1 billion,
provides test instruments, standard and customized test, measurement and
monitoring systems for the design, manufacture and support of electronic
and communication devices, and software for the design of high-frequency
electronic and communication devices;

. semiconductor products, which had fiscal 1998 revenue of $1.6 billion,
provides fiber optic communications devices and assemblies, integrated
circuits for wireless applications, application-specific integrated
circuits (ASICs), optoelectronics and image sensors;

. healthcare solutions, which had fiscal 1998 revenue of $1.3 billion,
provides patient monitoring, ultrasound imaging and cardiology products
and systems; and

. chemical analysis, which had fiscal 1998 revenue of $938 million,
provides analytical instruments, systems and services for
chromatography, spectroscopy and bio-instrumentation.

Agilent Technologies' ability to succeed is based on two fundamental
attributes. First, we have a broad and deep portfolio of technology expertise
in electronics, communications, medical and chemical measurement,
biotechnology, photonics, solid-state materials and components and measurement
systems and solutions. This expertise is driven by the research and development
efforts within our businesses and by the activities of Agilent Technologies
Laboratories, one of the world's leading industrial research and development
organizations. Each of our businesses takes advantage of the technology
advances developed by our central laboratories, often using common technology
in different applications within their specific business.

Our second core attribute is our close relationships with our customers and
our comprehensive insight into the worldwide markets in which we sell our
products and services. Our businesses have developed these relationships and
insights over our 60 year history. During this time, our businesses have worked
with thousands of customers worldwide as technologies, business needs and
global economic conditions have undergone dramatic changes.

Our businesses share important characteristics and resources that we believe
contribute significantly to our competitive success. Our test and measurement,
healthcare solutions and chemical analysis businesses are built around our
excellence in applying measurement technologies to the development of products
that sense, analyze and display data required by the end-user. Our test and
measurement and semiconductor businesses share focus on growth opportunities in
the communications sector, while our healthcare and chemical analysis
businesses share focus on growth opportunities in healthcare and life sciences.
Our global infrastructure enables our businesses to move our products from
initial commercialization to worldwide availability rapidly and efficiently and
to provide localized service and support.

4
<PAGE>

We provide the world's broadest range of test and measurement solutions to
customers in the communications, electronics and semiconductor industries. We
are also a leading supplier of:

. semiconductor and fiber optic components to the communications and
computer industries;

. modules and assemblies to the communications and electronics industries;

. patient monitoring and ultrasound imaging equipment and automatic
external defibrillators to the healthcare industry; and

. chemical measurement instruments and systems to the hydrocarbon
processing, environmental and pharmaceutical industries.

We serve customers in more than 120 countries, and we have major research
and development and manufacturing facilities around the world.

STRATEGY

Our business strategy is designed to take advantage of our competitive
strengths, leading market positions and global presence to capitalize on
emerging trends in the communications, electronics, healthcare and life
sciences industries. The key elements of our strategy are to:

. Focus on High Growth Market Opportunities. Our strategy is to use our
strengths as a diversified technology company to enter new markets
through internal development, strategic partnerships and acquisitions.
To achieve this objective, we work closely with our customers' research
and development teams to understand emerging markets, technologies and
standards and we invest accordingly in our own development of enabling
solutions in those areas. We intend to use strategic partnerships and
make tactical acquisitions to develop advanced systems that complement
our existing technologies and products to accelerate our entry into
high-growth markets.

. Continue to Innovate Technologically. Agilent Technologies and Agilent
Technologies Laboratories have a long legacy of technological innovation
and product generation as part of Hewlett-Packard. We will continue to
invest in and build research and development expertise. Our centralized
laboratories focus on fundamental technology and process developments
and utilize innovations from our four businesses to develop products
that address high growth market segments.

. Maximize the Benefits of our Scale and Global Presence. We believe our
scale and global presence provide us with a competitive advantage across
multiple industries. In many of our targeted markets and in many of the
countries in which we operate, we are the largest industry participant
and possess greater resources for research and development and service
and support than any competitor. Our global direct sales force gathers
valuable insights into emerging industry trends around the world and
provides us an effective means of bringing new products to market
rapidly. In addition, we believe our customers value our ability to
provide more complete solutions with our training, systems integration,
and project management programs. We intend to continually enhance
overall customer satisfaction by remaining focused on providing
effective service and support.

BENEFITS OF OUR SEPARATION FROM HEWLETT-PACKARD

Our company comprises businesses that will be separated from Hewlett-
Packard's other operations prior to this offering. We believe that we will
realize benefits from our complete separation from Hewlett-Packard, including
the following:

. Greater Strategic Focus. As a result of having our own board of
directors and separate management team, we expect to have a sharper
focus on the Agilent Technologies business and strategic opportunities.
We will also have greater ability to modify business processes to better
fit the needs of our customers, business units and employees.

5
<PAGE>

. Increased Speed and Responsiveness. As a company significantly smaller
than Hewlett-Packard, we expect to be able to make decisions more
quickly, deploy resources more rapidly and efficiently and operate with
more agility than when we were a part of a larger organization. In
addition, we expect to enhance our responsiveness to customers and
partners.

. Better Incentives for Employees and Greater Accountability. We expect
that the motivation of our employees and the focus of our management
will be strengthened by incentive compensation programs tied to the
market performance of our common stock. The separation will enable us to
offer our employees compensation directly linked to the performance of
the Agilent Technologies business, which we expect to enhance our
ability to attract and retain qualified personnel.

. More Direct Access to Capital Markets. As a separate company, we will
have more direct access to the capital markets to issue debt or equity
securities and to grow through acquisitions.

OUR RELATIONSHIP WITH HEWLETT-PACKARD

We are currently a wholly owned subsidiary of Hewlett-Packard. After the
completion of this offering, Hewlett-Packard will own approximately % of the
outstanding shares of our common stock, or approximately % if the U.S.
underwriters exercise their over-allotment option in full. Hewlett-Packard has
announced that it currently plans to complete its divestiture of Agilent
Technologies by the middle of calendar year 2000 by distributing all of the
shares of Agilent Technologies common stock owned by Hewlett-Packard to the
holders of Hewlett-Packard's common stock. However, Hewlett-Packard is not
obligated to complete the distribution, and the distribution may not occur by
the contemplated time or at all.

Hewlett-Packard will determine the timing, structure and all terms of its
distribution of our common stock in its sole discretion. Hewlett-Packard has
received a private letter ruling from the Internal Revenue Service that the
distribution of its shares of Agilent Technologies common stock to the holders
of Hewlett-Packard common stock will be tax-free to Hewlett-Packard and its
stockholders for United States federal income tax purposes. For a discussion of
the risks associated with Hewlett-Packard not completing the distribution, see
"Risk Factors--Risks Related To Our Separation From Hewlett-Packard--Our
business may suffer if Hewlett-Packard does not complete its distribution of
our common stock."

We have entered into agreements with Hewlett-Packard that provide for the
separation of our business operations from Hewlett-Packard. These agreements
are not conditioned on the distribution. They provide for, among other things,
the transfer from Hewlett-Packard to us of assets and the assumption by us of
liabilities relating to our business. For more information regarding the assets
and liabilities to be transferred to us, see our consolidated financial
statements and notes thereto that are included elsewhere in this prospectus. In
November 1999, Hewlett-Packard will make a $ cash payment to us in
connection with our planned initial funding. We have also entered into
agreements with Hewlett-Packard regarding the transfer and licensing to us of
intellectual property related to the business of Agilent Technologies.
Substantially all of these transfers will be completed prior to the closing of
this offering.

The agreements between Hewlett-Packard and us also govern our various
interim and ongoing relationships. All of the agreements providing for our
separation from Hewlett-Packard were made in the context of a parent-subsidiary
relationship and were negotiated in the overall context of our separation from
Hewlett-Packard. The terms of these agreements may be more or less favorable to
us than if they had been negotiated with unaffiliated third parties. See "Risk
Factors--Risks Related To Our Separation From Hewlett-Packard" and
"Arrangements between Agilent Technologies and Hewlett-Packard."

6
<PAGE>

THE OFFERING

<TABLE>
<C> <S>
Common stock offered:
In the United States and Canada........ shares
Outside the United States and Canada... shares
Total.............................. shares
Common stock to be outstanding immediately
after this offering...................... shares
Common stock to be held by Hewlett-Packard
immediately after this offering.......... shares
Use of proceeds........................... We estimate that our net proceeds
from this offering will be $ ,
based on an assumed initial public
offering price of $ per share.
The net proceeds of this offering
(including proceeds received from
any exercise of the U.S.
underwriters' over-allotment
option) will be paid to Hewlett-
Packard as a dividend to be
declared prior to the offering.
Proposed [New York Stock Exchange/
Nasdaq Stock Market] symbol..............
</TABLE>

This information is based on shares outstanding as of , 1999, all
of which are owned by Hewlett-Packard. We will declare a -for-one stock split
to increase the amount of outstanding shares of our common stock to shares
prior to this offering. Unless we specifically state otherwise, the information
in this prospectus does not take into account the issuance of up to shares
of common stock that the U.S. underwriters have the option to purchase solely
to cover over-allotments. If the U.S. underwriters exercise their over-
allotment option in full, shares of common stock will be outstanding after
this offering.

The number of shares of our common stock to be outstanding immediately after
this offering listed above does not take into account approximately shares
of our common stock reserved for issuance under our stock plans, of which
options to purchase shares have been granted.

----------------

We were incorporated in Delaware in May 1999 as a wholly owned subsidiary of
Hewlett-Packard. Our principal executive offices are located at 3000 Hanover
Street, Palo Alto, California 94304, and our telephone number is (650) 857-
1501. We expect to move our executive offices to 395 Page Mill Road, Palo Alto,
California 94306 in the middle of calendar year 2000. Our website is
http://www.agilent-tech.com. The information on the website is not a part of
this prospectus.

7
<PAGE>

SUMMARY FINANCIAL DATA

The following table presents summary consolidated financial data for Agilent
Technologies. The data presented in this table are derived from "Selected
Financial Data," "Unaudited Pro Forma Condensed Financial Statements" and the
historical consolidated financial statements and notes thereto that are
included elsewhere in this prospectus. You should read those sections for a
further explanation of the financial data summarized here.

The Pro Forma Consolidated Balance Sheet Data reflects the planned initial
funding of our operations by Hewlett-Packard and our pending purchase of
Yokogawa Electric Corporation's 25% interest in Hewlett-Packard Japan. The Pro
Forma As Adjusted Consolidated Balance Sheet Data also reflects the receipt and
subsequent payment to Hewlett-Packard of the net proceeds from the sale of the
shares of our common stock in this offering. The pro forma financial position
shown in this table is not indicative of what our financial position would have
been had the separation of our business from Hewlett-Packard been completed on
April 30, 1999. See Notes to Unaudited Pro Forma Condensed Financial Statements
for an explanation of the calculation of unaudited pro forma net earnings per
share.

Consolidated Statement of Earnings Data:

<TABLE>
<CAPTION>
Six Months
Years Ended October 31, Ended April 30,
---------------------------------- ---------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue................ $5,546 $6,595 $7,379 $7,785 $7,952 $4,090 $3,796
Earnings from operations... 521 841 875 870 442 403 341
Net earnings............... 282 499 542 543 257 254 231
Unaudited pro forma net
earnings per share:
Basic..................... $ $
Diluted................... $ $
Average shares used in
computing unaudited
pro forma net earnings per
share:
Basic.....................
Diluted...................
</TABLE>

Consolidated Balance Sheet Data:

<TABLE>
<CAPTION>
April 30, 1999
-------------------------
Pro Pro Forma
Actual Forma As Adjusted
------ ------ -----------
(in millions)
<S> <C> <C> <C>
Cash and cash equivalents............................ $ -- $ 913 $ 913
Working capital...................................... 1,642 2,232 2,232
Total assets......................................... 5,021 5,350 5,350
Stockholder's net investment/Stockholders' equity.... 3,162 3,992 3,992
</TABLE>

8
<PAGE>

RISK FACTORS

You should carefully consider the risks described below and the other
information in this prospectus before investing in our common stock. Our
business could be seriously harmed by any of these risks. The trading price of
our common stock could decline due to any of these risks, and you may lose all
or part of your investment.

Risks Related to Our Business

If we do not introduce new products and services in a timely manner, our
products and services will become obsolete, and our operating results will
suffer.

We sell our products in several industries that are characterized by rapid
technological changes, frequent new product and service introductions and
evolving industry standards. Without the timely introduction of new products,
services and enhancements, our products and services will likely become
technologically obsolete over time, in which case our revenue and operating
results would suffer. The success of our new product and service offerings
will depend on several factors, including our ability to:

. properly identify customer needs;

. price our products competitively;

. innovate and develop new technologies and applications;

. successfully commercialize new technologies in a timely manner;

. manufacture and deliver our products in sufficient volumes on time; and

. differentiate our offerings from our competitors' offerings.

Many of our products are used by our customers to develop, test and
manufacture their new products. We therefore must anticipate industry trends
and develop products in advance of the commercialization of our customers'
products. If we fail to adequately predict our customers' needs and future
activities, we may invest heavily in research and development of products and
services that do not lead to significant revenue. For example, the cellular
phone industry, which is served by our test and measurement and semiconductor
products businesses, currently has several competing communications standards.
We may suffer competitive harm if we dedicate resources to developing products
and technologies to support a standard that does not achieve broad market
acceptance. Our other businesses will encounter similar challenges. In our
healthcare business, new technologies that we develop may not be quickly
accepted because of industry-specific factors such as the need for regulatory
clearance, entrenched patterns of clinical practice, uncertainty over third-
party reimbursement and clinicians' fears of malpractice suits. We would
suffer competitive harm if we dedicate a significant amount of resources to
the development of products and technologies that do not achieve broad market
acceptance.

Moreover, significant technical innovations generally require a substantial
investment before we can determine the commercial viability of these
innovations. We may not have the financial resources necessary to fund these
technical innovations. In addition, even if we are able to successfully
develop enhancements or new generations of our products, these enhancements or
new generations of products may not generate revenue in excess of the costs of
development, and they may be quickly rendered obsolete by changing customer
preferences or the introduction of products embodying new technologies or
features by our competitors.

Our business is subject to economic, political and other risks associated
with international sales and operations.

Since we sell our products worldwide, our business is subject to risks
associated with doing business internationally. Our net revenue originating
outside the United States, as a percentage of our total net revenue, was 54.4%
in fiscal year 1998 and 56.0% for the six months ended April 30, 1999. We
anticipate that revenue

9
<PAGE>

from international operations will continue to represent a substantial portion
of our total revenue. In addition, many of our manufacturing facilities and
suppliers are located outside the United States. Accordingly, our future
results could be harmed by a variety of factors, including:

. changes in foreign currency exchange rates;

. changes in a specific country's or region's political or economic
conditions, particularly in emerging markets;

. trade protection measures and import or export licensing requirements;

. potentially negative consequences from changes in tax laws;

. difficulty in staffing and managing widespread operations;

. differing labor regulations;

. differing protection of intellectual property; and

. unexpected changes in regulatory requirements.

We do a substantial portion of our business in Korea and Japan, which have
been subject to increased economic instability in recent years. Our business
declined in 1998 when Korea and Japan experienced economic difficulties. The
recurrence of weakness in these economies or weakness in other international
economies could have a significant negative effect on our future operating
results.

Fluctuations in our quarterly operating results may cause our stock price
to decline.

Given the nature of the markets in which we participate, we cannot reliably
predict future revenue and profitability, and unexpected changes may cause us
to adjust our operations. A high proportion of our costs are fixed, due in
part to our significant sales, research and development and manufacturing
costs. Thus, small declines in revenue could disproportionately affect our
operating results in a quarter. For example, when our revenue declined in 1998
as a result of the financial crisis in Asia, it caused significant negative
fluctuations in our operating results. Other factors that could affect our
quarterly operating results include:

. demand for and market acceptance of our products;

. competitive pressures resulting in lower selling prices;

. adverse changes in the level of economic activity in the United States
and other major regions in which we do business;

. adverse changes in industries, such as semiconductors and electronics,
on which we are particularly dependent;

. changes in the relative portion of our revenue represented by our
various products and customers;

. unanticipated delays or problems in the introduction of new products;

. our competitors' announcements of new products, services or
technological innovations;

. increased costs of raw materials or supplies;

. changes in the timing of product orders due to:

-- unexpected delays in the introduction of products of our customers,

-- lifecycles of our customers' products ending earlier than expected,
or

-- market acceptance of products developed by our customers; and

. our inability to forecast revenue in a given quarter from large system
sales.

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<PAGE>

The current technology labor market is very competitive, and our business
will suffer if we are not able to hire and retain sufficient personnel.

Our future success depends partly on the continued service of our key
technical, sales, marketing, manufacturing, executive and administrative
personnel. If we fail to retain and hire a sufficient number of these
personnel, we will not be able to maintain and expand our business. We also
must attract and retain qualified research scientists and engineers for
Agilent Technologies Laboratories. Competition for qualified personnel in the
technology area is intense, and we operate in several geographic locations
where labor markets are particularly competitive, including the Silicon Valley
region of Northern California where our headquarters and central research and
development laboratories are located. Although we believe we offer competitive
salaries and benefits, certain of our businesses have had to increase spending
in order to retain personnel. We also believe we have benefited from Hewlett-
Packard's name and reputation as an employer in the past. To the extent we do
not obtain similar popular recognition, our ability to attract and retain
personnel could be harmed. In addition, some employees of Hewlett-Packard who
worked in our businesses in the past may have chosen, or may choose, to remain
with Hewlett-Packard in other positions. Until 30 days prior to Hewlett-
Packard's distribution of our stock, our employees are generally eligible to
apply for and move to positions at Hewlett-Packard without losing their
Hewlett-Packard tenure.

Our operating results could be harmed if the industries into which we sell
our products are in downward cycles.

Many of the industries and markets into which we sell our products are
cyclical. For example, in 1998 the operating results of our test and
measurement and semiconductor products businesses were harmed by downturns in
the semiconductor market. From time to time, the electronics industry has also
experienced significant downturns, often in connection with, or in
anticipation of, maturing product cycles and declines in general economic
conditions. In addition, the computer industry is subject to seasonal and
cyclical fluctuations in demand for its products. These industry downturns
have been characterized by diminished product demand, excess manufacturing
capacity and subsequent accelerated erosion of average selling prices. In
addition, the healthcare industry has experienced a significant increase in
cost pressures resulting from hospital consolidation and the trend by
insurance companies to reduce payments to healthcare providers. Any
significant downturn in our customers' markets or in general economic
conditions would likely result in a reduction in demand for our products and
services and could harm our business.

After our separation from Hewlett-Packard, we may experience increased
costs resulting from decreased purchasing power which could decrease our
profitability.

Prior to our separation from Hewlett-Packard, our businesses were able to
take advantage of Hewlett-Packard's size and purchasing power in procuring
goods, services and technology, such as computer software licenses. As a
separate, stand-alone entity, we may be unable to obtain goods, services and
technology at prices and on terms as favorable as those we obtained prior to
the separation. In addition, our patent cross-license agreement with Hewlett-
Packard gives us the right to sublicense only a portion of Hewlett-Packard's
intellectual property portfolio. As a result, in negotiating patent cross-
license agreements with third parties, we may be unable to obtain agreements
on terms as favorable as we may have been able to obtain if we had access to
Hewlett-Packard's entire intellectual property portfolio.

Our semiconductor technology licensing and supply arrangements with
Hewlett-Packard limit our ability to sell to other companies and could
restrict our ability to expand our businesses.

We do not have a license under Hewlett-Packard's patents, patent
applications and invention disclosures for printing devices, printer supplies,
components and accessories, document scanners and some computing devices. In
addition, our ICBD Technology Ownership and License Agreement, which generally
covers integrated circuit technology that is used in integrated circuits for
Hewlett Packard's printers, scanners and computers, provides that for a period
of three years in some cases and 10 years in other cases we are prohibited
from using this integrated circuit technology for the development and sale of
integrated circuits for use in printing devices, printer supplies, components
and accessories, document scanners and some computing devices to third parties
other than Hewlett-Packard.

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<PAGE>

Although we have entered into a supply agreement for the sale to
Hewlett-Packard of these kinds of integrated circuits, the supply agreement
does not require Hewlett-Packard to purchase a minimum amount of product from
us. In the event that Hewlett-Packard reduces its purchase of our integrated
circuits, we would be unable to address this reduction through sales of these
kinds of integrated circuits for these types of products to other customers.

If demand for Hewlett-Packard's printer, workstation and server products
declines, or if Hewlett-Packard chooses a different supplier, our
semiconductor products business revenue will decline significantly.

Historically, some of our businesses have sold products to Hewlett-Packard
and have engaged in product development efforts with divisions of Hewlett-
Packard. In fiscal 1998, our semiconductor products business received
approximately 34% of its revenue from sales to Hewlett-Packard's printer,
workstation and server businesses. These Hewlett-Packard businesses were not,
and will not be, required to purchase products from us. A reduction in sales
to any of these Hewlett-Packard customers would harm our business.

In the past, we have benefited from our access to Hewlett-Packard's
research and development strategy, technology plans, future product features
and product supply needs in competing for Hewlett-Packard's business. If our
competitors were to gain better access to Hewlett-Packard as a result of our
separation, our competitors may be able to develop products that better meet
the future needs of Hewlett-Packard, decreasing the competitiveness of our
products. In addition, we have taken advantage of collaborative relationships
with some of Hewlett-Packard's businesses. We may not continue to enjoy all of
the benefits of these collaborative relationships, particularly if our patent
cross-license is not renewed.

We face aggressive competition in all areas of our business, and if we do
not compete effectively, our business will be harmed.

We encounter aggressive competition in all areas of our business. Our
competitors are numerous, ranging from some of the world's largest
corporations, such as General Electric Company, International Business
Machines Corporation, Lucent Technologies, Inc., and Siemens AG, to many
highly specialized firms, such as Anritsu Corporation, PE Biosystems,
Teradyne, Inc. and Waters Corporation, as well as many smaller technology
startups. We may not be able to compete effectively with all of these
competitors. We compete primarily on the basis of:

. technology;

. product performance;

. price;

. product quality and reliability;

. sales and distribution capabilities; and

. customer service and support.

To remain competitive, we will be required to develop new products and
periodically enhance our existing products in a timely manner and compete
effectively on the basis of the factors described above. We anticipate that we
may have to adjust prices of many of our products to stay competitive, and we
will have to manage financial returns effectively. In addition, new
competitors may emerge, and entire product lines may be threatened by new
technologies or market trends which reduce the value of these product lines.

We and our customers are subject to various governmental regulations, and
we may incur significant expenses to comply with these regulations and
develop our products to be compatible with these regulations.

Several of our product lines are subject to significant international,
federal, state and local environmental, health and safety, packaging, product
content and labor regulations. These regulations are complex, change

12
<PAGE>

frequently and have tended to become more stringent over time. We may be
required to incur significant expenses to comply with these regulations or
remedy past violations of these regulations. Any failure by us to comply with
applicable government regulations could also result in cessation of portions
or all of our operations, impositions of fines and restrictions on our ability
to carry on or expand our operations. In addition, because many of our
products are regulated or sold into regulated industries, we must comply with
additional regulations in marketing our products.

Except for liabilities relating to specified environment contamination, for
which Hewlett-Packard is indemnifying us, we are indemnifying Hewlett-Packard
for any liability associated with past non-compliance with environmental laws
regulating ongoing operations at all properties to be transferred by Hewlett-
Packard to us, as well as at sold or discontinued businesses that related to
our business. While we are not aware of any material liabilities associated
with past non-compliance, past non-compliance may exist and may expose us to
material liability. For a discussion of indemnification related to
environmental contamination, see "--We are subject to liability for
environmental contamination resulting from the use of hazardous materials in
the conduct of our business."

Chemical Regulation. Some of our chemical analysis business' products are
used in conjunction with chemicals whose manufacture, processing and
distribution are regulated by the United States Environmental Protection
Agency under the Toxic Substances Control Act, and by regulatory bodies in
other countries with laws similar to the Toxic Substances Control Act. We must
conform the manufacture, processing and distribution of these chemicals to
these laws, and adapt to regulatory requirements in all countries as these
requirements change. If we fail to comply with these requirements in the
manufacture or distribution of our products, then we can be made to pay civil
penalties and, in some cases, prohibited from distributing our products in
commerce until the products or component substances are brought into
compliance.

Food and Drug Regulation. The medical device products produced by our
healthcare solutions business are subject to regulation by the United States
Food and Drug Administration (FDA) and similar international agencies. Their
regulations govern a wide variety of product activities from design and
development to labeling, manufacturing, promotion, sales and distribution. For
example, we received a warning letter from the FDA in 1996 alleging non-
compliance with the FDA's quality system regulations at one of our facilities.
The FDA's quality systems regulation includes elaborate design, testing,
control, documentation and other quality assurance requirements. We had to
apply considerable resources to address the FDA's concerns. We believe we have
resolved the issues identified in the FDA's letter and the FDA has concurred
with our assessment, but we cannot assure you that the FDA will not identify
other areas of noncompliance. If we fail to maintain satisfactory compliance
with the FDA's quality system and other regulations, we may have to recall
products and cease their manufacture and distribution. In addition, we could
be subject to fines or criminal prosecution.

In addition, our chemical analysis products are used in the drug design and
production processes to test compliance with the Toxic Substances Control Act,
the Federal Food, Drug and Cosmetic Act and similar regulations. Therefore, we
must continually adapt our chemical analysis products to changing regulations.

Healthcare Regulation. Our healthcare customers rely on third-party payors,
such as government programs and private health insurance plans, to reimburse
some or all of the cost of the procedures in which our products are used. The
continuing efforts of government, insurance companies and other payors of
healthcare costs to contain or reduce those costs could lead our customers to
reduce or eliminate purchases of our products. Likewise, legislative proposals
to reform healthcare or reduce government programs could result in lower
prices for or rejection of our products. The cost containment measures that
healthcare providers are instituting and the effect of any healthcare reform,
both in the United States and internationally, could harm our ability to
operate profitably.

Government Contracts and Other Regulation. We have agreements relating to
sales of our products to government entities and as a result we are subject to
various statutes and regulations that apply to companies doing business with
the government. The laws governing government contracts differ from the laws
governing private contracts. For example, many government contracts contain
pricing terms and conditions that are not

13
<PAGE>

applicable to private contracts. We are also subject to investigation for
compliance with the terms of contracts with the government.

Our products and operations are also often subject to the rules of
industrial standards bodies, like the International Standards Organization, as
well as regulation of other agencies such as the United States Federal
Communications Commission. We also must comply with work safety rules. If we
fail to adequately address any of these regulations, our business will be
harmed.

We are subject to liability for environmental contamination resulting from
the use of hazardous materials in the conduct of our business.

Environmental Contamination from Past Operations. Some of our properties are
undergoing remediation by Hewlett-Packard for known subsurface contamination.
Hewlett-Packard has agreed to retain the liability for the contamination,
perform the required remediation and indemnify us with respect to claims
arising out of that contamination. However, we will be responsible for any
additional contamination at these properties caused by our operations following
the separation. The determination of the existence and cost of any additional
contamination caused by us could involve costly and time-consuming negotiations
and litigation. In addition, Hewlett-Packard will have access to our properties
to perform remediation. While Hewlett-Packard has agreed to minimize
interference with on-site operations at those properties, we cannot assure you
that the remediation activities and subsurface contamination will not require
us to incur unreimbursed costs and have an adverse impact on site operations
and on the future use and value of the properties. We also cannot assure you
that Hewlett-Packard will fulfill its indemnification or remediation
obligations.

We are indemnifying Hewlett-Packard for any liability associated with
contamination from past operations at all other properties to be transferred
from Hewlett-Packard to us other than those properties currently undergoing
remediation by Hewlett-Packard. While we are not aware of any material
liabilities associated with existing subsurface contamination at any of those
properties, subsurface contamination may exist, and we may be exposed to
material liability as a result of the existence of that contamination.

Environmental Contamination Caused by Ongoing Operations. We will be
responsible for any contamination to our properties arising out of our
operations following the separation. Our semiconductor and other manufacturing
processes involve the use of substances regulated under various international,
federal, state and local laws governing the environment. We cannot assure you
that we will not be subject to liabilities for environmental contamination, and
these liabilities may be substantial. Although our policy is to apply strict
standards for environmental protection at our sites inside and outside the
United States, even if not subject to regulations imposed by foreign
governments, we may not be aware of all conditions that could subject us to
liability.

Third parties may claim we are infringing their intellectual property, and
we could suffer significant litigation or licensing expenses or be prevented
from selling products.

Third parties may claim that we are infringing their intellectual property
rights, and we may be found to infringe those intellectual property rights.
While we do not believe that any of our products infringe the valid
intellectual property rights of third parties, we may be unaware of
intellectual property rights of others that may cover some of our technology,
products and services. Moreover, in connection with future intellectual
property infringement claims, we will only have the benefit of asserting
counterclaims based on Hewlett-Packard's intellectual property portfolio in
limited circumstances, and we will only be able to offer licenses to Hewlett-
Packard's intellectual property in order to resolve claims in limited
circumstances.

Any litigation regarding patents or other intellectual property could be
costly and time-consuming, and divert our management and key personnel from our
business operations. The complexity of the technology

14
<PAGE>

involved and the uncertainty of intellectual property litigation increase
these risks. Claims of intellectual property infringement might also require
us to enter into costly royalty or license agreements. However, we may not be
able to obtain royalty or license agreements on terms acceptable to us, or at
all. We also may be subject to significant damages or injunctions against
development and sale of certain of our products.

We often rely on licenses of intellectual property useful for our business.
We cannot assure you that these licenses will be available in the future on
favorable terms or at all. In addition, our position with respect to the
negotiation of licenses may change after our separation from Hewlett-Packard.

Third parties may infringe our intellectual property, and we may expend
significant resources enforcing our rights or suffer competitive injury.

Our success depends in large part on our proprietary technology. We rely on
a combination of patents, copyrights, trademarks and trade secrets,
confidentiality provisions and licensing arrangements to establish and protect
our proprietary rights. If we fail to successfully enforce our intellectual
property rights, our competitive position could suffer, which could harm our
operating results.

Our pending patent and trademark registration applications may not be
allowed or competitors may challenge the validity or scope of these patent
applications or trademark registrations. In addition, our patents may not
provide us a significant competitive advantage.

We may be required to spend significant resources to monitor and police our
intellectual property rights. We may not be able to detect infringement and
may lose competitive position in the market before we do so. In addition,
competitors may design around our technology or develop competing
technologies. Intellectual property rights may also be unavailable or limited
in some foreign countries, which could make it easier for competitors to
capture market share.

Potential year 2000 problems associated with our products, our internal
systems or the products of our suppliers and customers could harm our
business.

Many currently installed computer systems and software were written to
accept and process only two digit entry codes for the year when storing dates.
Beginning with the year 2000, these entry codes will need to accept four digit
entries to distinguish 21st century dates from 20th century dates. As a
result, computer systems and products may need to be upgraded to solve this
problem to avoid incorrect or lost data. We are working to implement the
systems and programming changes necessary to address year 2000 internal
information technology and non-information technology readiness issues,
product and service readiness issues and material third party relationships.
However, we may encounter a delay in, or increased costs associated with, the
implementation of necessary systems and programming changes. In addition, if
we fail to achieve year 2000 readiness for our internal systems and processes,
it could delay our ability to manufacture and ship products and deliver
services, disrupt our customer service and technical support facilities and
interrupt customer access to our online products and services. Although we are
dedicating substantial resources to attaining year 2000 readiness, we cannot
assure you that we will be successful in our efforts to identify and address
all year 2000 issues. Even if we act in a timely manner to complete all of our
assessments; identify, develop and implement remediation plans believed to be
adequate; and develop contingency plans believed to be adequate; some problems
may not be identified or corrected in time to prevent serious harm to us. In
addition, we have relied on assurances from third parties that they and the
products they supply are year 2000 compliant. We have not independently
verified these assurances in many cases, and any failure of these third party
products and services to be year 2000 compliant could harm us. Although our
newly introduced products are year 2000 compliant, some of our products that
are currently installed at customer sites will require upgrades or other
remediation. Some of these products are used in critical applications in which
the impact of non-performance to these customers and other parties could be
significant. There is a risk that our customers could initiate litigation
against us for damages arising from our products that are not year 2000
compliant. Year 2000 issues could harm our future results of operations, cash
flows or financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000."

15
<PAGE>

If our factories or facilities were to experience catastrophic loss, our
operations would be seriously harmed.

Our facilities could be subject to a catastrophic loss such as a fire,
earthquake or flood. We have significant facilities, such as our production
facilities in California, Colorado, Delaware, Massachusetts and Washington in
the United States, Germany, Japan, Malaysia, Singapore, and the United Kingdom
and our headquarters and a portion of Agilent Technologies Laboratories in
California. If any of these facilities were to experience a catastrophic loss,
it could disrupt our operations, delay production, shipments and revenue, and
result in large expenses to repair or replace the facility. Until Hewlett-
Packard distributes our shares, we will be covered by its catastrophic
insurance policies. After the distribution, we expect to obtain insurance to
cover most potential losses at our facilities, other than those that result
from earthquakes. However, the insurance we obtain may not be adequate to
cover all possible losses.

Many of our facilities are located in areas with relatively frequent
earthquake activity. We intend to follow Hewlett-Packard's past and current
practices and do not intend to obtain earthquake insurance.

Risks Related to Our Separation from Hewlett-Packard

Our new name is not yet recognized as a brand in the marketplace, and as a
result our product sales could suffer.

The loss of the "Hewlett-Packard" brand name may hinder our ability to
establish new relationships. In addition, our current customers, suppliers and
partners may react negatively to the separation. In connection with our
separation from Hewlett-Packard, we will change the brand name and most of the
trademarks and trade names under which we conduct our business. This
transition to our new name will occur rapidly in the case of some products and
over specified periods of time in the case of other products. We believe that
sales of our products have benefited from the use of the "Hewlett-Packard"
brand name. In addition, although we believe we have all necessary rights to
use the new brand name, our rights to use it may be challenged by others.

Substantial sales of common stock may occur in connection with the
distribution, which could cause our stock price to decline.

Hewlett-Packard has announced that it intends to distribute the
approximately shares of common stock it owns to Hewlett-Packard
stockholders by the middle of calender year 2000. Substantially all of these
shares would be eligible for immediate resale in the public market. We are
unable to predict whether significant amounts of common stock will be sold in
the open market in anticipation of, or following, this distribution. We are
also unable to predict whether a sufficient number of buyers would be in the
market at that time.

A portion of Hewlett-Packard's common stock is held by index funds tied to
the Standard & Poor's 500 Index, the Dow Jones Industrial Average or other
stock indices. If we are not in these indices at the time of Hewlett-Packard's
distribution of our common stock, these index funds will be required to sell
our stock. Similarly, other institutional stockholders are not allowed by
their charters to hold the stock of companies that do not pay dividends. Since
we currently do not intend to pay dividends, we expect that these stockholders
will sell the shares of our common stock distributed to them. Any sales of
substantial amounts of common stock in the public market, or the perception
that such sales might occur, whether as a result of this distribution or
otherwise, could harm the market price of our common stock. See "Shares
Eligible for Future Sale."

We currently use Hewlett-Packard's information systems, and we must develop
our own information systems cost-effectively.

We currently use Hewlett-Packard's systems to support our operations,
including systems to manage inventory, order processing, human resources,
shipping and accounting. Many of these systems are proprietary to Hewlett-
Packard and are very complex. These systems have been modified, and are in the
process of being further modified, to enable Hewlett-Packard to separately
track items related to our business. These modifications, however, may result
in unexpected system failures or the loss or corruption of data.

We are in the process of creating our own information systems to eventually
replace Hewlett-Packard's systems. We may not be successful in implementing
these systems and transitioning data from Hewlett-Packard's

16
<PAGE>

systems to ours. We are currently in the process of implementing new enterprise
resource planning software applications to manage some of our information
systems. Our chemical analysis and healthcare solutions businesses have each
migrated to new enterprise resource planning software, and each experienced
disruptions during the transition process that negatively affected their
operating results for the period in which the transition occurred.

Any failure or significant downtime in Hewlett-Packard's or our own
information systems could prevent us from taking customer orders, shipping
products or billing customers and could harm our business. In addition,
Hewlett-Packard's and our information systems require the services of employees
with extensive knowledge of these information systems and the business
environment in which we operate. In order to successfully implement and operate
our systems, we must be able to attract and retain a significant number of
current Hewlett-Packard employees to our company. If we fail to attract and
retain the highly skilled personnel required to implement, maintain, and
operate our information systems, our business could suffer.

Our business may suffer if Hewlett-Packard does not complete its
distribution of our common stock.

Hewlett-Packard has announced that it intends to distribute to its
stockholders all of our common stock that it owns by the middle of calendar
year 2000, although it is not obligated to do so. This distribution may not
occur by that time or at all. We may not obtain the benefits we expect as a
result of this distribution, including greater strategic focus, increased
agility and speed, greater access to capital markets, better incentives for
employees, more accountable management and the other benefits described in "Our
Separation From Hewlett-Packard." In addition, until this distribution occurs,
the risks discussed below relating to Hewlett-Packard's control of us and the
potential business conflicts of interest between Hewlett-Packard and us will
continue to be relevant to our stockholders.

We will be controlled by Hewlett-Packard as long as it owns a majority of
our common stock, and our other stockholders will be unable to affect the
outcome of stockholder voting during such time.

After the completion of this offering, Hewlett-Packard will own
approximately % of our outstanding common stock, or approximately % if the
U.S. underwriters exercise their over-allotment option in full. As long as
Hewlett-Packard owns a majority of our outstanding common stock, Hewlett-
Packard will continue to be able to elect our entire board of directors and to
remove any director, with or without cause, without calling a special meeting.
Investors in this offering will not be able to affect the outcome of any
stockholder vote prior to the planned distribution of our stock to the Hewlett-
Packard stockholders. As a result, Hewlett-Packard will control all matters
affecting Agilent Technologies, including:

. the composition of our board of directors and, through it, any
determination with respect to our business direction and policies,
including the appointment and removal of officers;

. the allocation of business opportunities that may be suitable for us and
Hewlett-Packard;

. any determinations with respect to mergers or other business
combinations;

. our acquisition or disposition of assets;

. our financing;

. changes to the agreements providing for our separation from Hewlett-
Packard;

. the payment of dividends on our common stock; and

. determinations with respect to our tax returns.

Hewlett-Packard is not prohibited from selling a controlling interest in us
to a third party.

Our historical financial information may not be representative of our
results as a separate company.

The historical financial information we have included in this prospectus has
been carved out from Hewlett-Packard's consolidated financial statements and
does not reflect what our financial position, results of operations

17
<PAGE>

and cash flows would have been, had we been a separate, stand-alone entity
during the periods presented. Hewlett-Packard did not account for us as, and
we were not operated as, a single stand-alone entity for the periods
presented. In addition, the historical information is not necessarily
indicative of what our results of operations, financial position and cash
flows will be in the future. We have not made adjustments to reflect many
significant changes that will occur in our cost structure, funding and
operations as a result of our separation from Hewlett-Packard, including
changes in our employee base, changes in our tax structure, increased costs
associated with reduced economies of scale, increased marketing expenses
related to establishing a new brand identity and increased costs associated
with being a public, stand-alone company.

For additional information, see "Unaudited Pro Forma Condensed Financial
Statements," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our historical consolidated financial statements
and notes thereto.

We will not be able to rely on Hewlett-Packard to fund our future capital
requirements.

In the past, our capital needs have been satisfied by Hewlett-Packard.
However, following the separation, Hewlett-Packard will no longer provide
funds to finance our working capital or other cash requirements. We cannot
assure you that financing, if needed, will be available on favorable terms.

We believe our capital requirements will vary greatly from quarter to
quarter, depending on, among other things, capital expenditures, fluctuations
in our operating results, financing activities and build-up of inventories. We
believe that the planned initial funding from Hewlett-Packard, along with our
future cash flow from operations, will be sufficient to satisfy our working
capital, capital expenditure and research and development requirements for the
foreseeable future. However, we may require or choose to obtain additional
debt or equity financing in the future. Future equity financings would be
dilutive to the existing holders of our common stock. Future debt financings
could involve restrictive covenants. We will not be able to obtain financing
with interest rates as favorable as those historically enjoyed by Hewlett-
Packard. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

We may have potential business conflicts of interest with Hewlett-Packard
with respect to our past and ongoing relationships that could harm our
business operations.

Conflicts of interest may arise between Hewlett-Packard and us in a number
of areas relating to our past and ongoing relationships, including:

. labor, tax, employee benefit, indemnification and other matters arising
from our separation from Hewlett-Packard;

. intellectual property matters;

. employee retention and recruiting;

. major business combinations involving us;

. sales or distributions by Hewlett-Packard of all or any portion of its
ownership interest in us;

. the nature, quality and pricing of transitional services Hewlett-Packard
has agreed to provide us; and

. business opportunities that may be attractive to both Hewlett-Packard
and us.

Nothing restricts Hewlett-Packard from competing with us other than some
restrictions on the use of patents licensed to Hewlett-Packard by us.

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<PAGE>

We may not be able to resolve any potential conflicts, and even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated party. The agreements we have entered into with Hewlett-Packard
may be amended upon agreement between the parties. While we are controlled by
Hewlett-Packard, Hewlett-Packard may be able to require us to agree to
amendments to these agreements that may be less favorable to us than the
current terms of the agreement.

Our close relationship with Hewlett-Packard could limit our potential to do
business with Hewlett-Packard's competitors.

Hewlett-Packard is one of our largest customers, and we will continue to
have a variety of contractual relationships with Hewlett-Packard. Whether or
not Hewlett-Packard completes its distribution of our common stock, our close
relationship with Hewlett-Packard will continue for a significant period of
time. We cannot predict whether existing and potential customers will be
deterred by the existence of these relationships or the historical ties
between Hewlett-Packard and us. If they are deterred, our future growth could
be hindered.

Our directors and executive officers may have conflicts of interest because
of their ownership of Hewlett-Packard common stock.

Many of our directors and executive officers have a substantial amount of
their personal financial portfolios in Hewlett-Packard common stock and
options to purchase Hewlett-Packard common stock. Ownership of Hewlett-Packard
common stock by our directors and officers after our separation from Hewlett-
Packard could create, or appear to create, potential conflicts of interest
when directors and officers are faced with decisions that could have different
implications for Hewlett-Packard and us. For information regarding directors'
and officers' ownership of Hewlett-Packard common stock, see "Management--
Stock Ownership of Directors and Executive Officers."

The transitional services being provided to us by Hewlett-Packard may not
be sufficient to meet our needs, and we may not be able to replace these
services after our agreements with Hewlett-Packard expire.

Hewlett-Packard has agreed to provide certain transitional services to us,
including services related to:

. information technology systems;

. buildings and facilities; and

. finance and accounting.

Although Hewlett-Packard is contractually obligated to provide us with
these services, these services may not be provided at the same level as when
we were part of Hewlett-Packard, and we may not be able to obtain the same
benefits. We will also lease and sublease certain office and manufacturing
facilities from Hewlett-Packard. These transitional service and leasing
arrangements generally have a term of less than two years following the
separation. After the expiration of these various arrangements, we may not be
able to replace the transitional services or enter into appropriate leases in
a timely manner or on terms and conditions, including cost, as favorable as
those we will receive from Hewlett-Packard.

These agreements were made in the context of a parent-subsidiary
relationship and were negotiated in the overall context of our separation from
Hewlett-Packard. The prices charged to us under these agreements may be lower
than the prices that we may be required to pay third parties for similar
services or the costs of similar services if we undertake them ourselves. For
more information about these arrangements, see "Arrangements Between Agilent
Technologies and Hewlett-Packard."

19
<PAGE>

Risks Related to the Securities Markets and Ownership of Our Common Stock

Our securities have no prior market, and we cannot assure you that our
stock price will not decline after the offering.

Before this offering, there has not been a public market for our common
stock, and an active public market for our common stock may not develop or be
sustained after this offering. The market price of our common stock could be
subject to significant fluctuations after the offering. Among the factors that
could affect our stock price are:

. quarterly variations in our operating results;

. changes in revenue or earnings estimates or publication of research
reports by analysts;

. speculation in the press or investment community;

. strategic moves by us or our competitors, such as acquisitions or
restructurings;

. actions by institutional stockholders or by Hewlett-Packard prior to its
distribution of our stock;

. general market conditions; and

. domestic and international economic factors unrelated to our
performance.

The stock markets in general, and the markets for high technology stocks in
particular, have experienced extreme volatility that has often been unrelated
to the operating performance of particular companies. These broad market
fluctuations may adversely affect the trading price of our common stock. In
particular, we cannot assure you that you will be able to resell your shares
at or above the initial public offering price, which will be determined by
negotiations between the representatives of the underwriters and us. See the
section entitled "Underwriters" for a discussion of the factors to be
considered in determining the initial public offering price.

Provisions in our charter documents and Delaware law may delay or prevent
acquisition of our company, which could decrease the value of your shares.

Our certificate of incorporation and bylaws and Delaware law contain
provisions that could make it harder for a third party to acquire us without
the consent of our board of directors, although these provisions have little
significance while we are controlled by Hewlett-Packard. These provisions
include a classified board of directors and limitations on actions by our
stockholders by written consent. In addition, our board of directors has the
right to issue preferred stock without stockholder approval, which could be
used to dilute the stock ownership of a potential hostile acquiror. Delaware
law also imposes some restrictions on mergers and other business combinations
between us and any holder of 15% or more of our outstanding common stock.
Although we believe these provisions provide for an opportunity to receive a
higher bid by requiring potential acquirors to negotiate with our board of
directors, these provisions apply even if the offer may be considered
beneficial by some stockholders.

You should not rely on forward-looking statements.

You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions to identify such
forward-looking statements. This prospectus also contains forward-looking
statements attributed to third parties relating to their estimates regarding
the growth of our markets. Forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause our actual
results, as well as those of the test and measurement, semiconductor,
healthcare, chemical analysis and related markets we serve, levels of
activity, performance, achievements and prospects to be materially different
from those expressed or implied by such forward-looking statements. These
risks, uncertainties and other factors include, among others, those identified
here in this "Risk Factors" section and elsewhere in this prospectus.

20
<PAGE>

OUR SEPARATION FROM HEWLETT-PACKARD

Our Separation from Hewlett-Packard

On March 2, 1999, Hewlett-Packard announced a plan to create a separate
company that comprises Hewlett-Packard's test and measurement, semiconductor
products, healthcare solutions and chemical analysis businesses, related
portions of Hewlett-Packard Laboratories and associated infrastructure. We
were incorporated in Delaware in May 1999 in preparation for our separation
from Hewlett-Packard, and we are currently a wholly owned subsidiary of
Hewlett-Packard. Prior to the separation, Hewlett-Packard has conducted and
will conduct our business through various divisions and subsidiaries. We
expect that the separation of our businesses from those of Hewlett-Packard,
including the transfer of related assets, liabilities and intellectual
property rights, will be substantially completed by the closing of this
offering.

Benefits of the Separation

We believe that we will realize certain benefits from our complete
separation from Hewlett-Packard, including the following:

. Increased Speed and Responsiveness. As a company significantly smaller
than Hewlett-Packard, we expect to be able to make decisions more
quickly, deploy resources more rapidly and
efficiently and operate with more agility than when we were a part of a
larger organization. In addition, we expect to enhance our
responsiveness to customers and partners.

. Better Incentives for Employees and Greater Accountability. We expect
the motivation of our employees and the focus of our management will be
strengthened by incentive compensation programs tied to the market
performance of our common stock. The separation will enable us to offer
our employees compensation directly linked to the performance of the
Agilent Technologies business, which we expect to enhance our ability to
attract and retain qualified personnel.

. More Direct Access to Capital Markets. As a separate company, we will
have more direct access to the capital markets to issue debt or equity
securities and to grow through acquisitions.

Separation and Transitional Arrangements

We and Hewlett-Packard, and, in some cases, our respective subsidiaries,
have entered into or will enter into agreements providing for the separation
of our business from Hewlett-Packard, including a master separation and
distribution agreement to which we and Hewlett-Packard are parties. These
agreements generally provide for, among other things, the transfer from
Hewlett-Packard to us of assets and the assumption by us of liabilities
relating to our business, in each case to the extent agreed to by Hewlett-
Packard and us. We have entered into agreements with Hewlett-Packard regarding
the transfer and licensing to us of intellectual property relating to our
businesses. We have also entered into agreements governing various interim and
ongoing relationships between the parties including transitional services
Hewlett-Packard will provide to us.

The agreements relating to our separation from Hewlett-Packard were made in
the context of a parent-subsidiary relationship and were negotiated in the
overall context of our separation from Hewlett-Packard. The
terms of these agreements may be more or less favorable than those we could
have negotiated with unaffiliated third parties. For more information
regarding the separation arrangements, see "Arrangements Between Agilent
Technologies and Hewlett-Packard."

21
<PAGE>

The Distribution by Hewlett-Packard of Our Common Stock

After completion of this offering, Hewlett-Packard will own approximately
% of the outstanding shares of our common stock, or approximately % if the
U.S. underwriters exercise their over-allotment option in full. Hewlett-
Packard has announced that it currently plans to complete its divestiture of
our company by the middle of calendar year 2000 by distributing all of its
shares of our common stock to the holders of Hewlett-Packard's common stock.
However, Hewlett-Packard is not obligated to complete the distribution, and we
cannot assure you as to whether or when it will occur. See "Risk Factors--
Risks Related To Our Separation From Hewlett-Packard--Our business may suffer
if Hewlett-Packard does not complete its distribution of our common stock."

Hewlett-Packard has advised us that it would not complete the distribution
if its board of directors determines that the distribution is no longer in the
best interest of Hewlett-Packard and its stockholders. Hewlett-Packard has
further advised us that it currently expects that the principal factors that
it would consider in determining whether and when to complete the distribution
include:

. the relative market prices of our common stock and Hewlett-Packard's
common stock;

. the absence of any court orders or regulations prohibiting or
restricting the completion of the distribution; and

. other conditions affecting the businesses of Agilent Technologies or
Hewlett-Packard.

22
<PAGE>

USE OF PROCEEDS

We estimate that our net proceeds from this offering will be about $ ,
based on an assumed initial public offering price of $ per share. The net
proceeds of this offering, including net proceeds received from any exercise
of the U.S. underwriters' over-allotment option, will be paid to Hewlett-
Packard as a dividend to be declared prior to the offering. In November 1999,
Hewlett-Packard will make a $ cash payment to us under the terms of the
master separation and distribution agreement in connection with our initial
funding. See "Arrangements between Agilent Technologies and Hewlett-Packard--
Master Separation and Distribution Agreement."

DIVIDEND POLICY

We currently intend to retain any future earnings to fund the development
and growth of our business. Therefore, we do not anticipate paying any cash
dividends in the foreseeable future.

23
<PAGE>

CAPITALIZATION

Set forth below is our actual capitalization at April 30, 1999, our
unaudited pro forma capitalization that gives effect to the pro forma
adjustments described in "Unaudited Pro Forma Condensed Financial Statements,"
and our unaudited pro forma as adjusted capitalization that gives further
effect to the receipt and application of the net proceeds of this offering.
You should read the information set forth below together with "Selected
Financial Data," "Unaudited Pro Forma Condensed Financial Statements," our
historical consolidated financial statements and the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus.

<TABLE>
<CAPTION>
April 30, 1999
-------------------------
Pro Pro Forma
Actual Forma As Adjusted
------ ------ -----------
(in millions)
<S> <C> <C> <C>
Stockholders' Equity:
Preferred stock..................................... $ -- $ -- $ --
Common stock........................................ -- --
Additional paid-in capital.......................... -- 3,992
Stockholder's net investment........................ 3,162 -- --
------ ------ ------
Total stockholders' equity........................ 3,162 3,992 3,992
------ ------ ------
Total capitalization.............................. $3,162 $3,992 $3,992
====== ====== ======
</TABLE>

24
<PAGE>

SELECTED FINANCIAL DATA

The following table presents our selected historical financial data. The
information set forth below should be read in conjunction with "Unaudited Pro
Forma Condensed Financial Statements," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and our historical
consolidated financial statements and notes thereto included elsewhere in this
prospectus. The consolidated statement of earnings data set forth below for
the years ended October 31, 1996, 1997 and 1998 and the consolidated balance
sheet data as of October 31, 1997 and 1998 are derived from, and are qualified
by reference to, our audited consolidated financial statements included
elsewhere in this prospectus. The consolidated statement of earnings data for
the years ended October 31, 1994 and 1995 and the consolidated balance sheet
data as of October 31, 1994, 1995 and 1996 are derived from our unaudited
consolidated financial data that is not included in this prospectus. The
consolidated statement of earnings data for the six month periods ended April
30, 1998 and 1999 and the consolidated balance sheet data as of April 30, 1999
are derived from unaudited consolidated financial statements included
elsewhere in this prospectus and, in the opinion of management, include all
adjustments, consisting only of normal and recurring accruals, that are
necessary for a fair presentation of our financial position and results of
operations for these periods.

The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and results of
operations would have been had we operated as a separate, stand-alone entity
during the periods presented. Statement of earnings data for the year ended
October 31, 1998 include pre-tax restructuring charges of approximately $163
million. Of this amount, cost of products and services includes $138 million,
research and development includes $7 million and selling, general and
administrative includes $18 million. See Note 8 of notes to consolidated
financial statements.

Our net revenue presented below differs from the net revenue associated
with our businesses previously reported by Hewlett-Packard primarily because
intercompany sales to Hewlett-Packard are accounted for as third-party
transactions in the financial data below, but have been eliminated in
information previously reported by Hewlett-Packard.

<TABLE>
<CAPTION>
Six Months
Years Ended October 31, Ended April 30,
-------------------------------------- ----------------
1994 1995 1996 1997 1998 1998 1999
------ ------ ------ ------ ------ ------- -------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Earnings Data:
Net revenue............. $5,546 $6,595 $7,379 $7,785 $7,952 $ 4,090 $ 3,796
Costs and expenses:
Cost of products and
services.............. 2,860 3,335 3,901 4,126 4,512 2,182 1,993
Research and
development........... 692 765 805 880 948 469 463
Selling, general and
administrative........ 1,473 1,654 1,798 1,909 2,050 1,036 999
------ ------ ------ ------ ------ ------- -------
Total costs and
expenses............. 5,025 5,754 6,504 6,915 7,510 3,687 3,455
------ ------ ------ ------ ------ ------- -------
Earnings from
operations............. 521 841 875 870 442 403 341
Other income (expense),
net.................... (87) (62) (21) (47) (46) (13) 15
------ ------ ------ ------ ------ ------- -------
Earnings before taxes... 434 779 854 823 396 390 356
Provision for taxes..... 152 280 312 280 139 136 125
------ ------ ------ ------ ------ ------- -------
Net earnings............ $ 282 $ 499 $ 542 $ 543 $ 257 $ 254 $ 231
====== ====== ====== ====== ====== ======= =======
Basic and diluted net
earnings per share..... $ $ $ $ $ $ $
====== ====== ====== ====== ====== ======= =======
Average shares used in
computing basic and
diluted net earnings
per share..............
====== ====== ====== ====== ====== ======= =======
Unaudited pro forma
diluted net earnings
per share.............. $ $
====== =======
Average shares used in
computing unaudited pro
forma diluted net
earnings per share.....
====== =======
</TABLE>

<TABLE>
<CAPTION>
October 31,
---------------------------------- April 30,
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ---------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Working capital................... $1,331 $1,388 $1,449 $1,408 $1,476 $1,642
Total assets...................... 3,925 4,454 4,720 5,006 4,987 5,021
Stockholder's net investment...... 2,666 2,829 2,998 3,110 3,022 3,162
</TABLE>

25
<PAGE>

UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

The unaudited pro forma condensed financial statements set forth below
consist of an unaudited pro forma condensed balance sheet as of April 30, 1999
and an unaudited pro forma condensed statement of earnings for the year ended
October 31, 1998 and the six months ended April 30, 1999. The unaudited pro
forma condensed balance sheet has been prepared assuming that Hewlett-Packard
provided our planned initial funding and that the pending purchase of Yokogawa
Electric Corporation's 25% interest in Hewlett-Packard Japan was completed on
April 30, 1999. See Note 15 to our historical consolidated financial
statements included elsewhere in this prospectus. The "Pro Forma As Adjusted"
amounts also assume that the proceeds from the offering had been received and
the related dividend to Hewlett-Packard had been paid on April 30, 1999.

The unaudited pro forma condensed statement of earnings has been prepared
assuming that the pending purchase of Yokogawa's 25% interest and the offering
occurred on November 1, 1997. The unaudited pro forma condensed balance sheet
is not intended to represent what our financial position would actually have
been had these events occurred on April 30, 1999 or to project our financial
position for any future date. Similarly, the unaudited pro forma condensed
statement of earnings is not intended to represent what our operating results
would actually have been for the periods indicated or to project our operating
results for any future period. We do not expect that the incremental costs
related to our transitional services agreements with Hewlett-Packard will be
material to our consolidated financial statements. Other changes to our cost
structure resulting from our separation from Hewlett-Packard are not
determinable. The pro forma adjustments are based upon currently available
information and certain assumptions that management believes are reasonable.
These unaudited pro forma condensed financial statements should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and the
notes thereto included elsewhere in this prospectus.

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
April 30, 1999
-------------------------------------------------------------------
Adjustments Adjustments
for Initial Adjustments for the Pro Forma
Actual Funding for Purchase Pro Forma Offering As Adjusted
------ ----------- ------------ --------- ----------- -----------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents........... $ -- $ 913 (A) $ -- $ 913 $ (D) $ 913
(D)
Accounts receivable.... 1,211 (791)(A) -- 420 -- 420
Inventory.............. 1,466 -- -- 1,466 -- 1,466
Other current assets... 455 (27)(A) -- 428 -- 428
------ ------- ---- ------ --- ------
Total current assets... 3,132 95 -- 3,227 -- 3,227
Property, plant and
equipment, net......... 1,435 -- 53 (C) 1,488 -- 1,488
Other assets............ 454 -- 181 (C) 635 -- 635
------ ------- ---- ------ --- ------
Total assets........... $5,021 $ 95 $234 $5,350 $-- $5,350
====== ======= ==== ====== === ======
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable....... $ 403 $(301)(A) $ -- $ 102 $-- $ 102
Employee compensation
and benefits.......... 556 (147)(A) -- 409 -- 409
Deferred revenue....... 231 -- -- 231 -- 231
Other accrued
liabilities........... 300 (47)(A) -- 253 -- 253
------ ------- ---- ------ --- ------
Total current
liabilities........... 1,490 (495) -- 995 -- 995
Other liabilities....... 369 14 (A) (20)(C) 363 -- 363
Stockholders' equity:
Preferred stock........ -- -- -- -- -- --
Common stock........... -- -- (B) -- -- (D)
Additional paid-in
capital............... -- 576 (A) 254 (C) 3,992 (D)
3,162 (B) (D)
Stockholder's net
investment............ 3,162 (3,162)(B) -- -- -- --
------ ------- ---- ------ --- ------
Total stockholders'
equity................ 3,162 576 254 3,992 -- 3,992
------ ------- ---- ------ --- ------
Total liabilities and
stockholders' equity.. $5,021 $ 95 $234 $5,350 $-- $5,350
====== ======= ==== ====== === ======
</TABLE>

26
<PAGE>

UNAUDITED PRO FORMA CONDENSED STATEMENT OF EARNINGS

<TABLE>
<CAPTION>
Six Months Ended April 30,
Year Ended October 31, 1998 1999
------------------------------ -----------------------------
Adjustments Adjustments
for for
Actual Purchase Pro Forma Actual Purchase Pro Forma
------ ----------- --------- ------ ----------- ---------
(in millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Net revenue:
Products............... $6,794 $ -- $6,794 $3,185 $ -- $3,185
Services............... 1,158 -- 1,158 611 -- 611
------ ---- ------ ------ ---- ------
Total net revenue...... 7,952 -- 7,952 3,796 -- 3,796
------ ---- ------ ------ ---- ------
Costs and expenses:
Cost of products....... 3,807 -- 3,807 1,623 -- 1,623
Cost of services....... 705 -- 705 370 -- 370
Research and
development........... 948 -- 948 463 -- 463
Selling, general and
administrative........ 2,050 18 (E) 2,068 999 9 (E) 1,008
------ ---- ------ ------ ---- ------
Total costs and
expenses.............. 7,510 18 7,528 3,455 9 3,464
------ ---- ------ ------ ---- ------
Earnings from
operations............. 442 (18) 424 341 (9) 332
Other income (expense),
net.................... (46) 14 (F) (32) 15 1 (F) 16
------ ---- ------ ------ ---- ------
Earnings before taxes... 396 (4) 392 356 (8) 348
Provision for taxes..... 139 -- 139 125 -- 125
------ ---- ------ ------ ---- ------
Net earnings............ $ 257 $ (4) $ 253 $ 231 $ (8) $ 223
====== ==== ====== ====== ==== ======
Net earnings per share:
Basic.................. $ $ (G) $ $ (G)
====== ====== ====== ======
Diluted................ $ $ (G) $ $ (G)
====== ====== ====== ======
Average shares used in
computing net earnings
per share:
Basic.................. (G) (G)
====== ====== ====== ======
Diluted................ (G) (G)
====== ====== ====== ======
</TABLE>

27
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

(A) Reflects our initial funding from Hewlett-Packard that will occur on or
about November 1, 1999. If the initial funding had occurred on April 30,
1999, we would have received $913 million from Hewlett-Packard. Hewlett-
Packard will retain some of our assets and liabilities, and will transfer
to us some of the assets and liabilities related to its business. The
actual amount received from Hewlett-Packard will differ based on Hewlett-
Packard's and our assets and liabilities as of October 31, 1999.

(B) Reflects the incorporation of Agilent Technologies in May 1999, the
issuance of 10 million shares of $.01 par value common stock and the
transfer of Hewlett-Packard's net investment in Agilent Technologies to
additional paid-in capital.

(C) Reflects our pending purchase of Yokogawa's 25% interest in Hewlett-
Packard Japan, which will be funded by Hewlett-Packard. For purposes of
this pro forma presentation, management has allocated $254 million of the
Hewlett-Packard Japan purchase price to our business and we have allocated
this amount as follows: minority interest--$20 million, land--$53 million
and goodwill--$181 million. This preliminary allocation will be refined
upon the completion of an independent valuation.

(D) Reflects the net proceeds from the offering and the subsequent payment of
the dividend to Hewlett-Packard, assuming no exercise of the U.S.
underwriters' over-allotment option.

(E) Reflects amortization of the goodwill created from the pending purchase of
Yokogawa's 25% interest in Hewlett-Packard Japan over 10 years.

(F) Reflects the elimination of Yokogawa's share of earnings in Hewlett-
Packard Japan.

(G) Basic pro forma net earnings per share is calculated based on common stock
outstanding of shares upon completion of the offering. Diluted pro
forma net earnings per share assumes that % of the outstanding Hewlett-
Packard options held by Agilent Technologies' employees are assumed by
Agilent Technologies. The actual number of Hewlett-Packard options assumed
by Agilent Technologies will not be determined until individual employees
make an election to amend their Hewlett-Packard options in January 2000.
See "Arrangements Between Agilent Technologies and Hewlett-Packard--
Employee Matters Agreement." Unaudited pro forma diluted net earnings per
share would be $ if % of the outstanding Hewlett-Packard options are
assumed and $ if % of the outstanding Hewlett-Packard options are
assumed.

28
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
prospectus. The following discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially
from the results contemplated by these forward-looking statements due to
certain factors, including those discussed below and elsewhere in this
prospectus.

Overview

Separation from Hewlett-Packard

On March 2, 1999, Hewlett-Packard announced a plan to create a separate
company, subsequently named Agilent Technologies, that comprises Hewlett-
Packard's test and measurement, semiconductor products, healthcare solutions
and chemical analysis businesses, related portions of Hewlett-Packard
Laboratories, and associated infrastructure. After the completion of this
offering, Hewlett-Packard will own approximately % of our outstanding common
stock, assuming no exercise of the U.S. underwriters' over-allotment option.
Hewlett-Packard has also announced its intention to distribute to its
stockholders all of its remaining interest in us by the middle of calendar
year 2000. Hewlett-Packard and we have entered into various agreements related
to certain interim and ongoing relationships between the two companies. For a
description of these agreements, see "Arrangements Between Hewlett-Packard and
Agilent Technologies."

Agilent Technologies' Businesses

We were incorporated in Delaware in May 1999 as a wholly owned subsidiary
of Hewlett-Packard. Our businesses historically have been operated as internal
units of Hewlett-Packard. Hewlett-Packard has agreed to transfer to us prior
to the completion of this offering, substantially all of the assets and
liabilities relating to our businesses. We expect that the transfer of these
assets and liabilities will be substantially complete by the closing date of
this offering. In connection with our initial funding, Hewlett-Packard will
retain a portion of our assets and will transfer to us some of the assets and
liabilities related to its businesses. For a description of these retained
amounts, see "Unaudited Pro Forma Condensed Financial Statements."

We have entered into agreements with Hewlett-Packard under which Hewlett-
Packard will provide services to us during a transition period after the
separation. The agreements relate primarily to building services, information
technology services and accounting and finance services. Under these
agreements, we will reimburse Hewlett-Packard for its cost of the service plus
5%. The transition period varies depending on the agreement but is generally
less than two years. Some of the agreements, including those for building
services and information technology services, may be extended beyond the
initial transition period. If these agreements are extended, we would
reimburse Hewlett-Packard at its cost plus 10% for information technology
services and most other services and at negotiated market rates for building
services. The agreements do not necessarily reflect the costs of obtaining the
services from unrelated third parties or of our providing the applicable
services ourselves. However, we believe that purchasing these services from
Hewlett-Packard provides us with an efficient means of obtaining these
services during the transition period. In addition, we will provide some
transition services to Hewlett-Packard, for which we will be reimbursed at our
cost plus 5%.

We must also negotiate new agreements with various third parties as a
separate, stand-alone entity. There can be no assurance that the terms we will
be able to negotiate for these agreements will be as favorable as those we
enjoyed as part of Hewlett-Packard. In addition, as part of Hewlett-Packard,
we benefited from various economies of scale including shared global
administrative functions, facilities and volume purchase discounts. We expect
that our costs and expenses will increase as a result of the loss of these
economies of scale, although the amount is not determinable at this time.

29
<PAGE>

Hewlett-Packard has been and is expected to continue to be a significant
customer. In recent periods, sales to Hewlett-Packard represented
approximately 9% of our net revenue and approximately 35% of the net revenue
of our semiconductor products business.

Basis of Presentation

Our fiscal year end is October 31 and our fiscal quarters end on January
31, April 30 and July 31. Unless otherwise stated, all years and dates refer
to our fiscal year and fiscal periods.

Our consolidated financial statements have been carved out from the
consolidated financial statements of Hewlett-Packard using the historical
results of operations and historical bases of the assets and liabilities of
the Hewlett-Packard businesses that our company comprises. The consolidated
financial statements also include allocations to us of certain Hewlett-Packard
corporate assets, including pension assets; liabilities, including profit
sharing, pension and non-qualified deferred compensation obligations; and
expenses, including centralized research and development, legal, accounting,
employee benefits, real estate, insurance services, information technology
services, treasury and other Hewlett-Packard corporate and infrastructure
costs. The expense allocations have been determined on bases that Hewlett-
Packard and we considered to be a reasonable reflection of the utilization of
the services provided to us or the benefit received by us. The expense
allocation methods included relative sales, headcount, square footage,
transaction processing costs, adjusted operating expenses and others.

The financial information presented in this prospectus is not indicative of
our financial position, results of operations or cash flows in the future nor
is it necessarily indicative of what our financial position, results of
operations or cash flows would have been had we been an independent, stand-
alone entity for the periods presented. The financial information presented in
this prospectus does not reflect the many significant changes that will occur
in our funding and operations as a result of our becoming a stand-alone
entity, the offering and the distribution.

1998 Restructuring

During 1998, we committed to transfer the production of eight-inch
semiconductor wafers to a third party contractor. We also undertook employee
reductions through voluntary severance programs related to this transfer as
well as actions related to other businesses. Approximately 1,650 employees
accepted the voluntary severance incentive packages by the October 31, 1998
deadline. We recorded pre-tax charges of approximately $163 million related to
these restructuring actions. Of this amount, $138 million was included in cost
of products, $7 million was included in research and development expense and
$18 million was included in selling, general and administrative expense in the
1998 consolidated statement of earnings. The restructuring costs included
approximately $78 million related to employee severance under the voluntary
severance incentive plans and $85 million related to non-cash asset
impairments, primarily machinery and equipment, resulting from the
restructuring actions. In the six months ended April 30, 1999, approximately
$65 million of employee severance costs were paid. The remaining severance
costs of $13 million are expected to be paid by October 31, 1999. We expect
future benefits from the restructuring to be reflected primarily in cost of
products and to a lesser extent in operating expenses.

Cyclical Business

Many of the industries and markets into which we sell our products and
services are cyclical, causing a corresponding impact on our financial
results. Shifts in the semiconductor market, electronics industry and computer
industry, as well as rapidly shifting global economic conditions, have had
significant impacts on our business. Additionally, as a capital equipment
provider, our revenue is driven by the capital expenditure budgets and
spending patterns of our customers who often delay or accelerate purchases in
reaction to variations in their business. We expect our business to remain
cyclical when we operate as a separate, stand-alone entity. Given that a high
proportion of our costs are fixed, variability in revenue as a result of these
business cycles could disproportionately affect our quarterly and annual
results.

30
<PAGE>

Economic Conditions in Asia

Beginning in the second half of 1998 and continuing into the first half of
1999, our revenue and operating results declined as a result of the downturn
in Asian economies, particularly Korea and Japan. Many of our major customers,
particularly those in the semiconductor and electronics industries, delayed or
canceled purchases of our products. This had a significant impact on us,
particularly our test and measurement business.

Impact of Foreign Currencies

We sell our products in many countries and a substantial portion of our
sales and a portion of our costs and expenses are denominated in foreign
currencies, especially in the Japanese yen and the German mark. In 1997
compared to 1996 and in 1998 compared to 1997, the U.S. dollar strengthened
significantly against the Japanese yen and the German mark. This had an
adverse affect on our net revenue growth and a favorable impact on our
operating expense growth in these periods. In the first half of 1999 compared
to the first half of 1998, the U.S. dollar weakened against these currencies,
which had a favorable impact on our net revenue growth and an adverse effect
on our operating expense growth. Our currency exposures historically have been
hedged as part of Hewlett-Packard's global hedging program, which is designed
to minimize exposure to foreign currency fluctuations. We expect to implement
a similar hedging program upon our separation from Hewlett-Packard.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments and
requires recognition of all derivatives as assets or liabilities in our
balance sheet and measurement of those instruments at fair value. The
statement is effective for fiscal years beginning after June 15, 2000. We will
adopt the standard no later than the first quarter of fiscal year 2001 and we
are in the process of determining the impact that adoption will have on our
consolidated financial statements.

31
<PAGE>

Results of Operations

Six Months ended April 30, 1998 and 1999

Our results of operations for the six months ended April 30, 1998 and 1999
in dollars and as a percentage of total net revenue follow.

<TABLE>
<CAPTION>
Six Months Ended April 30,
-------------------------------------
As a
Percentage of
Total Net
Dollars Revenue
---------------------- --------------
1998 1999 1998 1999
---------- ---------- ------ ------
(dollars in millions)
<S> <C> <C> <C> <C>
Net revenue:
Products.............................. $ 3,532 $ 3,185 86.4% 83.9%
Services.............................. 558 611 13.6 16.1
---------- ---------- ------ ------
Total net revenue.................... 4,090 3,796 100.0 100.0
---------- ---------- ------ ------
Costs and expenses:
Cost of products...................... 1,829 1,623 44.7 42.8
Cost of services...................... 353 370 8.6 9.7
Research and development.............. 469 463 11.5 12.2
Selling, general and administrative... 1,036 999 25.3 26.3
---------- ---------- ------ ------
Total costs and expenses............. 3,687 3,455 90.1 91.0
---------- ---------- ------ ------
Earnings from operations............... 403 341 9.9 9.0
Other income (expense), net............ (13) 15 (.4) .4
---------- ---------- ------ ------
Earnings before taxes.................. 390 356 9.5 9.4
Provision for taxes.................... 136 125 3.3 3.3
---------- ---------- ------ ------
Net earnings........................... $ 254 $ 231 6.2% 6.1%
========== ========== ====== ======
Cost of products as a percentage of
products revenue...................... 51.8% 51.0%
Cost of services as a percentage of
services revenue...................... 63.3 60.6
</TABLE>

Net revenue

Net revenue consists of revenue from sales of products and services net of
trade discounts and allowances and includes revenue from sales to Hewlett-
Packard. We recognize revenue from product sales at the time we ship the
product to the customer or on installation and customer acceptance, if the
acceptance criteria are substantive. Services include hardware and software
support and maintenance, rentals, consulting and education. We recognize
revenue from services over the contractual period or as services are rendered
and accepted by the customer.

Our total net revenue decreased 7.2% in the first half of 1999 compared to
the first half of 1998. In the first half of 1999, net revenue from products
decreased 9.8%, while net revenue from services increased 9.5% compared to the
first half of 1998. In 1999, United States revenue decreased 8.7% to $1.7
billion while international revenue decreased 6.0% to $2.1 billion.
International revenue was negatively affected by the ongoing weakness in
economic conditions throughout Asia, particularly in Korea and Japan, and
particularly in the first quarter of 1999. Many of our United States customers
were also negatively affected by conditions in Asia. General weakness in the
semiconductor industry also negatively affected our revenue. These effects
were particularly significant in our test and measurement business. Net
revenue in the second quarter of 1999 increased 12.5% over the first quarter
of 1999, reflecting improvement in economic conditions in Asia.

Earnings from operations

Earnings from operations decreased 15.4% in the first half of 1999 compared
to the first half of 1998. First quarter earnings from operations decreased
62.0% while second quarter earnings from operations increased

32
<PAGE>

75.2% compared to the same periods in the prior year. The decrease in earnings
from operations in the first half of 1999 was substantially a result of lower
net revenue. The impact of the lower net revenue was partially offset by a
reduction of costs and expenses resulting from the 1998 restructuring,
particularly in the second quarter of 1999.

Cost of products and services consists of costs of manufacturing products
and providing services. These include materials, costs of third party contract
manufacturers, salaries and related expenses for manufacturing and service
personnel, distribution costs, warranty costs, depreciation of manufacturing
equipment and overhead allocations for facilities expenses and information
technology services.

Cost of products and services as a percentage of net revenue decreased .8
percentage points in the first half of 1999 from the first half of 1998. Costs
of semiconductor products decreased significantly as a percentage of net
revenue due primarily to cost improvements resulting from the 1998
restructuring. This improvement was substantially offset by increased costs as
a percentage of net revenue in all other businesses.

Operating expenses include research and development and selling, general
and administrative expenses. Research and development expenses include
salaries and related expenses of engineers and related engineering support
personnel, initial tooling, project materials, depreciation on equipment used
in research and development and an allocation of facilities expenses and
information technology services. Selling, general and administrative expenses
include salaries and related expenses for sales, account management,
marketing, administrative, finance, legal, human resources and executive
personnel, commissions, costs and expenses for marketing programs and trade
shows, fees for professional services, costs of accounting and internal
control systems, costs of patents, goodwill amortization and allocations for
facilities expenses and information technology services.

Although operating expenses decreased in the first half of 1999, operating
expenses as a percentage of net revenue increased by 1.7 percentage points in
the first half of 1999 compared to the first half of 1998 as a result of lower
net revenue. Research and development expenses were essentially unchanged in
the first half of 1999 compared to the same period of 1998. In the first half
of 1999, selling, general and administrative expenses decreased 3.6% compared
to the first half of 1998. The 1998 restructuring contributed to this
decrease.

We expect to benefit from lower operating expenses in future periods as a
result of the 1998 restructuring. However, the positive impact of the 1998
restructuring may be offset by increases in operating expenses resulting from
our operating as a separate, stand-alone entity.

Our effective tax rate, calculated on a separate return basis, for the
first half of 1999 was 35.0%. The rate is based on estimates of our earnings
before taxes in the various tax jurisdictions in which we operate throughout
the world. While changes in our mix of earnings before taxes in these tax
jurisdictions can cause our effective tax rate to fluctuate, we currently
expect our effective tax rate to remain at approximately 35% for the remainder
of 1999 and in 2000. From separation through the distribution, our tax
liability will be determined in accordance with our tax sharing agreement with
Hewlett-Packard.

Test and Measurement

<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
1998 1999
---------- ----------
(dollars in millions)
<S> <C> <C>
Net revenue.......................................... $ 2,149 $ 1,853
Earnings from operations............................. 278 149
As a percentage of net revenue...................... 12.9% 8.0%
</TABLE>

Net revenue

Net revenue from our test and measurement business decreased 13.8% in the
first half of 1999 compared to the first half of 1998 primarily due to the
impact of economic conditions in Asia and the broad

33
<PAGE>

downturn in the semiconductor industry on our customers. Revenue from sales of
products to our customers in Asia decreased to approximately 29% of our test
and measurement business' net revenue in the first half of 1999 from
approximately 33% of net revenue in the first half of 1998. These decreases
were partially offset by increased sales of communications test products as a
result of the rapidly growing demand for greater bandwidth and new services.

Earnings from operations

Earnings from operations from our test and measurement business decreased
46.4% in the first half of 1999 from the first half of 1998 as a result of
lower net revenue partially offset by lower costs and expenses.

Cost of products and services as a percentage of net revenue increased 1.3
percentage points in the first half of 1999 compared to the first half of
1998. The increase was attributable to lower volumes of products sold,
primarily wireless communication test equipment and automated test equipment,
and to higher support and services revenue and the associated higher cost of
this revenue. This increase was partially offset by cost savings resulting
from the 1998 restructuring.

Operating expenses as a percentage of net revenue increased 3.6 percentage
points in the first half of 1999 compared to the first half of 1998 as a
result of lower net revenue despite lower levels of expenses. Continued
savings from cost reduction programs initiated in the second half of 1998
resulted in significant decreases in some components of both research and
development and selling, general and administrative expenses. Research and
development expenses decreased 5.4% in the first half of 1999 from the first
half of 1998. Selling, general and administrative expenses decreased 7.2% in
the first half of 1999 compared to the first half of 1998.

Semiconductor Products

<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
1998 1999
---------- ----------
(dollars in millions)
<S> <C> <C>
Net revenue.......................................... $ 795 $ 773
Earnings from operations............................. 20 64
As a percentage of net revenue...................... 2.5% 8.3%
</TABLE>

Net revenue

Net revenue from our semiconductor products business decreased 2.8% in the
first half of 1999 compared to the first half of 1998, due to the sale of its
power amplifier business. If net revenue in the first half of 1998 were
adjusted to exclude revenue of the power amplifier business, net revenue would
have increased by 2.4% over the comparable prior period. Net revenue from
ASICs, fiber optic products, motion control products and high-speed networking
products grew. Sales to Hewlett-Packard accounted for 35.4% of net revenue
from the semiconductor products business in the first half of 1998 and 36.9%
of net revenue in the first half of 1999.

We expect sales of PA-RISC microprocessors to Hewlett-Packard to be reduced
from estimated revenue of $65 million in fiscal 1999 to estimated revenue of
less than $10 million in 2000 as Hewlett-Packard sources these products from
an alternate supplier. We currently do not expect to incur any incremental
costs related to winding down the microprocessor business. Although we expect
that the loss of revenue associated with the microprocessor business will have
a negative impact on our net revenue growth rates in the short term, we
believe this negative impact will not have a material effect on our
consolidated results of operations.

We have entered into a memorandum of understanding to expand our existing
joint venture relationship with Royal Philips Electronics, N.V. If this
transaction is completed, we expect to move a portion of our light-emitting
diode (LED) business into the joint venture. Since we will have less than a
majority ownership in the joint venture, our related LED business revenue will
no longer be consolidated in our results. Instead, we will record our
proportion of the joint venture's net earnings in other income.

34
<PAGE>

Earnings from operations

Earnings from operations from our semiconductor products business increased
220.0% in the first half of 1999 from the first half of 1998 despite lower net
revenue primarily due to the cost savings resulting from the 1998
restructuring.

As a percentage of net revenue, cost of products decreased 6.1 percentage
points in the 1999 period compared to the 1998 period. A substantial portion
of this improvement was the result of the 1998 restructuring. Decreases in
cost of products also resulted from a more profitable product mix,
specifically higher volumes of fiber optic communications products, motion
control devices and microprocessors.

Operating expenses as a percentage of net revenue were essentially
unchanged in the first half of 1999 compared to the first half of 1998.
Research and development expenses increased 3.2% in the first half of 1999
from the first half of 1998 reflecting increased investments in the fast
growing fiber optics and high-speed networking businesses. Lower marketing
expenses largely accounted for the 6.5% decrease in selling, general and
administrative expense.

Healthcare Solutions

<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
1998 1999
---------- ----------
(dollars in millions)
<S> <C> <C>
Net revenue.......................................... $ 676 $ 671
Earnings from operations............................. 56 45
As a percentage of net revenue...................... 8.3% 6.7%
</TABLE>

Net revenue

Net revenue from our healthcare solutions business was essentially
unchanged in the first half of 1999 from the comparable period in 1998. In the
first half of 1999, higher net revenue from cardiology products was offset by
lower net revenue from ultrasound imaging and patient monitoring products. The
lower revenue in these product lines was caused by internal production
constraints resulting from our transition to a new enterprise resource
planning system in November 1998 at our Andover, Massachusetts facility. The
implementation of the new enterprise resource planning system is now complete,
and we do not anticipate further problems.

Earnings from operations

Earnings from operations from our healthcare solutions business decreased
19.6% in the first half of 1999 compared to the first half of 1998
substantially as a result of higher expenses, primarily attributable to our
acquisition of Heartstream, Inc. in 1998. Research and development expense
increased 6.5% largely as a result of our efforts to develop new automatic
external defibrillator products. Selling, general and administrative expense
increased by 3.1% due to amortization of goodwill associated with the
Heartstream acquisition.

Chemical Analysis

<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
1998 1999
---------- ----------
(dollars in millions)
<S> <C> <C>
Net revenue.......................................... $ 470 $ 499
Earnings from operations............................. 46 64
As a percentage of net revenue...................... 9.8% 12.8%
</TABLE>

Net revenue

Net revenue from our chemical analysis business increased 6.2% in the first
half of 1999 over the first half of 1998. This growth was generated primarily
by pricing promotions across all product lines and a 13.5%

35
<PAGE>

increase in services revenue. In addition, strong demand in the pharmaceutical
industry led to increased sales of our liquid chromatography products.

Earnings from operations

Earnings from operations from our chemical analysis business increased
39.1% in the first half of 1999 compared to the first half of 1998 largely due
to higher net revenue, partially offset by small increases in costs and
expenses.

Cost of products and services as a percentage of net revenue decreased 2.4
percentage points in the first half of 1999 compared to the first half of
1998. The improvements were due to productivity improvements within the
services business and higher volumes and greater manufacturing efficiencies in
our mass spectrometer and liquid chromatography product lines. In addition,
warranty costs were lower in the first half of 1999 than in the first half of
1998.

Operating expenses as a percentage of net revenue decreased .6 percentage
points in the first half of 1999 compared to the first half of 1998 primarily
as a result of higher net revenue. Research and development expense increased
10.8% in the first half of 1999 from the first half of 1998 because of
increased investments in our microfluidics program. Microfluidics is the
manipulation of minute quantities of fluids for research purposes. Selling,
general and administrative expense was essentially the same in both periods.

Years ended October 31, 1996, 1997 and 1998

Our results of operations for the years ended October 31, 1996, 1997 and
1998 in dollars and as a percentage of total net revenue follow.

<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------------------------
As a Percentage
of
Dollars Total Net Revenue
---------------------- -------------------
1996 1997 1998 1996 1997 1998
------ ------ ------ ----- ----- -----
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Net revenue:
Products........................ $6,440 $6,754 $6,794 87.3% 86.8% 85.4%
Services........................ 939 1,031 1,158 12.7 13.2 14.6
------ ------ ------ ----- ----- -----
Total net revenue.............. 7,379 7,785 7,952 100.0 100.0 100.0
------ ------ ------ ----- ----- -----
Costs and expenses:
Cost of products................ 3,327 3,455 3,807 45.1 44.4 47.9
Cost of services................ 574 671 705 7.8 8.6 8.8
Research and development........ 805 880 948 10.9 11.3 11.9
Selling, general and
administrative................. 1,798 1,909 2,050 24.3 24.5 25.8
------ ------ ------ ----- ----- -----
Total costs and expenses....... 6,504 6,915 7,510 88.1 88.8 94.4
------ ------ ------ ----- ----- -----
Earnings from operations......... 875 870 442 11.9 11.2 5.6
Other income (expense), net...... (21) (47) (46) (.4) (.6) (.6)
------ ------ ------ ----- ----- -----
Earnings before taxes............ 854 823 396 11.5 10.6 5.0
Provision for taxes.............. 312 280 139 4.2 3.6 1.8
------ ------ ------ ----- ----- -----
Net earnings..................... $ 542 $ 543 $ 257 7.3% 7.0% 3.2%
====== ====== ====== ===== ===== =====

Cost of products as a percentage
of products revenue............. 51.7% 51.2% 56.0%
Cost of services as a percentage
of services revenue............. 61.1 65.1 60.9
</TABLE>

36
<PAGE>

Net revenue

Our total net revenue increased 5.5% in 1997 from 1996 and 2.1% in 1998
from 1997. The increase in 1997 from 1996 was driven primarily by our test and
measurement business, which contributed over half of our total net revenue.
The increase in 1998 from 1997 reflects improvements from our other three
businesses, substantially offset by decreased revenue in our test and
measurement business. United States revenue increased 2.1% to $3.4 billion in
1997 and increased 6.6% in 1998 to $3.6 billion. International revenue
increased 8.3% to $4.4 billion in 1997 and decreased 1.3% to $4.3 billion in
1998. Economic conditions in Asia adversely affected revenue from sales of our
products and services to customers in Japan and Korea, particularly in the
last three quarters of 1998, and also reduced revenue from other parts of the
world. Our product revenue was also affected by the global weakness in the
semiconductor industry. Product revenue increased 4.9% in 1997 from 1996 and
was essentially unchanged in 1998 from 1997. Revenue from services grew 9.8%
in 1997 from 1996 and 12.3% in 1998 from 1997 as a result of increases in our
installed base, primarily in test and measurement.

Earnings from operations

Earnings from operations was essentially unchanged in 1997 from 1996 and
decreased 49.2% in 1998 from 1997. Slightly higher net revenue in 1998 as
compared to 1997 was offset by significantly higher costs and expenses,
including the charges related to the 1998 restructuring.

As a percentage of net revenue, cost of products and services was
essentially unchanged in 1997 from 1996 and increased 3.7 percentage points in
1998 from 1997. The increase in 1998 was a result of lower volumes and less
profitable product mix in the test and measurement business and costs
associated with the 1998 restructuring.

Operating expenses as a percentage of net revenue increased .6 percentage
points in 1997 from 1996 and 1.9 percentage points in 1998 from 1997. The
increase in 1997 and 1998 reflects higher expenses offset by higher net
revenue.

Research and development expenses increased 9.3% in 1997 compared to 1996
and 7.7% in 1998 compared to 1997. The increases in 1997 and 1998 reflect
ongoing investments in new products and new technologies, primarily in test
and measurement and semiconductor products. Selling, general and
administrative expenses grew 6.2% in 1997 and 7.4% in 1998. The 1998 increase
reflects the acquisition of Heartstream. For both years, the expense growth
reflects increased selling costs related to revenue growth and increased
marketing program costs associated with our continued introduction of new
products and the expansion of our support capabilities. The growth rate in
operating expenses, exclusive of the 1998 restructuring costs, decreased
significantly in the second half of 1998 due to our cost reduction programs
that reduced certain variable costs such as travel and discretionary marketing
programs.

Our effective tax rate was 36.5% in 1996, 34.0% in 1997 and 35.0% in 1998.
The primary reason for the fluctuation in our tax rate is the change in the
mix of our earnings in various tax jurisdictions throughout the world.

Test and Measurement

<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------
1996 1997 1998
------- ------- -------
(dollars in millions)
<S> <C> <C> <C>
Net revenue....................................... $ 3,823 $ 4,203 $ 4,100
Earnings from operations.......................... 606 674 348
As a percentage of net revenue................... 15.9% 16.0% 8.5%
</TABLE>

Net revenue

Net revenue from our test and measurement business grew 9.9% in 1997 from
1996 and declined 2.5% in 1998 from 1997. The increase in 1997 from 1996
primarily reflected significant growth in sales to global wireless

37
<PAGE>

communications customers. Additional revenue growth resulted from investments
in increased capacity and capability by contract manufacturers, which resulted
in increased sales of our automated semiconductor test and automated
manufacturing test products. Sales of our communications test systems and
instruments also increased.

Results in 1998 reflected weak economic conditions in Asia, which
represented approximately 31% of test and measurement's total net revenue in
1998 compared to approximately 36% in 1997 and approximately 36% in 1996. A
slowdown in the semiconductor industry in mid-1998, which was partially caused
by the economic conditions in Asia, also reduced our revenue growth.
Competitive pressure increased because of these conditions and in some cases,
we granted higher than normal pricing discounts and allowances. These revenue
trends were partially offset by increased sales of products for development
and deployment of higher bandwidth and optical networks. In addition, services
revenue increased 18.6% in 1998 from 1997.

Earnings from operations

Earnings from operations from our test and measurement business increased
11.2% in 1997 from 1996 and decreased 48.4% in 1998 from 1997. The increase in
1997 from 1996 primarily reflects higher net revenue. The decrease in 1998
from 1997 reflects a combination of lower net revenue and higher costs and
expenses, including the costs of the 1998 restructuring.

Cost of products and services as a percentage of net revenue decreased .6
percentage points in 1997 from 1996. Most of this improvement was caused by
higher volumes in 1997, primarily in communications products and electronic
instruments. Cost of products and services as a percentage of net revenue
increased 3.3 percentage points from 1997 to 1998. The increase was
substantially attributable to lower volumes and less profitable product mix,
primarily in wireless communications products and automated test equipment.
Cost of products in 1998 included restructuring charges for employee severance
and other non-recurring charges, accounting for .7 percentage points of the
increase. Higher excess inventory write-offs across all product lines, as a
result of the weak economic conditions in Asia and the timing of new product
introductions, also contributed to the higher cost ratio in 1998.

Operating expenses as a percentage of net revenue increased .4 percentage
points in 1997 from 1996 and 4.3 percentage points in 1998 from 1997. The
increase in 1997 from 1996 was due to higher expenses only partially offset by
higher net revenue. The increase in 1998 from 1997 was due to a combination of
lower net revenue and higher expenses.

Research and development expense increased 15.2% in 1997 from 1996 and
10.0% in 1998 from 1997. The expense growth in 1997 from 1996 resulted from
the accelerated development of products for the wireless communications
market. The increase in 1998 from 1997 reflects our ongoing investment in new
products. Selling, general and administrative expense increased 9.3% in 1997
from 1996 and 7.4% in 1998 from 1997. The increase in 1997 from 1996 was
driven by marketing investments in the wireless communications market, as well
as new marketing efforts focused on Internet service providers. In 1998, our
cost reduction programs slowed overall expense growth and significantly
decreased some variable operating costs. However, this was partially offset by
1998 restructuring charges for employee severance costs.

Semiconductor Products

<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------
1996 1997 1998
------- ------- -------
(dollars in millions)
<S> <C> <C> <C>
Net revenue...................................... $ 1,470 $ 1,479 $ 1,574
Earnings (loss) from operations.................. 125 57 (106)
As a percentage of net revenue.................. 8.5% 3.9% (6.7)%
</TABLE>

38
<PAGE>

Net revenue

Net revenue from our semiconductor products business was essentially
unchanged in 1997 from 1996 and increased 6.4% in 1998 from 1997. Our sales of
ASICs and microprocessors in 1997 were lower as compared to 1996 because
Hewlett-Packard shipped fewer workstations using these components in the first
half of 1997. This decrease was offset by strong revenue growth in the fiber
optics and high-speed networking areas. The strong revenue growth in these two
areas continued into 1998. In addition, revenue in 1998 from sales of
integrated circuits increased significantly over 1997. In the second half of
1998, revenue growth slowed due to customer anticipation of the divestiture of
the power amplifier business and the decline in the wireless communications
semiconductor business in Asia. Revenue from sales to Hewlett-Packard was
32.8% of net revenue in 1996, 34.2% of net revenue in 1997 and 34.5% of net
revenue in 1998.

Earnings from operations

Earnings from operations from our semiconductor products business decreased
54.4% in 1997 from 1996 and 286.0% in 1998 from 1997. The decrease in 1997
from 1996 reflects significant growth in operating expenses while net revenue
remained essentially unchanged. The decrease in 1998 from 1997 occurred
despite growth in net revenue and was primarily a result of costs incurred for
the 1998 restructuring.

Cost of products as a percentage of net revenue increased 2.2 percentage
points in 1997 from 1996 and 9.7 percentage points in 1998 from 1997. The
increase in 1997 from 1996 was the result of lower volumes of ASIC sales to
Hewlett-Packard as well as write-offs of obsolete semiconductor inventory
related to wireless communications devices. Costs in 1998 include $116 million
of restructuring charges. Without these charges, cost of products as a
percentage of net revenue would have increased primarily as a result of lower
ASIC volumes in the second half of 1998.

Operating expenses as a percentage of net revenue increased 2.3 percentage
points in 1997 from 1996 and 1.0 percentage point in 1998 from 1997. The
increase in 1997 from 1996 was due primarily to higher expenses. The increase
in 1998 from 1997 was due to higher expenses, including amounts related to the
1998 restructuring, partially offset by the growth in net revenue.

Research and development expense increased 19.1% in 1997 from 1996 and
13.7% in 1998 from 1997. The increase in 1997 included increased research and
development spending on semiconductor process technologies, packaging
technologies and development tools. Research and development expense increased
in 1998 primarily as a result of our efforts to develop high-speed networking
products and advanced technology ASICs. Selling, general and administrative
expense increased 4.7% in 1997 from 1996, due primarily to higher marketing
costs, and increased 8.5% in 1998 from 1997. The increase in 1998 from 1997
reflects primarily the effect of one-time charges, including the 1998
restructuring.

We expect future research and development efforts to focus on the areas of
fiber optic and high-speed networking devices. Although we have had
significant research and development expenses related to semiconductor process
technologies in recent years, we expect to conduct future efforts through
joint venture partnering arrangements and through third-party agreements,
thereby reducing our research and development expenses in this area.

Healthcare Solutions

<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------
1996 1997 1998
------- ------- -------
(dollars in millions)
<S> <C> <C> <C>
Net revenue....................................... $ 1,244 $ 1,208 $ 1,340
Earnings from operations.......................... 106 30 62
As a percentage of net revenue................... 8.5% 2.5% 4.6%
</TABLE>

39
<PAGE>

Net revenue

Net revenue from our healthcare solutions business decreased 2.9% in 1997
compared to 1996 and increased 10.9% in 1998 from 1997. The decrease in 1997
from 1996 was primarily attributable to internal product transition issues in
the second half of 1997 that resulted in delays in shipments of patient
monitoring and ultrasound imaging products. The increase in 1998 from 1997 was
driven by strong sales of new patient monitoring systems and cardiology
ultrasound imaging products, which were introduced in the second half of 1997.
In addition, our entry into the automatic external defibrillator market
through our acquisition of Heartstream in March 1998 provided additional
revenue. The net revenue growth in 1998 from 1997 was achieved despite the
negative impact from international revenue resulting from economic weakness in
certain markets in Asia as well as lower healthcare system spending in parts
of Europe.

Earnings from operations

Earnings from operations from our healthcare solutions business decreased
71.7% in 1997 from 1996 and increased 106.7% in 1998 from 1997. The decrease
in 1997 from 1996 resulted from lower net revenue combined with higher costs
and expenses. The increase in 1998 from 1997 was primarily due to higher net
revenue, partially offset by higher costs and expenses.

Cost of products and services as a percentage of net revenue increased by
3.6 percentage points in 1997 from 1996 and decreased by .9 percentage points
in 1998 from 1997. The increase in 1997 from 1996 was driven by product
transition issues in the second half of 1997 as well as manufacturing quality
control issues in the second half of 1997. These factors resulted in delays in
shipments of ultrasound imaging and patient monitoring products, as well as a
shift in product mix to less profitable services and supplies. The decrease in
1998 from 1997 was primarily a result of higher volumes, as product transition
issues and manufacturing quality control issues encountered in 1997 were
resolved. The effect of higher volumes was partially offset by increased
spending related to the implementation of a new worldwide quality system and
the development of a new enterprise resource planning system.

Operating expenses as a percentage of net revenue increased 2.4 percentage
points in 1997 from 1996 and decreased 1.2 percentage points in 1998 from
1997. The increase in 1997 from 1996 was due to lower revenue combined with
higher expenses. The decrease in 1998 from 1997 resulted primarily from higher
revenue.

Research and development expense decreased 7.0% in 1997 from 1996 and 3.0%
in 1998 from 1997. The decrease in 1997 was attributable to lower initial
tooling costs than in 1996 and a headcount reduction related to the closure of
some product line operations. The decrease in 1998 from 1997 primarily
resulted from the lower spending levels required to complete customer
commitments after our divestiture of the healthcare information management
business. Selling, general and administrative expense increased 8.1% in 1997
from 1996 and 11.1% in 1998 from 1997. The increase in 1997 from 1996 was due
primarily to higher sales and marketing costs associated with new product
introductions in patient monitoring and ultrasound imaging. The acquisition of
Heartstream in March 1998 resulted in increased headcount in the sales
organization and higher goodwill amortization.

Chemical Analysis

<TABLE>
<CAPTION>
Years Ended October 31,
-------------------------
1996 1997 1998
------- ------- -------
(dollars in millions)
<S> <C> <C> <C>
Net revenue....................................... $ 842 $ 895 $ 938
Earnings from operations.......................... 38 77 75
As a percentage of net revenue................... 4.5% 8.6% 8.0%
</TABLE>

40
<PAGE>

Net revenue

Net revenue from our chemical analysis business increased 6.3% in 1997 from
1996 and 4.8% in 1998 from 1997. The increases resulted from strong growth in
mass spectroscopy, liquid chromatography and consumables, such as columns and
supplies. The increase in 1998 was achieved despite decreased revenue from
products and services sold to customers in Asia as a whole and Japan in
particular as a result of the economic conditions in that region. In 1998,
pricing pressures increased as some competitors cut prices worldwide.

Earnings from operations

Earnings from operations from our chemical analysis business increased
102.6% in 1997 from 1996 and decreased 2.6% in 1998 from 1997. The increase in
1997 from 1996 resulted from higher net revenue while costs and expenses
remained relatively unchanged. The decrease in 1998 from 1997 reflects higher
operating expenses partially offset by higher revenue.

As a percentage of net revenue, cost of products and services decreased by
1.4 percentage points in 1997 from 1996 and .7 percentage points in 1998 from
1997. The improvements in 1997 and 1998 were driven by revenue growth and
higher volumes. In addition, cost structure improvements were achieved as we
moved some production processes to contract manufacturers.

Operating expenses as a percentage of net revenue decreased 2.7 percentage
points in 1997 from 1996 and increased 1.3 percentage points in 1998 from
1997. The decrease in 1997 was due to higher net revenue and essentially
unchanged expenses. The increase in 1998 from 1997 resulted from greater
growth in expenses than in net revenue.

Research and development expense decreased 5.3% in 1997 from 1996 and
increased 9.7% in 1998 from 1997. The decrease in 1997 from 1996 resulted from
the completion in late 1996 of major development projects that were not
immediately replaced. In 1998, research and development investments increased
primarily due to joint development efforts in the bio-instrumentation and
microfluidics areas. Selling, general and administrative expense was unchanged
in 1997 from 1996 and increased 8.2% in 1998 from 1997. The increase in 1998
was primarily due to the 1998 restructuring and higher goodwill amortization
charges as a result of acquisitions in 1998 and the second half of 1997.

41
<PAGE>

Quarterly Financial Results

The following tables present our operating results for each of the ten
quarters in the period ended April 30, 1999, in dollars and as a percentage of
net revenue. The information for each of these quarters is unaudited and has
been prepared on the same basis as the audited consolidated financial
statements included elsewhere in this prospectus. In the opinion of
management, all necessary adjustments, which consist only of normal and
recurring accruals, have been included to present fairly the unaudited
quarterly results. This data should be read in conjunction with the
consolidated financial statements and the notes thereto included elsewhere in
this prospectus. These operating results are not indicative of the results of
any future period.

<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------------------------
1997 1998 1999
----------------------------- ----------------------------- -------------
Jan 31 Apr 30 Jul 31 Oct 31 Jan 31 Apr 30 Jul 31 Oct 31 Jan 31 Apr 30
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue:
Products............... $1,541 $1,656 $1,619 $1,938 $1,743 $1,789 $1,583 $1,679 $1,488 $1,697
Services............... 252 251 253 275 269 289 292 308 298 313
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total net revenue...... 1,793 1,907 1,872 2,213 2,012 2,078 1,875 1,987 1,786 2,010
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Costs and expenses:
Cost of products....... 790 835 856 974 854 975 887 1,091 792 831
Cost of services....... 160 167 165 179 170 183 176 176 182 188
Research and
development........... 205 222 223 230 226 243 230 249 222 241
Selling, general and
administrative........ 448 469 486 506 496 540 496 518 489 510
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total costs and
expenses.............. 1,603 1,693 1,730 1,889 1,746 1,941 1,789 2,034 1,685 1,770
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Earnings (loss) from
operations............. 190 214 142 324 266 137 86 (47) 101 240
Other income (expense),
net.................... (19) (14) -- (14) (18) 5 (1) (32) 13 2
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Earnings (loss) before
taxes.................. 171 200 142 310 248 142 85 (79) 114 242
Provision (benefit) for
taxes.................. 58 68 48 106 87 49 31 (28) 40 85
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net earnings (loss)..... $ 113 $ 132 $ 94 $ 204 $ 161 $ 93 $ 54 $ (51) $ 74 $ 157
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------------------
1997 1998 1999
------------------------------ ------------------------------ --------------
Jan 31 Apr 30 Jul 31 Oct 31 Jan 31 Apr 30 Jul 31 Oct 31 Jan 31 Apr 30
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(% of total net revenue)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue:
Products............... 85.9% 86.8% 86.5% 87.6% 86.6% 86.1% 84.4% 84.5% 83.3% 84.4%
Services............... 14.1 13.2 13.5 12.4 13.4 13.9 15.6 15.5 16.7 15.6
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total net revenue...... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Costs and expenses:
Cost of products....... 44.1 43.8 45.7 44.0 42.5 46.9 47.3 54.9 44.3 41.3
Cost of services....... 8.9 8.8 8.8 8.1 8.4 8.8 9.4 8.9 10.2 9.4
Research and
development........... 11.4 11.6 11.9 10.4 11.2 11.7 12.3 12.5 12.4 12.0
Selling, general and
administrative........ 25.0 24.6 26.0 22.9 24.7 26.0 26.4 26.1 27.4 25.4
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total costs and
expenses.............. 89.4 88.8 92.4 85.4 86.8 93.4 95.4 102.4 94.3 88.1
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Earnings (loss) from
operations............. 10.6 11.2 7.6 14.6 13.2 6.6 4.6 (2.4) 5.7 11.9
Other income (expense),
net.................... (1.1) (.7) -- (.6) (.9) .2 (.1) (1.6) .7 .1
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Earnings (loss) before
taxes.................. 9.5 10.5 7.6 14.0 12.3 6.8 4.5 (4.0) 6.4 12.0
Provision (benefit) for
taxes.................. 3.2 3.6 2.6 4.8 4.3 2.3 1.6 (1.4) 2.3 4.2
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net earnings (loss)..... 6.3% 6.9% 5.0% 9.2% 8.0% 4.5% 2.9% (2.6)% 4.1% 7.8%
===== ===== ===== ===== ===== ===== ===== ===== ===== =====

Costs of products as a
percentage of products
revenue................ 51.3% 50.4% 52.9% 50.3% 49.0% 54.5% 56.0% 65.0% 53.2% 49.0%
Costs of services as a
percentage of services
revenue................ 63.5% 66.5% 65.2% 65.1% 63.2% 63.3% 60.3% 57.1% 61.1% 60.1%
</TABLE>

42
<PAGE>

In the third quarter of 1997, our net earnings declined significantly
compared to the prior and subsequent quarters. During the quarter, the
healthcare solutions business received a letter from the FDA citing their
concerns regarding quality system regulations. As a result, the business
delayed shipping some of its products until the FDA's concerns were resolved,
which caused the quarter's net revenue to decrease. In addition, sales and
marketing programs in the test and measurement business related to new product
releases caused selling, general and administration expenses to increase.

Beginning in the third quarter of 1998 and through the first half of 1999,
our revenue was significantly affected by the economic conditions in Asia and
the slowdown in the semiconductor industry. Since a substantial portion of our
cost of products and services, as well as some of our operating expenses, are
relatively fixed in the short term, the sharp decline in revenue caused our
operating margins to decline. There are indications that conditions in Asia
are beginning to improve. Charges from the restructuring that occurred in the
quarter ended October 31, 1998 adversely affected operating results in that
quarter. The 1999 quarterly results reflect the benefit of the 1998
restructuring as well as other cost containment measures that we implemented
in the second half of 1998.

Our quarterly net revenue, earnings from operations and net earnings have
varied significantly in the past and we expect that they are likely to vary in
the future. In addition, upon our separation from Hewlett-Packard, we expect
to incur substantial additional costs in future periods resulting from being a
separate, stand-alone entity.

Liquidity and Capital Resources

Historically, Hewlett-Packard has managed cash on a centralized basis. Cash
receipts associated with our business have been transferred to Hewlett-Packard
on a daily basis and Hewlett-Packard has provided funds to cover our
disbursements. Accordingly, we have reported no cash or cash equivalents at
October 31, 1997 and 1998 and April 30, 1999.

In November 1999, Hewlett-Packard will make an initial cash payment to us
to fund our working capital and other needs for the first few months of our
operations as a separate, stand-alone entity. Our separation agreement with
Hewlett-Packard provides that Hewlett-Packard will retain some of our assets
and liabilities and Hewlett-Packard will transfer to us some of the assets and
liabilities related to its business. We expect that our cash balance will
initially decline until we begin to collect newly generated accounts
receivable. The net proceeds of the offering, including proceeds received from
any exercise of the U.S. underwriters' over-allotment option, will be paid to
Hewlett-Packard as a dividend. See "Arrangements between Agilent Technologies
and Hewlett-Packard--Master Separation and Distribution Agreement."

We generated cash from operations of $881 million in 1996 compared to $965
million in 1997 and $751 million in 1998. For the six months ended April 30,
we generated cash from operations of $341 million in 1998 and $223 million in
1999. In all periods, cash from operations is primarily a result of net
earnings adjusted for non-cash charges for depreciation and amortization.

Capital expenditures for property, plant and equipment constituted
substantially all of our cash used in investing activities in 1996, 1997, 1998
and the six months ended April 30, 1998 and 1999. The amounts expended were
partially offset by proceeds from the disposal of excess, unused or retired
assets. The high level of capital expenditures in 1996 and 1997 reflected our
investment in our semiconductor products business integrated circuit
fabrication capability, which was subsequently replaced with a joint venture
arrangement. In addition, we used small amounts of cash in each period to
acquire several small companies. We expect to continue to acquire
complementary products or businesses in the future.

On July 6, 1999, Hewlett-Packard entered into an agreement with Yokogawa to
acquire Yokogawa's 25% minority equity ownership of Hewlett-Packard Japan for
approximately $508 million. Under the terms of the agreement, Hewlett-Packard
will acquire Yokogawa's shares through redemption and sale of shares in
several steps beginning in January 2000. Under the terms of the master
separation and distribution agreement, we will

43
<PAGE>

assume these Hewlett-Packard obligations under the agreement with Yokogawa. In
the initial step, which will occur on or before January 31, 2000, we will
redeem 10.4% of Hewlett-Packard Japan's shares from Yokogawa. In the second
step, which will occur on or before April 30, 2000, we will purchase 10.4% of
Hewlett-Packard Japan's shares from Yokogawa. We will acquire the remaining
4.2% of Hewlett-Packard Japan's shares owned by Yokogawa either by redemption
or purchase of shares prior to March 31, 2003. Hewlett-Packard will provide
the funding for this transaction.

An independent valuation is being performed to determine the portion of the
transaction's purchase price attributable to our business and the remaining
Hewlett-Packard business and to allocate the purchase price to identifiable
assets and liabilities. Our preliminary estimate is that of the total purchase
price, $254 million is attributable to us, with the remainder attributable to
Hewlett-Packard's remaining business.

Our commitments consist primarily of future minimum lease payments under
noncancelable lease agreements. In addition, we have entered into agreements
with Hewlett-Packard under which Hewlett-Packard will provide services to us
during a transition period after the separation.

Our liquidity is affected by many factors, some of which are based on the
normal ongoing operations of our businesses and some of which arise from
uncertainties related to global economies. We believe that the initial cash
funding we receive from Hewlett-Packard together with cash generated from
operations will be sufficient to satisfy our working capital, capital
expenditure and research and development requirements for the foreseeable
future. However, we may require or choose to obtain additional debt or equity
financing in the future. We cannot assure you that financing, if needed, will
be available on favorable terms.

Factors That May Affect Future Results

Since we sell our products worldwide, our business is subject to risks
associated with doing business internationally. We do a substantial portion of
our business in Korea and Japan, which have been subject to increased economic
instability in recent years. We experienced a decline in our business in 1998
when Korea and Japan experienced economic difficulties. The recurrence of
weakness in these economies or weakness in other international economies could
have a significant negative effect on our future operating results. For a
detailed discussion of these risks, see "Risk Factors--Risks Related To Our
Business--Our business is subject to economic, political and other risks
associated with international sales and operations."

Given the nature of the markets in which we participate, we cannot reliably
predict future revenue and profitability, and unexpected changes may cause us
to adjust our operations. Small declines in revenue could disproportionately
affect our operating results in a quarter. Factors that could effect quarterly
operating results include the demand for and market acceptance of our products
and competitive pressures resulting in lower selling prices. For a detailed
discussion of these risks, see "Risk Factors--Risks Related To Our Business--
Fluctuations in our quarterly operating results may cause our stock price to
decline."

Many of the industries and markets into which we sell our products are
cyclical. Any significant downturn in our customers' markets or in general
economic conditions would likely result in a reduction in demand for our
products and services and could harm our business. For a detailed discussion
of these risks, see "Risk Factors--Risks Related To Our Business--Our
operating results could be harmed if the industries into which we sell our
products are in downward cycles."

Year 2000

The year 2000 problem arises from the use of a two-digit field to identify
years in computer programs, e.g., 85=1985, and the assumption of a single
century, the 1900s. Any program so created may read, or attempt to read, "00"
as the year 1900. There are two other related issues that could also lead to
incorrect calculations or failure: some systems' programming assigns special
meaning to certain dates and the year 2000 is a leap year. Accordingly, some
computer hardware and software, including programs embedded within machinery
and parts, will need to be modified prior to the year 2000 to remain
functional. Our year 2000 initiatives are focusing

44
<PAGE>

primarily on four areas of potential impact: internal information technology
(IT) systems; internal non-IT systems and processes, including services and
embedded chips (controllers); our products and services; and the readiness of
significant third parties with whom we have material business relationships.
In 1997, Hewlett-Packard established a Year 2000 Program Office to coordinate
these programs for all of its businesses, including Agilent Technologies,
across the enterprise and to provide a single point of contact for information
about year 2000 programs. The year 2000 efforts in these areas are led by the
year 2000 general manager who reports directly to Hewlett-Packard's senior
management, including Agilent Technologies' chief executive officer.

The costs associated with our IT internal readiness actions are a
combination of incremental external spending and use of existing internal
resources. We estimate that over the life of our IT internal readiness effort,
we will have spent a total of approximately $90 million over a multi-year
period. We expect to implement successfully the systems and programming
changes necessary to address year 2000 internal IT and non-IT readiness issues
and material third party relationships. Based on current estimates, we do not
believe that the costs associated with these actions will have a material
effect on our results of operations, cash flows or financial condition.
However, the costs of these actions may vary from quarter to quarter. There
can be no assurance, however, that there will not be a delay in, or increased
costs associated with the implementation of these changes. In addition,
failure to achieve year 2000 readiness for our internal systems and processes
could delay our ability to manufacture and ship products and deliver services,
disrupt our customer service and technical support facilities and interrupt
customer access to our online products and services. Our inability to perform
these functions could have an adverse effect on our future results of
operations, cash flows or financial condition.

Internal IT Systems

Hewlett-Packard has established a dedicated Year 2000 IT Internal Readiness
Program Organization to oversee the worldwide year 2000 internal IT
application and infrastructure readiness activities, for all its businesses,
including Agilent Technologies. The Internal Readiness IT Program Organization
provides monthly progress reports to Hewlett-Packard's senior management,
including Agilent Technologies' chief executive officer. The Internal
Readiness IT Program Organization is charged with raising awareness throughout
Hewlett-Packard and Agilent Technologies, developing tools and methodologies
for addressing the year 2000 issue, monitoring the development and
implementation of business and infrastructure plans to bring non-compliant
applications into compliance on a timely basis and identifying and assisting
in resolving high-risk issues.

We, in conjunction with the Hewlett-Packard program, are approaching our
year 2000 IT internal readiness program in four phases: (1) assessment, (2)
planning, (3) preparation and (4) implementation. The assessment phase
involves taking an inventory of our internal IT applications to prioritize
risk, identifying failure dates, defining a solution strategy, estimating
repair costs and communicating across and within business units regarding the
magnitude of the problem and the need to address year 2000 issues. The
planning phase consists of identifying the tasks necessary to ensure
readiness, scheduling remediation plans for applications and infrastructure
and determining resource requirements and allocations. The third phase,
preparation, involves readying the development and testing environments and
piloting the remediation process. Implementation, the last phase, consists of
executing the plans to fix, test and implement critical applications and
associated infrastructure, and putting in place contingency plans for
processes that have a high impact on our businesses.

We have targeted our efforts to ensure that our critical IT applications
will be year 2000 compliant. The assessment, planning and preparation phases
have been completed. As of July 31, 1999, the implementation phase is
substantially complete.

Internal Non-IT Systems and Processes

Non-IT systems include, but are not limited to, those systems that are not
commonly thought of as IT systems, such as telephone/PBX systems; fax
machines; facilities systems regulating alarms, building access and
sprinklers; manufacturing, assembly and distribution equipment; and other
miscellaneous systems and processes.

45
<PAGE>

Year 2000 readiness for these internal non-IT systems is the responsibility of
our worldwide operating units and their respective functions and operations,
e.g., facilities, research and development, manufacturing, distribution,
logistics, sales and customer support.

The year 2000 Program Office has developed a comprehensive process to
ensure all operations and global business units use a structured and
standardized methodology to organize, plan and implement their year 2000
readiness.

Hewlett-Packard has also established a Year 2000 Council to coordinate its
overall internal readiness and its business continuity planning efforts,
including those of Agilent Technologies. The Council is composed of
representatives from the major business units within Hewlett-Packard and
Agilent Technologies and the critical corporate and infrastructure functions
that support them. The Council is chaired by the year 2000 general manager and
has initiated a comprehensive program to ensure timely and consistent business
continuity planning by all of Hewlett-Packard's and Agilent Technologies'
business units. As of July 31, 1999, substantially all year 2000 testing,
internal mitigation and remediation activities, and business contingency plans
have been finalized. From July 31, 1999, until November 30, 1999, all year
2000 internal readiness solutions, contingency plans, crisis management and
recovery mechanisms will be further stress-tested to ensure full preparation.

Product and Customer Readiness

Our newly introduced products are year 2000 compliant. However, some
hardware and software products currently installed at customer sites will
require upgrade or other remediation. Some of these products are used in
critical applications in which the impact of non-performance to these
customers and other parties could be significant. While we believe our
customers are responsible for the year 2000 readiness of their IT and business
environments, we are taking significant steps to enable customers to achieve
their readiness goals, thereby preserving our customers' satisfaction and our
brand reputation. In 1997, Hewlett-Packard established a dedicated Year 2000
Product Compliance Program Office to coordinate worldwide year 2000 product
compliance activities for all its businesses, including Agilent Technologies.
The Product Compliance Program Office is charged with developing and
overseeing implementation of plans to identify all standard products delivered
since January 1, 1995; to test those products for compliance; to identify an
appropriate path to compliance for non-compliant standard products; and to
communicate the status and necessary customer action for non-compliant
standard products.

Hewlett-Packard has an Internet website dedicated to communicating year
2000 issues to a broad customer base. Most of our key business groups have
complementary Internet websites dedicated to similar communication to their
specific customers. These websites include product compliance search pages
that allow customers to look up the status of our products they have
installed. We are taking additional steps to identify affected customers,
raise customer awareness related to non-compliance of some products and help
customers to assess their risks. We are in the process of implementing plans
to accommodate increased levels of customer assistance in the first half of
2000 and currently anticipate that a significant portion of the costs related
to these actions will occur in the fourth quarter of 1999 and the first half
of 2000.

All of these efforts are coordinated by representatives from all of
Hewlett-Packard's and Agilent Technologies' product and service business
units, who work in conjunction with the Product Compliance Program Office to
develop and implement Hewlett-Packard's and Agilent Technologies' year 2000
policies for products and services. The year 2000 general manager chairs this
group of representatives.

The costs of the readiness program for products are primarily costs of
existing internal resources largely absorbed within existing engineering
spending levels. These costs were incurred primarily in 1998 and earlier years
and were not broken out from other product engineering costs. Historical year
2000 customer satisfaction costs were not material. Future product readiness
costs, including those for customer satisfaction, are not anticipated to be
material. We are aware of the potential for legal claims against us and other
companies for damages arising from products that are not year 2000 compliant.
We believe that reasonable communication and customer satisfaction steps are
under way so that any claims would not result in material liability for us.

46
<PAGE>

It is unknown how year 2000 issues may affect customer spending patterns.
As customers focus their attention and capital budgets in the near term on
preparing their own businesses for the year 2000, they may either delay or
accelerate purchases of new applications, services and systems from us. Many
of our products run custom software or connect to other systems or peripheral
products that may be adversely affected by operating system or hardware
upgrades. Although it is possible that these factors may increase demand for
certain of our products and services, the increase may be offset by the
softening in demand for other offerings. As a result, these events may affect
our future revenue and revenue patterns.

Material Third-Party Relationships

We have developed a year 2000 process for dealing with our key suppliers,
contract manufacturers, distributors, vendors and partners. The process
generally involves the following steps: (1) initial supplier survey; (2) risk
assessment and contingency planning; (3) follow-up supplier reviews and
escalation, if necessary; and where relevant, (4) testing. To date, we have
received formal responses from substantially all of our critical suppliers.
Most of them have responded that they expect to address all their significant
year 2000 issues on a timely basis. We regularly review and monitor the
suppliers' year 2000 readiness plans and performance. Based on our risk
assessment, selective on-site reviews have been performed. Risk analysis has
been completed with our base of suppliers and contingency plans are now being
developed and tested. All critical surveys and testing efforts were completed
by June 1, 1999. In some cases, to meet year 2000 readiness, we have replaced
suppliers or eliminated suppliers from consideration for new business. Where
efforts to work with critical suppliers have not been successful, contingency
planning generally emphasizes the identification of substitute and second-
source suppliers, or in certain situations includes a planned increase in the
level of inventory held (e.g., in the case of sole sources). We have also
contracted with multiple transportation companies to provide product delivery
alternatives. We have also completed substantially all Electronic Data
Interchange (EDI) migration and testing with our supply base.

We are working to identify and analyze the most reasonably likely worst-
case scenarios for third-party relationships affected by year 2000. These
scenarios could include possible infrastructure collapse, the failure of power
and water supplies, major transportation disruptions, unforeseen product
shortages due to hoarding of products and sub-assemblies and failures of
communications and financial systems. Any one of these scenarios could have a
major and material effect on our ability to build our products and deliver
services to our customers. While we have contingency plans in place to address
most issues under our control, an infrastructure problem outside of our
control or some combination of several of these problems could result in a
delay in product shipments depending on the nature and severity of the
problems. We would expect that most utilities and service providers would be
able to restore service within days although more pervasive system problems
involving multiple providers could last two to four weeks or more depending on
the complexity of the systems and the effectiveness of their contingency
plans.

Although we are dedicating substantial resources towards attaining year
2000 readiness, we cannot assure you that we can identify and address
successfully all year 2000 issues. Even if we act in a timely manner to
complete all of our assessments; identify, develop and implement remediation
plans believed to be adequate; and develop contingency plans believed to be
adequate, some problems may not be identified or corrected in time to prevent
material adverse consequences to us.

The discussion above regarding estimated completion dates, costs, risks and
other forward-looking statements regarding year 2000 is based on our best
estimates given information that is currently available and is subject to
change. As we continue to progress with our year 2000 initiatives, we may
discover that actual results will differ materially from these estimates.

Adoption of the Euro

Hewlett-Packard has established a dedicated task force to address the
issues raised for all of its businesses, including Agilent Technologies, by
the introduction of a European single currency, the Euro. The Euro's initial
implementation was effective as of January 1, 1999 and the transition period
will continue through January 1,

47
<PAGE>

2002. Beginning January 1, 1999, product prices in local currencies are being
converted to Euros as required. At an appropriate point during the transition
period, product prices in participating countries will be established and
stored in Euros, and converted to local denominations. We implemented system
changes to give multi-currency capability to the few internal applications
that did not yet have this capability, or to ensure that external partners'
systems processing Euro conversions are compliant with the European council
regulations.

We do not presently expect that introduction and use of the Euro will
materially affect Hewlett-Packard's foreign exchange and hedging activities or
our use of derivative instruments. We do not expect that the introduction of
the Euro will result in any material increase in our costs and all costs
associated with the introduction of the Euro will be expensed to operations as
incurred. While we will continue to evaluate the impact of the Euro
introduction over time, based on currently available information, we do not
believe that the introduction of the Euro currency will have a material
adverse impact on our consolidated financial condition, cash flows or results
of operations.

Market Risk

We are exposed to foreign currency exchange rate risk inherent in our sales
commitments, anticipated sales, and assets and liabilities denominated in
currencies other than the United States dollar. Historically, our exposure to
exchange rate risk has been managed on an enterprise-wide basis as part of
Hewlett-Packard's risk management strategy. This strategy has utilized
derivative financial instruments, including forwards, swaps and purchased
options, to hedge certain foreign currency exposures, with the intent of
offsetting gains and losses that occur on the underlying exposures with gains
and losses on the derivative contracts hedging them. We are currently
evaluating our exchange rate risk management strategy. We do not currently and
do not intend in the future to utilize derivative financial instruments for
trading purposes.

Hewlett-Packard has performed a sensitivity analysis assuming a
hypothetical 10% adverse movement in foreign exchange rates to the hedging
contracts and the underlying exposures described above. As of October 31, 1997
and 1998 and April 30, 1999, the analysis indicated that these hypothetical
market movements would not have a material effect on Hewlett-Packard's
consolidated financial position, results of operations or cash flows. Because
the exposure to exchange rate risk has been managed on an enterprise-wide
basis, it is not practicable to perform a similar analysis on only our
exposures. However, it is unlikely that the results of such an analysis on our
exposures would indicate a material impact on our consolidated financial
position, results of operations or cash flows.

All debt will be retained by Hewlett-Packard. Therefore, no debt has been
directly attributed to us. Accordingly, we have not been exposed to interest
rate risk.

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BUSINESS

We are a global leader in designing and manufacturing test, measurement and
monitoring instruments, systems and solutions and of semiconductors and
optical components. Agilent Technologies includes the following businesses:

. semiconductor products, which provides fiber optic communications
devices and assemblies, wireless integrated circuits, application-
specific integrated circuits, optoelectronics and image sensors;

. healthcare solutions, which provides patient monitoring, ultrasound
imaging and cardiology products and systems; and

. chemical analysis, which provides analytical instruments, systems and
services for chromatography, spectroscopy and bio-instrumentation.

Agilent Technologies' ability to succeed is based on two fundamental
attributes. First, we have a broad and deep portfolio of technology expertise
in electronics, communications, medical and chemical measurement,
biotechnology, photonics, solid-state materials and components and measurement
systems and solutions. This expertise is driven by the research and
development efforts within our businesses and by the activities of Agilent
Technologies Laboratories, one of the world's leading industrial research and
development organizations. Each of our businesses takes advantage of the
technology advances developed by our central laboratories, often using common
technology in different applications within their specific business.

Our second core attribute is our close relationships with our customers and
our comprehensive insight into the worldwide markets in which we sell our
products and services. Our businesses have developed these relationships and
insights over our 60 year history. During this time, our businesses have
worked with thousands of customers worldwide as technologies, business needs
and global economic conditions have undergone dramatic changes.

Our businesses share important characteristics and resources that we
believe contribute significantly to our competitive success. Our test and
measurement, healthcare solutions and chemical analysis businesses are built
around our excellence in applying measurement technologies to the development
of products that sense, analyze and display data required by the end-user. Our
test and measurement and semiconductor businesses share focus on growth
opportunities in the communications sector, while our healthcare and chemical
analysis businesses share focus on growth opportunities in healthcare and life
sciences. Each of our businesses takes advantage of the applied technology
advances from Agilent Technologies Laboratories, often modifying basic
technologies for use in its specific business. Our global infrastructure
enables our businesses to move products from initial commercialization to
worldwide availability rapidly and efficiently, and to provide our customers
with localized service and support.

We provide the world's broadest range of test and measurement solutions to
customers in the communications, electronics and semiconductor industries. We
are also a leading supplier of:

. semiconductor and fiber optic components to the communications and
computer industries;

. modules and assemblies to the communications and electronics industries;

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. patient monitoring and ultrasound imaging equipment and automatic
external defibrillators to the healthcare industry; and

. chemical measurement instruments and systems to the hydrocarbon
processing, environmental and pharmaceutical industries.

We serve customers in more than 110 countries, and sell our products
primarily through our direct sales force, but we also utilize distributors,
resellers, telesales and electronic commerce. Of our total net revenue of $8.0
billion in the fiscal year ended October 31, 1998, we generated 45.6% in the
United States and 54.4% internationally. As of July 31, 1999, we employed
approximately 42,000 people worldwide. We have major research and development
and manufacturing sites in California, Colorado, Delaware, Massachusetts, and
Washington in the United States and in China, Germany, Japan, Korea, Malaysia,
Singapore and the United Kingdom.

Our net revenue by business segment for each of the years ending October
31, 1996, 1997 and 1998 and for the six months ended April 30, 1998 and 1999
was:

<TABLE>
<CAPTION>
Six Months
Years Ended October Ended
31, April 30,
-------------------- -------------
1996 1997 1998 1998 1999
------ ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C>
Test and measurement......................... $3,823 $4,203 $4,100 $2,149 $1,853
Semiconductor products....................... 1,470 1,479 1,574 795 773
Healthcare solutions......................... 1,244 1,208 1,340 676 671
Chemical analysis............................ 842 895 938 470 499
------ ------ ------ ------ ------
Total net revenue.......................... $7,379 $7,785 $7,952 $4,090 $3,796
====== ====== ====== ====== ======
</TABLE>

Industry Overview

Many of the markets we serve are undergoing rapid change and experiencing
significant growth. We believe that these trends will provide us with major
growth opportunities.

Communications Industry

The communications industry is undergoing fundamental change and growth
resulting principally from explosive demand for Internet access and data
transmission services. Traditional voice telecommunications have been carried
as an electrical signal over copper wire. Since this technology was designed
for low-capacity voice transmission, it is unable to meet the high-volume
transmission requirements of Internet access and other forms of high-speed,
digital data communications. Increased bandwidth is critically important to
the transmission of high-volume data and is the driving force behind the
deployment of the high-speed, high-capacity, digital network infrastructure.

Fiber optic networks are increasingly replacing copper-based technologies
in local area and wide area networks. Fiber optics enable digital information,
such as coded data, voice or video, to be transmitted as pulses of light. The
light being transmitted along each fiber-optic cable can be divided up into
multiple frequencies, and each frequency can be used as a separate
transmission path. Thus each fiber optic cable can simultaneously carry
multiple transmissions. Other new communications technologies, such as Gigabit
Ethernet, Digital Subscriber Line and Asynchronous Transfer Mode, are being
deployed to expand the capabilities of existing networks or build new
broadband data networks. Cable service providers are in the early stages of
introducing broadband interactive data services and Internet access to their
customers by redesigning their networks and deploying cable modem
technologies.

The usage levels of wireless communications around the world are increasing
dramatically, as penetration increases in developed countries, and lesser-
developed countries deploy wireless networks as a means to quickly

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address the surging demand for communications. As an alternative to wireline
access, some carriers and service providers are utilizing wireless
technologies to provide voice, data and Internet services to their customers.
While broadband wireless data services are still in the early stages, the
development and deployment of next generation cellular technologies and
services is likely to lead to their rapid growth.

We believe that these emerging trends in the communications industry
provide us with a number of significant business opportunities. The widespread
deployment of fiber optic networks generates increasing demand for high-speed
optoelectronic components to connect the electronic systems controlling the
network to the transmission fiber. The manufacture, physical installation and
maintenance of network switches, routers and other high-speed devices rely on
increasingly sophisticated testing, calibration and measurement instruments
and systems. Additionally, these systems typically require physical layer
integrated circuits to prepare data for transmission across high-speed
networks, such as Gigabit Ethernet, Digital Subscriber Line, Asynchronous
Transfer Mode and next-generation cable networks. Service providers face
increased competition as a result of these emerging technologies and
deregulation of the industry. Traditional communications service providers and
emerging Internet service providers, competing aggressively for subscribers,
require advanced test and monitoring solutions to optimize quality of service
to their customers. Similarly, the manufacturers of cellular handsets, base
stations and other wireless network equipment require advanced design software
and test and measurement instruments and systems to develop, manufacture and
deploy advanced wireless communications products and capture the high growth
market opportunity.

Semiconductor and Electronics Industries

The semiconductor and electronics industries are still largely driven by
rapid technological advancement, a phenomenon commonly known as Moore's Law,
which states that the functionality and performance of a digital integrated
circuit doubles roughly every 18-24 months. Decreased size and greater density
of the individual electronic components on the integrated circuit drive
improvements in the performance and functionality of the device and decrease
price to the end user. This continuous cycle of increased performance at lower
cost drives the pervasiveness of semiconductor devices in multiple
applications, from communications networks to consumer products. At the same
time, the cycle places increasing demands on companies that develop and use
electronic components, products and systems to keep up with the fast pace of
technological advances.

The effect of Moore's Law creates major business opportunities for us. Each
new integrated circuit design presents new challenges for test and measurement
systems: smaller, more densely-packed elements; faster operating speeds; and
greater complexity. Semiconductor devices and electronic components and
assemblies comprise an increasing proportion of the overall value of end-
products, increasing the importance of test within the electronic component
and systems design and manufacturing process. The increasing pervasiveness of
semiconductor devices creates strong growth opportunities for many of our
products, including our electronic and optical components, our high frequency
and digital design solutions, as well as our automated test equipment used in
high volume manufacturing settings.

Pharmaceutical, Bioscience and Healthcare Industries

The time and expense required to discover and develop new drugs demand that
pharmaceutical companies continually find ways to improve the efficiency of
the drug-discovery process, often relying on analytical instruments to improve
productivity while remaining compliant with laws and regulations. At the same
time, the healthcare industry is seeking ways to reduce costs and improve the
quality of health care. We believe this trend will require healthcare
solutions that can be deployed in non-hospital settings, such as in smaller
clinics and in patients' homes. Healthcare research and development
institutions are also focusing increased resources on disease diagnosis and
prevention. Greater understanding of the genetic basis of disease is
considered critical to learning how to prevent, diagnose and manage diseases
and requires advanced instrumentation for DNA and related analysis.

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Strategy

Focus on High Growth Market Opportunities

Our strategy is to use our strengths as a diversified technology company to
enter new markets through internal development, strategic partnerships and
acquisitions. To achieve this objective, we work closely with our customers'
research and development teams to understand emerging markets, technologies
and standards and we invest accordingly in our own development of enabling
solutions in those areas. We intend to use strategic partnerships and make
tactical acquisitions to develop advanced systems that complement our existing
technologies and products to accelerate our entry into strategic, high-growth
markets.

Within the communications markets, we are focused on providing test,
measurement and monitoring technologies and solutions for the development and
deployment of next-generation fiber optic, broadband, Internet and cellular
networks, as well as leading edge fiber optic and semiconductor components. We
work closely with cellular component and device manufacturers at the research
and development stage to understand emerging industry standards. We have also
continued to invest in our market-leading high-frequency design solutions. We
were able to take advantage of our product diversity by applying the
technologies we developed for the defense industries in the 1980s to the
higher growth communications industry when growth of the defense market
slowed. In life sciences, we have focused our efforts on the high-growth
segments of the pharmaceutical industry. In healthcare, we recently made an
acquisition that accelerated our entry and gave us leading market share in the
fast-growing automatic external defibrillator market.

Continue to Innovate Technologically

Agilent Technologies and Agilent Technologies Laboratories have a long
legacy of technological innovation and product generation as part of Hewlett-
Packard. We will continue to invest in and build research and development
expertise, focusing our centralized laboratories on fundamental technology and
process developments and utilizing innovations from our businesses to develop
products to address high growth market segments. Our scientists have provided
significant contributions and technological advances across multiple markets
and industries. Our reputation for technological innovation allows us to work
closely with both established and emerging leaders in the communications,
electronics, life sciences and healthcare industries, and to provide advanced
solutions to meet emerging market requirements. The experience and knowledge
of our engineers, combined with our close customer relationships, enable us to
anticipate customer needs for next-generation products and solutions. In
healthcare, we market our equipment and establish strong relationships with
influential medical research and development centers around the world, to gain
valuable insights into new discoveries and strategic initiatives in the
healthcare and life sciences industries. Similarly, in semiconductor test, we
have worked closely with Rambus to develop a high-speed test solution for
advanced memory chips, which has been used in selected niche products such as
video games, but is now being developed as main memory for high-performance
personal computers.

Maximize the Benefits of our Scale and Global Presence

We believe our scale and global presence provide us with a competitive
advantage across multiple industries. In many of our targeted markets and in
many of the countries in which we operate, we are the largest industry
participant and possess greater resources for research and development and
service and support than any competitor. Our global direct sales force gathers
valuable insights into emerging industry trends around the world and provides
us an effective means of bringing new products to market rapidly. In addition,
we believe our customers value our global ability to provide more complete
solutions with our training, systems integration, and project management
programs. Our regional support centers enable us to provide localized service
and support, and our telesales and electronic commerce systems allow remote
customers to order products, obtain product information and utilize remote
support services. We intend to continually enhance overall customer
satisfaction by remaining focused on providing effective service and support.

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AGILENT TECHNOLOGIES LABORATORIES

We are supported by the technological expertise of Agilent Technologies
Laboratories, one of the world's foremost industrial research and development
organizations. Agilent Technologies Laboratories consists of those operations
of Hewlett-Packard Laboratories that historically conducted basic research in
our focus areas. Agilent Technologies Laboratories is thoroughly integrated
with our businesses in design, development and manufacturing engineering, and
substantially all of its development staff are aligned with the research and
development staff in our specific businesses.

Agilent Technologies Laboratories conducts applied research in electronics,
medical and analytical measurements, biotechnology, photonics, solid-state
materials and components, and measurement systems and solutions. The
scientists in Agilent Technologies Laboratories have made significant
contributions and advances in many of these areas, including LEDs, gallium-
arsenide integrated circuits, lightwave and LAN-based instruments, mass
spectrometry, ultra-violet and visible spectrophotometry, cardiac ultrasound
imaging, electrocardiogram algorithms and the wireless mouse.

Agilent Technologies Laboratories is located primarily in Palo Alto,
California and employs 500 people. Approximately half of the 300 technical
professionals in Agilent Technologies Laboratories have doctoral degrees and
over 75% have some form of advanced degree. In recent years, on average, 80
patents per year are issued to Agilent Technologies Laboratories.

TEST AND MEASUREMENT

Our test and measurement business is a leader in providing test and
measurement solutions to companies in the communications, electronics,
semiconductor and related industries. We provide standard and customized
solutions that are used in the design, development, manufacture, installation,
deployment and operation of electronic equipment and systems. These solutions
are used by our customers to improve time-to-market, lower cost of
manufacturing and improve the quality of their products. These solutions
include test and measurement instruments and systems, automated test
equipment, communications network monitoring and management tools and software
design tools and associated services. Our solutions are employed by a wide
range of customers, including:

. communications and network equipment manufacturers, including providers
of fiber optic, wireless and wireline components, products and systems;

. providers of communications services, including telecommunications,
Internet and cellular service providers;

. designers and manufacturers of semiconductor products, including
microprocessors, memory devices, ASICs, radio frequency and microwave
integrated circuits and other types of integrated circuits; and

. designers and manufacturers of electronic equipment, including printed
circuit board assemblies and electronic equipment, such as cellular
handsets, personal computers and avionics equipment.

We believe that we are the leading provider in over 25 product categories
of the test and measurement market, including:

. network and spectrum analyzers;

. communications test equipment;

. wireless test equipment;

. in-circuit test and x-ray inspection systems for printed circuit board
assemblies;

. lightwave test equipment;

. logic analyzers and logic-signal sources; and

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. high-frequency computer-aided engineering and simulation software.

These products represent more than 60% of our test and measurement
business. Our test and measurement business employed approximately 18,300
people as of July 31, 1999. We serve customers in more than 110 countries and
sell our products primarily through our direct sales force, as well as through
resellers, distributors, telesales and electronic commerce. Our products are
complemented by service and support offerings such as consulting, training,
local solutions integration, and instrument calibration and repair. We have
manufacturing and research and development facilities in Australia, Canada,
China, Germany, Japan, Korea, Malaysia, Singapore, the United Kingdom and the
United States. Our test and measurement business generated $4.1 billion in
revenue in fiscal 1998 and $1.9 billion in revenue in the first half of fiscal
1999.

Markets

The market for our test and measurement products comprises three major
customer groups:

. communications network equipment manufacturers and service providers;

. electronic component and equipment manufacturers; and

. semiconductor manufacturers and purchasers of semiconductors.

Communications Network Equipment Manufacturers and Service Providers

Network equipment manufacturers provide products to facilitate the
transmission of voice and data traffic. This transmission may be in various
forms, such as electronic signals over copper wire, optical signals over fiber
cables, and radio frequency or microwave signals. The customers of the network
equipment manufacturers are the communications service providers that deploy
and operate the networks. The communication service providers are facing
increasing competitive pressures as a result of deregulation in the
telecommunications industry and the rapid advances in transmission technology,
including communications switching and routing. Communications service
providers must provide high-quality, highly reliable service to remain
competitive, maintain customer loyalty and meet the rapidly growing demand for
data transmission and related services. As a result, these service providers
require network equipment that enables their networks to operate at
increasingly faster speeds while providing rapidly expanding capacity and
superior reliability. To meet these demands, network component and equipment
manufacturers require test and measurement instruments, systems and solutions
for the development, production, installation and operation of each new
network technology. These solutions include:

. test instruments and systems for developing and manufacturing
communications modules, assemblies and products; and

. test instruments and systems to support the installation and deployment
of network equipment and to validate the operational performance of the
equipment in the network.

Communications and Internet service providers also require a range of
sophisticated test instruments and systems to evaluate network performance and
to identify any sources of communications failure. Additionally, these
customers require advanced software and systems to monitor and manage the
network infrastructure on a continuous, proactive basis to achieve either
regulated or customer-specified service levels. Real-time monitoring of the
network infrastructure also enables the implementation of additional services,
such as fraud detection, which customers increasingly require of service
providers. Many corporations manage their own internal voice and data
communications networks. As enterprises increasingly rely on these networks
for critical applications, they also require advanced test and monitoring
equipment, systems and software to optimize network performance.

The market for cellular telephony has increased dramatically in recent
years, as the levels of wireless penetration in developed countries have grown
rapidly. Many lesser-developed countries have decided to build

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wireless communications infrastructure to meet their nations' needs for
telephony, rather than invest in expensive wire-based infrastructure. To
develop cellular telephone equipment, manufacturers require electronic design
software and test instruments and systems for the development of high-
frequency communications circuits, devices and systems. Cellular equipment
manufacturers also require advanced, high-frequency test instruments and
systems to develop, manufacture and deploy cellular base stations for these
wireless networks. In addition, the rapid growth of the cellular handset
market has created a new market segment for automated test equipment to test
cellular handsets on the factory floor. Further, as new standards evolve in
the wireless industry, new test and measurement equipment and systems have to
be developed to enable testing of the new standards in the research and
development and later in the manufacturing and deployment phases.

In the last several years, producers of networking communications equipment
have increased their use of contract manufacturers to reduce cost, retain
business flexibility and access high end or high volume manufacturing
capabilities. Contract manufacturers require test solutions that are
particularly well-suited for faster production and flexible for use in
different applications. Recently, cellular phone producers have also begun to
increasingly use contract manufacturers, including for functional test. This
requires specialized test products and services to address the particular
needs of these high-frequency products.

Electronic Equipment Manufacturers

The electronics industry designs, develops, manufactures and distributes a
wide range of products, including products in high-volume categories such as
computers, computer peripherals and consumer electronics. In addition,
electronic components and printed circuit assemblies are incorporated into
other products, such as aircraft, satellites and automobiles. These components
and printed circuit assemblies may be designed, developed and manufactured by
electronic components companies, by original equipment manufacturers or by
third-party contract manufacturers. For the development and timely
commercialization of new technologies, original equipment manufacturers
require state-of-the-art test instruments, systems and software design tools
in order to design the products for efficient and cost-effective manufacturing
and validate product performance in a variety of configurations and
environments. These demands have resulted in an increasing trend toward the
use of contract manufacturers by electronics equipment manufacturers.

Designers and developers of electronic devices and products require state-
of-the-art digital design tools and instruments in order to build electronic
circuits, components and products, to validate their performance and
functionality and to improve the efficiency of the overall design and
development process.

High volume manufacturers of electronics products, such as printed circuit
board assemblies, require sophisticated automated test equipment to operate
and perform highly accurate tests at speeds and volumes matching those of the
production line. This equipment includes in-circuit testing systems, automated
x-ray inspection systems and automated optical inspection systems, all of
which examine the printed circuit assemblies for manufacturing defects.
Manufacturers are also beginning to demand automated functional test systems,
which test an electronic device as if it were in its final environment.
Functional test equipment must have a wide range of capabilities in order to
simulate the functions of a wide variety of electronic devices such as
personal computers, personal computer peripherals or automotive electronics.

Electronics manufacturing also requires standardized test instruments,
system components and complete solutions. These offerings are used for testing
electronic devices in a broad range of applications, such as radar systems,
electronics used in the operation of household appliances and industrial
automation. Aerospace and defense are important markets for standardized
electronic equipment because of the high electronic content of advanced
defense systems and defense-related communications and surveillance equipment.
Following recent reductions in defense spending, defense purchasers are
shifting from specialized test equipment to off-the-shelf test products and
systems.

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Semiconductor Manufacturers

Semiconductor test systems are used by semiconductor designers,
semiconductor manufacturers and electronic component manufacturers in the
design, manufacture and testing of a wide variety of semiconductor products,
including logic, memory, mixed analog and digital signal, and system-on-a-chip
integrated circuits. Semiconductor test systems are sold to semiconductor
manufacturers and assembly and test subcontractors to the semiconductor
industry. Semiconductor manufacturers use our semiconductor test systems to
measure product performance, to confirm functionality, to improve product and
production process quality, to shorten time to market, to enhance
manufacturability, to reduce labor costs and to increase production yields.

According to VLSI Research, the market for automatic test equipment for
semiconductor manufacturing was approximately $3.3 billion in 1998 and is
expected to grow at a compound annual rate of 17% over the next five years.
Demand for this test equipment is driven primarily by the increased volume of
semiconductor devices produced. The use of semiconductors has proliferated
across many industries, including communications, computing, and consumer
electronics, driving up the overall production volume of semiconductor
devices. Advances in semiconductor technology are also increasing demand for
semiconductor test equipment. The development of increasingly faster and more
complex semiconductor devices stimulates demand for testers capable of
evaluating these high-speed devices. In addition, the continuing integration
of functions, such as microprocessor, logic and memory, on a single integrated
circuit has created a new category of device called system-on-a-chip. These
devices require a new category of sophisticated and flexible automatic test
equipment.

Strategy

Our test and measurement business pursues the following strategies to
maintain and extend our global leadership position and to be the preferred
supplier of enabling solutions for our customers:

Address the Needs of High Growth Markets

Our test and measurement business is focused on addressing the needs of the
communications and electronics industries. We believe these markets will
provide significant growth opportunities as end-users' demands are driven by
the rapid adoption of new technologies providing increased performance at
lower cost. In communications markets, we address the needs of both network
component and equipment manufacturers and network service providers, including
fiber optic, Internet Protocol-based and cellular networks. As demand for
greater communications capacity increases, network manufacturers must develop
higher speed and higher capacity equipment. Similarly, network service
providers must be able to expand and operate existing networks, as well as
create and operate new networks, at high service levels. In the electronics
industry, designers must develop next generation electronic devices and
equipment rapidly and in a cost-effective manner. To keep pace with the speed
of innovation in this market, manufacturers need to bring product to market
faster and achieve high quality at high volume production levels. We have
targeted our test and measurement business products and services to enable our
customers in these high growth markets to achieve these goals.

Utilize Our Investments in New Technology Across Multiple Customer
Applications

We design our products to be used in many phases of our customers'
business--from design and development through installation and deployment. We
invest heavily in the development of new test and measurement instruments,
systems and design tools to meet the requirements of our most innovative
customers. Our work with these customers in developing tools and test
instruments targeted for the research and development labs provides us with
valuable insight into emerging technologies and standards. Once we have
developed a testing solution for what we anticipate will become a sizable
market, we invest in further product development to market the solution to a
broader customer base. Our initial solutions often combine several general
purpose instruments with customized software applications. This approach
enables us to move our solutions more easily from our customers' research and
development laboratories to their manufacturing lines, allowing us to meet
their manufacturing test needs in a timely manner. By working closely with our
customers

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to understand the final application of their products, we are able to modify
the software and hardware design of our solutions for use in the installation
and deployment phase of their products. We believe that this strategy allows
us to utilize fully our investments in these new technologies.

Maintain Strong Customer Relationships to Anticipate Important Industry
Trends

A central component of our strategy is to work closely with our customers
in their product design stage to understand emerging technologies and
applications and develop advanced test and measurement instruments, systems
and solutions. We gather information from our customers so that we may design
and create new instruments to test emerging technologies as they develop them.
For example, as communications networks have been overwhelmed by demand for
increased speed and capacity, we have focused our product development on the
technologies to enable next-generation, high-speed networks. We provide
advanced fiber optic network test instruments and solutions to service
providers to maximize the performance and minimize the total cost of ownership
of high-speed fiber optic networks. In the cellular communications industry,
we are working closely with industry leaders such as Telefonaktiebolaget LM
Ericsson, Motorola, Inc. and Nokia Oy to develop testing solutions to support
next-generation high-capacity wireless cellular standards. We have also worked
closely with Rambus in developing advanced test solutions for high-speed
memory devices.

Expand Our Services and Consulting Business Globally

We believe that the rapid pace of technology innovation and our customers'
focus on more efficient uses of their resources have created an opportunity
for us to differentiate ourselves from our competitors with our global support
and service capabilities. We provide basic support services, such as repair
and calibration; systems integration services; training and customer
education; and advanced business services, such as design services and
consulting. For some of our more complex products, such as our automated test
equipment, we provide proactive maintenance and support to ensure maximum
reliability and continuous operation. In addition, we believe we provide
customers with more flexibility and lower the total cost of ownership with our
asset management, financing and pay-per-use programs.

Products

Our test and measurement business designs, develops and manufactures test
and design products that range from single-unit electronic measurement devices
priced under $1,000 to large scale integrated test solutions priced at $1
million and higher.

Communications Equipment Test Solutions

We provide test solutions for fiber optic, broadband wire-based, radio
frequency and microwave communications networks and products.

Fiber Optics. We make products that enable the development, production,
installation, verification and maintenance of fiber optic networks. Our
products include optical signal and spectrum analysis instruments used by the
industry's leading equipment manufacturers to develop and manufacture reliable
optical components. We also make products that test dense wavelength division
multiplexing systems, a new technology that is used to increase the
transmission capacity of optical fibers. Our products also include network
analyzers and high-speed bit-error rate testers that measure key transmission
properties of high-speed optical and electrical signals. These products are
used by network component and equipment manufacturers as well as service
providers to test the proper functioning of fiber optic components and
networks.

Broadband and Data Networks. Our network test equipment is used by service
providers to install and maintain connections to the Internet, high-speed data
networks, telephone systems and cable television lines. This equipment is also
used by network equipment manufacturers to develop and manufacture high- speed
network equipment. We market test solutions for high-speed network equipment
based on broadband data transmission

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<PAGE>

technologies such as Digital Subscriber Line, Asynchronous Transfer Mode and
Integrated Services Digital Network. Our suite of solutions for network
equipment based on the Internet Protocol tests quality and service performance
of voice and data traffic transmitted over Internet Protocol-based networks.
Enterprise network managers, network equipment designers and third-party field
network maintenance service providers rely on our Internet Advisor product
line for comprehensive diagnostic and problem solving solutions for
troubleshooting high-speed local area networks, wide area networks and
asynchronous transfer mode networks. Our cable television test equipment
ensures maximum radio frequency and video performance and troubleshooting of
components in the cable infrastructure and the connection to the cable
subscriber.

Wireless Communications and Microwave. In wireless communications, we
market our test solutions to manufacturers of cellular handsets and wireless
telephone infrastructure. Our radio frequency and microwave test instruments
assist in the design and production of cellular handsets and base stations, as
well as satellite and aerospace defense systems. Examples of our radio
frequency and microwave products include network analyzers, spectrum analyzers
and signal sources. These products generate and measure electronic
communications signals. We have combined several of our instruments into
integrated test solutions, such as our single-box testers for cellular
handsets that determine the ability of a handset to send and receive signals
accurately as well as successfully switch between cellular base stations while
traveling. Another example is our integrated solution for testing
communication satellite electronics.

Communications Service Test and Monitoring Solutions

Our acceSS7 product allows communications service providers using Signaling
System 7 (SS7), such as AT&T Corporation and Sprint Corporation, to monitor
and analyze their signaling network traffic for network performance and
management, fraud management and billing of interconnecting service providers.
Similarly, our AccessFiber products and solutions perform fault detection and
monitor fiber optic communications networks. Our acceSS7 and AccessFiber
products are typically sold as a combination of hardware, software and
services. Our Firehunter network management software solution provides
performance monitoring, analysis and reporting capabilities for Internet
service providers. Firehunter allows Internet service providers to monitor and
analyze network occurrences and helps improve the availability and
responsiveness of the network, while reducing the time required to isolate
problems. It gives Internet service providers the capability to monitor and
measure important service level parameters and thus to offer and meet customer
service level agreements. Our NetMetrix local area network probes and software
provide local area network management solutions for the enterprise.

We also market benchtop and handheld measurement devices such as lightwave
multimeters, power meters and optical sources. We also market portable test
instruments for installation and field service testing and monitoring for many
types of communications networks. For example, our portable bit error rate
test instruments are used by service providers for transmission performance
analysis during installation and for ongoing maintenance.

Electronics Design and Manufacturing Solutions

General Purpose Instruments. General purpose instruments are used by a wide
variety of customers across all electronics-related industries. They are used
principally by engineers in research and development laboratories,
manufacturing, calibration and service for measuring voltage, current,
frequency, signal pulse width and other standard electronics measurements.
These products are often the core of an electrical engineer's benchtop
equipment. Examples of general purpose instruments include:

. digitizing oscilloscopes;

. voltmeters and multimeters;

. frequency counters;

. bench and system power supplies; and

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. function generators and waveform synthesizers.

Our general purpose instruments have been the basic building blocks for
many of our more advanced products and solutions.

Modular Instruments and Test Software. Our modular instruments and test
software, including instruments incorporating the VXI bus, a standard
interface for building test systems using modular components, and modular
measurement system software is used to dynamically configure and reconfigure
test systems for designers and manufacturers of electronic devices.

Data Acquisition Devices. Our data acquisition and control products measure
physical phenomena, acquire data from sensors and perform digital-to-analog
conversion, signal processing and control functions. Data acquisition and
control products include digital-to-analog converters that are attached to
sensors to measure a wide range of physical data such as temperature, airplane
wing strain and vibrations in cars, jet engines and power generation
equipment.

Digital Design Products. Our digital design and test products are used
primarily by research and development engineers to design, test and remove
design defects from digital electronic systems, including microprocessors,
computers and computer peripherals. These systems range from simple digital
control circuits to complex, high-speed servers incorporating the latest
microprocessor technology. Our digital design products include logic
analyzers, logic-signal sources and data generators.

Automated In-Circuit Testing. We offer the leading family of in-circuit
test products, which test printed circuit board assemblies to find defects
caused by the manufacturing process. In-circuit testers use a probe fixture
which makes electrical contact with the circuit board and provides electrical
measurements. These products are used with a suite of proprietary tools for
testing printed circuit assemblies where probing may be able to access as
little as 50% of the contacts due to very densely packed or very small
components. These tools enable our current systems to test up to twice as fast
as previous in-circuit test systems.

Automated X-ray Inspection. Our leading x-ray inspection products provide a
three-dimensional scan of printed circuit board assemblies to identify and
isolate quality defects caused by the manufacturing process. Using patented
techniques, our products can look through a device to identify structural
defects in soldering that are not identified by visual inspection and that may
not be detected with in-circuit testing. This technique also eliminates the
need for expensive physical probe fixtures.

Automated Optical Inspection. Our automated optical inspection line of
products enables automated visual inspection of printed circuit assemblies.
These systems are able to locate, with a high degree of repeatability and
reliability, misplaced and misaligned parts, gross solder defects and other
process faults without the need for a human inspector.

Intelligent Test. In products that demand the highest reliability, like
those used in networking and communications, customers will often require that
their printed circuit assemblies be tested using a combination of automated
test processes. Our AwareTest Software enables customers to design test
processes that avoid unnecessary test duplication. For example, an in-circuit
test device will receive information about the faults that have already been
detected by an x-ray inspection system and not repeat the test of that
circuit. AwareTest allows customers to obtain maximum test coverage while
decreasing total test time and cost.

Semiconductor Automated Test Equipment

Our automated test equipment supports the development and manufacture of
semiconductor devices. We produce semiconductor test equipment to perform
electrical and functional testing of the operation of memory, logic, mixed
signal, systems-on-a chip, and radio frequency integrated circuits. Our
parametric test instruments and systems are used to examine semiconductor
wafers during the semiconductor manufacturing process. Our

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semiconductor parametric test systems combine hardware technology with system
software. The software can be customized to meet specific application needs to
allow faster verification of the accuracy of the manufacturing process of a
silicon wafer and wafer quality through its first electrical test. Our product
development efforts are targeted at leading edge technologies, such as
systems-on-a-chip and high-speed memory products, such as Direct Rambus
dynamic random access memory devices.

Our semiconductor test products test a variety of different circuit types.
These devices are usually tested after final assembly, but the testing of some
devices is most effective immediately after the production of the silicon
wafer, when the wafers are sorted. We believe we are the industry leader in
wafer-sort test solutions for flash memory devices, which retain data even
when the power is turned off and that are critical for use in digital cameras,
cellular phones, personal digital assistants and storage of portable digital
audio files. Our flash memory test products can test as many as 16 devices in
parallel, greatly improving test throughput for our customers.

In the final test area, we are exploiting our successful logic and mixed
signal semiconductor test offerings into two market areas. Based on our high
performance logic technology, we have developed an accurate, high-speed test
system for Direct Rambus dynamic random access memory chip testing. The Rambus
architecture addresses performance limitations in other random access memory
chips by moving data quickly in and out of memory. Rambus-designed memory has
been used in selected niche products, such as video games, for several years
but is now being developed as the main memory for high-performance personal
computers. Our Rambus memory testers will initially test 16 devices in
parallel. In the year 2000, we expect to offer the ability to test 32 devices
in parallel, which we believe will result in an extremely competitive cost of
test.

Our test equipment for the system-on-a-chip market is based on our newest
generation logic and mixed signal product platform. This platform is designed
to span the wide range of price, performance and functionality that the
system-on-a-chip market will require. We also produce a radio frequency
integrated circuit test system that has established a leadership position in
the wireless device market.

High-Frequency Electronic Design Tools

Our high-frequency electronic design automation software tools are used by
radio frequency integrated circuit design engineers to model, simulate and
analyze communications product designs at the circuit and system levels. Our
technology is the first in the industry to allow the simulation of complete
communication product design in a single environment. According to Dataquest,
we are the leader in the market for high-frequency computer aided engineering
software.

Customers

We market our test and measurement solutions to more than 3,000 customers
across a broad array of industries. Several of our customers purchase products
across several of our major product lines for their different business units.

A representative list of the customers of our test and measurement business
follows:

<TABLE>
<S> <C> <C>
Alcatel Alsthom Intel Corporation Qualcomm, Inc.
AT&T LG Group Samsung Electronics Co., Ltd.
Bell Canada Enterprises, Inc. Lockheed Martin Corporation Siemens
(Nortel Networks Corporation) Lucent Solectron Corporation
The Boeing Company Matsushita Electric Industrial Co., Ltd. Sprint
Ericsson Mitsubishi Electronics America, Inc. THOMSON Multimedia,
Fujitsu Limited Motorola Toshiba Corporation
General Electric NEC Corporation Tyco International
General Motors Corporation Nippon Telephone & Telegraph Corporation United States Air Force
Hitachi, Ltd. Nokia U S WEST, Inc.
IBM
</TABLE>

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<PAGE>

Sales, Marketing and Support

We have a focused sales strategy to strengthen customer satisfaction. Our
worldwide sales and support teams are key elements of this strategy. Our
direct sales force is focused on identifying customer needs and recommending
solutions involving the effective use and deployment of our equipment and
systems. Some members of our direct sales force focus on global accounts,
providing uniform services on a worldwide basis. Others focus on our more
complex products such as our communications monitoring systems and our
automated test equipment, where customers require intensive strategic
consultation. Our sales force also specifically targets the contract
manufacturer market by collaborating with original equipment manufacturers to
specify that our test equipment be used by contract manufacturers, as well as
marketing to contract manufacturers directly.

Our direct sales force consists of field engineers and systems engineers
who often hold advanced degrees and who have in-depth knowledge of the
customers' business and technology needs. Some of our field engineers are
account managers for our large accounts, and enhance our understanding of the
future needs of these customers. Our systems engineers provide a combination
of consulting, systems integration and application and software engineering
services, and are instrumental in all stages of the sale, implementation and
support of our complex systems and solutions. We have more than 3,000 sales,
service and support engineers located throughout the world. In support of our
selling efforts, we have regional sales and customer support centers in Hong
Kong, the Netherlands and the United States. We believe that the scale and
global presence of our direct sales force are an important competitive
advantage. We also use value-added resellers to address specific market
segments.

We sell our less complex products through a combination of our direct sales
force, distributors, mail order, telephone and electronic commerce, utilizing
our extensive catalogs. In many cases, initial sales of our products may be
made by our direct sales force, with follow-up sales of the products through
one of our alternative sales channels.

We have a support organization dedicated to delivering a full range of
services to our customers, including:

. instrument repair and calibration;

. proactive support to ensure continuous productivity of our semiconductor
and electronics manufacturing test equipment;

. application and process consulting;

. solution development and product integration;

. customer education;

. system integration; and

. software support.

We offer these services worldwide through an integrated team of support
engineers. We also provide support services over the Internet and through call
centers.

Manufacturing

We concentrate our test and measurement manufacturing efforts primarily on
final assembly and test of our products. To maximize our productivity and our
ability to respond to market conditions, we use contract manufacturers for the
production of printed circuit boards, sheetmetal fabrication, metal die
casting, plastic molding and standard electronic components. We also
manufacture proprietary devices and assemblies, such as x-ray tubes and high-
frequency integrated circuits and devices, in our own foundries for
competitive advantage.

We have approximately 2.5 million square feet of manufacturing space
worldwide dedicated to our test and measurement business.

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Competition

The market for test and measurement equipment is highly competitive, and we
expect this competition to increase. We believe that the principal factors of
competition are:

. speed, accuracy and cost of test;

. breadth of product offerings;

. scalability and flexibility of products;

. ease of product use;

. ability to upgrade product platform;

. time to market of new technologies;

. adherence to industry standards;

. ability to support emerging industry protocols; and

. ability to provide localized service and support on a worldwide basis.

We believe we compete favorably with respect to each of these factors and
have gained significant market share in many of our targeted markets as a
result. We believe our success has been driven by technology leadership, our
ability to generate customer loyalty and our track record at anticipating
market trends.

Our test and measurement business competes with a number of significant
competitors in all our major product categories and across our targeted
industries. In communications test, our primary competitors are Anritsu, IFR
Systems, Inc./Marconi Communications Ltd., Network Associates, Inc., Rhode &
Schwartz, Tektronix, Inc. and Wandel & Goltermann Technologies, Inc./Wavetek
Corporation, as well as INET Technologies, Inc. and Micromuse Inc. in the
communications network monitoring market. In the semiconductor test market, we
compete primarily against Advantest Corporation, Schlumberger Limited and
Teradyne. In the printed circuit board test market, a segment of the
electronics manufacturing market, we compete against GenRad, Inc. and
Teradyne. In the general purpose electronic test market, we compete against
companies such as Fluke Corporation (a subsidiary of Danaher Corporation),
Keithley Instruments, Inc., LeCroy Corporation, National Instruments
Corporation and Tektronix. Some of our competitors may have a strategic
advantage based on geographic location that could make it difficult for us to
compete in those markets. In addition to our larger competitors, we also face
competition from start-up companies with newer technologies or products based
on next-generation industry protocols, particularly in communications test.
Any of these start-up or other emerging competitors, as well as our existing
competitors, may develop technologies that more effectively address our
targeted markets at a lower cost. In addition, these small competitors may
enter into strategic alliances or business combinations that increase their
ability to innovate and address our markets.

SEMICONDUCTOR PRODUCTS

Our semiconductor products business is a leading supplier of semiconductor
components, modules and assemblies for high performance communications
infrastructure, computing devices and mobile information appliances. We
design, develop and manufacture:

. fiber-optic communication devices, components and assemblies;

. integrated circuits for high-speed local area networks;

. integrated circuits and board-level solutions for storage area networks;

. discrete devices and integrated circuits for microwave and radio
frequency mobile wireless devices and infrastructure;

. infrared components used for short-range communication between portable
and stationary devices;

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. ASICs for workstations, servers and laser and inkjet printers;

. LEDs for electronic image and information display; and

. semiconductors for image capture and display.

We believe we are the leading provider of:

. fiber optic communications transceiver (transmitter/receiver) modules
used for high speed data transmission;

. integrated circuits for storage area networks based on the Fibre Channel
protocol;

. infrared components;

. optoelectronic components and displays; and

. ASICs to Hewlett-Packard for its workstations, servers and printers.

In total, we produce more than 9,000 products for high-speed networking,
mobile communications and computing devices worldwide. As of July 31, 1999,
our semiconductor products business had approximately 10,900 employees
worldwide. We have eleven major design centers and eight manufacturing sites
around the world. Our semiconductor products business generated revenue of
$1.6 billion in fiscal 1998 and $773 million in the first half of fiscal 1999.

Markets

Our semiconductor products business serves two primary markets:
communications and computing.

Communications

High-Speed Networking. The advent of the Internet as a communications
medium has dramatically increased business and consumer demand for high-speed,
reliable access to data and, as a result, has placed considerable stress on
existing communications networks. In data communications, speed is measured in
the number of bits of data per second that can be transmitted across the
network.

As the volume of data transferred over networks grows, users are becoming
increasingly frustrated with the low performance of the existing
communications infrastructure, which was originally designed for lower speed
analog transmission rather than high-speed digital transmission. This
infrastructure consists primarily of copper wiring, which was originally
intended for analog voice transmission. Copper wiring is highly susceptible to
noise and interference, making accurate transmission of data at high speeds
difficult.

Fiber optic cables, which carry information in the form of pulses of light
produced by light-emitting diodes or lasers, can carry very large amounts of
data in a small space and are immune to electrical and magnetic interference.
Because fiber optic cables are not susceptible to interference, they can
minimize error in data transmission and prevent the crossing of telephone
conversations between lines. Fiber optic cables can also provide enhanced
security compared to copper wiring, since intercepting communications on a
fiber optic line without detection is difficult. Because of these benefits,
telecommunications service providers have historically used fiber-optic cables
for their ultra-long-distance, typically undersea, communications
infrastructure. For a number of years, fiber-optic cables have also been the
method of choice for long-distance, high-volume voice and data, and have more
recently been increasingly used in local area networks, in place of
traditional copper wires, for higher-speed and more reliable data
communication.

We are a major supplier of fiber optic transceivers, which convert digital
data into light signals for transmission, and convert light signals back into
digital form on the receiving end of the communication. We market fiber optic
transceivers for both short-range, local area network applications and long-
range, wide area

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network applications to major telecommunications and data networking equipment
vendors such as Alcatel, Cisco Systems, Inc., Lucent and Nortel. In addition,
we supply high reliability solid-state lasers to major telecommunications
companies for high-reliability, ultra-long-distance applications. We are also
a major supplier of physical layer integrated circuits for high-speed
networking applications, which prepare data for transmission across fiber
networks.

Storage Area Networking. As the volume of data that is being transmitted,
processed and stored in networked environments has increased, the market for
storage area network equipment, which connects computers and storage devices,
has grown dramatically. The increase in data transmission speeds across
networks has created a demand for high-speed and high-performance storage-to-
server and server-to-server connectivity. The Fibre Channel interconnect
protocol, a standard for the transfer of information between computers and
storage devices defined by the American National Standards Institute, was
developed to meet this growing demand. Fibre Channel supports the transfer of
large amounts of data within storage area networks at speeds of one gigabit
per second and greater and provides high transmission reliability. We supply a
broad range of integrated circuits, fiber optic components and systems to
manufacturers of storage area network systems utilizing the Fibre Channel
protocol, such as Data General Corporation, EMC Corporation, Hitachi and NEC.

Wireless Communications. Worldwide subscriber growth for wireless
communications has been increasing rapidly in recent years. The Strategis
Group anticipates that the worldwide market for cellular services will
increase to 519 million subscribers by 2002 from 256 million subscribers in
1998. We supply a wide range of radio frequency and microwave integrated
circuits and devices to mobile telephone manufacturers and vendors of
equipment for the mobile telephone infrastructure to meet this increasing
demand. We supply infrared and radio frequency devices and modules for short-
range, point-to-point wireless communications to manufacturers of computers,
printers and consumer electronics products, such as mobile telephones, digital
cameras, personal digital assistants and pagers.

Computing

We are the largest supplier to Hewlett-Packard of ASICs for printers,
workstations and servers. ASICs are semiconductors that are designed for a
unique, customer-specified application and typically replace a number of
discrete components resulting in improved performance, lower cost and high
reliability.

Strategy

To service the needs of our customers in the communications and computer
industries, the semiconductor products business pursues the following
strategies:

Apply our Broad Technology Base to Capture Demand for Higher-speed and
Mobile Data Transmission

We have established leadership positions in the design and development of
semiconductors used in fiber optic communications, radio frequency and
infrared technology. Building on this leadership and our broad technology
base, we continue to invest in designing and marketing semiconductor products
to address the growing demand for higher-speed, higher-capacity connections
and mobile communications. In particular, we are focused on developing devices
that enable data transmission speeds of one gigabit per second or greater to
address the increasing demand for high speed networking. We currently produce
integrated circuits for the most prevalent mobile communications standards,
and we believe we are well positioned to benefit from the increased demand for
these products.

Continue to be Hewlett-Packard's leading supplier of ASICs

Key elements of our remaining a leading supplier of ASICs to Hewlett-
Packard for use in its printers, workstations and servers have been:

. our development, external sourcing and application of intellectual
property;

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<PAGE>

. our ability to meet competitive pricing and performance requirements;
and

. our dedicated sales force and co-location of design personnel with major
Hewlett-Packard businesses.

To maintain this position, we will continue to pursue our intellectual
property strategy through both internal development and acquisitions, and
apply this intellectual property strategically to our products. In addition,
to remain competitive, we are focused on reducing the costs and improving the
performance of the ASICs we provide to Hewlett-Packard by pursuing higher
levels of device integration and employing advanced process technology. We
also intend to increase sales of ASICs to purchasers other than Hewlett-
Packard, in areas other than workstations, servers and printers, particularly
in the networking area.

Take Advantage of Technology Partnerships

To maintain technology leadership in a cost-effective manner, we have
formed several strategic technology partnerships. We intend to continue to
enter into strategic technology partnerships to gain access to intellectual
property and advanced semiconductor manufacturing process technology. For
example, through our joint venture with Chartered Semiconductor Manufacturing,
Ltd. and the joint venture's technology sharing arrangements with Motorola, we
obtain access to advanced semiconductor process technology and volume
production capacity while reducing capital outlays and design process costs.
Our alliance with Displaytech, Ltd. provides us with access to its expertise
in liquid crystal materials development, microdisplay design and display
systems integration for use in our near-eye microdisplay products.

Products

Our major product areas include:

Fiber Optics

Our fiber optic transceiver products address all segments of the market for
high-speed optical communications, including local area networking, wide area
networking, long-distance networks and custom-built, proprietary network
solutions. We market optical transceivers, transmitters and receivers for
high-speed local area network applications from 10 megabits per second to one
gigabit per second and higher, and wide area network applications at up to 2.5
gigabits per second. We are also the leading producer of solid-state lasers,
which are used for high-reliability undersea transmission, such as
intercontinental communications.

High-Speed Network Input-Output Circuits

We market integrated circuits and solutions for high-speed input-output
devices, focusing on the high-speed networking and storage area networking
markets. We produce physical layer integrated circuits for high speed network
switches and routers, devices that direct network traffic. We are also the
industry leader in Fibre Channel protocol-based integrated circuits and
subsystems for storage area networks.

Radio Frequency and Microwave Communications Devices

We produce a broad family of radio frequency and microwave communications
products, primarily integrated circuits for wireless communications products
and infrastructure. Our products include integrated circuits, individual
transistors and diodes and amplifiers used in higher speed and higher
frequency applications. These products are focused on applications in a broad
variety of wireless communications standards, including Cellular and Personal
Communication Systems based on Code Division Multiple Access, Global System
for Mobile Communications. We offer products for both cellular base stations
and handsets.

Infrared Emitters, Detectors and Transceiver Modules

We produce a full line of infrared products that enable short range, point-
to-point wireless communication between portable and stationary devices.
Examples of these portable devices include notebook personal

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computers, cellular phones, personal digital assistants and digital cameras.
Our infrared products utilize our strength in high-speed communication design
and our expertise in optics and are used in a substantial portion of the
notebook computers and laser printers produced today.

ASICs

Through a competitive process, we have been the primary supplier to
Hewlett-Packard of ASICs for Hewlett-Packard's printers. In addition, we
provide graphics chips, core electronics chipsets that surround central
processing units and microprocessors for Hewlett-Packard's workstations and
servers. However, we expect shipments of microprocessors to Hewlett-Packard to
be substantially reduced before the end of 2000. The terms of our license
limit our use of Hewlett-Packard's intellectual property for the sale of
integrated circuits in printing devices, printer supplies, components and
accessories, document scanners and some computing devices for a period of
three years in some cases and 10 years in other cases.

Optical Image Sensors, Optical Position Sensors and Reflective Microdisplay
Components

We have recently begun applying our capabilities in optoelectronics and
integrated circuit design to image and position sensors and microdisplays. Our
sensor products include color and monochrome still and video camera image
capture solutions and intelligent optical sensors. Our focus in this area is
to enable pervasive imaging through low-cost digital image sensors for use on
a stand-alone basis or embedded within personal computers, laptops,
peripherals, cellular telephones and affordable digital cameras.

We also produce optical position motion control products used primarily for
motion control in printers and small motors that require precise control.
These optical position sensors are used to locate the printing device in an
inkjet printer. In addition, our optical image sensors are being used as the
sensing system in a new generation of computer mice.

Our microdisplay products deliver high quality, low power, low cost images
on a single silicon chip with television or computer monitor image capability.
These image subsystems can be used as display panels on electronic devices
such as portable telephones and, when coupled with optics, can be used for
viewfinders in cameras and camcorders. Through an alliance with Displaytech,
we are jointly developing advanced microdisplay components and subsystems for
sale to original equipment manufacturers.

LEDs and Optocouplers

We manufacture and sell a broad range of LEDs, alphanumeric displays and
optocouplers. LEDs are semiconductor devices that emit light when an
electrical signal is applied. LEDs and alphanumeric displays are primarily
used as status indicators, back-lighting for panels or switches and
information in consumer, home office and industrial applications. Typical
applications include status indicators on computers, fax and other office
equipment, display panels and indicators for audio and video equipment, and as
indicators and displays on industrial grade electronic equipment. Optocoupler
products are devices that provide both electrical insulation, for protection,
and signal isolation, to prevent distortion of data, between differing
electrical environments. Typical applications for these products include
industrial automation, electrical motor control and data communications
interface isolation.

Lighting Joint Venture

We recently announced a memorandum of understanding with Philips to extend
our existing joint venture relating to the design and production of LEDs. The
joint venture will be expanded to take advantage of our technology and
manufacturing strength in high-brightness color LEDs, and Philips' strength in
developing, manufacturing and selling innovative lighting products and
systems. Under the terms of the new agreement, the global joint venture will
develop, manufacture and sell LEDs, modules, products and systems for a broad
spectrum of lighting applications, including automotive lighting, high-
brightness traffic signals, contour lighting

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and signs, outdoor illumination, and white LEDs for both indoor and outdoor
applications. We will equally own the joint venture with Philips, which will
involve 1,000 employees located in California, Malaysia and the Netherlands.
We are negotiating a definitive agreement with Philips based on the memorandum
of understanding, and we therefore cannot guarantee that our relationship with
Philips will be extended on these terms or at all.

Competition

The markets for our semiconductor products are intensely competitive, and
we expect competition to increase. Our ability to compete effectively depends
upon a number of factors, including:

. product reliability and performance in operation;

. price;

. power consumption;

. compliance with standards;

. product size and integration; and

. time to market.

In the fiber-optic products market, our principal competitors are Tyco,
Lucent and Siemens. In the market for high-speed network components, our
principal competitors are Emulex Corporation, LSI Logic Corporation, QLogic
Corporation and Vitesse Semiconductor Corporation. Our principal competitors
in wireless communications are Motorola, NEC and Siemens. In the market for
infrared products, our principal competitors are Vishay Intertechnology, Inc.
and IBM. We compete with companies including LSI, IBM, Mitsubishi, Motorola
and NEC in the production of integrated circuits. Principal competitors in our
LED businesses include Lite-on, Inc., Stanley Electronic Co., Ltd., Siemens
and Toshiba.

Customers

We sell to a broad array of customers in the communications and computing
industries. We sell to original equipment manufacturers directly, as well as
contract manufacturers including Celestica, Inc., Jabil Circuit, Inc., SCI
Systems, Inc. and Solectron. Our top customers by product line, including
customers purchasing through contract manufacturers and distributors, include
the following:

<TABLE>
<CAPTION>
High-Speed
Fiber Optics Networking Components Wireless
------------ --------------------------- --------
<S> <C> <C>
Alcatel Cisco Alcatel
Cabletron Systems, Inc. Compaq Computer Corporation Ericsson
Cisco Data General Lucent
FORE Systems, Inc. EMC Motorola
Hwawei Hewlett-Packard Nokia
IBM Hitachi Qualcomm
Lucent IBM Samsung
Nortel NEC Siemens
Siemens 3Com Corporation
Tellabs, Inc. Veritas Software Corp.
Tyco
</TABLE>

In addition, through sales of ASICs, storage area networking components,
motion-control products and microprocessors, Hewlett-Packard accounted for
approximately 37% of our semiconductor products business revenue in the six
months ended April 30, 1999, and approximately 34% in fiscal 1997 and fiscal
1998. We have begun marketing our imaging products to companies such as
Microsoft Corporation and Logitech International S.A.

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Sales, Marketing and Support

Our sales organization consists of 375 professionals. Our sales
organization is divided into four groups, with responsibilities for large,
global accounts and three regional areas: the Americas, Europe and Asia
Pacific. We also have a direct sales team that has several years of experience
in servicing our customer relationship with Hewlett-Packard. Our sales force
has specialized product and service knowledge that enables it to sell specific
offerings at key levels throughout a customer's organization. In addition to
our direct sales force, we generate approximately 25% of our revenue through
our relationships with key electronic distributors, such as Arrow Electronics,
Inc. and Avnet, Inc. on a worldwide basis, EBV Electronik GmbH/Wyle
Electronics in Europe and North America, Future Electronics, Inc. in Europe
and North America, and Ryoyo Electro Singapore PTE, Ltd. and Tokyo Electric
Power Company in Japan. We have also recently focused a sales effort to major
contract manufacturers such as Celestica, Jabil, SCI and Solectron. Our total
sales effort reaches 45 countries through 200 distribution locations.

In support of our selling effort, we also have regional sales and customer
support centers in Germany, Hong Kong, Japan, Singapore, the United Kingdom
and the United States. These regional centers are responsible for sales
support, product presentations, developing new services and business
opportunities, and meeting the demands of our customers for localized
aftermarket support. We also provide a broad range of products and
applications-related information to customers and channel partners via the
Internet.

Manufacturing

Our semiconductor products business has a total of eight manufacturing
sites located in California, Colorado in the United States, Malaysia,
Singapore and the United Kingdom. The sites together have usable manufacturing
space of over 897,000 square feet and, as of July 31, 1999 approximately 7,900
employees devoted strictly to manufacturing. The majority of our silicon and
gallium arsenide wafer fabrication is done in the United States and Singapore,
while our assembly and test operations are in Malaysia, Singapore and the
United Kingdom. In addition to these facilities, we utilize a network of
contract manufacturers throughout Asia for semiconductor fabrication and test.

Our manufacturing strategy has been to outsource more mature technologies
while using our in-house manufacturing fabrication, assembly and test
capabilities to develop new, leading edge-products. In addition, through our
joint venture with Chartered Semiconductor Manufacturing, we have access to a
guaranteed source of silicon wafers for our integrated circuit designs at
favorable prices. The joint venture provides us with access to Motorola's
fabrication process developments through the joint venture's licensing
arrangements with Motorola.

Our production facilities have developed several quality-management
processes designed to increase productivity. We have developed proprietary
automated test systems, particularly in optical, light-emitting diode and
microwave.

HEALTHCARE SOLUTIONS

Our healthcare solutions business is a worldwide leader in clinical
measurement and diagnostic solutions. Our products and systems enable medical
professionals to gather and analyze information in hospital intensive care
units and emergency rooms, outpatient clinics, doctors' offices, patients'
homes and other settings. Our products and services include patient monitoring
systems, imaging systems, external defibrillators, cardiology products and
related professional services and support, each aimed at helping our customers
improve the quality of patient care while decreasing their costs. We hold
leading market share with our patient monitoring and associated clinical
information-management systems for critical care and cardiovascular ultrasound
imaging systems.

We market our products to professionals and institutions in more than 100
countries. We have sales offices in 33 countries and manufacturing sites in
Massachusetts and Washington in the United States, China and

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Germany. As of July 31, 1999, the healthcare solutions business had
approximately 5,000 employees worldwide. Our healthcare solutions business
generated revenue of $1.3 billion in fiscal year 1998 and $671 million in the
first half of fiscal year 1999.

Markets

The principal markets in which we participate are patient monitoring,
ultrasound imaging and external defibrillator and cardiology products.

Patient Monitoring

Patient monitoring systems continuously assess a patient's vital signs,
such as heart rate, blood pressure and respiration rates, to enable very rapid
decision making in emergency and critical care environments. Our patient
monitoring systems are used in three major market segments: critical care,
anesthesia care and neonatal care. According to Frost & Sullivan, the
worldwide market for multi-functional patient monitoring equipment totaled
$5.3 billion in 1997, growing at a compound annual rate of 8.7% from 1994 to
1997. This market is forecasted to grow at a compound annual rate of 11.5%
from 1998 to 2003.

Patient monitoring equipment and services are also used in non-critical
care environments. As providers seek to reduce costs, patient care is often
being delivered in non-critical care environments. Many patients who
previously would have remained in the intensive-care unit are being moved to
non-critical care areas, where portable monitors and remote measurement
systems are used. These non-critical care areas, which include non-intensive-
care areas of hospitals, outpatient care facilities and patients' homes, are
expected to provide significant growth opportunities for patient monitoring
markets in the future. Frost & Sullivan expects the market for lower cost and
portable monitoring equipment to grow from $675 million in 1998 to $1.3
billion by the year 2004, a 11.3% compound annual growth rate.

Ultrasound Imaging

Ultrasound imaging systems enable medical professionals to view multiple
parts of the human anatomy with high-resolution images that are produced non-
invasively from sound waves. The ultrasound imaging equipment market includes
cardiovascular, radiology, obstetrical and general imaging equipment. Frost &
Sullivan estimates that the worldwide market for ultrasound imaging equipment
was $2.5 billion in 1998 and grew at a compound annual rate of 5.1% from 1996
to 1998. Frost & Sullivan forecasts the overall market to grow at a compound
annual rate of 6.7% over the next five years. Within ultrasound imaging, our
principal targeted market is cardiology ultrasound imaging. Frost & Sullivan
estimates that the global market for cardiology ultrasound imaging equipment
was approximately $768 million in 1998 and grew at a compound annual rate of
5.5% from 1996 to 1998. In line with the overall ultrasound market, Frost &
Sullivan forecasts the cardiovascular imaging segment to grow at an annual
rate of approximately 6.8% over the next five years.

Cardiology Products

Our cardiology products business includes external defibrillators,
electrocardiographs and related information systems. External defibrillators
are devices that deliver an electrical shock designed to restart the heart of
victims of sudden cardiac arrest. Theta Corporation estimates the worldwide
external defibrillator market was approximately $425 million for 1998 and
forecasts a compound annual growth of 8% for the years 1998 through 2000. The
fastest-growing segment of the defibrillator market is the out-of-hospital
segment, which is expected to grow more than 35% annually for the next three
years, according to Frost & Sullivan. Each year in the United States, sudden
cardiac arrest strikes approximately 350,000 people, of whom less than 5%
survive, largely because defibrillators do not reach victims in time. In 1997,
the American Heart Association called for the broad deployment of automatic
external defibrillators in public places where large groups of people gather
and estimated that broader public access to defibrillators could save an
additional 20,000 lives each year in the United States.

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We also sell electrocardiography equipment, which measures and displays
information about the electrical activity of the heart. According to Frost &
Sullivan estimates that the total worldwide electrocardiography equipment
market was approximately $200 million in 1998 and grew at a compound annual
growth rate of approximately 2.3% from 1991 to 1998. This market is expected
to grow at an annual rate of 3.0% over the next three years.

Strategy

Our healthcare solutions business focuses on creating and delivering new
products and services for the healthcare market, establishing and maintaining
a strong reputation with our customers and developing effective strategic
partnerships by pursuing the following strategies:

Bring New Technologies and Applications to Targeted Markets

We have established leadership positions in the patient monitoring,
ultrasound and cardiology markets. We believe we can expand our market
opportunity by moving into new areas of these markets, increasing the market
penetration of our existing products and services and delivering new products
that offer higher performance at lower prices. In particular, we aim to bring
new technologies to the patient monitoring and imaging markets and expand our
coverage in developed countries by delivering cost-effective diagnostic and
therapeutic tools. We are also focused on developing new, low-cost
applications of our existing products to expand our presence in smaller
hospitals and less-developed countries.

Target Medical Care Beyond the Hospital

We believe that an increasing proportion of healthcare is being delivered
outside of the hospital in clinics, surgical centers and doctors' offices, as
well as in the workplace and homes. According to data from the American
Hospital Association, the average length of stay at hospitals has declined
17.6% from 1990 to 1996. By contrast, outpatient visits increased 37% between
1990 and 1996. This growth in outpatient services has increased demand for
products that can enable nurses, other clinicians and nonmedical professionals
to provide care outside of the hospital. In 1998, we acquired Heartstream, a
market leader in automatic external defibrillators which enable nonmedical
professionals to deliver defibrillation in settings outside the hospital.
Through internal development efforts, we are also delivering cost-effective
diagnostic and therapeutic tools, which can decrease the cost of diagnosing
and monitoring patients. These tools are targeted at smaller hospitals, mobile
clinics and private offices.

Increase Presence in Emerging Systems Worldwide

We believe an opportunity exists in emerging countries with underdeveloped
healthcare systems and infrastructure. We believe the large and growing
populations of these countries will fuel demand for cost-efficient medical
products and services. In order to capitalize on this opportunity, we plan to
expand our global presence by continuing to invest in the development of low-
cost, reliable, high-utility, diagnostic, monitoring and therapy instruments
designed to be easily supported in rural areas. We also work with
international financial organizations, such as the World Bank, to arrange
secured financing services for our customers in these regions.

Take Advantage of the Rapid Adoption of Information Technology, the
Internet and Industry Standards

The rapid growth of the Internet is fueling the adoption of Internet-based
healthcare services, medical care by telephone and online self-care. According
to Cyber Dialogue, by the year 2000 an estimated 30 million Americans will use
the Internet to learn about options for treatment, self-care and prevention.
To take advantage of this accelerating trend, we are working with medical
professionals to deploy Internet-based communication systems that link medical
professionals and patients. For example, our CodeRunner Web product allows
healthcare professionals to review a summary of cardiac resuscitation efforts
to ensure that approved procedures were followed in an emergency situation.

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Our customers are increasingly demanding clinical diagnostic information
systems based on open standards for easier and more cost-effective access to
medical data. To proactively participate in the definition of new industry
standards and ensure compliance of our products and technologies, we are
currently leading several industry-wide efforts to create and promulgate
standards for communication and interoperability among disparate healthcare
systems.

Develop Point-of-Care Technologies

Point-of-care diagnostic products consist of blood-and-tissue analysis
systems that provide immediate or continuous diagnostic results at the
patient's bedside. These systems include portable, microprocessor-based
analyzers that employ single-use, disposable cartridges to perform
simultaneously several of the most frequently ordered blood tests in a simple
90-second procedure. These biochemistry-based devices provide accurate and
reliable blood test results more quickly, cost-effectively and simply than
most advanced clinical laboratory equipment. We believe market acceptance of
point-of-care diagnostics is increasing. In 1995, we entered into an agreement
with i-STAT Corporation to enter the point-of-care testing marketplace with
critical blood parameters. In 1999, we entered into a worldwide agreement with
Diametrics Medical Incorporated in order to provide both continuous and
intermittent blood monitoring capabilities. These companies' biochemical
sensors, when integrated into our monitoring platforms, enable time-sensitive
measurements to be made quickly and accurately at a patient's bedside for
faster diagnosis and therapeutic intervention. We intend to continue to
enhance our patient monitoring capabilities by developing alliances with other
companies.

Focus on the Management and Treatment of Chronic Illnesses

Our products and solutions primarily address the need for the diagnosis and
treatment of non-critical illnesses in a clinical setting. We believe
healthcare expenditures are shifting from acute care in the hospital to
ongoing care or treatment of long-standing conditions, as a result of the
dramatic growth in the elderly population and advances in life-extending
medical therapies and technologies. Therefore, we have recently begun to
pursue opportunities focused on the ongoing management and treatment of
chronic illnesses. We plan to introduce our first product to address the
chronic care market, our remote measurement solution, in late 1999. It is our
intention that this solution will assist clinicians in successfully managing
congestive heart failure patients at home. Studies show that this type of
disease management program increases patient comfort while avoiding costly
hospital emergency visits.

Products

Our products and services include patient monitoring, imaging systems,
cardiology products and related professional services.

Patient Monitoring

According to a 1998 study by Frost & Sullivan, we maintain a leadership
position in the market for patient monitoring and related information
management systems. Our products range from critical-care bedside monitors,
fetal monitoring and remote-measurement systems to central station monitors,
associated clinical decision support systems and critical-care information-
management systems. Our clinical decision support and critical-care
information-management systems are scalable based on department protocols,
severity of patient condition and workflow requirements. Our solutions range
from basic surveillance and centralized alarms to very large system
configurations that provide comprehensive patient information-management
support.

We have supplied over 170,000 units worldwide of our modular Viridia
Component Monitoring System family of patient monitors. The Viridia CMS
monitors support more than 20 different kinds of clinical measurements in
critical care, anesthesia and perinatal care. Our Viridia Information Center
is one of the industry's most advanced real-time, patient data analysis and
surveillance solutions offering data at a central station. It enables
clinicians to provide more effective care through the analysis, integration
and management of

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patient information. The Viridia Information Center integrates the data
management and review capabilities of a clinical workstation with the features
of a central monitor for increased productivity and improved quality of care.
Our CareVue clinical information system, deployed at the point of care,
captures, stores and makes available data that can be configured for
comprehensive reports. CareVue enables multiple caregivers to analyze patient
data in order to improve outcomes, analyze care protocols and perform research
and continuous quality improvements.

We have established a number of strategic relationships to provide us with
certain clinical applications to be used with our existing products and
products under development. We have an agreement with Diametrics Medical and
i-STAT Corporation in point-of-care blood chemistry. Continuous and
intermittent monitoring sensors provided by these partners, when integrated
into our monitoring platforms, enable these time-sensitive measurements to be
made quickly and accurately at a patient's bedside for faster diagnosis and
therapeutic intervention.

Ultrasound Imaging

We have a broad range of ultrasound imaging products, which are used by
doctors and technicians in cardiology, radiology, obstetrics, vascular,
emergency and operating departments to diagnose non-invasively a range of
diseases and abnormalities throughout the body. Our U.S. cardiac-ultrasound
business was ranked number one in the industry for overall quality of service
and support by International Marketing Ventures in 1998 for the fifth year in
a row. We offer three major ultrasound platforms: SONOS 5500, SONOS 4500 and
ImagePoint Hx. SONOS 5500 is a premium performance cardiovascular ultrasound
system used for both research and clinical applications, while SONOS 4500 is a
high-performance cardiovascular ultrasound system used primarily in the
clinical environment. ImagePoint Hx is a multispecialty product used in a
broad range of ultrasound applications to address the broad needs of
physicians working in smaller hospitals, mobile clinics and offices.

Our technology differentiates our ultrasound products from competitive
products. A key component of ultrasound products is the transducer, a complex
electro-mechanical device that transmits sound waves into the body and
converts the returning echoes into electrical signals, providing for the
display of high quality images of human anatomy. We believe our proprietary
transducers provide the widest bandwidth, or range of soundwave frequencies,
in the industry, enabling the ultrasound system to optimize image detail and
penetration without making the operator switch transducers. Another key
technology in ultrasound products, signal processing, takes the electrical
signals from the transducers and converts them into a high quality image. An
example is our proprietary Acoustic Quantification, which automatically
measures critical characteristics of the beating heart, eliminating time-
consuming manual measurements. Our expertise in signal processing has also led
to the development of proprietary ASICs, which have enabled us to provide
ultrasound imaging equipment with enhanced performance for the same or lower
cost.

To address the information-management needs of our ultrasound customers, we
have developed EnConcert, which consists of a series of software applications
running on personal computer hardware. EnConcert allows clinicians to review,
measure, manage and archive images, reports and patient data related to their
ultrasound exams. These tools improve doctors' efficiency and allow them to
communicate exam results more rapidly to their colleagues.

Cardiology Products

We develop and manufacture external defibrillators, electrocardiographs and
electrocardiogram information management systems. An external defibrillator is
a device that delivers an electrical charge that can restart a person's heart
in sudden cardiac arrest or restore a heart's correct rhythm in cases of
irregular heartbeat. An electrocardiograph is a diagnostic tool that measures
and displays the characteristics of the heart's electrical activity. An
electrocardiogram management system allows for the digital storage, review and
retrieval of electrocardiograms.

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We produce both manual and automatic external defibrillators. Manual
defibrillators are used by highly trained medical personnel, primarily in
hospitals and paramedic units. We believe our CodeMaster manual defibrillator
product line is one of the most extensive in the industry. Our products are
designed for both hospital and out-of-hospital use and are recognized as having
the fastest charge time in the industry. In addition to their reliability and
ease of use, our defibrillation products record the patient data monitored, and
action taken by the caregiver, for review by an emergency medical director or
other responsible parties, to enable monitoring of caregiver performance and
product effectiveness. We also have the industry's first pre-hospital product
with predictive software that provides information used to accelerate
assessment and triage of patients with chest pains so that appropriate therapy
can begin promptly.

Automatic external defibrillators are portable defibrillators that are used
by nonmedical professionals to deliver on-site defibrillation following a
cardiac event. Given the relatively low cost and ease of use, these systems are
well suited for deployment in places where people congregate. Purchasers of our
ForeRunner automatic external defibrillators include American Airlines, Inc.,
Delta Air Lines, Inc., United Air Lines, Inc., Chicago O'Hare International
Airport, Hilton Gaming Corporation, Michelin and Sundance Ski Resort. The
ForeRunner's competitive advantage is based upon its unique, proprietary, low-
energy biphasic waveform. A biphasic waveform is a form of energy where the
electrical current is reversed midway through the pulse. It enables the
ForeRunner to be lighter, less costly, safer, more reliable and the smallest
external defibrillator in the market.

Our electrocardiographs monitor the characteristics of the heart's
electrical activity to enable cardiology professionals to provide accurate
diagnoses and deliver care for cardiac patients. Our electrocardiogram
information management systems allow cardiologists in institutions where large
numbers of electrocardiograms are taken each day to automate the flow of
information efficiently and generate accurate diagnostic reports for referring
physicians. This system is based on industry standard computing platforms and
also provides for remote connectivity and information access using standard
Internet software.

We have also established strategic alliances for our cardiology products
business. For example, we have an agreement with Dr. Harry P. Selker, Chief of
the Division of Clinical Research at the New England Medical Center, to jointly
develop predictive instruments to help accelerate the assessment and triage of
patients who may be having a cardiac event. Dr. Selker provides us with
clinical and technical input and product evaluation by clinical trial, while we
provide software and hardware engineering and development. We also have an
agreement with Zymed, Inc. in electrocardiograms. Zymed's "EASI 12-lead"
technology, when integrated into our monitoring platforms, provides the ability
to more quickly and easily acquire, process and transmit a derived 12-lead
electrocardiogram using five electrodes instead of the customary 10 used today
in the critical care setting.

Customers

We provide products and services to a broad range of customers in the
industry. Within the last 12 months, 91% of the largest 2,000 hospitals in the
United States purchased our equipment and/or services. Outpatient clinics,
doctors' offices and public facilities, travel companies and entertainment
providers are also a growing part of our customer base.

A representative list of customers of our healthcare solutions business
follows:

Adventist Health Kaiser Foundation Scripps Memorial
System--Sunbelt Hospitals Health System
Advocate Health Care Lahey Hitchcock Sisters of
Baptist Health System Clinic Providence (WA)
of South Florida Mayo Foundation St. Joseph Health
Catholic Healthcare Memorial Healthcare System (CA)
West Systems Stanford Healthcare
Columbia/HCA Healthcare Methodist System Services
Corporation Methodist/Indiana Sutter Health
Intermountain Health University California
Care Mount Sinai Health Healthcare Systems
International Military System Tenet Healthcare
Medical Center, Cairo, New York Health Corporation
Egypt Hospital Tri-State Health
Promedica Health Initiative
System United States
Quorum Health Government
Group, Inc.

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Sales, Marketing and Support

Our products and services are sold through both direct and indirect
channels. We have sales offices in 33 countries and more than 2,400 direct
sales and service personnel. Our sales strategy is to sell to and service our
largest accounts (hospital and corporate business) directly while employing
third-party distributors and manufacturer's representatives for smaller or
more geographically dispersed countries. Electronic commerce is also an
integral and growing element of our sales and distribution strategy. Today,
customers can access product and service information for all our products, and
they can purchase medical supplies and replacement parts on our website.

In select instances we have also established distribution alliances with
complementary medical equipment manufacturers in order to leverage market
strength or bring a broader array of solutions to our customers. Specifically,
Quinton Instruments Company is the United States distributor for our
electrocardiographs and electrocardiogram information-management systems. We
have an agreement with Laerdal Medical Corporation in the area of worldwide
distribution and complementary training products in the emergency medical
services segment. Laerdal sells our CodeMaster and ForeRunner defibrillators
in the pre-hospital market for paramedics and other specifically-trained
emergency medical teams.

We believe that medical equipment sales are heavily influenced by personal
references among clinicians with large medical research facilities serving as
key installations. For this reason, we have sold equipment into what we
believe to be some of the most influential facilities worldwide, including
Allgemeines Krankenhaus (Vienna), Cedars Sinai Medical Center, Cleveland
Clinic Foundation, Duke University Medical Center, Johns Hopkins Hospital,
Massachusetts General Hospital, Mayo Foundation, Royal Brisbane Hospital,
Stanford University Hospital and Tokyo General Hospital.

To support our sales efforts we have marketing centers in Hong Kong and
Japan covering Asia; in Germany covering Europe; and in Massachusetts covering
North and Latin America. These centers are responsible for outbound marketing
programs, tradeshows, telesales, call-center operations and distribution
support.

Our professional services offerings include multivendor systems
integration, training and consulting to hospitals, outpatient facilities and
doctors' offices. Our professional services enhance our clients' ability to
access and utilize their data, enabling enhanced clinical decision support and
improved workflow for lower healthcare costs and improved delivery of patient
care. We combine our knowledge of clinical processes and technology with
complementary applications and tools from partners to create information
management solutions required by our customers. For example, our Report Review
software product integrates a patient's clinical reports from multiple
information sources to provide one access point for care planning and
treatment.

Our technical specialists and clinical application specialists provide
installation, repair and training services to preserve and maximize customer
investments in our solutions. In addition, geographic response centers and
remote on-line support supplement on-site services. Finally, we provide
consulting, project management and technical implementation services to meet
customer needs for networking and integrating our solutions.

Manufacturing

The healthcare solutions business has four manufacturing locations:
Massachusetts and Washington in the United States, China and Germany. We
selectively use suppliers to provide manufacturing capabilities outside our
core competencies, such as the manufacture of printed circuit assemblies by
Celestica. We typically complete the final assembly and test of our medical
products and systems internally.

Competition

The markets we address are highly competitive. Our competitors are diverse
and offer a variety of solutions directed at various segments of our medical
products and services markets. Our ability to compete effectively depends upon
a number of factors, including our ability to:

. provide a complete set of high quality products for our customers;

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. offer competitive prices;

. provide financing services;

. provide support and training; and

. innovate technologically.

Our competitors with broad product portfolios include GE Marquette Medical
Systems and Siemens Medical Systems, Inc. We also compete with other vendors
in specific markets. Our major competitors in patient monitoring include GE
Marquette Medical, Siemens Medical, Spacelabs Medical, Inc. and the Datex-
Ohmeda division of Instrumentarium Corporation. In the imaging systems
business, we compete with Acuson Corporation, Toshiba Medical Systems, Inc.,
GE Marquette Medical, Siemens Medical and the ATL Ultrasound, Inc. division of
Philips Medical Systems International. Our competition in the external
defibrillator market comes primarily from Physio Control Corporation (a
subsidiary of Medtronic Inc.), and Zoll Medical Corporation.

Government Regulation

The products developed and marketed by our healthcare solutions business
are subject to extensive regulation by the FDA and other regulatory bodies.
FDA regulations govern, among other things, the following product activities:

. design and development;

. testing, including animal and human studies;

. labeling;

. premarket clearance or approval;

. manufacturing;

. storage;

. advertising and promotion; and

. sales and distribution.

In the United States, medical devices are classified on the basis of
controls deemed necessary to ensure their safety and effectiveness. Class I
devices are subject to general controls, such as labeling, premarket
notification, and adherence to the FDA's Quality System Regulations, which
incorporate current good manufacturing practices that are applicable to
medical devices. Class II devices are subject to general and special controls.
Special controls include performance standards, postmarket surveillance,
patient registries and FDA guidelines. Most class III devices are controlled
through the premarket approval process to ensure their safety and
effectiveness.

Prior to commercialization, premarket notification clearance generally must
be obtained for class I and II devices as well as class III devices for which
the FDA has not called for premarket approval. For most class III devices, a
premarket approval application is required and must be supported by valid
scientific evidence to demonstrate their safety and effectiveness. The
notification or application typically includes:

. results of bench and laboratory tests;

. when appropriate, results of animal tests and clinical studies;

. a detailed description of the methods, facilities and controls used to
manufacture the device; and

. proposed labeling and advertising literature.

Most medical devices marketed by the healthcare solutions business are
class II or "Pre-Amendment" class III devices, which currently require only
premarket clearance. The healthcare solutions business does not market

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any class III device requiring premarket approval in the United States, but it
may do so in the future or the FDA may require by regulation that premarket
approval applications be submitted for our existing "Pre-Amendment" class III
devices.

Once clearance or approval is obtained, FDA oversight continues. We are
required to demonstrate and maintain compliance with the Quality System
Regulations for all our products. The FDA enforces the Quality System
Regulations through periodic inspections of our manufacturing operations and
those of our contract manufacturers. The Quality System Regulations relate to
product testing and quality assurance, as well as to the maintenance of
records and documentation. We are required to provide information to the FDA
on deaths or serious injuries alleged to have been associated with the use of
our medical devices, as well as on product malfunctions that could contribute
to death or serious injury. The FDA also restricts the promotion of products
for unapproved or off-label uses.

If the FDA believes we are not in compliance with the Federal Food, Drug
and Cosmetic Act or its regulations it can:

. detain or seize our products;

. order or request a recall;

. seek an injunction against future violations;

. assess civil penalties against us; and

. initiate criminal proceedings against us.

Compliance with other regulatory requirements is necessary to market our
medical devices outside the United States. These regulations vary from country
to country.

CHEMICAL ANALYSIS

Our chemical analysis business is a leading provider of analytical
instrument systems that enable customers to identify, quantify, analyze and
test the atomic, molecular, physical and biological properties of substances
and products. Our chemical analysis products and services are used by
scientists, engineers and technicians working in research and development,
quality assurance, quality control and manufacturing.

Our four main product lines are chromatography, spectroscopy, bio-
instrumentation and related consumables. We also provide service and customer
support for our products. Chromatographs separate a mixed sample in gas or
liquid form into its component compounds so that these components can be
analyzed individually. Mass spectrometers identify and quantify molecules and
elements within a sample by measuring the mass of atoms. Bio-instrumentation
is used in the analysis of complex compounds, such as DNA.

Our chemical analysis business offers a wide range of products and services
that are sold primarily into the hydrocarbon-processing, environmental,
pharmaceutical and bioscience markets. We are a leading provider of
chromatography and mass spectrometry systems used by research and development
and quality assurance laboratories for the measurement and analysis of
chemical compounds. We are also the market leader in the sale of benchtop
inductively coupled plasma mass spectrometers (ICP-MS), which are generally
acknowledged as the most powerful tools for the detection of minute quantities
of metals.

Some of the uses of our instrument systems are:

. determining octane levels in gasoline;

. analyzing pesticide levels in drinking water;

. ascertaining the quality of compounds in the manufacture of
pharmaceuticals;

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. identifying impurities in the manufacture of semiconductors; and

. analyzing DNA for various life science applications.

We employed approximately 3,700 people as of July 31, 1999 in our chemical
analysis business. This business operates in more than 50 countries, with
manufacturing and product development centers in China, Germany, Japan and the
United States and marketing centers in Germany, the United States, and
Singapore. Our chemical analysis business generated $938 million in revenues
in fiscal 1998 and $499 million in revenues in the first half of fiscal 1999.

Markets

Strategic Directions International estimates that in 1998, worldwide
revenue in the analytical instrumentation market totaled approximately $15.9
billion. According to Strategic Directions International, growth of the
overall analytical instrumentation market between 1998 to 2001 is expected to
be approximately 8% annually. The primary markets served by our chemical
analysis business are the hydrocarbon processing, environmental,
pharmaceutical and biopharmaceutical industries. We estimate that our market
represents approximately 30% of the total available analytical instrumentation
market.

Hydrocarbon Processing

The hydrocarbon processing industry encompasses the natural gas, petroleum
refining, petrochemical and chemical markets. This industry spends
approximately $2.2 billion annually on analytical instrumentation. We sell
primarily gas chromatographs and gas chromatography-mass spectrometry products
and systems into these markets. Petroleum refiners use our measurement
solutions to analyze crude oil composition and perform other raw material
analysis, verify and improve refining processes, and ensure the overall
quality of gasoline, fuels, lubricants and other products. Our gas
chromatographs are used to monitor consistent quality in the natural gas
delivered to consumers and industry. Petrochemical and chemical producers use
our products to measure and control the quality of their finished products and
to verify the environmental safety of their operations. We expect growth in
these markets to be driven by: (A) migration of measurement and analysis
activities out of the centralized labs and closer to the process, (B)
standardization of measurement processes across companies' worldwide
operations, and (C) technologies that improve analysts' productivity.

Environmental

We develop and market analytical instrumentation for the environmental
market for applications such as laboratory and field analysis and
characterization of chemical pollutants in air, water, soils, solid waste,
agriculture and food products. Environmental industry customers include all
levels of government, the industrial and manufacturing sectors, engineering
and consulting companies, commercial testing laboratories, colleges and
universities. We are a market and technology leader in the worldwide
environmental instruments market. Strategic Directions International estimates
that the market for our environmental products and services was $1 billion in
1998. We expect growth in this market to be driven by: (A) government
legislation, enforcement, site assessment and monitoring, (B) multi-national
trade agreements, (C) concerns about public health and food safety and (D)
technologies that identify new environmental risks. We believe these factors
will lead to more demand for environmental instrumentation in the Asia-
Pacific, Latin America and Eastern Europe regions, as these regions implement
new and stricter environmental regulations.

Pharmaceutical and Biopharmaceutical

Our analytical-instrument solutions are used by pharmaceutical and
biopharmaceutical companies in every phase of the drug development process.
This includes research into the basic causes of disease, identification and
development of new drugs, obtaining regulatory approval, manufacturing and
distribution. Strategic Directions International estimates that these
companies will spend approximately $3.8 billion on analytical instrumentation
in 2002.

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Drug discovery is extremely costly and involves high risk. The
Pharmaceutical Research Manufacturers' Association indicate that it takes, on
average, more than 10 years and costs in excess of $500 million to discover
and develop a new drug. Therefore, investment in productivity-enhancing
technology, such as analytical instrument solutions, is critical to reducing
the time and cost it takes to bring new drugs to the consumer.

Strategy

In order to maintain our leading position in the analytical instrumentation
market, our strategy is as follows:

Target high-growth opportunities in the pharmaceutical and
biopharmaceutical markets

We believe the pharmaceutical and biopharmaceutical markets represent a
high-growth opportunity for us, as participants in these markets continue to
invest significant resources in research and development. Companies in this
industry are constantly in search of ways to discover and develop new drugs
faster and at lower cost. We continue to invest in developing new instruments
and technologies to address these requirements. For example, through our
strategic relationship with Caliper Technologies Corporation, we have
developed instrumentation that enables chemical analysis procedures to be
performed on the surface of the Caliper LabChip. The LabChip uses a technology
called microfluidics to manipulate minute quantities of various fluids, which
allows researchers to conduct analysis at a fraction of the time and cost it
would take using conventional techniques.

Pharmaceutical and biopharmaceutical companies are also investing in bio-
instrumentation that increases understanding of the genetic cause of diseases
in order to speed the development and increase the efficacy of new drugs. We
will continue to focus resources on the development of technologies to address
this market segment. For example, working with Affymetrix, Inc., we have
developed an instrument that scans a large number of DNA molecules synthesized
on the surface of an Affymetrix GeneChip, enabling identification of important
genetic information.

Focus on growth opportunities in current markets

We will continue to focus resources on growth opportunities in markets we
currently address. We believe that emerging markets, particularly in the Asia
Pacific, Latin America and Eastern Europe regions, represent a growth
opportunity for analytical instrumentation, as investments in basic
industries, infrastructure and environmental protection increase over the
coming years. To address these emerging markets, we are broadening our
worldwide distribution capabilities and developing less complex
instrumentation with lower prices. Additionally, in order to differentiate our
product offerings and increase our market share in developed markets, we
intend to continue to grow our portfolio of services and consumable products,
enabling us to offer our customers more complete solutions. Finally, we
continue to develop gas chromatography and mass spectroscopy products that are
smaller and more portable to meet increasing demand for use of these
instruments outside of centralized laboratories.

Bring new products and technologies to market faster

We seek to bring new products and technologies to market both through
internal development and the strategic acquisition of technologies from third
parties. Internal development of new technology is accomplished through a
combination of discoveries at Agilent Technologies Laboratories and research
and development efforts within our chemical analysis business. Agilent
Technologies Laboratories is primarily focused on basic long-term research,
while our chemical analysis business emphasizes research and development of
technology for more immediate commercialization. We also focus considerable
effort on developing solutions that meet the current and anticipated needs of
customers. For example, we are expanding our programs to offer customers early
access to products under development to ensure that these products are meeting
customer needs. In addition, our development of modular hardware and software
platforms allows us to bring new generations of products to market faster.

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<PAGE>

In addition to our internal efforts, we consider acquisitions to complement
our current products, solutions and technologies and to accelerate our entry
into strategic markets.

Leverage strategic relationships and alliances

We intend to build strategic relationships to enable us to develop products
and services that complement existing technologies and products in our target
markets. For example, through our relationship with Caliper Technologies
Corp., we are conducting joint research and development in microfluidics. This
has resulted in the commercialization of the LabChip technology, which is
designed to increase the speed and accuracy of traditional analytical methods.

In addition, through our strategic alliances, we develop instruments that
work with our partners' products, enabling us to offer our customers a broader
range of products and solutions. These alliances also help our customers to
reduce the time and resources needed to integrate disparate products from
separate vendors.

Products

A key factor in our target markets is the need for new products that
increase productivity of the end customer. Our chemical analysis products,
systems and services enable our customers to analyze water, air and soil for
monitoring and remediation; to understand the properties of natural and man-
made gases, liquids and chemically-based products; and to advance knowledge of
the genetic basis of disease and enable the development, testing and use of
new drugs. Our four main product lines, chromatography, spectroscopy, bio-
instrumentation and related consumables, are described below.

Gas Chromatography

Gas chromatographs are used to separate molecules of a gaseous mixture to
determine the quantity and identity of the molecules present. A gas
chromatograph can analyze gas samples as well as solids and liquids that can
be converted to a gaseous state. Most gas chromatographs have the approximate
size and appearance of a large microwave oven.

We are the worldwide market leader in the $1 billion gas chromatograph
industry, according to Strategic Directions International. Our gas
chromatography systems are used in many industries, including pharmaceutical,
hydrocarbon processing, environmental, foods and flavors, forensics and
consumer products. Our instruments are used in laboratories involved in
research and development, quality assurance, quality control and routine
testing. We also produce portable chromatography systems used in the field for
performing on-site, real-time measurements. Our products are used to test the
quality and safety of food, air and water; to develop cleaner-burning fuels
and more effective pharmaceuticals; and to test for alcohol in blood, drugs in
urine or explosive residues in crime scene evidence.

Liquid Chromatography

Liquid chromatographs are used to separate molecules of a liquid mixture to
determine the quantity and identity of the molecules present. These
instruments are modular in construction and can be configured to form
instruments that perform specific analyses. Each module is about the size of a
home videocassette recorder.

According to Strategic Directions International, the high-performance
liquid chromatography market is larger than any other analytical instrument
market, exceeding $1.8 billion in 1998 with an estimated annual growth rate of
8% over the next five years. High-performance liquid chromatographs are an
essential tool in the pharmaceutical industry for basic research, drug
development and clinical trials of new drugs. Other industry groups that
utilize high-performance liquid chromatographs include chemical development
and manufacturing, industry and government testing laboratories for safety,
quality and nutritional content of foods and beverages, athlete monitoring for
illegal drug use and environmental monitoring.

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<PAGE>

Mass Spectroscopy

Mass spectroscopy systems break molecules into their component parts and
analyze these parts. Our mass spectrometers range in size from that of a small
microwave oven to that of a medium-sized refrigerator.

We are a leader in the worldwide mass spectroscopy market, which Strategic
Directions International estimates to have been about $518 million in 1998.
Mass spectroscopy systems are typically used in combination with gas or liquid
chromatographs in the pharmaceutical, semiconductor and environmental
industries. The combined instruments are used to study and refine the chemical
structure of new drugs, to determine the presence of impurities in
semiconductors as they are manufactured, or to research the presence of heavy
metals and other unwanted substances in soil and water.

Bio-Instrumentation

We have developed relationships with Affymetrix and Caliper Technologies to
address opportunities in the pharmaceutical and biopharmaceutical industries.

Our GeneArray system allows a researcher to use GeneChips designed by
Affymetrix to analyze many different samples more quickly than other DNA
analysis techniques. The procedure consists of extracting DNA from the sample
to be analyzed, tagging it with a fluorescent molecule and fragmenting it into
relatively small pieces. This fluorescent DNA sample is then placed on
Affymetrix's GeneChip. During this process, the DNA on the chip binds to
complementary DNA in the sample. Our GeneArray system then scans the GeneChip
with a laser and the results are analyzed by our software. For example, these
results are useful in identifying defects in genes that cause disease. The
GeneChip and GeneArray Scanner enable high-speed detection and
characterization of large amounts of genetic information.

In addition to our gene analysis system, we are also developing faster ways
to conduct chemical analysis for the pharmaceutical and biopharmaceutical
industries. The new instrument systems that we have developed through our
relationship with Caliper Technologies integrate a large number of chemical-
analysis procedures onto a single chip. We develop and distribute
instrumentation that extracts and analyzes data from the microchip developed
by Caliper Technologies, using advanced microfluidics technology. Using
miniature, integrated chemical-processing systems etched into glass, silicon,
quartz or plastic, the microchip allows the steps customarily performed in
conventional instruments to be done using minute quantities of costly liquids
in a fraction of the usual time. We believe these new systems will speed up
chemical analysis significantly while reducing costs.

Consumables

We also offer consumable products, including chromatograph columns,
analytical reagents and other accessories and supplies used by our customers
during the analytical experimentation process. Columns are metal or glass
tubes containing various substances that are inserted into chromatographs to
assist in the process of separating compounds into their constituent parts.
Reagents are chemicals used to perform analysis on the resulting constituent
parts. Other accessories and supplies we provide range from rubber rings to
syringes to safety glasses.

Our offerings include both generic consumables, where we seek to
distinguish our products on price, selection and customer loyalty, and
proprietary consumables developed by us, where we offer exclusive technology,
performance and functionality.

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Customers

We sell our products and services to a broad array of customers in each of
the markets we serve. Our top customers by market segment are the following:

<TABLE>
<CAPTION>
Hydrocarbon Processing Environmental Pharmaceutical
---------------------- ------------- --------------
<S> <C> <C>
Bayer AG Browning-Ferris AstraZeneca PLC
Industries, Inc.
Boehringer Ingelheim Government of Korea Chiyoda
International GmbH
E. I. du Pont de Nemours Government of Glaxo Wellcome PLC
and Company Switzerland
Elf Group Quanterra, Inc. Johnson & Johnson
Exxon Corporation Savannah Laboratories & Merck & Co., Inc.
Environmental Services,
Inc.
Hoechst AG State of California Novartis AG
Monsanto Company State of Georgia Pfizer, Inc.
Petroleos de Venezuela State of Texas Pharmacia & Upjohn, Inc.
S.A.
Rhone-Poulenc S.A. United States Army Roche Holdings, Inc.
Royal Dutch Shell U.S. Federal Government SmithKline Beecham
Clinical Laboratories,
Inc.
</TABLE>

Sales, Marketing and Support

Our sales and support delivery channels are aligned by our key markets to
maximize market coverage and to optimize selling and support delivery
efficiency. We market our products to our customers through our direct sales
force, value-added resellers, manufacturers' representatives and distributors.

We use our direct sales force to market our products to all our
pharmaceutical and biopharmaceutical accounts, large and medium size
hydrocarbon processing customers and all environmental accounts. We supplement
our direct sales force with sales agents to provide broader geographic
coverage and to cover smaller accounts. We also have an active value-added
reseller program to augment our ability to provide more complete solutions to
our customers. We sell our consumable products through distributors, telesales
and electronic commerce.

We offer a wide range of startup, operational, educational and compliance
support services for our chemical analysis measurement and data handling
systems. We deliver our support services to customers in a variety of ways,
including on-site assistance, return to us for repair or exchange, telephone
support and self diagnostic services provided over the Internet. Our support
services limit the amount of time an instrument is out of service, provide
increased system productivity, extend the instrument life and offer fast
problem resolution. We also offer special industry-focused service bundles
that are designed to meet the specific needs of hydrocarbon processing,
environmental, pharmaceutical and biopharmaceutical customers to keep
instruments fully operational and compliant with the respective industry
requirements.

Competition

The markets for analytical instruments in which we compete are
characterized by evolving industry standards and intense competition. Our
principal competitors include EG&G, Inc., PE Biosystems, Shimadzu Corporation,
Thermo Instrument Systems, Inc. and Waters.

Our ability to compete effectively depends upon a number of factors
including our ability to:

. produce high-quality and reliable products;

. introduce new technologies and products in a timely manner;

. provide favorable overall cost of ownership; and

. provide product and service solutions that complement and support our
main product lines.

We believe our analytical instrument solutions compete favorably with
respect to each of the above listed factors.

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Manufacturing

Our manufacturing strategy supports our diverse product range and customer-
centric focus. We assemble highly configurable products to individual customer
orders and make standard products to stock. We employ advanced manufacturing
techniques and supply chain management systems to reduce costs and
manufacturing cycle times. We selectively use partners to provide
manufacturing capabilities outside our core competencies, such as the
manufacture of printed circuit assemblies and the delivery of shipment
logistics. We have manufacturing facilities in California and Delaware in the
United States, China, Germany and Japan.

Government Regulation

The chemical analysis product and related consumables marketed by our
chemical analysis business are subject to regulation in the United States by
the Environmental Protection Agency under the Toxic Substances Control Act,
and by government agencies in other countries under similar laws. The Toxic
Substances Control Act regulations govern, among other things, the testing,
manufacture, processing and distribution of chemicals, the testing of
regulated chemicals for their effects on human health and safety and import
and export of chemicals. The act prohibits persons from manufacturing any
chemical in the United States that has not been reviewed by Environmental
Protection Agency for its effect on health and safety, and placed on an
Environmental Protection Agency inventory of chemical substances. If we fail
to comply with the notification, record-keeping and other requirements in the
manufacture or distribution of our products, then the Environmental Protection
Agency can obtain an order from a court that would prohibit the further
distribution or marketing of a product that contains a chemical that is out of
compliance or can impose fines and penalties.

---------------------

Research and Development
The process of developing new high-technology products and solutions is
inherently complex and uncertain. It requires, among other things, innovation
and accurate anticipation of customers' changing needs and emerging
technological trends. Without the introduction of new products, services and
enhancements, our products and services are likely to become technologically
obsolete over time, in which case revenue would be materially and adversely
affected. There can be no assurance that such new products and services, if
and when introduced, will achieve market acceptance. After the products and
services are developed, we must quickly manufacture and deliver such products
and services in sufficient volumes at acceptable costs to meet demand.

Research and development expenditures were $805 million in 1996, $880
million in 1997 and $948 million in 1998. We anticipate that we will continue
to have significant research and development expenditures in order to maintain
our competitive position with a continuing flow of innovative, high-quality
products and services.

Intellectual Property

Our general policy has been to seek patent and other intellectual property
protection for those inventions and improvements likely to be incorporated
into our products and services or to give us a competitive advantage. While we
believe that our patents and applications have value, in general no single
patent is in itself essential. In addition, we cannot assure you that any of
our proprietary rights will not be challenged, invalidated or circumvented, or
that our rights will provide significant competitive advantages.

International Operations

Our net revenue originating outside the United States, as a percentage of
our total net revenue, was approximately 54.9% in 1996, 56.3% in 1997, and
54.4% in 1998 the majority of which was from customers other than foreign
governments. Approximately 20% of our international revenue in the last three
years was derived from Japan.

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Most of our sales in international markets are made by foreign sales
subsidiaries. In countries with low sales volumes, sales are made through
various representatives and distributors. However, we make certain sales in
international markets directly from the United States.

Our international business is subject to risks customarily encountered in
foreign operations, including changes in a specific country's or region's
political or economic conditions, trade protection measures, import or export
licensing requirements, the overlap of different tax structures, unexpected
changes in regulatory requirements and natural disasters. We are also exposed
to foreign currency exchange rate risk inherent in our sales commitments,
anticipated sales and assets and liabilities denominated in currencies other
than the United States dollar and may also become subject to interest rate
risk inherent in any debt, investment and finance receivable portfolios we
incur.

We believe that our international diversification provides stability to our
worldwide operations and reduces the impact on us of adverse economic changes
in any single country.

Properties

Our principal executive offices are located in Palo Alto, California. We
plan to move our headquarters to another location in Palo Alto, California in
May 2000. As of August 1999, we operated 35 manufacturing sites, occupying in
excess of 10.5 million square feet, of which approximately 500,000 square feet
were leased. These sites are located in eight countries, including 10 in the
United States.

As of August 1999, we operated three research and development sites, of
which one was located in the United States, occupying in excess of 1.3 million
square feet, none of which were leased. These sites were located in two
countries. We operated five warehouse sites, of which two were located in the
United States, occupying in excess of 300,000 square feet, all of which were
leased. These sites were located in two countries. We operated 92 office sites
(administration, sales, field service), of which 29 were located in the United
States, occupying in excess of five million square feet, of which one million
square feet were leased. These sites were located in 21 countries.

Materials

Our manufacturing operations employ a wide variety of semiconductors,
electromechanical components and assemblies, and raw materials such as plastic
resins and sheet metal. We believe that the materials and supplies necessary
for our manufacturing operations are presently available in the quantities
required. We purchase materials, supplies and product subassemblies from a
substantial number of vendors. For many of our products, we have existing
alternate sources of supply, or such sources are readily available. In certain
instances, however, we enter into non-cancelable purchase commitments with, or
make advance payments to, certain suppliers to ensure supply. Portions of our
manufacturing operations are dependent on the ability of suppliers to deliver
quality components, subassemblies and completed products in time to meet
critical manufacturing and distribution schedules. The failure of suppliers to
deliver these components, subassemblies and products in a timely manner may
adversely affect our operating results until alternate sources could be
developed. In addition, we periodically experience constrained supply of
certain component parts in some product lines as a result of strong demand in
the industry for those parts. Such constraints, if persistent, may adversely
affect our operating results. However, we believe that alternate suppliers or
design solutions could be arranged within a reasonable time so that material
long-term adverse impacts would be minimized.

Environmental

Our research and development and manufacturing operations involve the use
of hazardous substances and are regulated under international, federal, state
and local laws governing health and safety and the environment. We apply
strict standards for protection of the environment and worker health and
safety to sites inside and outside the United States, even if not subject to
regulation imposed by foreign governments. We believe that our

83
<PAGE>

properties and operations at our facilities comply in all material respects
with applicable environmental laws; however, the risk of environmental
liabilities cannot be completely eliminated and there can be no assurance that
the application of environmental and health and safety laws to our company may
not require our company to incur substantial expenditures. We are also
regulated under a number of international, federal, state and local laws
regarding recycling, product packaging and product content requirements. These
laws are gradually becoming more stringent and may in the future cause us to
incur substantial expenditures.

Some of our operations are located on properties that are known to have
subsurface contamination that is undergoing remediation by Hewlett-Packard.
Hewlett-Packard has agreed to retain the liability for the contamination,
perform the required remediation and indemnify us with respect to claims
arising out of the contamination. While we expect that Hewlett-Packard will
meet its remediation and idemnification obligations in this regard, there can
be no guarantee that it will do so. Under our agreement with Hewlett-Packard,
Hewlett-Packard will have access to these properties to perform the
remediation. Hewlett-Packard has agreed to minimize interference with on-site
operations at those properties during the course of the remediation, but there
can be no guarantee that our operations will not be interrupted or that we
will not be required to incur unexpected expenses associated with the
remediation.

In addition, some of these properties are undergoing remediation by
Hewlett-Packard under an order of an agency of the state in which the property
is located. Although Hewlett-Packard has agreed to indemnify us with respect
to that subsurface contamination, it is possible that one or more of the
governmental agencies will require us to be named on any of these orders. The
naming of our company will not affect Hewlett-Packard's obligation to
indemnify us with regard to these matters.

We are liable and are indemnifying Hewlett-Packard for any contamination
found at all facilities being transferred to us excluding the properties
undergoing remediation. In addition, we are indemnifying Hewlett-Packard for
any liability associated with past non-compliance with environmental laws
regulating ongoing operations at all properties to be transferred by Hewlett-
Packard to us, as well as at sold or discontinued businesses that related to
our businesses. While we are not aware of any material liabilities associated
with such indemnified matters, there is no guarantee that such contamination
or regulatory non-compliance does not exist, and will not expose us to
material liability in the future.

We are being indemnified by Hewlett-Packard with respect to all
environmental liabilities for which Hewlett-Packard accrued a reserve and we
are not aware of any material and probable environmental liabilities being
assumed by us which are not subject to the indemnity.

Legal Proceedings

The Environmental Protection Agency initiated a civil penalty proceeding
against Hewlett-Packard in 1998 that alleged four violations of the Toxic
Substances Control Act, two of which were directed at operations of our
chemical analysis business. Under this proceeding, the Environmental
Protection Agency is seeking a total of $112,750 in civil penalties. As a
result of this enforcement action, Hewlett-Packard offered in 1999 to conduct
a post-enforcement audit of some of its operations for compliance with the
Toxic Substances Control Act. The audit will include some facilities operated
by our chemical analysis business. If violations of the law are discovered in
the audit, we would pay civil penalties for those violations in stipulated
amounts.

There are presently no other material legal proceedings, other than routine
litigation incidental to our business, pending against us or our properties.

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<PAGE>

MANAGEMENT

Directors and Executive Officers

Set forth below is information concerning our directors and executive
officers and their ages as of June 30, 1999.

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Edward W. Barnholt...... 55 President, Chief Executive Officer and Director
Gerald Grinstein........ 67 Chairman of the Board of Directors
Thomas E. Everhart...... 67 Director
Walter B. Hewlett....... 55 Director
David M. Lawrence, 58 Director
M.D. ..................
Byron Anderson.......... 56 Vice President, Electronic Products and Solutions
Cynthia Danaher......... 41 Vice President, Healthcare Solutions
William R. Hahn......... 48 Vice President, Strategic Programs
Jean M. Halloran........ 46 Vice President, Human Resources
Dorothy D. Hayes........ 48 Vice President and Controller
Richard D. Kniss........ 58 Vice President, Chemical Analysis
D. Craig Nordlund....... 50 Vice President, General Counsel and Secretary
Thomas A. Saponas....... 49 Vice President and Chief Technology Officer
John E. Scruggs......... 57 Vice President, Automated Test
William P. Sullivan..... 49 Vice President, Semiconductor Products
Robert R. Walker........ 48 Vice President and Chief Financial Officer
Thomas White............ 41 Vice President, Communications Solutions
</TABLE>

Edward W. Barnholt has served as our President and Chief Executive Officer
and as a director since May 1999. Before being named our Chief Executive
Officer, Mr. Barnholt served as General Manager of Hewlett-Packard's
Measurement Organization from 1998 to 1999, which included Hewlett-Packard's
Electronic Instruments Group, the Microwave and Communications Group, the
Communications Test Solutions Group, the Automated Test Group, the Chemical
Analysis Group, the Components Group and the Medical Products Group. From 1990
to 1998, he served as General Manager of Hewlett-Packard's Test and
Measurement Organization. He was elected a Senior Vice President of Hewlett-
Packard in 1993 and an Executive Vice President in 1996. He is a director of
KLA-Tencor Corporation.

Gerald Grinstein has served as Chairman of our board of directors since
August 1999. From 1985 to 1995, he held a number of positions at Burlington
Northern, Inc. He was named its Chairman and Chief Executive Officer in 1991
and retired from that position in 1995. Mr. Grinstein is Chairman of the Board
of Delta Air Lines, Inc. and is a principal of Madrona Investment Group,
L.L.C., a Seattle based investment company. He is a director of Browning-
Ferris Industries, Inc., PACCAR Inc., Vans, Inc., the Pittston Company and
Imperial Sugar Corporation.

Thomas E. Everhart has served as a director since July 1999. From February
to July 1998, Dr. Everhart acted as the Pro-Vice Chancellor of the University
of Cambridge. Since October 1998, he has served as a trustee of the California
Institute of Technology. Prior to assuming that position, Dr. Everhart served
as President of the California Institute of Technology from September 1987
until his retirement in October 1997, when he became President Emeritus. Since
December 1997, Dr. Everhart has acted as the Senior Scientific Advisor to the
W. M. Keck Foundation. He is a director of General Motors Corporation,
Raytheon Company, Hughes Electronics Corporation, Reveo, Inc. and Saint-Gobain
Company. He is also a director of the Corporation for National Research
Initiatives, the Electric Power Research Institute and a member of the Board
of Trustees of the California Institute of Technology and of the Board of
Overseers of Harvard University. He has served as a director of Hewlett-
Packard since June 1991.

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<PAGE>

Walter B. Hewlett has served as a director since July 1999. Mr. Hewlett is
an independent software developer involved with computer applications in the
humanities. In 1997, Mr. Hewlett was elected to the Board of Overseers of
Harvard University. In 1994, Mr. Hewlett participated in the formation of
Vermont Telephone Company of Springfield, Vermont and currently serves as its
Chairman. Mr. Hewlett founded the Center for Computer Assisted Research in the
Humanities in 1994, for which he serves as a director. Mr. Hewlett has been a
trustee of The William and Flora Hewlett Foundation since its founding in 1966
and currently serves as its Chairman. Mr. Hewlett has served as a director of
Hewlett-Packard since 1987. He is the son of Hewlett-Packard co-founder
William R. Hewlett.

David M. Lawrence, M.D. has served as a director since July 1999.
Dr. Lawrence has served as Chairman of the Board since 1992 and Chief
Executive Officer since 1991 of Kaiser Foundation Health Plan, Inc. and Kaiser
Foundation Hospitals. He held a number of management positions with those
organizations prior to assuming his current positions, including Vice Chairman
of the Board and Chief Operating Officer. Dr. Lawrence is a director of
Pacific Gas and Electric Company and Raffles Medical Group, Inc. He has served
as a director of Hewlett-Packard since May 1995.

Byron Anderson has served as our Vice President, Electronic Products and
Solutions since August 1999. Prior to assuming that position, Mr. Anderson
served as a vice president of Hewlett-Packard since November 1995 and General
Manager of the Microwave and Communications Group since September 1997. In
January 1991, Mr. Anderson was named General Manager of Hewlett-Packard's
Communications Test Business Unit, which became the Test Solutions Group in
1994.

Cynthia Danaher has served as our Vice President, Healthcare Solutions
since August 1999. Prior to assuming that position, Ms. Danaher served as Vice
President and General Manager of Hewlett-Packard's Medical Products Group. Ms.
Danaher joined Hewlett-Packard's Imaging Systems Division as a Marketing
Manager in 1990, before assuming the position of General Manager of Hewlett-
Packard's Medical Products Group's Imaging Systems Division.

William R. Hahn has served as our Vice President, Strategic Programs since
August 1999. Since October 1997, Mr. Hahn served as the Sector Controller of
Hewlett-Packard's Measurement Organization. From September 1995 to October
1997, he served as Operations Manager for Hewlett-Packard's interactive
broadband program. From May 1993 to September 1995, Mr. Hahn served as Vice
President of Finance and Manufacturing and Chief Financial Officer at Aspect
Communications.

Jean M. Halloran has served as our Vice President, Human Resources since
August 1999. Since 1997, Ms. Halloran served as Director of Corporate
Education and Development for Hewlett-Packard. Prior to assuming this
position, from 1993 to 1997, Ms. Halloran acted as personnel manager for
Hewlett-Packard's Measurement Systems Organization. From 1990 to 1993, she
acted as group personnel manager for Hewlett-Packard's Medical Products Group.
Ms. Halloran joined Hewlett-Packard in 1980 in the Medical Products Group,
where she held a variety of positions in human resources, manufacturing and
strategic planning.

Dorothy D. Hayes has served as our Vice President and Controller since
August 1999. Prior to assuming that position, since October 1989, Ms. Hayes
held a number of positions at Hewlett-Packard. She served as Transition
General Manager from March to July 1999, Director of Internal Audit from July
1997 to June 1999, Measurement Systems Organization Controller from February
1994 to July 1997, Components Group Controller from September 1993 to February
1996 and Corporate Financial Reporting Manager from October 1989 to September
1993.

Richard D. Kniss has served as our Vice President, Chemical Analysis Group
since August 1999. Prior to assuming that position, since May 1995, Mr. Kniss
was General Manager of Hewlett-Packard's Chemical Analysis Group and was named
a vice president of Hewlett-Packard in June 1997. He served as general manager
of the Optical Communication Division from 1984 to 1995.

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<PAGE>

D. Craig Nordlund was named our Vice President, General Counsel and
Secretary in May 1999. Mr. Nordlund has served as Associate General Counsel
and Secretary of Hewlett-Packard since 1987. He has served as an officer or
director for a variety of Hewlett-Packard's subsidiaries and affiliates. He
currently serves as Chairman of the National American Society of Corporate
Secretaries organization.

Thomas A. Saponas has served as our Vice President and Chief Technology
Officer since August 1999. Prior to being named Chief Technology Officer, from
June 1998 to April 1999, Mr. Saponas was Vice President and General Manager of
Hewlett-Packard's Electronic Instruments Group. Mr. Saponas has held a number
of positions since the time he joined Hewlett-Packard. Mr. Saponas served as
General Manager of the Lake Stevens Division from August 1997 to June 1998 and
General Manager of the Colorado Springs Division from August 1989 to August
1997. In 1986 he was a White House Fellow in Washington. D.C.

John E. Scruggs has served as our Vice President, Automated Test since
August 1999. Prior to assuming that position, since January 1992, Mr. Scruggs
was General Manager of the Automated Test Group of Hewlett-Packard within the
Test and Measurement Organization. He was elected a vice president of Hewlett-
Packard in November 1996.

William P. Sullivan has served as our Vice President, Semiconductor
Products since August 1999. Prior to assuming that position, since February
1998, he served as Vice President and General Manager of Hewlett-Packard's
Components Group. In 1997, Mr. Sullivan became General Manager of the
Communication Semiconductor Solutions Division. From 1995 to 1997, he was
General Manager of the Optical Communication Division. From April 1991 to
February 1995, Mr. Sullivan served as research and development manager for the
Optical Communication Division.

Robert R. Walker has served as our Vice President and Chief Financial
Officer since May 1999. During 1997 and 1998 Mr. Walker served as Vice
President and General Manager of Hewlett-Packard's Professional Services
Business Unit. From 1993 to 1997 he led Hewlett-Packard's information systems
function. He became Chief Information Officer in 1995 and served in that
position until 1997. Mr. Walker was named a vice president of Hewlett-Packard
in 1995.

Thomas White has served as our Vice President, Communications Solutions
since August 1999. From 1997 to August 1999, Mr. White served as Vice
President and General Manager of the Communications Solutions Group of
Hewlett-Packard. From 1996 to 1997, he served as General Manager of the
Computer Peripherals Bristol Division and, in 1994, he served as General
Manager for the Telecommunications Systems Division, South Queensferry,
Scotland.

Board Structure and Compensation

Our board of directors is divided into three classes serving staggered
three-year terms. Mr. Barnholt's and Mr. Grinstein's initial term will expire
in 2000. Mr. Hewlett's initial term will expire in 2001. Dr. Everhart's and
Dr. Lawrence's initial term will expire in 2002. Prior to Hewlett-Packard's
distribution of our shares to its stockholders, our nominating committee
expects to identify a number of additional candidates not affiliated with
Agilent Technologies or Hewlett-Packard for election to our board of
directors.

Our board of directors has four directors and the following four
committees: (1) audit, (2) compensation, (3) nominating, and (4) executive.
The membership and the function of each committee are described below.

<TABLE>
<CAPTION>
Audit Compensation Nominating Executive
----- ------------ ---------- ---------
<S> <C> <C> <C>
Thomas E.
Everhart Thomas E. Everhart Edward W. Barnholt Edward W. Barnholt
Walter B.
Hewlett Gerald Grinstein Thomas E. Everhart Gerald Grinstein
David M.
Lawrence,
M.D. David M. Lawrence, M.D. Gerald Grinstein
Walter B. Hewlett
David M. Lawrence, M.D.*
</TABLE>
- --------
* Committee Chair

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<PAGE>

Audit Committee

Our audit committee reviews our auditing, accounting, financial reporting
and internal control functions and makes recommendations to the board of
directors for the selection of independent accountants. In addition, the
committee monitors the quality of our accounting principles and financial
reporting, our compliance with foreign trade regulations as well as the
independence of and the non-audit services provided by independent
accountants. In discharging its duties, the audit committee:

. reviews and approves the scope of the annual audit and the independent
accountant's fees;

. meets independently with our internal auditing staff, our independent
accountants and our senior management; and

. reviews the general scope of our accounting, financial reporting, annual
audit and internal audit program, matters relating to internal control
systems as well as the results of the annual audit.

Compensation Committee

Our compensation committee determines, approves and reports to the board on
all elements of compensation for our elected officers including targeted total
cash compensation and long-term equity based incentives.

Nominating Committee

Our nominating committee proposes a slate of directors for appointment by
our stockholders at each annual meeting and candidates to fill any vacancies
on the board of directors. It is also responsible for approving management
succession plans and addressing board of directors organizational and
governance issues.

Executive Committee

Our executive committee meets or takes written action when the board is not
otherwise meeting and has the level of authority delegated to it from time to
time by the board of directors, except that it cannot amend our bylaws,
recommend any action that requires the approval of the stockholders or to take
any other action not permitted under Delaware law to be delegated to a
committee.

Stock Ownership of Directors and Executive Officers

All of our common stock is currently owned by Hewlett-Packard, and thus
none of our officers, directors or director nominees own any of our common
stock. To the extent our directors and officers own shares of Hewlett-Packard
common stock at the time of the distribution, they will participate in the
distribution on the same terms as other holders of Hewlett-Packard common
stock.

The following table sets forth the number of shares of Hewlett-Packard
common stock beneficially owned on June 30, 1999 by each director, each of the
executive officers named in the Summary Compensation Table in the "--Executive
Compensation" section below, and all of our directors, director nominees and
executive officers as a group. Except as otherwise noted, the individual
director or executive officer or their family members had sole voting and
investment power with respect to such securities. The total number of shares
of Hewlett-Packard common stock outstanding as of June 30, 1999 was
1,019,373,830.

<TABLE>
<CAPTION>
Shares of
Hewlett-Packard
Beneficially Owned
------------------
Name of Beneficial Owner Number Percentage
- ------------------------ ------- ----------
<S> <C> <C>
Edward W. Barnholt(1)........................................ 345,046 *
Gerald Grinstein(2).......................................... 4,500 *
Thomas E. Everhart(3)........................................ 10,780 *
Walter B. Hewlett(4)......................................... 320,434 *
David M. Lawrence, M.D.(5)................................... 6,012 *
Robert R. Walker(6).......................................... 63,153 *
All directors and executive officers as a group..............
</TABLE>
- --------
* Represents holdings of less than one percent.

88
<PAGE>

(1) Includes 189,988 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 1999 and 4,872 of the shares are held by
Mr. Barnholt as a custodian for his children.
(2) These shares are beneficially owned by Mr. Grinstein and his spouse.
(3) Includes 8,380 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 1999.
(4) Includes 3,224 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 1999. Also includes 14,580 shares held by Mr.
Hewlett as a custodian for his children, 1,100 shares held by Mr. Hewlett
for the benefit of his son, 250 shares held by Mr. Hewlett for the benefit
of his daughter and 1,280 shares held by Mr. Hewlett for the benefit of his
spouse. Excludes 60,695,396 shares held by the William R. Hewlett Revocable
Trust, of which Mr. Hewlett is a co-trustee, 1,083,000 shares held by the
Flora L. Hewlett Trust, of which Mr. Hewlett is a co-trustee, and 2,353,500
shares held by the William and Flora Hewlett Foundation, of which Mr.
Hewlett is a director. Mr. Hewlett shares voting and investment power over
the shares held by the William R. Hewlett Revocable Trust, the Flora L.
Hewlett Trust and the William and Flora Hewlett Foundation. Mr. Hewlett
disclaims any beneficial interest in the excluded shares, because he has no
economic interest in any of these shares.
(5) Includes 4,560 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 1999.
(6) Includes 24,600 shares issuable upon the exercise of options exercisable
within 60 days of June 30, 1999.

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<PAGE>

Executive Compensation

The following table sets forth certain compensation information for the
chief executive officer and the four other executive officers of Agilent
Technologies who, based on salary and bonus compensation from Hewlett-Packard
and its subsidiaries, were the most highly compensated for the year ended
October 31, 1998. All information set forth in this table reflects
compensation earned by these individuals for services with Hewlett-Packard and
its subsidiaries for the year ended October 31, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long-Term
Compensation
---------------------
Annual Compensation Awards Payouts
------------------------------- ----------- ---------
Restricted Long Term
Stock Securities Incentive All Other
Name and Principal Bonus Award(s) Underlying Payouts Compensation
Position Salary ($) ($)(1)(4) ($)(2) Options (#) ($)(3)(4) ($)(5)
- ------------------ ---------- --------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Barnholt...... $759,488 $115,754 $967,581 60,000 $(531,000) $6,499
President and Chief
Executive Officer

Robert R. Walker........ 408,438 22,514 104,125 12,000 0 6,499
Vice President and
Chief Financial Officer
</TABLE>

FOOTNOTES TO SUMMARY COMPENSATION TABLE

(1) The amounts shown in this column reflect payments under Hewlett-Packard's
1998 Variable Pay Plan established November 1, 1998 and Hewlett-Packard's
Cash Profit-Sharing Plan. Hewlett-Packard's 1998 Variable Pay Plan is
available to designated key employees of Hewlett-Packard. The Cash Profit-
Sharing Plan is available to all employees of Hewlett-Packard.

Under the cash profit-sharing plan, a portion of Hewlett-Packard's earnings
generated during each half of Hewlett-Packard's fiscal year is paid to
employees. The amount paid is based upon the performance of Hewlett-Packard
as measured by return on assets and revenue growth.

Hewlett-Packard's 1998 Variable Pay Plan permits Hewlett-Packard to
designate a portion of the annual cash compensation planned for certain key
employees as variable pay. Under Hewlett-Packard's 1998 Variable Pay Plan,
the percentage of the targeted variable amount to be paid is dependent upon
the degree to which performance metrics defined on an annual basis are met.
In November 1998, the Compensation Committee of the Board of Directors of
Hewlett-Packard established the performance metrics for fiscal 1998, which
metrics were based on the performance of Hewlett-Packard's common stock
relative to the S&P High Technology Composite Index. In November 1998, the
Compensation Committee determined that 80% of the targeted variable
compensation for Mr. Barnholt in the amount of $86,000 had been earned. The
amounts attributable to the Variable Pay Plan for fiscal 1998 are disclosed
in the table above as "Bonus".

(2) The amounts disclosed in this column reflect, for fiscal 1998, the dollar
values of Hewlett-Packard's common stock which Hewlett-Packard contributed
under its Stock Purchase Plan, as a match for every two shares purchased
by the named executive officer and for Mr. Barnholt performance-based
restricted shares of Hewlett-Packard's common stock which Hewlett-Packard
granted.

The Stock Purchase Plan is a broad-based plan which is available to all
employees of Hewlett-Packard. The matching shares vest two years after the
date of Hewlett-Packard's contributions, which occur on a rolling fiscal
quarter basis, and are subject to forfeiture during the two-year period in
the event of termination or certain other events. The named executive
officers receive non-preferential dividends on these restricted shares. In
fiscal 1998, Hewlett-Packard, under its Stock Purchase Plan, granted 664
shares of restricted stock
to Mr. Barnholt worth $41,331 and 258 shares of restricted stock to Mr.
Walker worth $17,562.

90
<PAGE>

In fiscal 1998, Hewlett-Packard granted 15,000 shares of performance-based
restricted stock to Mr. Barnholt valued at $926,250 based upon the grant
date closing price of $61.75 per share. The performance-based restricted
stock will vest only to the extent that Hewlett-Packard achieves stated
performance goals with respect to earnings per share and return on assets
over a three-year period ending October 31, 2000 for the performance-based
restricted stock granted in fiscal 1998. Because the stated performance
goals for the three year period ended October 31, 1998 were not met, 75% of
the performance-based restricted stock granted in fiscal 1996 was forfeited
as further described in footnote 3 below.

At October 31, 1998, Mr. Barnholt held 51,000 shares of restricted stock
valued at $3,072,750, and Mr. Walker held 24,000 shares of restricted stock
valued at $1,446,000 based on the October 30, 1998 closing price of $60.25
per share.

(3) In November 1998, the Compensation Committee reviewed the results for the
three year performance period ended October 31, 1998 to determine to what
extent the performance objectives associated with performance-based
restricted stock granted in fiscal 1996 had been met. The Compensation
Committee determined that under the terms of each grant Mr. Barnholt was
required to forfeit 75% of the performance-based restricted stock granted
in 1996. The amount forfeited is reflected in the table above as a
negative LTIP pay-out in fiscal 1998 based upon the original grant date
closing price of $44.25 per share.

(4) As noted above, Hewlett-Packard provides performance-based compensation
under its 1998 Variable Pay Plan, its cash profit-sharing plan and
pursuant to the agreement under which the Compensation Committee granted
shares of restricted stock in fiscal 1998. The subsequent payment or
forfeiture described above as "Bonus" or "LTIP Payout" is reflected as
compensation in the fiscal year for which the relevant performance period
is completed.

(5) The amounts disclosed in this column include payment by Hewlett-Packard of
$99 in fiscal 1998 for term life insurance on behalf of Mr. Barnholt and
Mr. Walker and Hewlett-Packard's contributions under its Tax Saving
Capital Accumulation Plan, a tax-qualified defined contribution 401(k)
plan, in fiscal 1998 of $6,400 on behalf of Mr. Barnholt and $6,400 on
behalf of Mr. Walker.

Grants of Stock Options

The following table shows all grants of options to acquire shares of
Hewlett-Packard common stock granted to the executive officers named in the
Summary Compensation Table in the "--Executive Compensation" section in the
year ended October 31, 1998.

<TABLE>
<CAPTION>
% of Total
Number of Options Granted
Securities to
Underlying Hewlett-Packard Exercise or Grant Date
Options Employees in Base Price Present Value
Name Granted (#)(1) Fiscal Year(2) ($/Sh.)(3) Expiration Date ($)(4)
- ---- -------------- --------------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Edward W. Barnholt...... 60,000 .6% $61.75 Nov. 2007 $1,315,200
Robert R. Walker........ 12,000 .1% 61.75 Nov. 2007 263,040
</TABLE>
- --------
(1) The options granted in fiscal 1998 are exercisable 25% after the first
year, 50% after the second year, 75% after the third year, and 100% after
the fourth year.
(2) Hewlett-Packard granted options representing 10,648,000 shares to
employees in fiscal 1998.
(3) The exercise price may be paid by delivery of already-owned shares and tax
withholding obligations related to exercise may be paid by offset of the
underlying shares, subject to certain conditions.
(4) Hewlett-Packard used a modified Black-Scholes model of option valuation to
determine grant date present value. Hewlett-Packard does not advocate or
necessarily agree that the Black-Scholes model can properly determine the
value of an option. Calculations for the named officers are based on a
seven-year option term, which reflects Hewlett-Packard's experience that
its options, on average, are exercised within seven years of grant. Other
assumptions used for the valuations are: an annual interest rate of 5.39%;
annual dividend yield of 1.0%; and volatility of 30%. The resulting values
are reduced by 9% to reflect Hewlett-Packard's experience with
forfeitures.

91
<PAGE>

Exercises of Stock Options

The following table shows aggregate exercises of options to purchase
Hewlett-Packard common stock in the year ended October 31, 1998 by the
executive officers named in the Summary Compensation Table in the "--Executive
Compensation" section above.

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at Fiscal The- Money Options at
Shares Value Year-End (#) Fiscal Year-End ($) (1)
Acquired on Realized ------------------------- -------------------------
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Barnholt...... 20,000 $1,035,600 218,288 110,000 $9,113,541 $824,450
Robert R. Walker........ 25,000 1,319,650 27,600 24,000 1,067,240 119,040
</TABLE>
- --------
(1) The value of unexercised options is based upon the difference between the
exercise price and the average of the high and low market prices on
October 30, 1998 of $59.91.

Treatment of Hewlett-Packard Options

Under the existing terms of Hewlett-Packard's stock option plans,
substantially all Hewlett-Packard options held by our employees on the
distribution date will be fully vested and, if not exercised, will expire in
three months. Alternatively, our employees may elect to amend their Hewlett-
Packard options to waive the vesting acceleration. We will assume these
amended options, which will convert at the distribution into options to
purchase our common stock. The number of shares and the exercise price of
Hewlett-Packard options that convert into Agilent Technologies options will be
adjusted using a conversion formula. The conversion formula will be based on
the opening per share price of our common stock on the first trading day after
the distribution relative to the closing per share price of Hewlett-Packard
common stock on the last trading day before the distribution. The resulting
Agilent Technologies options will maintain the original vesting provisions and
option periods. We do not currently know how many Hewlett-Packard options held
by our employees will be converted into Agilent Technologies options.

Treatment of Hewlett-Packard Restricted Stock

Under the Hewlett-Packard 1985 Incentive Compensation Plan and the 1990 and
1995 Incentive Stock Plans, certain key employees of Hewlett-Packard were
granted restricted stock awards. The majority of the shares of restricted
stock outstanding at October 31, 1998 are subject to forfeiture if employment
terminates prior to three years from the date of grant. Restricted shares held
by our employees are expected to be forfeited on or before the distribution.
Our employees who forfeit Hewlett-Packard restricted shares may elect to
receive either replacement options to purchase our common stock granted on the
effective date of this offering at an exercise price equal to the initial
public offering price or replacement Agilent Technologies restricted shares
granted on or before the distribution, in either case with the same vesting as
before. We intend to provide replacement options and replacement Agilent
Technologies restricted shares with a value that is comparable to the value of
the forfeited Hewlett-Packard restricted shares. Our employees will be
required to make their election in October 1999.

Incentive Plans

1999 Stock Plan

We intend to adopt the 1999 Stock Plan to provide grants of incentive stock
options to our employees, including officers and employee directors, and
grants of nonstatutory stock options, stock appreciation rights, stock awards
and cash awards to our employees and directors. A total of shares of
common stock will be reserved for issuance under the stock plan.

Administration of the 1999 Stock Plan

The administrator, which is either the board of directors or a committee of
the board of directors, will administer the stock plan. In the case of options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, the committee will consist of two or more "outside
directors"

92
<PAGE>

within the meaning of Section 162(m) of the Code. The administrator has the
power to determine the terms of the options, stock awards, stock appreciation
rights and cash awards granted, including the exercise price, the number of
shares subject to each option, stock appreciation right or stock award, the
exercisability of the options and stock appreciation rights and the form of
consideration payable upon exercise of the options.

Options

The exercise price of nonstatutory stock options granted under the stock
plan is determined by the administrator, but the per share exercise price
shall be no less than seventy-five percent of the fair market value of our
common stock on the date of grant. With respect to nonstatutory stock options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code, the exercise price must be at
least equal to the fair market value of our common stock on the date of grant.
The exercise price of all incentive stock options granted under the stock plan
must be at least equal to the fair market value of our common stock on the
date of grant. The term of all other options granted under the stock plan may
not exceed ten years.

Unless otherwise provided in the optionee's option agreement, options
granted under the stock plan terminate immediately upon the termination of the
optionee's status as an employee of our company, within three years after the
optionee's termination by disability or retirement, or within one year after
the optionee's termination by death, but in no event later than the expiration
of the option's term. If an optionee's status as an employee ends due to
death, disability, retirement or through certain voluntary severance programs,
the optionee will fully vest in and have the right to exercise the option
within the time limits described above.

During any fiscal year each optionee may be granted options and stock
appreciation rights to purchase a maximum of shares of our common stock.

Stock Appreciation Rights

Stock appreciation rights may be granted under the stock plan to employees
who hold options. An optionee may exercise a stock appreciation right by
surrendering to us, unexercised, a corresponding portion of an option. A stock
appreciation right is exercisable only to the extent the related option is
exercisable. The stock appreciation right will terminate at the same time and
pursuant to the same terms as the related option.

Stock Awards

The administrator determines the terms and conditions, including vesting,
of stock awards granted under the stock plan. Unless the administrator
determines otherwise, stock awards shall be forfeited upon the voluntary or
involuntary termination of the grantee's employment with us for any reason,
although full or partial vesting may occur in the event of termination by
reason of death, disability or retirement, or in connection with a corporate
transaction.

Cash Awards

Cash awards may be granted alone, in addition to, or in tandem with other
awards granted under the stock plan. The terms of a cash award will be
determined by the administrator.

Non-Transferability of Options, Stock Appreciation Rights and Stock Awards

Options, stock appreciation rights, cash awards and stock awards granted
under the stock plan are generally not transferable by the grantee, and each
option, stock appreciation right and stock award is exercisable during the
lifetime of the optionee only by such grantee.

Adjustments upon Merger or Change in Control

The stock plan provides that in the event we are merged into or acquired by
another entity; we may provide for the assumption or substitution in, or
adjustment to, awards under the stock plan. In the event of a transaction

93
<PAGE>

involving a change in control, we may accelerate the vesting of options and
terminate any restrictions on stock awards and we may provide for the
cancellation of awards under the stock plan with a cash payment to the
grantee.

Amendment and Termination of the 1999 Stock Plan

Unless terminated sooner, the stock plan will terminate automatically ten
years from the date of its adoption by the board of directors. In addition,
the administrator has the authority to amend, suspend or terminate the stock
plan, so long as no such action affects any shares of common stock previously
issued and sold and any option or award previously granted under the stock
plan.

1999 Employee Stock Purchase Plan

We intend to adopt the 1999 Employee Stock Purchase Plan to encourage
employee stock ownership. The total number of shares of common stock that we
will reserve for issuance under the employee stock purchase plan equals
shares.

Administration of the Employee Stock Purchase Plan

Our officers or other selected employees of us will administer the employee
stock purchase plan and determine employee eligibility to participate in the
employee stock purchase plan.

Eligibility to Participate

Regular full-time or regular part-time employees are eligible to
participate in the employee stock purchase plan on their hire date and may
enroll before their first day of work or at the beginning of any fiscal
quarter. The employee stock purchase plan permits participants to purchase our
common stock through payroll deductions of up to 10% of the participant's pay.
Pay means base earnings but excludes:

. bonuses;

. pay for overtime work; and

. other extra compensation.

An employee may participate in both the 401(k) plan and the stock purchase
plan. A participant may always contribute up to 5% of pay to the employee
stock purchase plan, even if the participant contributes the maximum
percentage permitted under the 401(k) plan. If a participant contributes more
than 5% of pay to the employee stock purchase plan, the participant's combined
401(k) plan and employee stock purchase plan contributions cannot exceed 10%
of eligible pay.

Purchases

Participant contributions are used to purchase shares of our common stock
on the last business day of each fiscal quarter. Our fiscal quarters end in
January, April, July, and October. The price of stock purchased under the
employee stock purchase plan will be the lowest of the following:

. the average of the daily closing prices of the stock on the [New York
Stock Exchange/Nasdaq Stock Market] for the full quarter;

. the average of the daily closing prices of the stock on the [New York
Stock Exchange/Nasdaq Stock Market] for the last five trading days of
the quarter; or

. the closing price of the stock on the last trading day of the quarter.

For every two shares purchased through employee contributions, we will
contribute one share.

Restrictions

A participant cannot sell or transfer shares purchased with contributions
from us for the two-year period after purchase unless the participant leaves
us due to retirement, permanent and total disability or death. If a

94
<PAGE>

participant leaves us within two years of purchase for any reason other than
retirement, permanent and total disability or death, the participant will
forfeit all our contributions. If a participant sells or transfers shares
purchased through employee contributions in a quarter prior to the lapse of
the two-year period, the participant will forfeit our contributions for that
quarter.

End of Participation

Participation in the employee stock purchase plan will end when an employee
voluntarily elects to withdraw from the employee stock purchase plan or is no
longer eligible to participate. If an employee's participation in the employee
stock purchase plan ends, we will promptly distribute all accrued employee
contributions without interest and the employee will not be able to
participate in the employee stock purchase plan until the next quarter.

Transferability of Rights

A participant may not transfer rights granted under the employee stock
purchase plan other than by will or the laws of descent and distribution.

Amendment and Termination of the Employee Stock Purchase Plan

Our board of directors has the authority to amend or terminate the employee
stock purchase plan at any time.

1999 Non-Employee Director Stock Plan

We intend to adopt the 1999 Non-Employee Director Stock Plan to help
attract and retain non-employee directors. The total number of shares of our
common stock that we will reserve for issuance under the non-employee director
stock plan equals shares.

Administration

Our board of directors or a committee of the board of directors will
administer the non-employee director stock plan.

Stock Options

The non-employee director stock plan will permit stock option grants. Each
non-employee director shall receive a minimum of 75% of the value of his or
her annual retainer in the form of a stock option grant and the balance in a
cash payment.

We will issue the non-employee director an option grant on or about March 1
of each year based on the non-employee director's election. If the non-
employee director fails to make a timely election, a non-employee director
will receive an option grant that has a value equal to 75% of the value of his
or her annual retainer. We will use a modified Black-Scholes option valuation
model to determine the number of shares necessary so that the value of each
stock option equals that portion of the annual retainer that a non-employee
director receives in the form of a stock option.

Each stock option will vest in full 12 months after the grant date. The
exercise price of each stock option will equal the fair market value of our
common stock on the date of grant.

Transferability of Options

Unless the administrator provides otherwise, a non-employee director may
not transfer stock a option granted under the non-employee director stock plan
other than by will or by the laws of descent and distribution.

95
<PAGE>

Cash Payments

All cash payments will be paid in equal quarterly installments beginning in
March of each year.

Adjustments upon Merger or Asset Sale

At the time of any merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, or other change in the corporate structure or
capitalization affecting our common stock, our board of directors or the
committee will make appropriate adjustments to the number and kind of shares
to be issued under the non-employee director stock plan and the price of any
stock option.

Amendment and Termination of the 1999 Non-Employee Director Stock Plan

The non-employee director stock plan will terminate 10 years from its
adoption, unless our board of directors or the committee terminates the non-
employee director stock plan earlier. No stock options will be granted after
the non-employee director stock plan terminates. Our board of directors has
the authority to amend, modify, suspend or terminate the non-employee director
stock plan at any time.

1999 Variable Pay Plan

We intend to adopt a 1999 variable pay plan that will be designed to link
annual cash compensation for designated executives to business performance.
Under the variable pay plan, a portion of targeted total cash compensation for
each plan participant will be designated "at risk" variable pay which will
only be paid if certain pre-determined business performance goals are
achieved. If the pre-determined business performance goals are exceeded,
additional cash compensation may be awarded.

The variable pay plan will be administered in six-month performance periods
which coincide with each half of our fiscal year. Awards will be distributed
after each performance period if the pre-determined business performance goals
are achieved.

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<PAGE>

Pension Plans

The following table shows the estimated annual benefits payable upon
retirement to Hewlett-Packard eligible employees in the United States under
Hewlett-Packard's Deferred Profit-Sharing Plan or the Deferred Plan, Hewlett-
Packard's Retirement Plan, or the Retirement Plan, and Hewlett-Packard's
Excess Benefit Retirement Plan or the Excess Benefit Plan. To calculate the
number of years of an eligible employee's service, the pension plans will
bridge each eligible employee's service with Hewlett-Packard to that eligible
employee's service with Agilent Technologies.

ESTIMATED ANNUAL RETIREMENT BENEFITS(1)(2)

<TABLE>
<CAPTION>
Highest 20 Years 25 Years
Five-Year Average 15 Years of of 30 Years
Compensation of Service Service Service of Service
- ----------------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 400,000 $ 87,207 $116,276 $145,345 $ 174,414
600,000 132,207 176,276 220,345 264,414
800,000 177,207 236,276 295,345 354,414
1,000,000 222,207 296,276 370,345 444,414
1,200,000 267,207 356,276 445,345 534,414
1,400,000 312,207 416,276 520,345 624,414
1,600,000 357,207 476,276 595,345 714,414
1,800,000 402,207 536,276 670,345 804,414
2,000,000 447,207 596,276 745,345 894,414
2,200,000 492,207 656,276 820,345 984,414
2,400,000 537,207 716,276 895,345 1,074,414
</TABLE>
- --------
(1) Amounts exceeding $130,000 would be paid pursuant to the Excess Benefit
Plan.
(2) No more than $160,000 (as adjusted from time to time by the IRS) of
eligible compensation may be taken into account in calculating benefits
payable under the Retirement Plan.

The compensation covered by the pension plans whose benefits are summarized
in the table above equals base pay. The covered compensation for each of the
executive officers named in the Summary Compensation Table is the highest
five-year average of the amounts shown in the "Salary" column of that table.
The compensation covered by the pension plans for any Hewlett-Packard officer
who participates in Hewlett-Packard's 1999 Variable Pay Plan shall be the
"total targeted cash compensation" as defined under each of such variable pay
plans.

Agilent Technologies employees will receive credit under Agilent
Technologies' new defined benefit plans for their years of service with
Hewlett-Packard. Officers named in the Summary Compensation Table have been
credited with the following years of service: Mr. Barnholt, 30 years and Mr.
Walker, 23 years. Retirement benefits shown are payable at age 65 in the form
of a qualified joint and survivor annuity or single life annuity, as
applicable to the employee and reflect the maximum offset allowance currently
in effect under Section 401(1) of the Internal Revenue Code of 1986, as
amended, to compute the offset for such benefits under the pension plans. For
purposes of calculating the benefit, an employee cannot be credited with more
than 30 years of service.

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<PAGE>

ARRANGEMENTS BETWEEN AGILENT TECHNOLOGIES AND HEWLETT-PACKARD

We have provided below a summary description of the master separation and
distribution agreement, effective as of August 12, 1999, or the separation
agreement, and the key related agreements. This description, which summarizes
the material terms of such agreements, is not complete. You should read the
full text of these agreements, which have been filed with the Securities and
Exchange Commission as exhibits to the registration statement of which this
prospectus is a part.

Master Separation and Distribution Agreement

The master separation and distribution agreement contains the key
provisions relating to the separation, this offering and the distribution.

The Separation. The separation is scheduled to occur on or around November
1, 1999. On or before the separation date, Hewlett-Packard and we will sign
the general assignment and assumption agreement which provides for the
transfer to us of assets and liabilities from Hewlett-Packard, effective on
the separation date. Hewlett-Packard will also transfer to us ownership of
specified subsidiaries. Hewlett-Packard will deliver additional agreements
governing various interim and ongoing relationships between Hewlett-Packard
and us following the separation date. The ancillary agreements include:

. a general assignment and assumption agreement;

. master technology, patent, and trademark ownership agreements;

. an employee matters agreement;

. a tax sharing agreement;

. a master information technology service level agreement;

. a real estate matters agreement;

. an environmental matters agreement;

. a master confidential disclosure agreement; and

. an indemnification and insurance matters agreement.

To the extent that the terms of any of these ancillary agreements conflict
with the separation agreement, the terms of these agreements govern. These
agreements are described more fully below.

Cash to be Transferred to Agilent Technologies. Hewlett-Packard has agreed
to provide us sufficient cash to satisfy the following obligations or
requirements (as adjusted with mutual agreement):

. the obligations of Hewlett-Packard, which will be assumed by Agilent
Technologies, and the obligations of our Japanese subsidiary under
Hewlett-Packard's agreement with Yokogawa to buy out Yokogawa's interest
in this subsidiary;

. taxes specified in the tax sharing agreement incurred in connection with
Hewlett-Packard's restructuring of its operations in Japan;

. working capital and acquisition requirements of $250 million;

. an amount equal to the difference between our assets and liabilities
retained by Hewlett-Packard and Hewlett-Packard's assets and liabilities
transferred to us, as of October 31, 1999; and

. taxes payable by some of our subsidiaries as of October 31, 1999.

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Additional cash will be held by Agilent Technologies subsidiaries on the
separation date. On December 15, 1999, Hewlett-Packard and we will recalculate
these cash payments based on our October 31, 1999 balance sheet and Hewlett-
Packard's October 31, 1999 balance sheet, and reallocate cash in the amount of
any difference.

The Initial Public Offering. Under the terms of the separation agreement we
are offering approximately % of our outstanding common stock in this
offering. We estimate that the net proceeds from this offering will be about
$ , based on an assumed initial public offering price of $ per share. All
of the proceeds of this offering (including any proceeds from the sale of
shares pursuant to the exercise of the U.S. underwriters' over-allotment
option), less underwriters' discounts and commissions, will be paid to
Hewlett-Packard as a dividend to be declared prior to the offering. We are
obligated to use our reasonable best efforts to satisfy the following
conditions to the consummation of this offering (any of which may be waived by
Hewlett-Packard):

. the registration statement containing this prospectus must be effective;

. U.S. securities laws must be satisfied;

. our common stock must be listed on the New York Stock Exchange or the
Nasdaq Stock Market;

. all our obligations under the underwriting agreement must be met or
waived by the underwriters;

. Hewlett-Packard must own at least 80.1% of our stock and must be
satisfied that the distribution will be tax free to its U.S.
stockholders;

. no legal restraints must exist preventing the separation or this
offering;

. the separation must have occurred; and

. the separation agreement must not have been terminated.

The Distribution. By the middle of calendar year 2000, Hewlett-Packard
intends to distribute the remaining shares of our common stock Hewlett-Packard
holds to Hewlett-Packard stockholders on a pro rata basis. We will prepare an
information statement with Hewlett-Packard and send it to Hewlett-Packard
stockholders before the distribution becomes effective. The information
statement will inform the stockholders of the distribution and its specifics.
Hewlett-Packard may, in its sole discretion, change the distribution date.
Hewlett-Packard intends to consummate the distribution only if the following
conditions are met (any of which may be waived by Hewlett-Packard):

. the Internal Revenue Service must issue a favorable tax ruling on the
tax-free status of the transaction and the transaction qualifies as a
tax-free reorganization under Sections 368(a)(1)(D) and 355 of the
Internal Revenue Code of 1986;

. all required government approvals must be in effect;

. no legal restraints must exist preventing this distribution; and

. nothing must have happened in the intervening time between the initial
public offering and the distribution that makes the distribution harmful
to Hewlett-Packard or its stockholders.

Covenants Between Hewlett-Packard and Agilent Technologies. In addition to
signing documents that transfer control and ownership of various assets and
liabilities of Hewlett-Packard relating to our business, we have agreed with
Hewlett-Packard to enter into additional service level agreements, exchange
information, engage in certain auditing practices and resolve disputes in
particular ways.

Additional Service Level Agreements. Hewlett-Packard and we will enter into
interim service level agreements covering the provision of various interim
services, including financial, accounting, building services, legal and other
services by Hewlett-Packard to us or, in certain circumstances, vice versa.
These services will generally be provided for a fee equal to the actual direct
and indirect costs of providing the services plus 5%. The interim service
level agreements will generally have a term of two years or less from the date
of separation. However, some interim service level agreements, including those
for building services and

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information technology services, may be extended beyond the initial two-year
period. If these agreements are extended, their terms will change so that the
lessor will receive fair market rental value for the rental component of the
building services and the costs plus 10% for information technology and other
services and non-rental components of building services.

Information Exchange. Both Hewlett-Packard and we have agreed to share
information with each other, at no cost to the requesting party, for the
following purposes, unless the sharing would be commercially detrimental:

. Each party has agreed to maintain adequate internal accounting to allow
the other party to satisfy its own reporting obligations and prepare its
own financial statements.

. Each party will retain records that may be beneficial to the other party
for a specified period of time. If the records are going to be
destroyed, the destroying party will give the other party an opportunity
to retrieve all relevant information from the records.

. Each party will do its best to provide the other party with personnel,
directors, officers or agents who may be used as witnesses in legal
proceedings.

Auditing Practices. So long as Hewlett-Packard is required to consolidate
our results of operations and financial position, we have agreed to:

. not change independent accounting firms without Hewlett-Packard's
consent;

. use reasonable commercial efforts to cause our auditors to date their
opinion on our audited annual financial statements on the same date as
Hewlett-Packard's auditors' date their opinion on Hewlett-Packard's
financial statements;

. provide Hewlett-Packard all relevant information to enable Hewlett-
Packard to prepare their financial statements (and Hewlett-Packard has
agreed to provide us all relevant information to enable us to prepare
our financial statements);

. grant each other's internal auditors access to our records; and

. notify each other of any change in our accounting principles.

Dispute Resolution. If problems arise between us and Hewlett-Packard, we
have agreed to the following procedures:

. The parties will make a good faith effort to first resolve the dispute
through negotiation.

. If negotiations fail, the parties agree to attempt to resolve the
dispute through non-binding mediation.

. If mediation fails, the parties can resort to litigation. In addition,
nothing prevents either party acting in good faith from initiating
litigation at any time if failure to do so would substantially
disadvantage the party.

No Representations and Warranties. Neither party is making any promises to
the other regarding:

. the value of any asset that Hewlett-Packard is transferring;

. whether there is a lien or encumbrance on the asset Hewlett-Packard is
transferring; or

. the legal sufficiency of any conveyance of title to any asset Hewlett-
Packard is transferring.

No Solicitation. Both parties have agreed not to directly recruit employees
of the other party for two years after the distribution date if the recruiting
would be damaging to the other party. However, general advertising and
employee-initiated solicitations are permissible.

Expenses. Hewlett-Packard will pay all of our costs and expenses related to
this offering and the distribution and a portion of our costs and expenses
related to the separation.

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Termination of the Agreement. Hewlett-Packard in its sole discretion can
terminate the separation agreement and all ancillary agreements and abandon
the distribution at any time prior to the closing of this offering. Both
Hewlett-Packard and Agilent Technologies must agree to terminate the
separation agreement and all ancillary agreements at any time between the
closing of this offering and the distribution.

General Assignment and Assumption Agreement

The general assignment and assumption agreement identifies the assets
Hewlett-Packard will transfer to us and the liabilities we will assume from
Hewlett-Packard in the separation. The agreement also describes when and how
these transfers and assumptions will occur.

Asset Transfer. Effective on the separation date, Hewlett-Packard will
transfer the following assets to us, except as provided in an ancillary
agreement or other agreement:

. all assets reflected on our balance sheet as of July 31, 1999, minus any
assets disposed of after July 31, 1999;

. all written off, expensed or fully depreciated assets that would have
appeared on our balance sheet as of July 31, 1999 if we had not written
off, expensed or fully depreciated them;

. all assets that Hewlett-Packard acquired after July 31, 1999 that would
have appeared in our financial statements as of the separation date if
we prepared such financial statements using the same principles we used
in preparing our balance sheet dated July 31, 1999;

. all assets that our business primarily uses as of the separation date
but are not reflected in our balance sheet as of July 31, 1999 due to
mistake or omission;

. all contingent gains related primarily to our business;

. all supply, vendor, capital, equipment lease or other contracts that
relate primarily to our business, including contracts representing
obligations reflected on our balance sheet as of July 31, 1999;

. all outstanding stock, investments or similar interests of specified
Hewlett-Packard subsidiaries;

. all computers, desks, equipment and other assets used primarily by
employees of Hewlett-Packard who will become our employees due to the
separation;

. specified rights under existing insurance policies; and

. other specified assets.

Excluded Assets. The general assignment and assumption agreement also
provides that Hewlett-Packard will not transfer certain assets to us,
including most accounts receivable.

Assumption of Liabilities. Effective on the separation date, we will assume
the following liabilities from Hewlett-Packard, except as provided in an
ancillary agreement or other agreement:

. all liabilities reflected as liabilities on our balance sheet as of July
31, 1999, minus any liabilities that were discharged after such date of
the balance sheet;

. all liabilities of Hewlett-Packard that arise after July 31, 1999, that
would have appeared in our financial statements as of the separation
date if we prepared such financial statements using the same principles
we used in preparing our balance sheet of Agilent Technologies as of
July 31, 1999;

. all liabilities that are primarily related to or primarily arise out of
our business at the separation date but are not reflected in our balance
sheet as of July 31, 1999 due to mistake or omission;

. all contingent liabilities primarily related to our business;

. all liabilities (other than taxes) primarily resulting from the
operation of our business, or resulting from any asset that Hewlett-
Packard transferred to us;

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. all liabilities arising out of specified terminated, divested or
discontinued businesses and operations; and

. other specified liabilities.

Excluded Liabilities. The general assignment and assumption agreement
provides that we will not assume specified liabilities, including:

. most accounts payable;

. any liabilities that would otherwise be allocated to us but which are
covered by Hewlett-Packard's insurance policies, unless we are a named
insured under such policies; and

. specified third party environmental actions.

The Non-United States Plan. The transfer of international assets and
assumption of international liabilities will be accomplished through
agreements entered into between international subsidiaries. According to the
general assignment and assumption agreement, Hewlett-Packard will transfer its
ownership of all outstanding capital stock of the holding company that owns
all of the subsidiaries holding the international assets and liabilities
related to our business. The agreement acknowledges that circumstances in
jurisdictions outside of the United States may require the timing of the
international separation to be delayed past the separation date.

Delayed Transfers. If it is not practicable to transfer specified assets
and liabilities on the separation date, the agreement provides that these
assets and liabilities will be transferred after the separation date.

Terms of Other Ancillary Agreements Govern. To the extent that another
ancillary agreement expressly provides for the transfer of an asset or an
assumption of a liability, the terms of such other ancillary agreement will
determine the manner of the transfer and assumption.

Obtaining Approvals and Consents. The parties agree to use all reasonable
efforts to obtain any required consents, substitutions or amendments required
to novate or assign all rights and obligations under any contracts that will
be transferred in the separation.

Nonrecurring Costs and Expenses. Any nonrecurring costs and expenses that
are not allocated in the separation agreement or any other ancillary agreement
shall be the responsibility of the party that incurs the costs and expenses.

Indemnification and Insurance Matters Agreement

General Release of Pre-Separation Claims. Effective as of the separation
date, we will release Hewlett-Packard and its affiliates, agents, successors
and assigns, and Hewlett-Packard will release us, and our affiliates, agents,
successors and assigns, from any liabilities arising from events occurring on
or before the separation date, including events occurring in connection with
the activities to implement the separation, the initial public offering and
the distribution. This provision will not impair a party from enforcing the
separation agreement, any ancillary agreement or any arrangement specified in
any of these agreements.

Indemnification. The indemnification and insurance matters agreement also
contains provisions governing indemnification. In general, we have agreed to
indemnify Hewlett-Packard and its affiliates, agents, successors and assigns
from all liabilities arising from:

. our business, any of our liabilities or any of our contracts; and

. any breach by us of the separation agreement or any ancillary agreement.

Hewlett-Packard has agreed to indemnify us and our affiliates, agents,
successors and assigns from all liabilities arising from:

. Hewlett-Packard's business other than the businesses transferred to us
pursuant to the separation; and

. any breach by Hewlett-Packard of the separation agreement or any
ancillary agreement.

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The indemnifying party will make all indemnification payments net of
insurance proceeds that the indemnified party receives. The agreement also
contains provisions governing notice and indemnification procedures.

Liability Arising From This Prospectus. We and Hewlett-Packard have agreed
to share any liability arising from any untrue statement of a material fact or
any omission of a material fact in this prospectus. Hewlett-Packard will bear
82% of any such liability, and we will bear 18% of any such liability.

Agilent Technologies Contingent Liabilities in Excess of $50 Million. To
the extent we incur any contingent liability or group of related contingent
liabilities with a value of more than $50 million, after deducting related
insurance proceeds and amounts recovered from third parties, Hewlett-Packard
has agreed to share the liability relating to this excess portion. Hewlett-
Packard will bear 82% of any such liability, and we will bear 18% of any such
liability. This provision only applies to Agilent Technologies contingent
liabilities arising from written demands made or suits or similar proceedings
filed within four years following the separation date that seek or demand
monetary damages, services or non-monetary relief. An Agilent Technologies
contingent liability is a liability that primarily relates to our business
that arises out of events, acts or omission occurring prior to the separation
date, where the existence or scope of the obligation of Hewlett-Packard or
Agilent Technologies as of the separation date with respect to such liability
was not acknowledged, fixed or determined in any material respect. We may not
assign our rights under this provision, and this provision terminates upon a
change of control of Agilent Technologies (other than as a result of the
distribution).

Insurance Matters. The agreement also contains provisions governing our
insurance coverage from the separation date until the distribution date. In
general, we agree to reimburse Hewlett-Packard for premium expenses related to
insurance coverage during this period. Prior to the distribution, Hewlett-
Packard will maintain insurance policies on our behalf that are generally
comparable to those maintained at Hewlett-Packard.

Environmental Matters. Under the general assignment and assumption
agreement, we have generally assumed environmental liabilities associated with
the historic operations of the businesses transferred to us. This would
include, for example, liabilities associated with non-compliance with
environmental laws prior to separation. However, under the indemnification and
insurance matters agreement and general assignment and assumption agreement,
there are exceptions to our assumption of liabilities for environmental
contamination associated with the historic operations of those businesses.
They include the following:

. Hewlett-Packard will generally retain and indemnify us for all
liabilities for environmental contamination, whether or not arising out
of the businesses transferred to us, on any property (including third
party disposal sites) other than the properties that are to be
transferred to us upon separation.

. Hewlett-Packard will also retain and indemnify us for liabilities
associated with any contamination existing prior to the separation date
on those properties to be transferred to us which are currently
undergoing investigation and remediation by Hewlett-Packard and for
which Hewlett-Packard has accrued a reserve.

We will indemnify Hewlett-Packard for liabilities associated with
environmental contamination at those sites that are to be transferred to us
(other than specifically listed properties which are undergoing investigation
and remediation by Hewlett-Packard) regardless of whether the contamination
was caused by historic operations of the business transferred to us or a
business retained by Hewlett-Packard. We will have limited access to Hewlett-
Packard's historic insurance policies for coverage of liabilities associated
with pre-separation contamination assumed by us. Each party will be
responsible for all liabilities associated with any environmental
contamination caused by that party post-separation.

Certain Losses and liabilities Not Covered by Hewlett-Packard's Insurance
Policies. Hewlett-Packard has agreed to reimburse us for any losses or
liabilities aggregating in excess of $20 million, exclusive of amounts

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covered by insurance policies, that we incur between the separation date and
the distribution date of the following nature:

. specified categories of losses resulting from an earthquake;

. property losses of a type that is covered by Hewlett-Packard's insurance
policies or that is covered by standard form insurance policies; or

. events, acts or omissions occur that give rise to one or more third
party claims that result in a liability to Agilent Technologies of a
type that is covered by Hewlett-Packard's insurance policies or that is
covered by standard form insurance policies, but only to the extent that
suits or similar proceedings are filed or written demands are made in
connection with such claims within four years following the distribution
date that seek or demand monetary damages, services or non-monetary
relief.

. releases occur that give rise to one or more environmental actions that
result in a liability to Agilent Technologies, but only to the extent
that suits or similar proceedings are filed, orders or decrees are
issued, written notice that the environmental action will be commenced
is received by us or Hewlett-Packard, or written demands are made in
connection with the environmental action within four years following the
distribution date that seek or demand monetary damages, services or non-
monetary relief.

Assignment. The indemnification and insurance matters agreement is not
assignable by either party without prior written consent.

Master Patent Ownership and License Agreement

The master patent ownership and license agreement, or the master patent
agreement, allocates rights relating to patents, patent applications and
invention disclosures. Under the master patent agreement, Hewlett-Packard will
assign to us ownership of listed patents, patent applications and invention
disclosures and joint ownership of a small number of listed patents and patent
applications. Hewlett-Packard will not restrict our right to practice the
assigned patents, and neither party will restrict the other's right to
practice the joint patents except for a small number of joint patents that
will be subject to field-of-use limitations.

In addition, each party will grant the other a non-exclusive, royalty-free
patent cross-license to make, have made, use, lease, sell, offer for sale, and
import any and all products and services of the businesses in which the
licensed company and its subsidiaries, including specified affiliated
companies are, as of or after the separation date, engaged, except in specific
excluded fields-of-use. The fields that are excluded from the license granted
by us to Hewlett-Packard are some areas of biological and chemical deposition
and some areas of health care. The fields that are excluded from the license
granted by Hewlett-Packard to us are printing devices, printer supplies,
components and accessories, document scanners and some computing devices. The
cross-licenses between Hewlett-Packard and us will cover all of each company's
patents issued on patent applications with first effective filing dates before
the separation date or within five years after, and will include rights to
sublicense to subsidiaries and specified affiliated companies as well as
certain rights to sublicense a small number of patents to third parties. The
licenses continue for the life of the patent.

The master patent agreement also will provide that Hewlett-Packard and we
will assist each other in specified ways for a period of five years after the
separation date in the event either party is subject to patent litigation.

Under the master patent agreement, Hewlett-Packard and we will have the
right to require, subject to some restrictions, that the other party license
its patents, subject to the same field-of-use restrictions, to (A) a
subsidiary or one of the specified affiliated companies valued at $10 million
or more that has been spun-off or sold and (B) a third party that acquires a
business from it valued at $10 million or more. These licenses will be limited
to the products, services and processes that are in the subsidiary, affiliated
company or business at the time of transfer

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and minor extensions to those products, services and processes and will be
limited to patents issued on patent applications with first effective filing
dates on or before the effective date of the spin-off or acquisition. As a
condition of these licenses, the transferee of the subsidiary, affiliated
company or business must grant a patent license back to the non-transferring
party.

In the event of an acquisition of either party, the acquired party may
assign the master patent agreement. In that event, the license granted to the
acquired party will be limited to the products, services and processes of the
acquired party as of the date of the acquisition and minor extensions to those
products, services and processes. The license granted to the acquired party
will not include patents issued on patent applications with first effective
filing dates after the date of acquisition.

Master Technology Ownership and License Agreement

The master technology ownership and license agreement, or the master
technology agreement, allocates rights in technology other than the integrated
circuit technology covered by the ICBD technology ownership and license
agreement (discussed below) and other than patents, patent applications and
invention disclosures. In the master technology agreement, Hewlett-Packard
will assign to us technology related to our products and developments.
Hewlett-Packard will not restrict our right to use the assigned technology. In
addition, each party will license its technology to the other party for
unrestricted use (except for commercially released software, which is subject
to narrower rights), to the extent that its technology has been disclosed to
or is in the possession of the other party as of the separation date, with the
right to sublicense to subsidiaries and specified affiliated companies. The
licenses are perpetual.

Under the master technology agreement, subject to some restrictions, each
party may also sublicense the technology that it licenses from the other party
to (A) a subsidiary or one of the specified affiliated companies valued at $10
million or more that has been spun-off or sold and (B) a third party that
acquires a business from it valued at $10 million or more.

The master technology agreement will not obligate either party to provide
to the other party improvements that it makes, whether to its own technology
or to the other party's technology licensed to it under the agreement.

In the event of an acquisition of either party, the acquired party may
assign the master technology agreement.

ICBD Technology Ownership and License Agreement

The ICBD technology ownership and license agreement, or the ICBD technology
agreement, assigns to us listed technology relating to the design, development
and manufacture of integrated circuits that is used by the Integrated Circuits
Business Division (ICBD), or integrated circuit technology, (other than
patents, patent applications and invention disclosures). The ICBD technology
agreement also provides that Hewlett-Packard will retain ownership of other
integrated circuit technology. In the ICBD technology agreement, Hewlett-
Packard will assign to us joint ownership of other listed integrated circuit
technology and both parties will have unrestricted rights to use the jointly
owned integrated circuit technology. The integrated circuit technology that is
covered by the ICBD technology agreement encompasses the majority of the
integrated circuit technology within Hewlett-Packard. The covered integrated
circuit technology generally includes the integrated circuit technology that
was developed jointly with or for the benefit of the imaging and computing
businesses of Hewlett-Packard.

In addition, under the ICBD technology agreement, each party will license
the listed integrated circuit technology to the other party, with the right to
sublicense to subsidiaries and specified affiliated companies. The licenses
are perpetual. We will be restricted from using both the integrated circuit
technology that Hewlett-Packard will assign to us and that Hewlett-Packard
will license to us within the fields of printing devices, printer supplies,
components and accessories, document scanners and some computing devices,
other than to supply Hewlett-Packard. This restriction expires ten years after
the separation date for certain printing, scanning and computing technology
considered fundamental or of long term value and three years after the
separation date for the rest of the technology.

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Under the ICBD technology agreement, subject to some restrictions, each
party may sublicense the integrated circuit technology that it licenses from
the other party to (A) a subsidiary or one of the specified affiliated
companies valued at $10 million or more that has been spun-off or sold and (B)
a third party that acquires a business from it valued at $10 million or more.

The ICBD technology agreement will not obligate either party to provide to
the other party improvements that it makes, whether to its own technology or
to the other party's technology licensed to it under the agreement. Each
party, upon request, will notify the other party of improvements that it may
have made in a particular defined technical area and will negotiate in good
faith disclosing and licensing those improvements to the other party.

In the event of an acquisition of either party, the acquired party may
assign the ICBD technology agreement.

Master Trademark Ownership and License Agreement

The master trademark ownership and license agreement, or the master
trademark agreement, will allocate rights relating to trademarks, service
marks and trade names. Under the master trademark agreement, Hewlett-Packard
will assign to us its rights in listed trademarks, service marks and trade
names that it uses in connection with the businesses transferred to us. In
addition, Hewlett-Packard will grant us a perpetual license to mark our
products shipping as of the distribution date with, and advertise and promote
these products using, listed Hewlett-Packard trademarks and service marks.
After five years, our use will be subject to royalty payments. We may
sublicense these rights to subsidiaries and specified affiliated companies,
and we and our subsidiaries and the specified affiliated companies may allow
authorized dealers to use the trademarks and service marks in the
advertisement and promotion of these products.

During the first three years from the separation date, Hewlett-Packard will
agree not to license the trademarks and service marks it licenses to us to
third parties for use in connection with products or services that compete
with our products shipping as of the distribution date (other than in
connection with co-branding activities and other than any licenses that may
have previously been granted).

Hewlett-Packard may terminate the license under the master trademark
agreement only with regard to products that fail to meet required quality
standards, subject to a notice and cure period.

In the event of an acquisition of either party, the acquired party may
assign the master trademark agreement.

Master Confidential Disclosure Agreement

The master confidential disclosure agreement provides that both parties
agree not to disclose confidential information of the other party except in
specific circumstances. Hewlett-Packard and we also agree not to use this
information in violation of any use restrictions in one of the other written
agreements between us.

Master IT Service Level Agreement

The master IT service level agreement governs the provision of information
technology services by Hewlett-Packard and us to each other, on an interim
basis, until November 1, 2001, unless extended for specific services or
otherwise indicated in the agreement. The services include data processing and
telecommunications services, such as voice telecommunications and data
transmission, and information technology support services, for functions
including accounting, financial management, tax, payroll, stockholder and
public relations, legal, human resources administration, procurement, real
estate management and other administrative functions. Specified charges for
such services are generally intended to allow the providing company to recover
the direct and indirect costs of providing the services, plus 5% until
November 1, 2001 and such costs plus 10% thereafter. The master IT service
level agreement also will cover the provision of certain additional
information technology services identified from time to time after the
separation date that were inadvertently or unintentionally omitted from the
specified services, or that are essential to effectuate an orderly transition
under the separation agreement, so long as the provision of such services
would not significantly disrupt the providing company's operations or
significantly increase the scope of the agreement.

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In addition, the master IT service level agreement will provide for the
replication of some computer systems, including hardware, software, data
storage or maintenance and support components. Generally, the party needing
the replicated system will bear the costs and expenses of replication.
Generally, the party purchasing new hardware or licensing new software will
bear the costs and expenses of purchasing the new hardware or obtaining the
new software licenses.

Employee Matters Agreement

We will enter into an employee matters agreement with Hewlett-Packard to
allocate assets, liabilities, and responsibilities relating to current and
former United States employees of Agilent Technologies and their participation
in the benefit plans, including stock plans, that Hewlett-Packard currently
sponsors and maintains.

In general, separate agreements will address similar issues relating to
foreign employment and benefit matters.

All eligible United States Agilent Technologies employees will continue to
participate in the Hewlett-Packard benefit plans on comparable terms and
conditions to those for Hewlett-Packard employees until we establish
comparable benefit plans for our current and former employees. We intend to
establish these plans no later than the time of the distribution.

Around November 1, 1999, all United States Agilent Technologies employees
will be transferred to Agilent Technologies' United States payroll. At that
time, we will adopt specified plans associated with our United States payroll
system, such as the Agilent Technologies stock plans, the Agilent Technologies
executive deferred compensation plan and the Agilent Technologies leave of
absence programs. After that time, we will adopt benefit plans that reflect
our more permanent separation from Hewlett-Packard, such as the Agilent
Technologies health and welfare plans, the Agilent Technologies pension plans,
the Agilent Technologies Excess Benefit Plan and the Agilent Technologies
fringe benefit plans. Each Agilent Technologies benefit plan will be
comparable to the corresponding Hewlett-Packard benefit plan.

Once we establish our own corresponding benefit plan, we may modify or
terminate that plan in accordance with the terms of that plan and our
policies. No Agilent Technologies benefit plan will provide benefits that
overlap benefits under the corresponding Hewlett-Packard benefit plan at the
time of the distribution. Each Agilent Technologies benefit plan will provide
that all service, compensation and other benefit determinations that, as of
the distribution, were recognized under the corresponding Hewlett-Packard
benefit plan will be taken into account under that Agilent Technologies
benefit plan.

Each Agilent Technologies benefit plan will assume any liabilities under
the corresponding Hewlett-Packard benefit plan for Agilent Technologies
employees. Assets relating to the employee liabilities will also be
transferred to Agilent Technologies or the related Agilent Technologies plans
and trusts from trusts and other funding vehicles associated with Hewlett-
Packard's benefit plans.

Options and Stock Appreciation Rights. We will establish a replacement
stock plan for eligible Agilent Technologies employees on the distribution.
Under the existing terms of the Hewlett-Packard stock option plans,
substantially all Hewlett-Packard options held by Agilent Technologies
employees at the time of the distribution will be fully vested and, if not
exercised, will expire three months from the distribution. Alternatively,
Agilent Technologies employees may elect to amend their Hewlett-Packard
options to waive the vesting acceleration. We will assume the amended options,
which will convert at the distribution into options to purchase our common
stock. The number of shares and the exercise price of Hewlett-Packard options
that convert into Agilent Technologies options will be adjusted using a
conversion formula. The conversion formula will be based on the opening per-
share price of our common stock on the first trading day after the
distribution relative to the closing per-share price of Hewlett-Packard common
stock on the last trading day before the distribution. The resulting Agilent
Technologies options will maintain the original vesting provisions and option
period. At the distribution, Agilent Technologies will assume each Hewlett-
Packard stock appreciation right held by Agilent Technologies employees.

Restricted Stock. On or before the distribution, Hewlett-Packard restricted
stock granted under incentive stock plans and held by Agilent Technologies
employees is expected to be forfeited. Each Agilent Technologies

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employee who forfeits Hewlett-Packard restricted stock may elect to receive
replacement Agilent Technologies options or Agilent Technologies restricted
shares.

Stock Purchase Plan. We anticipate that Agilent Technologies employees will
continue to participate in the Hewlett-Packard stock purchase plan through
October 31, 1999 or at such later date as we and Hewlett-Packard mutually
agree. After that time, we will sponsor a stock purchase plan for the benefit
of Agilent Technologies employees that is comparable to the Hewlett-Packard
stock purchase plan.

Tax Sharing Agreement

Hewlett-Packard and we will enter into a tax sharing agreement providing
for each of the party's obligations concerning various tax liabilities. The
tax sharing agreement provides that Hewlett-Packard generally will pay, and
indemnify us if necessary, with respect to all federal, state, local and
foreign taxes relating to our business for any taxable period ending prior to
this offering. In addition, the tax sharing agreement provides that Hewlett-
Packard and we will make payments between us so that, with respect to tax
returns for any taxable period in which we or any of our subsidiaries are
included in Hewlett-Packard's consolidated group for U.S. federal income tax
purposes, or in any consolidated, combined or unitary group which includes
Hewlett-Packard or any of its subsidiaries for state, local or foreign income
tax purposes the amount of taxes to be paid by us will be determined, subject
to specified adjustments, as if we and each of our subsidiaries filed our own
consolidated, combined or unitary tax return. Each member of a consolidated
group for U.S. federal income tax purposes is jointly and severally liable for
the federal income tax liability of each other member of the consolidated
group. Accordingly, although the tax sharing agreement allocates tax
liabilities between Hewlett-Packard and us, for any period in which we were
included in Hewlett-Packard's consolidated group we could be liable in the
event that any federal tax liability was incurred, but not discharged, by any
other member of the group.

The tax sharing agreement allocates responsibility for various taxes
arising from restructurings related to the spinoff between Hewlett-Packard and
Agilent Technologies. In addition, Agilent Technologies will bear 18% of
unanticipated taxes related to the spinoff where neither party is at fault.

In addition, the tax sharing agreement provides that we shall indemnify
Hewlett-Packard for any taxes arising out of the failure of the spin-off or
some of the transactions related to it to qualify as tax free as a result of
actions taken, or the failure to take required actions, by us or any of our
subsidiaries. Specifically, we are required under the tax sharing agreement to
comply with the representations made to the Internal Revenue Service in
connection with the private letter ruling that has been issued to Hewlett-
Packard by the Internal Revenue Service regarding the tax-free nature of the
spin-off of our stock by Hewlett-Packard to Hewlett-Packard's stockholders.

The tax sharing agreement further provides for cooperation with respect to
tax matters, the exchange of information and the retention of records which
may affect the income tax liability of either party. Disputes arising between
Hewlett-Packard and us relating to matters covered by the tax sharing
agreement are subject to resolution through specific dispute resolution
provisions.

Real Estate Matters Agreement

The real estate matters agreement addresses real estate matters relating to
the Hewlett-Packard leased and owned properties that Hewlett-Packard will
transfer to or share with us. The agreement describes the manner in which
Hewlett-Packard will transfer to or share with us various leased and owned
properties, including the following types of transactions:

. conveyances to us of specified properties that Hewlett-Packard owns;

. leases back to Hewlett-Packard of specified owned properties that
Hewlett-Packard will convey to us;

. leases to us of portions of specified properties that Hewlett-Packard
owns;

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. assignments to us of Hewlett-Packard's leases for specified leased
properties;

. subleases back to Hewlett-Packard of specified leased properties to be
assigned to us; and

. subleases to us of portions of specified leased properties.

The real estate matters agreement includes a description of each material
property to be transferred to or shared with us for each type of transaction.
The standard forms of the proposed transfer documents (e.g., lease and
sublease) are contained in schedules.

The real estate matters agreement also requires both parties to use
reasonable efforts to obtain any landlord consents required for the proposed
transfers of leased sites, including Hewlett-Packard paying commercially
reasonable consent fees and negotiating other commercially reasonable
amendments to the leases, if required by the landlords, and us agreeing to
provide the security required under the applicable leases.

The real estate matters agreement further provides that we will be required
to accept the transfer of all sites allocated to us, even if a site has been
damaged by a casualty before the separation date. Transfers with respect to
leased sites where the underlying lease is terminated due to casualty or
action by the landlord prior to the separation date will not be made, and
neither party will have any liability related thereto.

The real estate matters agreement also gives the parties the right to
change the allocation and terms of specified sites by mutual agreement based
on changes in the requirements of the parties.

The real estate matters agreement provides that all reasonable costs
required to effect the transfers (including landlord consent fees, landlord
attorneys' fees, title insurance fees and transfer taxes) will be paid by
Hewlett-Packard.

Environmental Matters Agreement

Hewlett-Packard has agreed to retain and indemnify us for liabilities
associated with properties transferred to us which are undergoing
environmental investigation and remediation and for which Hewlett-Packard has
accrued a reserve. The purpose of the environmental matters agreement is to
address, in a general way, Hewlett-Packard's rights and obligations with
respect to remediation of contamination at those properties. The agreement
also sets forth our rights and obligations with respect to that remediation.

Among other things, we are required to cooperate with Hewlett-Packard in
providing access to and use of the property for the performance of the
remedial activities by Hewlett-Packard and make reasonable efforts to avoid
interference with the remedial activities. Hewlett-Packard agrees to minimize,
to the extent feasible, the impact of remedial activities on the use and
operation on or at the relevant properties.

Hewlett-Packard and Agilent Technologies will designate liaisons for each
property who will work together and attend regular meetings with respect to
the remedial activities.

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PRINCIPAL STOCKHOLDER

Prior to this offering, all of the outstanding shares of our common stock
will be owned by Hewlett-Packard. After this offering, Hewlett-Packard will
own about %, or about % if the U.S. underwriters exercise their over-
allotment option in full, of our outstanding common stock. Except for Hewlett-
Packard, we are not aware of any person or group that will beneficially own
more than 5% of the outstanding shares of our common stock following this
offering.

DESCRIPTION OF CAPITAL STOCK

General

Upon the completion of this offering, we will be authorized to issue
2,000,000,000 shares of common stock, $0.01 par value, and 125,000,000 shares
of undesignated preferred stock, $0.01 par value. The following description of
our capital stock is subject to and qualified in its entirety by our
certificate of incorporation and bylaws, which are included as exhibits to the
registration statement of which this prospectus forms a part, and by the
provisions of applicable Delaware law.

Common Stock

Prior to this offering, there were shares of common stock outstanding,
all of which were held of record by Hewlett-Packard.

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available for
that purpose. See "Dividend Policy." In the event of our liquidation,
dissolution or winding up, the holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding. The holders
of common stock have no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
common stock.

Preferred Stock

The board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may
be greater than the rights of the common stock. It is not possible to state
the actual effect of the issuance of any shares of preferred stock upon the
rights of holders of the common stock until the board of directors determines
the specific rights of the holders of such preferred stock. However, the
effects might include, among other things:

. restricting dividends on the common stock;

. diluting the voting power of the common stock;

. impairing the liquidation rights of the common stock; or

. delaying or preventing a change in control of us without further action
by the stockholders.

At the closing, no shares of preferred stock will be outstanding, and we
have no present plans to issue any shares of preferred stock.

Anti-Takeover Effects of Our Certificate and Bylaws and Delaware Law

Some provisions of Delaware law and our certificate of incorporation and
bylaws could make the following more difficult:

. acquisition of us by means of a tender offer;

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. acquisition of us by means of a proxy contest or otherwise; or

. removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first
negotiate with our board. We believe that the benefits of increased protection
give us the potential ability to negotiate with the proponent of an unfriendly
or unsolicited proposal to acquire or restructure us and outweigh the
disadvantages of discouraging such proposals because negotiation of such
proposals could result in an improvement of their terms.

Election and Removal of Directors. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term,
one class being elected each year by our stockholders. See "Management--
Directors and Executive Officers." This system of electing and removing
directors may discourage a third party from making a tender offer or otherwise
attempting to obtain control of us because it generally makes it more
difficult for stockholders to replace a majority of the directors.

Stockholder Meetings. Under our bylaws, only the board of directors, the
chairman of the board, and until Hewlett-Packard owns less than 50% of our
common stock, Hewlett-Packard, may call special meetings of stockholders.

Requirements for Advance Notification of Stockholder Nominations and
Proposals. Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of the board of
directors or a committee of the board of directors.

Delaware Anti-Takeover Law. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
following the date the person became an interested stockholder, unless the
"business combination" or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a
"business combination" includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder.
Generally, an "interested stockholder" is a person who, together with
affiliates and associates, owns or within three years prior to the
determination of interested stockholder status, did own, 15% or more of a
corporation's voting stock. The existence of this provision may have an anti-
takeover effect with respect to transactions not approved in advance by the
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.

Elimination of Stockholder Action By Written Consent. Our certificate of
incorporation eliminates the right of stockholders other than Hewlett-Packard
to act by written consent without a meeting. Hewlett-Packard will lose this
right once it owns less than 50% of our common stock.

Elimination of Cumulative Voting. Our certificate of incorporation and
bylaws do not provide for cumulative voting in the election of directors.

Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock
with voting or other rights or preferences that could impede the success of
any attempt to change control of us. These and other provisions may have the
effect of deferring hostile takeovers or delaying changes in control or
management of us.

Amendment of Charter Provisions. The amendment of any of the above
provisions would require approval by holders of at least 80% of the
outstanding common stock.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Harris Trust and
Savings Bank.

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SHARES ELIGIBLE FOR FUTURE SALE

All of the shares of our common stock sold in this offering (
shares if the U.S. underwriters exercise their over-allotment option in full),
will be freely tradeable without restriction under the Securities Act, except
for any shares which be may acquired by an affiliate of Agilent Technologies,
as that term is defined in Rule 144 under the Securities Act. Persons who may
be deemed to be affiliates generally include individuals or entities that
control, are controlled by, or are under common control with, Agilent
Technologies and may include directors and officers of Agilent Technologies as
well as significant stockholders of Agilent Technologies, if any.

Hewlett-Packard has announced that, subject to specified conditions, it
intends to distribute to its stockholders by the middle of calendar year 2000
all of the shares of our common stock owned by Hewlett-Packard by means
of the distribution. Shares of our common stock distributed to Hewlett-Packard
shareholders in the distribution generally will be freely transferable, except
for shares of common stock received by persons who may be deemed to be
affiliates. Persons who are affiliates will be permitted to sell the shares of
common stock that are issued in this offering or that they receive in the
distribution only through registration under the Securities Act, or under an
exemption from registration, such as the one provided by Rule 144.

The shares of our common stock held by Hewlett-Packard before distribution
are deemed "restricted securities" as defined in Rule 144, and may not be sold
other than through registration under the Securities Act or under an exemption
from registration, such as the one provided by Rule 144. Hewlett-Packard, our
directors and officers and we have agreed not to offer or sell any shares of
our common stock, subject to exceptions (including the distribution), for a
period of 180 days after the date of this prospectus, without the prior
written consent of the underwriters. See "Underwriters."

We will grant shares of our common stock and non-stock awards pursuant to
the 1999 Stock Plan subject to restrictions. See "Management--Incentive
Plans--1999 Stock Plan." We currently expect to file a registration statement
under the Securities Act to register shares reserved for issuance under the
1999 Stock Plan. Shares issued pursuant to awards after the effective date of
such registration statement (other than shares issued to affiliates) generally
will be freely tradable without further registration under the Securities Act.
Any vested and exercisable options of Hewlett-Packard will also be freely
tradeable without registration under the Securities Act after the effective
date of such registration statement. See "Management--Treatment of Hewlett-
Packard Options."

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MATERIAL UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

General

The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of common
stock that may be relevant to you if you are a non-United States Holder. In
general, a "non-United States Holder" is any person or entity that is, for
United States federal income tax purposes, a foreign corporation, a
nonresident alien individual, a foreign partnership or a foreign estate or
trust. This discussion is based on current law, which is subject to change,
possibly with retroactive effect, or different interpretations. This
discussion is limited to non-United States Holders who hold shares of common
stock as capital assets. Moreover, this discussion is for general information
only and does not address all of the tax consequences that may be relevant to
you in light of your personal circumstances, nor does it discuss special tax
provisions which may apply to you if you relinquished United States
citizenship or residence.

If you are an individual, you may, in many cases, be deemed to be a
resident alien, as opposed to a nonresident alien, by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the
current calendar year (counting for such purposes all of the days present in
the current year, one-third of the days present in the immediately preceding
year, and one-sixth of the days present in the second preceding year).
Resident aliens are subject to United States federal income tax as if they
were United States citizens.

EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO CONSULT A TAX
ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX CONSEQUENCES OF
PURCHASING, OWNING AND DISPOSING OF OUR COMMON STOCK AS WELL AS ANY TAX
CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY UNITED STATES STATE,
MUNICIPALITY OR OTHER TAXING JURISDICTION.

Dividends

If dividends are paid, as a non-United States Holder, you will be subject
to withholding of United States federal income tax at a 30% rate or a lower
rate as may be specified by an applicable income tax treaty. To claim the
benefit of a lower rate under an income tax treaty, you must properly file
with the payor an IRS Form 1001, or successor form, claiming an exemption from
or reduction in withholding under the applicable tax treaty.

If dividends are considered effectively connected with the conduct of a
trade or business by you within the United States and, where a tax treaty
applies, are attributable to a United States permanent establishment of yours,
those dividends will not be subject to withholding tax, but instead will be
subject to United States federal income tax on a net basis at applicable
graduated individual or corporate rates, provided an IRS Form 4224, or
successor form, is filed with the payor. If you are a foreign corporation, any
effectively connected dividends may, under certain circumstances, be subject
to an additional "branch profits tax" at a rate of 30% or a lower rate as may
be specified by an applicable income tax treaty.

Unless the payor has knowledge to the contrary, dividends paid prior to
January 1, 2001 to an address outside the United States are presumed to be
paid to a resident of such country for purposes of the withholding discussed
above and for purposes of determining the applicability of a tax treaty rate.
However, recently finalized Treasury Regulations pertaining to United States
federal withholding tax provide that you must comply with certification
procedures, or, in the case of payments made outside the United States with
respect to an offshore account, certain documentary evidence procedures,
directly or under certain circumstances through an

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intermediary, to obtain the benefits of a reduced rate under an income tax
treaty with respect to dividends paid after December 31, 2000. In addition,
these regulations will require you, if you provide an IRS Form 4224 or
successor form, as discussed above, to also provide your identification
number.

If you are eligible for a reduced rate of United States withholding tax
pursuant to an income tax treaty, you may obtain a refund of any excess
amounts withheld by filing an appropriate claim for refund with the IRS.

Gain on Disposition of Common Stock

As a non-United States Holder, you generally will not be subject to United
States federal income tax on any gain recognized on the sale or other
disposition of common stock unless:

(1) the gain is considered effectively connected with the conduct of a
trade or business by you within the United States and, where a tax
treaty applies, is attributable to a United States permanent
establishment of yours (and, in which case, if you are a foreign
corporation, you may be subject to an additional branch profits tax
equal to 30% or a lower rate as may be specified by an applicable
income tax treaty).

(2) you are an individual who holds the common stock as a capital asset and
are present in the United States for 183 or more days in the taxable
year of the sale or other disposition and other conditions are met; or

(3) we are or have been a "United States real property holding
corporation", or a USRPHC, for United States federal income tax
purposes. We believe that we are not currently, and are likely not to
become, a USRPHC. If we were to become a USRPHC, then gain on the sale
or other disposition of common stock by you generally would not be
subject to United States federal income tax provided:

. the common stock was "regularly traded" on an established securities
market; and

. you do not actually or constructively own more than 5% of the common
stock during the shorter of the five-year period preceding the
disposition or your holding period.

Federal Estate Tax

If you are an individual, common stock held at the time of your death will
be included in your gross estate for United States federal estate tax
purposes, and may be subject to United States federal estate tax, unless an
applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding Tax

We must report annually to the IRS and to each of you the amount of
dividends paid to you and the tax withheld with respect to those dividends,
regardless of whether withholding was required. Copies of the information
returns reporting those dividends and withholding may also be made available
to the tax authorities in the country in which you reside under the provisions
of an applicable income tax treaty or other applicable agreements.

Backup withholding is generally imposed at the rate of 31% on certain
payments to persons that fail to furnish the necessary identifying information
to the payer. Backup withholding generally will not apply to dividends paid
prior to January 1, 2001 to a Non-United States Holder at an address outside
the United States, unless the payor has knowledge that the payee is a United
States person. In the case of dividends paid after December 31, 2000, the
recently finalized Treasury Regulations provide that you generally will be
subject to withholding tax at a 31% rate unless you certify your non-United
States status.

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The payment of proceeds of a sale of common stock effected by or through a
United States office of a broker is subject to both backup withholding and
information reporting unless you provide the payor with your name and address
and you certify your non-United States status or you otherwise establish an
exemption. In general, backup withholding and information reporting will not
apply to the payment of the proceeds of a sale of common stock by or through a
foreign office of a broker. If, however, such broker is, for United States
federal income tax purposes, a United States person, a controlled foreign
corporation, or a foreign person that derives 50% or more of its gross income
for certain periods from the conduct of a trade or business in the United
States, or, in addition, for periods after December 31, 2000, a foreign
partnership that at any time during its tax year either is engaged in the
conduct of a trade or business in the United States or has as partners one or
more United States persons that, in the aggregate, hold more than 50% of the
income or capital interest in the partnership, such payments will be subject
to information reporting, but not backup withholding, unless such broker has
documentary evidence in its records that you are a non-United States Holder
and certain other conditions are met or you otherwise establish an exemption.

Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against your United States federal income tax
liability provided the required information is furnished in a timely manner to
the IRS.

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UNDERWRITERS

Under the terms and subject to the conditions contained in an underwriting
agreement dated the date hereof the U.S. underwriters named below, for whom
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. are acting as U.S.
representatives, and the international underwriters named below for whom
Morgan Stanley & Co. International Limited and Goldman Sachs International are
acting as international representatives, have severally agreed to purchase,
and Agilent Technologies has agreed to sell to them, severally, the number of
shares of our common stock indicated below:

<TABLE>
<CAPTION>
Name Number of Shares
- ---- ----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................
Goldman, Sachs & Co..........................................
---
Subtotal...................................................
---
International Underwriters:
Morgan Stanley & Co. International Limited...................
Goldman Sachs International..................................
---
Subtotal...................................................
---
Total....................................................
===
</TABLE>

The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively
referred to as the "underwriters" and the "representatives," respectively. The
underwriters are offering the shares of common stock subject to their
acceptance of the shares from Agilent Technologies and subject to prior sale.
The underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the shares of our common stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The underwriters are obligated to
take and pay for all of the shares of our common stock offered hereby, if any
such shares are taken, other than those covered by the U.S. underwriters'
over-allotment option described below.

In the agreement between the U.S. and international underwriters, sales may
be made between the U.S. underwriters and international underwriters of any
number of shares as may be mutually agreed. The per share price of any shares
sold by the underwriters shall be the public offering price set forth on the
cover page of this prospectus, in United States dollars, less an amount not
greater than the per share amount of the concession to dealers described
below.

The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the
cover page of this prospectus and part to certain dealers at a price that
represents a concession not in excess of $ a share under the public
offering price. Any underwriter may allow, and such dealers may reallow, a
concession not in excess of $ a share to other underwriters or to certain
dealers. After the initial offering of the shares of common stock, the
offering price and other selling terms may from time to time be varied by the
representatives.

Agilent Technologies has granted to the U.S. underwriters an option,
exercisable for 30 days from the date of this prospectus, to purchase up to an
aggregate of additional shares of common stock at the public offering price
set forth on the cover page of this prospectus, less underwriting discounts
and commissions. The

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U.S. underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with this offering of the shares
of common stock offered by this prospectus. To the extent the option is
exercised, each U.S. underwriter will become obligated, subject to certain
conditions, to purchase about the same percentage of the additional shares of
common stock as the number listed next to the U.S. underwriter's name in the
preceding table bears to the total number of shares of common stock set forth
next to the names of all U.S. underwriters in the preceding table. If the U.S.
underwriters' option is exercised in full, the total price to the public would
be $ , the total underwriters' discounts and commissions would be $ and
total proceeds to Agilent Technologies would be $ .

The underwriters have informed Agilent Technologies that each principal
underwriter in this offering may, subject to the approval of Morgan Stanley &
Co. Incorporated, sell to discretionary accounts over which such principal
underwriter exercises discretionary authority. The underwriters have further
informed Agilent Technologies that they estimate that such sales will not
exceed in the aggregate five percent of the total number of shares of common
stock offered by them.

Application has been made for listing of the Agilent Technologies common
stock on the [Nasdaq Stock Market/New York Stock Exchange] under the symbol
" ."

Each of Agilent Technologies, Hewlett-Packard and the directors and
executive officers of Agilent Technologies has agreed that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, it will not, during the period ending 180 days after the date of
this prospectus:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock; or

. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock;

whether any such transaction described above is to be settled by delivery of
common stock or such other securities, in cash or otherwise.

The restrictions described in the previous paragraph do not apply to:

. the sale of the shares to the underwriters;

. the issuance by Agilent Technologies of shares of common stock upon the
exercise of an option or a warrant or the conversion of a security
outstanding on the date of this prospectus of which the underwriters
have been advised in writing;

. the granting of stock options and/or restricted stock units pursuant to
existing Agilent Technologies employee benefit plans, provided that such
options do not become exercisable and such units do not vest during such
180-day period;

. transactions by any person other than Agilent Technologies relating to
shares of common stock or other securities acquired in open market or
other transactions after the completion of this offering;

. transactions in shares of Hewlett-Packard common stock;

. the distribution; or

. the substitution of Hewlett-Packard Awards with replacement awards under
Agilent Technologies' incentive plans and other transactions under
Agilent Technologies' incentive plans.

In order to facilitate this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may over-allot in connection with

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this offering, creating a short position in the common stock for their own
account. In addition, to cover any over-allotments or to stabilize the price
of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the common stock in this offering, if the syndicate repurchases
previously distributed common stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the common stock above
independent market levels. The underwriters are not required to engage in
these activities, and may end any of these activities at any time.

From time to time, certain of the underwriters have provided, and may
continue to provide, investment banking services to each of Agilent
Technologies and Hewlett-Packard.

Hewlett-Packard has generally agreed to pay the costs and expenses relating
to this offering. The underwriters have agreed to reimburse Hewlett-Packard
for certain of its expenses incurred in connection with this offering.

Agilent Technologies and the underwriters have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act.

Pricing of this Offering

Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between Agilent Technologies and the U.S. representatives. Among the factors
to be considered in determining the initial public offering price will be the
future prospects of Agilent Technologies and its industry in general, sales,
earnings and certain other financial and operating information of Agilent
Technologies in recent periods, and the price-earnings ratios, price-sales
ratios, market prices of securities and certain financial and operating
information of companies engaged in activities similar to those of Agilent
Technologies. The estimated initial public offering price range set forth on
the cover page of this preliminary prospectus is subject to change as a result
of market conditions and other factors.

118
<PAGE>

LEGAL MATTERS

The validity of the common stock offered hereby and certain other legal
matters will be passed upon for us by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. Certain legal matters will be
passed upon for the underwriters by Shearman & Sterling, Menlo Park,
California.

EXPERTS

The consolidated financial statements as of October 31, 1997 and 1998 and
for each of the three years in the period ended October 31, 1998 included in
this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, a registration statement on Form S-1 under the Securities Act with
respect to the common stock offered hereby. This prospectus does not contain
all of the information set forth in the registration statement and the
exhibits and schedules thereto. Certain items are omitted in accordance with
the rules and regulations of the SEC. For further information with respect to
Agilent Technologies and its common stock, reference is made to the
registration statement and the exhibits and any schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance,
if such contract or document is filed as an exhibit, reference is made to the
copy of such contract or other documents filed as an exhibit to the
registration statement, each statement being qualified in all respects by such
reference. A copy of the registration statement, including the exhibits and
schedules thereto, may be read and copied at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. In addition, the SEC maintains an Internet site at
http://www.sec.gov, from which interested persons can electronically access
the registration statement, including the exhibits and any schedules thereto.

As a result of this offering, we will become subject to the full
informational requirements of the Securities Exchange Act of 1934, as amended.
We will fulfill our obligations with respect to such requirements by filing
periodic reports and other information with the SEC. We intend to furnish our
stockholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm. We also maintain an
Internet site at http://www.agilent-tech.com. Our website and the information
contained therein or connected thereto shall not be deemed to be incorporated
into this prospectus or the registration statement of which it forms a part.

119
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants.......................................... F-2
Consolidated Balance Sheet................................................. F-3
Consolidated Statement of Earnings......................................... F-4
Consolidated Statement of Stockholder's Net Investment..................... F-5
Consolidated Statement of Cash Flows....................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholder of Agilent Technologies, Inc.:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of earnings, stockholder's net investment and cash
flows present fairly, in all material respects, the financial position of
Agilent Technologies, Inc. and its subsidiaries at October 31, 1997 and 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended October 31, 1998 in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

San Jose, California
August 13, 1999

F-2
<PAGE>

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEET
(in millions)

<TABLE>
<CAPTION>
October 31,
-------------
April 30,
1997 1998 1999
------ ------ -----------
(unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................... $ -- $ -- $ --
Accounts receivable................................. 1,234 1,154 1,211
Inventory........................................... 1,432 1,485 1,466
Other current assets................................ 265 436 455
------ ------ ------
Total current assets............................... 2,931 3,075 3,132
Property, plant and equipment, net................... 1,623 1,481 1,435
Other assets......................................... 452 431 454
------ ------ ------
Total assets......................................... $5,006 $4,987 $5,021
====== ====== ======
LIABILITIES AND STOCKHOLDER'S NET INVESTMENT
Current liabilities:
Accounts payable.................................... $ 495 $ 435 $ 403
Employee compensation and benefits.................. 604 574 556
Deferred revenue.................................... 157 205 231
Other accrued liabilities........................... 267 385 300
------ ------ ------
Total current liabilities.......................... 1,523 1,599 1,490
Other liabilities.................................... 373 366 369
Commitments and contingencies
Stockholder's net investment......................... 3,110 3,022 3,162
------ ------ ------
Total liabilities and stockholder's net investment... $5,006 $4,987 $5,021
====== ====== ======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share amounts)

<TABLE>
<CAPTION>
Years Ended Six Months Ended
October 31, April 30,
---------------------- ------------------
1996 1997 1998 1998 1999
------ ------ ------ -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net revenue:
Products........................... $5,756 $6,114 $6,098 $ 3,184 $ 2,807
Products to Hewlett-Packard........ 684 640 696 348 378
Services........................... 939 1,031 1,158 558 611
------ ------ ------ -------- --------
Total net revenue................. 7,379 7,785 7,952 4,090 3,796
------ ------ ------ -------- --------
Costs and expenses:
Cost of products................... 3,327 3,455 3,807 1,829 1,623
Cost of services................... 574 671 705 353 370
Research and development........... 805 880 948 469 463
Selling, general and
administrative.................... 1,798 1,909 2,050 1,036 999
------ ------ ------ -------- --------
Total costs and expenses.......... 6,504 6,915 7,510 3,687 3,455
------ ------ ------ -------- --------
Earnings from operations............ 875 870 442 403 341
Other income (expense), net......... (21) (47) (46) (13) 15
------ ------ ------ -------- --------
Earnings before taxes............... 854 823 396 390 356
Provision for taxes................. 312 280 139 136 125
------ ------ ------ -------- --------
Net earnings........................ $ 542 $ 543 $ 257 $ 254 $ 231
====== ====== ====== ======== ========
Basic and diluted net earnings per
share.............................. $ $ $ $ $
====== ====== ====== ======== ========
Average shares used in computing
basic and diluted net earnings per
share..............................
====== ====== ====== ======== ========
Unaudited pro forma diluted net
earnings per share................. $ $
====== ========
Average shares used in computing
unaudited pro forma diluted net
earnings per share.................
====== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDER'S NET INVESTMENT
(in millions)

<TABLE>
<CAPTION>
Stock-
holder's
Net
Investment
----------
<S> <C>
Balance, October 31, 1995.......................................... $2,829
Net earnings....................................................... 542
Net cash transfers to Hewlett-Packard Company...................... (373)
------
Balance, October 31, 1996.......................................... 2,998
Net earnings....................................................... 543
Transfer of net assets from Hewlett-Packard Company related to an
immaterial acquisition............................................ 19
Net cash transfers to Hewlett-Packard Company...................... (450)
------
Balance, October 31, 1997.......................................... 3,110
Net earnings....................................................... 257
Transfer of net assets from Hewlett-Packard Company related to the
Heartstream acquisition........................................... 134
Net cash transfers to Hewlett-Packard Company...................... (479)
------
Balance, October 31, 1998.......................................... 3,022
Net earnings (unaudited)........................................... 231
Net cash transfers to Hewlett-Packard Company (unaudited).......... (91)
------
Balance, April 30, 1999 (unaudited)................................ $3,162
======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE>

AGILENT TECHNOLOGIES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)

<TABLE>
<CAPTION>
Years Ended Six Months Ended
October 31, April 30,
------------------ ------------------
1996 1997 1998 1998 1999
----- ---- ----- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings.......................... $ 542 $543 $ 257 $ 254 $ 231
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization....... 401 409 477 212 235
Deferred taxes on earnings.......... (1) (26) (140) (70) (69)
Non-cash restructuring charges...... -- -- 85 17 --
Write-down of investments........... -- -- 52 13 --
Changes in assets and liabilities:
Accounts receivable................ 67 (20) 79 44 (59)
Inventory.......................... (181) (57) (67) (164) 18
Accounts payable................... (11) 72 (60) (48) (32)
Other current assets and
liabilities....................... 84 57 69 103 (24)
Other, net......................... (20) (13) (1) (20) (77)
----- ---- ----- -------- --------
Net cash provided by operating
activities............................ 881 965 751 341 223
----- ---- ----- -------- --------
Cash flows from investing activities:
Investment in property, plant and
equipment............................ (559) (582) (410) (199) (196)
Disposition of property, plant and
equipment............................ 64 81 78 21 31
Acquisitions, net of cash acquired.... (6) (9) (2) 14 (12)
Cash proceeds of divestitures......... -- -- 57 -- 39
Other, net............................ (7) (5) 5 8 6
----- ---- ----- -------- --------
Net cash used in investing activities.. (508) (515) (272) (156) (132)
----- ---- ----- -------- --------
Net cash transfers to Hewlett-Packard
Company............................... (373) (450) (479) (185) (91)
----- ---- ----- -------- --------
Change in cash and cash equivalents.... -- -- -- -- --
Cash and cash equivalents at beginning
of period............................. -- -- -- -- --
----- ---- ----- -------- --------
Cash and cash equivalent at end of
period................................ $ -- $ -- $ -- $ -- $ --
===== ==== ===== ======== ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Overview and Basis of Presentation

On March 2, 1999, Hewlett-Packard Company (HP) announced a plan to create a
separate company, subsequently named Agilent Technologies, Inc. (Agilent
Technologies), comprised of HP's test and measurement, semiconductor products,
healthcare solutions and chemical analysis businesses, related portions of
Hewlett-Packard Laboratories and associated infrastructure. After completion
of Agilent Technologies' initial public offering, HP will own at least 80.1%
of Agilent Technologies' outstanding common stock. HP also announced its
intention to distribute all of the shares of Agilent Technologies' common
stock that HP owns to HP's stockholders by the middle of calendar year 2000
(the distribution date).

Agilent Technologies was incorporated in Delaware in May 1999 as a wholly
owned subsidiary of HP. Agilent Technologies authorized 125,000,000 shares of
$.01 par value preferred stock, with no shares issued and outstanding, and
2,000,000,000 shares of $.01 par value common stock, with 10,000,000 shares
issued and outstanding.

HP and Agilent Technologies have entered into a Master Separation and
Distribution Agreement (the separation agreement) under which HP will make an
initial cash payment to Agilent Technologies on or about November 1, 1999 (the
separation date), to fund working capital and other needs for the first few
months of operation as a separate, stand-alone entity. Additionally, HP will
transfer to Agilent Technologies, on or about the separation date,
substantially all of the assets and liabilities associated with Agilent
Technologies' businesses, except that HP will retain some of Agilent
Technologies' assets and liabilities and will transfer to Agilent Technologies
some of its assets and liabilities.

The consolidated financial statements include the assets, liabilities,
operating results and cash flows of Agilent Technologies and have been
prepared using HP's historical bases in the assets and liabilities and the
historical results of operations of Agilent Technologies. Changes in
stockholder's net investment represent HP's transfer of its net investment in
Agilent Technologies, after giving effect to the net earnings of Agilent
Technologies plus net cash transfers to HP and other transfers from HP.
Agilent Technologies will begin accumulating retained earnings on November 1,
1999.

The consolidated financial statements include allocations of certain HP
corporate expenses, including centralized research and development, legal,
accounting, employee benefits, real estate, insurance services, information
technology services, treasury and other HP corporate and infrastructure costs.
The expense allocations have been determined on bases that HP and Agilent
Technologies considered to be a reasonable reflection of the utilization of
services provided or the benefit received by Agilent Technologies. However,
the financial information included herein may not reflect the consolidated
financial position, operating results, changes in stockholder's net investment
and cash flows of Agilent Technologies in the future or what they would have
been had Agilent Technologies been a separate, stand-alone entity during the
periods presented.

2. Summary of Significant Accounting Policies

Principles of consolidation. The consolidated financial statements include
the accounts of Agilent Technologies and its wholly- and majority-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.

Use of estimates. The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in Agilent
Technologies' consolidated financial statements and accompanying notes. Actual
results could differ from those estimates.

F-7
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Interim financial information. The financial information as of April 30,
1999 and for the six months ended April 30, 1998 and 1999 is unaudited but
includes all adjustments, consisting only of normal and recurring accruals,
that management considers necessary for a fair presentation of its
consolidated financial position, operating results and cash flows. Results for
the six months ended April 30, 1999 are not necessarily indicative of results
to be expected for the full fiscal year 1999 or for any future period.

Revenue recognition. Revenue from product sales, net of trade discounts and
allowances, is recognized at the time the product is shipped or upon
installation and customer acceptance, if the acceptance criteria are
substantive. Provisions are established for estimated costs that may be
incurred for product warranties and post-sales support. Revenue from services
is recognized over the contractual period or as services are rendered and
accepted by the customer.

Advertising. Advertising costs are expensed as incurred and amounted to $87
million in 1996, $98 million in 1997 and $94 million in 1998.

Taxes on earnings. Agilent Technologies' operating results historically
have been included in HP's consolidated U.S. and state income tax returns and
in tax returns of certain HP foreign subsidiaries. The provision for income
taxes in Agilent Technologies' consolidated financial statements has been
determined on a separate-return basis. Deferred tax assets and liabilities are
recognized for the expected tax consequences of temporary differences between
the tax bases of assets and liabilities and their reported amounts.

Net earnings per share. In July 1999, Agilent Technologies issued
10,000,000 shares of common stock, all of which is owned by HP. Immediately
prior to the offering, Agilent Technologies will effect a stock split or other
issuance of shares resulting in common shares outstanding, at which time
historical net earnings per share will be presented. Subsequent to the
offering of common shares, a total of common shares will be
outstanding.

Basic and diluted net earnings per share have been computed by dividing the
net earnings for each period presented by the common shares. Unaudited pro
forma diluted net earnings per share has been computed by dividing the net
earnings for each period by the sum of the common shares plus the
estimated number of dilutive stock options. The number of dilutive stock
options was computed using the treasury stock method assuming an initial
public offering price of $ per share.

It is currently unknown how many HP options held by Agilent Technologies
employees will be assumed by Agilent Technologies. The estimated number of
dilutive stock options assumes that % of the outstanding HP options held by
Agilent Technologies employees are assumed by Agilent Technologies. The actual
number of HP options assumed by Agilent Technologies will not be determined
until individual employees make an election to amend their Hewlett-Packard
options in January 2000. See Note 9, "Employee Stock Plans," for a description
of the election to be made by employees. Unaudited pro forma diluted net
earnings per share would be $ if % of the outstanding HP options are
assumed and $ if % of the outstanding HP options are assumed.

Cash and cash equivalents. Historically, HP has managed cash and cash
equivalents on a centralized basis. Cash receipts associated with Agilent
Technologies' business have been transferred to HP on a daily basis and HP has
funded Agilent Technologies' disbursements.

Inventory. Inventory is valued at standard cost that approximates actual
cost computed on a first-in, first-out basis, not in excess of market value.

Property, plant and equipment. Property, plant and equipment are stated at
cost. Additions, improvements and major renewals are capitalized. Maintenance,
repairs and minor renewals are expensed as incurred.

F-8
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Depreciation is provided using accelerated methods, principally over 15 to 40
years for buildings and improvements and 3 to 10 years for machinery and
equipment. Depreciation of leasehold improvements is provided using the
straight-line method over the life of the lease or the asset, whichever is
shorter.

Impairment of long-lived assets. Agilent Technologies continually monitors
events and changes in circumstances that could indicate carrying amounts of
long-lived assets, including intangible assets, may not be recoverable. When
such events or changes in circumstances are present, Agilent Technologies
assesses the recoverability of long-lived assets by determining whether the
carrying value of such assets will be recovered through undiscounted expected
future cash flows. If the total of the future cash flows is less than the
carrying amount of those assets, Agilent Technologies recognizes an impairment
loss based on the excess of the carrying amount over the fair value of the
assets.

Foreign currency translation. Agilent Technologies uses the U.S. dollar as
its functional currency. Foreign currency assets and liabilities are
remeasured into U.S. dollars at end-of-period exchange rates except for
inventory, property, plant and equipment, other assets and deferred revenue,
which are remeasured at historical exchange rates.

Revenue and expenses are remeasured at average exchange rates in effect
during each period, except for those expenses related to balance sheet amounts
that are remeasured at historical exchange rates. Gains or losses from foreign
currency remeasurement are included in net earnings. Because Agilent
Technologies' consolidated balance sheets include no cash or cash equivalents,
foreign currency exchange rate fluctuations have had no material effect on
Agilent Technologies' cash flows.

Comprehensive earnings. Agilent Technologies has no material components of
other comprehensive earnings and, accordingly, comprehensive earnings are the
same as net earnings for all periods presented.

Recent pronouncements. In June 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments and requires recognition of all
derivatives as assets or liabilities in the statement of financial position
and measurement of those instruments at fair value. The statement is effective
for fiscal years beginning after June 15, 2000. Agilent Technologies will
adopt the standard no later than the first quarter of fiscal year 2001 and is
in the process of determining the impact that adoption will have on its
consolidated financial statements.

3. Acquisitions

In March 1998, Agilent Technologies acquired all of the outstanding stock
of Heartstream, Inc. for approximately 2.1 million shares of HP stock with a
fair market value of approximately $134 million. Heartstream develops and
markets automatic external defibrillators. During 1996, 1997, 1998 and the
first six months of 1999, Agilent Technologies acquired several additional
companies that were not significant to its financial position, results of
operations or cash flows. All of these acquisitions were accounted for under
the purchase method. Under the purchase method, the results of operations of
the acquired companies were included prospectively from the date of
acquisition and the acquisition cost was allocated to the acquired tangible
and identifiable intangible assets and liabilities based on fair market values
at the date of acquisition. Residual amounts were recorded as goodwill. In-
process research and development write-offs have not been significant.
Goodwill is amortized on a straight-line basis over its estimated economic
life, generally three to five years. The net book value of goodwill associated
with acquisitions was $56 million at October 31, 1997 and $126 million at
October 31, 1998.

Unaudited pro forma statement of earnings information has not been
presented because the effects of these acquisitions were not material on
either an individual or aggregated basis.

F-9
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. Financial Instruments

Off-balance-sheet foreign exchange risk. HP enters into foreign exchange
contracts, primarily forwards and purchased options, to hedge against
exposures to changes in foreign currency exchange rates. At October 31, 1998,
HP had entered into foreign exchange contracts in approximately 35 foreign
currencies. These contracts are designated at inception to the related foreign
currency exposures being hedged, which include committed and anticipated sales
by subsidiaries and assets and liabilities that are denominated in currencies
other than the U.S. dollar. To achieve hedge accounting, contracts must reduce
the foreign currency exchange rate risk otherwise inherent in the amount and
duration of the hedged exposures and comply with established HP risk
management policies. Hedging contracts generally mature within six months.

When hedging sales-related exposure, HP sets foreign exchange contract
expirations so as to occur in the same month the hedged shipments occur,
allowing realized gains and losses on the contracts to be recognized in net
revenue in the same periods in which the related revenue is recognized. When
hedging balance sheet exposure, HP recognizes realized gains and losses on
foreign exchange contracts in other income and expense in the same period as
the realized gains and losses on remeasurement of the foreign currency
denominated assets and liabilities occur.

Agilent Technologies' exposures to foreign currency exchange rate
fluctuations have been netted with those of other HP businesses and hedged as
described above on a combined basis. As of October 31, 1997 and 1998 and April
30, 1999, there were no specific contracts for Agilent Technologies' foreign
exchange exposures. A portion of the gains and losses related to foreign
exchange contracts has been allocated to Agilent Technologies based on the
proportion of its foreign currency exposures to HP's total foreign currency
exposures. The gains and losses are included in cash flows from operating
activities in the consolidated statement of cash flows.

Concentrations of credit risk. Agilent Technologies sells the majority of
its products through its direct sales force. No single customer accounted for
10% or more of accounts receivable at October 31, 1997 and 1998. Credit risk
with respect to accounts receivable is generally diversified due to the large
number of entities comprising Agilent Technologies' customer base and their
dispersion across many different industries and geographies. Agilent
Technologies performs ongoing credit evaluations of its customers' financial
condition, and requires collateral, such as letters of credit and bank
guarantees, in certain circumstances.

Fair value of financial instruments. The carrying values of Agilent
Technologies' financial instruments, including accounts receivable, accounts
payable and other accrued liabilities, approximate their fair values due to
their short maturities. The estimated fair values may not be representative of
actual values of the financial instruments that could have been realized as of
the period end or that will be realized in the future.

5. Inventory

<TABLE>
<CAPTION>
October 31,
------------- April 30,
1997 1998 1999
------ ------ -----------
(unaudited)
(in millions)
<S> <C> <C> <C>
Finished goods..................................... $ 477 $ 617 $ 585
Purchased parts and fabricated assemblies.......... 955 868 881
------ ------ ------
$1,432 $1,485 $1,466
====== ====== ======
</TABLE>

F-10
<PAGE>

AGILENT TECHNOLOGIES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. Property, Plant and Equipment

<TABLE>
<CAPTION>
October 31,
----------------
1997 1998
------- -------
(in millions)
<S> <C> <C>
Land....................................................... $ 96 $ 93
Buildings and leasehold improvements....................... 1,410 1,442
Machinery and equipment.................................... 1,950 1,997
------- -------
3,456 3,532
Accumulated depreciation................................... (1,833) (2,051)
------- -------
$ 1,623 $ 1,481
======= =======
</TABLE>

Agilent Technologies leases certain of its products to customers under
operating leases. Equipment on operating leases was $173 million at October
31, 1997 and $193 million at October 31, 1998 and is included in machinery and
equipment. Accumulated depreciation on equipment on operating leases was $58
million at October 31, 1997 and $68 million at October 31, 1998. At October
31, 1998, minimum future rentals on noncancelable operating leases with
original terms of one year or longer are $109 million in 1999, $42 million in
2000, $17 million in 2001, $7 million in 2002 and $1 million in 2003.

7. Taxes on Earnings

The provision for income taxes is comprised of:

<TABLE>
<CAPTION>
Years Ended
October 31,
-----------------
1996 1997 1998
---- ---- -----
(in millions)
<S> <C> <C> <C>
U.S. federal taxes:
Current................................................. $181 $236 $ 213
Deferred................................................ (17) (42) (133)
Non-U.S. taxes:
Current................................................. 128 65 63
Deferred................................................ 11 17 (8)
State taxes............................................... 9 4 4
---- ---- -----
$312 $280 $ 139
==== ==== =====
</TABLE>

F-11
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The significant components of deferred tax assets, which required no
valuation allowance, and deferred tax liabilities included on the balance
sheet are:

<TABLE>
<CAPTION>
October 31,
-----------------------------------------
1997 1998
-------------------- --------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
(in millions)
<S> <C> <C> <C> <C>
Inventory........................ $ 89 $ 4 $ 96 $ 3
Property, plant and equipment.... 22 18 13 15
Warranty......................... 18 -- 29 --
Retiree medical benefits......... 90 -- 89 --
Other retirement benefits........ -- 42 -- 40
Employee benefits, other than
retirement...................... 92 4 126 16
Intracompany sales............... -- -- 77 --
Unremitted earnings of foreign
subsidiaries.................... -- 68 -- 89
Other............................ 76 78 65 19
---- ---- ---- ----
$387 $214 $495 $182
==== ==== ==== ====
</TABLE>

The current portion of the deferred tax asset is $134 million at October
31, 1997 and $260 million at October 31, 1998 and is included in other current
assets.

The differences between the U.S. federal statutory income tax rate and
Agilent Technologies' effective tax rate are:

<TABLE>
<CAPTION>
Years Ended
October 31,
----------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory income tax rate..................... 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit............. 1.0 0.5 0.9
Lower rates in other jurisdictions, net.................... (1.4) (2.2) (1.4)
Other, net................................................. 1.9 0.7 0.5
---- ---- ----
36.5% 34.0% 35.0%
==== ==== ====
</TABLE>

The domestic and foreign components of earnings before taxes are:

<TABLE>
<CAPTION>
Years Ended
October 31,
--------------
1996 1997 1998
---- ---- ----
(in millions)
<S> <C> <C> <C>
U.S. operations............................................... $443 $543 $224
Non-U.S operations............................................ 411 280 172
---- ---- ----
$854 $823 $396
==== ==== ====
</TABLE>

As a result of certain employment and capital investment actions undertaken
by Agilent Technologies, income from manufacturing activities in certain
countries is subject to reduced tax rates, and in some cases is wholly exempt
from taxes, for years through 2007. The income tax benefits attributable to
the tax status of these subsidiaries are estimated to be $44 million in 1996,
$46 million in 1997 and $40 million in 1998.

F-12
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Agilent Technologies has not provided for U.S. federal income and foreign
withholding taxes on $791 million of non-U.S. subsidiaries' undistributed
earnings as of October 31, 1998 because these earnings are intended to be
reinvested indefinitely. Where excess cash has accumulated in Agilent
Technologies' non-U.S. subsidiaries and it is advantageous for tax or foreign
exchange reasons, subsidiary earnings are remitted.

See Note 11, "Transactions with Hewlett-Packard," for a description of the
Tax Sharing Agreement between Agilent Technologies and HP.

8. Restructuring

During 1998, management committed to transfer the production of eight-inch
semiconductor wafers to a third-party contractor. Management also undertook
employee reductions through voluntary severance programs related to this
transfer, as well as actions related to other businesses. Approximately 1,650
employees accepted the voluntary severance incentive packages by the October
31, 1998 deadline. Agilent Technologies recorded pre-tax charges of
approximately $163 million related to these restructuring actions. Of this
amount, $138 million was included in cost of products, $7 million was included
in research and development expense and $18 million was included in selling,
general and administrative expense in the 1998 consolidated statement of
earnings. The restructuring costs included approximately $78 million related
to employee severance under the voluntary severance incentive plans and $85
million related to non-cash asset impairments, primarily machinery and
equipment, resulting from the restructuring actions taken by management. In
the six months ended April 30, 1999, approximately $65 million of employee
severance costs were paid. The remaining severance costs of $13 million are
expected to be paid by October 31, 1999.

9. Employee Stock Plans

Employee Stock Purchase Plan. Eligible Agilent Technologies employees have
generally been able to contribute up to 10 percent of their base compensation
to the quarterly purchase of shares of HP's common stock under the HP Stock
Purchase Plan. Under this plan, employee contributions to purchase shares are
partially matched with shares contributed by HP. These matching shares
generally vest over two years. Agilent Technologies and HP have not yet
determined the treatment of unvested shares held by Agilent Technologies
employees on the distribution date. Compensation expense, measured using the
fair market value of HP shares on the date of purchase by HP, is recognized
over the two-year vesting period. The allocated portion of compensation
expense attributable to Agilent Technologies employees was $24 million in
1996, $32 million in 1997 and $33 million in 1998.

Incentive compensation plans. Eligible Agilent Technologies employees
participate in HP's four principal stock option plans, which were adopted in
1979, 1985, 1990 and 1995. Options are generally granted as non-qualified
options although all plans permit the granting of options that qualify as
"Incentive Stock Options" under the Internal Revenue Code. The exercise price
of a stock option is generally equal to the fair market value of HP's common
stock on the date the option is granted and its term is generally ten years.
Under the 1990 and 1995 Incentive Stock Plans, HP's Compensation Committee, in
certain cases, may choose to establish a discounted exercise price at no less
than 75 percent of fair market value on the grant date. The allocated portion
of stock compensation expense related to Agilent Technologies employees'
discounted options was not material in 1996, 1997 and 1998. Options, other
than discounted options, generally vest at a rate of 25 percent per year over
a period of four years from the date of grant. Discounted options generally
vest fully on the third or fifth anniversary of the date of grant.

Under the existing terms of the stock option plans, substantially all HP
options held by Agilent Technologies employees on the distribution date will
be fully vested, and if not exercised, will expire in three months.

F-13
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Alternatively, Agilent Technologies employees may elect to amend their HP
options to waive the vesting acceleration and have the resulting options
assumed by Agilent Technologies. This election will be made in January 2000.
The conversion of HP options into Agilent Technologies options will be done in
such a manner that (1) the aggregate intrinsic value of the options
immediately before and after the exchange are the same, (2) the ratio of the
exercise price per option to the market value per option is not reduced, and
(3) the vesting provisions and option period of the replacement Agilent
Technologies options are the same as the original vesting terms and option
period of the HP options. It is currently unknown how many HP options held by
Agilent Technologies employees will be converted into Agilent Technologies
options.

Under the HP 1985 Incentive Compensation Plan and the 1990 and 1995
Incentive Stock Plans, certain key employees may be granted cash or restricted
stock awards. The majority of the shares of restricted stock outstanding at
October 31, 1998 are subject to forfeiture if employment terminates prior to
three years from the date of grant. During the restricted period, ownership of
the shares cannot be transferred. Restricted stock has the same cash dividend
and voting rights as other common stock and is considered to be currently
issued and outstanding. The cost of the awards, determined to be the fair
market value of the shares at the date of grant, is expensed ratably over the
period the restrictions lapse. This expense was not material in 1996, 1997 or
1998. Restricted shares held by Agilent Technologies employees will be
forfeited on or before the distribution date. Agilent Technologies employees
who forfeit HP restricted shares may elect to receive either replacement
options to purchase Agilent Technologies stock granted on the effective date
of the initial public offering at an exercise price equal to the initial
public offering price or replacement Agilent Technologies restricted shares
granted on or before the distribution date, in either case with the same
vesting as before. Agilent Technologies employees will be required to make
their election in October 1999.

Pro forma information. Agilent Technologies applies the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," in accounting for stock options granted to
Agilent Technologies employees. Accordingly, compensation expense is
recognized only when options are granted with a discounted exercise price. Any
compensation expense is recognized ratably over the associated service period,
which is generally the option vesting term.

Pro forma net earnings and earning per share information, as required by
SFAS No. 123, "Accounting for Stock-Based Compensation," has been determined
as if HP had accounted for employee stock options granted to Agilent
Technologies employees under SFAS No. 123's fair value method. The fair value
of these options was estimated at grant date using a Black-Scholes option
pricing model with the following weighted-average assumptions: risk-free
interest rates of 6.29 percent in 1996, 6.21 percent in 1997 and 5.38 percent
in 1998; dividend yield of 1.0 percent in all years; expected option life of 6
years for 1996 and 1997 and 7 years for 1998; and volatility of 30 percent in
all years.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the four-year average vesting period of
the options. The pro forma effect of recognizing compensation expense in
accordance with SFAS No. 123 would have been to reduce Agilent Technologies'
reported net earnings by $5 million in 1996, $11 million in 1997 and $20
million in 1998. Had compensation expense been recorded by Agilent
Technologies in accordance with SFAS No. 123, the effect would be to reduce
unaudited pro forma diluted net earnings per share to $ in 1998. These pro
forma amounts include amortized fair values attributable to options granted
after October 31, 1995 only, and therefore are not representative of future
pro forma amounts.

10. Retirement Plans and Retiree Medical Benefits

At the date of distribution by HP of its investment in Agilent Technologies
to the stockholders of HP, Agilent Technologies will assume responsibility for
pension, deferred profit sharing and other post-employment

F-14
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

benefits for current and former employees whose last work assignment prior to
the distribution was with Agilent Technologies. These current and former
employees are collectively referred to as "Agilent Technologies Employees."
Until the distribution date, the expense for these programs associated with
Agilent Technologies Employees will be allocated to Agilent Technologies.

Pension and deferred profit-sharing plans. Substantially all Agilent
Technologies employees are covered under various HP retirement plans.
Worldwide retirement costs were $100 million in 1996, $115 million in 1997 and
$123 million in 1998.

U.S. employees who meet eligibility criteria are provided benefits under
HP's Retirement Plan. Defined benefits are generally based on an employee's
average pay and length of service. For eligible service through October 31,
1993, the benefit payable under the defined benefit plan is reduced by any
amounts due to the eligible employee under HP's fixed and frozen deferred
profit-sharing plan (DPSP), which has been closed to new participants.

The combined status of the Retirement Plan and DPSP allocated to Agilent
Technologies follows.

<TABLE>
<CAPTION>
October 31,
-------------
1997 1998
------ ------
(in millions)
<S> <C> <C>
Fair value of plan assets..................................... $1,215 $1,356
Retirement benefit obligation................................. $1,231 $1,423
</TABLE>

Eligible employees outside the U.S. generally receive retirement benefits
under various retirement plans based upon factors such as years of service and
compensation levels. Eligibility is generally determined in accordance with
local statutory requirements.

Retiree medical plan. In addition to receiving pension benefits, Agilent
Technologies Employees may participate in HP's medical plan which provides
medical benefits to U.S. retired employees. Substantially all of Agilent
Technologies' current U.S. employees could become eligible for these benefits,
and the existing benefit obligation relates primarily to those employees. Once
participating in the plan, retirees may choose from managed-care and indemnity
options, with their contributions dependent on options chosen and length of
service.

401(k) Plan. Agilent Technologies' U.S. eligible employees may participate
in HP's 401(k) plan, the Tax Savings Capital Accumulation Plan (TAXCAP), which
was established as a supplemental retirement program. Beginning February 1,
1998, enrollment in the TAXCAP became automatic for employees who met
eligibility requirements unless they declined participation. Under the TAXCAP
program, HP matches contributions by employees up to a maximum of 4 percent of
an eligible employee's annual compensation. The maximum combined contribution
to the Employee Stock Purchase Plan and TAXCAP is 25 percent of an employee's
annual eligible compensation subject to certain regulatory and plan
limitations. Agilent Technologies' expense related to TAXCAP was $36 million
in 1996, $40 million in 1997 and $47 million in 1998.

Upon the distribution, Agilent Technologies will establish separate defined
benefit pension, deferred profit-sharing, retiree medical and 401(k) plans for
its current and former employees. An allocable share of the defined benefit
plan assets will be transferred from the HP pension trust in each country to a
newly established Agilent Technologies pension trust. Subject to local law, it
is anticipated that the share of assets allocated to Agilent Technologies will
be in the same proportion as the projected benefit obligation of Agilent
Technologies Employees to the total projected benefit obligation of HP. The
deferred profit sharing plan assets attributable to Agilent Technologies will
also be transferred to Agilent Technologies. Included in the consolidated

F-15
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

balance sheet as of October 31, 1997 and 1998 are estimates of the assets and
pension obligations to be transferred to Agilent Technologies. Actual amounts
to be transferred will be measured at the distribution, using the same
methodology, and will likely be different from these estimates.

The tables below set forth the estimated net periodic cost and funded
status of the HP pension and retiree medical plans allocable to Agilent
Technologies based on the allocation methodology described above, as well as
the actuarial assumptions on which those amounts are based.

Net periodic cost. For the years ended October 31, 1996, 1997 and 1998, net
pension and retiree medical costs allocated to Agilent Technologies are
comprised of:

<TABLE>
<CAPTION>
Pensions
----------------------------------- U.S. Retiree
U.S. Plan Non-U.S. Plans Medical Plan
---------------- ----------------- ----------------
1996 1997 1998 1996 1997 1998 1996 1997 1998
---- ---- ---- ---- ----- ---- ---- ---- ----
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost--benefits
earned during the
period................. $ 50 $ 58 $ 69 $ 30 $ 36 $ 40 $ 8 $ 9 $ 10
Interest cost on benefit
obligation............. 10 15 20 28 30 33 12 13 13
Actual return on plan
assets................. (22) (39) (32) (43) (121) (89) (21) (31) (21)
Net amortization and
deferral............... 9 21 6 12 83 38 5 11 (2)
---- ---- ---- ---- ----- ---- ---- ---- ----
Net plan costs.......... $ 47 $ 55 $ 63 $ 27 $ 28 $ 22 $ 4 $ 2 $ --
==== ==== ==== ==== ===== ==== ==== ==== ====
</TABLE>

Funded status. As of October 31, 1997 and 1998, the estimated funded
status of the defined benefit and retiree medical plans allocated to Agilent
Technologies is:

<TABLE>
<CAPTION>
U.S. Defined Non-U.S. Defined U.S. Retiree
Benefit Plan Benefit Plans Medical Plan
-------------- ------------------ --------------
1997 1998 1997 1998 1997 1998
------ ------ -------- -------- ------ ------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Fair value of plan
assets................. $ 269 $ 343 $ 578 $ 705 $ 168 $ 189
Benefit obligation...... (292) (420) (545) (750) (179) (204)
------ ------ -------- -------- ------ ------
Plan assets in excess
(less than) benefit
obligation............. (23) (77) 33 (45) (11) (15)
Unrecognized net
experience (gain)
loss................... (9) 28 (29) 50 (101) (96)
Unrecognized prior
service cost (benefit)
related to plan
changes................ 16 14 14 13 (57) (54)
Unrecognized net
transition asset*...... (9) (5) (1) (1) -- --
------ ------ -------- -------- ------ ------
Prepaid (accrued)
costs.................. $ (25) $ (40) $ 17 $ 17 $ (169) $ (165)
====== ====== ======== ======== ====== ======
Vested benefit
obligation............. $ (120) $ (186) $ (407) $ (567)
====== ====== ======== ========
Accumulated benefit
obligation............. $ (120) $ (186) $ (421) $ (587)
====== ====== ======== ========
</TABLE>
- --------
*Amortized over 15 years for the U.S. plan and over periods ranging from 12 to
20 years for the foreign plans.

Plan assets consist primarily of listed stocks and bonds. These costs are
funded to the extent they are tax-deductible.

F-16
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Assumptions. The assumptions used to measure the benefit obligations and to
compute the expected long-term return on assets for Agilent Technologies'
defined benefit and retiree medical plans are:

<TABLE>
<CAPTION>
Years Ended
October 31,
---------------------------
1996 1997 1998
-------- ------- --------
<S> <C> <C> <C>
U.S. defined benefit plan:
Discount rate............................... 7.5% 7.0% 6.5%
Average increase in compensation levels..... 5.5% 5.5% 5.0%
Expected long-term return on assets......... 9.0% 9.0% 9.0%
Non-U.S. defined benefit plans:
Discount rate............................... 4.0-8.5% 3.5-8.0% 3.0-6.5%
Average increase in compensation levels..... 3.5-6.5% 3.5-5.5% 3.75-5.0%
Expected long-term return on assets......... 5.8-10.0% 6.0-9.0% 6.5-8.5%
U.S. retiree medical plan:
Discount rate............................... 7.5% 7.0% 6.5%
Expected long-term return on assets......... 9.0% 9.0% 9.0%
Current medical cost trend rate............. 10.0% 9.6% 8.65%
Ultimate medical cost trend rate............ 6.0% 6.0% 5.5%
Medical cost trend rate decreases to
ultimate rate in year...................... 2007 2007 2007
Effect of a 1% increase in the medical cost
trend rate (in millions):
Increase in benefit obligation............ $33 $37 $43
Increase in the annual retiree medical
cost..................................... 5 6 6
</TABLE>

11. Transactions with Hewlett-Packard

Agilent Technologies' revenue from sales of products to HP was $684 million
in 1996, $640 million in 1997, $696 million in 1998, $348 million (unaudited)
for the six months ended April 30, 1998 and $378 million (unaudited) for the
six months ended April 30, 1999.

Agilent Technologies has purchased products from HP, at a price that
management believes approximates the price an unrelated third party would pay,
for inclusion in its products sold to third parties. These purchases from HP
totaled $91 million in 1996, $99 million in 1997, $86 million in 1998, $43
million (unaudited) for the six months ended April 30, 1998 and $27 million
(unaudited) for the six months ended April 30, 1999. Agilent Technologies also
purchases products from HP at cost for internal use. Purchases at cost were
$59 million in 1996, $63 million in 1997 and $65 million in 1998, $32 million
(unaudited) for the six months ended April 30, 1998 and $34 million
(unaudited) for the six months ended April 30, 1999.

Agilent Technologies' costs and expenses include allocations from HP for
centralized research and development, legal, accounting, employee benefits,
real estate, insurance services, information technology services, treasury and
other HP corporate and infrastructure costs. These allocations have been
determined on bases that HP and Agilent Technologies considered to be a
reasonable reflection of the utilization of services provided or the benefit
received by Agilent Technologies. The allocation methods include relative
sales, headcount, square footage, transaction processing costs, adjusted
operating expenses and others. Allocated costs included in the accompanying
consolidated statement of earnings follow.

F-17
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Six Months Ended
Years Ended October 31, April 30,
----------------------- -----------------
1996 1997 1998 1998 1999
------- ------- ------- -------- --------
(unaudited)
(in millions)
<S> <C> <C> <C> <C> <C>
Costs of products and services... $ 139 $ 152 $ 197 $ 99 $ 96
Research and development......... 128 140 143 71 71
Selling, general and
administrative.................. 391 430 440 220 212
</TABLE>

For purposes of governing certain of the ongoing relationships between
Agilent Technologies and HP at and after the separation and to provide for an
orderly transition, Agilent Technologies and HP have entered or will enter
into various agreements. A brief description of each of the agreements
follows.

Master Separation and Distribution Agreement. The separation agreement
contains the key provisions relating to the separation, Agilent Technologies'
initial funding, initial public offering and the distribution. The agreement
lists the documents and items that the parties must deliver in order to
accomplish the transfer of assets and liabilities from HP to Agilent
Technologies, effective on the separation date. The agreement also contains
conditions that must occur prior to the initial public offering and the
distribution. The parties also entered into ongoing covenants that survive the
transactions, including covenants to establish interim service level
agreements, exchange information, notify each other of changes in their
accounting principles and resolve disputes in particular ways.

General Assignment and Assumption Agreement. The General Assignment and
Assumption Agreement identifies the assets that HP will transfer to Agilent
Technologies and the liabilities that Agilent Technologies will assume from HP
in the separation. In general, the assets that will be transferred and the
liabilities that will be assumed are those that appear on the consolidated
balance sheet, after adjustment for certain assets and liabilities that will
be retained by HP and for activity that occurs between the balance sheet date
and the separation date.

Indemnification and Insurance Matters Agreement. Effective as of the
separation date, Agilent Technologies and HP will each release the other from
any liabilities arising from events occurring on or before the separation
date. The agreement also contains provisions governing indemnification. In
general, Agilent Technologies and HP will each indemnify the other from all
liabilities arising from its business, any of its liabilities, any of its
contracts or a breach of the separation agreement. In addition, HP and Agilent
Technologies will each indemnify the other against liability for specified
environmental matters. Agilent Technologies will reimburse HP for the cost of
any insurance coverage from the separation date to the distribution date.

Employee Matters Agreement. The Employee Matters Agreement outlines how HP
and Agilent Technologies plan to allocate responsibility for, and liability
related to the employment of those employees of HP who will become Agilent
Technologies employees. The agreement also contains provisions describing
Agilent Technologies' benefit and equity plans. On or before the distribution
date, Agilent Technologies expects to establish employee benefit plans
comparable to those of HP for its active, inactive and former employees.
However, in certain cases, certain of its employees will continue to
participate in the HP benefit plans. The transfer to Agilent Technologies of
employees at certain of HP's international operations, and of certain pension
and employee benefit plans, may not take place until Agilent Technologies
receives consents or approvals or has satisfied other applicable requirements.

Tax Sharing Agreement. The tax sharing agreement provides for HP's and
Agilent Technologies' obligations concerning various tax liabilities. The tax
sharing agreement provides that HP generally will pay, and indemnify Agilent
Technologies if necessary, with respect to all federal, state, local and
foreign taxes relating to Agilent Technologies' business for any taxable
period ending prior to this offering. In addition, the tax sharing agreement
provides that HP and Agilent Technologies will make payments between them such
that the amount

F-18
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

of taxes to be paid by HP and Agilent Technologies will be determined, subject
to specified adjustments, as if HP and Agilent Technologies and each of their
subsidiaries included in HP's consolidated tax returns had filed their own
consolidated, combined or unitary tax return.

The tax sharing agreement allocates responsibility for various taxes
arising from restructurings related to the spinoff between HP and Agilent
Technologies. In addition, Agilent Technologies will bear 18% of unanticipated
taxes related to the distribution where neither party is at fault.

In addition, the tax sharing agreement provides that Agilent Technologies
will indemnify HP for any taxes arising out of the failure of the distribution
or certain of the transactions related to it to qualify as tax free as a
result of actions taken, or the failure to take required actions, by Agilent
Technologies. Specifically, Agilent Technologies is required under the tax
sharing agreement to comply with the representations made to the Internal
Revenue Service, or the IRS, in connection with the private letter ruling that
has been issued to HP from the IRS regarding the tax-free nature of the
distribution of Agilent Technologies' stock by HP to HP's stockholders.

The tax sharing agreement further provides for cooperation with respect to
certain tax matters, the exchange of information and the retention of records
which may affect the income tax liability of either party. Disputes arising
between HP and Agilent Technologies relating to matters covered by the tax
sharing agreement are subject to resolution through specific dispute
resolution provisions.

Real Estate Matters Agreement. The Real Estate Matters Agreement addresses
real estate matters relating to the HP leased and owned properties that HP
will transfer to or share with Agilent Technologies. The agreement describes
the manner in which HP will transfer to or share with Agilent Technologies
various leased and owned properties. The Real Estate Matters Agreement
provides that Agilent Technologies will be required to accept the transfer of
all sites allocated to Agilent Technologies, even if a site has been damaged
by a casualty before the separation date. The Real Estate Matters Agreement
also provides that all costs required to effect the transfers, including
landlord consent fees, landlord attorneys' fees, title insurance fees and
transfer taxes, will be paid by HP.

Master IT Service Level Agreement. The Master IT Service Level Agreement
governs the provision of information technology services by HP and Agilent
Technologies to each other, on an interim basis, until November 1, 2001,
unless extended for specific services or otherwise indicated in the agreement.
The services include data processing and telecommunications services, such as
voice telecommunications and data transmission, and corporate support
services, including accounting, financial management, tax, payroll,
stockholder and public relations, legal, human resources administration,
procurement, real estate management and other administrative functions.
Specified charges for such services are generally intended to allow the
providing company to recover the direct and indirect costs of providing the
services, plus 5% until November 1, 2001 and such costs plus 10% thereafter.
The Master IT Service Level Agreement also will cover the provision of certain
additional information technology services identified from time to time after
the separation date that were inadvertently or unintentionally omitted from
the specified services, or that are essential to effectuate an orderly
transition under the separation agreement, so long as the provision of such
services would not significantly disrupt the providing company's operations or
significantly increase the scope of the agreement.

In addition, the Master IT Service Level Agreement will provide for the
replication of some computer systems, including hardware, software, data
storage or maintenance and support components. Generally, the party needing
the replicated system will bear the costs and expenses of replication.
Generally, the party purchasing new hardware or licensing new software will
bear the costs and expenses of purchasing the new hardware or obtaining the
new software licenses.

F-19
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Intellectual Property Agreements. The Master Technology Ownership and
License Agreement, the Master Patent Ownership and License Agreement, the
Master Trademark Ownership and License Agreement and the ICBD Technology
Ownership and License Agreement together are referred to as the Intellectual
Property Agreements. Under the Intellectual Property Agreements, HP will
transfer to Agilent Technologies its rights in specified patents, specified
trademarks and other intellectual property related to Agilent Technologies'
current business and research and development efforts. HP and Agilent
Technologies will each be licensed under the other's patents issued on patent
applications with effective filing dates before November 1, 2004, subject to
field restrictions. HP and Agilent Technologies will also be licensed to use
technology that has been disclosed to such licensed company or that is in the
licensed company's possession as of the separation date, with certain
limitations. The agreements include certain rights to sublicense for both
parties. Agilent Technologies will be licensed to use some Hewlett-Packard
trademarks, and this license is royalty-bearing after five years.

Environmental Matters Agreement. Hewlett-Packard has agreed to retain and
indemnify Agilent Technologies for liabilities associated with properties
transferred to Agilent Technologies which are undergoing environmental
investigation and remediation and for which Hewlett-Packard has accrued a
reserve. The purpose of the Environmental Matters Agreement is to address, in
a general way, HP's and Agilent Technologies' rights and obligations with
respect to that investigation and remediation.

12. Commitments

Agilent Technologies leases certain real and personal property from
unrelated third parties under noncancelable operating leases. Future minimum
lease payments under these leases at October 31, 1998 were $36 million for
1999, $26 million for 2000, $17 million for 2001, $11 million for 2002, $8
million for 2003 and $36 million thereafter. Certain leases require Agilent
Technologies to pay property taxes, insurance and routine maintenance, and
include escalation clauses. Rent expense was $87 million in 1996, $92 million
in 1997 and $111 million in 1998.

Beginning in November 1999, Agilent Technologies will lease or sublease
some of its facilities from HP at amounts that are yet to be determined. See
Note 11, "Transactions with Hewlett-Packard."

13. Contingencies

Agilent Technologies is involved in lawsuits, claims, investigations and
proceedings, including patent, commercial and environmental matters, which
arise in the ordinary course of business. There are no such matters pending
that Agilent Technologies expects to be material in relation to its business,
consolidated financial condition, results of operations or cash flows. See
Note 11, "Transactions with Hewlett-Packard," for a discussion of Agilent
Technologies' indemnification agreement with HP.

14. Segment Information

Description of segments. Agilent Technologies is a diversified technology
company that provides enabling solutions to high growth markets within the
communications, electronics, life sciences and healthcare industries. Agilent
Technologies designs and manufactures test, measurement and monitoring
instruments, systems and solutions and semiconductors and optical components.

Agilent Technologies' organizes its business operations into four major
groups--test and measurement, semiconductor products, healthcare solutions and
chemical analysis, each of which comprises a reportable segment. The segments
were determined based primarily on how management views and evaluates Agilent
Technologies' operations. Other factors, including customer base, homogeneity
of products, technology and delivery channels, were also considered in
determining Agilent Technologies' reportable segments. Agilent Technologies
measures segment performance based on earnings from operations.

F-20
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Agilent Technologies includes the following businesses:

. test and measurement, which provides test instruments, standard and
customized test, measurement and monitoring systems for the design,
manufacture and support of electronic and communication devices, and
software for the design of high-frequency electronic and communication
devices. The test and measurement business includes operating segments
that have been aggregated based on the similarity of the nature of their
products and services, their production processes, their class of
customers, their distribution methods and their economic
characteristics;

. semiconductor products, which provides fiber optic communications
devices and assemblies, integrated circuits for wireless applications,
application-specific integrated circuits, optoelectronics and image
sensors;

. healthcare solutions, which provides patient monitoring, ultrasound
imaging and cardiology products and systems; and

. chemical analysis, which provides analytical instruments, systems and
services for chromatography, spectroscopy and bio-instrumentation.

Segment revenue and profit. The accounting policies used to derive
reportable segment results are generally the same as those described in Note
2, "Summary of Significant Accounting Policies." Internal revenue and earnings
from operations include transactions between segments that are intended to
reflect an arm's length transfer at the best price available for comparable
external customers.

A significant portion of the segments' expenses arise from shared services
and infrastructure that HP has historically provided to the segments in order
to realize economies of scale and to efficiently use resources. These expenses
include costs of centralized research and development, legal, accounting,
employee benefits, real estate, insurance services, information technology
services, treasury and other HP corporate and infrastructure costs. These
allocations have been determined on bases that HP and Agilent Technologies
considered to be a reasonable reflection of the utilization of services
provided to or benefits received by the segments. A different result could be
arrived at for any segment if costs were specifically identified to each
segment.

The following tables reflect the results of Agilent Technologies'
reportable segments under Agilent Technologies management system. These
results are not necessarily a depiction that is in conformity with generally
accepted accounting principles. The performance of each segment is measured
based on several metrics, including earnings from operations. These results
are used, in part, by management, in evaluating the performance of, and in
allocating resources to, each of the segments.

F-21
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Test and Semiconductor Healthcare Chemical Total
Measurement Products Solutions Analysis Segments
----------- ------------- ---------- -------- --------
(in millions)
<S> <C> <C> <C> <C> <C>
Year ended October 31,
1996:
External revenue........ $3,823 $1,470 $1,244 $842 $7,379
Internal revenue........ -- 30 -- -- 30
------ ------ ------ ---- ------
Total net revenue....... $3,823 $1,500 $1,244 $842 $7,409
====== ====== ====== ==== ======
Depreciation and amorti-
zation expense......... $ 110 $ 181 $ 21 $ 13 $ 325
====== ====== ====== ==== ======
Earnings from opera-
tions.................. $ 606 $ 125 $ 106 $ 38 $ 875
====== ====== ====== ==== ======
Year ended October 31,
1997:
External revenue........ $4,203 $1,479 $1,208 $895 $7,785
Internal revenue........ -- 27 -- 1 28
------ ------ ------ ---- ------
Total net revenue....... $4,203 $1,506 $1,208 $896 $7,813
====== ====== ====== ==== ======
Depreciation and amorti-
zation expense......... $ 107 $ 177 $ 16 $ 13 $ 313
====== ====== ====== ==== ======
Earnings from opera-
tions.................. $ 674 $ 57 $ 30 $ 77 $ 838
====== ====== ====== ==== ======
Year ended October 31,
1998:
External revenue........ $4,100 $1,574 $1,340 $938 $7,952
Internal revenue........ -- 39 -- -- 39
------ ------ ------ ---- ------
Total net revenue....... $4,100 $1,613 $1,340 $938 $7,991
====== ====== ====== ==== ======
Depreciation and amorti-
zation expense......... $ 133 $ 205 $ 28 $ 15 $ 381
====== ====== ====== ==== ======
Earnings (loss) from op-
erations............... $ 348 $ (106) $ 62 $ 75 $ 379
====== ====== ====== ==== ======
Six months ended April
30, 1998 (unaudited):
External revenue........ $2,149 $ 795 $ 676 $470 $4,090
Internal revenue........ -- 19 -- -- 19
------ ------ ------ ---- ------
Total net revenue....... $2,149 $ 814 $ 676 $470 $4,109
====== ====== ====== ==== ======
Depreciation and amorti-
zation expense......... $ 58 $ 90 $ 9 $ 7 $ 164
====== ====== ====== ==== ======
Earnings from opera-
tions.................. $ 278 $ 20 $ 56 $ 46 $ 400
====== ====== ====== ==== ======
Six months ended April
30, 1999 (unaudited):
External revenue........ $1,853 $ 773 $ 671 $499 $3,796
Internal revenue........ 2 12 -- -- 14
------ ------ ------ ---- ------
Total net revenue....... $1,855 $ 785 $ 671 $499 $3,810
====== ====== ====== ==== ======
Depreciation and amorti-
zation expense......... $ 68 $ 85 $ 18 $ 9 $ 180
====== ====== ====== ==== ======
Earnings from opera-
tions.................. $ 149 $ 64 $ 45 $ 64 $ 322
====== ====== ====== ==== ======
</TABLE>

F-22
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Reconciliations to Agilent Technologies, as reported.

<TABLE>
<CAPTION>
Six Months Ended
Years Ended October 31, April 30,
------------------------- ------------------
1996 1997 1998 1998 1999
------- ------- ------- -------- --------
(unaudited)
(in millions)
<S> <C> <C> <C> <C> <C>
Net revenue:
Total reportable
segments................. $ 7,409 $ 7,813 $ 7,991 $ 4,109 $ 3,810
Elimination of internal
revenue.................. (30) (28) (39) (19) (14)
------- ------- ------- -------- --------
Total net revenue, as
reported............... $ 7,379 $ 7,785 $ 7,952 $ 4,090 $ 3,796
======= ======= ======= ======== ========
Earnings before taxes:
Total reportable segments'
earnings from
operations............... $ 875 $ 838 $ 379 $ 400 $ 322
Corporate and
unallocated.............. -- 32 63 3 19
Other income (expense),
net...................... (21) (47) (46) (13) 15
------- ------- ------- -------- --------
Total earnings before
taxes, as reported..... $ 854 $ 823 $ 396 $ 390 $ 356
======= ======= ======= ======== ========
Depreciation and
amortization expense:
Total reportable
segments................. $ 325 $ 313 $ 381 $ 164 $ 180
Corporate and
unallocated.............. 76 96 96 48 55
------- ------- ------- -------- --------
Total depreciation and
amortization expense,
as reported............ $ 401 $ 409 $ 477 $ 212 $ 235
======= ======= ======= ======== ========
</TABLE>

Corporate and unallocated primarily relates to employee related benefit
programs. The expenses for these programs are recorded by the segments at a
pre-determined rate and are adjusted at the corporate level to reflect the
actual rate. This adjustment is not allocated to the segments. Corporate and
unallocated also includes certain unallocated goodwill amortization.

Major customers. No single customer represents 10% or more of Agilent
Technologies' total net revenue.

Segment assets and other items. Segment assets directly managed by the
segment primarily consist of accounts receivable, inventory, property, plant
and equipment and certain other current and non-current assets. In some cases,
several segments may occupy the same location and therefore will share a
common building and certain machinery and equipment. In these cases, there
will not be a precise correlation between a segment's earnings from operations
and the segment's assets. Capital expenditures for each segment also reflect
the asset assignment by segment.

Corporate-held assets not allocated to the segments include property, plant
and equipment assigned to corporate functions, equity investments managed at
the corporate level, deferred tax assets and other current and non-current
assets managed at the corporate level.

The investment in equity method investees totals disclosed for each segment
represent equity investments directly managed by the segment.

F-23
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Test and Semiconductor Healthcare Chemical Total
Measurement Products Solutions Analysis Segments
----------- ------------- ---------- -------- --------
(in millions)
<S> <C> <C> <C> <C> <C>
As of October 31, 1996:
Assets.................. $2,214 $1,173 $763 $455 $4,605
Capital expenditures,
year-to-date........... 146 326 17 13 502
Investment in equity-
method investees....... 15 -- -- -- 15
As of October 31, 1997:
Assets.................. $2,305 $1,273 $793 $469 $4,840
Capital expenditures,
year-to-date........... 147 316 13 17 493
Investment in equity-
method investees....... 14 4 -- -- 18

As of October 31, 1998:
Assets.................. $2,188 $1,134 $847 $517 $4,686
Capital expenditures,
year-to-date........... 155 162 22 8 347
Investment in equity-
method investees....... 11 19 -- -- 30

As of April 30, 1999
(unaudited):
Assets.................. $2,234 $ 935 $907 $511 $4,587
Capital expenditures,
year-to-date........... 75 49 7 3 134
Investment in equity-
method investees....... 11 16 -- -- 27
</TABLE>

Reconciliations to Agilent Technologies, as reported.

<TABLE>
<CAPTION>
October 31,
-------------------- April 30,
1996 1997 1998 1999
------ ------ ------ -----------
(unaudited)
(in millions)
<S> <C> <C> <C> <C>
Assets:
Total reportable segments..................... $4,605 $4,840 $4,686 $4,587
Unallocated corporate assets.................. 115 166 301 434
------ ------ ------ ------
Total assets, as reported..................... $4,720 $5,006 $4,987 $5,021
====== ====== ====== ======
</TABLE>

Geographic information.

<TABLE>
<CAPTION>
United Rest of the
States Japan World Total
------ ----- ----------- ------
(in millions)
<S> <C> <C> <C> <C> <C>
Revenue (based on location of customer):
Year ended October 31, 1996............... $3,328 $918 $3,133 $7,379
Year ended October 31, 1997............... 3,399 972 3,414 7,785
Year ended October 31, 1998............... 3,623 880 3,449 7,952
Six months ended April 30, 1998
(unaudited).............................. 1,831 491 1,768 4,090
Six months ended April 30, 1999
(unaudited).............................. 1,672 404 1,720 3,796
Long-lived assets (all non-current assets):
October 31, 1996.......................... $1,127 $267 $ 491 $1,885
October 31, 1997.......................... 1,223 261 591 2,075
October 31, 1998.......................... 1,180 242 490 1,912
April 30, 1999 (unaudited)................ 1,158 269 462 1,889
</TABLE>

F-24
<PAGE>

AGILENT TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. Subsequent Event

On July 6, 1999, HP entered into an agreement with Yokogawa Electric
Corporation (Yokogawa) to acquire Yokogawa's 25% equity interest in Hewlett-
Packard Japan (HPJ) for approximately $508 million. Under the terms of the
agreement, HP will acquire Yokogawa's shares through redemption and sale of
shares in several steps beginning in January 2000. Under the terms of the
Master Separation and Distribution Agreement, Agilent Technologies will assume
HP's obligations under the terms of the agreement. In the initial step, which
will occur on or before January 31, 2000, Agilent Technologies will redeem
approximately 10.4% of HPJ shares from Yokogawa. In the second step, which
will occur on or before April 30, 2000, Agilent Technologies will purchase
approximately 10.4% of HPJ shares from Yokogawa. Agilent Technologies will
acquire the remaining 4.2% of HPJ shares owned by Yokagawa either by
redemption or purchase of shares prior to March 31, 2003. HP will provide the
funding for this transaction.

An independent valuation is being performed to determine the portion of the
purchase price attributable to Agilent Technologies' business and the
remaining HP business and to allocate the purchase price to identifiable
assets and liabilities. Management's preliminary estimate is that of the total
purchase price, $254 million is attributable to Agilent Technologies'
business.

F-25
<PAGE>

[AGILENT TECHNOLOGIES LOGO]
<PAGE>

[Agilent Technologies, Inc. Logo]

COMMON STOCK

-----------

Application has been made for listing of our common stock on [the New York
Stock Exchange/the Nasdaq Stock Market] under the trading symbol " ".

-----------

Investing in our common stock involves risks. See "Risk Factors" beginning on
page 9.

-----------

PRICE $ A SHARE

-----------

The United States Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Agilent Technologies has granted the U.S. underwriters the right to purchase up
to an additional shares of common stock to cover over-allotments. Morgan
Stanley & Co. Incorporated expects to deliver the shares of common stock to
purchasers on , 1999.

-----------

MORGAN STANLEY DEAN WITTER GOLDMAN SACHS INTERNATIONAL

, 1999
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale
and distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission registration fee and the
registration fee. Hewlett-Packard has generally agreed to pay these costs and
expenses.

<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Securities and Exchange Commission registration fee................ $
NASD registration fee..............................................
[Nasdaq Stock Market / NYSE original and continued listing fees]...
Blue Sky qualification fees and expenses...........................
Legal fees and expenses............................................
Accounting fees and expenses.......................................
Transfer agent and registrar fees..................................
Printing and engraving expenses....................................
Miscellaneous expenses.............................................
----
Total............................................................ $
====
</TABLE>

Item 14. Indemnification of Directors and Officers

Agilent Technologies is incorporated under the laws of the State of
Delaware. Section 145 ("Section 145") of the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (the
"General Corporation Law"), inter alia, provides that a Delaware corporation
may indemnify any persons who were, are or are threatened to be made, parties
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of such corporation), by reason of the fact that such person is
or was an officer, director, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal.

Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.

Agilent Technologies' Certificate of Incorporation and Bylaws provide for
the indemnification of officers and directors to the fullest extent permitted
by the General Corporation Law.

All of Agilent Technologies' directors and officers will be covered by
insurance policies maintained by Agilent Technologies against certain
liabilities for actions taken in their capacities as such, including
liabilities under the Securities Act of 1933, as amended. In addition, the
Company has entered into indemnity agreements with its directors and executive
officers (a form of which is filed as Exhibit 10.9 to this Registration
Statement) that obligate the Company to indemnify such directors and executive
officers to the fullest extent permitted by the General Corporation Law.

Item 15. Recent Sales of Unregistered Securities

In connection with its incorporation and organization, on July 30, 1999,
Agilent Technologies issued 10,000,000 shares of common stock to Hewlett-
Packard for an aggregate of $10,000,000. Agilent Technologies

II-1
<PAGE>

believes that this issuance was exempt from registration under Section 4(2) of
the Securities Act as a transaction not involving any public offering.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1 Master Separation and Distribution Agreement between Hewlett-Packard
and the registrant effective as of August 12, 1999.
2.2 Form of General Assignment and Assumption Agreement between Hewlett-
Packard and the registrant.
2.3 Form of Master Technology Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.4 Form of Master Patent Ownership and License Agreement between Hewlett-
Packard and the registrant.
2.5 Form of Master Trademark Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.6 Form of ICBD Technology Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.7 Form of Employee Matters Agreement between Hewlett-Packard and the
registrant.
2.8 Form of Tax Sharing Agreement between Hewlett-Packard and the
registrant.
2.9 Form of Master IT Service Level Agreement between Hewlett-Packard and
the registrant.
2.10 Form of Real Estate Matters Agreement between Hewlett-Packard and the
registrant.
2.11 Form of Environmental Matters Agreement between Hewlett-Packard and
the registrant.
2.12 Form of Master Confidential Disclosure Agreement between Hewlett-
Packard and the registrant.
2.13 Form of Indemnification and Insurance Matters Agreement between
Hewlett-Packard and the registrant.
3.1 Amended and Restated Certificate of Incorporation.
3.2 Bylaws.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1* 1999 Employee Stock Purchase Plan.
10.2* 1999 Employee Stock Purchase Plan Agreements.
10.3* 1999 Stock Plan.
10.4* 1999 Stock Plan Agreements.
10.5* 1999 Non-Employee Director Stock Plan.
10.6* 1999 Non-Employee Director Stock Plan Agreements.
10.7* 1999 Variable Pay Plan.
10.8 Yokogawa Electric Corporation and Hewlett-Packard Company Agreement
for the Redemption and Sale of Shares and Termination of Joint Venture
Relationship.
10.9 Form of Indemnification Agreement entered into by the registrant with
each of its directors and executive officers.
21.1* Subsidiaries of Agilent Technologies.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-4).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.

II-2
<PAGE>

(b) Financial Statement Schedules.

Schedules have been omitted because the information required to be set
forth therein is not applicable or is immaterial.

Item 17. Undertakings

The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as the indemnification for liabilities arising under the Securities
Act of 1933 may be permitted as to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 14, or
otherwise, the Registrant has been advised that in the opinion of the SEC,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payments by the Registrant of
expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and

(2) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and this offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palo Alto, State of
California, on August 16, 1999.

/s/ Edward W. Barnholt
_____________________________________
Edward W. Barnholt
President, Chief Executive Officer
and
Director

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert R. Walker and D. Craig Nordlund, and
each of them, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective statements), and to sign any registration statement
for the same offering covered by this Registration Statement that is to be
effective upon filing pursuant to Rule 462(b) promulgated under the Securities
Act of 1933, and all post-effective amendments thereto, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that such attorneys-in-fact, or
his or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on August 16,
1999 in the capacities indicated.

<TABLE>
<CAPTION>
Signature Title
--------- -----

<S> <C>
/s/ Edward W. Barnholt President, Chief Executive Officer and Director
______________________________________ (Principal Executive Officer)
Edward W. Barnholt

/s/ Gerald Grinstein Chairman of the Board
______________________________________
Gerald Grinstein

/s/ Robert R. Walker Vice President and Chief Financial Officer
______________________________________ (Principal Financial Officer)
Robert R. Walker

/s/ Dorothy D. Hayes Vice President, Controller and
______________________________________ Chief Accounting Officer
Dorothy D. Hayes (Principal Accounting Officer)

/s/ Thomas E. Everhart Director
______________________________________
Thomas E. Everhart

/s/ Walter B. Hewlett Director
______________________________________
Walter B. Hewlett

/s/ David M. Lawrence Director
______________________________________
David M. Lawrence, M.D.
</TABLE>

II-4
<PAGE>

INDEX OF EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1 Master Separation and Distribution Agreement between Hewlett-Packard
and the registrant effective as of August 12, 1999.
2.2 Form of General Assignment and Assumption Agreement between Hewlett-
Packard and the registrant.
2.3 Form of Master Technology Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.4 Form of Master Patent Ownership and License Agreement between Hewlett-
Packard and the registrant.
2.5 Form of Master Trademark Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.6 Form of ICBD Technology Ownership and License Agreement between
Hewlett-Packard and the registrant.
2.7 Form of Employee Matters Agreement between Hewlett-Packard and the
registrant.
2.8 Form of Tax Sharing Agreement between Hewlett-Packard and the
registrant.
2.9 Form of Master IT Service Level Agreement between Hewlett-Packard and
the registrant.
2.10 Form of Real Estate Matters Agreement between Hewlett-Packard and the
registrant.
2.11 Form of Environmental Matters Agreement between Hewlett-Packard and
the registrant.
2.12 Form of Master Confidential Disclosure Agreement between Hewlett-
Packard and the registrant.
2.13 Form of Indemnification and Insurance Matters Agreement between
Hewlett-Packard and the registrant.
3.1 Amended and Restated Certificate of Incorporation.
3.2 Bylaws.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1* 1999 Employee Stock Purchase Plan.
10.2* 1999 Employee Stock Purchase Plan Agreements.
10.3* 1999 Stock Plan.
10.4* 1999 Stock Plan Agreements.
10.5* 1999 Non-Employee Director Stock Plan.
10.6* 1999 Non-Employee Director Stock Plan Agreements.
10.7* 1999 Variable Pay Plan.
10.8 Yokogawa Electric Corporation and Hewlett-Packard Company Agreement
for the Redemption and Sale of Shares and Termination of Joint Venture
Relationship.
10.9 Form of Indemnification Agreement entered into by the registrant with
each of its directors and executive officers.
21.1* Subsidiaries of Agilent Technologies, Inc.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2* Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-4).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.

<PAGE>

EXHIBIT 2.1
Master Separation and Distribution Agreement

Between

Hewlett-Packard Company

and

Agilent Technologies, Inc.

Effective As Of

August 12, 1999
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I SEPARATION................................................................................................ 2
Section 1.1 Separation Date.......................................................................... 2
Section 1.2 Closing of Transactions.................................................................. 2
Section 1.3 Exchange of Secretary's Certificates..................................................... 2

ARTICLE II DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE............................................... 2
Section 2.1 Documents to Be Delivered By HP.......................................................... 2
Section 2.2 Cash to be Transferred by HP............................................................. 3
Section 2.3 Documents to Be Delivered by Agilent..................................................... 4

ARTICLE III THE IPO AND ACTIONS PENDING THE IPO..................................................................... 5
Section 3.1 Transactions Prior to the IPO............................................................ 5
Section 3.2 Proceeds of the IPO...................................................................... 5
Section 3.3 Cooperation.............................................................................. 5
Section 3.4 Conditions Precedent to Consummation of the IPO.......................................... 6

ARTICLE IV THE DISTRIBUTION......................................................................................... 7
Section 4.1 The Distribution......................................................................... 7
Section 4.2 Actions Prior To The Distribution........................................................ 7
Section 4.3 Sole Discretion of HP.................................................................... 8
Section 4.4 Conditions To Distribution............................................................... 8
Section 4.5 Fractional Shares........................................................................ 9

ARTICLE V COVENANTS AND OTHER MATTERS............................................................................... 9
Section 5.1 Other Agreements......................................................................... 9
Section 5.2 Further Instruments...................................................................... 9
Section 5.3 Additional Service Level Agreements...................................................... 10
Section 5.4 Agreement For Exchange of Information.................................................... 10
Section 5.5 Auditors and Audits; Annual and Quarterly Statements and Accounting...................... 12
Section 5.6 Consistency with Past Practices.......................................................... 13
Section 5.7 Payment of Expenses...................................................................... 13
Section 5.8 Foreign Subsidiaries..................................................................... 14
Section 5.9 Dispute Resolution....................................................................... 14
Section 5.10 Governmental Approvals................................................................... 15
Section 5.11 No Representation or Warranty............................................................ 15
Section 5.12 Non-Solicitation of Employees............................................................ 15
Section 5.13 Employee Agreements...................................................................... 16
Section 5.14 Cooperation in Obtaining New Agreements.................................................. 17
Section 5.15 Property Damage to Agilent Assets Prior to the Separation Date........................... 17
</TABLE>

-i-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI MISCELLANEOUS............................................................................................ 18
Section 6.1 Limitation of Liability.................................................................. 18
Section 6.2 Entire Agreement......................................................................... 18
Section 6.3 Governing Law............................................................................ 18
Section 6.4 Termination.............................................................................. 18
Section 6.5 Notices.................................................................................. 18
Section 6.6 Counterparts............................................................................. 19
Section 6.7 Binding Effect; Assignment............................................................... 19
Section 6.8 Severability............................................................................. 19
Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative.................................... 19
Section 6.10 Amendment................................................................................ 19
Section 6.11 Authority................................................................................ 19
Section 6.12 Interpretation........................................................................... 19
Section 6.13 Conflicting Agreements................................................................... 20

ARTICLE VII DEFINITIONS............................................................................................. 20
Section 7.1 Affiliated Company....................................................................... 20
Section 7.2 Agilent Assets........................................................................... 20
Section 7.3 Agilent Business......................................................................... 20
Section 7.4 Agilent Group............................................................................ 20
Section 7.5 Agilent Pro Forma Balance Sheet.......................................................... 20
Section 7.6 Agilent's Auditors....................................................................... 20
Section 7.7 Ancillary Agreements..................................................................... 20
Section 7.8 Assignment Agreement..................................................................... 21
Section 7.9 Business Day............................................................................. 21
Section 7.10 Code..................................................................................... 21
Section 7.11 Commission............................................................................... 21
Section 7.12 Disputes................................................................................. 21
Section 7.13 Distribution............................................................................. 21
Section 7.14 Distribution Agent....................................................................... 21
Section 7.15 Distribution Date........................................................................ 21
Section 7.16 Employee Agreement....................................................................... 21
Section 7.17 Exchange Act............................................................................. 21
Section 7.18 Governmental Approvals................................................................... 21
Section 7.19 Governmental Authority................................................................... 21
Section 7.20 HP Business.............................................................................. 21
Section 7.21 HP Group................................................................................. 21
Section 7.22 HP's Auditors............................................................................ 21
Section 7.23 Information.............................................................................. 22
Section 7.24 IPO...................................................................................... 22
Section 7.25 IPO Closing Date......................................................................... 22
</TABLE>

-ii-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.26 IPO Net Proceeds......................................................................... 22
Section 7.27 IPO Over-allotment Option................................................................ 22
Section 7.28 IPO Registration Statement............................................................... 22
Section 7.29 Nasdaq................................................................................... 22
Section 7.30 Non-US Plan.............................................................................. 22
Section 7.31 NYSE..................................................................................... 22
Section 7.32 Person................................................................................... 22
Section 7.33 Prime Rate............................................................................... 22
Section 7.34 Record Date.............................................................................. 22
Section 7.35 Retained Payables........................................................................ 22
Section 7.36 Retained Receivables..................................................................... 23
Section 7.37 Separation............................................................................... 23
Section 7.38 Separation Date.......................................................................... 23
Section 7.39 Subsidiary............................................................................... 23
Section 7.40 Underwriters............................................................................. 23
Section 7.41 Underwriting Agreement................................................................... 23
Section 7.42 WSGR..................................................................................... 23
</TABLE>

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<PAGE>

EXHIBITS

Exhibit A Certificate of Secretary of HP

Exhibit B Certificate of Secretary of Agilent

Exhibit C General Assignment and Assumption Agreement

Exhibit D-1 Master Technology Ownership and License Agreement

Exhibit D-2 Master Patent Ownership and License Agreement

Exhibit D-3 Master Trademark Ownership and License Agreement

Exhibit D-4 ICBD Technology Ownership and License Agreement

Exhibit E Employee Matters Agreement

Exhibit F Tax Sharing Agreement

Exhibit G Master IT Service Level Agreement

Exhibit H Real Estate Agreement

Exhibit I Environmental Matters Agreement

Exhibit J Master Confidential Disclosure Agreement

Exhibit K Indemnification and Insurance Matters Agreement

Exhibit L Intentionally Omitted

Exhibit M Reorganization of Operations Outside the US (the Non-US Plan)

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<PAGE>

SCHEDULES

Schedule 2.1(b) Subsidiaries of HP to be Transferred to Agilent

Schedule 2.2(b) Cash Held in Subsidiaries

Schedule 7.1(a) Affiliated Companies of HP to be Included in the HP
Group

Schedule 7.1(b) Affiliated Companies of Agilent to be Included in the
Agilent Group

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<PAGE>

MASTER SEPARATION AND DISTRIBUTION AGREEMENT

This Master Separation and Distribution Agreement (this "Agreement") is
entered into as of August 12, 1999, between Hewlett-Packard Company ("HP"), a
Delaware corporation, and Agilent Technologies, Inc. ("Agilent"), a Delaware
corporation. Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in Article VII hereof.

RECITALS

WHEREAS, the Boards of Directors of HP and Agilent have each determined
that it would be appropriate and desirable for HP to contribute and transfer to
Agilent, and for Agilent to receive and assume, directly or indirectly,
substantially all of the assets and liabilities currently associated with the
Agilent Business and the stock, investments or similar interests currently held
by HP in subsidiaries and other entities that conduct such business (the
"Separation");

WHEREAS, HP has caused Agilent to be incorporated in order to effect
the Separation and HP currently owns all of the issued and outstanding common
stock of Agilent;

WHEREAS, HP and Agilent currently contemplate that, following the
contribution and assumption of assets and liabilities, Agilent will make an
initial public offering ("IPO") of an amount of its common stock pursuant to a
registration statement on Form S-1 pursuant to the Securities Act of 1933, as
amended (the "IPO Registration Statement"), that will reduce HP's ownership of
Agilent to not less than 80.1%;

WHEREAS, Agilent intends to distribute all of the proceeds of the IPO
(including the proceeds from the sale of shares pursuant to the exercise of the
Underwriters' over-allotment option (the "IPO Over-allotment Option")), net of
underwriting discounts and commissions (the "IPO Net Proceeds") to HP by means
of a dividend declared prior to the IPO, which IPO Net Proceeds HP ultimately
intends to use to satisfy obligations to creditors or to repurchase shares of HP
common stock within twelve (12) months following the closing of the IPO (the
"IPO Closing Date");

WHEREAS, HP currently contemplates that, several months following such
initial public offering, HP will distribute to the holders of its common stock,
$ 0.01 par value, by means of a pro rata distribution, all of the shares of
Agilent common stock owned by HP (the "Distribution");

WHEREAS, HP and Agilent intend that the contribution and assumption of
assets and liabilities and the Distribution will qualify as a tax-free
reorganization under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code
of 1986, as amended (the "Code"), and that this Agreement is intended to be, and
is hereby adopted as, a plan of reorganization under Section 368 of the Code;
and

WHEREAS, the parties intend in this Agreement, including the Exhibits
and Schedules hereto, to set forth the principal arrangements between them
regarding the separation of the Agilent Business.
<PAGE>

NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I

SEPARATION

Section 1.1 Separation Date. Unless otherwise provided in this Agreement,
or in any agreement to be executed in connection with this Agreement, the
effective time and date of each transfer of property, assumption of liability,
license, undertaking, or agreement in connection with the Separation shall be
12:01 a.m., Pacific Time, November 1, 1999 or such other date as may be fixed by
the Board of Directors of HP (the "Separation Date").

Section 1.2 Closing of Transactions. Unless otherwise provided herein, the
closing of the transactions contemplated in Article II shall occur by the
lodging of each of the executed instruments of transfer, assumptions of
liability, undertakings, agreements, instruments or other documents executed or
to be executed with Wilson Sonsini Goodrich & Rosati ("WSGR"), 650 Page Mill
Road, Palo Alto, California 94304, to be held in escrow for delivery as provided
in Section 1.3 of this Agreement.

Section 1.3 Exchange of Secretary's Certificates. Upon receipt of a
certificate of the Secretary or an Assistant Secretary of HP in the form
attached to this Agreement as Exhibit A, WSGR shall deliver to Agilent on behalf
of HP all of the items required to be delivered by HP hereunder pursuant to
Section 2.1 of this Agreement and each such item shall be deemed to be delivered
to Agilent as of the Separation Date upon delivery of such certificate. Upon
receipt of a certificate of the Secretary or an Assistant Secretary of Agilent
in the form attached to this Agreement as Exhibit B, WSGR shall deliver to HP on
behalf of Agilent all of the items required to be delivered by Agilent hereunder
and each such item shall be deemed to be delivered to HP as of the Separation
Date upon receipt of such certificate.

ARTICLE II

DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE

Section 2.1 Documents to Be Delivered By HP. On the Separation Date, or
such later date as agreed in connection with the Non-US Plan, HP will deliver,
or will cause its appropriate Subsidiaries to deliver, to Agilent all of the
following items and agreements (collectively, together with all agreements and
documents contemplated by such agreements, the "Ancillary Agreements"):

(a) A duly executed General Assignment and Assumption Agreement (the
"Assignment Agreement") substantially in the form attached hereto as Exhibit C;

(b) Certificates representing the stock and/or investments in the
Subsidiaries and other holdings of HP set forth on Schedule 2.1(b) with duly
executed stock powers in the form proper for transfer;

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<PAGE>

(c) A duly executed Master Technology Ownership and License Agreement
substantially in the form attached hereto as Exhibit D-1, a duly executed Master
Patent Ownership and License Agreement substantially in the form attached hereto
as Exhibit D-2, a duly executed Master Trademark Ownership and License Agreement
substantially in the form attached as Exhibit D-3 and a duly executed ICBD
Technology Ownership and License Agreement substantially in the form attached
hereto as Exhibit D-4, and;

(d) A duly executed Employee Matters Agreement substantially in the
form attached hereto as Exhibit E;

(e) A duly executed Tax Sharing Agreement substantially in the form
attached hereto as Exhibit F;

(f) A duly executed Master IT Service Level Agreement substantially in
the form attached hereto as Exhibit G;

(g) A duly executed Real Estate Matters Agreement substantially in
the form attached hereto as Exhibit H;

(h) A duly executed Environmental Matters Agreement substantially in
the form attached hereto as Exhibit I;

(i) A duly executed Master Confidential Disclosure Agreement
substantially in the form attached hereto as Exhibit J;

(j) A duly executed Indemnification and Insurance Matters Agreement
substantially in the form attached hereto as Exhibit K;

(k) Resignations of each person who is an officer or director of any
member of Agilent or its Subsidiaries, immediately prior to the Separation Date,
and who will be employees of HP from and after the Separation Date; and

(l) Such other agreements, documents or instruments as the parties may
agree are necessary or desirable in order to achieve the purposes hereof,
including, without limitation, all service level agreements entered into in
accordance with Section 5.3 and those documents referred to in Section 5.8.

Section 2.2 Cash to be Transferred by HP.

(a) Cash Requirements. On or around the Separation Date, HP and its
Subsidiaries will provide that Agilent and its Subsidiaries have sufficient cash
to satisfy the following obligations or requirements (as adjusted with the
parties' mutual agreement):

(i) (A) HP's obligations under the Agreement for the
Redemption and Sale of Shares and Termination of Joint Venture Relationship
dated July 6, 1999 by and between HP and Yokogawa Electric Corporation (the "YEW
Agreement"), which obligations Agilent will

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<PAGE>

assume from HP pursuant to the Assignment Agreement and (B) Hewlett-Packard
Japan Ltd.'s obligations under the YEW Agreement;

(ii) Working capital and acquisition requirements of $250
million;

(iii) An amount equal to:

(1) the Retained Receivables minus the Retained Payables,
plus or minus

(2) the liabilities retained by HP Japan related to the HP
Business, net of the assets retained by HP Japan related to the HP Business;

(iv) The requirements of Section 5.9 of the Tax Sharing
Agreement entitled Japan Restructuring Taxes; and

(v) As described in Section 3.1(a) of the Tax Sharing
Agreement, an amount equal to taxes of Agilent Historical Affiliates for periods
before their acquisition by the HP Group.

all in accordance with the parties' best estimates on the Separation Date of
such amounts as of October 31, 1999; and

(b) Cash Held in Subsidiaries. Additional cash in amounts to be
determined by the parties on the Separation Date will be held in certain
Subsidiaries of Agilent, all of which are either listed on Schedule 2.2(b)
hereto or will be geographical counterparts of Subsidiaries of HP listed on
Schedule 2.2(b) hereto.

(c) True-Up. On December 15, 1999, the parties will recalculate the
cash payments made pursuant to this Section 2.2, based on the amounts included
in the HP balance sheet as of October 31, 1999 and the Agilent balance sheet as
of October 31, 1999. To the extent the new calculations differ from the
estimates upon which the cash payments made pursuant to this Section 2.2 were
based, the parties shall reallocate cash in the amount of such difference.

Section 2.3 Documents to Be Delivered by Agilent. As of the Separation
Date, Agilent will or will cause its appropriate Subsidiaries to deliver to HP
all of the following:

(a) In each case where Agilent is a party to any agreement or
instrument referred to in Section 2.1, a duly executed counterpart of such
agreement or instrument; and

(b) Resignations of each person who is an officer or director of any
member of HP or its Subsidiaries, immediately prior to the Separation Date, and
who will be employees of Agilent from and after the Separation Date.

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<PAGE>

ARTICLE III

THE IPO AND ACTIONS PENDING THE IPO

SECTION 3.1 Transactions Prior to the IPO. Subject to the conditions
specified in Section 3.4, HP and Agilent shall use their reasonable commercial
efforts to consummate the IPO. Such efforts shall include, but not necessarily
be limited to, those specified in this Section 3.1

(a) Registration Statement. Agilent shall file the IPO Registration
Statement, and such amendments or supplements thereto, as may be necessary in
order to cause the same to become and remain effective as required by law or by
the managing underwriters for the IPO (the "Underwriters"), including, but not
limited to, filing such amendments to the IPO Registration Statement as may be
required by the underwriting agreement to be entered into among Agilent and the
Underwriters (the "Underwriting Agreement"), the Securities and Exchange
Commission (the "Commission") or federal, state or foreign securities laws. HP
and Agilent shall also cooperate in preparing, filing with the Securities and
Exchange Commission and causing to become effective a registration statement
registering the common stock of Agilent under the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), and any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans necessary or appropriate in
connection with the IPO, the Separation, the Distribution or the other
transactions contemplated by this Agreement.

(b) Underwriting Agreement. Agilent shall enter into the Underwriting
Agreement, in form and substance reasonably satisfactory to Agilent, and shall
comply with its obligations thereunder.

(c) Other Matters. HP and Agilent shall consult with each other and
the Underwriters regarding the timing, pricing and other material matters with
respect to the IPO.

(d) Blue Sky. Agilent shall use its reasonable commercial efforts to
take all such action as may be necessary or appropriate under state securities
and blue sky laws of the United States (and any comparable laws under any
foreign jurisdictions) in connection with the IPO.

(e) NYSE or Nasdaq Listing. Agilent shall prepare, file and use
reasonable commercial efforts to seek to make effective, an application for
listing of the common stock of Agilent issued in the IPO on the New York Stock
Exchange (the "NYSE") or the Nasdaq National Market ("Nasdaq"), subject to
official notice of issuance.

Section 3.2 Proceeds of the IPO. The IPO will be a primary offering of
common stock of Agilent. All of the IPO Net Proceeds will be distributed to HP
by means of a dividend declared prior to the IPO, which IPO Net Proceeds HP
ultimately intends to use to satisfy obligations to creditors or to repurchase
shares of HP common stock within twelve (12) months following the IPO Closing
Date.

Section 3.3 Cooperation. Agilent shall consult with, and cooperate in all
respects with, HP in connection with the pricing of the common stock of Agilent
to be offered in the IPO and shall,

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<PAGE>

at HP's direction, promptly take any and all actions necessary or desirable to
consummate the IPO as contemplated by the IPO Registration Statement and the
Underwriting Agreement.

Section 3.4 Conditions Precedent to Consummation of the IPO. As soon as
practicable after the Separation Date, the parties hereto shall use their
reasonable commercial efforts to satisfy the conditions listed below to the
consummation of the IPO. The IPO Closing Date is currently scheduled to occur
prior to December 31, 1999. The obligations of the parties to use their
reasonable commercial efforts to consummate the IPO shall be conditioned on the
satisfaction, or waiver by HP, of the following conditions:

(a) Registration Statement. The IPO Registration Statement shall have
been filed and declared effective by the Commission, and there shall be no
stop-order in effect with respect thereto.

(b) Blue Sky. The actions and filings with regard to state securities
and blue sky laws of the United States (and any comparable laws under any
foreign jurisdictions) described in Section 3.1 shall have been taken and, where
applicable, have become effective or been accepted.

(c) NYSE or Nasdaq Listing. The common stock of Agilent to be issued
in the IPO shall have been accepted for listing on the NYSE or Nasdaq, on
official notice of issuance.

(d) Underwriting Agreement. Agilent shall have entered into the
Underwriting Agreement and all conditions to the obligations of Agilent and the
Underwriters shall have been satisfied or waived.

(e) Common Stock Ownership. HP shall be satisfied in its sole
discretion that it will own at least 80.1% of the outstanding common stock of
Agilent following the IPO. All other conditions to permit the Distribution to
qualify as a tax-free distribution to HP, Agilent and HP's stockholders shall,
to the extent applicable as of the time of the IPO, be satisfied. There shall be
no event or condition that is likely to cause any of such conditions not to be
satisfied as of the time of the Distribution or thereafter.

(f) No Legal Restraints. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Separation or the IPO or any of
the other transactions contemplated by this Agreement shall be in effect.

(g) Separation. The Separation shall have become effective.

(h) Other Actions. Such other actions as the parties hereto may, based
upon the advice of counsel, reasonably request to be taken prior to the IPO in
order to assure the successful completion of the IPO shall have been taken.

(i) No Termination. This Agreement shall not have been terminated.

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<PAGE>

ARTICLE IV

THE DISTRIBUTION

Section 4.1 The Distribution

(a) Delivery of Shares for Distribution. Subject to Section 4.4
hereof, on or prior to the date the Distribution is effective (the "Distribution
Date"), HP will deliver to the distribution agent (the "Distribution Agent") to
be appointed by HP to distribute to the stockholders of HP the shares of common
stock of Agilent held by HP pursuant to the Distribution for the benefit of
holders of record of common stock of HP on the Record Date, a single stock
certificate, endorsed by HP in blank, representing all of the outstanding shares
of common stock of Agilent then owned by HP, and shall cause the transfer agent
for the shares of common stock of HP to instruct the Distribution Agent to
distribute on the Distribution Date the appropriate number of such shares of
common stock of Agilent to each such holder or designated transferee or
transferees of such holder.

(b) Shares Received. Subject to Sections 4.4 and 4.5, each holder of
common stock of HP on the Record Date (or such holder's designated transferee or
transferees) will be entitled to receive in the Distribution a number of shares
of common stock of Agilent equal to the number of shares of common stock of HP
held by such holder on the Record Date multiplied by a fraction the numerator of
which is the number of shares of common stock of Agilent beneficially owned by
HP on the Record Date and the denominator of which is the number of shares of
common stock of HP outstanding on the Record Date.

(c) Obligation to Provide Information. Agilent and HP, as the case may
be, will provide to the Distribution Agent all share certificates and any
information required in order to complete the Distribution on the basis
specified above.

Section 4.2 Actions Prior To The Distribution.

(a) Information Statement. HP and Agilent shall prepare and mail,
prior to the Distribution Date, to the holders of common stock of HP, such
information concerning Agilent and the Distribution and such other matters as HP
shall reasonably determine are necessary and as may be required by law. HP and
Agilent will prepare, and Agilent will, to the extent required under applicable
law, file with the Commission any such documentation which HP and Agilent
determines is necessary or desirable to effectuate the Distribution, and HP and
Agilent shall each use its reasonable commercial efforts to obtain all necessary
approvals from the Commission with respect thereto as soon as practicable.

(b) Blue Sky. HP and Agilent shall take all such actions as may be
necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.

(c) NYSE or Nasdaq Listing. Agilent shall prepare and file, and shall
use its reasonable commercial efforts to have approved, an application for the
listing of the common stock

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<PAGE>

of Agilent to be distributed in the Distribution on the NYSE or Nasdaq, subject
to official notice of distribution.

(d) Conditions. HP and Agilent shall take all reasonable steps
necessary and appropriate to cause the conditions set forth in Section 4.4 to be
satisfied and to effect the Distribution on the Distribution Date.

Section 4.3 Sole Discretion of HP. HP currently intends, following the
consummation of the IPO, to complete the Distribution by June 1, 2000. HP shall,
in its sole and absolute discretion, determine the date of the consummation of
the Distribution and all terms of the Distribution, including, without
limitation, the form, structure and terms of any transaction(s) and/or
offering(s) to effect the Distribution and the timing of and conditions to the
consummation of the Distribution. In addition, HP may at any time and from time
to time until the completion of the Distribution modify or change the terms of
the Distribution, including, without limitation, by accelerating or delaying the
timing of the consummation of all or part of the Distribution. Agilent shall
cooperate with HP in all respects to accomplish the Distribution and shall, at
HP's direction, promptly take any and all actions necessary or desirable to
effect the Distribution, including, without limitation, the registration under
the Securities Act of the common stock of Agilent on an appropriate registration
form or forms to be designated by HP. HP shall select any investment banker(s)
and manager(s) in connection with the Distribution, as well as any financial
printer, solicitation and/or exchange agent and outside counsel for HP;
provided, however, that nothing herein shall prohibit Agilent from engaging (at
its own expense) its own financial, legal, accounting and other advisors in
connection with the Distribution.

Section 4.4 Conditions To Distribution. The following are conditions to
the consummation of the Distribution. The conditions are for the sole benefit of
HP and shall not give rise to or create any duty on the part of HP or the HP
Board of Directors to waive or not waive any such condition.

(a) IRS Ruling. HP shall have obtained a private letter ruling from
the Internal Revenue Service in form and substance satisfactory to HP (in its
sole discretion), and such ruling shall remain in effect as of the Distribution
Date, to the effect that (i) the transfer by the HP Group to the Agilent Group
of the property, subject to liabilities, of the Agilent Business in exchange for
the issuance to HP of the stock of Agilent, the distribution of the IPO Net
Proceeds and Agilent's assumption of liabilities, followed by the distribution
by HP of all of its Agilent stock to the stockholders of HP, will qualify as a
reorganization under Sections 368(a)(1)(D) and 355 of the Code; (ii) no gain or
loss will be recognized by HP on its transfer of the property of the Agilent
Business to Agilent in exchange for Agilent common stock and the distribution of
the IPO Net Proceeds, followed by the transfer of the IPO Net Proceeds to HP's
creditors and/or stockholders: (iii) no gain or loss will be recognized by
Agilent on its receipt of the property of the Agilent Business from HP in
exchange for the issuance of Agilent common stock; and (iv) no gain or loss will
be recognized by (and no amount will otherwise be included in the income of) the
stockholders of HP upon their receipt of Agilent common stock pursuant to the
Distribution.

(b) Government Approvals. Any material governmental approvals and
consents necessary to consummate the Distribution shall have been obtained and
be in full force and effect;

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<PAGE>

(c) No Legal Restraints. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Distribution shall be in effect
and no other event outside the control of HP shall have occurred or failed to
occur that prevents the consummation of the Distribution; and

(d) No Material Adverse Effect. No other events or developments shall
have occurred subsequent to the IPO Closing Date that, in the judgment of the
Board of Directors of HP, would result in the Distribution having a material
adverse effect on HP or on the stockholders of HP.

Section 4.5 Fractional Shares. As soon as practicable after the
Distribution Date, HP shall direct the Distribution Agent to determine the
number of whole shares and fractional shares of common stock of Agilent
allocable to each holder of record or beneficial owner of common stock of HP as
of the Record Date, to aggregate all such fractional shares and sell the whole
shares obtained thereby at the direction of HP, in open market transactions, at
then prevailing trading prices, and to cause to be distributed to each such
holder or for the benefit of each such beneficial owner to which a fractional
share shall be allocable such holder's or owner's ratable share of the proceeds
of such sale, after making appropriate deductions of the amount required to be
withheld for federal income tax purposes and after deducting an amount equal to
all brokerage charges, commissions and transfer taxes attributed to such sale.
HP and the Distribution Agent shall use their reasonable commercial efforts to
aggregate the shares of common stock of HP that may be held by any beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.

ARTICLE V

COVENANTS AND OTHER MATTERS

Section 5.1 Other Agreements. In addition to the specific agreements,
documents and instruments annexed to this Agreement, HP and Agilent agree to
execute or cause to be executed by the appropriate parties and deliver, as
appropriate, such other agreements, instruments and other documents as may be
necessary or desirable in order to effect the purposes of this Agreement and the
Ancillary Agreements.

SECTION 5.2 Further Instruments. At the request of Agilent and without
further consideration, HP will execute and deliver, and will cause its
applicable Subsidiaries to execute and deliver, to Agilent and its Subsidiaries
such other instruments of transfer, conveyance, assignment, substitution and
confirmation and take such action as Agilent may reasonably deem necessary or
desirable in order more effectively to transfer, convey and assign to Agilent
and its Subsidiaries and confirm Agilent's and its Subsidiaries' title to all of
the assets, rights and other things of value contemplated to be transferred to
Agilent and its Subsidiaries pursuant to this Agreement, the Ancillary
Agreements, and any documents referred to therein, to put Agilent and its
Subsidiaries in actual possession and operating control thereof and to permit
Agilent and its Subsidiaries to exercise all rights with respect thereto
(including, without limitation, rights under contracts and other arrangements as
to which the consent of any third party to the transfer thereof shall not have
previously been obtained). At the request of HP and without further
consideration, Agilent will

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<PAGE>

execute and deliver, and will cause its applicable Subsidiaries to execute and
deliver, to HP and its Subsidiaries all instruments, assumptions, novations,
undertakings, substitutions or other documents and take such other action as HP
may reasonably deem necessary or desirable in order to have Agilent fully and
unconditionally assume and discharge the liabilities contemplated to be assumed
by Agilent under this Agreement or any document in connection herewith and to
relieve the HP Group of any liability or obligation with respect thereto and
evidence the same to third parties. Neither HP nor Agilent shall be obligated,
in connection with the foregoing, to expend money other than reasonable out-of-
pocket expenses, attorneys' fees and recording or similar fees. Furthermore,
each party, at the request of another party hereto, shall execute and deliver
such other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.

Section 5.3 Additional Service Level Agreements. HP and its Subsidiaries
and Agilent and its Subsidiaries will enter into interim service level
agreements covering the provision of various interim services, including
financial, accounting, building services, legal, and other services by HP (and
its Subsidiaries) to Agilent (and its Subsidiaries) or, in certain
circumstances, vice versa. Such services will generally be provided for a fee
equal to the actual Direct Costs and Indirect Costs of providing such services
plus five percent (5%). The interim service level agreements will generally
provide for a term of two (2) years. However, some interim service level
agreements, including those for building services and information technology
services, may be extended beyond the initial two-year period. If these
agreements are extended, Agilent will reimburse HP at the fair market rental
value for the rental component of the building services and cost plus 10% for
information technology and other services and the non-rental components of
building services. "Direct Costs" shall include compensation and travel expenses
attributable to employees, temporary workers, and contractors directly engaged
in performing the services as well as materials and supplies consumed in
performing the services. "Indirect Costs" shall include occupancy, IT
supervision and other overhead burden of the department incurring the direct
costs of providing the service.

Section 5.4 Agreement For Exchange of Information. Each of HP and Agilent
agrees to provide, or cause to be provided, to each other, at any time before or
after the Distribution Date, as soon as reasonably practicable after written
request therefor, any Information in the possession or under the control of such
party that the requesting party reasonably needs (i) to comply with reporting,
disclosure, filing or other requirements imposed on the requesting party
(including under applicable securities laws) by a Governmental Authority having
jurisdiction over the requesting party, (ii) for use in any other judicial,
regulatory, administrative or other proceeding or in order to satisfy audit,
accounting, claims, regulatory, litigation or other similar requirements, (iii)
to comply with its obligations under this Agreement or any Ancillary Agreement
or (iv) in connection with the ongoing businesses of HP or Agilent, as the case
may be; provided, however, that in the event that any party determines that any
such provision of Information could be commercially detrimental, violate any law
or agreement, or waive any attorney-client privilege, the parties shall take all
reasonable measures to permit the compliance with such obligations in a manner
that avoids any such harm or consequence.

(a) Internal Accounting Controls; Financial Information. After the
Separation Date, (i) each party shall maintain in effect at its own cost and
expense adequate systems and controls for its business to the extent necessary
to enable the other party to satisfy its reporting, accounting, audit

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<PAGE>

and other obligations, and (ii) each party shall provide, or cause to be
provided, to the other party and its Subsidiaries in such form as such
requesting party shall request, at no charge to the requesting party, all
financial and other data and information as the requesting party determines
necessary or advisable in order to prepare its financial statements and reports
or filings with any Governmental Authority.

(b) Ownership of Information. Any Information owned by a party that
is provided to a requesting party pursuant to this Section 5.4 shall be deemed
to remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.

(c) Record Retention. To facilitate the possible exchange of
Information pursuant to this Section 5.4 and other provisions of this Agreement
after the Distribution Date, each party agrees to use its reasonable commercial
efforts to retain all Information in their respective possession or control on
the Distribution Date substantially in accordance with the policies of HP as in
effect on the Separation Date. However, except as set forth in the Tax Sharing
Agreement, at any time after the Distribution Date, each party may amend their
respective record retention policies at such party's discretion; provided,
however, that if a party desires to effect the amendment within three (3) years
after the Distribution Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement.

(i) No party will destroy, or permit any of its Subsidiaries to
destroy, any Information that exists on the Separation Date (other than
Information that is permitted to be destroyed under the current record retention
policy of such party) without first using its reasonable commercial efforts to
notify the other party of the proposed destruction and giving the other party
the opportunity to take possession of such Information prior to such
destruction.

(d) Limitation of Liability. No party shall have any liability to
any other party in the event that any Information exchanged or provided pursuant
to this Section is found to be inaccurate, in the absence of willful misconduct
by the party providing such Information. No party shall have any liability to
any other party if any Information is destroyed or lost after reasonable
commercial efforts by such party to comply with the provisions of Section
5.4(c).

(e) Other Agreements Providing For Exchange of Information. The
rights and obligations granted under this Section 5.4 are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in this Agreement
and any Ancillary Agreement.

(f) Production of Witnesses; Records; Cooperation. After the
Distribution Date, except in the case of a legal or other proceeding by one
party against another party (which shall be governed by such discovery rules as
may be applicable under Section 5.9 or otherwise), each party hereto shall use
its reasonable commercial efforts to make available to each other party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of such party as witnesses and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books,

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records or other documents may reasonably be required in connection with any
legal, administrative or other proceeding in which the requesting party may from
time to time be involved, regardless of whether such legal, administrative or
other proceeding is a matter with respect to which indemnification may be sought
hereunder. The requesting party shall bear all costs and expenses in connection
therewith.

Section 5.5 Auditors and Audits; Annual and Quarterly Statements and
Accounting. Each party agrees that, for so long as HP is required in accordance
with United States generally accepted accounting principles to consolidate
Agilent's results of operations and financial position:

(a) Selection of Auditors. Agilent shall not select a different
accounting firm than PricewaterhouseCoopers LLP to serve as its (and its
Subsidiaries') independent certified public accountants ("Agilent's Auditors")
for purposes of providing an opinion on its consolidated financial statements
without HP's prior written consent (which shall not be unreasonably withheld).

(b) Date of Auditors' Opinion and Quarterly Reviews. Agilent shall
use its reasonable commercial efforts to enable the Agilent Auditors to complete
their audit such that they will date their opinion on Agilent's audited annual
financial statements on the same date that HP's independent certified public
accountants ("HP's Auditors") date their opinion on HP's audited annual
financial statements, and to enable HP to meet its timetable for the printing,
filing and public dissemination of HP's annual financial statements. Agilent
shall use its reasonable commercial efforts to enable the Agilent Auditors to
complete their quarterly review procedures such that they will provide clearance
on Agilent's quarterly financial statements on the same date that HP's Auditors
provide clearance on HP's quarterly financial statements.

(c) Annual and Quarterly Financial Statements. Agilent shall provide
to HP on a timely basis all Information that HP reasonably requires to meet its
schedule for the preparation, printing, filing, and public dissemination of HP's
annual and quarterly financial statements. Without limiting the generality of
the foregoing, Agilent will provide all required financial Information with
respect to Agilent and its Subsidiaries to Agilent's Auditors in a sufficient
and reasonable time and in sufficient detail to permit Agilent's Auditors to
take all steps and perform all reviews necessary to provide sufficient
assistance to HP's Auditors with respect to Information to be included or
contained in HP's annual and quarterly financial statements. Similarly, HP shall
provide to Agilent on a timely basis all Information that Agilent reasonably
requires to meet its schedule for the preparation, printing, filing, and public
dissemination of Agilent's annual and quarterly financial statements. Without
limiting the generality of the foregoing, HP will provide all required financial
Information with respect to HP and its Subsidiaries to HP's Auditors in a
sufficient and reasonable time and in sufficient detail to permit HP's Auditors
to take all steps and perform all reviews necessary to provide sufficient
assistance to Agilent's Auditors with respect to Information to be included or
contained in Agilent's annual and quarterly financial statements.

(d) Identity of Personnel Performing the Annual Audit and Quarterly
Reviews. Agilent shall authorize Agilent's Auditors to make available to HP's
Auditors both the personnel who performed or are performing the annual audits
and quarterly reviews of Agilent and work papers related to the annual audits
and quarterly reviews of Agilent, in all cases within a reasonable time prior to
Agilent's Auditors' opinion date, so that HP's Auditors are able to perform the

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procedures they consider necessary to take responsibility for the work of
Agilent's Auditors as it relates to HP's Auditors' report on HP's financial
statements, all within sufficient time to enable HP to meet its timetable for
the printing, filing and public dissemination of HP's annual and quarterly
statements. Similarly, HP shall authorize HP's Auditors to make available to
Agilent's Auditors both the personnel who performed or are performing the annual
audits and quarterly reviews of HP and work papers related to the annual audits
and quarterly reviews of HP, in all cases within a reasonable time prior to HP's
Auditors' opinion date, so that Agilent's Auditors are able to perform the
procedures they consider necessary to take responsibility for the work of HP's
Auditors as it relates to Agilent's Auditors' report on Agilent's statements,
all within sufficient time to enable Agilent to meet its timetable for the
printing, filing and public dissemination of Agilent's annual and quarterly
financial statements.

(e) Access to Books and Records. Agilent shall provide HP's internal
auditors and their designees access to Agilent's and its Subsidiaries' books and
records so that HP may conduct reasonable audits relating to the financial
statements provided by Agilent pursuant hereto as well as to the internal
accounting controls and operations of Agilent and its Subsidiaries. Similarly,
HP shall provide Agilent's internal auditors and their designees access to HP's
and its Subsidiaries' books and records so that Agilent may conduct reasonable
audits relating to the financial statements provided by HP pursuant hereto as
well as to the internal accounting controls and operations of HP and its
Subsidiaries

(f) Notice of Change in Accounting Principles. Agilent shall give HP
as much prior notice as reasonably practical of any proposed determination of,
or any significant changes in, its accounting estimates or accounting principles
from those in effect on the Separation Date. Agilent will consult with HP and,
if requested by HP, Agilent will consult with HP's independent public
accountants with respect thereto. HP shall give Agilent as much prior notice as
reasonably practical of any proposed determination of, or any significant
changes in, its accounting estimates or accounting principles from those in
effect on the Separation Date.

(g) Conflict with Third-Party Agreements. Nothing in Sections 5.4
and 5.5 shall require Agilent to violate any agreement with any third parties
regarding the confidentiality of confidential and proprietary information
relating to that third party or its business; provided, however, that in the
event that Agilent is required under Sections 5.4 and 5.5 to disclose any such
information, Agilent shall use all commercially reasonable efforts to seek to
obtain such customer's consent to the disclosure of such information.

Section 5.6 Consistency with Past Practices. At all times HP will cause
the Agilent Business before the Separation Date to continue to ship products,
invoice customers, make payments, maintain properties and otherwise conduct
business in the ordinary course, consistent with past practices and will not
undertake or permit any arrangement with any third party which is intended to or
has the effect of delaying the payment of any account receivable beyond the
Separation Date or delaying or accelerating the payment of any account payable
before the Separation Date.

Section 5.7 Payment of Expenses. Except as otherwise provided in this
Agreement, the Ancillary Agreements or any other agreement between the parties
relating to the Separation, the IPO

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or the Distribution, all costs and expenses of the parties hereto in connection
with the IPO (excluding underwriting discounts and commissions) and the
Distribution and certain costs and expenses of the parties hereto in connection
with the Separation shall be paid by HP. Notwithstanding the foregoing, Agilent
shall pay any internal fees, costs and expenses incurred by Agilent in
connection with the Separation, the IPO and the Distribution.

Section 5.8 Foreign Subsidiaries. HP and Agilent shall cause each of
their foreign subsidiaries to execute such local transfer agreements,
assignments, assumptions, novations and other documents as shall be necessary to
carry out the plan of reorganization described in Exhibit M (the "Non-US Plan")
hereto to effect the purposes of this Agreement with respect to their respective
operations outside the United States.

Section 5.9 Dispute Resolution. Except as otherwise set forth in the
Ancillary Agreements, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 5.9.

(a) Negotiation. The parties shall make a good faith attempt to
resolve any Dispute arising out of or relating to this Agreement through
negotiation. Within thirty (30) days after notice of a Dispute is given by
either party to the other party, each party shall select a first tier
negotiating team comprised of general manager level employees of such party and
shall meet and make a good faith attempt to resolve such Dispute and shall
continue to negotiate in good faith in an effort to resolve the Dispute or
renegotiate the applicable section or provision without the necessity of any
formal proceedings. If the first tier negotiating teams are unable to agree
within thirty (30) days of their first meeting, then each party shall select a
second tier negotiating team comprised of vice president level employees of such
party and shall meet within thirty (30) days after the end of the first thirty
(30) day negotiating period to attempt to resolve the matter. During the course
of negotiations under this Section 5.9(a), all reasonable requests made by one
party to the other for information, including requests for copies of relevant
documents, will be honored. The specific format for such negotiations will be
left to the discretion of the designated negotiating teams but may include the
preparation of agreed upon statements of fact or written statements of position
furnished to the other party.

(b) Non-Binding Mediation. In the event that any Dispute arising out
of or related to this Agreement is not settled by the parties within fifteen
(15) days after the first meeting of the second tier negotiating teams under
Section 5.9(a), the parties will attempt in good faith to resolve such Dispute
by non-binding mediation in accordance with the American Arbitration Association
Commercial Mediation Rules. The mediation shall be held within thirty (30) days
of the end of such fifteen (15) day negotiation period of the second tier
negotiating teams. Except as provided below in Section 5.9(c), no litigation for
the resolution of such dispute may be commenced until the parties try in good
faith to settle the dispute by such mediation in accordance with such rules and
either party has concluded in good faith that amicable resolution through
continued mediation of the matter does not appear likely. The costs of mediation
shall be shared equally by the parties to the mediation. Any settlement reached
by mediation shall be recorded in writing, signed by the parties, and shall be
binding on them.

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(c) Proceedings. Nothing herein, however, shall prohibit either
party from initiating litigation or other judicial or administrative proceedings
if such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the Dispute through
negotiation or mediation. In the event that litigation is commenced under this
Section 5.9(c), the parties agree to continue to attempt to resolve any Dispute
according to the terms of Sections 5.9(a) and 5.9(b) during the course of such
litigation proceedings under this Section 5.9(c).

(d) Pay and Dispute. Except as provided herein or in any Ancillary
Agreement, in the event of any dispute regarding payment of a third-party
invoice (subject to standard verification of receipt of products or services),
the party named in a third party's invoice must make timely payment to such
third party, even if the party named in the invoice desires to pursue the
dispute resolution procedures outlined in this Section 5.9. If the party that
paid the invoice is found pursuant to this Section 5.9 to not be responsible for
such payment, such paying party shall be entitled to reimbursement, with
interest accrued at a compound annual rate of the Prime Rate plus 2%, from the
party found responsible for such payment.

Section 5.10 Governmental Approvals. To the extent that the Separation
requires any Governmental Approvals, the parties will use their reasonable
commercial efforts to obtain any such Governmental Approvals.

Section 5.11 No Representation or Warranty. HP does not, in this
Agreement or any other agreement, instrument or document contemplated by this
Agreement, make any representation as to, warranty of or covenant with respect
to:

(a) the value of any asset or thing of value to be transferred to
Agilent;

(b) the freedom from encumbrance of any asset or thing of value to be
transferred to Agilent;

(d) the legal sufficiency of any assignment, document or instrument
delivered hereunder to convey title to any asset or thing of value upon its
execution, deliver and filing.

Except as may expressly be set forth herein or in any Ancillary Agreement,
all assets to be transferred to Agilent shall be transferred "AS IS, WHERE IS"
and Agilent shall bear the economic and legal risk that any conveyance shall
prove to be insufficient to vest in Agilent good and marketable title, free and
clear of any lien, claim, equity or other encumbrance.

Section 5.12 Non-Solicitation of Employees. Each party agrees not to
directly solicit or recruit the other party's employees for a period of two
years following the Distribution Date if such solicitation or recruitment would
be disruptive or damaging or would interfere with the operation or business of
the other party. This prohibition on solicitation does not apply to actions
taken by a party (i) as a result of an employee's affirmative response to a
general recruitment effort carried out through a public solicitation or a
general solicitation or (ii) as a result of an employee's initiative.

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Section 5.13 Employee Agreements. Definition. As used in this Section
5.13, "Employee Agreement" means the Agreement Regarding Confidential
Information and Proprietary Developments and corresponding agreements in foreign
countries.

(a) Survival of HP Employee Agreement Obligations and HP's Common Law
Rights. The HP Employee Agreements of all former HP employees transferred to
Agilent as of the Distribution Date shall remain in full force and effect
according to their terms; provided, however, that none of the following acts
committed by former HP employees within the scope of their Agilent employment
shall constitute a breach of such HP Employee Agreements: (i) the use or
disclosure of Confidential Information (as that term is defined in the former HP
employee's HP Employee Agreement) for or on behalf of Agilent, if such
disclosure is consistent with the license rights granted to Agilent and
restrictions imposed on Agilent under this Agreement, any other Ancillary
Agreement or any other agreement between the parties, (ii) the disclosure and
assignment to Agilent of rights in Proprietary Developments authored or
conceived by the former HP employee after the Separation Date and resulting from
the use of, or based upon intellectual property (whether patented or not) which
is retained by HP (as Proprietary Developments are defined in the former HP
employee's HP Employee Agreement); provided, however, that in no event shall
such disclosure and assignment be regarded as assigning the underlying
intellectual property to Agilent, (iii) the rendering of any services, directly
or indirectly, to Agilent to the extent such services are consistent with the
assignment or license of rights granted to Agilent and the restrictions imposed
on Agilent under this Agreement, any other Ancillary Agreement or any other
agreement between the parties and (iv) solicitation of the employees of one
party by the other party prior to the Distribution Date. Further, HP retains any
rights it has under statute or common law with respect to actions by its former
employees to the extent such actions are inconsistent with the rights granted to
Agilent and restrictions imposed on Agilent under this Agreement, any other
Ancillary Agreement or any other agreement between the parties.

(b) Assignment, Cooperation for Compliance and Enforcement.

(i) HP retains all rights under the HP Employee Agreements
of all former HP employees necessary to permit HP to protect the rights and
interests of HP, but hereby transfers and assigns to Agilent its rights under
the HP Employee Agreements of all former HP employees to the extent required to
permit Agilent to enjoin, restrain, recover damages from or obtain specific
performance of the HP Employee Agreements or obtain other remedies against any
employee who breaches his/her HP Employee Agreement, and to the extent necessary
to permit Agilent to protect the rights and interests of the businesses being
transferred to Agilent on the Separation Date.

(ii) HP and Agilent agree, at their own respective cost and
expense, to use their reasonable efforts to cooperate as follows: (A) Agilent
shall advise HP of: (1) any violation(s) of the HP Employee Agreement by former
HP employees, and (2) any violation(s) of the Agilent Employee Agreement which
affect HP's rights; and (B) HP shall advise Agilent of any violations of the HP
Employee Agreement by current or former HP employees which affect Agilent's
rights; provided, however, that the foregoing obligations shall only apply to
violations which become known to an attorney within the legal department of the
party obligated to provide notice thereof.

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(iii) HP and Agilent each may separately enforce the HP
Employee Agreements of former HP employees to the extent necessary to reasonably
protect their respective interests, provided, however, that (i) Agilent shall
not commence any litigation relating thereto without first consulting with HP's
Director of Intellectual Property or his/her designee and (ii) HP shall not
commence any litigation relating thereto against any former HP employee who is
at the time an Agilent employee without first consulting with Agilent's Director
of Intellectual Property or his/her designee. If either party, in seeking to
enforce any HP Employee Agreement, notifies the other party that it requires, or
desires, the other party to join in such action, then the other party shall do
so. In addition, if either party commences or becomes a party to any action to
enforce a HP Employee Agreement of a former HP employee, the other party shall,
whether or not it becomes a party to the action, cooperate with the other party
by making available its files and employees who have information or knowledge
relevant to the dispute, subject to appropriate measures to protect the
confidentiality of any proprietary or confidential information that may be
disclosed in the course of such cooperation or action and subject to any
relevant privacy laws and regulations. Any such action shall be conducted at the
expense of the party bringing the action and the parties shall agree on a case
by case basis on compensation, if any, of the other party for the value of the
time of such other party's employees as reasonably required in connection with
the action.

(iv) HP and Agilent understand and acknowledge that matters
relating to the making, performance, enforcement, assignment and termination of
employee agreements are typically governed by the laws and regulations of the
national, federal, state or local governmental unit where an employee resides,
or where an employee's services are rendered, and that such laws and regulations
may supersede or limit the applicability or enforceability of this Section 5.13.
In such circumstances, HP and Agilent agree to take action with respect to the
employee agreements that best accomplishes the parties' objectives as set forth
in this Section 5.13 and that is consistent with applicable law.

Section 5.14 Cooperation in Obtaining New Agreements. HP understands
that, prior to the Separation Date, Agilent has derived benefits under certain
agreements between HP and third parties, which agreements are not being assigned
to Agilent in connection with the Separation. Upon the request of Agilent, HP
agrees to make introductions to appropriate Agilent personnel to HP's contacts
at such third parties, and agrees to provide reasonable assistance to Agilent,
at HP's own expense, so that Agilent may obtain agreements from such third
parties under substantially equivalent terms and conditions, including financial
terms and conditions, that apply to HP. Such assistance may include, but is not
limited to, (i) requesting and encouraging such third parties to enter into such
agreements with Agilent, (ii) attending meetings and negotiating sessions with
Agilent and such third parties, and (iii) participating in buying consortiums
with Agilent. HP also understands that there are certain agreements between HP
and third parties, which agreements are being assigned to Agilent in connection
with the Separation but which may require the consent of the applicable third
party. Upon the request of Agilent, HP agrees to assist Agilent in seeking and
obtaining the consent of such third parties to such assignment. The parties
expect that the activities contemplated by this Section will be substantially
completed by the Distribution Date, but in no event will HP have any obligations
hereunder after the first anniversary of the Distribution Date.

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Section 5.16 Newly Discovered Environmental Conditions at Agilent Schedule
1 Facilities. If between the date of this Agreement and the Separation Date,
Environmental Conditions (as defined in Section 4.21 of the Indemnification and
Insurance Matters Agreement) are discovered on an Agilent Schedule 1 Facility
(as defined in Section 4.11 of the Indemnification and Insurance Matters
Agreement) for which HP, consistent with its past practices, would accrue a
reserve, then HP and Agilent shall determine the allocation of responsibility
for any Environmental Actions (as defined in Section 4.20 of the Indemnification
and Insurance Matters Agreement) arising, whether before or after the
Separation Date, out of such Environmental Conditions, in a manner consistent
with the provisions of Section 1.4 of the Indemnification and Insurance Matters
Agreement.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Limitation of Liability. IN NO EVENT SHALL ANY MEMBER OF THE
HP GROUP OR AGILENT GROUP BE LIABLE TO ANY OTHER MEMBER OF THE HP GROUP OR
AGILENT GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED,
HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S
INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THE
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT.

Section 6.2 Entire Agreement. This Agreement, the other Ancillary
Agreements and the Exhibits and Schedules referenced or attached hereto and
thereto, constitutes the entire agreement between the parties with respect to
the subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.

Section 6.3 Governing Law. This Agreement shall be governed and construed
and enforced in accordance with the laws of the State of Delaware as to all
matters regardless of the laws that might otherwise govern under the principles
of conflicts of laws applicable thereto.

Section 6.4 Termination. This Agreement and all Ancillary Agreements may
be terminated and the Distribution abandoned at any time prior to the IPO
Closing Date by and in the sole discretion of HP without the approval of
Agilent. This Agreement may be terminated at any time after the IPO Closing Date
and before the Distribution Date by mutual consent of HP and Agilent. In the
event of termination pursuant to this Section, no party shall have any liability
of any kind to the other party.

Section 6.5 Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and addressed to the attention of
the party's General Counsel at the address of its principal executive office or
such other address as a party may request by notifying the other in writing.

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Section 6.6 Counterparts. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

Section 6.7 Binding Effect; Assignment. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
not be assigned by any party hereto. This Agreement may be enforced separately
by each member of the HP Group and each member of the Agilent Group.

Section 6.8 Severability. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.

Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement or the Schedules or Exhibits attached hereto are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

Section 6.10 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such agreement.

Section 6.11 Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other actions, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.

Section 6.12 Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a

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Section, Exhibit or Schedule, such reference shall be to an Article or Section
of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.

Section 6.13 Conflicting Agreements. In the event of conflict between
this Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of such other agreement shall prevail.

ARTICLE VII

DEFINITIONS

Section 7.1 Affiliated Company. "Affiliated Company" means, with respect
to HP, any entity in which HP holds a 50% or less ownership interest and that is
listed on Schedule 7.1(a) hereto and, with respect to Agilent, any entity in
which Agilent holds a 50% or less ownership interest and that is listed on
Schedule 7.1(b) hereto. Schedules 7.1(a) and 7.1(b) may be amended from time to
time after the date hereof upon mutual written consent of the parties.

Section 7.2 Agilent Assets. "Agilent Assets" has the meaning set forth
in Section 1.2 of the Assignment Agreement.

Section 7.3 Agilent Business. "Agilent Business" means (a) the business
and operations of the business entities of HP currently known under the
following names, as described in the IPO Registration Statement and as such
business and operations will continue following the Separation Date: (i) the
Test and Measurement Organization, (ii) the Semiconductor Products Group, (iii)
the Chemical Analysis Group, (iv) the Healthcare Solutions Group and (v) the
portion of HP Labs and infrastructure organizations related to these businesses
and (b) except as otherwise expressly provided herein, any terminated, divested
or discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Agilent Business as then
conducted.

Section 7.4 Agilent Group. "Agilent Group" means Agilent, each
Subsidiary and Affiliated Company of Agilent immediately after the Separation
Date or that is contemplated to be a Subsidiary or Affiliated Company of Agilent
pursuant to the Non-US Plan and each Person that becomes a Subsidiary or
Affiliate Company of Agilent after the Separation Date.

Section 7.5 Agilent Pro Forma Balance Sheet. "Agilent Pro Forma Balance
Sheet" means the unaudited pro forma condensed consolidated balance sheet
appearing in the IPO Registration Statement.

Section 7.6 Agilent's Auditors. "Agilent's Auditors" means Agilent's
independent certified public accountants.

Section 7.7 Ancillary Agreements. "Ancillary Agreements" has the meaning
set forth in Section 2.1 hereof.

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Section 7.8 Assignment Agreement. "Assignment Agreement" has the meaning
set forth in Section 2.1(a) hereof.

Section 7.9 Business Day. "Business Day" means a day other than a
Saturday, a Sunday or a day on which banking institutions located in the State
of California are authorized or obligated by law or executive order to close.

Section 7.10 Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.

Section 7.11 Commission. "Commission" means the Securities and Exchange
Commission.

Section 7.12 Disputes. "Disputes" has the meaning set forth in Section
5.9 hereof.

Section 7.13 Distribution. "Distribution" has the meaning set forth in
the Recitals hereof.

Section 7.14 Distribution Agent. "Distribution Agent" has the meaning set
forth in Section 4.1 hereof.

Section 7.15 Distribution Date. "Distribution Date" has the meaning set
forth in Section 4.1 hereof.

Section 7.16 Employee Agreement. "Employee Agreement" has the meaning set
forth in Section 5.13(a) hereof.

Section 7.17 Exchange Act. "Exchange Act" means the Securities and
Exchange Act of 1934, as amended.

Section 7.18 Governmental Approvals. "Governmental Approvals" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.

Section 7.19 Governmental Authority. "Governmental Authority" shall mean
any federal, state, local, foreign or international court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority.

Section 7.20 HP Business. "HP Business" means any business of HP other
than the Agilent Business.

Section 7.21 HP Group. "HP Group" means HP, each Subsidiary and
Affiliated Company of HP (other than any member of the Agilent Group)
immediately after the Separation Date, after giving effect to the Non-US Plan
and each Person that becomes a Subsidiary or Affiliate Company of HP after the
Separation Date.

Section 7.22 HP's Auditors. "HP's Auditors" means HP's independent
certified public accountants.

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Section 7.23 Information. "Information" means information, whether or not
patentable or copyrightable, in written, oral, electronic or other tangible or
intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.

Section 7.24 IPO. "IPO" has the meaning set forth in the Recitals hereof.

Section 7.25 IPO Closing Date. "IPO Closing Date" has the meaning set
forth in the Recitals hereof.

Section 7.26 IPO Net Proceeds. "IPO Net Proceeds" has the meaning set
forth in the Recitals hereof.

Section 7.27 IPO Over-allotment Option. "IPO Over-allotment Option" has
the meaning set forth in the Recitals hereof.

Section 7.28 IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act of
1933, as amended, to be filed with the Commission registering the shares of
common stock of Agilent to be issued in the IPO, together with all amendments
thereto.

Section 7.29 Nasdaq. "Nasdaq" means the Nasdaq National Market.

Section 7.30 Non-US Plan. "Non-US Plan" has the meaning set forth in
Section 5.8 hereof.

Section 7.31 NYSE. "NYSE" means the New York Stock Exchange.

Section 7.32 Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.

Section 7.33 Prime Rate. "Prime Rate" means the prime rate as published
in the Wall Street Journal on the date of determination.

Section 7.34 Record Date. "Record Date" means the close of business on
the date to be determined by the Board of Directors of HP as the record date for
determining the stockholders of HP entitled to receive shares of common stock of
Agilent in the Distribution.

Section 7.35 Retained Payables. "Retained Payables" means (i) all
accounts payable and other obligations of payment for goods or services
purchased, leased or otherwise received in the

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<PAGE>

conduct of the Agilent Business that as of the Separation Date are payable to a
third Person by HP or any of HP's Subsidiaries, whether past due, due or to
become due, including any interest, sales or use taxes, finance charges, late or
returned check charges and other obligations of HP or any of HP's Subsidiaries
with respect thereto, and any obligations related to any of the foregoing and
(ii) all employee compensation Liabilities and other miscellaneous Liabilities
for which an adjustment is made in the Agilent Pro Forma Balance Sheet.

Section 7.36 Retained Receivables. "Retained Receivables" means (i) all
accounts receivable and other rights to payment for goods or services sold,
leased or otherwise provided in the conduct of the Agilent Business that as of
the Separation Date are payable by a third Person to HP or any of HP's
Subsidiaries, whether past due, due or to become due, including any interest,
sales or use taxes, finance charges, late or returned check charges and other
obligations of the account debtor with respect thereto, and any proceeds of any
of the foregoing and (ii) all other miscellaneous Assets for which an adjustment
is made in the Agilent Pro Forma Balance Sheet.

Section 7.37 Separation. "Separation" has the meaning set forth in the
Recitals hereof.

Section 7.38 Separation Date. "Separation Date" has the meaning set forth
in Section 1.1 hereof.

Section 7.39 Subsidiary. "Subsidiary" means with respect to any specified
Person, any corporation, any limited liability company, any partnership or other
legal entity of which such Person or its Subsidiaries owns, directly or
indirectly, more than 50% of the stock or other equity interest entitled to vote
on the election of the members of the board of directors or similar governing
body. Unless context otherwise requires, reference to HP and its Subsidiaries
shall not include the subsidiaries of HP that will be transferred to Agilent
after giving effect to the Separation, including the actions taken pursuant to
the Non-US Plan.

Section 7.40 Underwriters. "Underwriters" means the underwriters of the
IPO.

Section 7.41 Underwriting Agreement. "Underwriting Agreement" has the
meaning set forth in Section 3.1(a) hereof.

Section 7.42 WSGR. "WSGR" means Wilson Sonsini Goodrich & Rosati,
Professional Corporation.

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<PAGE>

WHEREFORE, the parties have signed this Master Separation and
Distribution Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By: /s/ Robert Wayman By: /s/ Edward W. Barnholt
---------------------------- -----------------------------------

Name: Robert P. Wayman Name: Edward W. Barnholt
-------------------------- ---------------------------------

Title: Executive Vice President of Title: President and Chief Executive
Finance and Administration, Officer
Chief Financial Officer

<PAGE>

Schedule 2.1(b)

Subsidiaries and Other Holdings of HP to be Transferred to Agilent

Subsidiaries

Agilent Technologies World Trade, Inc.
Heartstream, Inc.
Pete, Inc.
Rockland Technologies Inc.
Scope Communications, Inc.
Telegra Corporation

Other Holdings

Candescent Technologies Corporation
Cascade Microtech Inc.
HP-Sci Tech Joint Software Development Center Co. Ltd.
i-Stat Corporation
Microelectrics & Computer Technology Group
<PAGE>

Schedule 2.2(b)

Cash Held in Subsidiaries

China Hewlett-Packard Company Limited
Heartstream, Inc.
Hewlett-Packard Belgium SA/NV
Hewlett-Packard Coordination Center, S.C.
Hewlett-Packard Espanola, S.A.
Hewlett-Packard Japan, Ltd.
Hewlett-Packard Malaysia Sdn Bhd
Hewlett-Packard Microwave Products (M) Sdn Bhd
Hewlett-Packard Oy
Hewlett-Packard S.A.S.
Hewlett-Packard Taiwan Ltd.
Yokogawa Analytical Systems, Inc.
<PAGE>

Schedule 7.1 (a)

Affiliated Companies of HP to be Included in the HP Group

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Hugin Expert

Idea LLC

ImagineCard

Intria-HP

Intria-HP Potomac

Liquidity Management Group

PT Berka Services

Putial Ome

Sopura Systems

Syc
<PAGE>

Schedule 7.1(b)

Affiliated Companies of Agilent to be Included in the Agilent Group

Chartered Semiconductor Partners Singapore

LumiLEDS

<PAGE>

EXHIBIT 2.2

General Assignment and Assumption Agreement

between

Hewlett-Packard Company

and

Agilent Technologies, Inc.

______________, 1999
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CONTRIBUTION AND ASSUMPTION................................................ 1

Section 1.1 Contribution of Assets and Assumption of Liabilities.................... 1
Section 1.2 Agilent Assets.......................................................... 2
Section 1.3 Agilent Liabilities..................................................... 4
Section 1.4 The Non-US Plan......................................................... 5
Section 1.5 Methods of Transfer and Assumption...................................... 6
Section 1.6 Governmental Approvals and Consents..................................... 7
Section 1.7 Nonrecurring Costs and Expenses......................................... 8
Section 1.8 Novation of Assumed Agilent Liabilities................................. 8

ARTICLE II LITIGATION................................................................ 9

Section 2.1 Allocation.............................................................. 9
Section 2.2 Cooperation............................................................. 9

ARTICLE III MISCELLANEOUS............................................................ 10

Section 3.1 Entire Agreement........................................................ 10
Section 3.2 Governing Law........................................................... 10
Section 3.3 Notices................................................................. 10
Section 3.4 Parties in Interest..................................................... 10
Section 3.5 Counterparts............................................................ 10
Section 3.6 Binding Effect; Assignment.............................................. 10
Section 3.7 Severability............................................................ 11
Section 3.8 Failure or Indulgence Not Waiver; Remedies Cumulative................... 11
Section 3.9 Amendment............................................................... 11
Section 3.10 Authority............................................................... 11
Section 3.11 Interpretation.......................................................... 11
Section 3.12 Conflicting Agreements.................................................. 11

ARTICLE IV DEFINITIONS............................................................... 12

Section 4.1 Action.................................................................. 12
Section 4.2 Affiliated Company...................................................... 12
Section 4.3 Agilent Assets.......................................................... 12
Section 4.4 Agilent Balance Sheet................................................... 12
Section 4.5 Agilent Business........................................................ 12
Section 4.6 Agilent Contingent Gain................................................. 12
Section 4.7 Agilent Contingent Liability............................................ 13
Section 4.8 Agilent Contracts....................................................... 13
Section 4.9 Agilent Group........................................................... 14
Section 4.10 Agilent Liabilities..................................................... 14
Section 4.11 Agilent Pro Forma Balance Sheet......................................... 14
Section 4.12 Agilent World Trade..................................................... 14
Section 4.13 Ancillary Agreement..................................................... 14
</TABLE>
<PAGE>

<TABLE>
<S> <C>
Section 4.14 Assets.............................................. 14
Section 4.15 Consents............................................ 16
Section 4.16 Contracts........................................... 16
Section 4.17 Delayed Transfer Assets............................. 16
Section 4.18 Distribution........................................ 16
Section 4.19 Distribution Date................................... 16
Section 4.20 Environmental Actions............................... 16
Section 4.21 Excluded Assets..................................... 16
Section 4.22 Excluded Liabilities................................ 17
Section 4.23 Governmental Approvals.............................. 17
Section 4.24 Governmental Authority.............................. 17
Section 4.25 HP Group............................................ 17
Section 4.26 Indemnification and Insurance Matters Agreement..... 17
Section 4.27 Insurance Policies.................................. 17
Section 4.28 Insured Agilent Liability........................... 17
Section 4.29 Intellectual Property............................... 17
Section 4.30 IPO Registration Statement.......................... 17
Section 4.31 Liabilities......................................... 18
Section 4.32 Litigation Disclosure Letter........................ 18
Section 4.33 Local Transfer Agreements........................... 18
Section 4.34 Non-US Plan......................................... 18
Section 4.35 OFLs................................................ 18
Section 4.36 Person.............................................. 18
Section 4.37 Retained Payables................................... 19
Section 4.38 Retained Receivables................................ 19
Section 4.39 Security Interest................................... 19
Section 4.40 Separation.......................................... 19
Section 4.41 Separation Agreement................................ 19
Section 4.42 Separation Date..................................... 19
Section 4.43 Subsidiary.......................................... 19
Section 4.44 Taxes............................................... 20
</TABLE>

ii
<PAGE>

SCHEDULES

Schedule 1.1(c) Delayed Transfer Assets and Liabilities
Schedule 1.2(a)(xii) Specific Agilent Assets to be Transferred
Schedule 1.2(b)(i) Excluded Assets
Schedule 1.3(a)(vi) Divested Businesses Which Contain Liabilities to be
Transferred to Agilent
Schedule 1.3(a)(vii) Specific Agilent Liabilities
Schedule 1.3(b)(i) Excluded Liabilities
<PAGE>

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

This General Assignment and Assumption Agreement (this "Agreement") is
entered into on _________, 1999 between Hewlett-Packard Company, a Delaware
corporation ("HP"), and Agilent Technologies, Inc., a Delaware corporation
("Agilent"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in Article IV hereof.

RECITALS

WHEREAS, HP hereby and by certain other instruments of even date herewith
transfers or will transfer to Agilent effective as of the Separation Date,
substantially all of the business and assets of the Agilent Business owned by HP
in accordance with the Master Separation and Distribution Agreement dated as of
August 12, 1999 between the parties (the "Separation Agreement"). It is the
intent of the parties hereto, by this Agreement and the other agreements and
instruments provided for in the Separation Agreement, that HP and its
Subsidiaries convey to Agilent and its Subsidiaries substantially all of the
business and assets of the Agilent Business.

WHEREAS, it is further intended between the parties that Agilent assume
certain of the liabilities related to the Agilent Business, as provided in this
Agreement, the Separation Agreement or the other agreements and instruments
provided for in the Separation Agreement.

NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I

CONTRIBUTION AND ASSUMPTION

Section 1.1 Contribution Of Assets And Assumption Of Liabilities.

(a) Transfer of Assets. Effective on the Separation Date, HP hereby
assigns, transfers, conveys and delivers to Agilent, and agrees to cause its
applicable Subsidiaries to assign, transfer, convey and deliver to Agilent's
applicable Subsidiaries pursuant to the relevant Local Transfer Agreements, and
Agilent hereby accepts from HP, and agrees to cause its applicable Subsidiaries
to accept from HP's applicable Subsidiaries, all of HP's and its applicable
Subsidiaries' respective right, title and interest in all Agilent Assets, other
than the Delayed Transfer Assets; provided, however, that any Agilent Assets
that are specifically assigned or transferred pursuant to another Ancillary
Agreement shall not be assigned or transferred pursuant to this Section 1.1(a).

(b) Assumption of Liabilities. Effective on the Separation Date, Agilent
hereby assumes and agrees faithfully to perform and fulfill, all the Agilent
Liabilities held by HP, other than the Delayed Transfer Liabilities, in
accordance with their respective terms, and agrees to cause its applicable
Subsidiaries to assume, perform and fulfill all the Agilent Liabilities held by
its Subsidiaries (other than the Delayed Transfer Liabilities), in accordance
with their respective terms. Agilent shall be

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<PAGE>

responsible for all Agilent Liabilities held by HP, regardless of when or where
such Liabilities arose or arise, or whether the facts on which they are based
occurred prior to, on or after the date hereof, regardless of where or against
whom such Liabilities are asserted or determined (including any Agilent
Liabilities arising out of claims made by HP's or Agilent's respective
directors, officers, consultants, independent contractors, employees or agents
against any member of the HP Group or the Agilent Group) or whether asserted or
determined prior to the date hereof, and regardless of whether arising from or
alleged to arise from negligence, recklessness, violation of law, fraud or
misrepresentation by any member of the HP Group or the Agilent Group or any of
their respective directors, officers, employees or agents.

(c) Delayed Transfer Assets and Liabilities. Each of the parties hereto
agrees that the Delayed Transfer Assets will be assigned, transferred, conveyed
and delivered, and the Delayed Transfer Liabilities will be assumed, in
accordance with the terms of the agreements that provide for such assignment,
transfer, conveyance and delivery, or such assumption, after the date of this
Agreement or as otherwise set forth on Schedule 1.1(c). Following such
assignment, transfer, conveyance and delivery of any Delayed Transfer Asset, or
the assumption of any Delayed Transfer Liability, the applicable Delayed
Transfer Asset or Delayed Transfer Liability shall be treated for all purposes
of this Agreement and the Ancillary Agreements as an Agilent Asset or as an
Agilent Liability, as the case may be.

(d) Misallocated Assets. In the event that at any time or from time to time
(whether prior to, on or after the Separation Date), any party hereto (or any
member of such party's respective Group), shall receive or otherwise possess any
Asset that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer, or cause to be
transferred, such Asset to the Person so entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for any such other Person.

Section 1.2 Agilent Assets.

(a) Included Assets. For purposes of this Agreement, "Agilent Assets" shall
mean (without duplication) the following Assets, except as otherwise provided
for in any Ancillary Agreement or other express agreement of the parties:

(i) all Assets reflected in the Agilent Balance Sheet, subject to any
dispositions of such Assets subsequent to the date of the Agilent Balance Sheet;

(ii) all Assets that have been written off, expensed or fully
depreciated that, had they not been written off, expensed or fully depreciated,
would have been reflected in the Agilent Balance Sheet in accordance with the
principles and accounting policies under which the Agilent Balance Sheet was
prepared;

(iii) all Assets acquired by HP or its Subsidiaries after the date of
the Agilent Balance Sheet that would be reflected in the consolidated balance
sheet of Agilent as of the

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<PAGE>

Separation Date if such consolidated balance sheet was prepared using the same
principles and accounting policies under which the Agilent Balance Sheet was
prepared;

(iv) all Assets that are used primarily by the Agilent Business at
the Separation Date but are not reflected in the Agilent Balance Sheet due to
mistake or unintentional omission; provided, however, that no Asset shall be an
Agilent Asset unless Agilent or its Subsidiaries has, on or before the first
anniversary of the Distribution Date, given HP or its Subsidiaries notice that
such Asset is an Agilent Asset;

(v) all Agilent Contingent Gains;

(vi) all Agilent Contracts;

(vii) all issued and outstanding capital stock of Agilent World Trade;

(viii) all issued and outstanding stock, investments or similar
interests of HP and the Subsidiaries of HP listed on Schedule 2.1(b) of the
Separation Agreement;

(ix) all computers, desks, equipment (including equipment used for
research and development) and other Assets used primarily by employees of HP
that will become employees of Agilent in connection with the Separation; and

(x) cash, as set forth in Section 2.2 of the Separation Agreement;

(xi) to the extent permitted by law and subject to the
Indemnification and Insurance Matters Agreement, all rights of any member of the
Agilent Group under any of HP's Insurance Policies or other insurance policies
issued by Persons unaffiliated with HP; and

(xii) all Assets that are expressly contemplated by this Agreement,
the Separation Agreement or any other Ancillary Agreement (or Schedule
1.2(a)(xii) or any other Schedule hereto or thereto) as Assets to be transferred
to Agilent or any other member of the Agilent Group.

Notwithstanding the foregoing, any Assets held directly or indirectly by Agilent
World Trade or any Subsidiaries of HP listed on Schedule 2.1(b) of the
Separation Agreement shall not be assigned or transferred pursuant to Section
1.1(a), and the Agilent Assets shall not in any event include the Excluded
Assets referred to in Section 1.2(b) below.

(b) Excluded Assets. For the purposes of this Agreement, "Excluded Assets"
shall mean:

(i) the Assets listed or described on Schedule 1.2(b)(i);

(ii) the Retained Receivables; and

-3-
<PAGE>

(iii) any Assets that are expressly contemplated by the Separation
Agreement, this Agreement or any other Ancillary Agreement (or the Schedules
hereto or thereto) as Assets to be retained by HP or any other member of the HP
Group.

Section 1.3 Agilent Liabilities.

(a) Included Liabilities. For the purposes of this Agreement, "Agilent
Liabilities" shall mean (without duplication) the following Liabilities, except
as otherwise provided for in any Ancillary Agreement or other express agreement
of the parties:

(i) all Liabilities reflected in the Agilent Balance Sheet,
subject to any discharge of such Liabilities subsequent to the date of the
Agilent Balance Sheet;

(ii) all Liabilities of HP or its Subsidiaries that arise after the
date of the Agilent Balance Sheet that would be reflected in the consolidated
balance sheet of Agilent as of the Separation Date if such consolidated balance
sheet was prepared using the same principles and accounting policies under which
the Agilent Balance Sheet was prepared;

(iii) all Liabilities that are related primarily to the Agilent
Business at the Separation Date but are not reflected in the Agilent Balance
Sheet due to mistake or unintentional omission; provided, however, that no
Liability shall be an Agilent Liability unless HP or its Subsidiaries, on or
before the first anniversary of the Distribution Date, has given Agilent or its
Subsidiaries notice that such Liability is an Agilent Liability;

(iv) all Agilent Contingent Liabilities;

(v) all Liabilities (other than Liabilities for Taxes), whether
arising before, on or after the Separation Date, primarily relating to, arising
out of or resulting from:

(1) the operation of the Agilent Business, as conducted at any
time prior to, on or after the Separation Date (including any Liability relating
to, arising out of or resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not such act or failure
to act is or was within such Person's authority));

(2) the operation of any business conducted by any member of
the Agilent Group at any time after the Separation Date (including any Liability
relating to, arising out of or resulting from any act or failure to act by any
director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person's authority)); or

(3) any Agilent Assets;

(vi) all Liabilities relating to, arising out of or resulting from
any of the terminated, divested or discontinued businesses and operations listed
or described on Schedule 1.3(a)(vi); and

-4-
<PAGE>

(vii) all Liabilities that are expressly contemplated by this
Agreement, Schedule 1.3(a)(vii), the Separation Agreement or any other Ancillary
Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by
Agilent or any member of the Agilent Group, and all agreements, obligations and
Liabilities of any member of the Agilent Group under this Agreement or any of
the Ancillary Agreements.

Notwithstanding the foregoing, any Liabilities of Agilent World Trade or any
Subsidiaries of HP listed on Schedule 2.1(b) of the Separation Agreement shall
not be assumed pursuant to Section 1.2(a), and the Agilent Liabilities shall not
include the Excluded Liabilities referred to in Section 1.3(b) below.

(b) Excluded Liabilities. For the purposes of this Agreement, "Excluded
Liabilities" shall mean:

(i) all Liabilities listed or described in Schedule 1.3(b)(i);

(ii) the Retained Payables;

(iii) all Insured Agilent Liabilities;

(iv) all Environmental Actions set forth in Section 1.4(b) of the
Indemnification and Insurance Matters Agreement; and

(v) all Liabilities that are expressly contemplated by this
Agreement, the Separation Agreement or any other Ancillary Agreement (or the
Schedules hereto or thereto) as Liabilities to be retained or assumed by HP or
any other member of the HP Group, and all agreements and obligations of any
member of the HP Group under the Separation Agreement, this Agreement or any
other Ancillary Agreement.

Section 1.4 The Non-us Plan.

(a) Consummation of Non-US Plan. Each of HP and Agilent shall take, and
shall cause each member of its respective Group to take, such action as
reasonably necessary to consummate the transactions contemplated by the Non-US
Plan (whether prior to, on or after the Separation Date). Notwithstanding
anything in this Agreement, the Separation Agreement or in any other Ancillary
Agreement to the contrary, no party to a Local Transfer Agreement shall be
entitled to receive or retain any Asset unless such party shall have paid any
consideration contemplated to be paid in connection therewith pursuant to the
Non-US Plan.

(b) Transfer of Stock. Effective on the Separation Date, HP shall transfer
all of its right, title and interest in and to all of the issued and outstanding
capital stock in Agilent World Trade and the other Subsidiaries listed in
Schedule 2.1(b) of the Separation Agreement, to Agilent by means of a
contribution of such capital stock by HP to Agilent. The parties hereto shall
execute, or cause to be

-5-
<PAGE>

executed, such transfer instruments as they mutually deem appropriate to
effectuate and evidence such transfer.

Section 1.5 Methods Of Transfer And Assumption.

(a) Terms of Other Ancillary Agreements Govern. The parties shall enter
into the other Ancillary Agreements, on or about the date of this Agreement. To
the extent that the transfer of any Agilent Asset or the assumption of any
Agilent Liability is expressly provided for by the terms of any other Ancillary
Agreement, the terms of such other Ancillary Agreement shall effect, and
determine the manner of, the transfer or assumption. It is the intent of the
parties that pursuant to Sections 1.1, 1.2 and 1.3, the transfer and assumption
of all other Agilent Assets and Agilent Liabilities, other than Delayed Transfer
Assets and Delayed Transfer Liabilities, shall be made effective as of the
Separation Date; provided, however, that circumstances in various jurisdictions
outside the United States may require the transfer of certain Assets and the
assumption of certain Liabilities to occur in such other manner and at such
other time as the parties shall agree, as provided in Section 1.4 hereof.

(b) Mistaken Assignments and Assumptions. In addition to those transfers
and assumptions accurately identified and designated by the parties to take
place but which the parties are not able to effect prior to the Separation Date,
there may exist (i) Assets that the parties discover were, contrary to the
agreements between the parties, by mistake or omission, transferred to Agilent
or retained by HP or (ii) Liabilities that the parties discover were, contrary
to the agreements between the parties, by mistake or omission, assumed by
Agilent or not assumed by Agilent. The parties shall cooperate in good faith to
effect the transfer or re-transfer of such Assets, and/or the assumption or re-
assumption of such Liabilities, to or by the appropriate party and shall not use
the determination that remedial actions need to be taken to alter the original
intent of the parties hereto with respect to the Assets to be transferred to or
Liabilities to be assumed by Agilent. Each party shall reimburse the other or
make other financial adjustments (e.g., without limitation, cash reserves) or
other adjustments to remedy any mistakes or omissions relating to any of the
Assets transferred hereby or any of the Liabilities assumed hereby.

(c) Transfer of Assets and Liabilities Not Included in Agilent Assets and
Agilent Liabilities. In the event the parties discover Assets and Liabilities
that relate primarily to the Agilent Business but do not constitute Agilent
Assets under Section 1.2 or Agilent Liabilities under Section 1.3, the parties
shall cooperate in good faith to effect the transfer of such Assets at book
value, or the assumption of such Liabilities, to Agilent or its Subsidiaries and
shall not use the determination of remedial actions contemplated in the
Separation Agreement to alter the original intent of the parties hereto with
respect to the Assets to be transferred to or Liabilities to be assumed by
Agilent. Each party shall reimburse the other or make other financial
adjustments (e.g., without limitation, cash reserves) or other adjustments to
remedy any mistakes or omissions relating to any of the Assets transferred
hereby or any of the Liabilities assumed hereby.

-6-
<PAGE>

(d) Documents Relating to Other Transfers of Assets and Assumption of
Liabilities. In furtherance of the assignment, transfer and conveyance of
Agilent Assets and the assumption of Agilent Liabilities set forth in Sections
1.5(a), (b) and (c) and certain Ancillary Agreements, simultaneously with the
execution and delivery hereof or as promptly as practicable thereafter, (i) HP
shall execute and deliver, and shall cause its Subsidiaries in accordance with
Local Transfer Agreements to execute and deliver, such bills of sale, stock
powers, certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of HP's and its Subsidiaries'
right, title and interest in and to the Agilent Assets to Agilent and (ii)
Agilent shall execute and deliver, to HP and its Subsidiaries such bills of
sale, stock powers, certificates of title, assumptions of contracts and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the Agilent Liabilities by Agilent.

Section 1.6 Governmental Approvals And Consents.

(a) Transfer In Violation of Laws. If and to the extent that the valid,
complete and perfected transfer assignment or novation to the Agilent Group of
any Agilent Assets and Agilent Liabilities (or from the Agilent Group of any
Non-Agilent Assets) would be a violation of applicable laws or require any
Consent or Governmental Approval in connection with the Separation, the IPO or
the Distribution, then, unless HP shall otherwise determine, the transfer,
assignment or novation to or from the Agilent Group, as the case may be, of such
Agilent Assets or Non-Agilent Assets, respectively, shall be automatically
deemed deferred and any such purported transfer, assignment or novation shall be
null and void until such time as all legal impediments are removed and/or such
Consents or Governmental Approvals have been obtained. Notwithstanding the
foregoing, such Asset shall still be considered an Agilent Asset for purposes of
determining whether any Liability is an Agilent Liability; provided, however,
that if such covenants or Governmental Approvals have not been obtained within
six months of the Distribution Date, the parties will use their reasonable
commercial efforts to achieve an alternative solution in accordance with the
parties' intentions.

(b) Transfers Not Consummated Prior to Separation Date. If the transfer,
assignment or novation of any Assets intended to be transferred or assigned
hereunder, including pursuant to the Non-US Plan, is not consummated prior to or
on the Separation Date, whether as a result of the provisions of Section 1.6(a)
or for any other reason, then the Person retaining such Asset shall thereafter
hold such Asset for the use and benefit, insofar as reasonably possible, of the
Person entitled thereto (at the expense of the Person entitled thereto). In
addition, the Person retaining such Asset shall take such other actions as may
be reasonably requested by the Person to whom such Asset is to be transferred in
order to place such Person, insofar as reasonably possible, in the same position
as if such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such Agilent Assets (or such Non-Agilent
Assets, as the case may be), including possession, use, risk of loss, potential
for gain, and dominion, control and command over such Assets, are to inure from
and after the Separation Date to the Agilent Group (or the HP Group, as the case
may be). If and when the Consents and/or Governmental Approvals, the absence of
which caused the deferral of transfer of any Asset pursuant to Section 1.6(a),
are obtained, the transfer of

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<PAGE>

the applicable Asset shall be effected in accordance with the terms of this
Agreement and/or the applicable Ancillary Agreement.

(c) Expenses. The Person retaining an Asset due to the deferral of the
transfer of such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such Asset.

Section 1.7 Nonrecurring Costs And Expenses. Notwithstanding anything
herein to the contrary, any nonrecurring costs and expenses incurred by the
parties hereto to effect the transactions contemplated hereby which are not
allocated pursuant to the terms of the Separation Agreement, this Agreement or
any other Ancillary Agreement shall be the responsibility of the party which
incurs such costs and expenses.

Section 1.8 Novation Of Assumed Agilent Liabilities.

(a) Reasonable Commercial Efforts. Each of HP and Agilent, at the request
of the other, shall use their reasonable commercial efforts to obtain, or to
cause to be obtained, any consent, substitution, approval or amendment required
to novate (including with respect to any federal government contract) or assign
all rights and obligations under agreements, leases, licenses and other
obligations or Liabilities (including Agilent OFLs) of any nature whatsoever
that constitute Agilent Liabilities or to obtain in writing the unconditional
release of all parties to such arrangements other than any member of the Agilent
Group, so that, in any such case, Agilent and its Subsidiaries will be solely
responsible for such Liabilities; provided, however, that neither HP, Agilent
nor their Subsidiaries shall be obligated to pay any consideration therefor to
any third party from whom such consents, approvals, substitutions and amendments
are requested.

(b) Inability to Obtain Novation. If HP or Agilent is unable to obtain, or
to cause to be obtained, any such required consent, approval, release,
substitution or amendment, the applicable member of the HP Group shall continue
to be bound by such agreements, leases, licenses and other obligations and,
unless not permitted by law or the terms thereof (except to the extent expressly
set forth in this Agreement, the Separation Agreement or any other Ancillary
Agreement), Agilent shall, as agent or subcontractor for HP or such other
Person, as the case may be, pay, perform and discharge fully, or cause to be
paid, transferred or discharged all the obligations or other Liabilities of HP
or such other Person, as the case may be, thereunder from and after the date
hereof. HP shall, without further consideration, pay and remit, or cause to be
paid or remitted, to Agilent or its appropriate Subsidiary promptly all money,
rights and other consideration received by it or any member of its respective
Group in respect of such performance (unless any such consideration is an
Excluded Asset). If and when any such consent, approval, release, substitution
or amendment shall be obtained or such agreement, lease, license or other rights
or obligations shall otherwise become assignable or able to be novated, HP shall
thereafter assign, or cause to be assigned, all its rights, obligations and
other Liabilities thereunder or any rights or obligations of any member of its

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respective Group to Agilent without payment of further consideration and Agilent
shall, without the payment of any further consideration, assume such rights and
obligations.

ARTICLE II

LITIGATION

Section 2.1 Allocation.

(a) Litigation to Be Transferred to Agilent. Notwithstanding any contrary
provisions in the provisions of the Indemnification and Insurance Matters
Agreement, on the Separation Date, the responsibilities for management of the
litigation identified in Section 2.1(a) of a litigation disclosure letter (the
"Litigation Disclosure Letter"), which will be delivered by HP to Agilent on the
Separation Date, shall be transferred in their entirety from HP and its
Subsidiaries to Agilent and its Subsidiaries. As of the Separation Date and
thereafter, Agilent shall manage the defense of this litigation and shall cause
its applicable Subsidiaries to do the same. HP and its Subsidiaries must first
obtain the prior consent of Agilent or its applicable Subsidiary for any action
taken subsequent to the Separation Date in connection with the litigation
identified in the Litigation Disclosure Letter, which consent cannot be
unreasonably withheld or delayed. All other matters relating to such litigation,
including but not limited to indemnification for such claims, shall be governed
by the provisions of the Indemnification and Insurance Matters Agreement.

(b) Litigation to be Defended by HP at Agilent's Expense. Notwithstanding
any contrary provisions in the Indemnification and Insurance Matters Agreement,
HP shall defend, and shall cause its applicable Subsidiaries to defend, the
litigation identified in Section 2.1(b) of the Litigation Disclosure Letter. All
other matters relating to such litigation, including but not limited to
indemnification for such claims, shall be governed by the provisions of the
Indemnification and Insurance Matters Agreement.

(c) All Other Litigation. All other litigation outstanding at the
Separation Date not included in the Litigation Disclosure Letter shall remain
with HP, and Agilent shall have no liability in connection with, or
responsibility for defending, such litigation.

Section 2.2 Cooperation. HP and Agilent and their respective Subsidiaries
shall cooperate with each other in the defense of any litigation covered under
this Article II and afford to each other reasonable access upon reasonable
advance notice to witnesses and information (other than information protected
from disclosure by applicable privileges) that is reasonably required to defend
this litigation as set forth in Section 5.4 of the Separation Agreement. The
foregoing agreement to cooperate includes, but is not limited to, an obligation
to provide access to qualified assistance to provide information, witnesses and
documents to respond to discovery requests in specific lawsuits. In such cases,
cooperation shall be timely so that the party responding to discovery may meet
all court-imposed deadlines. The party requesting information shall reimburse
the party providing information consistent with the terms of Section 5.4 of the
Separation

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Agreement. The obligations set forth in this paragraph are more clearly defined
in Section 5.4 of the Separation Agreement, to which reference is hereby made.

ARTICLE III

MISCELLANEOUS

Section 3.1 Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
referenced or attached hereto and thereto, constitutes the entire agreement
between the parties with respect to the subject matter hereof and shall
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.

Section 3.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

Section 3.3 Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
US mail, First Class with postage prepaid, and addressed to the attention of the
party's General Counsel at the address of its principal executive office or such
other address as a party may request by notifying the other in writing.

Section 3.4 Parties In Interest. This Agreement, including the Schedules
and Exhibits hereto, and the other documents referred to herein, shall be
binding upon and inure solely to the benefit of each party hereto and their
legal representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.

Section 3.5 Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

Section 3.6 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives and
successors. This Agreement may not be assigned by any party hereto.

Section 3.7 Severability. If any term or other provision of this Agreement
or the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of

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law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
fullest extent possible.

SECTION 3.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement or the Schedules or Exhibits attached hereto are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

SECTION 3.9 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such agreement.

SECTION 3.10 Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other action, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.

SECTION 3.11 Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

SECTION 3.12 Conflicting Agreements. In the event of conflict between
this Agreement and any other Ancillary Agreement or other agreement executed in
connection herewith, the provisions of Ancillary Agreement and such other
agreement shall prevail.

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ARTICLE IV

DEFINITIONS

SECTION 4.1 Action. "Action" means any demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation by or before any
federal, state, local, foreign or international governmental authority or any
arbitration or mediation tribunal.

SECTION 4.2 Affiliated Company. "Affiliated Company" means, with respect
to HP, any entity in which HP holds a 50% or less ownership interest and that is
listed on Schedule 7.1(a) to the Separation Agreement and, with respect to
Agilent, any entity in which Agilent holds a 50% or less ownership interest and
that is listed on Schedule 7.1(b) to the Separation Agreement. Schedules 7.1(a)
and 7.1(b) may be amended from time to time after the date hereof upon mutual
written consent of the parties.

SECTION 4.3 Agilent Assets. "Agilent Assets" has the meaning set forth
in Section 1.2 of this Agreement.

SECTION 4.4 Agilent Balance Sheet. "Agilent Balance Sheet" means the
audited consolidated balance sheet (including the notes thereto) of the Agilent
Business as of July 31, 1999 that is included in the IPO Registration Statement.

SECTION 4.5 Agilent Business. "Agilent Business" the business and
operations of the business entities of HP currently known under the following
names, as described in the IPO Registration Statement and as such business and
operations will continue following the Separation Date: (i) the Test and
Measurement Organization, (ii) the Semiconductor Products Group, (iii) the
Chemical Analysis Group, (iv) the Healthcare Solutions Group and (v) the portion
of HP Labs and infrastructure organizations related to these businesses and (b)
except as otherwise expressly provided herein, any terminated, divested or
discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Agilent Business as then
conducted.

SECTION 4.6 Agilent Contingent Gain. "Agilent Contingent Gain" means any
claim or other right of a member of the HP Group or the Agilent Group that
primarily relates to the Agilent Business, whenever arising, against any Person
other than a member of the HP Group or the Agilent Group, if and to the extent
that (i) such claim or right arises out of the events, acts or omissions
occurring as of the Separation Date (based on then existing law) and (ii) the
existence or scope of the obligation of such other Person as of the Separation
Date was not acknowledged, fixed or determined in any material respect, due to a
dispute or other uncertainty as of the Separation Date or as a result of the
failure of such claim or other right to have been discovered or asserted as of
the Separation Date. A claim or right meeting the foregoing definition shall be
considered an Agilent Contingent Gain regardless of whether there was any Action
pending, threatened or contemplated as of the Separation Date with respect
thereto. In the case of any claim or right a portion of which

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arises out of events, acts or omissions occurring prior to the Separation Date
and a portion of which arises out of events, acts or omissions occurring on or
after the Separation Date, only that portion that arises out of events, acts or
omissions occurring prior to the Separation Date shall be considered an Agilent
Contingent Gain. For purposes of the foregoing, a claim or right shall be deemed
to have accrued as of the Separation Date if all the elements of the claim
necessary for its assertion shall have occurred on or prior to the Separation
Date, such that the claim or right, were it asserted in an Action on or prior to
the Separation Date, would not be dismissed by a court on ripeness or similar
grounds. Notwithstanding the foregoing, none of (i) any Insurance Proceeds, (ii)
any Excluded Assets, (iii) any reversal of any litigation or other reserve, or
(iv) any matters relating to Taxes (which are governed by the Tax Sharing
Agreement) shall be deemed to be an Agilent Contingent Gain.

SECTION 4.7 Agilent Contingent Liability. "Agilent Contingent Liability"
means any Liability, other than Liabilities for Taxes (which are governed by the
Tax Sharing Agreement), of a member of the HP Group or the Agilent Group that
primarily relates to the Agilent Business, whenever arising, to any Person other
than a member of the HP Group or the Agilent Group, if and to the extent that
(i) such Liability arises out of the events, acts or omissions occurring as of
the Separation Date and (ii) the existence or scope of the obligation of a
member of the HP Group or the Agilent Group as of the Separation Date with
respect to such Liability was not acknowledged, fixed or determined in any
material respect, due to a dispute or other uncertainty as of the Separation
Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Separation Date (it being understood that the existence of a
litigation or other reserve with respect to any Liability shall not be
sufficient for such Liability to be considered acknowledged, fixed or
determined). In the case of any Liability a portion of which arises out of
events, acts or omissions occurring prior to the Separation Date and a portion
of which arises out of events, acts or omissions occurring on or after the
Separation Date, only that portion that arises out of events, acts or omissions
occurring prior to the Separation Date shall be considered an Agilent Contingent
Liability. For purposes of the foregoing, a Liability shall be deemed to have
arisen out of events, acts or omissions occurring prior to the Separation Date
if all the elements necessary for the assertion of a claim with respect to such
Liability shall have occurred on or prior to the Separation Date, such that the
claim, were it asserted in an Action on or prior to the Separation Date, would
not be dismissed by a court on ripeness or similar grounds. For purposes of
clarification of the foregoing, the parties agree that no Liability relating to,
arising out of or resulting from any obligation of any Person to perform the
executory portion of any contract or agreement existing as of the Separation
Date, or to satisfy any obligation accrued under any Plan (as defined in the
Employee Matters Agreement) as of the Separation Date, shall deemed to be an
Agilent Contingent Liability. For purposes of determining whether a claim
relating to the Year 2000 problem is an Agilent Contingent Liability, claims
relating to products shipped prior to the Separation Date shall be deemed to
have arisen prior to the Separation Date.

SECTION 4.8 Agilent Contracts. "Agilent Contracts" means the following
contracts and agreements to which HP is a party or by which it or any of its
Assets is bound, whether or not in

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writing, except for any such contract or agreement that is contemplated to be
retained by HP or any member of the HP Group pursuant to any provision of this
Agreement or any other Ancillary Agreement:

(i) any contract or agreement entered into in the name of, or
expressly on behalf of, any division or business unit of Agilent;

(ii) any contract or agreement that relates primarily to the Agilent
Business;

(iii) any contracts or agreements related to the computers, desks,
equipment and other Assets used or managed primarily by employees of HP that
will become employees of Agilent in connection with the Separation;

(iv) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement, the Separation Agreement or any of the
other Ancillary Agreements to be assigned to Agilent;

(v) any guarantee, indemnity, representation, warranty or other
Liability of any member of the Agilent Group or the HP Group in respect of any
other Agilent Contract, any Agilent Liability or the Agilent Business (including
guarantees of financing incurred by customers or other third parties in
connection with purchases of products or services from the Agilent Business);
and

(vi) any Agilent OFL.

SECTION 4.9 Agilent Group. "Agilent Group" means Agilent, each
Subsidiary and Affiliated Company of Agilent immediately after the Separation
Date or that is contemplated to be a Subsidiary or Affiliated Company of Agilent
pursuant to the Non-US Plan and each Person that becomes a Subsidiary or
Affiliate Company of Agilent after the Separation Date.

SECTION 4.10 Agilent Liabilities. "Agilent Liabilities" has the meaning
set forth in Section 1.3 of this Agreement.

SECTION 4.11 Agilent Pro Forma Balance Sheet. "Agilent Pro Forma Balance
Sheet" means the unaudited pro forma condensed consolidated balance sheet
appearing in the IPO Registration Statement.

SECTION 4.12 Agilent World Trade. "Agilent World Trade" refers to Agilent
World Trade, Inc., a Delaware corporation.

SECTION 4.13 Ancillary Agreement. "Ancillary Agreement" has the meaning
set forth in Section 2.1 of the Separation Agreement.

SECTION 4.14 Assets. "Assets" means assets, properties and rights
(including goodwill), wherever located (including in the possession of vendors
or other third parties or elsewhere),

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whether real, personal or mixed, tangible, intangible or contingent, in each
case whether or not recorded or reflected or required to be recorded or
reflected on the books and records or financial statements of any Person,
including the following:

(i) all accounting and other books, records and files whether in
paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other
form;

(ii) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment,
automobiles, trucks, aircraft, rolling stock, vessels, motor vehicles and other
transportation equipment, special and general tools, test devices, prototypes
and models and other tangible personal property;

(iii) all inventories of materials, parts, raw materials, supplies,
work-in-process and finished goods and products;

(iv) all interests in real property of whatever nature, including
easements, whether as owner, mortgagee or holder of a Security Interest, lessor,
sublessor, lessee, sublessee or otherwise;

(v) all interests in any capital stock or other equity interests of
any Subsidiary or any other Person; all bonds, notes, debentures or other
securities issued by any Subsidiary or any other Person; all loans, advances or
other extensions of credit or capital contributions to any Subsidiary or any
other Person; and all other investments in securities of any Person;

(vi) all license agreements, leases of personal property, open
purchase orders for raw materials, supplies, parts or services, unfilled orders
for the manufacture and sale of products and other contracts, agreements or
commitments;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written technical information, data, specifications, research
and development information, engineering drawings, operating and maintenance
manuals, and materials and analyses prepared by consultants and other third
parties;

(ix) all Intellectual Property and licenses from third Persons
granting the right to use any Intellectual Property;

(x) all computer applications, programs and other software, including
operating software, network software, firmware, middleware, design software,
design tools, systems documentation and instructions;

(xi) all cost information, sales and pricing data, customer prospect
lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings,

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formulations and specifications, quality records and reports and other books,
records, studies, surveys, reports, plans and documents;

(xii) all prepaid expenses, trade accounts and other accounts and notes
receivables;

(xiii) all rights under contracts or agreements, all claims or rights
against any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all claims, choses in action or similar
rights, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature
of insurance, indemnification or contribution;

(xv) all licenses (including radio and similar licenses), permits,
approvals and authorizations which have been issued by any Governmental
Authority;

(xvi) cash or cash equivalents, bank accounts, lock boxes and other
deposit arrangements; and

(xvii) interest rate, currency, commodity or other swap, collar, cap or
other hedging or similar agreements or arrangements.

SECTION 4.15 Consents. "Consents" means any consents, waivers or
approvals from, or notification requirements to, any third parties.

SECTION 4.16 Contracts. "Contracts" means any contract, agreement, lease,
license, sales order, purchase order, instrument or other commitment that is
binding on any Person or any part of its property under applicable law.

SECTION 4.17 Delayed Transfer Assets. "Delayed Transfer Assets" means any
Agilent Assets that are expressly provided in this Agreement, the Separation
Agreement or any other Ancillary Agreement to be transferred after the date of
this Agreement.

SECTION 4.18 Distribution. "Distribution" means HP's pro rata
distribution to the holders of its common stock, $0.01 par value, several months
following the IPO, of all of the shares of Agilent common stock owned by HP.

SECTION 4.19 Distribution Date. "Distribution Date" has the meaning set
forth in Section 4.1 of the Separation Agreement.

SECTION 4.20 Environmental Actions. "Environmental Actions" has the
meaning set forth in Section 4.15 of the Indemnification and Insurance Matters
Agreement.

SECTION 4.21 Excluded Assets. "Agilent Assets" has the meaning set forth
in Section 1.2(b) of this Agreement.

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SECTION 4.22 Excluded Liabilities. "Agilent Liabilities" has the meaning
set forth in Section 1.3(b) of this Agreement.

SECTION 4.23 Governmental Approvals. "Governmental Approvals" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.

SECTION 4.24 Governmental Authority. "Governmental Authority" means any
federal, state, local, foreign or international court, government, department,
commission, board, bureau, agency, official or other regulatory, administrative
or governmental authority.

SECTION 4.25 HP Group. "HP Group" means HP, each Subsidiary and
Affiliated Company of HP (other than any member of the Agilent Group)
immediately after the Separation Date, after giving effect to the Non-US Plan
and each Person that becomes a Subsidiary or Affiliate Company of HP after the
Separation Date.

SECTION 4.26 Indemnification and Insurance Matters Agreement..
"Indemnification and Insurance Matters Agreement" means the Indemnification and
Insurance Matters Agreement attached as Exhibit K to the Separation Agreement.

SECTION 4.27 Insurance Policies. "Insurance Policies". means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.

SECTION 4.28 Insured Agilent Liability. "Insured Agilent Liability" means
any Agilent Liability to the extent that (i) it is covered under the terms of
HP's Insurance Policies in effect prior to the Distribution Date and (ii)
Agilent is not a named insured under, or otherwise entitled to the benefits of,
such Insurance Policies.

SECTION 4.29 Intellectual Property. "Intellectual Property" means all
domestic and foreign patents and patent applications, together with any
continuations, continuations-in-part or divisional applications thereof, and all
patents issuing thereon (including reissues, renewals and re-examinations of the
foregoing); design patents, invention disclosures; mask works; copyrights, and
copyright applications and registrations; Web addresses, trademarks, service
marks, trade names, and trade dress, in each case together with any applications
and registrations therefor and all appurtenant goodwill relating thereto; trade
secrets, commercial and technical information, know-how, proprietary or
confidential information, including engineering, production and other designs,
notebooks, processes, drawings, specifications, formulae, and technology;
computer and electronic data processing programs and software (object and source
code), data bases and documentation thereof; inventions (whether patented or
not); utility models; registered designs, certificates of invention and all
other intellectual property under the laws of any country throughout the world.

SECTION 4.30 IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act of
1933, as amended, to be filed

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with the Securities and Exchange Commission registering the shares of common
stock of Agilent to be issued in the initial public offering, together with all
amendments thereto.

SECTION 4.31 Liabilities. "Liabilities" means all debts, liabilities,
guarantees, assurances, commitments and obligations, whether fixed, contingent
or absolute, asserted or unasserted, matured or unmatured, liquidated or
unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out
of any Contract or tort based on negligence or strict liability) and whether or
not the same would be required by generally accepted principles and accounting
policies to be reflected in financial statements or disclosed in the notes
thereto.

SECTION 4.32 Litigation Disclosure Letter. "Litigation Disclosure Letter"
has the meaning set forth in Section 2.1(a) of this Agreement.

SECTION 4.33 Local Transfer Agreements. "Local Transfer Agreements" means
the agreements necessary to effect the Non-US Plan (as defined in the Separation
Agreement).

SECTION 4.34 Non-US Plan. "Non-US Plan" has the meaning set forth in
Section 5.8 of the Separation Agreement.

SECTION 4.35 OFLs. "OFLs" mean all liabilities, obligations,
contingencies, instruments and other Liabilities of any member of the HP Group
of a financial nature with third parties existing on the date hereof or entered
into or established between the date hereof and the Separation Date, including
any of the following:

(i) foreign exchange contracts;

(ii) letters of credit;

(iii) guarantees of third party loans to customers;

(iv) surety bonds (excluding surety for workers' compensation
self-insurance);

(v) interest support agreements on third party loans to
customers;

(vi) performance bonds or guarantees issued by third parties;

(vii) swaps or other derivatives contracts; and

(viii) recourse arrangements on the sale of receivables or
notes.

SECTION 4.36 Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an

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unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

SECTION 4.37 Retained Payables. "Retained Payables" means (i) all
accounts payable and other obligations of payment for goods or services
purchased, leased or otherwise received in the conduct of the Agilent Business
that as of the Separation Date are payable to a third Person by HP or any of
HP's Subsidiaries, whether past due, due or to become due, including any
interest, sales or use taxes, finance charges, late or returned check charges
and other obligations of HP or any of HP's Subsidiaries with respect thereto,
and any obligations related to any of the foregoing and (ii) all employee
compensation Liabilities and other miscellaneous Liabilities for which an
adjustment is made in the Agilent Pro Forma Balance Sheet.

SECTION 4.38 Retained Receivables. "Retained Receivables" means (i) all
accounts receivable and other rights to payment for goods or services sold,
leased or otherwise provided in the conduct of the Agilent Business that as of
the Separation Date are payable by a third Person to HP or any of HP's
Subsidiaries, whether past due, due or to become due, including any interest,
sales or use taxes, finance charges, late or returned check charges and other
obligations of the account debtor with respect thereto, and any proceeds of any
of the foregoing and (ii) all other miscellaneous Assets for which an adjustment
is made in the Agilent Pro Forma Balance Sheet.

SECTION 4.39 Security Interest. "Security Interest" means any mortgage,
security interest, pledge, lien, charge, claim, option, right to acquire, voting
or other restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.

SECTION 4.40 Separation. "Separation" means the transfer and contribution
from HP to Agilent, and Agilent's receipt and assumption of, directly or
indirectly, substantially all of the Assets and Liabilities currently associated
with the Agilent Business and the stock, investments or similar interests
currently held by HP in subsidiaries and other entities that conduct such
business.

SECTION 4.41 Separation Agreement. "Separation Agreement" means the
Master Separation and Distribution Agreement dated as of August 12, 1999, of
which this is an Exhibit thereto.

SECTION 4.42 Separation Date. "Separation Date" means the effective date
and time of each transfer of property, assumption of liability, licenase,
undertaking, or agreement in connection with the Separation, which shall be
12:01 a.m., Pacific Time, November 1, 1999, or such date as may be fixed by the
Board of Directors of HP.

SECTION 4.43 Subsidiary. "Subsidiary" means with respect to any specified
Person, any corporation, any limited liability company, any partnership or other
legal entity of which such Person or its Subsidiaries owns, directly or
indirectly, more than 50% of the stock or other equity interest entitled to vote
on the election of the members of the board of directors or similar governing

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<PAGE>

body. Unless context otherwise requires, reference to HP and its Subsidiaries
shall not include the subsidiaries of HP that will be transferred to Agilent
after giving effect to the Separation, including the actions taken pursuant to
the Non-US Plan.

SECTION 4.44 Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.

[SIGNATURES ON FOLLOWING PAGE]

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<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.

HEWLETT PACKARD COMPANY

By:_________________________________________
Name:
Title: President and Chief Executive Officer

AGILENT TECHNOLOGIES, INC.

By:_________________________________________
Name:
Title: President and Chief Executive Officer

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<PAGE>

Schedule 1.1(c) Delayed Transfer Assets and Liabilities

None.
<PAGE>

Schedule 1.2(a)(xii) Specific Agilent Assets to be Transferred

None.

<PAGE>

Schedule 1.2(b)(i) Excluded Assets

None.
<PAGE>

Schedule 1.3(a)(vi) Divested Businesses Which Contain Liabilities to be
Transferred to Agilent

1. Businesses divested by HP pursuant to the Master Asset Purchase Agreement,
dated February 12, 1998, by and between Hewlett-Packard Company and Lucent
Technologies, Inc, as amended by Amendment No. 1 to the Master Asset
Purchase Agreement, dated March 9, 1998.

2. Businesses divested by HP pursuant to the Amended and Restated Asset
Purchase Agreement, dated October 9, 1998, by and between Hewlett-Packard
Company and Powerwave Technologies, Inc.

3. Divestiture of certain assets of the Video Communications Division to
Pinnacle Systems.

<PAGE>

Schedule 1.3(a)(vii) Specific Agilent Liabilities

<PAGE>

Schedule 1.3(b)(i) Excluded Liabilities
None.

<PAGE>

Exhibit 2.3

MASTER TECHNOLOGY OWNERSHIP AND
LICENSE AGREEMENT

between

HEWLETT-PACKARD COMPANY

and

AGILENT TECHNOLOGIES, INC.

Effective as of ___________, 1999
<PAGE>

MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I DEFINITIONS..................................................... 1

1.1 AFFILIATED COMPANY.............................................. 1
1.2 AGILENT BUSINESS................................................ 1
1.3 AGILENT OWNED TECHNOLOGY........................................ 2
1.4 AGILENT PRODUCTS................................................ 2
1.5 AGILENT PRODUCTS DATABASE....................................... 2
1.6 COPYRIGHTS...................................................... 2
1.7 DATABASE RIGHTS................................................. 2
1.8 HP PRODUCTS..................................................... 2
1.9 IMPROVEMENTS.................................................... 2
1.10 INVENTION DISCLOSURE............................................ 3
1.11 LICENSED AGILENT TECHNOLOGY..................................... 3
1.12 LICENSED HP TECHNOLOGY.......................................... 3
1.13 MASK WORK RIGHTS................................................ 3
1.14 MASTER SEPARATION AGREEMENT..................................... 3
1.15 PATENTS......................................................... 3
1.16 PERSON.......................................................... 4
1.17 SELL............................................................ 4
1.18 SEPARATION DATE................................................. 4
1.19 SUBSIDIARY...................................................... 4
1.20 TECHNOLOGY...................................................... 4
1.21 THIRD PARTY..................................................... 5

ARTICLE II ALLOCATION OF OWNERSHIP........................................ 5

2.1 ASSIGNMENT...................................................... 5
2.2 PRIOR GRANTS.................................................... 5
2.3 ASSIGNMENT DISCLAIMER........................................... 5
2.4 COPIES IN ITS POSSESSION........................................ 5

ARTICLE III LICENSE GRANTS................................................ 6

3.1 LICENSE TO HP................................................... 6
3.2 LICENSE TO AGILENT.............................................. 9
3.3 HAVE MADE RIGHTS................................................ 11
3.4 IMPROVEMENTS.................................................... 12
3.5 DURATION OF SUBLICENSES TO SUBSIDIARIES AND AFFILIATED
COMPANIES....................................................... 12
3.6 NO PATENT LICENSES.............................................. 12
3.7 THIRD PARTY TECHNOLOGY.......................................... 12
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV CONFIDENTIALITY............................................... 12

ARTICLE V TERMINATION.................................................... 13

5.1 VOLUNTARY TERMINATION.......................................... 13
5.2 SURVIVAL....................................................... 13
5.3 NO OTHER TERMINATION........................................... 13

ARTICLE VI DISPUTE RESOLUTION............................................ 13

6.1 NEGOTIATION.................................................... 13
6.2 NONBINDING MEDIATION........................................... 13
6.3 PROCEEDINGS.................................................... 14

ARTICLE VII LIMITATION OF LIABILITY...................................... 14

ARTICLE VIII MISCELLANEOUS PROVISIONS.................................... 14

8.1 DISCLAIMER..................................................... 14
8.2 NO IMPLIED LICENSES............................................ 15
8.3 INFRINGEMENT SUITS............................................. 15
8.4 NO OTHER OBLIGATIONS........................................... 15
8.5 ENTIRE AGREEMENT............................................... 15
8.6 GOVERNING LAW.................................................. 16
8.7 DESCRIPTIVE HEADINGS........................................... 16
8.8 NOTICES........................................................ 16
8.9 NONASSIGNABILITY............................................... 16
8.10 SEVERABILITY................................................... 17
8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.......... 17
8.12 AMENDMENT...................................................... 17
8.13 COUNTERPARTS................................................... 17
</TABLE>

EXHIBIT A: AFFILIATED COMPANIES

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<PAGE>

MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

This Master Technology Ownership and License Agreement (the "Agreement") is
effective as of __________, 1999 (the "Effective Date"), between Hewlett-Packard
Company, a Delaware corporation ("HP"), having an office at 3000 Hanover Street,
Palo Alto, California 94304, and Agilent Technologies, Inc., a Delaware
corporation ("Agilent"), having an office at 3000 Hanover Street, Palo Alto,
California 94304.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interest of HP and its stockholders to separate HP's existing businesses into
two independent businesses;

WHEREAS, as part of the foregoing, HP and Agilent have entered into a
Master Separation Agreement (as defined below), which provides, among other
things, for the separation of certain Agilent assets and Agilent liabilities,
the initial public offering of Agilent stock, the distribution of such stock and
the execution and delivery of certain other agreements in order to facilitate
and provide for the foregoing;

WHEREAS, also as part of the foregoing, HP desires to assign to Agilent
ownership of certain technology and each party desires to license to the other
party certain of its technology; and

WHEREAS, also as part of the foregoing, the parties have also entered into
an ICBD Technology Ownership and License Agreement (the "ICBD Technology
Agreement") which provides for the ownership and licensing of certain integrated
circuit technology.

NOW, THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, it is agreed by and between the parties as
follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement the following capitalized terms are
defined in this Article I and shall have the meaning specified herein:

1.1 AFFILIATED COMPANY. "Affiliated Company" means, with respect to HP,
any entity in which HP holds a 50% or less ownership interest and that is listed
on Exhibit A hereto and, with respect to Agilent, any entity in which Agilent
holds a 50% or less ownership interest and that is listed on Exhibit A hereto;
provided, however, that any such entity listed in Exhibit A shall be considered
to be an Affiliated Company under this Agreement only if it agrees in writing to
be bound by the terms and conditions of this Agreement. Exhibit A may be amended
from time to time after the date hereof upon mutual consent of the parties.

1.2 AGILENT BUSINESS. "Agilent Business" means (a) the business and
operations of the following business entities of HP, as described in the IPO
Registration Statement (as defined in
<PAGE>

the Master Separation Agreement): (i) the Test and Measurement Organization,
(ii) the Semiconductor Products Group, (iii) the Chemical Analysis Group, (iv)
the Healthcare Solutions Group and (v) any related infrastructure organizations
and (b) except as otherwise expressly provided herein, any terminated, divested
or discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Agilent Business as then
conducted.

1.3 AGILENT OWNED TECHNOLOGY. "Agilent Owned Technology" means (i) all
Technology associated with the development, design, testing, manufacture,
maintenance, support, debugging, quality control, repair, use, marketing and
sale of the products listed in the Agilent Products Database and the products
developed or being developed primarily by the Agilent Business as of the
Separation Date, (ii) all Technology developed or being developed primarily by
the Agilent Business as of the Separation Date and (iii) all other Technology
used exclusively by the Agilent Business.

1.4 AGILENT PRODUCTS. "Agilent Products" means any and all products and
services of the businesses in which Agilent or any of its Subsidiaries or
Affiliated Companies is now or hereafter engaged (including the business of
making (but not having made) Third Party products for Third Parties when
Agilent, its Subsidiaries or Affiliated Companies is acting as a contract
manufacturer or foundry for such Third Parties).

1.5 AGILENT PRODUCTS DATABASE. "Agilent Products Database" means the
Agilent Products Database, as it may be updated by the parties upon mutual
agreement to add products as of the Separation Date.

1.6 COPYRIGHTS. "Copyrights" mean (i) any copyright in any original works
of authorship fixed in any tangible medium of expression as set forth in 17
U.S.C. Section 101 et. seq., whether registered or unregistered, including any
applications for registration thereof, (ii) any corresponding foreign copyrights
under the laws of any jurisdiction, in each case, whether registered or
unregistered, and any applications for registration thereof, and (iii) moral
rights under the laws of any jurisdiction.

1.7 DATABASE RIGHTS. "Database Rights" means any rights in databases
under the laws of the United States or any other jurisdiction, whether
registered or unregistered, and any applications for registration thereof.

1.8 HP PRODUCTS. "HP Products" means any and all products and services of
the businesses in which HP or any of its Subsidiaries or Affiliated Companies is
now or hereafter engaged (including the business of making (but not having made)
Third Party products for Third Parties when HP, its Subsidiaries or Affiliated
Companies is acting as a contract manufacturer or foundry for such Third
Parties).

1.9 IMPROVEMENTS. "Improvements" to Technology means (i) with respect to
Copyrights, any modifications, derivative works, and translations of works of
authorship, (ii) with respect to Database Rights, any database that is created
by extraction or re-utilization of another

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<PAGE>

database, and (iii) with respect to Mask Work Rights, trade secrets and other
intellectual property rights included within the definition of Technology and
not covered by Sections 1.9(i) - (ii) above, any improvements of Technology. For
the purposes of clarification, an item of Technology will be deemed to be an
Improvement of another item of Technology only if it is actually derived from
such other item of Technology and not merely because it may have the same or
similar functionality or use as such other item of Technology.

1.10 INVENTION DISCLOSURE. "Invention Disclosure" means a disclosure of
an invention (i) written for the purpose of allowing legal and business people
to determine whether to file a Patent application with respect to such invention
and (ii) recorded with a control number in the owning party's records.

1.11 LICENSED AGILENT TECHNOLOGY. "Licensed Agilent Technology" means any
Technology:

(a) which, as of the Separation Date, Agilent or any Subsidiary or
Affiliated Company of Agilent (i) owns or controls or (ii) otherwise has the
right to grant any licenses of the type and on the terms herein granted to HP
without the obligation to pay royalties or other consideration to Third Parties;
and

(b) which is known to or in the possession of HP or its Subsidiaries
or Affiliated Companies as of the Separation Date.

1.12 LICENSED HP TECHNOLOGY. "Licensed HP Technology" means any
Technology:

(a) which, as of the Separation Date, HP or any Subsidiary or
Affiliated Company of HP (i) owns or controls or (ii) otherwise has the right to
grant any licenses of the type and on the terms herein granted to Agilent
without the obligation to pay royalties or other consideration to Third Parties;
and

(b) which is known to or in the possession of Agilent, its
Subsidiaries or Affiliated Companies as of the Separation Date.

1.13 MASK WORK RIGHTS. "Mask Work Rights" means (i) any rights in mask
works, as defined in 17 U.S.C. Section 901, whether registered or unregistered,
including applications for registration thereof, and (ii) any foreign rights in
semiconductor topologies under the laws of any jurisdiction, whether registered
or unregistered, including applications for registration thereof.

1.14 MASTER SEPARATION AGREEMENT. "Master Separation Agreement" means the
Master Separation and Distribution Agreement between the parties.

1.15 PATENTS. "Patents" means patents, utility models, design patents,
design registrations, certificates of invention and other governmental grants
for the protection of inventions

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<PAGE>

or industrial designs anywhere in the world and all reissues, renewals, re-
examinations and extensions of any of the foregoing.

1.16 PERSON. "Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, and a governmental entity or any
department, agency or political subdivision thereof.

1.17 SELL. To "Sell" a product means to sell, transfer, lease or
otherwise dispose of a product. "Sale" and "Sold" have the corollary meanings
ascribed thereto.

1.18 SEPARATION DATE. "Separation Date" means 12:01 a.m., Pacific Time,
November 1, 1999 or such other date as may be fixed by the Board of Directors of
HP.

1.19 SUBSIDIARY. "Subsidiary" means with respect to any specified Person,
any corporation, any limited liability company, any partnership or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body. Unless the context
otherwise requires, reference to HP and its Subsidiaries shall not include the
subsidiaries of HP that will be transferred to Agilent after giving effect to
the Separation (as defined in the Master Separation Agreement), including the
actions taken pursuant to the Non-US Plan (as defined in the Master Separation
Agreement). For example, if HP owns 70% of the stock of another corporation, and
that corporation owns 60% of the equity interest of a limited liability company,
then that corporation is a Subsidiary of HP but that limited liability company
is not. However, if such corporation owns 90% of the equity interest of a
limited liability company, then that limited liability company is a Subsidiary
of HP. For the avoidance of doubt, this definition of Subsidiary is different
from the definition of Subsidiary in the Master Separation Agreement.

1.20 TECHNOLOGY. "Technology" means technological models, algorithms,
manufacturing processes, design processes, behavioral models, logic diagrams,
schematics, test vectors, know-how, computer and electronic data processing and
other apparatus programs and software (object code and source code), optical,
hydraulic and fluidic apparatus and processes, medical chemical, biochemical,
biological, macro-molecular and genetic compounds, processes, cell lines,
detection and analytical devices, databases and documentation thereof, trade
secrets, technical information, specifications, drawings, records,
documentation, works of authorship or other creative works, websites, ideas,
knowledge, data or the like. The term Technology includes Copyrights, Database
Rights, Mask Work Rights, trade secrets and any other intellectual property
right, but expressly does not include (i) any trademark, trade name, trade dress
or service mark, or applications for registration thereof or (ii) any Patents or
applications therefor, including any of the foregoing that may be based on
Invention Disclosures that are covered by the Master Patent Ownership and
Assignment Agreement between the parties, but does include trade secret rights
in and to inventions disclosed in such Patent applications and Invention
Disclosures. Notwithstanding the generality of the foregoing provisions of this
Section 1.20, however, the term "Technology" does not include ICBD Technology as
such term is defined in the ICBD Technology Agreement.

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<PAGE>

1.21 THIRD PARTY. "Third Party" means a Person other than HP and its
Subsidiaries and Affiliated Companies and Agilent and its Subsidiaries and
Affiliated Companies.

ARTICLE II

ALLOCATION OF OWNERSHIP

2.1 ASSIGNMENT. Subject to Sections 2.2 and 2.3 below, HP hereby grants,
conveys and assigns (and agrees to cause its appropriate Subsidiaries to grant,
convey and assign) to Agilent, by execution hereof (or, where appropriate or
required, by execution of separate instruments of assignment), all its (and
their) right, title and interest in and to the Agilent Owned Technology, to be
held and enjoyed by Agilent, its successors and assigns. HP further grants,
conveys and assigns (and agrees to cause its appropriate Subsidiaries to grant,
convey and assign) to Agilent all its (and their) right, title and interest in
and to any and all causes of action and rights of recovery for past infringement
of Copyrights, Database Rights and Mask Work Rights in and to the Agilent Owned
Technology, and for past misappropriation of trade secrets in and to the Agilent
Owned Technology. HP further covenants that HP will, without demanding any
further consideration therefor, at the request and expense of Agilent (except
for the value of the time of HP employees), do (and cause its Subsidiaries to
do) all lawful and just acts that may be or become necessary for evidencing,
maintaining, recording and perfecting Agilent's rights to such Agilent Owned
Technology consistent with HP's general business practice as of the Separation
Date, including but not limited to, execution and acknowledgement of (and
causing its Subsidiaries to execute and acknowledge) assignments and other
instruments in a form reasonably required by Agilent for each Copyright, Mask
Work Right or Database Right jurisdiction.

2.2 PRIOR GRANTS. Agilent acknowledges and agrees that the foregoing
assignment is subject to any and all licenses or other rights that may have been
granted by HP or its Subsidiaries with respect to the Agilent Owned Technology
prior to the Separation Date. HP shall respond to reasonable inquiries from
Agilent regarding any such prior grants.

2.3 ASSIGNMENT DISCLAIMER. AGILENT ACKNOWLEDGES AND AGREES THAT THE
FOREGOING ASSIGNMENTS ARE MADE ON AN "AS IS," QUITCLAIM BASIS AND THAT NEITHER
HP NOR ANY SUBSIDIARY OR AFFILIATED COMPANY OF HP HAS MADE OR WILL MAKE ANY
WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.

2.4 COPIES IN ITS POSSESSION. Notwithstanding the allocation of ownership
in this Article II, each party has the right to retain copies of any Technology
that it has in its possession as of the Separation Date.

-5-
<PAGE>

ARTICLE III

LICENSE GRANTS

3.1 LICENSE TO HP.

(a) Agilent grants (and agrees to cause its appropriate Subsidiaries
or Affiliated Companies to grant) to HP the following personal, irrevocable,
nonexclusive, worldwide, fully paid, royalty-free and non-transferable (except
as specified in Section 8.9 below) licenses:

(i) under its and their Copyrights in and to the Licensed
Agilent Technology, (A) to reproduce and have reproduced the works of authorship
included in the Licensed Agilent Technology and Improvements thereof prepared by
or for HP, in whole or in part, as part of HP Products, (B) to prepare
Improvements or have Improvements prepared for it based upon the works of
authorship included in the Licensed Agilent Technology in order to create HP
Products, (C) to distribute (by any means and using any technology, whether now
known or unknown, including without limitation electronic transmission) copies
of the works of authorship included in the Licensed Agilent Technology and
Improvements thereof prepared by or for HP to the public by sale or other
transfer of ownership or by rental, lease or lending, as part of HP Products,
and (D) to perform (by any means and using any technology, whether now known or
unknown, including without limitation electronic transmission) and display the
works of authorship included in the Licensed Agilent Technology and Improvements
thereof prepared by or for HP, as part of HP Products;

(ii) under its and their Database Rights in and to the Licensed
Agilent Technology, to extract data from the databases included in the Licensed
Agilent Technology and to re-utilize such data to design, develop, manufacture
and have manufactured HP Products and to Sell such HP Products that incorporate
such data, databases and Improvements thereof prepared by or for HP;

(iii) under its and their Mask Work Rights in and to the
Licensed Agilent Technology, (A) to reproduce and have reproduced mask works and
semiconductor topologies included in the Licensed Agilent Technology and
embodied in HP Products by optical, electronic or any other means, (B) to import
or distribute a product in which any such mask work or semiconductor topology is
embodied, and (C) to induce or knowingly to cause a Third Party to do any of the
acts described in Sections 3.1(a)(iii)(A) and (B) above; and

(iv) under its and their trade secrets and other intellectual
property rights in and to the Licensed Agilent Technology (except the
intellectual property rights excluded from the definition of Technology), to use
the Licensed Agilent Technology and Improvements thereof prepared by or for HP
to design, develop, manufacture and have manufactured HP Products and to Sell
such HP Products.

(b) Without limiting the generality of the foregoing licenses granted
in Section 3.1(a) above, with respect to software included within the Licensed
Agilent Technology,

-6-
<PAGE>

such licenses include the right to use, modify, and reproduce such software and
Improvements thereof made by or for HP to create HP Products, in source code and
object code form, and to Sell such software and Improvements thereof made by or
for HP, in source code and object code form, as part of HP Products; provided,
however, that,

(i) with respect to Agilent's software products that are
commercially released as of the Separation Date, HP shall be limited to using no
more than ten percent (10%) of the lines of code of any such commercially
released software product in any HP Product Sold by HP to a Third Party. Any
other rights of HP to Sell such commercially released software products of
Agilent shall be solely as set forth in a separate written agreement. For
purposes of this Section 3.1(b), a "commercially released" product shall mean a
product that has been placed on an Agilent corporate price list or released by
Agilent to Third Parties for beta testing; and

(ii) with respect to Agilent software that is only used
internally, HP recognizes that such software was not designed for use in
products that are Sold to Third Parties and that Agilent has no obligation
whatsoever to support such software. Accordingly, HP agrees to use reasonable
care in selecting any such software for use in HP Products, taking into account
that such software will be difficult to support.

(c) The foregoing licenses in this Section 3.1 include the right to
have contract manufacturers and foundries manufacture HP Products for HP.

(d) HP may grant sublicenses within the scope of the licenses granted
under Sections 3.1(a) and (b) above as follows:

(i) HP may grant sublicenses to its Subsidiaries for so long as
they remain its Subsidiaries, with no right to grant further sublicenses other
than, in the case of a sublicensed Subsidiary, to another Subsidiary of such
party and as described in Section 3.1(d)(iii) below; provided that any such
sublicense may be made effective retroactively but not prior to the
sublicensee's becoming a Subsidiary;

(ii) HP may grant sublicenses to its Affiliated Companies for so
long as HP holds at least thirty percent (30%) ownership interest in the
Affiliated Companies, with no right to grant further sublicenses other than, in
the case of a sublicensed Affiliated Company, to the Affiliated Company's wholly
owned subsidiaries and as described in Section 3.1(d)(iii) below; provided that
any such sublicense may be made effective retroactively but not prior to the
sublicensee's becoming an Affiliated Company;

(iii) HP may grant sublicenses with respect to HP Products in the
form of software, in object code and source code form, to its distributors,
resellers, OEM customers, VAR customers, VAD customers, systems integrators and
other channels of distribution and to its end user customers; and

(iv) HP may grant sublicenses with respect to the relevant
Licensed Agilent Technology to the Transferee (as defined below), in the event
that HP transfers, after the

-7-
<PAGE>

Separation Date, a going business (but not all or substantially all of its
business or assets), provided that such transfer includes at least one
marketable product and tangible assets having a net value of at least ten
million U.S. Dollars ($10,000,000.00), regardless of whether such transfer is
part of (A) an asset sale to any Third Party, (B) a sale of shares or securities
in a Subsidiary or Affiliated Company to a Third Party such that (x) in the case
of a Subsidiary, the Subsidiary ceases to be a Subsidiary, or in the case of an
Affiliated Company, HP ceases to hold at least thirty percent (30%) of the
outstanding shares or securities in such Affiliated Company and (y) the Third
Party owns at least eighty percent (80%) of the outstanding shares or securities
representing the right to vote for the election of directors or other managing
authority, or (C) a sale of shares or securities in a Subsidiary or Affiliated
Company to a Third Party such that (x) in the case of a Subsidiary, the
Subsidiary ceases to be a Subsidiary, or in the case of an Affiliated Company,
Agilent ceases to hold at least thirty percent (30%) of the outstanding shares
or securities in such Affiliated Company and (y) no single Third Party owns at
least eighty percent (80%) of the outstanding shares or securities representing
the right to vote for the election of directors or other managing authority of
such ex-Subsidiary or ex-Affiliated Company; provided that:

(1) the Transferee shall have no right to grant further
sublicenses except as described in Section 3.1(d)(iii) above and except that the
Transferee shall have the right to grant sublicenses to any Third Party at least
eighty percent (80%) of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority are,
directly or indirectly, owned by the Transferee, only for so long as such
ownership exists;

(2) such sublicenses shall not come into effect unless and until
such Transferee agrees in writing for the benefit of Agilent to be bound by the
terms of this Agreement, including but not limited to the confidentiality
obligations under Article IV;

(3) this Section 3.1(d)(iv) shall be excluded from such
sublicense in any event; and

(4) HP shall give Agilent prompt written notice of any such
sublicense and a copy of the portions of the relevant agreement between HP and
such Transferee containing the sublicense terms.

(5) As used in this Section 3.1(d)(iv), "Transferee" in the case
of Sections 3.1(d)(iv)(A) and (B) means the Third Party acquiring the going
business or eighty percent (80%) of the Subsidiary or Affiliated Company and in
the case of Section 3.1(d)(iv)(C) means the ex-Subsidiary or ex-Affiliated
Company only.

(6) The licenses granted above to the Licensed Agilent
Technology shall continue in perpetuity (or, in the case of Copyrights, Database
Rights and Mask Work Rights, until the expiration of the term thereof).

-8-
<PAGE>

3.2 LICENSE TO AGILENT.

(a) HP grants (and agrees to cause its appropriate Subsidiaries or
Affiliated Companies to grant) to Agilent the following personal, irrevocable,
nonexclusive, worldwide, fully paid, royalty-free and non-transferable (except
as specified in Section 8.9 below) licenses:

(i) under its and their Copyrights in and to the Licensed HP
Technology, (A) to reproduce and have reproduced the works of authorship
included in the Licensed HP Technology and Improvements thereof prepared by or
for Agilent, in whole or in part, as part of Agilent Products, (B) to prepare
Improvements or have Improvements prepared for it based upon the works of
authorship included in the Licensed HP Technology in order to create Agilent
Products, (C) to distribute (by any means and using any technology, whether now
known or unknown, including without limitation electronic transmission) copies
of the works of authorship included in the Licensed HP Technology and
Improvements thereof prepared by or for Agilent to the public by sale or other
transfer of ownership or by rental, lease or lending, as part of Agilent
Products, and (D) to perform (by any means and using any technology, whether now
known or unknown, including without limitation electronic transmission) and
display the works of authorship included in the Licensed HP Technology and
Improvements thereof prepared by or for Agilent, as part of Agilent Products;

(ii) under its and their Database Rights in and to the Licensed
HP Technology, to extract data from the databases included in the Licensed HP
Technology and to re-utilize such data to design, develop, manufacture and have
manufactured Agilent Products and to Sell such Agilent Products that incorporate
such data, databases and Improvements thereof prepared by or for Agilent;

(iii) under its and their Mask Work Rights in and to the Licensed
HP Technology, (A) to reproduce and have reproduced mask works and semiconductor
topologies included in the Licensed HP Technology and embodied in Agilent
Products by optical, electronic or any other means, (B) to import or distribute
a product in which any such mask work or semiconductor topology is embodied, and
(C) to induce or knowingly to cause a Third Party to do any of the acts
described in Sections 3.2(a)(iii)(A) and (B) above; and

(iv) under its and their trade secrets and other intellectual
property rights in and to the Licensed HP Technology (except the intellectual
property rights excluded from the definition of Technology), to use the Licensed
HP Technology and Improvements thereof prepared by or for Agilent to design,
develop, manufacture and have manufactured Agilent Products and to Sell such
Agilent Products.

(b) Without limiting the generality of the foregoing licenses granted
in Section 3.2(a) above, with respect to software included within the Licensed
HP Technology, such licenses include the right to use, modify, and reproduce
such software and Improvements thereof made by or for Agilent to create Agilent
Products, in source code and object code form, and to Sell such software and
Improvements thereof made by or for Agilent, in source code and object code
form, as part of Agilent Products; provided, however, that,

-9-
<PAGE>

(i) with respect to HP's software products that are commercially
released as of the Separation Date, Agilent shall be limited to using no more
than ten percent (10%) of the lines of code of any such commercially released
software product in any Agilent Product Sold by Agilent to a Third Party. Any
other rights of Agilent to Sell such commercially released software products of
HP shall be solely as set forth in a separate written agreement. For purposes of
this Section 3.2(b), a "commercially released" product shall mean a product that
has been placed on an HP corporate price list or released by HP to Third Parties
for beta testing; and

(ii) with respect to HP software that is only used internally,
Agilent recognizes that such software was not designed for use in products that
are Sold to Third Parties and that HP has no obligation whatsoever to support
such software. Accordingly, Agilent agrees to use reasonable care in selecting
any such software for use in Agilent Products, taking into account that such
software will be difficult to support.

(c) The foregoing licenses in this Section 3.2 include the right to
have contract manufacturers and foundries manufacture Agilent Products for
Agilent.

(d) Agilent may grant sublicenses within the scope of the licenses
granted under Sections 3.2(a) and (b) above as follows:

(i) Agilent may grant sublicenses to its Subsidiaries for so
long as they remain its Subsidiaries, with no right to grant further sublicenses
other than, in the case of a sublicensed Subsidiary, to another Subsidiary of
such party and as described in Section 3.2(d)(iii) below; provided that any such
sublicense may be made effective retroactively but not prior to the
sublicensee's becoming a Subsidiary;

(ii) Agilent may grant sublicenses to its Affiliated Companies
for so long as Agilent holds at least thirty percent (30%) ownership interest in
the Affiliated Companies with no right to grant further sublicenses other than,
in the case of a sublicensed Affiliated Company, to the Affiliated Company's
wholly owned subsidiaries and as described in Section 3.2(d)(iii) below;
provided that any such sublicense may be made effective retroactively but not
prior to the sublicensee's becoming an Affiliated Company;

(iii) Agilent may grant sublicenses with respect to Agilent
Products in the form of software, in object code and source code form, to its
distributors, resellers, OEM customers, VAR customers, VAD customers, systems
integrators and other channels of distribution and to its end user customers;
and

(iv) Agilent may grant sublicenses with respect to the relevant
Licensed HP Technology to the Transferee (as defined below), in the event that
Agilent transfers, after the Separation Date, a going business (but not all or
substantially all of its business or assets), provided that such transfer
includes at least one marketable product and tangible assets having a net value
of at least ten million U.S. Dollars ($10,000,000.00), regardless of whether
such transfer is part of (A) an asset sale to any Third Party, (B) a sale of
shares or securities in a Subsidiary or Affiliated Company to a Third Party such
that (x) in the case of a Subsidiary, the Subsidiary ceases to be a

-10-
<PAGE>

Subsidiary, or in the case of an Affiliated Company, Agilent ceases to hold at
least thirty percent (30%) of the outstanding shares or securities in such
Affiliated Company and (y) the Third Party owns at least eighty percent
(80%) of the outstanding shares or securities representing the right to vote for
the election of directors or other managing authority, or (C) a sale of shares
or securities in a Subsidiary or Affiliated Company to a Third Party such that
(x) in the case of a Subsidiary, the Subsidiary ceases to be a Subsidiary, or in
the case of an Affiliated Company, Agilent ceases to hold at least thirty
percent (30%) of the outstanding shares or securities in such Affiliated Company
and (y) no single Third Party owns at least eighty percent (80%) of the
outstanding shares or securities representing the right to vote for the election
of directors or other managing authority of such ex-Subsidiary or ex-Affiliated
Company; provided that:

(1) the Transferee shall have no right to grant further
sublicenses except as described in Section 3.2(d)(iii) above and except that the
Transferee shall have the right to grant sublicenses to any Third Party at least
eighty percent (80%) of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority are,
directly or indirectly, owned by the Transferee, only for so long as such
ownership exists;

(2) such sublicenses shall not come into effect unless and
until such Transferee agrees in writing for the benefit of HP to be bound by the
terms of this Agreement including but not limited to the confidentiality
obligations under Article IV;

(3) this Section 3.2(d)(iv) shall be excluded from such
sublicense in any event; and

(4) Agilent shall give HP prompt written notice of any such
sublicense and a copy of the portions of the relevant agreement between Agilent
and such Transferee containing the sublicense terms.

(5) As used in this Section 3.2(d)(iv), "Transferee" in the
case of Sections 3.2(d)(iv)(A) and (B) means the Third Party acquiring the going
business or eighty percent (80%) of the Subsidiary or Affiliated Company and in
the case of Section 3.2(d)(iv)(C) means the ex-Subsidiary or ex-Affiliated
Company only.

(e) The licenses granted above to the Licensed HP Technology shall
continue in perpetuity (or, in the case of Copyrights, Database Rights and Mask
Work Rights, until the expiration of the term thereof).

3.3 HAVE MADE RIGHTS. Each party understands and acknowledges that the
"have made" rights granted to it in Section 3.1 or 3.2, as applicable, and the
sublicenses of such "have made" rights granted pursuant to Sections 3.1(d)(i)
and (ii) and 3.2(d)(i) and (ii), as applicable, are intended to cover only the
products of such party, its Subsidiaries and Affiliated Companies (including
private label or OEM versions of such products), and are not intended to cover
foundry or contract manufacturing activities that such party may undertake
through Third Parties for Third Parties.

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<PAGE>

3.4 IMPROVEMENTS. As between the parties, after the Separation Date,
Agilent hereby retains all right, title and interest, including all intellectual
property rights, in and to any Improvements to Licensed HP Technology made by or
for Agilent in the exercise of the licenses granted to it hereunder, subject
only to the ownership of HP in the underlying Licensed HP Technology, and HP
hereby retains all right, title and interest, including all intellectual
property rights, in and to any Improvements to Licensed Agilent Technology made
by or for HP in the exercise of the licenses granted to it hereunder, subject
only to the ownership of Agilent in the underlying Licensed Agilent Technology.
Neither party shall have any obligation under this Agreement to notify the other
party of any Improvements made by or for it or to disclose or license any such
Improvements to the other party.

3.5 DURATION OF SUBLICENSES TO SUBSIDIARIES AND AFFILIATED COMPANIES. A
sublicense to a particular Subsidiary or Affiliated Company of a party hereto
granted pursuant to Section 3.1(d)(i) or (ii) or 3.2(d)(i) or (ii) shall
terminate upon the date that, in the case of a Subsidiary of a party, such
Subsidiary ceases to be a Subsidiary of such party, or, in the case of an
Affiliated Company of a party, such party ceases to hold at least a thirty
percent (30%) ownership interest in such Affiliated Company; provided, however,
that such cessation shall not affect such party's rights to grant further
sublicenses to such terminated Subsidiary or Affiliated Company as set forth in
Section 3.1(d)(iv) or 3.2(d)(iv) above. In the event that, at the time of such
cessation, such Subsidiary or Affiliated Company owns any Technology to which
the other party is licensed, such license shall continue for the term thereof.

3.6 NO PATENT LICENSES. Nothing contained in this Agreement shall be
construed as conferring to either party by implication, estoppel or otherwise
any license or right under any Patent or applications therefor, whether or not
the exercise of any right herein granted necessarily employs an invention of any
existing or later issued Patent. The applicable licenses granted between HP and
Agilent with respect to Patents are set forth in a separate Master Patent
Ownership and License Agreement.

3.7 THIRD PARTY TECHNOLOGY. The assignment of any applicable license
agreements with respect to Third Party Technology are set forth in a separate
General Assignment and Assumption Agreement between the parties.

ARTICLE IV

CONFIDENTIALITY

The terms of the Master Confidential Disclosure Agreement between the
parties shall apply to any Confidential Information (as defined therein) which
is the subject matter of this Agreement.

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<PAGE>

ARTICLE V

TERMINATION

5.1 VOLUNTARY TERMINATION. By written notice to the other party, each
party may voluntarily terminate all or a specified portion of the licenses and
rights granted to it hereunder by such other party. Such notice shall specify
the effective date of such termination and shall clearly specify any affected
Technology, product or service.

5.2 SURVIVAL. Any voluntary termination of licenses and rights of a party
under Section 5.1 shall not affect such party's licenses and rights with respect
to any licensed product made or service furnished prior to such termination, and
shall not affect the licenses and rights granted to the other party hereunder.

5.3 NO OTHER TERMINATION. Each party acknowledges and agrees that its
remedy for breach by the other party of the licenses granted to it hereunder or
of any other provision hereof shall be, subject to the requirements of Article
VI, to bring a claim to recover damages subject to the limits set forth in this
Agreement and to seek any other appropriate equitable relief, other than
termination of the licenses granted by it in this Agreement.

ARTICLE VI

DISPUTE RESOLUTION

6.1 NEGOTIATION. The parties shall make a good faith attempt to resolve
any dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is given
by either party to the other party, the parties' first tier negotiating teams
(as determined by each party's Director of Intellectual Property or his or her
delegate) shall meet and make a good faith attempt to resolve such dispute or
claim and shall continue to negotiate in good faith in an effort to resolve the
dispute or claim or renegotiate the applicable section or provision without the
necessity of any formal proceedings. If the first tier negotiating teams are
unable to agree within thirty (30) days of their first meeting, then the
parties' second tier negotiating teams (as determined by each party's Director
of Intellectual Property or his or her delegate) shall meet within thirty (30)
days after the end of the first thirty (30) day negotiating period to attempt to
resolve the matter. During the course of negotiations under this Section 6.1,
all reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such negotiations will be left to the discretion of the
designated negotiating teams but may include the preparation of agreed upon
statements of fact or written statements of position furnished to the other
party.

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<PAGE>

to resolve such dispute or claim by nonbinding mediation in accordance with the
American Arbitration Association Commercial Mediation Rules. The mediation shall
be held within thirty (30) days of the end of such fifteen (15) day negotiation
period of the second tier negotiating teams. Except as provided below in Section
6.3, no litigation for the resolution of such dispute may be commenced until the
parties try in good faith to settle the dispute by such mediation in accordance
with such rules and either party has concluded in good faith that amicable
resolution through continued mediation of the matter does not appear likely. The
costs of mediation shall be shared equally by the parties to the mediation. Any
settlement reached by mediation shall be recorded in writing, signed by the
parties, and shall be binding on them.

6.3 PROCEEDINGS. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the dispute or claim
through negotiation or mediation. In the event that litigation is commenced
under this Section 6.3, the parties agree to continue to attempt to resolve any
dispute or claim according to the terms of Sections 6.1 and 6.2 during the
course of such litigation proceedings under this Section 6.3.

ARTICLE VII

LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES
BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST
PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE)
ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING LIMITATIONS SHALL NOT LIMIT DAMAGES FOR INFRINGEMENT AVAILABLE TO
EITHER PARTY UNDER APPLICABLE LAW IN THE EVENT OF BREACH BY THE OTHER PARTY OF
SECTIONS 3.1(a) OR 3.2(a) AND SHALL NOT LIMIT EACH PARTY'S OBLIGATIONS EXPRESSLY
ASSUMED IN EXHIBIT K OF THE MASTER SEPARATION AGREEMENT; PROVIDED FURTHER THAT
THE EXCLUSION OF PUNITIVE DAMAGES SHALL APPLY IN ANY EVENT.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

8.1 DISCLAIMER. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL TECHNOLOGY
AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER IS
LICENSED OR PROVIDED ON AN "AS IS" BASIS, AND THAT NEITHER PARTY NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATED COMPANIES MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES WHATSOEVER, EXPRESS,

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<PAGE>

IMPLIED OR STATUTORY, WITH RESPECT THERETO, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE,
ENFORCEABILITY OR NON-INFRINGEMENT. Without limiting the generality of the
foregoing, neither party nor any of its Subsidiaries or Affiliated Companies
makes any warranty or representation that any manufacture, use, importation,
offer for sale or sale of any product or service will be free from infringement
of any Patent or other intellectual property right of any Third Party.

8.2 NO IMPLIED LICENSES. Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or otherwise, under
any intellectual property right, other than the rights expressly granted in this
Agreement with respect to the Licensed Agilent Technology and the Licensed HP
Technology. Neither party is required hereunder to furnish or disclose to the
other any technical or other information (including copies of the Licensed
Agilent Technology and the Licensed HP Technology), except as specifically
provided herein.

8.3 INFRINGEMENT SUITS. Neither party shall have any obligation hereunder
to institute any action or suit against Third Parties for infringement of any
Copyrights, Database Rights or Mask Work Rights or misappropriation of any trade
secret rights in or to any Technology licensed to the other party hereunder, or
to defend any action or suit brought by a Third Party which challenges or
concerns the validity of any of such rights or which claims that any Technology
assigned or licensed to the other party hereunder infringes any Patent,
Copyright, Database Right, Mask Work Right or other intellectual property right
of any Third Party or constitutes a misappropriated trade secret of any Third
Party. HP shall not have any right to institute any action or suit against Third
Parties for infringement of any of the Copyrights, Database Rights or Mask Work
Rights in or to the Licensed Agilent Technology and Agilent shall not have any
right to institute any action or suit against Third Parties for infringement of
any of the Copyrights, Database Rights or Mask Work Rights in or to the Licensed
HP Technology.

8.4 NO OTHER OBLIGATIONS. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR
OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN
THE PARTIES. Without limiting the generality of the foregoing, neither party,
nor any of its Subsidiaries or Affiliated Companies, is obligated to provide any
technical assistance.

8.5 ENTIRE AGREEMENT. This Agreement, the Master Separation Agreement and
the other Ancillary Agreements (as defined in the Master Separation Agreement)
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof. This Agreement shall prevail in the event of any conflicting
terms or legends which may appear on any portion of the Agilent Owned
Technology, Licensed Agilent Technology or Licensed HP Technology. To the extent
there is a conflict between this Agreement and the Master Assignment and
Assumption Agreement between the parties, the terms of this Agreement shall
govern.

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<PAGE>

8.6 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

8.7 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.

8.8 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy with answer back, by express or overnight mail delivered by a
nationally recognized air courier (delivery charges prepaid), by registered or
certified mail (postage prepaid, return receipt requested) or by e-mail with
receipt confirmed by return e-mail to the respective parties as follows:

if to HP:

c/o Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: Associate General Counsel and
Director of Intellectual Property
Telecopy: (650) 852-8194

if to Agilent:

c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: Assistant General Counsel and
Director of Intellectual Property
Telecopy: (650) 813-3095

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air courier
shall be deemed effective on the first Business Day following the day on which
such notice or communication was sent. Any notice or communication sent by
registered or certified mail shall be deemed effective on the third Business Day
following the day on which such notice or communication was mailed. As used in
this Section 8.8, "Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions located in the State of California are
authorized or obligated by law or executive order to close.

8.9 NONASSIGNABILITY. Neither party may, directly or indirectly, in whole
or in part, whether by operation of law or otherwise, assign or transfer this
Agreement, without the other party's prior written consent, and any attempted
assignment, transfer or delegation without such

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<PAGE>

prior written consent shall be voidable at the sole option of such other party.
Notwithstanding the foregoing, each party (or its permitted successive assignees
or transferees hereunder) may assign or transfer this Agreement as a whole
without consent to a Person that succeeds to all or substantially all of the
business or assets of such party. Without limiting the foregoing, this Agreement
will be binding upon and inure to the benefit of the parties and their permitted
successors and assigns.

8.10 SEVERABILITY. If any term or other provision of this Agreement is
determined by a nonappealable decision of a court, administrative agency or
arbitrator to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.

8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of either party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

8.12 AMENDMENT. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
such agreement.

8.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which, taken together, shall be considered to be one and
the same instrument.

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<PAGE>

WHEREFORE, the parties have signed this Master Technology Ownership and
License Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:_______________________________ By:_____________________________________

Name:_____________________________ Name:___________________________________

Title:____________________________ Title:__________________________________

18
<PAGE>

EXHIBIT A
TO MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

AFFILIATED COMPANIES

1. HP Affiliated Companies
-----------------------

ImagineCard

Idea LLC

Intria-HP

Intria-HP Potomac

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Putial Ome

PT Berka Services

Liquidity Management Group

Hugin Expert

Syc

Sopura Systems

2. Agilent Affiliated Companies
----------------------------

Chartered Semiconductor Partners Singapore

LumiLEDS

<PAGE>

EXHIBIT 2.4

MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

Between

HEWLETT-PACKARD COMPANY

AND

AGILENT TECHNOLOGIES, INC.

Effective as of __________, 1999
<PAGE>

MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS.................................................................... 1

1.1 AFFILIATED COMPANY..................................................... 1
1.2 AGILENT PATENTS........................................................ 2
1.3 AGILENT PRODUCTS....................................................... 2
1.4 ALLOCATED PATENT ASSETS DATABASE....................................... 2
1.5 ASSIGNED PATENTS....................................................... 2
1.6 CAPTURE PERIOD......................................................... 3
1.7 DISTRIBUTION DATE...................................................... 3
1.8 FIRST EFFECTIVE FILING DATE............................................ 3
1.9 HP PATENTS............................................................. 3
1.10 HP PRODUCTS............................................................ 4
1.11 INVENTION DISCLOSURE................................................... 4
1.12 JOINT PATENTS.......................................................... 4
1.13 LICENSED PATENTS....................................................... 5
1.14 MASTER SEPARATION AGREEMENT............................................ 5
1.15 PATENT FIELD DEFINITION DATABASE....................................... 5
1.16 PATENTS................................................................ 5
1.17 PERSON................................................................. 5
1.18 SEPARATION DATE........................................................ 5
1.19 SUBSIDIARY............................................................. 5
1.20 THIRD PARTY............................................................ 6

ARTICLE II ASSIGNMENTS................................................................... 6

2.1 ASSIGNED PATENTS....................................................... 6
2.2 JOINT PATENTS.......................................................... 6
2.3 PRIOR GRANTS........................................................... 6
2.4 ASSIGNMENT DISCLAIMER.................................................. 7

ARTICLE III LICENSES AND RIGHTS.......................................................... 7

3.1 LICENSE GRANTS TO HP................................................... 7
3.2 LICENSE GRANTS TO AGILENT.............................................. 7
3.3 SUBLICENSE RIGHTS...................................................... 7
3.4 HAVE MADE RIGHTS....................................................... 8
3.5 DURATION............................................................... 8
3.6 SALE OF A BUSINESS, SUBSIDIARY OR AFFILIATED COMPANY................... 9
3.7 SALE OF A PARTY OR ALL ASSETS OF A PARTY............................... 11
3.8 RIGHTS TO JOINT PATENTS................................................ 11
3.9 PATENT APPLICATIONS AND INVENTION DISCLOSURES.......................... 12
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(Continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
3.10 TURBO COOLER PATENTS................................................... 12
3.11 DISPLAY PATENTS........................................................ 12

ARTICLE IV ADDITIONAL OBLIGATIONS........................................................ 13

4.1 ADDITIONAL OBLIGATIONS WITH REGARD TO ASSIGNED PATENTS................. 13
4.2 ADDITIONAL OBLIGATIONS WITH REGARD TO HP PATENTS....................... 13
4.3 ADDITIONAL OBLIGATIONS WITH REGARD TO JOINT PATENTS.................... 14
4.4 DEFENSIVE PROTECTION MEASURES.......................................... 15
4.5 STANDARDS BODIES....................................................... 15
4.6 ASSIGNMENT OF PATENTS.................................................. 15
4.7 RESPONSE TO REQUESTS................................................... 15
4.8 RECORDATION OF LICENSES................................................ 15

ARTICLE V CONFIDENTIALITY................................................................ 16

ARTICLE VI TERMINATION................................................................... 16

6.1 VOLUNTARY TERMINATION.................................................. 16
6.2 SURVIVAL............................................................... 16
6.3 NO OTHER TERMINATION................................................... 16

ARTICLE VII DISPUTE RESOLUTION........................................................... 17

7.1 NEGOTIATION............................................................ 17
7.2 NONBINDING MEDIATION................................................... 17
7.3 PROCEEDINGS............................................................ 17

ARTICLE VIII LIMITATION OF LIABILITY..................................................... 18

ARTICLE IX MISCELLANEOUS PROVISIONS...................................................... 18

9.1 DISCLAIMER............................................................. 18
9.2 NO IMPLIED LICENSES.................................................... 18
9.3 INFRINGEMENT SUITS..................................................... 18
9.4 NO OTHER OBLIGATIONS................................................... 19
9.5 ENTIRE AGREEMENT....................................................... 19
9.6 GOVERNING LAW.......................................................... 19
9.7 DESCRIPTIVE HEADINGS................................................... 19
9.8 NOTICES................................................................ 19
9.9 NONASSIGNABILITY....................................................... 20
9.10 SEVERABILITY........................................................... 20
9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.................. 20
9.12 AMENDMENT.............................................................. 20
9.13 COUNTERPARTS........................................................... 21
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(Continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
EXHIBIT A: AFFILIATED COMPANIES
EXHIBIT B: HP FIELD RESTRICTIONS
EXHIBIT C: AGILENT FIELD RESTRICTIONS
</TABLE>

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<PAGE>

MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

This Master Patent Ownership and License Agreement (the "Agreement") is
effective as of __________, 1999 (the "Effective Date"), between Hewlett-Packard
Company, a Delaware corporation ("HP"), having an office at 3000 Hanover Street,
Palo Alto, California 94304 and Agilent Technologies, Inc., a Delaware
corporation ("Agilent"), having an office at 3000 Hanover Street, Palo Alto,
California 94304.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interest of HP and its stockholders to separate HP's existing businesses into
two independent businesses;

WHEREAS, also as part of the foregoing, HP desires to assign to Agilent
certain patents, patent applications and invention disclosures that are owned or
controlled by HP prior to the Effective Date;

WHEREAS, the parties desire to facilitate such transaction by exchanging
licenses under certain of the patents and patent applications owned or
controlled by them;

WHEREAS, HP desires to receive and Agilent is willing to grant to HP
certain licenses and rights under patents and patent applications owned by
Agilent; and

WHEREAS, Agilent desires to receive and HP is willing to grant to Agilent
certain licenses and rights under patents and patent applications owned by HP.

NOW, THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, it is agreed by and between the parties as
follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement the following capitalized terms are
defined in this Article I and shall have the meaning specified herein:

considered to be an Affiliated Company under this Agreement only if it agrees in
writing to be bound by the terms and conditions of this Agreement. Exhibit A may
be amended from time to time after the date hereof upon mutual consent of the
parties.

1.2 AGILENT PATENTS. "Agilent Patents" means:

(a) the Assigned Patents; except for design patents and design
registrations (other than typeface design patents and typeface design
registrations) with a First Effective Filing Date after the Separation Date; and

(b) every Non-Design Patent to the extent entitled to a First
Effective Filing Date prior to the expiration of the Capture Period, provided
that, at any time after the First Effective Filing Date of any such Non-Design
Patent and prior to the expiration of the Capture Period, Agilent (or any
Subsidiary or Affiliated Company of Agilent):

(i) has ownership or control of any such Non-Design Patent, or

(ii) otherwise has the right under such Non-Design Patent to
grant any licenses of the type and on the terms herein granted by Agilent
without the obligation to pay royalties or other consideration to Third Parties;
and

(c) applications for the foregoing Non-Design Patents described in
Section 1.2(b), including without limitation any continuations, continuations-
in-part, divisions and substitutions; but

(d) excluding from any Non-Design Patent or Non-Design Patent
application described in Sections 1.2(b) and (c) any claim (i) directed to
subject matter that does not appear in any Non-Design Patent application having
a First Effective Filing Date prior to the expiration of the Capture Period and
(ii) of which neither Agilent nor any person having a legal duty to assign
his/her interest therein to Agilent is entitled to be named as an inventor.

1.3 AGILENT PRODUCTS. "Agilent Products" means any and all products and
services of the businesses in which Agilent or any of its Subsidiaries or
Affiliated Companies is now or hereafter engaged (including the business of
making (but not having made) Third Party products for Third Parties when Agilent
is acting as a contract manufacturer or foundry for such Third Parties).

1.4 ALLOCATED PATENT ASSETS DATABASE. "Allocated Patent Assets Database"
means the Allocated Patent Assets Database, as it may be updated by the parties
upon mutual agreement to add Patents, Patent applications and Invention
Disclosures as of the Separation Date.

1.5 ASSIGNED PATENTS. "Assigned Patents" means only those

(a) Patents, Patent applications and Invention Disclosures allocated
to Agilent in the Allocated Patent Assets Database;

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(b) Patent applications filed on the foregoing Invention Disclosures
described in Section 1.5(a);

(c) continuations, continuations-in-part, divisions and substitutions
of any of the foregoing Patent applications described in Sections 1.5(a) and
(b);

(d) Patents which may issue on any of the foregoing Patent
applications described in Sections 1.5(a)-(c);

(e) renewals, reissues, reexaminations and extensions of the foregoing
Patents described in Sections 1.5(a) and (d); and

(f) foreign Patent applications and Patents that are counterparts of
any of the foregoing Patent applications or Patents described in Sections
1.5(a)-(e), including any Patent application or Patent to the extent that it
claims priority from any of the foregoing Patent applications or Patents
described in Sections 1.5(a)-(e); but

(g) excluding from any Patent or Patent application described in
Sections 1.5(c)-(f) any claim (i) directed to subject matter that does not
appear in any Patent application having a First Effective Filing Date prior to
the Separation Date and (ii) of which neither Agilent nor any person having a
legal duty to assign his/her interest therein to Agilent is entitled to be named
as an inventor.

1.6 CAPTURE PERIOD. "Capture Period" means the period ending five (5)
years from the Separation Date.

1.7 DISTRIBUTION DATE. "Distribution Date" has the meaning set forth in
the Master Separation Agreement.

1.8 FIRST EFFECTIVE FILING DATE. "First Effective Filing Date" means the
earliest effective filing date in the particular country for any Patent or any
application for any Patent. By way of example, it is understood that the First
Effective Filing Date for a United States Patent is the earlier of (i) the
actual filing date of the United States Patent application which issued into
such Patent, (ii) the priority date under 35 U.S.C. (S) 119 for such Patent, or
(iii) the priority date under 35 U.S.C. (S) 120 for such Patent.

1.9 HP PATENTS. "HP Patents" means:

(a) every Non-Design Patent to the extent entitled to a First
Effective Filing Date prior to the expiration of the Capture Period, provided
that, at any time after the First Effective Filing Date of any such Non-Design
Patent and prior to the expiration of the Capture Period, HP (or any Subsidiary
or Affiliated Company of HP):

(i) has ownership or control of any such Non-Design Patent, or

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(ii) otherwise has the right under such Non-Design Patent to
grant any licenses of the type and on the terms herein granted by HP without the
obligation to pay royalties or other consideration to Third Parties; and

(b) applications for the foregoing Non-Design Patents described in
Section 1.9(a), including without limitation any continuations, continuations-
in-part, divisions and substitutions; but

(c) excluding from any Non-Design Patent or Non-Design Patent
application described in Sections 1.9(a) and (b) any claim (i) directed to
subject matter that does not appear in any Patent application having a First
Effective Filing Date prior to the expiration of the Capture Period and (ii) of
which neither HP nor any person having a legal duty to assign his/her interest
therein to HP is entitled to be named as an inventor.

(d) Notwithstanding the foregoing, the term "HP Patents" does not
include Agilent Patents.

1.10 HP PRODUCTS. "HP Products" means any and all products and services of
the businesses in which HP or any of its Subsidiaries or Affiliated Companies is
now or hereafter engaged (including the business of making (but not having made)
Third Party products for Third Parties when HP is acting as a contract
manufacturer or foundry for such Third Parties).

1.11 INVENTION DISCLOSURE. "Invention Disclosure" means a disclosure of an
invention (i) written for the purpose of allowing legal and business people to
determine whether to file a Patent application with respect to such invention
and (ii) recorded with a control number in the owning party's records) with a
First Effective Filing Date after the Separation Date.

1.12 JOINT PATENTS. "Joint Patents" means:

(a) Patents, Patent applications and Invention Disclosures allocated
to the parties jointly in the Allocated Patent Assets Database;

(b) Patent applications filed on the foregoing Invention Disclosures
described in Section 1.12 (a);

(c) continuations, continuations-in-part, divisions and substitutions
of any of the foregoing Patent applications described in Sections 1.12 (a) and
(b);

(d) Patents which may issue on any of the foregoing Patent
applications described in Sections 1.12 (a)-(c);

(e) renewals, reissues and extensions of the foregoing Patents
described in Sections 1.12(a) and (d); and

(f) foreign Patent applications and Patents that are counterparts of
any of the foregoing Patent applications or Patents described in Sections 1.12
(a)-(e), including any Patent

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application or Patent that takes priority from any of the foregoing Patent
applications or Patents described in Sections 1.12 (a)-(e); but

(g) excluding from any Patent or Patent application described in
Sections 1.12 (c)-(f) any claim (i) directed to subject matter that does not
appear in any Patent application having a First Effective Filing Date prior to
the Separation Date and (ii) of which there is no joint inventorship including
at least one Agilent employee and at least one HP employee.

1.13 NON-DESIGN PATENTS. "Non-Design Patents" means Patents except for
design patents (other than typeface design patents and typeface design
registrations) to the extent that such design patents have a First Effective
Filing Date after the Separation Date.

1.14 MASTER SEPARATION AGREEMENT. "Master Separation Agreement" means the
Master Separation and Distribution Agreement between the parties.

1.15 PATENT FIELD DEFINITION DATABASE. "Patent Field Definition Database"
means the Patent Field Definition Database, as it may be updated by the parties
as of the Separation Date.

1.16 PATENTS. "Patents" means patents, utility models, design patents,
design registrations, certificates of invention and other governmental grants
for the protection of inventions or industrial designs anywhere in the world and
all reissues, renewals, re-examinations and extensions of any of the foregoing.

1.17 PERSON. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

1.18 SEPARATION DATE. "Separation Date" means 12:01 a.m., Pacific Time,
November 1, 1999 or such other date as may be fixed by the Board of Directors of
HP.

1.19 SUBSIDIARY. "Subsidiary" means with respect to any specified Person,
any corporation, any limited liability company, any partnership or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body. Unless the context
otherwise requires, reference to HP and its Subsidiaries shall not include the
subsidiaries of HP that will be transferred to Agilent after giving effect to
the Separation (as defined in the Master Separation Agreement), including the
actions taken pursuant to the Non-US Plan (as defined in the Master Separation
Agreement). For example, if HP owns 70% of the stock of another corporation,
and that corporation owns 60% of the equity interest of a limited liability
company, then that corporation is a Subsidiary of HP but that limited liability
company is not. However, if such corporation owns 90% of the equity interest of
a limited liability company, then that limited liability company is a Subsidiary
of HP. For the avoidance of doubt, this definition of Subsidiary is different
from the definition of Subsidiary in the Master Separation Agreement.

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1.20 THIRD PARTY. "Third Party" means a Person other than HP and its
Subsidiaries and Affiliated Companies and Agilent and its Subsidiaries and
Affiliated Companies.

ARTICLE II

ASSIGNMENTS

2.1 ASSIGNED PATENTS. Subject to Sections 2.3 and 2.4 below, HP hereby
grants, conveys and assigns (and agrees to cause its appropriate Subsidiaries to
grant, convey and assign) to Agilent, by execution hereof (or, where appropriate
or required, by execution of separate instruments of assignment), all its (and
their) right, title and interest in and to the Assigned Patents, to be held and
enjoyed by Agilent, its successors and assigns. HP further grants, conveys and
assigns (and agrees to cause its appropriate Subsidiaries to grant, convey and
assign) to Agilent all its (and their) right, title and interest in and to any
and all causes of action and rights of recovery for past infringement of the
Assigned Patents and the right to claim priority from the Assigned Patents. HP
will, without demanding any further consideration therefor, at the request and
expense of Agilent (except for the value of the time of HP employees), do (and
cause its Subsidiaries to do) all lawful and just acts, that may be or become
necessary for prosecuting, sustaining, obtaining continuations of, or reissuing
said Assigned Patents and for evidencing, maintaining, recording and perfecting
Agilent's rights to said Assigned Patents, consistent with HP's general business
practice as of the Separation Date, including but not limited to execution and
acknowledgement of (and causing its Subsidiaries to execute and acknowledge)
assignments and other instruments in a form reasonably required by Agilent for
each Patent jurisdiction.

2.2 JOINT PATENTS. Subject to Sections 2.3, 2.4, 3.8 and 4.3 below, HP
hereby grants, conveys and assigns (and agrees to cause its appropriate
Subsidiaries to grant, convey and assign) to Agilent, by execution hereof (or,
where appropriate or required, by execution of separate instruments of
assignment), an undivided one-half interest in and to the Joint Patents, to be
held and enjoyed by Agilent, its successors and assigns. HP further grants,
conveys, and assigns (and agrees to cause its appropriate Subsidiaries to grant,
convey and assign) to Agilent an undivided one-half interest in and to any and
all causes of action and rights of recovery for past infringement of the Joint
Patents and the right to claim priority from the Joint Patents. HP will,
without demanding any further consideration therefor, at the request and expense
of Agilent (except for the value of the time of HP employees), do (and cause its
Subsidiaries to do) all lawful and just acts, that may be or become necessary
for evidencing, maintaining, recording and perfecting Agilent's rights to said
Joint Patents consistent with HP's general business practice as of the
Separation Date, including but not limited to execution and acknowledgement of
(and causing its Subsidiaries to execute and acknowledge) assignments and other
instruments in a form reasonably required by Agilent for each Patent
jurisdiction.

2.3 PRIOR GRANTS. Agilent acknowledges and agrees that the foregoing
assignments are subject to any and all licenses or other rights that may have
been granted by HP or its Subsidiaries with respect to the Assigned Patents and
the Joint Patents prior to the Separation Date. HP shall respond to reasonable
inquiries from Agilent regarding any such prior grants.

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2.4 ASSIGNMENT DISCLAIMER. AGILENT ACKNOWLEDGES AND AGREES THAT THE
FOREGOING ASSIGNMENTS ARE MADE ON AN "AS-IS," QUITCLAIM BASIS AND THAT NEITHER
HP NOR ANY SUBSIDIARY OR AFFILIATED COMPANY OF HP HAS MADE OR WILL MAKE ANY
WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
TITLE, ENFORCEABILITY, NON-INFRINGEMENT, OR VALIDITY OF PATENT CLAIMS (ISSUED OR
PENDING).

ARTICLE III

LICENSES AND RIGHTS

3.1 LICENSE GRANTS TO HP. Agilent grants (and agrees to cause its
appropriate Subsidiaries or Affiliated Companies to grant) to HP, under the
Agilent Patents, a personal, irrevocable, nonexclusive, worldwide, fully-paid,
royalty-free and non-transferable (except as set forth in Section 9.9) license
to make (including the right to practice methods, processes and procedures),
have made, use, lease, sell, offer for sale and import HP Products in all fields
of use except in the fields of use set forth on Exhibit B. In addition, the
foregoing license grants are subject to the special contract terms, if any, set
forth in the Allocated Patent Assets Database.

3.2 LICENSE GRANTS TO AGILENT. HP grants (and agrees to cause its
appropriate Subsidiaries or Affiliated Companies to grant) to Agilent, under the
HP Patents, a personal, irrevocable, nonexclusive, worldwide, fully-paid,
royalty-free and non-transferable (except as set forth in Section 9.9) license
to make (including the right to practice methods, processes and procedures),
have made, use, lease, sell, offer for sale and import Agilent Products in all
fields of use except in the fields of use set forth on Exhibit C. In addition,
the foregoing license grants are subject to the special contract terms, if any,
set forth in the Allocated Patent Assets Database.

3.3 SUBLICENSE RIGHTS.

(a) Subject to Sections 3.5 and 3.6, each party may grant sublicenses
to its respective Subsidiaries within the scope of its respective license
hereunder (with no right to grant further sublicenses other than, in the case of
a sublicensed Subsidiary, to another Subsidiary of such party and as described
in Sections 3.3(e) and (f) below).

(b) Subject to Sections 3.5 and 3.6, each party may grant sublicenses
to its respective Affiliated Companies within the scope of its respective
license hereunder (with no right to grant further sublicenses other than, in the
case of a sublicensed Affiliated Company, to such Affiliated Company's wholly-
owned subsidiaries and as described in Sections 3.3(e) and (f) below).

(c) Any sublicense under Section 3.3(a) or 3.3(b) may be made
effective retroactively, but not prior to the sublicensee's becoming a
Subsidiary or Affiliated Company of the granting party.

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(d) Each party may grant sublicenses to Third Parties within the scope
of their respective licenses hereunder with respect to the Patents identified as
sublicensable in the Allocated Patent Assets Database, subject to prior written
approval by the other party. Such sublicense shall be deemed approved if not
disapproved in writing within thirty (30) days of written request to such other
party. Such sublicense shall be subject to any special contract terms applicable
to Third Party sublicenses set forth in the Allocated Patent Assets Database.
The sublicense agreement between the sublicensor and the Third Party sublicensee
shall provide that the owner of the sublicensed Patent may terminate the
sublicense for breach upon written notice to the sublicensee, subject to a cure
period of not less than thirty (30) days, and may seek immediate injunctive
relief in the event of any breach.

(e) Any licenses granted by HP to its distributors, resellers, OEM
customers, VAR customers, VAD customers, systems integrators and other channels
of distribution and to its end user customers with respect to any HP Product in
the form of software, may include a sublicense under the Agilent Patents within
the scope of HP's license hereunder, provided that the scope of such sublicense
is limited to the exercise of the rights granted by HP with respect to the HP
Product.

(f) Any licenses granted by Agilent to its distributors, resellers,
OEM customers, VAR customers, VAD customers, systems integrators and other
channels of distribution and to its end user customers with respect to any
Agilent Product in the form of software may include a sublicense under the HP
Patents within the scope of Agilent's license hereunder, provided that the scope
of such sublicense is limited to the exercise of the rights granted by Agilent
with respect to the Agilent Product.

3.4 HAVE MADE RIGHTS. Each party understands and acknowledges that the
"have made" rights granted to it in Section 3.1 or 3.2, as applicable, and the
sublicenses of such "have made" rights granted pursuant to Sections 3.3(a) and
(b), as applicable, are intended to cover only the products of such party, its
Subsidiaries and Affiliated Companies (including private label or OEM versions
of such products), and are not intended to cover foundry or contract
manufacturing activities that such party may undertake through Third Parties for
Third Parties.

3.5 DURATION.

(a) All licenses granted herein with respect to each Patent shall
expire upon the expiration of the term of such Patent; provided, however, that
licenses for Patents falling within Section 1.2(b)(ii) or Section 1.9(a)(ii)
shall expire upon the expiration of the term of the grantor's license under such
Patent.

(b) All sublicenses granted pursuant to this Agreement to a particular
Subsidiary or Affiliated Company of a party hereto shall terminate the date
that, in the case of a Subsidiary of a party, the Subsidiary ceases to be a
Subsidiary of such party, or, in the case of an Affiliated Company of a party,
such party ceases to hold at least a thirty percent (30%) ownership interest in
such Affiliated Company; provided however, that the foregoing shall not affect
the other party's obligations under Section 3.6 below. The licenses granted to
such other party hereunder with respect

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to Patents and Patent applications of such Subsidiary or Affiliated Company with
a First Effective Filing Date prior to the date of such cessation shall remain
in effect notwithstanding such cessation.

3.6 SALE OF A BUSINESS, SUBSIDIARY OR AFFILIATED COMPANY.

(a) If either party (the "Transferring Party"), after the Separation
Date, transfers a going business (but not all or substantially all of its
business or assets), and such transfer includes at least one marketable product
and tangible assets having a net value of at least ten million U.S. dollars
($10,000,000.00), regardless of whether such transfer is part of (i) an asset
sale to any Third Party, (ii) a sale of shares or securities in a Subsidiary or
Affiliated Company to a Third Party such that (A) in the case of a Subsidiary,
the Subsidiary ceases to be a Subsidiary, or in the case of an Affiliated
Company, the Transferring Party ceases to hold at least a thirty percent (30%)
of the outstanding shares or securities in such Affiliated Company and (B) the
Third Party owns at least eighty percent (80%) of the outstanding shares or
securities representing the right to vote for the election of directors or other
managing authority, or (iii) a sale of shares or securities in a Subsidiary or
Affiliated Company such that (A) in the case of a Subsidiary, the Subsidiary
ceases to be a Subsidiary, or in the case of an Affiliated Company, the
Transferring Party ceases to hold at least thirty percent (30%) of the
outstanding shares or securities in such Affiliated Company and (B) no single
Third Party owns at least eighty percent (80%) of the outstanding shares or
securities representing the right to vote for the election of directors or other
managing authority of such ex-Subsidiary or ex-Affiliated Company;

(b) then, upon written request to the other party (the "Non-
Transferring Party") jointly by the Transferring Party and the Transferee (as
defined below) within sixty (60) days following the transfer, the Non-
Transferring Party shall grant a royalty-free license to the Transferee under
the same terms as the license granted to the Transferring Party under this
Agreement subject to the following:

(i) the effective date of such license shall be the effective
date of such transfer,

(ii) the products, services and processes of the Transferee that
are subject to such license shall be limited to the products, services and
processes of the Subsidiary or Affiliated Company or the products, services and
processes in the transferred business that are commercially released or for
which substantial steps have been taken to commercialization and for new
versions that have merely minor incremental differences from such products,
services and processes,

(iii) the Patents of the Non-Transferring Party that are subject
to such license shall be limited to HP Patents or Agilent Patents, as the case
may be, that are entitled to a First Effective Filing Date on or before the date
of such transfer,

(iv) the Transferee shall have no right to grant sublicenses
(except as set forth in Sections 3.3(e) and (f) above) except that the
Transferee shall have the right to grant sublicenses to any Person at least
eighty percent (80%) of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority are,
directly or

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indirectly, owned by the Transferee ("Transferee Subsidiaries"), only for so
long as such ownership exists, and

(v) this Section 3.6 shall be excluded from such license in
any event;

(c) provided, further, that the Transferee shall grant to the Non-
Transferring Party a royalty-free license under the same terms as the license
granted to the Non-Transferring Party by the Transferring Party under this
Agreement, subject to the following:

(i) the effective date of such license shall be the effective
date of the transfer,

(ii) the products, services and processes of the Non-
Transferring Party that are subject to such license shall be all the products,
services and processes that are subject to the license from the Transferring
Party to the Non-Transferring Party as of the effective date of the transfer,
and

(iii) the Patents of the Transferee that are subject to such
license shall be limited to all the Non-Design Patents that are entitled to a
First Effective Filing Date on or before the date of such transfer and under
which, at any time commencing with the date of the transfer, the Transferee or
any of the Transferee Subsidiaries has ownership or control or otherwise has the
right to grant such license without the obligation to pay royalties or other
consideration to Third Parties; and

(d) provided, further, that in the event that the Non-Transferring
Party and the Transferee are engaged in litigation, arbitration or other formal
dispute resolution proceedings covering Patent infringement (pending in any
court, tribunal, or administrative agency or before any appointed or agreed upon
arbitrator in any jurisdiction worldwide), then the Non-Transferring Party shall
have no obligation to enter into a license with the Transferee under this
Section 3.6.

(e) Each party may exercise its rights as the Transferring Party under
this Section 3.6 no more than eight (8) times unless otherwise agreed to in
writing by the other party. Notwithstanding the foregoing limitation, however,
in any license granted by a Non-Transferring Party to a Transferee under this
Section 3.6, the Transferring Party may elect to relinquish its license under
this Agreement in the field of use covered by the license, and such license
shall not count toward the limit. In making such election, the Transferring
Party promptly shall notify the Non-Transferring Party. All notices of transfer
and all consents by HP and Agilent shall be effective only if provided to or by
the Director of Intellectual Property of the applicable party.

(f) As used above in this Section 3.6, "Transferee" in the case of
Sections 3.6(a)(i) and (ii) means the Third Party acquiring the going business
or eighty percent (80%) of the Subsidiary or Affiliated Company and in the case
of Section 3.6(a)(iii) means the ex-Subsidiary or ex-Affiliated Company only.

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3.7 SALE OF A PARTY OR ALL ASSETS OF A PARTY.

(a) Each party (or its permitted successive assignees or transferees
hereunder) may assign or transfer this Agreement as a whole without consent in
connection with a corporate reorganization which leaves such party substantially
equivalent in terms of business, assets and ownership as before the
reorganization (e.g., a reincorporation in another state).

(b) Each party (or its permitted successive assignees or transferees
hereunder) (the "Acquired Party") may assign or transfer this Agreement as a
whole without consent to a Person that succeeds to all or substantially all of
the business or assets of such party (the "Acquiring Party"); provided, however,
that in the event of any assignment or transfer under this Section 3.7(b) that
is not covered by Section 3.7(a) above:

(i) the Acquired Party promptly shall give notice of such
acquisition to the other party (the "Non-Acquired Party"),

(ii) the license granted to the Acquired Party by the Non-
Acquired Party pursuant to this Agreement, and any sublicenses granted by the
Acquired Party to its Subsidiaries and Affiliated Companies, shall automatically
become limited to the products, processes and services of the Acquired Party or
its Subsidiaries or Affiliated Companies that are commercially released or for
which substantial steps have been taken to commercialization as of the effective
date of the acquisition and for new versions that have merely minor incremental
differences from such products, processes and services and shall not in any
event include any products, processes or services of the Acquiring Party, and
the Capture Period for Patents under such license shall expire as of the
effective date of the acquisition; provided, however, that in any event such
license shall be terminable at will by the Non-Acquired Party if the Non-
Acquired Party and the Acquiring Party are engaged in litigation, arbitration or
other formal dispute resolution proceedings covering Patent infringement
(pending in any court, tribunal, or administrative agency or before any
appointed or agreed upon arbitrator in any jurisdiction worldwide) at the time
that the acquisition agreement is entered into, or if such proceedings are
initiated by the Acquiring Party within one hundred twenty-one days (121) days
after the date that the acquisition agreement is entered into, and

(iii) the license granted by the Acquired Party to the Non-
Acquired Party pursuant to this Agreement shall remain in place unchanged except
that the Capture Period for Patents under such license shall expire as of the
effective date of the acquisition.

3.8 RIGHTS TO JOINT PATENTS.

(a) Subject to the further restrictions in this Section 3.8(a), each
party has the right to practice the Joint Patents without restriction and
without the consent of the other party. Certain Joint Patents are subject to
the restriction that each party may not practice such Joint Patents, in certain
fields of use as indicated in the Allocated Patent Assets Database.

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(b) Each party may license the Joint Patents only with the prior
written consent of the other party, which consent will not be unreasonably
withheld. Such consent shall be deemed given if not withheld in writing within
thirty (30) days of written request to such other party.

(c) In the event that either party (the "Transferring Party") desires
to transfer its ownership interest in any or all Joint Patents to any Third
Party, it shall first give the other party (the "Non-Transferring Party") notice
and the opportunity to acquire any such Joint Patents for the same consideration
as that offered to the Third Party. The Non-Transferring Party shall have
fifteen (15) Business Days (as such term is defined in Section 9.8 below) to
determine whether to acquire such Joint Patents for the same consideration as
that offered to the Third Party. In the event that the Non-Transferring Party
fails to respond within such fifteen (15) Business Day period or declines to
accept such offer, then the Transferring Party may transfer its interest in such
Joint Patents to the Third Party on the same terms offered to the Non-
Transferring Party. If the Transferring Party desires to offer more favorable
terms to such Third Party or to any other Third Party, then the process set
forth in this Section 3.8(c) shall be repeated.

3.9 PATENT APPLICATIONS AND INVENTION DISCLOSURES. Each party agrees, at
its own expense, to provide to the other party copies of any Patents, Patent
applications and Invention Disclosures that are listed in the Allocated Patent
Assets Database in the form that such Patents, Patent applications and Invention
Disclosures exist as of the Separation Date. Neither party has any obligation
to disclose or provide copies to the other party any other Patents, Patent
applications or Invention Disclosures. The licenses granted under this
Agreement cover only statutory rights under Patents and statutory rights (if
any) under Patent applications. Trade secret and other non-Patent licenses with
respect to inventions described in Invention Disclosures and Patent applications
shall be solely as set forth in the Master Technology Ownership and License
Agreement or the ICBD Technology Ownership and License Agreement between the
parties, as applicable.

3.10 TURBO COOLER PATENTS. Certain Patents related to turbo coolers, as
identified in the Allocated Patent Assets Database, are subject to additional
terms as set forth in a separate written agreement between the parties.

3.11 DISPLAY PATENTS. In the event that either party (the "Transferring
Party") desires to transfer to any Third Party its ownership interest in any
Patents that are specifically identified as "Display Patents" in the Allocated
Patent Assets Database ("Display Patents"), it shall first give the other party
(the "Non-Transferring Party") notice and the opportunity to acquire those
Display Patents for the same consideration as that offered to the Third Party.
The Non-Transferring Party shall have fifteen (15) Business Days (as such term
is defined in Section 9.8 below) to determine whether to acquire such Display
Patents for the same consideration as that offered to the Third Party. In the
event that the Non-Transferring Party fails to respond within such fifteen (15)
Business Day period or declines to accept such offer, then the Transferring
Party may transfer its interest in those Display Patents to the Third Party on
the same terms offered to the Non-Transferring Party. If the Transferring Party
desires to offer more favorable terms to such Third Party or to any other Third
Party, then the process set forth in this Section 3.11 shall be repeated.

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ARTICLE IV

ADDITIONAL OBLIGATIONS

4.1 ADDITIONAL OBLIGATIONS WITH REGARD TO ASSIGNED PATENTS.

(a) The parties will cooperate to effect a smooth transfer of the
responsibility for prosecution, maintenance and enforcement of the Assigned
Patents from HP to Agilent. Until such transfer has been effected, HP agrees to
continue the prosecution and maintenance of, and ongoing litigation (if any)
with respect to, the Assigned Patents (including payment of maintenance fees),
and to maintain its files and records relating to the Assigned Patents using the
same standard of care and diligence that it uses with respect to the HP Patents.
Agilent will reimburse HP for all actual and reasonable expenses (excluding the
value of the time of HP employees) to continue to prosecute and maintain the
Assigned Patents after the Separation Date until the transfer of responsibility
for the Assigned Patents has been completed and to continue any such ongoing
litigation. The parties shall agree on a case by case basis on compensation, if
any, of HP for the value of time of HP's employees as reasonably required in
connection with any such litigation. HP will provide Agilent with the originals
or copies of its files relating to the Assigned Patents upon such transfer or at
such earlier time as the parties may agree.

(b) HP shall provide continuing reasonable support to Agilent with
respect to the Assigned Patents, including by way of example the following:

(i) executing all documents prepared by Agilent necessary for
prosecution, maintenance, and litigation of the Assigned Patents,

(ii) making available to Agilent or its counsel, inventors and
other persons employed by HP for interviews and/or testimony to assist in good
faith in further prosecution, maintenance or litigation of the Assigned Patents,
including the signing of documents related thereto,

(iii) forwarding copies of all correspondence sent and received
concerning the Assigned Patents within a reasonable period of time after receipt
by HP, and

(iv) making all relevant documents in the possession or control
of HP and corresponding to the Assigned Patents, or any licenses thereunder,
available to Agilent or its counsel.

Any actual and reasonable out-of-pocket expenses associated with any such
assistance shall be borne by Agilent, expressly excluding the value of the time
of such HP employees; provided, however, that in the case of assistance with
litigation, the parties shall agree on a case by case basis on compensation, if
any, of HP for the value of the time of HP's employees as reasonably required in
connection with such litigation.

4.2 ADDITIONAL OBLIGATIONS WITH REGARD TO HP PATENTS. Agilent
acknowledges that its employees and contractors who are former HP employees and
contractors

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<PAGE>

have a continuing duty to assist HP with the prosecution of HP Patent
applications and, accordingly, Agilent agrees to make available, to HP or its
counsel, inventors and other persons employed by Agilent for interviews and/or
testimony to assist in good faith in further prosecution, maintenance or
litigation of the HP Patents, including the signing of documents related
thereto. Any actual and reasonable out-of-pocket expenses associated with such
assistance shall be borne by HP, expressly excluding the value of the time of
such Agilent personnel; provided, however, that in the case of assistance with
litigation, the parties shall agree on a case by case basis on compensation, if
any, of Agilent for the value of the time of Agilent's employees as reasonably
required in connection with such litigation.

4.3 ADDITIONAL OBLIGATIONS WITH REGARD TO JOINT PATENTS.

(a) The parties shall agree, through their respective Directors of
Intellectual Property or delegates thereof, from time to time on which party
shall be responsible for filing, prosecuting and maintaining any Joint Patents
and such party shall conduct such prosecution by generally accepted good Patent
filing and prosecution practices. The parties shall share equally any actual
and reasonable out-of-pocket expenses (expressly excluding the value of the time
of either party's employees) incurred in connection with such prosecution and
maintenance. From time to time, upon the request of the party responsible for
prosecuting and maintaining a particular Joint Patent application or Joint
Patent, the other party will provide the responsible party with copies of all
relevant filings and correspondence and will respond to reasonable inquiries
with respect thereto. The party not responsible for prosecuting and maintaining
a particular Joint Patent shall provide the following additional assistance to
the responsible party:

(i) executing all documents prepared by the responsible party
necessary for prosecution and maintenance of the Joint Patent,

(ii) making available to the responsible party or its counsel,
inventors and other persons employed by the other party for interviews and/or
testimony to assist in good faith in further prosecution or maintenance of the
Joint Patent, including the signing of documents related thereto,

(iii) forwarding copies of all correspondence sent and received
concerning the Joint Patent within a reasonable period of time after receipt,
and

(iv) making all relevant documents in the possession or control
of such other party and corresponding to the Joint Patent, or any licenses
thereunder, available to the responsible party or its counsel.

(b) Subject to Section 3.8(b), each party or any of its Subsidiaries
may, at its own expense, in good faith enforce any Joint Patents against any
Third Party infringer (including but not limited to past infringements) only
with the prior written consent of the other party, which consent will not be
unreasonably withheld. Such consent shall be deemed given if not withheld in
writing within thirty (30) days of written request. The parties shall agree on a
case by case basis on compensation, if any, of the other party for the value of
the time of such other party's employees as

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<PAGE>

reasonably required in connection with the action. If the enforcing party or any
of its Subsidiaries recovers any damages or compensation for any action which
the enforcing party or any of the Subsidiaries of the enforcing party solely
takes hereunder, including any settlement, the enforcing party or the
Subsidiaries of the enforcing party shall retain one hundred percent (100%) of
such damages or compensation. If the parties cooperate in any such enforcement
action, then any recovery of damages or compensation shall be allocated pursuant
to mutual written agreement.

4.4 DEFENSIVE PROTECTION MEASURES. For a period of five (5) years from
the Separation Date, the parties shall cooperate reasonably and in good faith to
the extent consistent with each party's own business objectives in the event
that either party is involved in Patent litigation or controversies in which it
would be helped in some way by the other party's Patents or relevant knowledge.
Such cooperation may include, by way of example, (i) cooperation with respect to
knowledge of prior art (whether the other party's or a Third Party's), (ii)
consent to the granting of licenses to such other party's Patents, and (iii)
assignment to such party of such other party's Patents for the purpose of
bringing a counterclaim against a Third Party. The party requesting such
cooperation shall bear the actual and reasonable out-of-pocket expenses of the
cooperating party (except for the value of the time of the cooperating party's
employees).

4.5 STANDARDS BODIES. For a period of five (5) years from the Separation
Date, the parties agree to cooperate reasonably and in good faith with each
other with respect to the licensing of each party's Patents in the context of
standards bodies, to the extent consistent with each party's own business
objectives.

4.6 ASSIGNMENT OF PATENTS. HP shall not assign or grant any rights under
any of the HP Patents unless such assignment or grant is made subject to the
licenses granted in this Agreement. Agilent shall not assign or grant any
rights under any of the Agilent Patents unless such assignment or grant is made
subject to the licenses granted in this Agreement.

4.7 RESPONSE TO REQUESTS. Each party shall, upon a request from the other
party sufficiently identifying any Patent or Patent application, inform the
other party as to the extent to which said Patent or Patent application is
subject to the licenses and other rights granted hereunder. If such licenses or
other rights under said Patent or Patent application are restricted in scope,
copies of all pertinent provisions of any contract or other arrangement creating
such restrictions shall, upon request, be furnished to the party making such
request, unless such disclosure is prevented by such contract or other
arrangement, and in such event, a statement of the nature of such restriction
shall be provided.

4.8 RECORDATION OF LICENSES.

(a) For any country, now or in the future, that requires the express
consent of all inventors or their assignees to the grant of licenses or rights
under Patents issued in such countries for joint inventions:

(i) each party shall give such consent, or shall obtain such
consent from its employees, its Subsidiaries or employees of any of its
Subsidiaries, as required to make full and

-15-
<PAGE>

effective any such licenses and rights respecting any joint invention granted to
a grantee hereunder by such party; and

(ii) each party shall take steps that are reasonable under the
circumstances to obtain from Third Parties whatever other consents are necessary
to make full and effective such licenses and rights respecting any joint
invention purported to be granted by it hereunder. If, in spite of such
reasonable steps, such party is unable to obtain the requisite consents from
such Third Parties, the resulting inability of such party to make full and
effective its purported grant of such licenses and rights shall not be
considered to be a breach of this Agreement.

(b) Each party agrees, without demanding any further consideration, to
execute (and to cause its Subsidiaries or Affiliated Companies to execute) all
documents reasonably requested by the other party to effect recordation of the
license relationship between the parties created by this Agreement.

ARTICLE V

CONFIDENTIALITY

The terms of the Master Confidential Disclosure Agreement between the
parties shall apply to any Confidential Information (as defined therein) which
is the subject matter of this Agreement.

ARTICLE VI

TERMINATION

6.1 VOLUNTARY TERMINATION. By written notice to the other party, each
party may voluntarily terminate all or a specified portion of the licenses and
rights granted to it hereunder by such other party. Such notice shall specify
the effective date of such termination and shall clearly specify any affected
Patent, Patent application, Invention Disclosure, product or service.

6.2 SURVIVAL. Any voluntary termination of licenses and rights of a party
under Section 6.1 shall not affect such party's licenses and rights with respect
to any licensed product made or service furnished prior to such termination, and
shall not affect the licenses and rights granted to the other party hereunder.

6.3 NO OTHER TERMINATION. Each party acknowledges and agrees that its
remedy for breach by the other party of the licenses granted to it hereunder or
of any other provision hereof, shall be, subject to the requirements of Article
VII, to bring a claim to recover damages subject to the limits set forth in this
Agreement and to seek any other appropriate equitable relief, other than
termination of the licenses granted by it in this Agreement.

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<PAGE>

ARTICLE VII

DISPUTE RESOLUTION

7.1 NEGOTIATION. The parties shall make a good faith attempt to resolve
any dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is
given by either party to the other party, the parties' first tier negotiating
teams (as determined by each party's Director of Intellectual Property or his or
her delegate) shall meet and make a good faith attempt to resolve such dispute
or claim and shall continue to negotiate in good faith in an effort to resolve
the dispute or claim or renegotiate the applicable section or provision without
the necessity of any formal proceedings. If the first tier negotiating teams
are unable to agree within thirty (30) days of their first meeting, then the
parties' second tier negotiating teams (as determined by each party's Director
of Intellectual Property or his or her delegate) shall meet within thirty (30)
days after the end of the first thirty (30) day negotiating period to attempt to
resolve the matter. During the course of negotiations under this Section 7.1,
all reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such negotiations will be left to the discretion of the
designated negotiating teams but may include the preparation of agreed upon
statements of fact or written statements of position furnished to the other
party.

7.2 NONBINDING MEDIATION. In the event that any dispute or claim arising
out of or related to this Agreement is not settled by the parties within fifteen
(15) days after the first meeting of the second tier negotiating teams under
Section 7.1, the parties will attempt in good faith to resolve such dispute or
claim by nonbinding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules. The mediation shall be held within
thirty (30) days of the end of such fifteen (15) day negotiation period of the
second tier negotiating teams. Except as provided below in Section 7.3, no
litigation for the resolution of such dispute may be commenced until the parties
try in good faith to settle the dispute by such mediation in accordance with
such rules and either party has concluded in good faith that amicable resolution
through continued mediation of the matter does not appear likely. The costs of
mediation shall be shared equally by the parties to the mediation. Any
settlement reached by mediation shall be recorded in writing, signed by the
parties, and shall be binding on them.

7.3 PROCEEDINGS. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the dispute or claim
through negotiation or mediation. In the event that litigation is commenced
under this Section 7.3, the parties agree to continue to attempt to resolve any
dispute according to the terms of Sections 7.1 and 7.2 during the course of such
litigation proceedings under this Section 7.3.

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<PAGE>

ARTICLE VIII
LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES
BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST
PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE)
ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING LIMITATIONS SHALL NOT LIMIT DAMAGES FOR INFRINGEMENT AVAILABLE TO
EITHER PARTY UNDER APPLICABLE LAW IN THE EVENT OF BREACH BY THE OTHER PARTY OF
SECTIONS 3.1, 3.2 OR 3.8(a) AND SHALL NOT LIMIT EACH PARTY'S OBLIGATIONS
EXPRESSLY ASSUMED IN EXHIBIT K OF THE MASTER SEPARATION AGREEMENT; PROVIDED
FURTHER THAT THE EXCLUSION OF PUNITIVE DAMAGES SHALL APPLY IN ANY EVENT.

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.1 DISCLAIMER. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL PATENTS AND
ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER ARE LICENSED
OR PROVIDED ON AN "AS IS" BASIS AND THAT NEITHER PARTY NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATED COMPANIES MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. Without
limiting the generality of the foregoing, neither party nor any of its
Subsidiaries or Affiliated Companies makes any warranty or representation as to
the validity and/or scope of any Patent licensed by it to the other party
hereunder or any warranty or representation that any manufacture, use,
importation, offer for sale or sale of any product or service will be free from
infringement of any Patent or other intellectual property right of any Third
Party.

9.2 NO IMPLIED LICENSES. Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or otherwise, under
any intellectual property right, other than the rights expressly granted in this
Agreement with respect to the Agilent Patents and the HP Patents. Neither party
is required hereunder to furnish or disclose to the other any technical or other
information (including copies of the Agilent Patents and the HP Patents, Patent
applications or Invention Disclosures) except as specifically provided herein.

9.3 INFRINGEMENT SUITS. Neither party shall have any obligation hereunder
to institute any action or suit against Third Parties for infringement of any of
the Agilent Patents or the HP Patents or to defend any action or suit brought by
a Third Party which challenges or concerns the

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<PAGE>

validity of any of the Agilent Patents or the HP Patents. Unless the parties
otherwise agree pursuant to Section 4.4, HP shall not have any right to
institute any action or suit against Third Parties for infringement of any of
the Agilent Patents, and Agilent shall not have any right to institute any
action or suit against Third Parties for infringement of any of the HP Patents.

9.4 NO OTHER OBLIGATIONS. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR
OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN
THE PARTIES. Without limiting the generality of the foregoing, neither party,
nor any of its Subsidiaries or Affiliated Companies is obligated to (i) file any
Patent application, or to secure any Patent or Patent rights, (ii) to maintain
any Patent in force, or (iii) provide any technical assistance, except for the
obligations expressly assumed in this Agreement.

9.5 ENTIRE AGREEMENT. This Agreement, the Master Separation Agreement and
the other Ancillary Agreements (as defined in the Master Separation Agreement)
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof. To the extent there is a conflict between this Agreement and the
Master Assignment and Assumption Agreement between the parties, the terms of
this Agreement shall govern.

9.6 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

9.7 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.

9.8 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy with answer back, by express or overnight mail delivered by a
nationally recognized air courier (delivery charges prepaid), by registered or
certified mail (postage prepaid, return receipt requested) or by e-mail with
receipt confirmed by return e-mail to the respective parties as follows:

if to HP:c/o Hewlett Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: Associate General Counsel and
Director of Intellectual Property
Telecopy: (650) 852-8194

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<PAGE>

if to Agilent:

c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: Assistant General Counsel and
Director of Intellectual Property
Telecopy: (650) 813-3095

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air
courier shall be deemed effective on the first Business Day following the day on
which such notice or communication was sent. Any notice or communication sent
by registered or certified mail shall be deemed effective on the third Business
Day following the day on which such notice or communication was mailed. As used
in this Section 9.8, "Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions located in the State of California
are authorized or obligated by law or executive order to close.

9.9 NONASSIGNABILITY. Except as set forth in Section 3.7, neither party
may, directly or indirectly, in whole or in part, whether by operation of law or
otherwise, assign or transfer this Agreement, without the other party's prior
written consent, and any attempted assignment, transfer or delegation without
such prior written consent shall be voidable at the sole option of such other
party. Without limiting the foregoing, this Agreement will be binding upon and
inure to the benefit of the parties and their permitted successors and assigns.

9.10 SEVERABILITY. If any term or other provision of this Agreement is
determined by a nonappealable decision of a court, administrative agency or
arbitrator to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.

9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of either party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

9.12 AMENDMENT. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
such agreement.

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<PAGE>

9.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which, taken together, shall be considered to be one and
the same instrument.

-21-
<PAGE>

WHEREFORE, the parties have signed this Master Patent Ownership and License
Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:______________________________ By:_______________________________________

Name:____________________________ Name:_____________________________________

Title:___________________________ Title:____________________________________
<PAGE>

EXHIBIT A

TO MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

AFFILIATED COMPANIES

1. HP Affiliated Companies
-----------------------

ImagineCard

Idea LLC

Intria-HP

Intria-HP Potomac

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Putial Ome

PT Berka Services

Liquidity Management Group

Hugin Expert

Syc

Sopura Systems

2. Agilent Affiliated Companies
----------------------------

Chartered Semiconductor Partners Singapore

LumiLEDS
<PAGE>

EXHIBIT B
TO MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

HP FIELD RESTRICTIONS

1. Biological and Chemical Deposition (as such terms are defined in the Patent
Field Definition Database)

2. Health Care (as such term is defined in the Patent Field Definition
Database)
<PAGE>

EXHIBIT C
TO MASTER PATENT OWNERSHIP AND LICENSE AGREEMENT

AGILANT FIELD RESTRICTIONS

1. Printing Devices, Printer Supplies, Components and Accessories and Document
Scanners (as such terms are defined in the Patent Field Definition
Database)

2. Computing Devices (as such term is defined in the Patent Field Definition
Database)

<PAGE>

Exhibit 2.5

MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT

BETWEEN

HEWLETT-PACKARD COMPANY

AND

AGILENT TECHNOLOGIES, INC.

Effective as of _______, 1999
<PAGE>

MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS......................................................... 1

1.1 AFFILIATED COMPANY................................................. 1
1.2 AGILENT BUSINESS................................................... 1
1.3 AGILENT BUSINESS MARKS............................................. 2
1.4 AGILENT BUSINESS MARKS DATABASE.................................... 2
1.5 AUTHORIZED DEALERS................................................. 2
1.6 COLLATERAL MATERIALS............................................... 2
1.7 CORPORATE IDENTITY MATERIALS....................................... 2
1.8 DISTRIBUTION DATE.................................................. 2
1.9 LICENSED MARKS..................................................... 2
1.10 MAINTENANCE CONTRACTS.............................................. 2
1.11 MARK............................................................... 2
1.12 MASTER SEPARATION AGREEMENT........................................ 3
1.13 MEASUREMENT PRODUCT................................................ 3
1.14 PERSON............................................................. 3
1.15 QUALITY STANDARDS.................................................. 3
1.16 SELL............................................................... 3
1.17 SEPARATION DATE.................................................... 3
1.18 SUBSIDIARY......................................................... 3
1.19 THIRD PARTY........................................................ 3
1.20 TRADEMARK USAGE GUIDELINES......................................... 4

ARTICLE II ASSIGNMENT......................................................... 4

2.1 ASSIGNMENT OF AGILENT BUSINESS MARKS............................... 4
2.2 PRIOR GRANTS....................................................... 4
2.3 ASSIGNMENT DISCLAIMER.............................................. 4

ARTICLE III LICENSES.......................................................... 4

3.1 LICENSE GRANT...................................................... 4
3.2 LICENSE RESTRICTIONS............................................... 5
3.3 LICENSEE UNDERTAKINGS.............................................. 5
3.4 NON-TRADEMARK USE.................................................. 6
3.5 RESERVATION OF RIGHTS.............................................. 6
3.6 THIRD PARTY LICENSES............................................... 6

ARTICLE IV PERMITTED SUBLICENSES.............................................. 7

4.1 SUBLICENSES........................................................ 7
4.2 AUTHORIZED DEALERS' USE OF MARKS................................... 7
4.3 ENFORCEMENT OF AGREEMENTS.......................................... 8
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V ROYALTIES.......................................................... 8

5.1 ROYALTIES......................................................... 8
5.2 PAYMENTS AND ACCOUNTING........................................... 9

ARTICLE VI TRADEMARK USAGE GUIDELINES........................................ 10

6.1 TRADEMARK USAGE GUIDELINES........................................ 10
6.2 TRADEMARK REVIEWS................................................. 10

ARTICLE VII TRADEMARK USAGE GUIDELINE ENFORCEMENT............................ 10

7.1 INITIAL CURE PERIOD............................................... 10
7.2 SECOND CURE PERIOD................................................ 10
7.3 FINAL CURE PERIOD................................................. 10

ARTICLE VIII QUALITY STANDARDS............................................... 11

8.1 GENERAL........................................................... 11
8.2 QUALITY STANDARDS................................................. 11
8.3 QUALITY CONTROL REVIEWS........................................... 11
8.4 PRODUCT DISCONTINUATION........................................... 11

ARTICLE IX QUALITY STANDARD ENFORCEMENT...................................... 11

9.1 INITIAL CURE PERIOD............................................... 11
9.2 SECOND CURE PERIOD................................................ 11
9.3 FINAL CURE PERIOD................................................. 12

ARTICLE X PROTECTION OF LICENSED MARKS....................................... 12

10.1 OWNERSHIP AND RIGHTS.............................................. 12
10.2 PROTECTION OF MARKS............................................... 12
10.3 SIMILAR MARKS..................................................... 12
10.4 INFRINGEMENT PROCEEDINGS.......................................... 13

ARTICLE XI TERMINATION....................................................... 13

11.1 VOLUNTARY TERMINATION............................................. 13
11.2 SURVIVAL.......................................................... 13
11.3 NO OTHER TERMINATION.............................................. 13

ARTICLE XII DISPUTE RESOLUTION............................................... 13

12.1 NEGOTIATION....................................................... 13
12.2 NONBINDING MEDIATION.............................................. 14
12.3 PROCEEDINGS....................................................... 14
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XIII LIMITATION OF LIABILITY......................................... 14

ARTICLE XIV MISCELLANEOUS PROVISIONS......................................... 15
14.1 DISCLAIMER....................................................... 15
14.2 NO IMPLIED LICENSES.............................................. 15
14.3 INFRINGEMENT SUITS............................................... 15
14.4 NO OTHER OBLIGATIONS............................................. 15
14.5 ENTIRE AGREEMENT................................................. 15
14.6 GOVERNING LAW.................................................... 16
14.7 DESCRIPTIVE HEADINGS............................................. 16
14.8 NOTICES.......................................................... 16
14.9 NONASSIGNABILITY................................................. 17
14.10 SEVERABILITY..................................................... 17
14.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE............ 17
14.12 AMENDMENT........................................................ 17
14.13 COUNTERPARTS..................................................... 17
</TABLE>

EXHIBIT A: LICENSED MARKS
EXHIBIT B: AFFILIATED COMPANIES

-iii-
<PAGE>

MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT

This Master Trademark Ownership and License Agreement (the "Agreement") is
effective as of _________, 1999 (the "Effective Date"), between Hewlett-Packard
Company, a Delaware corporation ("HP"), having an office at 3000 Hanover Street,
Palo Alto, California 94304, and Agilent Technologies, Inc., a Delaware
corporation ("Agilent"), having an office at 3000 Hanover Street, Palo Alto,
California 94304.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interest of HP and its stockholders to separate HP's existing businesses into
two independent businesses;

WHEREAS, as part of the foregoing, HP and Agilent have entered into a
Master Separation Agreement (as defined below) which provides, among other
things, for the separation of certain Agilent assets and Agilent liabilities,
the initial public offering of Agilent stock, the distribution of such stock and
the execution and delivery of certain other agreements in order to facilitate
and provide for the foregoing;

WHEREAS, the parties desire that HP assign and transfer to Agilent the
Agilent Business Marks (as defined below); and

WHEREAS, the parties further desire that HP license the Licensed Marks (as
defined below) to Agilent after the separation of the Agilent businesses.

NOW, THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, it is agreed by and between the parties as
follows:

ARTICLE I
DEFINITIONS

For the purpose of this Agreement, the following capitalized terms are
defined in this Article I and shall have the meaning specified herein:

1.2 AGILENT BUSINESS. "Agilent Business" means (a) the business and
operations of the following business entities of HP, as described in the IPO
Registration Statement (as defined in the Master Separation Agreement): (i) the
Test and Measurement Organization, (ii) the Semiconductor Products Group, (iii)
the Chemical Analysis Group, (iv) the Healthcare Solutions Group and (v) any
related infrastructure organizations and (b) except as otherwise expressly
provided herein, any terminated, divested or discontinued businesses or
operations that at the time of
<PAGE>

termination, divestiture or discontinuation primarily related to the Agilent
Business as then conducted.

1.3 AGILENT BUSINESS MARKS. "Agilent Business Marks" means the Marks
listed in the Agilent Business Marks Database.

1.4 AGILENT BUSINESS MARKS DATABASE. "Agilent Business Marks Database"
means the Agilent Business Marks Database, as it may be updated by the parties
upon mutual agreement to add additional Marks as of the Separation Date.

1.5 AUTHORIZED DEALERS. "Authorized Dealers" means any distributor,
dealer, OEM customer, VAR customer, VAD customer, systems integrator or other
agent that on or after the Separation Date is authorized to market, advertise,
sell, lease, rent, service or otherwise offer Measurement Products. Agilent will
provide HP a list of the then current Authorized Dealers within a reasonable
period after HP's request.

1.6 COLLATERAL MATERIALS. "Collateral Materials" means all packaging,
tags, labels, advertising, promotions, display fixtures, instructions,
warranties and other materials of any and all types associated with the
Measurement Products that are marked with at least one of the Licensed Marks.

1.7 CORPORATE IDENTITY MATERIALS. "Corporate Identity Materials" means
materials that are not products or product-related and that Agilent may now or
hereafter use to communicate its identity, including, by way of example and
without limitation, business cards, letterhead, stationery, paper stock and
other supplies, signage on real property, buildings, fleet and uniforms.

1.8 DISTRIBUTION DATE. "Distribution Date" has the meaning set forth in
the Master Separation Agreement.

1.9 LICENSED MARKS. "Licensed Marks" means the Marks set forth on Exhibit
A hereto.

1.10 MAINTENANCE CONTRACTS. "Maintenance Contracts" means agreements
pursuant to which Agilent, its Subsidiaries or Affiliated Companies or its or
their Authorized Dealers or their designees provide repair and maintenance
services (whether preventive, diagnostic, remedial, warranty or non-warranty) in
connection with Measurement Products, including without limitation agreements
entered into by HP prior to the Separation Date and assigned to Agilent pursuant
to the Master Separation Agreement or the Ancillary Agreements (as such term is
defined in the Master Separation Agreement).

1.11 MARK. "Mark" means any trademark, service mark, trade name, domain
name, and the like, or other word, name, symbol or device, or any combination
thereof, used or intended to be used by a Person to identify and distinguish the
products or services of that Person from the products or services of others and
to indicate the source of such goods or services, including without

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limitation all registrations and applications therefor throughout the world and
all common law and other rights therein throughout the world.

1.12 MASTER SEPARATION AGREEMENT. "Master Separation Agreement" means the
Master Separation and Distribution Agreement between the parties.

1.13 MEASUREMENT PRODUCT. "Measurement Product" means any Agilent product
that is listed on an Agilent corporate price list as of the Distribution Date,
and new versions thereof that have merely minor incremental differences from any
such product. Measurement Products shall also include maintenance (whether
diagnostic, preventive, remedial, warranty or non-warranty), support and similar
services associated with Measurement Products, pursuant to Maintenance Contracts
or otherwise.

1.14 PERSON. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, and a governmental entity or any
department, agency or political subdivision thereof.

1.15 QUALITY STANDARDS. "Quality Standards" means standards of quality
applicable to the Measurement Products, as in use immediately prior to the
Separation Date, unless otherwise communicated in writing by HP from time to
time.

1.16 SELL. To "Sell" a product means to sell, transfer, lease or otherwise
dispose of a product. "Sale" and "Sold" have the corollary meanings ascribed
thereto.

1.17 SEPARATION DATE. "Separation Date" means 12:01 a.m., Pacific Time,
November 1, 1999 or such other date as may be fixed by the Board of Directors of
HP.

1.18 SUBSIDIARY. "Subsidiary" means with respect to any specified Person,
any corporation, any limited liability company, any partnership or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body. Unless the context
otherwise requires, reference to HP and its Subsidiaries shall not include the
subsidiaries of HP that will be transferred to Agilent after giving effect to
the Separation (as defined in the Master Separation Agreement), including the
actions taken pursuant to the Non-US Plan (as defined in the Master Separation
Agreement). For example, if HP owns 70% of the stock of another corporation, and
that corporation owns 60% of the equity interest of a limited liability company,
then that corporation is a Subsidiary of HP but that limited liability company
is not. However, if such corporation owns 90% of the equity interest of a
limited liability company, then that limited liability company is a Subsidiary
of HP. For the avoidance of doubt, this definition of Subsidiary is different
from the definition of Subsidiary in the Master Separation Agreement.

1.19 THIRD PARTY. "Third Party" means a Person other than HP and its
Subsidiaries and Affiliated Companies and Agilent and its Subsidiaries and
Affiliated Companies.

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<PAGE>

1.20 TRADEMARK USAGE GUIDELINES. "Trademark Usage Guidelines" means the
guidelines for proper usage of the Licensed Marks, as in use immediately prior
to the Separation Date, as such guidelines may be revised and updated in writing
by HP from time to time.

ARTICLE II
ASSIGNMENT

2.1 ASSIGNMENT OF AGILENT BUSINESS MARKS. Subject to Sections 2.2 and 2.3
below, HP hereby grants, conveys and assigns (and agrees to cause its
appropriate Subsidiaries to grant, convey and assign) to Agilent, by execution
hereof (or, where appropriate or required, by execution of separate instruments
of assignment), all its (and their) right, title and interest in and to the
Agilent Business Marks, including all goodwill of the Agilent Business
appurtenant thereto, to be held and enjoyed by Agilent, its successors and
assigns. HP further grants, conveys and assigns (and agrees to cause its
appropriate Subsidiaries to grant, convey and assign) to Agilent all its (and
their) right, title and interest in and to any and all causes of action and
rights of recovery for past infringement of the Agilent Business Marks. HP will,
without demanding any further consideration therefor, at the request and expense
of Agilent (except for the value of the time of HP employees), do (and to cause
its Subsidiaries to do) all lawful and just acts that may be or become necessary
for evidencing, maintaining, recording and perfecting Agilent's rights to such
Agilent Business Marks consistent with HP's general business practice as of the
Separation Date, including but not limited to execution and acknowledgement of
(and causing its Subsidiaries to execute and acknowledge) assignments and other
instruments in a form reasonably required by Agilent or the relevant
governmental or other authorities for each Mark in all jurisdictions in which HP
owns rights thereto.

2.2 PRIOR GRANTS. Agilent acknowledges and agrees that the foregoing
assignment is subject to any and all licenses or other rights that may have been
granted by HP or its Subsidiaries with respect to the Agilent Business Marks
prior to the Separation Date. HP shall respond to reasonable inquiries from
Agilent regarding any such
prior grants.

2.3 ASSIGNMENT DISCLAIMER. AGILENT ACKNOWLEDGES AND AGREES THAT THE
FOREGOING ASSIGNMENTS ARE MADE ON AN "AS-IS," QUITCLAIM BASIS AND THAT NEITHER
HP NOR ANY SUBSIDIARY OR AFFILIATED COMPANY OF HP HAS MADE OR WILL MAKE ANY
WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.

ARTICLE III
LICENSES

3.1 LICENSE GRANT. HP grants (and agrees to cause its appropriate
Subsidiaries to grant) to Agilent a personal, irrevocable, nonexclusive,
perpetual, worldwide, fully-paid and non-transferable (except as set forth in
Section 14.9) license to use the Licensed Marks on the Measurement Products and
in connection with the Sale and offer for Sale of Measurement Products (or, in
the case of Measurement Products in the form of software, in connection with
licensing of

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Measurement Products) and to use the Licensed Marks in the advertisement and
promotion of such Measurement Products.

3.2 LICENSE RESTRICTIONS.

(a) Once Agilent abandons the use of all of the Licensed Marks on a
particular Measurement Product, then Agilent agrees that its license granted
hereunder with respect to that Measurement Product shall thereupon terminate.

(b) Agilent may not make any use whatsoever, in whole or in part, of
the Licensed Marks, or any other Mark owned by HP, in connection with Agilent's
corporate, doing business as, or fictitious name, or on Corporate Identity
Materials without the prior written consent of HP, except as expressly set forth
in this Section 3.2(b) or in Section 3.4 below. Notwithstanding the foregoing,
Agilent may use any business cards, letterhead, stationery, paper stock and
other supplies, uniforms and the like throughout their useful life in connection
with the conduct of the Agilent Business, to the extent that, as of the
Separation Date, they are in use, in inventory or on order.

(c) Agilent may not use any Licensed Mark in direct association with
another Mark such that the two Marks appear to be a single Mark or in any other
composite manner with any Marks of Agilent or any Third Party (other than the
Agilent Business Marks as permitted herein).

(d) In all respects, Agilent's usage of the Licensed Marks pursuant
to the license granted hereunder shall be in a manner consistent with the high
standards, reputation and prestige represented by the Licensed Marks, and any
usage by Agilent that is inconsistent with the foregoing shall be deemed to be
outside the scope of the license granted hereunder. As a condition to the
license granted hereunder, Agilent shall at all times present, position and
promote the Measurement Products marked with one or more of the Licensed Marks
in a manner consistent with the high standards and prestige represented by the
Licensed Marks.

3.3 LICENSEE UNDERTAKINGS. As a condition to the licenses granted
hereunder, Agilent undertakes to HP that:

(a) Agilent shall not use the Licensed Marks (or any other Mark of
HP) in any manner contrary to public morals, in any manner which is deceptive or
misleading, which ridicules or is derogatory to the Licensed Marks, or which
compromises or reflects unfavorably upon the goodwill, good name, reputation or
image of HP or the Licensed Marks, or which might jeopardize or limit HP's
proprietary interest therein.

(b) Agilent shall not use the Licensed Marks in connection with any
products or services other than the Measurement Products, including, without
limitation, any other Agilent Business products.

(c) Agilent shall not (i) misrepresent to any Person the scope of its
authority under this Agreement, (ii) incur or authorize any expenses or
liabilities chargeable to HP, or (iii) take

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<PAGE>

any actions that would impose upon HP any obligation or liability to a Third
Party other than obligations under this Agreement, or other obligations which HP
expressly approves in writing for Agilent to incur on its behalf.

(d) All press releases and corporate advertising and promotions that
embody the Licensed Marks and messages conveyed thereby shall be consistent with
the high standards and prestige represented by the Licensed Marks.

3.4 NON-TRADEMARK USE.

(a) Each party may make appropriate and truthful references to the
other party and the other party's products and technology.

(b) The parties acknowledge that the letters "HP" are a part of
several well-known generic acronyms, (for example, "HPLC" for "high performance
liquid chromatography", and "HPCE" for "high pressure capillary
electrophoresis"), or are part of the name of certain concepts or principles
(such as "the HP Way"). This Agreement does not apply to the proper use of such
acronyms or names.

3.5 RESERVATION OF RIGHTS. Except as otherwise expressly provided in this
Agreement, HP shall retain all rights in and to the Licensed Marks, including
without limitation:

(a) All rights of ownership in and to the Licensed Marks;

(b) The right to use (including the right of HP's Subsidiaries and
Affiliated Companies to use) the Licensed Marks, either alone or in combination
with other Marks, in connection with the marketing, offer or provision of any
product or service, including any product or service which competes with Agilent
Business products; and

3.6 THIRD PARTY LICENSES. HP agrees that it and its Subsidiaries and
Affiliated Companies will not license or transfer the Licensed Marks to Third
Parties (other than to and among Subsidiaries of HP) for use in connection with
products or services which compete with Measurement Products that are listed on
an Agilent corporate price list as of the Distribution Date until three (3)
years after the Separation Date. Such restriction shall be binding on any
successors and assigns of the Licensed Marks. The foregoing shall not, in any
event, limit any of the following: (i) any licenses that may have been granted
by HP with respect to the Licensed Marks prior to the Separation Date or (ii)
licenses granted to Third Parties in connection with any co-branding program
(including, by way of example and not by way of limitation, the OpenView
program). For purposes of clarification, a product will not necessarily be
deemed to compete with another product if it is merely complementary or merely
has some functions in common. Each party promptly will respond

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to requests from the other party regarding whether it considers one product to
compete with another product. Except as set forth in this Section 3.6, nothing
in this Agreement shall be construed to prevent HP from granting any licenses
for the use of the Licensed Marks, or from utilizing the Licensed Marks in any
manner whatsoever other than as provided in this Section 3.6.

ARTICLE IV
PERMITTED SUBLICENSES

4.1 SUBLICENSES

(a) SUBLICENSES TO SUBSIDIARIES AND AFFILIATED COMPANIES. Subject to
the terms and conditions of this Agreement, including all applicable Quality
Standards and Trademark Usage Guidelines and other restrictions in this
Agreement, Agilent may grant sublicenses to its Subsidiaries and Affiliated
Companies to use the Licensed Marks in accordance with the license grant in
Section 3.1 above; provided, that (i) Agilent enters into a written sublicense
agreement with each such Subsidiary and Affiliated Company sublicensee, and (ii)
such agreement does not include the right to grant further sublicenses other
than, in the case of a sublicensed Subsidiary of Agilent, to another Subsidiary
of Agilent. Agilent shall provide copies of such written sublicense agreements
to HP upon request. If Agilent grants any sublicense rights pursuant to this
Section 4.1(a) and any such sublicensed Subsidiary ceases to be a Subsidiary or
Agilent ceases to hold at least a thirty percent (30%) ownership interest in
such sublicensed Affiliated Company, then the sublicense granted to such
Subsidiary or Affiliated Company pursuant to this Section 4.1(a) shall terminate
one hundred eighty (180) days from the date of such cessation.

(b) SUBLICENSES TO TRANSFEREES. In addition, if Agilent, within five
(5) years after the Separation Date, transfers a going business (but not all or
substantially all of its business or assets), and such transfer includes at
least one marketable product and tangible assets having a net value of at least
ten million U.S. dollars ($10,000,000.00) then, subject to the terms and
conditions of this Agreement, including all applicable Quality Standards and
Trademark Usage Guidelines and other restrictions in this Agreement, Agilent may
grant sublicenses to the transferee of such business to use the Licensed Marks
on the Measurement Products that are in the transferred business as of the
effective date of the transfer in accordance with the license grant in Section
3.1 above; provided, that (i) Agilent enters into a written sublicense agreement
with the sublicensee, (ii) such agreement does not include the right to grant
further sublicenses and (iii) in any event, such sublicense shall terminate one
hundred eighty (180) days after the effective date of the transfer. Agilent
shall provide copies of such written sublicense agreements to HP upon request.

4.2 AUTHORIZED DEALERS' USE OF MARKS. Subject to the terms and conditions
of this Agreement, including all applicable Quality Standards and Trademark
Usage Guidelines and other restrictions in this Agreement, Agilent (and those
Subsidiaries and Affiliated Companies sublicensed to use the Licensed Marks
pursuant to Section 4.1) may allow Authorized Dealers to, and may allow such
Authorized Dealers to allow other Authorized Dealers to, use the Licensed Marks
in the advertisement and promotion of Measurement Products Sold by such
Authorized Dealers.

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<PAGE>

4.3 ENFORCEMENT OF AGREEMENTS. Agilent shall take all appropriate
measures at Agilent's expense promptly and diligently to enforce the terms of
any sublicense agreement or other agreement with any Subsidiary, Affiliated
Company or Authorized Dealer, or of any existing agreement with any Authorized
Dealer, and shall restrain any such Subsidiary, Affiliated Company or Authorized
Dealer from violating such terms, including without limitation (i) monitoring
the Subsidiaries', Affiliated Companies' and Authorized Dealers' compliance with
the relevant Trademark Usage Guidelines and Quality Standards and causing any
noncomplying Subsidiary, Affiliated Company or Authorized Dealer promptly to
remedy any failure, (ii) terminating such agreement and/or (iii) commencing
legal action, in each case, using a standard of care consistent with HP's
practices as of the Separation Date. In the event that HP determines that
Agilent has failed promptly and diligently to enforce the terms of any such
agreement using such standard of care, HP reserves the right to enforce such
terms, and Agilent shall reimburse HP for its fully allocated direct costs and
expenses incurred in enforcing such agreement, plus all out-of-pocket costs and
expenses, plus five percent (5%) (or, if such costs and expenses are incurred
more than two (2) years after the Separation Date, ten percent (10%)).

ARTICLE V
ROYALTIES

5.1 ROYALTIES.

(a) Upon (i) any Sale occurring more than five (5) years after the
Separation Date by Agilent, its Subsidiaries or Affiliated Companies of tangible
Measurement Products that are marked with one or more of the Licensed Marks
(other than repaired, refurbished or reconstructed Measurement Products or
repair parts and other than Sales to HP, its Subsidiaries and its Affiliated
Companies), and (ii) the use by Agilent, its Subsidiaries or Affiliated
Companies of one or more of the Licensed Marks as a service mark in connection
with the sale of services associated with Measurement Products (other than
repair, maintenance and calibration services and other than sales to HP, its
Subsidiaries and its Affiliated Companies), Agilent shall pay to HP a royalty on
the Net Sales earned by Agilent in each Agilent fiscal quarter as a result of
such sale. The royalty rate shall be the standard royalty rate that is charged
by HP to the Agilent Business as of the Separation Date for use of the Licensed
Marks.

(b) As used in this Article V, "Net Sales" means the gross invoice
price from (i) royalty-bearing Sales under Section 5.1(a)(i) above and (ii)
royalty-bearing sales of services under Section 5.1(a)(ii) above, in any case
less (A) charges for handling, freight, sales taxes, insurance costs and import
duties where such items are included in the invoiced price, (B) point-of-sale
credits (or other similar adjustments to price) granted to independent
distributors and (C) credits actually granted or refunds actually given for
returns during such Agilent fiscal quarter. In the event that the foregoing
Measurement Products are Sold for no or nominal consideration or to a Subsidiary
or Affiliated Company or in any other circumstances in which the selling price
is established on other than an arms-length basis, the Net Sales on such Sales
shall be determined on the average selling price earned by Agilent during the
preceding Agilent fiscal quarter on Sales of like volumes of the applicable
Measurement Products to unaffiliated customers in arms-length sales. However, in

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the event that the foregoing Measurement Products are Sold to Agilent's
Subsidiaries or Affiliated Companies for resale to Third Parties, then the
royalties will be based on Net Sales from the Subsidiaries or Affiliated
Companies to the Third Parties and no royalties will be due on the Sales to the
Subsidiaries and Affiliated Companies.

(c) For the purposes of clarification, no royalty is due under this
Article V for uses of the Licensed Marks that are covered by Section 3.4.

5.2 PAYMENTS AND ACCOUNTING.

(a) With respect to the royalties set forth herein, Agilent shall
keep full, clear and accurate records until otherwise provided in Section
5.2(b). These records shall be retained for a period of three (3) years from the
date of payment notwithstanding the expiration or other termination of this
Agreement. HP shall have the right, through a mutually agreed upon independent
certified public accountant (consent to which shall not be unreasonably withheld
or delayed by Agilent), and at HP's expense, to examine and audit, not more than
once a year, and during normal business hours, all such records and such other
records and accounts as may under recognized accounting practices contain
information bearing upon the amount of royalty payable to HP under this
Agreement. Prompt adjustment shall be made by either party to compensate for any
errors and/or omissions disclosed by such examination or audit. Should any such
error and/or omission result in an underpayment of more than five percent (5%)
of the total royalties due for the period under audit, Agilent shall upon HP's
request pay for the cost of the audit and pay HP an additional fee equal to a
compound annual interest rate of ten percent (10%) of such error and/or
omission.

(b) Within forty-five (45) days after the end of each Agilent fiscal
quarter, Agilent shall furnish to HP a statement in suitable form showing all
Measurement Products and related services subject to royalties that were sold,
during such quarter, and the amount of royalty payable thereon. If no products
or services subject to royalty have been sold, that fact shall be shown on such
statement. Also, within such forty-five (45) days, Agilent shall pay to HP the
royalties payable hereunder for such quarter. HP and Agilent will determine the
form of the statement prior to submission of the first such statement. All
royalty and other payments to HP hereunder shall be in United States dollars.
Royalties based on sales in other currencies shall be converted to United States
dollars according to the official rate of exchange for that currency, as
published in the Wall Street Journal on the last day of the calendar month in
which the royalty accrued (or, if not published on that day, the last
publication day for the Wall Street Journal during that month). If two
consecutive Agilent fiscal quarters pass in which no royalties are due under
this Agreement and Agilent reasonably believes no royalties will be due, the
obligations pursuant to this Article V shall terminate. If Agilent resumes sale
of Measurement Products or related services that are subject to royalties, the
obligations of this Article V shall automatically resume.

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ARTICLE VI
TRADEMARK USAGE GUIDELINES

6.1 TRADEMARK USAGE GUIDELINES. Agilent and its Subsidiaries, Affiliated
Companies and Authorized Dealers shall use the Licensed Marks only in a manner
that is consistent with the Trademark Usage Guidelines.

6.2 TRADEMARK REVIEWS. At HP's request, Agilent agrees to furnish or make
available for inspection to HP samples of all Measurement Products and
Collateral Materials of Agilent, its Subsidiaries, Affiliated Companies and
Authorized Dealers that are marked with one or more of the Licensed Marks (to
the extent that Agilent has the right to obtain such samples). If Agilent is
notified or determines that it or any of its Subsidiaries, Affiliated Companies
or Authorized Dealers is not complying with any Trademark Usage Guidelines, it
shall notify HP and the provisions of Article VII and Section 4.3 shall apply to
such noncompliance.

ARTICLE VII
TRADEMARK USAGE GUIDELINE ENFORCEMENT

7.1 INITIAL CURE PERIOD. If HP becomes aware that Agilent or any
Subsidiary, Affiliated Company or Authorized Dealer is not complying with any
Trademark Usage Guidelines, HP shall notify Agilent in writing, setting forth in
reasonable detail a written description of the noncompliance and any requested
action for curing such noncompliance. Agilent shall then have sixty (60) days
with regard to noncompliance by Authorized Dealers and thirty (30) days with
regard to noncompliance by Agilent or any Subsidiary or Affiliated Company after
receipt of such notice ("Guideline Initial Cure Period") to correct such
noncompliance or submit to HP a written plan to correct such noncompliance which
written plan is reasonably acceptable to HP.

7.2 SECOND CURE PERIOD. If noncompliance with the Trademark Usage
Guidelines continues beyond the Guideline Initial Cure Period, Agilent and HP
shall each promptly appoint a representative to negotiate in good faith actions
that may be necessary to correct such noncompliance. The parties shall have
thirty (30) days following the expiration of the Guideline Initial Cure Period
to agree on corrective actions, and Agilent shall have thirty (30) days from the
date of an agreement of corrective actions to implement such corrective actions
and cure or cause the cure of such noncompliance ("Second Guideline Cure
Period").

7.3 FINAL CURE PERIOD. If the noncompliance with the Trademark Usage
Guidelines remains uncured after the expiration of the Second Guideline Cure
Period, then at HP's election, Agilent, or the noncomplying Subsidiary,
Affiliated Company or Authorized Dealer, whichever is applicable, promptly shall
cease using the noncomplying Collateral Materials until HP determines that
Agilent, or the noncomplying Subsidiary, Affiliated Company or Authorized
Dealer, whichever is applicable, has demonstrated its ability and commitment to
comply with the Trademark Usage Guidelines. Nothing in this Article VII shall be
deemed to limit Agilent's obligations under Section 4.3 above or to preclude HP
from exercising any rights or remedies under Section 4.3 above.

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ARTICLE VIII
QUALITY STANDARDS

8.1 GENERAL. Agilent acknowledges that the Measurement Products permitted
by this Agreement to be marked with one or more of the Licensed Marks must
continue to be of sufficiently high quality as to provide protection of the
Licensed Marks and the goodwill they symbolize, and Agilent further acknowledges
that the maintenance of the high quality standards associated with such products
is of the essence of this Agreement.

8.2 QUALITY STANDARDS. Agilent and its Authorized Dealers, Affiliated
Companies and Subsidiaries shall use the Licensed Marks only on and in
connection with Measurement Products that meet or exceed in all respects the
Quality Standards.

8.3 QUALITY CONTROL REVIEWS. At HP's request, Agilent agrees to furnish
or make available to HP for inspection sample Measurement Products marked with
one or more of the Licensed Marks. HP may also independently conduct customer
satisfaction surveys to determine if Agilent and its Subsidiaries, Affiliated
Companies and Authorized Dealers are meeting the Quality Standards. Agilent
shall cooperate with HP fully in the distribution of such surveys. In the event
of a challenge by HP, HP shall, at the request of Agilent, provide Agilent with
copies of customer surveys used by HP to determine if Agilent is meeting the
Quality Standards. If Agilent is notified or determines that it or any of its
Subsidiaries, Affiliated Companies or Authorized Dealers is not complying with
any Quality Standards, it shall notify HP and the provisions of Article IX and
Section 4.3 shall apply to such noncompliance.

8.4 PRODUCT DISCONTINUATION. If, at any time during or after the term of
this Agreement, Agilent discontinues the sale of a Measurement Product that has
been marked with one or more of the Licensed Marks, Agilent shall substantially
comply with the discontinuation procedure used by HP for such or similar
products immediately prior to Separation Date.

ARTICLE IX
QUALITY STANDARD ENFORCEMENT

9.1 INITIAL CURE PERIOD. If HP becomes aware that Agilent or any
Subsidiary, Affiliated Company or Authorized Dealer sublicensee is not complying
with any Quality Standards, HP shall notify Agilent in writing, setting forth in
reasonable detail a written description of the noncompliance and any requested
action for curing such noncompliance. Agilent shall then have thirty (30) days
after receipt of such notice ("Initial Cure Period") to correct such
noncompliance or submit to HP a written plan to correct such noncompliance which
written plan is reasonably acceptable to HP.

9.2 SECOND CURE PERIOD. If noncompliance with the Quality Standards
continues beyond the Initial Cure Period, Agilent and HP shall each promptly
appoint a representative to negotiate in good faith actions that may be
necessary to correct such noncompliance. The parties shall have thirty (30) days
following the expiration of the Initial Cure Period to agree on corrective
actions, and Agilent shall have thirty (30) days from the date of an agreement
of corrective actions to

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implement such corrective actions and cure or cause the cure of such
noncompliance ("Second Cure Period").

9.3 FINAL CURE PERIOD. If the noncompliance with the Quality Standards
remains uncured after the expiration of the Second Cure Period, then at HP's
election, Agilent, or the noncomplying Subsidiary, Affiliated Company or
Authorized Dealer, whichever is applicable, promptly shall cease offering the
noncomplying Measurement Products under the Licensed Marks until HP determines
that Agilent, or the noncomplying Subsidiary, Affiliated Company or Authorized
Dealer, whichever is applicable, has demonstrated its ability and commitment to
comply with the Quality Standards. Nothing in this Article IX shall be deemed to
limit Agilent's obligations under Section 4.3 above or to preclude HP from
exercising any rights or remedies under Section 4.3 above.

ARTICLE X
PROTECTION OF LICENSED MARKS

10.1 OWNERSHIP AND RIGHTS. Agilent agrees not to challenge the ownership
or validity of the Licensed Marks. Agilent shall not disparage, dilute or
adversely affect the validity of the Licensed Marks. Agilent's use of the
Licensed Marks shall inure exclusively to the benefit of HP, and Agilent shall
not acquire or assert any rights therein. Agilent recognizes the value of the
goodwill associated with the Licensed Marks, and that the Licensed Marks may
have acquired secondary meaning in the minds of the public.

10.2 PROTECTION OF MARKS. Agilent shall assist HP, at HP's request and
expense, in the procurement and maintenance of HP's intellectual property rights
in the Licensed Marks. Agilent will not grant or attempt to grant a security
interest in the Licensed Marks, or to record any such security interest in the
United States Patent and Trademark Office or elsewhere, against any trademark
application or registration belonging to HP. Agilent agrees to, and to cause its
Subsidiaries and Affiliated Companies to, execute all documents reasonably
requested by HP to effect further registration of, maintenance and renewal of
the Licensed Marks, recordation of the license relationship between HP and
Agilent, and recordation of Agilent as a registered user. HP makes no warranty
or representation that trademark registrations have been or will be applied for,
secured or maintained in the Licensed Marks throughout, or anywhere within, the
world. Agilent shall cause to appear on all Measurement Products, and all
Collateral Materials, such legends, markings and notices as may be required by
applicable law or reasonably requested by HP.

10.3 SIMILAR MARKS. Agilent agrees not to use or register in any country
any Mark that infringes HP's rights in the Licensed Marks, or any element
thereof. If any application for registration is, or has been, filed in any
country by Agilent which relates to any Mark that infringes HP's rights in the
Licensed Marks, Agilent shall immediately abandon any such application or
registration or assign it to HP. Agilent shall not challenge HP's ownership of
or the validity of the Licensed Marks or any application for registration
thereof throughout the world. Agilent shall not use or register in any country
any copyright, domain name, telephone number or any other intellectual property
right, whether recognized currently or in the future, or other designation which

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<PAGE>

would affect the ownership or rights of HP in and to the Licensed Marks, or
otherwise to take any action which would adversely affect any of such ownership
rights, or assist anyone else in doing so. Agilent shall cause its Subsidiaries,
Affiliated Companies and Authorized Dealers to comply with the provisions of
this Section 10.3.

10.4 INFRINGEMENT PROCEEDINGS. In the event that the Agilent Director of
Intellectual Property or Agilent Trademark Counsel learns of any infringement or
threatened infringement of the Licensed Marks, or any unfair competition,
passing-off or dilution with respect to the Licensed Marks, Agilent shall notify
HP or its authorized representative giving particulars thereof, and Agilent
shall provide necessary information and assistance to HP or its authorized
representatives at HP's expense in the event that HP decides that proceedings
should be commenced. Notwithstanding the foregoing, Agilent is not obligated to
monitor or police use of the Licensed Marks by Third Parties other than as
specifically set forth in Section 4.3. HP shall have exclusive control of any
litigation, opposition, cancellation or related legal proceedings. The decision
whether to bring, maintain or settle any such proceedings shall be at the
exclusive option and expense of HP, and all recoveries shall belong exclusively
to HP. Agilent shall not and shall have no right to initiate any such
litigation, opposition, cancellation or related legal proceedings in its own
name, but, at HP's request, agrees to be joined as a party in any action taken
by HP to enforce its rights in the Licensed Marks. HP shall incur no liability
to Agilent or any other Person under any legal theory by reason of HP's failure
or refusal to prosecute or by HP's refusal to permit Agilent to prosecute, any
alleged infringement by Third Parties, nor by reason of any settlement to which
HP may agree.

ARTICLE XI
TERMINATION

11.1 VOLUNTARY TERMINATION. By written notice to HP, Agilent may
voluntarily terminate all or a specified portion of the licenses and rights
granted to it hereunder by HP. Such notice shall specify the effective date of
such termination and shall clearly specify any affected Licensed Marks,
Measurement Products or services.

11.2 SURVIVAL. Any voluntary termination of licenses and rights of
Agilent under Section 11.1 shall not affect Agilent's licenses and rights with
respect to any Measurement Products made or furnished prior to such termination.

11.3 OTHER TERMINATION. HP acknowledges and agrees that its rights to
terminate the licenses granted to Agilent hereunder are solely as set forth in
Section 4.3 and Articles VII and IX.

ARTICLE XII
DISPUTE RESOLUTION

12.1 NEGOTIATION. The parties shall make a good faith attempt to resolve
any dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is given
by either party to the other party, the parties' first tier

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<PAGE>

negotiating teams (as determined by each party's Director of Intellectual
Property or his or her delegate) shall meet and make a good faith attempt to
resolve such dispute or claim and shall continue to negotiate in good faith in
an effort to resolve the dispute or claim or renegotiate the applicable section
or provision without the necessity of any formal proceedings. If the first tier
negotiating teams are unable to agree within thirty (30) days of their first
meeting, then the parties' second tier negotiating teams (as determined by each
party's Director of Intellectual Property or his or her delegate) shall meet
within thirty (30) days after the end of the first thirty (30) day negotiating
period to attempt to resolve the matter. During the course of negotiations under
this Section 12.1, all reasonable requests made by one party to the other for
information, including requests for copies of relevant documents, will be
honored. The specific format for such negotiations will be left to the
discretion of the designated negotiating teams but may include the preparation
of agreed upon statements of fact or written statements of position furnished to
the other party.

12.2 NONBINDING MEDIATION. In the event that any dispute or claim arising
out of or related to this Agreement is not settled by the parties within fifteen
(15) days after the first meeting of the second tier negotiating teams under
Section 12.1, the parties will attempt in good faith to resolve such dispute or
claim by nonbinding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules. The mediation shall be held within
thirty (30) days of the end of such fifteen (15) day negotiation period of the
second tier negotiating teams. Except as provided below in Section 12.3, no
litigation for the resolution of such dispute may be commenced until the parties
try in good faith to settle the dispute by such mediation in accordance with
such rules, and either party has concluded in good faith that amicable
resolution through continued mediation of the matter does not appear likely. The
costs of mediation shall be shared equally by the parties to the mediation. Any
settlement reached by mediation shall be recorded in writing, signed by the
parties, and shall be binding on them.

12.3 PROCEEDINGS. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the dispute or claim
through negotiation or mediation. In the event that litigation is commenced
under this Section 12.3, the parties agree to continue to attempt to resolve any
dispute or claim according to the terms of Sections 12.1 and 12.2 during the
course of such litigation proceedings under this Section 12.3.

ARTICLE XIII
LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES
BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY
DAMAGES, INCLUDING WITHOUT LIMITATION SPECIAL, CONSEQUENTIAL, INDIRECT,
INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS OR ANY OTHER DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY
OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH

-14-
<PAGE>

DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH
PARTY'S OBLIGATIONS EXPRESSLY ASSUMED IN EXHIBIT K OF THE MASTER SEPARATION
AGREEMENT; PROVIDED FURTHER THAT THE EXCLUSION OF PUNITIVE DAMAGES SHALL APPLY
IN ANY EVENT.

ARTICLE XIV
MISCELLANEOUS PROVISIONS

14.1 DISCLAIMER. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL LICENSED
MARKS AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER ARE
LICENSED OR PROVIDED ON AN "AS IS" BASIS AND THAT NEITHER PARTY NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATED COMPANIES MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF TITLE, ENFORCEABILITY OR
NON-INFRINGEMENT. Without limiting the generality of the foregoing, neither HP
nor any of its Subsidiaries or Affiliated Companies makes any warranty or
representation as to the validity of any Mark licensed by it to Agilent or any
warranty or representation that any use of any Mark with respect to any product
or service will be free from infringement of any rights of any Third Party.

14.2 NO IMPLIED LICENSES. Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or otherwise, under
any intellectual property right, other than the rights expressly granted in this
Agreement with respect to the Licensed Marks. Neither party is required
hereunder to furnish or disclose to the other any information (including copies
of registrations of the Marks), except as specifically provided herein.

14.3 INFRINGEMENT SUITS. Except as set forth in Section 4.3, (i) neither
party shall have any obligation hereunder to institute any action or suit
against Third Parties for infringement of any of the Licensed Marks or to defend
any action or suit brought by a Third Party which challenges or concerns the
validity of any of the Licensed Marks and (ii) Agilent shall not have any right
to institute any action or suit against Third Parties for infringement of any of
the Licensed Marks.

14.4 NO OTHER OBLIGATIONS. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR
OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN
THE PARTIES. Without limiting the generality of the foregoing, neither party,
nor any of its Subsidiaries or Affiliated Companies, is obligated to (i) file
any application for registration of any Mark, or to secure any rights in any
Marks, (ii) to maintain any Mark registration, or (iii) provide any assistance,
except for the obligations expressly assumed in this Agreement.

14.5 ENTIRE AGREEMENT. This Agreement, the Master Separation Agreement
and the other Ancillary Agreements (as defined in the Master Separation
Agreement) constitute the entire agreement between the parties with respect to
the subject matter hereof and shall supersede all prior

-15-
<PAGE>

written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof. To the extent there is a conflict between
this Agreement and the General Assignment and Assumption Agreement between the
parties, the terms of this Agreement shall govern.

14.6 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

14.7 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.

14.8 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy with answer back, by express or overnight mail delivered by a
nationally recognized air courier (delivery charges prepaid), by registered or
certified mail (postage prepaid, return receipt requested) or by e-mail with
receipt confirmed by return e-mail to the respective parties as follows:

if to HP:

c/o Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: Associate General Counsel and
Director of Intellectual Property
Telecopy: (650) 852-8194

if to Agilent:

c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: Assistant General Counsel and
Director of Intellectual Property
Telecopy: (650) 813-3095

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air
courier shall be deemed effective on the first Business Day following the day on
which such notice or communication was sent. Any notice or communication sent
by registered or certified mail shall be deemed effective on the third Business
Day following the day on which such notice or communication was mailed. As used
in this Section 14.8, "Business Day" means day other than a

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<PAGE>

Saturday, a Sunday or a day on which banking institutions located in the State
of California are authorized or obligated by law or executive order to close.

14.9 NONASSIGNABILITY. Neither party may, directly or indirectly, in
whole or in part, whether by operation of law or otherwise, assign or transfer
this Agreement, without the other party's prior written consent, and any
attempted assignment, transfer or delegation without such prior written consent
shall be voidable at the sole option of such other party. Notwithstanding the
foregoing, each party (or its permitted successive assignees or transferees
hereunder) may assign or transfer this Agreement as a whole without consent to a
Person that succeeds to all or substantially all of the business or assets of
such party. Without limiting the foregoing, this Agreement will be binding upon
and inure to the benefit of the parties and their permitted successors and
assigns.

14.10 SEVERABILITY. If any term or other provision of this Agreement is
determined by a nonappealable decision of a court, administrative agency or
arbitrator to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.

14.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

14.12 AMENDMENT. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
such agreement.

14.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which, taken together, shall be considered to be one and
the same instrument.

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<PAGE>

WHEREFORE, the parties have signed this Trademark Ownership and License
Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:_____________________________ By:____________________________

Name:___________________________ Name:__________________________

Title:__________________________ Title:_________________________

<PAGE>

EXHIBIT A
TO MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT

LICENSED MARKS

Hewlett Packard

HP Symbol

<PAGE>

EXHIBIT B
TO MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT

AFFILIATED COMPANIES

1. HP Affiliated Companies
-----------------------

ImagineCard

Idea LLC

Intria-HP

Intria-HP Potomac

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Putial Ome

PT Berka Services

Liquidity Management Group

Hugin Expert

Syc

Sopura Systems

2. Agilent Affiliated Companies
----------------------------

Chartered Semiconductor Partners Singapore

LumiLEDS

<PAGE>

EXHIBIT 2.6

ICBD TECHNOLOGY OWNERSHIP AND
LICENSE AGREEMENT

between

HEWLETT-PACKARD COMPANY

and

AGILENT TECHNOLOGIES, INC.

Effective as of ___________, 1999
<PAGE>

ICBD TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS............................................................................... 1
1.1 AFFILIATED COMPANY..................................................................... 1
1.2 AGILENT ICBD PRODUCTS.................................................................. 1
1.3 AGILENT OWNED ICBD TECHNOLOGY.......................................................... 2
1.4 COPYRIGHTS............................................................................. 2
1.5 DATABASE RIGHTS........................................................................ 2
1.6 HP ICBD PRODUCTS....................................................................... 2
1.7 HP OWNED ICBD TECHNOLOGY............................................................... 2
1.8 ICBD TECHNOLOGY........................................................................ 2
1.9 ICBD TECHNOLOGY RESTRICTION DATABASE................................................... 3
1.10 ICBD TECHNOLOGY DATABASE............................................................... 3
1.11 IMPROVEMENTS........................................................................... 3
1.12 INVENTION DISCLOSURE................................................................... 3
1.13 JOINT ICBD TECHNOLOGY.................................................................. 3
1.14 LICENSED AGILENT ICBD TECHNOLOGY....................................................... 3
1.15 LICENSED HP ICBD TECHNOLOGY............................................................ 3
1.16 MASK WORKS RIGHTS...................................................................... 4
1.17 MASTER SEPARATION AGREEMENT............................................................ 4
1.18 PATENTS................................................................................ 4
1.19 PERSON................................................................................. 4
1.20 SELL................................................................................... 4
1.21 SEPARATION DATE........................................................................ 4
1.22 SUBSIDIARY............................................................................. 4
1.23 THIRD PARTY............................................................................ 4
ARTICLE II ALLOCATION OF OWNERSHIP.................................................................. 5
2.1 CONFIRMATION OF OWNERSHIP.............................................................. 5
2.2 ASSIGNMENT............................................................................. 5
2.3 JOINT ICBD TECHNOLOGY.................................................................. 5
2.4 PRIOR GRANTS........................................................................... 6
2.5 ASSIGNMENT DISCLAIMER.................................................................. 6
2.6 PRIOR AGREEMENTS....................................................................... 6
2.7 COPIES IN ITS POSSESSION............................................................... 6
ARTICLE III LICENSES AND RIGHTS..................................................................... 6
3.1 LICENSE TO HP UNDER THE LICENSED AGILENT ICBD TECHNOLOGY............................... 6
3.2 LICENSE TO AGILENT UNDER THE HP OWNED ICBD TECHNOLOGY WITH RESPECT TO HP ICBD PRODUCTS. 9
3.3 LICENSE TO AGILENT UNDER THE LICENSED HP ICBD TECHNOLOGY............................... 11
</TABLE>
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
3.4 HAVE MADE RIGHTS....................................................................... 14
3.5 RIGHTS TO JOINT ICBD TECHNOLOGY........................................................ 14
3.6 IMPROVEMENTS........................................................................... 15
3.7 SUBSIDIARIES AND AFFILIATED COMPANIES.................................................. 16
3.8 NO PATENT LICENSES..................................................................... 16
3.9 THIRD PARTY TECHNOLOGY................................................................. 16
ARTICLE IV USE RESTRICTIONS......................................................................... 16
ARTICLE V CONFIDENTIALITY........................................................................... 17
ARTICLE VI TERMINATION.............................................................................. 17
6.1 VOLUNTARY TERMINATION.................................................................. 17
6.2 SURVIVAL............................................................................... 17
6.3 NO OTHER TERMINATION................................................................... 17
ARTICLE VII DISPUTE RESOLUTION...................................................................... 17
7.1 NEGOTIATION............................................................................ 17
7.2 NONBINDING MEDIATION................................................................... 18
7.3 PROCEEDINGS............................................................................ 18
ARTICLE VIII LIMITATION OF LIABILITY................................................................ 18
ARTICLE IX MISCELLANEOUS PROVISIONS................................................................. 19
9.1 DISCLAIMER............................................................................. 19
9.2 NO IMPLIED LICENSES.................................................................... 19
9.3 INFRINGEMENT SUITS..................................................................... 19
9.4 NO OTHER OBLIGATIONS................................................................... 19
9.5 ENTIRE AGREEMENT....................................................................... 20
9.6 GOVERNING LAW.......................................................................... 20
9.7 DESCRIPTIVE HEADINGS................................................................... 20
9.8 NOTICES................................................................................ 20
9.9 NONASSIGNABILITY....................................................................... 21
9.10 SEVERABILITY........................................................................... 21
9.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.................................. 21
9.12 AMENDMENT.............................................................................. 21
9.13 COUNTERPARTS........................................................................... 21
</TABLE>

EXHIBIT A: AFFILIATED COMPANIES
EXHIBIT B: FIELD RESTRICTIONS
<PAGE>

ICBD TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

This ICBD Technology Ownership and License Agreement (the "Agreement") is
effective as of __________, 1999 (the "Effective Date"), between Hewlett-Packard
Company, a Delaware corporation ("HP"), having an office at 3000 Hanover Street,
Palo Alto, California 94304 and Agilent Technologies, Inc., a Delaware
corporation ("Agilent"), having an office at 3000 Hanover Street, Palo Alto,
California 94304.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interest of HP and its stockholders to separate HP's existing businesses into
two independent businesses;

WHEREAS, also as part of the foregoing, HP and Agilent desire to confirm
HP's and Agilent's ownership of certain technology related to integrated
circuits; and

WHEREAS, each party further desires to receive, and the other party is
willing to grant, certain rights to use certain of such technology.

NOW, THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, it is agreed by and between the parties as
follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement the following capitalized terms are
defined in this Article I and shall have the meaning specified herein:

1.2 AGILENT ICBD PRODUCTS. "Agilent ICBD Products" means any and all
semiconductor devices, at whatever stage of completion in the manufacturing
process, in die, wafer, packaged or chip form, integrated circuit modules
incorporating such semiconductor devices, and related software (whether embedded
in such devices or modules or Sold or licensed in connection
<PAGE>

with such devices or modules) that are used or Sold now or hereafter by Agilent,
its Subsidiaries or Affiliated Companies and are based on or incorporate the
Licensed HP ICBD Technology (including Third Party semiconductor devices,
integrated circuit modules and related software when Agilent, its Subsidiaries
or Affiliated Companies are making (but not having made) such products as a
contract manufacturer or foundry for such Third Parties).

1.3 AGILENT OWNED ICBD TECHNOLOGY. "Agilent Owned ICBD Technology" means
the ICBD Technology listed or described as such in the ICBD Technology Database.

1.4 COPYRIGHTS. "Copyrights" mean (i) any copyright in any original works
of authorship fixed in any tangible medium of expression as set forth in 17
U.S.C. Section 101 et. seq., whether registered or unregistered, including any
applications for registration thereof, (ii) any corresponding foreign copyrights
under the laws of any jurisdiction, in each case, whether registered or
unregistered, and any applications for registration thereof and (iii) moral
rights under the laws of any jurisdiction.

1.5 DATABASE RIGHTS. "Database Rights" means any rights in databases
under the laws of the United States or any other jurisdiction, whether
registered or unregistered, and any applications for registration thereof.

1.6 HP ICBD PRODUCTS. "HP ICBD Products" means any and all semiconductor
devices, at whatever stage of completion in the manufacturing process, in die,
wafer, packaged or chip form, integrated circuit modules incorporating such
semiconductor devices, and related software (whether embedded in such devices or
modules or Sold or licensed in connection with such devices or modules) that are
used or Sold now or hereafter by HP, its Subsidiaries or Affiliate Companies and
are based on or incorporate the Licensed Agilent ICBD Technology (including
Third Party semiconductor devices, integrated circuit modules and related
software when HP, its Subsidiaries or Affiliated Companies are making (but not
having made) such products as a contract manufacturer or foundry for such Third
Parties).

1.7 HP OWNED ICBD TECHNOLOGY. "HP Owned ICBD Technology" means ICBD
Technology listed or described as such in the ICBD Technology Database.

1.8 ICBD TECHNOLOGY. "ICBD Technology" means semiconductor topologies,
cell libraries, cores or other similar elements, logic modules, algorithms,
manufacturing processes, design processes, behavioral models, logic diagrams,
schematics, test vectors, know-how, computer and electronic data processing and
other apparatus programs and software (object code and source code), databases
and documentation thereof, trade secrets, technical information, specifications,
drawings, records, documentation, works of authorship or other creative works,
ideas, knowledge, data or the like, solely to the extent that any of the
foregoing are listed or described in the ICBD Technology Database. The term ICBD
Technology includes Copyrights, Database Rights, Mask Work Rights, trade secrets
and any other intellectual property right, but expressly does not include (i)
any trademark, trade name, trade dress or service mark or applications for
registration thereof, or (ii) any Patents, or applications therefor, including
any of the foregoing that may be based on Invention Disclosures that are covered
by the Master Patent Ownership and Assignment Agreement

-2-
<PAGE>

between the parties, but does include trade secret rights in and to inventions
disclosed in such applications and Invention Disclosures.

1.9 ICBD TECHNOLOGY DATABASE. "ICBD Technology Database" means the ICBD
Technology Database, as it may be updated by the parties upon mutual agreement
to add ICBD Technology as of the Separation Date.

1.10 ICBD TECHNOLOGY FIELD DEFINITION DATABASE. "ICBD Technology Field
Definition Database" means the ICBD Technology Field Definition Database, as it
may be updated by the parties as of the Separation Date.

1.11 IMPROVEMENTS. "Improvements" to ICBD Technology means (i) with
respect to Copyrights, any modifications, derivative works, and translations of
works of authorship, (ii) with respect to Database Rights, any database that is
created by extraction or re-utilization of another database, and (iii) with
respect to Mask Work Rights, trade secrets and other intellectual property
rights included within the definition of ICBD Technology and not covered by
Sections 1.11(i) and (ii) above, any improvements of ICBD Technology. For the
purposes of clarification, an item of ICBD Technology will be deemed to be an
Improvement of another item of ICBD Technology only if it is actually derived
from such other item of ICBD Technology and not merely because it may have the
same or similar functionality or use as such other item of ICBD Technology.

1.12 INVENTION DISCLOSURE. "Invention Disclosure" means a disclosure of
an invention (i) written for the purpose of allowing legal and business people
to determine whether to file a Patent application with respect to such invention
and (ii) recorded with a control number in the owning party's records.

1.13 JOINT ICBD TECHNOLOGY. "Joint ICBD Technology" means the ICBD
Technology listed or described as such in the ICBD Technology Database.

1.14 LICENSED AGILENT ICBD TECHNOLOGY. "Licensed Agilent ICBD Technology"
means the ICBD Technology listed or described as such in the ICBD Technology
Database and:

(b) which is known to or in the possession of HP, its Subsidiaries
or Affiliated Companies as of the Separation Date.

1.15 LICENSED HP ICBD TECHNOLOGY. "Licensed HP ICBD Technology" means the
ICBD Technology listed or described as such in the ICBD Technology Database and:

(a) which, as of the Separation Date, HP or any Subsidiary or
Affiliated Company of HP (i) owns or controls or (ii) otherwise has the right to
grant any licenses of the type and on the

-3-
<PAGE>

terms herein granted to Agilent without the obligation to pay royalties or other
consideration to Third Parties; and

(b) which is known to or in the possession of Agilent, its
Subsidiaries or Affiliated Companies as of the Separation Date.

1.16 MASK WORK RIGHTS. "Mask Work Rights" means (i) any rights in mask
works, as defined in 17 U.S.C. Section 901, whether registered or unregistered,
including applications for registration thereof, and (ii) any foreign rights in
semiconductor topologies under the laws of any jurisdiction, whether registered
or unregistered, including applications for registration thereof.

1.17 MASTER SEPARATION AGREEMENT. "Master Separation Agreement" means the
Master Separation and Distribution Agreement between the parties.

1.18 PATENTS. "Patents" means patents, utility models, design patents,
design registrations, certificates of invention and other governmental grants
for the protection of inventions or industrial designs anywhere in the world and
all reissues, renewals, re-examinations and extensions of any of the foregoing.

1.19 PERSON. "Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, and a governmental entity or any
department, agency, or political subdivision thereof.

1.20 SELL. To "Sell" a product means to sell, transfer, lease, or
otherwise dispose of a product. "Sale" and "Sold" have the corollary meanings
ascribed thereto.

1.21 SEPARATION DATE. "Separation Date" means 12:01 a.m., Pacific Time,
November 1, 1999 or such other date as may be fixed by the Board of Directors of
HP.

1.22 SUBSIDIARY. "Subsidiary" means with respect to any specified Person,
any corporation, any limited liability company, any partnership or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body. Unless the context
otherwise requires, reference to HP and its Subsidiaries shall not include the
subsidiaries of HP that will be transferred to Agilent after giving effect to
the Separation (as defined in the Master Separation Agreement), including the
actions taken pursuant to the Non-US Plan (as defined in the Master Separation
Agreement). For example, if HP owns 70% of the stock of another corporation, and
that corporation owns 60% of the equity interest of a limited liability company,
then that corporation is a Subsidiary of HP but that limited liability company
is not. However, if such corporation owns 90% of the equity interest of a
limited liability company, then that limited liability company is a Subsidiary
of HP. For the avoidance of doubt, this definition of Subsidiary is different
from the definition of Subsidiary in the Master Separation Agreement.

1.23 THIRD PARTY. "Third Party" means a Person other than HP and its
Subsidiaries and Affiliated Companies and Agilent and its Subsidiaries and
Affiliated Companies.

-4-
<PAGE>

ARTICLE II

ALLOCATION OF OWNERSHIP

2.1 CONFIRMATION OF OWNERSHIP. The parties hereby agree and confirm that,
as between the parties, HP retains for itself all right, title and interest in
and to the HP Owned ICBD Technology (except for any licenses expressly granted
in Article III) and that no transfer or assignment of ownership rights is
intended by the parties. At any time during the period beginning on the
Separation Date and until a reasonable period after Agilent ceases to
manufacture a particular HP ICBD Product for HP, HP shall have the right to
access and to copy or have Agilent copy for HP any and all portions of the HP
Owned ICBD Technology related to such HP ICBD Product in the possession of
Agilent. Such access and copying shall be in accordance with a reasonable
request and schedule to be mutually agreed upon between Agilent and HP. All
costs associated with the assembling, copying and delivering of the HP Owned
ICBD Technology shall be borne by HP (except for the value of the time of
Agilent employees). HP shall respond to reasonable requests by Agilent
concerning whether a particular HP ICBD Product will continue to be manufactured
by Agilent.

2.2 ASSIGNMENT. Subject to Sections 2.4-2.6 below and to Article IV, HP
hereby grants, conveys and assigns (and agrees to cause its appropriate
Subsidiaries to grant, convey and assign) to Agilent, by execution hereof (or,
where appropriate or required, by execution of separate instruments of
assignment), all its (and their) right, title and interest in and to the Agilent
Owned ICBD Technology, to be held and enjoyed by Agilent, its successors and
assigns. HP further grants, conveys and assigns (and agrees to cause its
appropriate Subsidiaries to grant, convey and assign) to Agilent all its (and
their) right, title and interest in and to any and all causes of action and
rights of recovery for past infringement of Copyrights, Database Rights and Mask
Work Rights in and to the Agilent Owned ICBD Technology, and for past
misappropriation of trade secrets in and to the Agilent Owned ICBD Technology.
HP further covenants that HP will, without demanding any further consideration
therefor, at the request and expense of Agilent (except for the value of the
time of HP employees), do (and cause its Subsidiaries to do) all lawful and just
acts, that may be or become necessary for evidencing, maintaining, recording and
perfecting Agilent's rights to such Agilent Owned ICBD Technology consistent
with HP's general business practice as of the Separation Date, including but not
limited to, execution and acknowledgement of (and causing its Subsidiaries to
execute and acknowledge) assignments and other instruments in a form reasonably
required by Agilent for each Copyright, Mask Work Right, or Database Right
jurisdiction.

2.3 JOINT ICBD TECHNOLOGY. Subject to Sections 2.4-2.6 below and to
Article IV, HP hereby grants, conveys and assigns (and agrees to cause its
appropriate Subsidiaries to grant, convey and assign) to Agilent an undivided
one-half interest in and to the Joint ICBD Technology to be held and enjoyed by
Agilent, its successors and assigns. HP further grants, conveys and assigns (and
agrees to cause its appropriate Subsidiaries to grant, convey and assign) to
Agilent an undivided one-half interest in and to any and all causes of action
and rights of recovery for past infringement of Copyrights, Database Rights and
Mask Work Rights in and to the Joint ICBD Technology, and for past
misappropriation of trade secrets in and to the Joint ICBD Technology. HP
further covenants that HP will, without demanding any consideration therefor, at
the request and expense of Agilent (except for the value of the time of HP
employees), do (and cause its Subsidiaries to do) all lawful

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and just acts including the execution and acknowledgement of instruments, that
may be or become necessary for evidencing, maintaining and perfecting Agilent's
rights to such Joint ICBD Technology consistent with HP's general business
practice as of the Separation Date, including but not limited to, execution and
acknowledgement of (and causing its Subsidiaries to execute and acknowledge)
assignments and other instruments in a form reasonably required by Agilent for
each Copyright, Mask Work Right or Database Right jurisdiction.

2.4 PRIOR GRANTS. Agilent acknowledges and agrees that the foregoing
assignments are subject to any and all licenses or other rights that may have
been granted by HP or its Subsidiaries with respect to the Agilent Owned ICBD
Technology prior to the Separation Date. HP shall respond to reasonable
inquiries from Agilent regarding any such prior grants.

2.5 ASSIGNMENT DISCLAIMER. AGILENT ACKNOWLEDGES AND AGREES THAT THE
FOREGOING ASSIGNMENTS ARE MADE ON AN "AS IS," QUITCLAIM BASIS AND THAT NEITHER
HP NOR ANY SUBSIDIARY OR AFFILIATED COMPANY OF HP HAS MADE OR WILL MAKE ANY
WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.

2.6 PRIOR AGREEMENTS. Notwithstanding the foregoing provisions of this
Article II, the parties agree that this Agreement does not supersede any
existing agreements that may have been entered into before the Separation Date
regarding the allocation of ownership to any ICBD Technology as between HP and
Agilent.

2.7 COPIES IN ITS POSSESSION. Notwithstanding the allocation of ownership
in this Article II, each party has the right to retain copies of any ICBD
Technology that it has in its possession as of the Separation Date.

ARTICLE III

LICENSES AND RIGHTS

3.1 LICENSE TO HP UNDER THE LICENSED AGILENT ICBD TECHNOLOGY.

(i) under its and their Copyrights in and to the Licensed
Agilent ICBD Technology, (A) to reproduce and have reproduced the works of
authorship included in the Licensed Agilent ICBD Technology and Improvements
thereof prepared by or for HP, in whole or in part, as part of HP ICBD Products,
(B) to prepare Improvements or have Improvements prepared for it based upon the
works of authorship included in the Licensed Agilent ICBD Technology in order to
create HP ICBD Products, (C) to distribute (by any means and using any
technology, whether now known or unknown, including without limitation
electronic transmission) copies of the works of authorship

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<PAGE>

included in the Licensed Agilent ICBD Technology and Improvements thereof
prepared by or for HP to the public by sale or other transfer of ownership or by
rental, lease or lending, as part of HP ICBD Products, and (D) to perform (by
any means and using any technology, whether now known or unknown, including
without limitation electronic transmission) and display the works of authorship
included in the Licensed Agilent ICBD Technology and Improvements thereof
prepared by or for HP, as part of HP ICBD Products;

(ii) under its and their Database Rights in and to the Licensed
Agilent ICBD Technology, to extract data from the databases included in the
Licensed Agilent ICBD Technology and to re-utilize such data to design, develop,
manufacture and have manufactured HP ICBD Products and to Sell such HP ICBD
Products that incorporate such data, databases and Improvements thereof prepared
by or for HP;

(iii) under its and their Mask Work Rights in and to the Licensed
Agilent ICBD Technology, (A) to reproduce and have reproduced mask works and
semiconductor topologies included in the Licensed Agilent ICBD Technology and
embodied in HP ICBD Products by optical, electronic or any other means, (B) to
import or distribute a product in which any such mask work or semiconductor
topology is embodied, and (C) to induce or knowingly to cause another Person to
do any of the acts described in Sections 3.1(a)(iii)(A) and (B) above; and

(iv) under its and their trade secrets and other intellectual
property rights in and to the Licensed Agilent ICBD Technology (except the
intellectual property rights excluded from the definition of ICBD Technology),
to use the Licensed Agilent ICBD Technology and Improvements thereof prepared by
or for HP to design, develop, manufacture and have manufactured HP ICBD Products
and to Sell such HP ICBD Products.

(b) Without limiting the generality of the foregoing licenses granted
in Section 3.1(a) above,

(i) with respect to cores or other similar elements included
within the Licensed Agilent ICBD Technology, such licenses include the right to
synthesize, simulate, design, verify, monitor, analyze, compile, incorporate,
embed and integrate the cores or other similar elements and Improvements thereof
made by or for HP to design, develop and manufacture HP ICBD Products, and to
Sell HP ICBD Products worldwide;

(ii) with respect to software included within the Licensed
Agilent ICBD Technology, such licenses include the right to use, modify, and
reproduce such software and Improvements thereof made by or for HP to create HP
ICBD Products, in source code and object code form, and to Sell such software
and Improvements thereof made by or for HP, in source code and object code form,
as part of HP ICBD Products; and

(iii) the foregoing licenses include the right to have contract
manufacturers and foundries manufacture HP ICBD Products for HP.

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<PAGE>

(i) HP may grant sublicenses to its Subsidiaries for so long as
they remain its Subsidiaries, with no right to grant further sublicenses other
than, in the case of a sublicensed Subsidiary, to another Subsidiary of such
party and as described in Section 3.1(c) (iii) below; provided that any such
sublicense may be made effective retroactively but not prior to the
sublicensee's becoming a Subsidiary;

(ii) HP may grant sublicenses to its Affiliated Companies for so
long as HP holds at least thirty percent (30%) ownership interest in the
Affiliated Companies, with no right to grant further sublicenses other than, in
the case of a sublicensed Affiliated Company, to the Affiliated Company's wholly
owned subsidiaries and as described in Section 3.1(c)(iii) below; provided that
any such sublicense may be made effective retroactively but not prior to the
sublicensee's becoming an Affiliated Company;

(iii) HP may grant sublicenses with respect to HP ICBD Products
in the form of software, in object code and source code form, to its
distributors, resellers, OEM customers, VAR customers, VAD customers, systems
integrators and other channels of distribution and to its end user customers;
and

(iv) HP may grant sublicenses with respect to the relevant
Licensed Agilent ICBD Technology to the Transferee (as defined below), in the
event that HP transfers, after the Separation Date, a going business (but not
all or substantially all of its business or assets), provided that such transfer
includes at least one marketable product and tangible assets having a net value
of at least ten million U.S. Dollars ($10,000,000.00), regardless of whether
such transfer is part of (A) an asset sale to any Third Party, (B) a sale of
shares or securities in a Subsidiary or Affiliated Company to a Third Party such
that (x) in the case of a Subsidiary, the Subsidiary ceases to be a Subsidiary,
or in the case of an Affiliated Company, HP ceases to hold at least thirty
percent (30%) of the outstanding shares or securities in such Affiliated Company
and (y) the Third Party owns at least eighty percent (80%) of the outstanding
shares or securities representing the right to vote for the election of
directors or other managing authority, or (C) a sale of shares or securities in
a Subsidiary or Affiliated Company to a Third Party such that (x) in the case of
a Subsidiary, the Subsidiary ceases to be a Subsidiary, or in the case of an
Affiliated Company, Agilent ceases to hold at least thirty percent (30%) of the
outstanding shares or securities in such Affiliated Company and (y) no single
Third Party owns at least eighty percent (80%) of the outstanding shares or
securities representing the right to vote for the election of directors or other
managing authority of such ex-Subsidiary or ex-Affiliated Company; provided
that:

(1) the Transferee shall have no right to grant further
sublicenses except as described in Section 3.1(c)(iii) above and except that the
Transferee shall have the right to grant sublicenses to any Person at least
eighty percent (80%) of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority are,
directly or indirectly, owned by the Transferee, only for so long as such
ownership exists;

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<PAGE>

(2) such sublicenses shall not come into effect unless and
until such Transferee agrees in writing for the benefit of Agilent to be bound
by the terms of this Agreement, including but not limited to the use
restrictions in Article IV and the confidentiality obligations under Article V;

(3) this Section 3.1(c)(iv) shall be excluded from such
sublicense in any event; and

(4) HP shall give Agilent prompt written notice of any
such sublicense and a copy of the portions of the relevant agreement between HP
and such Transferee containing the sublicense terms.

(5) HP may exercise its rights under this Section
3.1(c)(iv) no more than eight (8) times unless otherwise agreed to in writing by
Agilent. Notwithstanding the foregoing limitation, however, in any sublicense
granted by HP to a Transferee under this Section 3.1(c)(iv), HP may elect to
relinquish its license under this Agreement in the field of use covered by the
sublicense, and such sublicense shall not count toward the limit. In making such
election, HP promptly shall notify Agilent. All notices of transfer by HP and
all consents by Agilent shall be effective only if provided to or by the
Director of Intellectual Property of the applicable party.

(6) As used in this Section 3.1(c)(iv), "Transferee" in
the case of Sections 3.1(c)(iv)(A) and (B) means the Third Party acquiring the
going business or eighty percent (80%) of the Subsidiary or Affiliated Company
and in the case of Section 3.1(c)(iv)(C) means the ex-Subsidiary or ex-
Affiliated Company only.

(d) The licenses granted above to the Licensed Agilent ICBD
Technology shall continue in perpetuity (or, in the case of Copyrights, Database
Rights and Mask Work Rights, until the expiration of the term thereof).

3.2 LICENSE TO AGILENT UNDER THE HP OWNED ICBD TECHNOLOGY WITH RESPECT TO
HP ICBD PRODUCTS.

(i) under its and their Copyrights in and to the HP Owned ICBD
Technology, (A) to reproduce and have reproduced the works of authorship
included in the HP Owned ICBD Technology and Improvements prepared for HP, in
whole or in part, as part of HP ICBD Products, (B) to prepare Improvements or
have Improvements prepared for HP based upon the works of authorship included in
the HP Owned ICBD Technology in order to create HP ICBD Products, (C) to
distribute (by any means and using any technology, whether now known or unknown,
including without limitation electronic transmission) copies of the works of
authorship included in the HP Owned ICBD Technology and Improvements thereof
prepared for HP to HP and

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<PAGE>

such Subsidiaries and Affiliated Companies of HP and Third Parties as HP may
designate in writing to Agilent from time to time, by sale or other transfer of
ownership or by rental, lease or lending, as part of HP ICBD Products, and (D)
to perform (by any means and using any technology, whether now known or unknown,
including without limitation electronic transmission) and display the works of
authorship included in the HP Owned ICBD Technology and Improvements thereof
prepared for HP, as part of HP ICBD Products;

(ii) under its and their Database Rights in and to the HP Owned
ICBD Technology, to extract data from the databases included in the HP Owned
ICBD Technology and to re-utilize such data to design, develop, and manufacture
HP ICBD Products for HP and to Sell such HP ICBD Products that incorporate such
data, databases and Improvements thereof prepared for HP to HP and such
Subsidiaries and Affiliated Companies of HP and Third Parties as HP may
designate in writing to Agilent from time to time;

(iii) under its and their Mask Work Rights in and to the HP Owned
ICBD Technology, (A) to reproduce and have reproduced mask works and
semiconductor topologies included in the HP Owned ICBD Technology and embodied
in HP ICBD Products by optical, electronic or any other means, (B) to import or
distribute a product in which any such mask work or semiconductor topology is
embodied to HP and such Subsidiaries and Affiliated Companies of HP and Third
Parties as HP may designate in writing to Agilent from time to time, and (C) to
induce or knowingly to cause another Person to do any of the acts described in
Sections 3.2(a)(iii)(A) and (B) above solely on behalf of HP; and

(iv) under its and their trade secrets and other intellectual
property rights in and to the HP Owned ICBD Technology (except the intellectual
property rights excluded from the definition of ICBD Technology), to use the HP
Owned ICBD Technology and Improvements thereof prepared for HP to design,
develop and manufacture HP ICBD Products and to Sell such HP ICBD Products to HP
and such Subsidiaries and Affiliated Companies of HP and Third Parties as HP may
designate in writing to Agilent from time to time.

(b) Without limiting the generality of the foregoing licenses granted
in Section 3.2(a) above,

(i) with respect to cores or other similar elements included
within the HP Owned ICBD Technology, such licenses include the right to
synthesize, simulate, design, verify, monitor, analyze, compile, incorporate,
embed and integrate the cores or other similar elements and Improvements thereof
made for HP to design, develop and manufacture HP ICBD Products, and to Sell HP
ICBD Products to HP and such Subsidiaries and Affiliated Companies of HP and
Third Parties as HP may designate in writing to Agilent from time to time;

(ii) with respect to software included within the HP Owned ICBD
Technology, such licenses include the right to use, modify, and reproduce such
software and Improvements thereof made for HP to create HP ICBD Products, in
source code and object code form, and to Sell such software and Improvements
thereof made for HP, in source code and object

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<PAGE>

code form, as part of HP ICBD Products to HP and such Subsidiaries and
Affiliated Companies of HP and Third Parties as HP may designate in writing to
Agilent from time to time; and

(iii) the foregoing licenses include the right to have contract
manufacturers and foundries including, but not limited to, Chartered Silicon
Partners, Ltd. and Chartered Silicon Manufacturing, manufacture HP ICBD Products
for HP.

(c) Agilent may grant sublicenses (with no further right to
sublicense) to its Subsidiaries and Affiliated Companies within the scope of the
license granted under Section 3.2(a) above for so long as, in the case of
Subsidiaries, they remain its Subsidiaries, or, in the case of Affiliated
Companies, Agilent holds at least thirty percent (30%) ownership interest in
such Affiliated Companies. Any such sublicense may be made effective
retroactively, but not prior to the sublicensee's becoming a Subsidiary or
Affiliated Company.

(d) The licenses granted in this Section 3.2 to the HP Owned ICBD
Technology shall continue only for so long as Agilent is making HP ICBD Products
for Sale to HP, its Subsidiaries, Affiliated Companies or Third Parties
designated by HP in writing.

(e) This Section 3.2 does not limit the licenses granted in Section
3.3 below with respect to Licensed HP ICBD Technology.

3.3 LICENSE TO AGILENT UNDER THE LICENSED HP ICBD TECHNOLOGY.

(a) Subject to Article IV, HP grants (and agrees to cause its
appropriate Subsidiaries or Affiliated Companies to grant) to Agilent the
following personal, irrevocable, nonexclusive, worldwide, fully paid, royalty-
free and non-transferable (except as specified in Section 9.9 below) licenses:

(i) under its and their Copyrights in and to the Licensed HP
ICBD Technology, (A) to reproduce and have reproduced the works of authorship
included in the Licensed HP ICBD Technology and Improvements thereof prepared by
or for Agilent, in whole or in part, as part of Agilent ICBD Products, (B) to
prepare Improvements or have Improvements prepared for it based upon the works
of authorship included in the Licensed HP ICBD Technology in order to create
Agilent ICBD Products, (C) to distribute (by any means and using any technology,
whether now known or unknown, including without limitation electronic
transmission) copies of the works of authorship included in the Licensed HP ICBD
Technology and Improvements thereof prepared by or for Agilent to the public by
sale or other transfer of ownership or by rental, lease or lending, as part of
Agilent ICBD Products, and (D) to perform (by any means and using any
technology, whether now known or unknown, including without limitation
electronic transmission) and display the works of authorship included in the
Licensed HP ICBD Technology and Improvements thereof prepared by or for Agilent,
as part of Agilent ICBD Products;

(ii) under its and their Database Rights in and to the Licensed
HP ICBD Technology, to extract data from the databases included in the Licensed
HP ICBD Technology and to re-utilize such data to design, develop, manufacture
and have manufactured Agilent ICBD

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<PAGE>

Products and to Sell such Agilent ICBD Products that incorporate such data,
databases and Improvements thereof prepared by or for Agilent;

(iii) under its and their Mask Work Rights in and to the
Licensed HP ICBD Technology, (A) to reproduce and have reproduced mask works and
semiconductor topologies included in the Licensed HP ICBD Technology and
embodied in Agilent ICBD Products by optical, electronic or any other means, (B)
to import or distribute a product in which any such mask work or semiconductor
topology is embodied, and (C) to induce or knowingly to cause another Person to
do any of the acts described in Sections 3.3(a)(iii)(A) and (B) above; and

(iv) under its and their trade secrets and other intellectual
property rights in and to the Licensed HP ICBD Technology (except the
intellectual property rights excluded from the definition of ICBD Technology),
to use the Licensed HP ICBD Technology and Improvements thereof prepared by or
for Agilent to design, develop, manufacture and have manufactured Agilent ICBD
Products and to Sell such Agilent ICBD Products.

(b) Without limiting the generality of the foregoing licenses granted
in Section 3.3(a) above,

(i) with respect to cores or other similar elements included
within the Licensed HP ICBD Technology, such licenses include the right to
synthesize, simulate, design, verify, monitor, analyze, compile, incorporate,
embed and integrate the cores or other similar elements and Improvements thereof
made by or for Agilent to design, develop and manufacture Agilent ICBD Products,
and to Sell Agilent ICBD Products worldwide;

(ii) with respect to software included within the Licensed HP
ICBD Technology, such licenses include the right to use, modify, and reproduce
such software and Improvements thereof made by or for Agilent to create Agilent
ICBD Products, in source code and object code form, and to Sell such software
and Improvements thereof made by or for Agilent, in source code and object code
form, as part of Agilent ICBD Products; and

(iii) the foregoing licenses include the right to have contract
manufacturers and foundries manufacture Agilent ICBD Products for Agilent.

(c) Agilent may grant sublicenses within the scope of the licenses
granted under Sections 3.3(a) and (b) above as follows:

(i) Agilent may grant sublicenses to its Subsidiaries for so
long as they remain its Subsidiaries, with no right to grant further sublicenses
other than, in the case of a sublicensed Subsidiary, to another Subsidiary of
such party, and as described in Section 3.3(c)(iii) below; provided that any
such sublicense may be made effective retroactively but not prior to the
sublicensee's becoming a Subsidiary;

(ii) Agilent may grant sublicenses to its Affiliated Companies
for so long as Agilent holds at least thirty percent (30%) ownership interest in
the Affiliated Companies, with no right to grant further sublicenses other than,
in the case of a sublicensed Affiliated Company, to the

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<PAGE>

Affiliated Company's wholly owned subsidiaries and as described in Section
3.3(c)(iii) below; provided that any such sublicense may be made effective
retroactively but not prior to the sublicensee's becoming an Affiliated Company;

(iii) Agilent may grant sublicenses with respect to Agilent ICBD
Products in the form of software, in object code and source code form, to its
distributors, resellers, OEM customers, VAR customers, VAD customers, systems
integrators and other channels of distribution and to its end user customers;
and

(iv) Agilent may grant sublicenses with respect to the relevant
Licensed HP ICBD Technology to the Transferee (as defined below), in the event
that Agilent transfers, after the Separation Date, a going business (but not all
or substantially all of its business or assets), provided that such transfer
includes at least one marketable product and tangible assets having a net value
of at least ten million U.S. Dollars ($10,000,000.00), regardless of whether
such transfer is part of (A) an asset sale to any Third Party, (B) a sale of
shares or securities in a Subsidiary or Affiliated Company to a Third Party such
that (x) in the case of a Subsidiary, the Subsidiary ceases to be a Subsidiary,
or in the case of an Affiliated Company, Agilent ceases to hold at least thirty
percent (30%) of the outstanding shares or securities in such Affiliated Company
and (y) the Third Party owns at least eighty percent (80%) of the outstanding
shares or securities representing the right to vote for the election of
directors or other managing authority, or (C) a sale of shares or securities in
a Subsidiary or Affiliated Company to a Third Party such that (x) in the case of
a Subsidiary, the Subsidiary ceases to be a Subsidiary, or in the case of an
Affiliated Company, Agilent ceases to hold at least thirty percent (30%) of the
outstanding shares or securities in such Affiliated Company and (y) no single
Third Party owns at least eighty percent (80%) of the outstanding shares or
securities representing the right to vote for the election of directors or other
managing authority of such ex-Subsidiary or ex-Affiliated Company; provided
that:

(1) the Transferee shall have no right to grant further
sublicenses except as described in Section 3.3(c)(iii) above and except that the
Transferee shall have the right to grant sublicenses to any Person at least
eighty percent (80%) of whose outstanding shares or securities representing the
right to vote for the election of directors or other managing authority are,
directly or indirectly, owned by the Transferee, only for so long as such
ownership exists;

(2) such sublicenses shall not come into effect unless
and until such Transferee agrees in writing for the benefit of HP to be bound by
the terms of this Agreement, including but not limited to the use restrictions
in Article IV and the confidentiality and obligations under Article V;

(3) this Section 3.3(c)(iv) shall be excluded from such
sublicense in any event; and

(4) Agilent shall give HP prompt written notice of any
such sublicense and a copy of the portions of the relevant agreement between
Agilent and such Transferee containing the sublicense terms.

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<PAGE>

(5) Agilent may exercise its rights under this Section
3.3(c)(iv) no more than eight (8) times unless otherwise agreed to in writing by
HP. Notwithstanding the foregoing limitation, however, in any sublicense granted
by Agilent to a Transferee under this Section 3.3(c)(iv), Agilent may elect to
relinquish its license under this Agreement in the field of use covered by the
sublicense, and such sublicense shall not count toward the limit. In making such
election, Agilent promptly shall notify HP. All notices of transfer by Agilent
and all consents by HP shall be effective only if provided to or by the Director
of Intellectual Property of the applicable party.

(6) As used in this Section 3.3(c)(iv), "Transferee" in the case
of Sections 3.3(c)(iv)(A) and (B) means the Third Party acquiring the going
business or eighty percent (80%) of the Subsidiary or Affiliated Company and in
the case of Section 3.3(c)(iv)(C) means the ex-Subsidiary or ex-Affiliated
Company only.

(d) The licenses granted above to the Licensed HP ICBD Technology
shall continue in perpetuity (or, in the case of Copyrights, Database Rights and
Mask Work Rights, until the expiration of the term thereof).

3.4 HAVE MADE RIGHTS. Each party understands and acknowledges that the
"have made" rights granted to it in Section 3.1 or 3.3, as applicable, and the
sublicenses of such "have made" rights granted pursuant to Sections 3.1(c)(i)
and (ii) and 3.3(c)(i) and (ii), as applicable, are intended to cover only the
products of such party, its Subsidiaries and Affiliated Companies (including
private label or OEM versions of such products), and are not intended to cover
foundry or contract manufacturing activities that such party may undertake
through Third Parties for Third Parties.

3.5 RIGHTS TO JOINT ICBD TECHNOLOGY.

(a) Each party has the right to (i) use and exploit the Joint ICBD
Technology, (ii) license the Joint ICBD Technology to Third Parties and (iii)
transfer its ownership interest in any or all Joint ICBD Technology to any Third
Party, in each case (x) without restriction, (y) without the consent of the
other party and (z) without the obligation to account to the other party for
profits derived therefrom.

(b) Should either party (the "Registering Party") desire at any time
to register Copyrights, Database Rights or Mask Work Rights in and to the Joint
ICBD Technology in any jurisdiction, such party shall notify the other party
(the "Non-Registering Party") in writing of its intent and the reasons therefor.
The Non-Registering Party promptly shall communicate in writing any objections
it may have. In the absence of any written objections within thirty (30) days
after the date of its notice, the Registering Party shall be free to proceed
with the desired registration in the name of both HP and Agilent. In the event
of any such objections by the Non-Registering Party, the parties shall discuss
and negotiate reasonably and in good faith to resolve the objections based on
each party's business objectives with respect to the relevant item of Joint ICBD
Technology. The parties shall share equally any actual and reasonable out-of-
pocket expenses (expressly excluding the value of the time of either party's
employees) incurred in connection with any such registration. The

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Registering Party promptly shall provide the Non-Registering Party with copies
of each application and issued registration under this Section 3.5(b).

(c) Should either party become aware of any actual infringement or
misappropriation of Joint ICBD Technology, such party shall promptly communicate
the details to the other party and the parties will meet and confer regarding
any enforcement action with respect to such Joint ICBD Technology. If the
parties decide jointly to bring an action for infringement or misappropriation
of such Joint ICBD Technology, the parties shall equally share all actual and
reasonable expenses associated therewith (except for the value of the time of
each party's employees in connection with the action; each party shall alone
bear its employee expenses) and any resulting damages or compensation, including
any amounts paid in settlement. If the parties decide not to jointly bring such
an action, either party or any of its Subsidiaries may, at its own expense
(including, as the parties shall agree on a case by case basis, compensation, if
any, of the other party for the value of time of the other party's employees as
reasonably required in connection with the action), enforce any Joint ICBD
Technology against any Third Party infringer or misappropriating Person without
the consent of the other party, subject to the following: (i) neither party
shall have any obligation to be joined as a party plaintiff in such action
without its prior written consent, which may be granted or withheld in its sole
discretion, regardless of whether such joinder is required in order to confer
jurisdiction in the jurisdiction in which the action is to be brought, (ii) if
either party brings any such action on its own, including cases in which the
other party consents to be named as party plaintiff, the party bringing the
action agrees to defend, indemnify and hold harmless the other party for all
losses, costs, liabilities and expenses arising out of or related to the
bringing of such action, and (iii) the party bringing such action may not take
any action, or make any admissions, that may affect the validity of any
registration for Copyrights, Database Rights or Mask Work Rights covering Joint
ICBD Technology without the prior written consent of the other party. If the
enforcing party or its Subsidiaries recovers any damages or compensation for any
action the enforcing party or the Subsidiaries of the enforcing party takes
hereunder, including any settlement, the enforcing party or the Subsidiaries of
the enforcing party shall retain one hundred percent (100%) of such damages. If
the parties cooperate in any such enforcement action, then any recovery of
damages or compensation shall be allocated pursuant to mutual agreement.

3.6 IMPROVEMENTS.

(a) As between the parties, after the Separation Date, Agilent hereby
retains all right, title and interest, including all intellectual property
rights, in and to any Improvements to Licensed HP ICBD Technology or HP Owned
ICBD Technology made by or for Agilent in the exercise of the licenses granted
to it hereunder, subject only to the ownership of HP in the underlying Licensed
HP ICBD Technology and HP Owned ICBD Technology, and HP hereby retains all
right, title and interest, including all intellectual property rights, in and to
any Improvements to Licensed Agilent ICBD Technology made by or for HP in the
exercise of the licenses granted to it hereunder, subject only to the ownership
of Agilent in the underlying Licensed Agilent ICBD Technology. Unless otherwise
agreed by the parties in writing, Agilent has no obligation to disclose or
license to HP any Improvements to the Agilent Owned ICBD Technology, Licensed
Agilent ICBD Technology, HP Owned ICBD Technology, Licensed HP ICBD Technology
or Joint ICBD Technology made by or for Agilent and HP has no obligation to
disclose or license to

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<PAGE>

Agilent any Improvements to HP Owned ICBD Technology, Licensed HP ICBD
Technology, Licensed Agilent ICBD Technology or Joint ICBD Technology made by or
for HP; provided, however, that each party agrees promptly to respond to
requests from the other party regarding any such Improvements that may have been
made by or for it in a defined technical area, and to negotiate in good faith
disclosing and licensing such Improvements to the other party.

(b) Notwithstanding the foregoing provisions of Section 3.6 (a), the
parties agree that this Agreement does not supersede any existing arrangements
that may have been made before the Separation Date regarding the allocation of
ownership to any Improvements as between HP and Agilent.

3.7 SUBSIDIARIES AND AFFILIATED COMPANIES. A sublicense to a particular
Subsidiary or Affiliated Company of a party hereto granted pursuant to Sections
3.1(c)(i) or (ii) or 3.3(c)(i) or (ii) shall terminate upon the date that, in
the case of a Subsidiary of a party, such Subsidiary ceases to be a Subsidiary
of such party, or, in the case of an Affiliated Company of a party, such party
ceases to hold at least a thirty percent (30%) ownership interest in such
Affiliated Company; provided, however, that such cessation shall not affect such
party's rights to grant further sublicenses to such terminated Subsidiary or
Affiliated Company as set forth in Sections 3.1(c)(iv) or 3.3(c)(iv) above. In
the event that, at the time of such cessation, such Subsidiary or Affiliated
Company owns any ICBD Technology to which the other party is licensed, such
license shall continue for the term thereof.

3.8 NO PATENT LICENSES. Nothing contained in this Agreement shall be
construed as conferring to either party by implication, estoppel or otherwise
any license or right under any Patent, or applications therefor, whether or not
the exercise of any right herein granted necessarily employs an invention of any
existing or later issued Patent. The applicable licenses granted between HP and
Agilent with respect to Patents are set forth in a separate Master Patent
Ownership and License Agreement.

3.9 THIRD PARTY TECHNOLOGY. The assignment of any applicable license
agreements with respect to Third Party ICBD Technology are set forth in a
separate General Assignment and Assumption Agreement between the parties.

ARTICLE IV
USE RESTRICTIONS

Agilent agrees that, other than HP ICBD Products for Sale to HP (or its
Subsidiaries or Affiliated Companies or Third Parties designated in writing by
HP), Agilent and its sublicensees will not use the Agilent Owned ICBD Technology
or Licensed HP ICBD Technology to design, develop, make, have made, import,
offer for Sale or Sell products in the fields of use set forth in Exhibit B. The
foregoing limitations shall terminate three (3) or ten (10) years after the
Separation Date, as indicated in the ICBD Technology Field Definition Database.
The foregoing restrictions in this Article IV shall not restrict Agilent or its
Subsidiaries or Affiliated Companies from continuing to design, develop, make,
have made, import, offer for Sale or Sell Agilent ICBD Products that are being
shipped by Agilent or its Subsidiaries or Affiliated Companies as of the
Separation Date in

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<PAGE>

volumes comparable to (or less than) the volumes in which they are shipped as of
the Separation Date.

ARTICLE V
CONFIDENTIALITY

The terms of the Master Confidential Disclosure Agreement between the
parties shall apply to any Confidential Information (as defined therein) which
is the subject matter of this Agreement.

ARTICLE VI
TERMINATION

6.3 NO OTHER TERMINATION. Each party acknowledges and agrees that its
remedy for breach by the other party of the licenses granted to it hereunder or
of any other provision hereof shall be, subject to the requirements of Article
VII, to bring a claim to recover damages subject to the limits set forth in this
Agreement and to seek any other appropriate equitable relief, other than
termination of the licenses granted by it in this Agreement.

ARTICLE VII
DISPUTE RESOLUTION

7.1 NEGOTIATION. The parties shall make a good faith attempt to resolve
any dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is given
by either party to the other party, the parties' first tier negotiating teams
(as determined by each party's Director of Intellectual Property or his or her
delegate) shall meet and make a good faith attempt to resolve such dispute or
claim and shall continue to negotiate in good faith in an effort to resolve the
dispute or claim or renegotiate the applicable section or provision without the
necessity of any formal proceedings. If the first tier negotiating teams are
unable to agree within thirty (30) days of their first meeting, then the
parties' second tier negotiating teams (as determined by each party's Director
of Intellectual Property or his or her delegate) shall meet within thirty (30)
days after the end of the first thirty (30) day negotiating period to attempt to
resolve the matter. During the course of negotiations under this Section 7.1,
all reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such

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negotiations will be left to the discretion of the designated negotiating teams
but may include the preparation of agreed upon statements of fact or written
statements of position furnished to the other party.

7.3 PROCEEDINGS. Nothing herein, however, shall prohibit either party
from initiating litigation or other judicial or administrative proceedings if
such party would be substantially harmed by a failure to act during the time
that such good faith efforts are being made to resolve the dispute or claim
through negotiation or mediation. In the event that litigation is commenced
under this Section 7.3, the parties agree to continue to attempt to resolve any
dispute or claim according to the terms of Sections 7.1 and 7.2 during the
course of such litigation proceedings under this Section 7.3.

ARTICLE VIII
LIMITATION OF LIABILITY

IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES
BE LIABLE TO THE OTHER PARTY OR ITS SUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY
SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST
PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE)
ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE
FOREGOING LIMITATIONS SHALL NOT LIMIT DAMAGES FOR INFRINGEMENT AVAILABLE TO
EITHER PARTY UNDER APPLICABLE LAW IN THE EVENT OF BREACH BY THE OTHER PARTY OF
SECTIONS 3.1(a), 3.2(a), 3.3(a) OR ARTICLE IV AND SHALL NOT LIMIT EACH PARTY'S
OBLIGATIONS EXPRESSLY ASSUMED IN EXHIBIT K OF THE MASTER SEPARATION AGREEMENT;
PROVIDED FURTHER THAT THE EXCLUSION OF PUNITIVE DAMAGES SHALL APPLY IN ANY
EVENT.

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<PAGE>

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.1 DISCLAIMER. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL ICBD
TECHNOLOGY AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER
IS LICENSED OR PROVIDED ON AN "AS IS" BASIS, AND THAT NEITHER PARTY NOR ANY OF
ITS SUBSIDIARIES OR AFFILIATED COMPANIES MAKES ANY REPRESENTATIONS OR EXTENDS
ANY WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. Without
limiting the generality of the foregoing, neither party nor any of its
Subsidiaries or Affiliated Companies makes any warranty or representation that
any manufacture, use, importation, offer for sale or sale of any product or
service will be free from infringement of any Patent or other intellectual
property right of any Third Party.

9.2 NO IMPLIED LICENSES. Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or otherwise, under
any intellectual property right, other than the rights expressly granted in this
Agreement with respect to the Licensed Agilent ICBD Technology, the Licensed HP
ICBD Technology and the HP Owned ICBD Technology. Neither party is required
hereunder to furnish or disclose to the other any technical or other information
(including copies of the Licensed Agilent ICBD Technology and the Licensed HP
ICBD Technology), except as specifically provided herein.

9.3 INFRINGEMENT SUITS. Neither party shall have any obligation hereunder
to institute any action or suit against Third Parties for infringement of any
Copyrights, Database Rights or Mask Work Rights or misappropriation of any trade
secret rights in or to any ICBD Technology licensed to the other party
hereunder, or to defend any action or suit brought by a Third Party which
challenges or concerns the validity of any of such rights or which claims that
any ICBD Technology assigned or licensed to the other party hereunder infringes
any Patent, Copyright, Database Right, Mask Work Right or other intellectual
property right of any Third Party or constitutes a misappropriated trade secret
of any Third Party. HP shall not have any right to institute any action or suit
against Third Parties for infringement of any of the Copyrights, Database Rights
or Mask Work Rights in or to the Licensed Agilent ICBD Technology and Agilent
shall not have any right to institute any action or suit against Third Parties
for infringement of any of the Copyrights, Database Rights or Mask Work Rights
in or to the Licensed HP ICBD Technology.

9.4 NO OTHER OBLIGATIONS. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR
OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN
THE PARTIES. Without limiting the generality of the foregoing: (i) neither the
execution of this Agreement nor anything in it or in the HP Owned ICBD
Technology shall be construed as an obligation upon Agilent to make or Sell HP
ICBD Products; any such obligation shall be set forth in a separate written
agreement between the

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<PAGE>

parties and (ii) neither party or any of its Subsidiaries or Affiliated
Companies is obligated to provide any technical assistance.

9.5 ENTIRE AGREEMENT. This Agreement, the Master Separation Agreement and
the other Ancillary Agreements (as defined in the Master Separation Agreement)
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof. This Agreement shall prevail in the event of any conflicting
terms or legends which may appear on any portion of the Agilent Owned ICBD
Technology, Licensed Agilent ICBD Technology, HP Owned ICBD Technology or
Licensed HP ICBD Technology. To the extent there is a conflict between this
Agreement and the Master Assignment and Assumption Agreement between the
parties, the terms of this Agreement shall govern.

9.7 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.

if to HP:

c/o Hewlett Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: Associate General Counsel and
Director of Intellectual Property
Telecopy: (650) 852-8194

if to Agilent:

c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: Assistant General Counsel and
Director of Intellectual Property
Telecopy: (650) 813-3095

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<PAGE>

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air courier
shall be deemed effective on the first Business Day following the day on which
such notice or communication was sent. Any notice or communication sent by
registered or certified mail shall be deemed effective on the third Business Day
following the day on which such notice or communication was mailed. As used in
this Section 9.8, "Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions located in the State of California are
authorized or obligated by law or executive order to close.

9.9 NONASSIGNABILITY. Neither party may, directly or indirectly, in whole
or in part, whether by operation of law or otherwise, assign or transfer this
Agreement, without the other party's prior written consent, and any attempted
assignment, transfer or delegation without such prior written consent shall be
voidable at the sole option of such other party. Notwithstanding the foregoing,
each party (or its permitted successive assignees or transferees hereunder) may
assign or transfer this Agreement as a whole without consent to a Person that
succeeds to all or substantially all of the business or assets of such party.
Without limiting the foregoing, this Agreement will be binding upon and inure to
the benefit of the parties and their permitted successors and assigns.

9.12 AMENDMENT. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
such agreement.

9.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which, taken together, shall be considered to be one and
the same instrument.

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WHEREFORE, the parties have signed this ICBD Technology Ownership and
License Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:________________________ By:_____________________________

Name:______________________ Name:___________________________

Title:_____________________ Title:__________________________
<PAGE>

EXHIBIT A
TO ICBD TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

AFFILIATED COMPANIES

1. HP Affiliated Companies
-----------------------

ImagineCard

Idea LLC

Intria-HP

Intria-HP Potomac

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Putial Ome

PT Berka Services

Liquidity Management Group

Hugin Expert

Syc

Sopura Systems

2. Agilent Affiliated Companies
----------------------------

Chartered Semiconductor Partners Singapore

LumiLEDS
<PAGE>

EXHIBIT B
TO ICBD TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT

FIELD RESTRICTIONS

1. Printing Devices, Printer Supplies, Components and Accessories, and
Document Scanners (as such terms are defined in the ICBD Technology Field
Definition Database).

2. Computing Devices (as such term is defined in the ICBD Technology Field
Definition Database).

<PAGE>

EXHIBIT 2.7

EMPLOYEE MATTERS AGREEMENT

BETWEEN

HEWLETT-PACKARD COMPANY

AND

AGILENT TECHNOLOGIES, INC.

DATED AS OF

_______________, 1999

<PAGE>

TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I DEFINITIONS..................................................... 1
1.1 Affiliate....................................................... 1
1.2 Agilent......................................................... 1
1.3 Agilent Business................................................ 2
1.4 Agilent Employee................................................ 2
1.5 Agilent Group................................................... 2
1.6 Agilent Master Trust............................................ 2
1.7 Agilent Stock Value............................................. 2
1.8 Agilent Terminated Employee..................................... 2
1.9 Agilent Transferred Employee.................................... 3
1.10 Agilent WCP Claims.............................................. 3
1.11 Agreement....................................................... 3
1.12 Ancillary Agreements............................................ 3
1.13 ASO Contracts................................................... 3
1.14 Benefits Committee.............................................. 3
1.15 Cash Profit Sharing Program..................................... 3
1.16 COBRA........................................................... 4
1.17 Code............................................................ 4
1.18 DCR Plan........................................................ 4
1.19 Distribution.................................................... 4
1.20 Distribution Date............................................... 4
1.21 DOL............................................................. 4
1.22 DPSP............................................................ 4
1.23 DPSP Transfer Date.............................................. 4
1.24 ERISA........................................................... 4
1.25 Excess Benefit Plan............................................. 4
1.26 Excluded Options................................................ 4
1.27 Executive Deferred Compensation Plan............................ 4
1.28 Flexible Benefits Plan.......................................... 5
1.29 FMLA............................................................ 5
1.30 Food Subsidy Programs........................................... 5
1.31 Foreign Plan.................................................... 5
1.32 Fringe Benefits................................................. 5
1.33 FTO............................................................. 5
1.34 General Assignment and Assumption Agreement..................... 5
1.35 Group Insurance Policies........................................ 5
</TABLE>

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TABLE OF CONTENTS
(Continued)
<TABLE>
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1.36 Group Trust..................................................... 5
1.37 GUL............................................................. 5
1.38 HCFA............................................................ 5
1.39 HCR Plan........................................................ 6
1.40 Health and Welfare Plans........................................ 6
1.41 Health Plans.................................................... 6
1.42 HMO............................................................. 6
1.43 HMO Agreements.................................................. 6
1.44 HP.............................................................. 6
1.45 HP Employee..................................................... 6
1.46 HP Group........................................................ 6
1.47 HP GUL Transfer Date............................................ 6
1.48 HP L-T Care Plan Transfer Date.................................. 7
1.49 HP Master Trust................................................. 7
1.50 HP Stock Value.................................................. 7
1.51 HP Terminated Employee.......................................... 7
1.52 HP WCP.......................................................... 7
1.53 Income Protection Plan.......................................... 7
1.54 IPO............................................................. 7
1.55 IPO Closing Date................................................ 7
1.56 IPO Registration Statement...................................... 7
1.57 IRG............................................................. 7
1.58 IRS............................................................. 7
1.59 L-T Care Plan................................................... 8
1.60 Leave of Absence Programs....................................... 8
1.61 Legally Permissible............................................. 8
1.62 Liabilities..................................................... 8
1.63 Local Agreement................................................. 8
1.64 Material Feature................................................ 8
1.65 Non-Qualified Plans............................................. 8
1.66 Non-U.S. Plan................................................... 8
1.67 Option.......................................................... 9
1.68 Outsource....................................................... 9
1.69 Participating Company........................................... 9
1.70 Payroll Date.................................................... 9
1.71 PBGC............................................................ 9
1.72 Person.......................................................... 9
</TABLE>

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(Continued)
<TABLE>
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1.73 Plan............................................................ 9
1.74 Post-Employment Programs........................................ 9
1.75 Premium Plan.................................................... 9
1.76 QDRO............................................................ 10
1.77 QMCSO........................................................... 10
1.78 Rabbi Trust..................................................... 10
1.79 Ratio........................................................... 10
1.80 Record Date..................................................... 10
1.81 Redeployment/Alternate Offer Program............................ 10
1.82 Restricted Stock................................................ 10
1.83 Retirement Plans................................................ 10
1.84 RP.............................................................. 10
1.85 RP Transfer Date................................................ 11
1.86 SEC............................................................. 11
1.87 Separation...................................................... 11
1.88 Separation Agreement............................................ 11
1.89 Separation Date................................................. 11
1.90 Stock Plan...................................................... 11
1.91 Stock Purchase Plan............................................. 11
1.92 Subsidiary...................................................... 11
1.93 Survivor Protection Plan........................................ 11
1.94 Tax Sharing Agreement........................................... 12
1.95 TAXCAP.......................................................... 12
1.96 Transition Period............................................... 12
1.97 Unemployment Insurance Program.................................. 12
1.98 Variable Pay Plan............................................... 12
1.99 VEBA............................................................ 12
1.100 VEBA Transfer Date.............................................. 12
1.101 Voluntary Severance Incentive Plan.............................. 12

ARTICLE II GENERAL PRINCIPLES............................................. 13

2.1 Assumption of Agilent Liabilities............................... 13
2.2 Establishment of Agilent Plans.................................. 13
2.3 Agilent's Participation in HP Plans............................. 14
2.4 Terms of Participation by Agilent Transferred Employees in
Agilent Plans................................................... 15
2.5 Allocation of Costs and Expenses................................ 16
</TABLE>

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(Continued)
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2.6 Benefits Committee and Dispute Resolution....................... 16
2.7 Foreign Plans................................................... 16

ARTICLE III DEFINED BENEFIT PLAN.......................................... 17

3.1 Establishment of Group Trust and Master RP Trust................ 17
3.2 Assumption of RP Liabilities and Allocation of Interests in the
Group Trust..................................................... 17
3.3 No Distributions to Agilent Transferred Employees............... 18

ARTICLE IV DEFINED CONTRIBUTION PLANS..................................... 19

4.1 TAXCAP.......................................................... 19
4.2 DPSP............................................................ 20

ARTICLE V NON-QUALIFIED AND OTHER PLANS 21

5.1 Excess Benefit Plan............................................. 21
5.2 Executive Deferred Compensation Plan............................ 21
5.3 Officers Early Retirement Plan.................................. 22
5.4 IRG............................................................. 22

ARTICLE VI HEALTH AND WELFARE PLANS....................................... 23

6.1 VEBA Asset Transfers............................................ 23
6.2 Assumption of Health and Welfare Plan Liabilities............... 24
6.3 Claims for Health and Welfare Plans............................. 24
6.4 Post-Distribution Transitional Arrangements..................... 25
6.5 Vendor Arrangements............................................. 26
6.6 Group Long-Term Care Plan Asset Transfer........................ 26
6.7 Group Universal Life: Group Universal Life Insurance Program
Cash Value and Reserve Transfers................................ 26
6.8 IPP/State Voluntary Disability Plans............................ 27
6.9 Business Travel Accident Insurance.............................. 27
6.10 Flexible Benefits Plan.......................................... 28
6.11 Redeployment/Alternate Offer Program............................ 28
6.12 COBRA........................................................... 28
6.13 Leave of Absence Programs and FMLA.............................. 28
</TABLE>

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(Continued)
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6.14 Post-Employment Programs........................................ 29
6.15 HP Workers' Compensation Program................................ 29

ARTICLE VII EQUITY AND OTHER COMPENSATION................................. 32

7.1 HP Variable Pay Plan............................................ 32
7.2 HP Options and Stock Appreciation Rights........................ 32
7.3 HP Restricted Stock............................................. 33
7.4 Stock Purchase Plan............................................. 33
7.5 Stock Service Award Program..................................... 34
7.6 Cash Profit Sharing Program..................................... 34

ARTICLE VIII FRINGE AND OTHER BENEFITS.................................... 35

8.1 Employee Assistance Program..................................... 35
8.2 Educational Assistance Program.................................. 35
8.3 Adoption Assistance Program..................................... 35
8.4 Cafeteria and Related Subsidies................................. 35
8.5 Credit Union.................................................... 36
8.6 Employee Product Discounts...................................... 36
8.7 Employee Scholarship Program.................................... 36
8.8 Recreational Properties......................................... 36
8.9 HP-Owned and Operated Aircraft.................................. 36
8.10 HP-Owned Cars................................................... 36
8.11 Other Benefits.................................................. 37

ARTICLE IX ADMINISTRATIVE PROVISIONS...................................... 38

9.1 Additional Service Level Agreements............................. 38
9.2 Payment of Liabilities, Plan Expenses and Related Matters....... 38
9.3 Sharing of Participant Information.............................. 38
9.4 Reporting and Disclosure Communications to Participants......... 39
9.5 Audits Regarding Vendor Contracts............................... 39
9.6 Employee Identification Numbers................................. 39
9.7 Beneficiary Designations........................................ 39
9.8 Requests for IRS and DOL Opinions............................... 39
9.9 Fiduciary Matters............................................... 40
</TABLE>

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9.10 Consent of Third Parties........................................ 40
9.11 World Wide Web.................................................. 40
9.12 Tax Cooperation................................................. 40

ARTICLE X EMPLOYMENT-RELATED MATTERS...................................... 41

10.1 Terms of Agilent Employment..................................... 41
10.2 HR Data Support Systems......................................... 41
10.3 Non-Solicitation of Employees................................... 41
10.4 Employment of Employees with U.S. Work Visas.................... 41
10.5 Confidentiality and Proprietary Information..................... 41
10.6 FTO............................................................. 42
10.7 Accrued Payroll, Bonuses, Profit Sharing and Commissions........ 42
10.8 Payroll and Withholding......................................... 42
10.9 Personnel and Pay Records....................................... 43
10.10 Unemployment Insurance Program.................................. 43
10.11 Non-Termination of Employment; No Third-Party Beneficiaries..... 44
10.1 Employment Litigation........................................... 44

ARTICLE XI GENERAL PROVISIONS............................................. 45

11.1 Effect if Payroll, Separation, IPO and/or Distribution Does
Not Occur....................................................... 45
11.2 Relationship of Parties......................................... 45
11.3 Affiliates...................................................... 45
11.4 Incorporation of Separation Agreement Provisions................ 45
11.5 Governing Law................................................... 45
11.6 Severability.................................................... 45
11.7 Amendment....................................................... 46
11.8 Termination..................................................... 46
11.9 Conflict........................................................ 46
11.10 Counterparts.................................................... 46
</TABLE>

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(Continued)
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SCHEDULE 1.40
Health and Welfare Plans................................................. i

SCHEDULE 6.1(a)(i)
Actuarial Assumptions for HP VEBA Income Protection Plan Liabilities..... ii

SCHEDULE 6.1(a)(ii)
Actuarial Assumptions for HP VEBA Survivor Protection Plan Liabilities... iv

SCHEDULE 6.5(a)
Third Party ASO Contracts................................................ v

SCHEDULE 6.5(b)
Group Insurance Policies................................................. vi

SCHEDULE 6.5(c)
Third Party HMO Contracts................................................ vii

SCHEDULE 6.6(a)
Assumptions for HP Long-Term Care Plan Liabilities.......................viii

SCHEDULE 6.15(d)
WCP Claims Accrued Liabilities Allocation................................ ix

SCHEDULE 7.2(c)
Options Held by Certain Non-U.S. Agilent Transferred Employees........... x

SCHEDULE 8.11
Fringe Benefits.......................................................... xi

SCHEDULE 10.12(a)
Employment Litigation Transferred Claims................................. xii

SCHEDULE 10.12(b)
Employment Litigation Jointly Defend Claims..............................xiii
</TABLE>

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<PAGE>

EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this "Agreement") is entered into on
_________, 1999, between Hewlett-Packard Company ("HP"), a Delaware corporation,
and Agilent Technologies, Inc. ("Agilent"), a Delaware corporation. Capitalized
terms used herein (other than the formal names of HP Plans (as defined below)
and related trusts of HP) and not otherwise defined, shall have the respective
meanings assigned to them in Article I hereof.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interests of HP and its shareholders to separate HP's existing businesses into
two (2) independent businesses, HP and the Agilent Business;

WHEREAS, in furtherance of the foregoing, HP and Agilent have agreed to
enter into this Agreement to allocate between them assets, liabilities and
responsibilities with respect to certain employee compensation, benefit plans
and programs, and certain employment matters;

WHEREAS, the foreign subsidiaries of Agilent and HP, as applicable, have or
will enter into separate agreements to specify the terms under which HP and
Agilent agree to allocate between them all assets, liabilities and
responsibilities relating to, and arising from Foreign Plans and certain
employment matters ("Local Agreements"); and

NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS
-----------

Wherever used in this Agreement, the following terms shall have the
meanings indicated below, unless a different meaning is plainly required by the
context. The singular shall include the plural, unless the context indicates
otherwise. Headings of sections are used for convenience of reference only, and
in case of conflict, the text of this Agreement, rather than such headings,
shall control:

1.1 Affiliate. "Affiliate" means, with respect to HP, any entity in which
---------
HP holds a fifty percent (50%) or less ownership (as listed on Schedule 7.1(a)
of the Separation Agreement), and with respect to Agilent, any entity in which
Agilent holds a fifty percent (50%) or less ownership (as listed on Schedule
7.1(b) of the Separation Agreement).

1.2 Agilent. "Agilent" means Agilent Technologies, Inc., a Delaware
-------
corporation. In all such instances in which Agilent is referred to in this
Agreement, it shall also be deemed to include a reference to each member of the
Agilent Group, unless it specifically provides otherwise; Agilent
<PAGE>

shall be solely responsible to HP for ensuring that each member of the Agilent
Group complies with the applicable terms of this Agreement.

1.3 Agilent Business. "Agilent Business" means (a) the business and
----------------
operations of the business entities of HP currently known under the following
names, as described in the IPO Registration Statement and as such business and
operations will continue following the Separation Date: (i) the Test and
Measurement Organization, (ii) the Semiconductor Products Group, (iii) the
Chemical Analysis Group, (iv) the Healthcare Solutions Group, (v) a portion of
HP Labs, and (vi) any related infrastructure organizations, and (b) except as
otherwise expressly provided in the General Assignment and Assumption Agreement,
any terminated, divested, or discontinued businesses or operations that at the
time of termination, divestiture or discontinuation primarily related to the
Agilent Business as then conducted.

1.4 Agilent Employee. "Agilent Employee" means any individual who is: (a)
----------------
either actively employed by, or on leave of absence from, the Agilent Group on
the Payroll Date; (b) either actively employed by, or on leave of absence from,
the HP Group as either part of a work group or organization, or common support
function that, at any time after the Payroll Date and before the Distribution
Date, moves to the employ of the Agilent Group from the employ of the HP Group;
(c) an Agilent Terminated Employee; (d) employed by the Agilent Group; (e) any
other employee or group of employees designated as Agilent Employees (as of the
specified date) by HP and Agilent by mutual agreement; or (f) an alternate payee
under a QDRO, alternate recipient under a QMCSO, beneficiary, covered dependent,
or qualified beneficiary (as such term is defined under COBRA), in each case, of
an employee or former employee, described in Subsections 1.4(a) through (e) with
respect to that employee's or former employee's benefit under the applicable
Plan(s) (unless specified otherwise in this Agreement, such an alternate payee,
alternate recipient, beneficiary, covered dependent, or qualified beneficiary
shall not otherwise be considered an Agilent Employee with respect to any
benefits he or she accrues or accrued under any applicable Plan(s), unless he or
she is an Agilent Employee by virtue of Subsections 1.4(a) through (e)).

1.5 Agilent Group. "Agilent Group" means Agilent and each Subsidiary and
-------------
Affiliate of Agilent as of the Payroll Date, or that is contemplated to be a
Subsidiary or Affiliate of Agilent after the Payroll Date pursuant to the Non-
U.S. Plan other than any Subsidiary or Affiliate that is contemplated not to be
controlled by Agilent pursuant to the Non-U.S. Plan.

1.6 Agilent Master Trust. "Agilent Master Trust" is defined in Subsection
--------------------
3.1(b).

1.7 Agilent Stock Value. "Agilent Stock Value" means the opening per-
-------------------
share price of Agilent common stock as listed on the NYSE or Nasdaq, as
applicable, on the first trading day after the Distribution Date.

1.8 Agilent Terminated Employee. "Agilent Terminated Employee" means any
---------------------------
individual who is: (a) a former employee of the HP Group who was terminated from
the Agilent Business on or before the Payroll Date; or (b) a former employee of
the Agilent Group.

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<PAGE>

Notwithstanding the foregoing, "Agilent Terminated Employee" shall not, unless
otherwise expressly provided to the contrary in this Agreement, include: (a) an
individual who is an HP Employee at the Distribution Date; or (b) an individual
who is otherwise an Agilent Terminated Employee, but who is subsequently
employed by the HP Group prior to the Distribution Date.

1.9 Agilent Transferred Employee. "Agilent Transferred Employee" means
----------------------------
any individual who, as of the Distribution Date, is: (a) either actively
employed by, or on a leave of absence from, the Agilent Group; (b) an Agilent
Terminated Employee; (c) an alternate payee under a QDRO, alternate recipient
under a QMCSO, beneficiary, covered dependent, or qualified beneficiary (as such
term is defined under COBRA), in each case, of an employee or former employee,
described in Subsection 1.9(a) or (b) with respect to that employee's or former
employee's benefit under the applicable Plan(s) (unless specified otherwise in
this Agreement, such an alternate payee, alternate recipient, beneficiary,
covered dependent, or qualified beneficiary shall not otherwise be considered an
Agilent Transferred Employee with respect to any benefits he or she accrues or
accrued under any applicable Plan(s), unless he or she is an Agilent Transferred
Employee by virtue of Subsection 1.9(a) or (b)); or (d) an employee or group of
employees designated by HP and Agilent, by mutual agreement, as Agilent
Transferred Employees. An employee may be an Agilent Transferred Employee
pursuant to this Section regardless of whether such employee is, as of the
Distribution Date, alive, actively employed, on a temporary leave of absence
from active employment, on layoff, terminated from employment, retired or on any
other type of employment or post-employment status relative to an HP Plan, and
regardless of whether, as of the Distribution Date, such employee is then
receiving any benefits from an HP Plan.

1.10 Agilent WCP Claims. "Agilent WCP Claims" is defined in Subsection
------------------
6.15(a)(i).

1.11 Agreement. "Agreement" means this Employee Matters Agreement,
---------
including all the Addendums, Schedules and Exhibits hereto, and all amendments
made hereto from time to time.

1.12 Ancillary Agreement. "Ancillary Agreements" means all of the
-------------------
underlying agreements, documents and instruments referred to, contemplated by,
or made a part of the Separation Agreement.

1.13 ASO Contracts. "ASO Contracts" is defined in Subsection 6.5(a) and
-------------
the Schedule 6.5(a).

1.14 Benefits Committee. "Benefits Committee" means the benefits
------------------
committee established pursuant to Section 2.6.

1.15 Cash Profit Sharing Program. "Cash Profit Sharing Program," when
---------------------------
immediately preceded by "HP," means the HP Cash Profit Sharing Program. When
immediately preceded by "Agilent," "Cash Profit Sharing Program" means the cash
profit sharing program to be established by Agilent pursuant to Sections 2.2 and
7.6 that corresponds to the HP Cash Profit Sharing Plan.

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<PAGE>

1.16 COBRA. "COBRA" means the continuation coverage requirements for
-----
"group health plans" under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended from time to time, and as codified in
Code Section 4980B and ERISA Sections 601 through 608.

1.17 Code. "Code" means the Internal Revenue Code of 1986, as amended from
----
time to time.

1.18 DCR Plan. "DCR Plan," when immediately preceded by "HP," means the HP
--------
Dependent Care Reimbursement Plan. When immediately preceded by "Agilent," "DCR
Plan" means the dependent care reimbursement plan to be established by Agilent
pursuant to Sections 2.2 and 6.10 that corresponds to the HP DCR Plan.

1.19 Distribution. "Distribution" means HP's pro rata distribution to the
------------
holders of its common stock, $0.01 par value, several months following the IPO,
of all the shares of Agilent common stock owned by HP.

1.20 Distribution Date. "Distribution Date" means the date that the
-----------------
Distribution is effective.

1.21 DOL. "DOL" means the United States Department of Labor.
---

1.22 DPSP. "DPSP," when immediately preceded by "HP," means the HP
----
Deferred Profit-Sharing Plan, a defined contribution plan. When immediately
preceded by "Agilent," "DPSP" means the profit-sharing plan to be established by
Agilent pursuant to Sections 2.2 and 4.2 and that corresponds to the HP DPSP.

1.23 DPSP Transfer Date. "DPSP Transfer Date" is defined in Subsection
------------------
4.2(e)(ii).

1.24 ERISA. "ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.

1.25 Excess Benefit Plan. "Excess Benefit Plan," when immediately preceded
-------------------
by "HP," means the HP Excess Benefit Retirement Plan. When immediately preceded
by "Agilent," "Excess Benefit Plan" means the non-qualified supplemental excess
benefit retirement plan to be established by Agilent pursuant to Sections 2.2
and 5.1 that corresponds to the HP Excess Benefit Plan.

1.26 Excluded Options. "Excluded Options" is defined in Section 7.2(b).
----------------

1.27 Executive Deferred Compensation Plan. "Executive Deferred
------------------------------------
Compenstion Plan," when immediately preceded by "HP," means the HP Executive
Deferred Compensation Plan. When immediately preceded by "Agilent," "Executive
Deferred Compensation Plan" means the deferred compensation plan to be
established by Agilent pursuant to Sections 2.2 and 5.2 that corresponds to the
HP Executive Deferred Compensation Plan.

-4-
<PAGE>

1.28 Flexible Benefits Plan. "Flexible Benefits Plan," when immediately
----------------------
preceded by "HP," means the HP Premium Plan, the HP HCR Plan, and the HP DCR
Plan. When immediately preceded by "Agilent," Flexible Benefits Plan means the
Agilent Premium Plan, the Agilent HCR Plan, and the Agilent DCR Plan to be
established by Agilent pursuant to Sections 2.2 and 6.10 that correspond to the
respective HP Flexible Benefits Plan.

1.29 FMLA. "FMLA" means the Family and Medical Leave Act of 1993, as
----
amended from time to time.

1.30 Food Subsidy Programs. "Food Subsidy Programs" is defined in Section
---------------------
8.4.

1.31 Foreign Plan. "Foreign Plan," when immediately preceded by "HP,"
------------
means a Plan maintained by the HP Group for the benefit of its employees outside
the U.S. When immediately preceded by "Agilent," "Foreign Plan" means a Plan to
be established by Agilent for the benefit of its employees outside the U.S.

1.32 Fringe Benefits. "Fringe Benefits," when immediately preceded by "HP"
---------------
means the HP employee assistance program, the educational assistance program and
other fringe benefits, plans, programs and arrangements sponsored and maintained
by HP (as set forth in Article VIII and the Schedule attached thereto). When
immediately preceded by "Agilent," "Fringe Benefits" means the fringe benefits,
plans, programs and arrangements to be established by Agilent pursuant to
Section 2.2 and Article VIII that correspond to the respective HP Fringe
Benefits.

1.33 FTO. "FTO," when immediately preceded by "HP," means the HP Flexible
---
Time Off Policy. When immediately preceded by "Agilent," "FTO" means the Agilent
flexible time off policy to be established by Agilent pursuant to Sections 2.2
and 10.6 that corresponds to the HP FTO Policy.

1.34 General Assignment and Assumption Agreement. "General Assignment and
-------------------------------------------
Assumption Agreement" means the Ancillary Agreement which is Exhibit C to the
Separation Agreement.

1.35 Group Insurance Policies. "Group Insurance Policies" is defined in
------------------------
Subsection 6.5(b) and the Schedule thereto.

1.36 Group Trust. "Group Trust" is defined in Subsection 3.1(a).
-----------

1.37 GUL. "GUL," when immediately preceded by "HP," means the HP Group
---
Universal Life Insurance Program. When immediately preceded by "Agilent," "GUL"
means the group universal life insurance program to be established by Agilent
pursuant to Sections 2.2 and 6.7 that corresponds to the HP GUL.

1.38 HCFA. "HCFA" means the United States Health Care Financing
----
Administration.

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<PAGE>

1.39 HCR Plan. "HCR Plan," when immediately preceded by "HP," means the HP
--------
Health Care Reimbursement Plan. When immediately preceded by "Agilent," "HCR
Plan" means the health care reimbursement plan to be established by Agilent
pursuant to Sections 2.2 and 6.10 that corresponds to the HP HCR Plan.

1.40 Health and Welfare Plans. "Health and Welfare Plans," when
------------------------
immediately preceded by "HP," means the HP Health Plans, the HP Flexible Benefit
Plan, and the health and welfare plans listed on Schedule 1.40 established and
maintained by HP for the benefit of employees and retirees of the HP Group, and
such other welfare plans or programs as may apply to such employees and retirees
as of the Distribution Date. When immediately preceded by "Agilent," "Health and
Welfare Plans" means the Agilent Health Plans, the Agilent Flexible Benefit
Plan, and the health and welfare plans to be established by Agilent pursuant to
Section 2.2 and Article VI that correspond to the respective HP Health and
Welfare Plans.

1.41 Health Plans. "Health Plans," when immediately preceded by "HP,"
------------
means the Medical Plan Option A, Medical Plan Option B, HMO, Regular Dental
Plan, Dental Plan II, Community Dental Network ("CDN") (available in San Diego,
California only), Continued Group Medical and SeniorMed Programs, and any
similar or successor plans, programs or arrangements. When immediately preceded
by "Agilent," "Health Plans" means the health plans, programs and arrangements
to be established by Agilent pursuant to Section 2.2 and Article VI that
correspond to the respective HP Health Plans.

1.42 HMO. "HMO" means a health maintenance organization that provides
---
benefits under the HP Health Plans or the Agilent Health Plans.

1.43 HMO Agreements. "HMO Agreements" is defined in Subsection 6.5(c) and
--------------
Schedule 6.5(c).

1.44 HP. "HP" means Hewlett-Packard Company, a Delaware corporation. In
--
all such instances in which HP is referred to in this Agreement, it shall also
be deemed to include a reference to each member of the HP Group, unless it
specifically provides otherwise; HP shall be solely responsible to Agilent for
ensuring that each member of the HP Group complies with the applicable terms of
this Agreement.

1.45 HP Employee. "HP Employee" means an individual who, on the
-----------
Distribution Date, is: (a) either actively employed by, or on leave of absence
from, the HP Group; (b) an HP Terminated Employee; or (c) an employee or group
of employees designated as HP Employees by HP and Agilent, by mutual agreement.

1.46 HP Group. "HP Group" means HP and each Subsidiary and Affiliate of HP
--------
(or any predecessor organization thereof).

1.47 HP GUL Transfer Date. "HP GUL Transfer Date" is defined in Subsection
--------------------
6.7(c)(iii).

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<PAGE>

1.48 HP L-T Care Plan Transfer Date. "HP L-T Care Plan Transfer Date" is
------------------------------
defined in Subsection 6.6(b)(ii).

1.49 HP Master Trust. "HP Master Trust" is defined in Subsection 3.1(c).
---------------

1.50 HP Stock Value. "HP Stock Value" means the closing per-share price of
--------------
HP common stock as listed on the NYSE on the last trading day before the
Distribution Date.

1.51 HP Terminated Employee. "HP Terminated Employee" means any individual
----------------------
who is a former employee of the HP Group and who, on the Distribution Date, is
not an Agilent Transferred Employee.

1.52 HP WCP. "HP WCP" means the HP Workers' Compensation Program,
------
comprised of the various arrangements established by a member of the HP Group to
comply with the workers' compensation requirements of the states in which the HP
Group conducts business.

1.53 Income Protection Plan. "Income Protection Plan" or "IPP," when
----------------------
immediately preceded by "HP," means the HP Income Protection Plan for short-term
and long-term disabilities which is offered through the HP Employee Benefits
Organization Trust (or, where an employee works in a state that offers a
statutory state disability plan, then "Income Protection Plan" refers to the
alternative voluntary state disability plan offered under the Income Protection
Plan). When immediately preceded by "Agilent," "Income Protection Plan" or "IPP"
means the Income Protection Plan to be established by Agilent pursuant to
Section 2.2 and Article VI that corresponds to the HP IPP Plan.

1.54 IPO. "IPO" means the initial public offering of Agilent common stock
---
pursuant to a registration statement on Form S-1 pursuant to the Securities Act
of 1933, as amended.

1.55 IPO Closing Date. "IPO Closing Date" means the closing of the IPO
----------------
which is currently scheduled to occur prior to December 31, 1999.

1.56 IPO Registration Statement. "IPO Registration Statement" means the
--------------------------
registration statement on Form S-1 pursuant to the Securities Act of 1933 as
amended, to be filed with the SEC registering the shares of common stock of
Agilent to be issued in the IPO, together with all amendments thereto.

1.57 IRG. "IRG," when immediately preceded by "HP," means the HP
---
International Retirement Guaranty. When immediately preceded by "Agilent," "IRG"
means the international retirement guarantee program to be established by
Agilent pursuant to Sections 2.2 and 5.4.

1.58 IRS. "IRS" means the United States Internal Revenue Service.
---

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<PAGE>

1.59 L-T Care Plan. "L-T Care Plan," when immediately preceded by "HP,"
-------------
means the HP Group Long-Term Care Plan. When immediately preceded by "Agilent,"
"L-T Care Plan" means the group long-term care plan to be established by Agilent
pursuant to Sections 2.2 and 6.6 that corresponds to the HP L-T Care Plan.

1.60 Leave of Absence Programs. "Leave of Absence Programs," when
-------------------------
immediately preceded by "HP," means the personal, medical, military and FMLA
leave offered from time to time under the personnel policies and practices of
HP. When immediately preceded by "Agilent," "Leave of Absence Programs" means
the leave of absence programs to be established by Agilent pursuant to Sections
2.2 and 6.13 that correspond to the respective HP Leave of Absence Programs.

1.61 Legally Permissible. "Legally Permissible" is defined in Subsection
-------------------
6.15(a)(iv).

1.62 Liabilities. "Liabilities" means all debts, liabilities, guarantees,
-----------
assurances, commitments, and obligations, whether fixed, contingent or absolute,
asserted or unasserted, matured or unmatured, liquidated or unliquidated,
accrued or not accrued, known or unknown, due or to become due, whenever or
however arising (including, without limitation, whether arising out of any
Contract or tort based on negligence or strict liability) and whether or not the
same would be required by generally accepted principles and accounting policies
to be reflected in financial statements or disclosed in the notes thereto.
"Contract" means any contract, agreement, lease, license, sales order, purchase
order, instrument or other commitment that is binding on any Person or any part
of its property under applicable law.

1.63 Local Agreement. "Local Agreement" is defined in Section 2.7.
---------------

1.64 Material Feature. "Material Feature" means any feature of a Plan that
----------------
could reasonably be expected to be of material importance to the sponsoring
employer or the participants (or their dependents or beneficiaries) (in the
aggregate) of that Plan, which could include, depending on the type and purpose
of the particular Plan, the class or classes of employees eligible to
participate in such Plan, the nature, type, form, source, and level of benefits
provided under such Plan and the amount or level of contributions, if any,
required to be made by participants (or their dependents or beneficiaries) to
such Plan.

1.65 Non-Qualified Plans. "Non-Qualified Plans" when immediately preceded
-------------------
by "HP," means the HP Excess Benefit Plan, the HP Executive Deferred
Compensation Plan, and the HP Officers Early Retirement Plan. When immediately
preceded by "Agilent," "Non-Qualified Plan" means the deferred compensation and
excess benefit plans, programs, or arrangements to be established by Agilent
pursuant to Section 2.2 and Article V.

1.66 Non-U.S. Plan. "Non-U.S. Plan" means the local transfer agreements,
-------------
assignments, assumptions, novations and other documents executed by the foreign
subsidiaries of HP and Agilent as shall be necessary to carry out the plan of
reorganization described in Exhibit M to the Separation

-8-
<PAGE>

Agreement to effect the purposes of the Separation Agreement with respect to HP
and Agilent's respective operations outside the U.S.

1.67 Option. "Option," when immediately preceded by "HP," means an option
------
to purchase HP common stock pursuant to a Stock Plan. When immediately preceded
by "Agilent," "Option" means an option to purchase Agilent common stock pursuant
to a Stock Plan.

1.68 Outsource. "Outsource" is defined in Subsections 6.3(b) and
---------
6.15(a)(iii) for purposes of each such respective section.

1.69 Participating Company. "Participating Company" means: (a) HP; (b) any
---------------------
Person (other than an individual) that HP has approved for participation in, has
accepted participation in, and which is participating in, a Plan sponsored by
HP; or (c) any Person (other than an individual) which, by the terms of such
Plan, participates in such Plan or any employees of which, by the terms of such
Plan, participate in or are covered by such Plan.

1.70 Payroll Date. "Payroll Date" means November 1, 1999, or such later
------------
date on which Agilent Employees are first added to Agilent's U.S. payroll.

1.71 PBGC. "PBGC" means the Pension Benefit Guaranty Corporation.
----

1.72 Person. "Person" means an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, and a governmental entity or any
department, agency or political subdivision thereof.

1.73 Plan. "Plan," means any plan, policy, program, payroll practice,
----
arrangement, contract, trust, insurance policy, or any agreement or funding
vehicle providing compensation or benefits to employees, former employees or
directors of HP or Agilent.

1.74 Post-Employment Programs. "Post-Employment Programs," when
------------------------
immediately preceded by "HP," means the HP Continued Group Medical, HP
SeniorMed, and HP Retiree Life Programs that permit certain retirees and former
employees of the HP Group, and their eligible spouses, domestic partners, and
dependents to continue to receive coverage and benefits under certain HP Health
and Welfare Plans (other than dental plans) for a designated period of time.
When immediately preceded by "Agilent," "Post-Employment Programs" means such
continuation programs to be established by Agilent pursuant to Sections 2.2 and
6.14 that correspond to the HP Post-Employment Programs.

1.75 Premium Plan. "Premium Plan," when immediately preceded by "HP,"
------------
means the HP Medical/Dental Pre-Tax Premium Plan. When immediately preceded by
"Agilent," "Premium Plan" means the medical/dental pre-tax premium plan to be
established by Agilent pursuant to Sections 2.2 and 6.10 that corresponds to the
HP Premium Plan.

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<PAGE>

1.76 QDRO. "QDRO" means a domestic relations order which qualifies under
----
Code Section 414(p) and ERISA Section 206(d) and which creates or recognizes an
alternate payee's right to, or assigns to an alternate payee, all or a portion
of the benefits payable to a participant under any of the HP Retirement Plans.

1.77 QMCSO. "QMCSO" means a medical child support order which qualifies
-----
under ERISA Section 609(a) and which creates or recognizes the existence of an
alternate recipient's right to, or assigns to an alternate recipient the right
to, receive benefits for which a participant or beneficiary is eligible under
any of the Health Plans.

1.78 Rabbi Trust. "Rabbi Trust," when immediately preceded by "HP," means
-----------
the rabbi trust established for purposes of holding assets under the HP
Executive Deferred Compensation Plan. When immediately preceded by "Agilent,"
"Rabbi Trust" means the grantor trust to be established by Agilent pursuant to
Section 5.2 that corresponds to the HP Rabbi Trust.

1.79 Ratio. "Ratio" means the ratio determined by dividing the Agilent
-----
Stock Value by the HP Stock Value.

1.80 Record Date. "Record Date" means the close of business on the date to
-----------
be determined by the Board of Directors of HP as the record date for determining
the stockholders of HP entitled to receive shares of common stock of Agilent in
the Distribution.

1.81 Redeployment/Alternate Offer Program. "Redeployment/Alternate Offer
------------------------------------
Program," when immediately preceded by "HP," means the HP Redeployment/Alternate
Offer Program. When immediately preceded by "Agilent," "Redeployment/Alternate
Offer Program" means the redeployment/alternate offer program to be established
by Agilent pursuant to Sections 2.2 and 6.11 that corresponds to the HP
Redeployment/Alternate Offer Program.

1.82 Restricted Stock. "Restricted Stock" when immediately preceded by
----------------
"HP," means shares of HP common stock that are subject to transfer restrictions
or to employment and/or performance vesting conditions, pursuant to an HP Stock
Plan. When immediately preceded by "Agilent," "Restricted Stock" means shares of
Agilent common stock that are subject to transfer restrictions or to employment
and/or performance vesting conditions, pursuant to an Agilent Stock Plan.

1.83 Retirement Plans. "Retirement Plans," when immediately preceded by
----------------
"HP," means the HP TAXCAP, the HP DPSP and the HP RP. When immediately preceded
by "Agilent," "Retirement Plans" means all defined contribution and defined
benefit plans to be established by Agilent pursuant to Section 2.2, and Articles
III and IV that correspond to the respective HP Retirement Plan.

1.84 RP. "RP," when immediately preceded by "HP," means the HP Retirement
--
Plan, a defined benefit plan. When immediately preceded by "Agilent," "RP" means
the defined benefit

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<PAGE>

plan to be established by Agilent pursuant to Section 2.2 and Article III that
corresponds to the HP RP.

1.85 RP Transfer Date. "RP Transfer Date" is defined in Subsection
----------------
3.2(b)(iv).

1.86 SEC. "SEC" means the United States Securities and Exchange
---
Commission.

1.87 Separation. "Separation" means the contribution and transfer from HP
----------
to Agilent, and Agilent's receipt and assumption of, directly or indirectly,
substantially all of the assets and liabilities (as defined in Section 1.3 of
the General Assignment and Assumption Agreement) currently associated with the
Agilent Business and the stock, investments or similar interests currently held
by HP in subsidiaries and other entities that conduct such business.

1.88 Separation Agreement. "Separation Agreement" means the Master
--------------------
Separation and Distribution Agreement of which this is an Exhibit thereto.

1.89 Separation Date. "Separation Date" means the effective date and time
---------------
of each transfer of property, assumption of liability, license, undertaking, or
agreement in connection with the Separation which shall be 12:01 a.m., Pacific
Time, November 1, 1999, or such other date as may be fixed by the Board of
Directors of HP.

1.90 Stock Plan. "Stock Plan," when immediately preceded by "HP," means
----------
any plan, program or arrangement, other than the Stock Purchase Plan, pursuant
to which employees and other service providers hold Options, HP Restricted
Stock, or other HP equity incentives. When immediately preceded by "Agilent,"
"Stock Plan" means substantially similar plans, programs or arrangements to be
established by Agilent pursuant to Section 2.2 and Article VIII.

1.91 Stock Purchase Plan. "Stock Purchase Plan," when immediately
-------------------
preceded by "HP," means the HP Employee Stock Purchase Plan. When immediately
preceded by "Agilent," "Stock Purchase Plan" means the employee stock purchase
plan to be established by Agilent pursuant to Sections 2.2 and 7.4 that
corresponds to the HP Stock Purchase Plan.

1.92 Subsidiary. "Subsidiary" means, with respect to any specified
----------
Person, any corporation, any limited liability company, any partnership or other
legal entity of which such Person or its Subsidiaries owns, directly or
indirectly, more than fifty percent (50%) of the stock or other equity interest
entitled to vote on the election of the members of the board of directors or
similar governing body. Unless the context otherwise requires, reference to HP
and its Subsidiaries shall not include the subsidiaries of HP that will be
transferred to Agilent after giving effect to the Separation, including the
actions taken pursuant to the Non-U.S. Plans.

1.93 Survivor Protection Plan. "Survivor Protection Plan," when
------------------------
immediately preceded by "HP," means the HP Accidental Death and Dismemberment
("AD&D") Plan, the HP LIFE Insurance Plan, the HP Retiree Survivor's Benefit
Plan, and any other similar or successor programs, plans or arrangements. When
immediately preceded by "Agilent," "Survivor Protection Plan" means the life

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<PAGE>

insurance programs, plans and arrangements to be established by Agilent pursuant
to Section 2.2 that correspond to the HP Survivor Protection Plan.

1.94 Tax Sharing Agreement. "Tax Sharing Agreement" means the Ancillary
---------------------
Agreement which is Exhibit F to the Separation Agreement.

1.95 TAXCAP. "TAXCAP," when immediately preceded by "HP," means the HP
------
Tax Saving Capital Accumulation Plan, a stock bonus, defined contribution plan.
When immediately preceded by "Agilent," "TAXCAP" means the stock bonus, defined
contribution plan to be established by Agilent pursuant to Sections 2.2 and 4.1
that corresponds to the HP TAXCAP.

1.96 Transition Period. "Transition Period" means, for each designated
-----------------
Plan, the period beginning as of the Distribution Date and ending on the date
that no member of the Agilent Group is using HP benefit delivery and
administrative services with respect to that Plan.

1.97 Unemployment Insurance Program. "Unemployment Insurance Program,"
------------------------------
when immediately preceded by "HP," means the group unemployment insurance
policies purchased by HP from time to time. When immediately preceded by
"Agilent," "Unemployment Insurance Program" means any group unemployment
insurance policies to be established by Agilent pursuant to Section 10.10.

1.98 Variable Pay Plan. "Variable Pay Plan," when immediately preceded by
-----------------
"HP," means the HP Variable Pay Plan. When immediately preceded by "Agilent,"
"Variable Pay Plan" means the variable pay plan to be established by Agilent
pursuant to Sections 2.2 and 7.1 that corresponds to the HP Variable Pay Plan.

1.99 VEBA. "VEBA," when immediately preceded by "HP," means the HP
----
Employee Benefits Organization Trust which is intended to be a voluntary
employees' beneficiary association under Code Section 501(c)(9). When
immediately preceded by "Agilent," "VEBA" means any voluntary employees'
beneficiary association trust to be established by Agilent pursuant to Sections
2.2 and 6.1 that corresponds to the HP VEBA.

1.100 VEBA Transfer Date. "VEBA Transfer Date" is defined in Subsection
------------------
6.1(b)(ii).

1.101 Voluntary Severance Incentive Plan. "Voluntary Severance Incentive
----------------------------------
Plan" when immediately preceded by "HP," means the HP Voluntary Severance
Incentive Plan, an ERISA severance program. When immediately preceded by
"Agilent," "Voluntary Severance Incentive Plan" means the severance program to
be established by Agilent pursuant to Section 2.2.

-12-
<PAGE>

ARTICLE II

GENERAL PRINCIPLES
------------------

2.1 Assumption of Agilent Liabilities. Except as specified otherwise in
---------------------------------
this Agreement, or as mutually agreed upon by Agilent and HP from time to time,
Agilent hereby assumes and agrees to pay, perform, fulfill and discharge, in
accordance with their respective terms, all of the following: (a) all
Liabilities to or relating to Agilent Transferred Employees, in each case
relating to, arising out of or resulting from employment by the HP Group before
becoming Agilent Transferred Employees, respectively (including Liabilities
arising under or relating to HP Plans and Agilent Plans); (b) all other
Liabilities to or relating to Agilent Employees or Agilent Transferred
Employees, to the extent relating to, arising out of, or resulting from future,
present or former employment with the Agilent Group (including Liabilities
arising under or relating to HP Plans and Agilent Plans); (c) all Liabilities
relating to, arising out of or resulting from any other actual or alleged
employment relationship with the Agilent Group; and (d) all other Liabilities
relating to, arising out of, or resulting from obligations, liabilities and
responsibilities expressly assumed or retained by the Agilent Group, or an
Agilent Plan pursuant to this Agreement. Except as specified otherwise in this
Agreement or as otherwise mutually agreed upon by HP and Agilent from time to
time, HP shall transfer to Agilent amounts equal to trust assets, insurance
reserves, and other related assets as consistent with the applicable Plan
transition that arises out of or relates to Agilent's pro rata interest in each
HP Plan.

2.2 Establishment of Agilent Plans.
------------------------------

(a) VEBA/Health and Welfare Plans. Except as specified otherwise in
-----------------------------
this Agreement, effective as of the Distribution Date or such other date(s) as
HP and Agilent may mutually agree, Agilent shall adopt the Agilent VEBA and the
Agilent Health and Welfare Plans. The foregoing Agilent Plans as in effect as of
the Distribution Date shall be substantially identical in all Material Features
to the comparable HP Plans as in effect on the Distribution Date.

(b) Retirement Plans and Fringe Benefits. Except as specified
------------------------------------
otherwise in this Agreement, effective as of the Distribution Date or such other
date(s) as HP and Agilent may mutually agree, Agilent shall adopt the Agilent
Retirement Plans and the Agilent Fringe Benefits. The foregoing Agilent Plans as
in effect as of the Distribution Date shall be substantially identical in all
Material Features to the comparable HP Plans as in effect on the Distribution
Date.

(c) Equity and Other Compensation. Except as specified otherwise in
-----------------------------
this Agreement, effective on or before the Payroll Date or such other date(s) as
HP and Agilent may mutually agree, Agilent shall adopt the Agilent Stock Plans,
the Agilent Variable Pay Plan and the Agilent Cash Profit Sharing Program.
Effective on or before the IPO or such other date as HP and Agilent may mutually
agree, Agilent shall adopt the Agilent Stock Purchase Plan. The foregoing
Agilent Plans as in effect as of the Payroll Date (IPO in the case of the Stock
Purchase Plan) shall be

-13-
<PAGE>

substantially identical in all Material Features to the comparable HP Plans as
in effect on the Payroll Date (IPO in the case of the Stock Purchase Plan).

(d) Other Plans. Except as specified otherwise in this Agreement,
-----------
effective as of the Payroll Date or such other date(s) as HP and Agilent may
mutually agree, Agilent shall adopt such Plans that are directly associated with
Agilent's U.S. payroll system or as otherwise may be determined to be
appropriate, including, without limitation, the Agilent Executive Deferred
Compensation Plan and the Agilent Leave of Absence Programs. The foregoing
Agilent Plans as in effect as of the Payroll Date shall be substantially
identical in all Material Features to the comparable HP Plans as in effect on
the Payroll Date.

(e) Agilent Under No Obligation to Maintain Plans. Except as
---------------------------------------------
specified otherwise in this Agreement, nothing in this Agreement shall preclude
Agilent, at any time after the Distribution Date from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any Agilent Plan, any benefit under any Agilent Plan or any trust,
insurance policy or funding vehicle related to any Agilent Plan (to the extent
permitted by law).

2.3 Agilent's Participation in HP Plans.
-----------------------------------

(a) Participation in HP Plans. Except as specified otherwise in this
-------------------------
Agreement, or as HP and Agilent may mutually agree, effective as of the Payroll
Date, Agilent shall become a Participating Company in the HP Plans in effect as
of the Payroll Date, to the extent that Agilent has not yet established a
comparable Plan. Effective as of any date on or after the Payroll Date and
before the Distribution Date (or such other date as HP or Agilent may mutually
agree upon), any member of the Agilent Group not described in the preceding
sentence may, at its request and with the consent of HP and Agilent, become a
Participating Company in any or all of the HP Plans, to the extent that Agilent
has not yet established a comparable Plan.

(b) HP's General Obligations as Plan Sponsor. To the extent that
----------------------------------------
Agilent is a Participating Company in any HP Plan(s), HP shall continue to
administer, or cause to be administered, in accordance with their terms and
applicable law, such HP Plan(s), and shall have the sole and absolute discretion
and authority to interpret the HP Plan(s), as set forth therein. HP shall not,
without first consulting with Agilent, amend any Material Feature of any HP Plan
in which Agilent is a Participating Company, except to the extent such amendment
would not affect any benefits of Agilent Employees or Agilent Transferred
Employees under such Plan or as may be necessary or appropriate to comply with
applicable law.

(c) Agilent's General Obligations as Participating Company. Agilent
------------------------------------------------------
shall perform with respect to its participation in the HP Plans, the duties of a
Participating Company as set forth in each such Plan or any procedures adopted
pursuant thereto, including (without limitation): (i) assisting in the
administration of claims, to the extent requested by the claims administrator of
the applicable HP Plan; (ii) cooperating fully with HP Plan auditors, benefit
personnel and benefit vendors; (iii) preserving the confidentiality of all
financial arrangements HP has or may have with

-14-
<PAGE>

any vendors, claims administrators, trustees or any other entity or individual
with whom HP has entered into an agreement relating to the HP Plans; and (iv)
preserving the confidentiality of participant information (including, without
limitation, health information in relation to FMLA leaves) to the extent not
specified otherwise in this Agreement.

(d) Termination of Participating Company Status. Except as otherwise
-------------------------------------------
may be mutually agreed upon by HP and Agilent, effective as of the Distribution
Date or such other date as Agilent establishes a comparable Plan (as specified
in Section 2.2 or otherwise in this Agreement), Agilent shall automatically
cease to be a Participating Company in the corresponding HP Plan.

2.4 Terms of Participation by Agilent Transferred Employees in Agilent
------------------------------------------------------------------
Plans.
- -----

(a) Non-Duplication of Benefits. As of the Distribution Date or such
---------------------------
later date that applies to the particular Agilent Plan established thereafter,
the Agilent Plans shall be, with respect to Agilent Transferred Employees, in
all respects the successors in interest to, and shall not provide benefits that
duplicate benefits provided by, the corresponding HP Plans. HP and Agilent shall
agree on methods and procedures, including amending the respective Plan
documents, to prevent Agilent Transferred Employees from receiving duplicate
benefits from the HP Plans and the Agilent Plans.

(b) Service Credit. Except as specified otherwise in this Agreement,
--------------
with respect to Agilent Transferred Employees, each Agilent Plan shall provide
that all service, all compensation and all other benefit-affecting
determinations that, as of the Distribution Date, were recognized under the
corresponding HP Plan shall, as of the Distribution Date, receive full
recognition and credit and be taken into account under such Agilent Plan to the
same extent as if such items occurred under such Agilent Plan, except to the
extent that duplication of benefits would result. Notwithstanding the foregoing,
HP and Agilent shall recognize service with either HP or Agilent that was
recognized as of the Distribution Date, except to the extent provided in
Subsection 2.4(a) above. The service crediting provisions shall be subject to
any respectively applicable "service bridging," "break in service," "employment
date," or "eligibility date" rules under the Agilent Plans and the HP Plans.

(c) Assumption of Liabilities. The provisions of this Agreement for
-------------------------
the transfer of assets relating to HP Plans to Agilent and/or the appropriate
Agilent Plans are based upon the understanding of the parties that Agilent
and/or the appropriate Agilent Plan will assume all Liabilities of the
corresponding HP Plan to or relating to Agilent Transferred Employees, as
provided for herein. If any such Liabilities are not effectively assumed by
Agilent and/or the appropriate Agilent Plan, then the amount of transferred
assets shall be recomputed accordingly, taking into account the retention of
such Liabilities by such HP Plan, and assets shall be transferred from Agilent
and/or the appropriate Agilent Plan to HP and/or the appropriate HP Plan so as
to place Agilent and/or the appropriate Agilent Plan in the position it would
have been in, had the initial asset transfer been made in accordance with such
recomputed amount of assets.

-15-
<PAGE>

2.5 Allocation of Costs and Expenses. Except as otherwise provided in
--------------------------------
this Agreement or in any underlying service level agreement between HP and
Agilent (as discussed in Section 9.1) relating to the Separation, the IPO, or
the Distribution, all costs and expenses of either party hereto in connection
with the IPO (excluding underwriting discounts and commissions) and the
Distribution, and certain costs and expenses of the parties hereto in connection
with the Separation, shall be paid by HP. Notwithstanding the foregoing, Agilent
shall pay any internal fees, costs and expenses incurred by Agilent in
connection with the Separation, the IPO and the Distribution.

2.6 Benefits Committee and Dispute Resolution. From the date of this
-----------------------------------------
Agreement through the later of the Distribution Date or the end of the
Transition Period, as applicable, the management of the Plans shall be conducted
under the supervision of the Benefits Committee. The Benefits Committee shall be
comprised of an equal number of representatives from HP and Agilent as appointed
by their respective Vice President, Human Resources, and shall provide strategic
oversight and direction of the cohesive administration of the Plans. Issues that
cannot be resolved by the Benefits Committee shall be decided, at the request of
either party, by the Agilent Vice President, Human Resources (or his or her
authorized delegate) and the HP Vice President, Human Resources (or his or her
authorized delegate). After the exhaustion of the process, as specified herein,
any outstanding issue shall be resolved in accordance with Section 5.9, entitled
"Dispute Resolution," of the Separation Agreement.

2.7 Foreign Plans. Agilent and HP each authorize their non-U.S.
-------------
subsidiaries to enter into separate local agreements with the counterpart of the
other party ("Local Agreements"). Agilent and HP intend that the Local
Agreements will generally specify the terms under which HP and Agilent agree to
allocate between them all assets, liabilities and responsibilities relating to,
and arising from Foreign Plans and certain employment matters. To the extent,
however, that any such Local Agreement does not address a particular principle
or plan, then the intent of the parties relating to comparable U.S. matters or
issues as reflected in this Agreement shall govern (to the extent permitted by
law).

-16-
<PAGE>

ARTICLE III

DEFINED BENEFIT PLAN
--------------------

3.1 Establishment of Group Trust and Master RP Trust.
------------------------------------------------

(a) Group Trust. Prior to the Distribution Date, HP shall cause the
-----------
Master Trust Agreement pursuant to the HP DPSP and HP RP to qualify as a group
trust under IRS Revenue Ruling 81-100 (the "Group Trust").

(b) Agilent Master Trust. Effective as of the Distribution Date,
--------------------
Agilent shall establish, or cause to be established, a separate master trust
which is intended to be qualified under Code Section 401(a) and exempt from
taxation under Code Section 501(a)(1) (the "Agilent Master Trust"), to hold the
assets of the Agilent RP and the Agilent DPSP.

(c) HP Master Trust. Effective as of the Distribution Date, HP shall
---------------
establish, or cause to be established, a new separate master trust which is
intended to be qualified under Code Section 401(a) and exempt from taxation
under Code Section 501(a)(1) (the "HP Master Trust"), to hold the assets of the
HP RP and the HP DPSP.

(d) Share of Group Trust Assets. Effective as of the Distribution
---------------------------
Date, the HP Master Trust and the Agilent Master Trust each shall own a pro rata
share of the portion of the assets of the Group Trust attributable to the HP RP
and the Agilent RP, as described in Subsection 3.2(b) below. The assets shall
remain in the Group Trust until such later date or dates that one or both of the
HP RP and the Agilent RP request to transfer from the Group Trust of some or all
of their pro rata shares of such Group Trust assets to the respective HP Master
Trust and Agilent Master Trust.

(e) Investment Management of Group Trust Assets. Effective as of the
-------------------------------------------
Distribution Date, HP and Agilent shall establish procedures to jointly manage
and invest the assets of the HP Master Trust and the Agilent Master Trust held
in the Group Trust that are attributable to the HP RP and the Agilent RP. Such
procedures may include the management of some or all of the Group Trust Assets
by employees of HP or Agilent, or by outside investment managers.

3.2 Assumption of RP Liabilities and Allocation of Interests in the Group
---------------------------------------------------------------------
Trust.
-----

(a) Assumption of Liabilities by Agilent RP. Effective as of the
---------------------------------------
Distribution Date, all accrued benefits of Agilent Transferred Employees under
the HP RP will be transferred to the Agilent RP. The Agilent RP shall assume and
be solely responsible for all Liabilities for or relating to the accrued
benefits of the Agilent Transferred Employees under the HP RP as of the
Distribution Date.

-17-
<PAGE>

(b) Asset Allocation and Transfers.
------------------------------

(i) As soon as reasonably practicable after the Distribution
Date, HP shall engage actuaries and cause to be determined for the HP RP: (A)
the total accrued benefit Liabilities as of the Distribution Date (without
regard to any benefit Liabilities funded through the Code Section 401(h) account
in the HP RP) for all participants in the HP RP, calculated on a projected
benefit obligation basis in accordance with Statement of Financial Accounting
Standards 87 ("FAS 87"), and (B) the present value of all of the retiree health
benefit Liabilities that are funded in part through the Code Section 401(h)
account portion of the HP RP as of the Distribution Date, calculated on an
accumulated post-retirement benefit obligation basis in accordance with
Statement of Financial Accounting Standards 106 ("FAS 106"). The particular
actuarial assumptions that will be used to value the benefit Liabilities
described in the preceding sentence shall be generally consistent with the
actuarial assumptions used by HP in prior valuations for purposes of satisfying,
respectively, its FAS 87 and FAS 106 reporting obligations, and shall be agreed
to by HP and Agilent prior to the Distribution Date.

(ii) The Agilent RP's share of the HP RP assets (other than
those HP RP assets attributable to the Code Section 401(h) account in the HP RP)
shall be equal to the percentage that the benefit Liabilities for the Agilent
Transferred Employees bears to the total benefit Liabilities determined under
Subsection 3.2 (b)(i)(A) above.

(iii) The Agilent RP's share of the HP RP assets in the Code
Section 401(h) account portion of the HP RP shall be equal to the percentage
that the retiree health benefit Liabilities for the Agilent Transferred
Employees bears to the total retiree health benefit Liabilities determined under
Subsection 3.2(b)(i)(B) above.

(iv) As soon as reasonably practicable after the Distribution
Date (the "RP Transfer Date"), the proportions calculated in Subsection
3.2(b)(ii) and (b)(iii) above of the respective retirement and 401(h) assets of
the HP RP valued as of the RP Transfer Date shall be transferred to the Agilent
RP. In this regard, no contributions shall be made by HP or Agilent to either
the HP RP or the Agilent RP between the Distribution Date and the RP Transfer
Date.

3.3 No Distributions to Agilent Transferred Employees. The HP RP and the
-------------------------------------------------
Agilent RP shall provide that no distribution of retirement benefits shall be
made to any Agilent Transferred Employee on account of the Agilent Group ceasing
to be an Affiliate of the HP Group as of the Distribution Date.

-18-
<PAGE>

ARTICLE IV

DEFINED CONTRIBUTION PLANS
--------------------------
4.1 TAXCAP.
------

(a) TAXCAP Trust. Effective as of the Distribution Date, Agilent
------------
shall establish, or cause to be established, a separate trust, which is intended
to be qualified under Code Section 401(a), exempt from taxation under Code
Section 501(a)(1), and forming the Agilent TAXCAP.

(b) TAXCAP: Assumption of Liabilities and Transfer of Assets.
--------------------------------------------------------
Effective as of the Distribution Date: (i) the Agilent TAXCAP shall assume and
be solely responsible for all Liabilities for or relating to Agilent Transferred
Employees under the HP TAXCAP; and (ii) HP shall cause the accounts of the
Agilent Transferred Employees under the HP TAXCAP that are held by its related
trust as of the Distribution Date to be transferred to the Agilent TAXCAP and
its related trust, and Agilent shall cause such transferred accounts to be
accepted by such plan and its related trust. As soon as reasonably practicable
after the Distribution Date, Agilent shall use its commercially reasonable best
efforts to enter into agreements satisfactory to Agilent to accomplish such
assumption and transfer, the maintenance of the necessary participant records,
the appointment of Fidelity Management Trust Company as the initial trustee
under the Agilent TAXCAP, and the engagement of Fidelity Institutional
Retirement Services Company as the initial recordkeeper under the Agilent
TAXCAP. Agilent and HP each agree to use their commercially reasonable best
efforts to accomplish this spin-off.

(c) TAXCAP: Stock Bonus Plan Considerations. As a result of the
----------------------------------------
spin-off of the HP TAXCAP, both the resulting HP TAXCAP and Agilent TAXCAP shall
be comprised in part of HP and Agilent employer securities. Agilent and HP shall
assume sole responsibility for ensuring that their respective company stock
funds, and underlying employer securities held in each such fund, are maintained
in compliance with all requirements of the SEC including, without limitation,
filing Forms S-8 and 11-K, and the prospectus requirements for such funds.

(d) No Distribution to Agilent Transferred Employees. The HP TAXCAP
------------------------------------------------
and the Agilent TAXCAP shall provide that no distribution of account balances
shall be made to any Agilent Transferred Employee on account of the Agilent
Group ceasing to be an Affiliate of the HP Group as of the Distribution Date.

-19-
<PAGE>

4.2 DPSP.
----

(a) Agilent Master Trust. Effective as of the Distribution Date, the
--------------------
Agilent Master Trust established under Subsection 3.1(b) shall hold the assets
of the Agilent DPSP and the Agilent RP.

(b) Share Group Trust Assets. Effective as of the Distribution Date,
------------------------
the HP Master Trust and the Agilent Master Trust each shall own a pro rata share
of the portion of the assets of the Group Trust attributable to the HP DPSP and
the Agilent DPSP as described in Subsection 4.2(e) below. The assets shall
remain in the Group Trust until such later date or dates that one or both of the
HP DPSP and Agilent DPSP request a transfer from the Group Trust of some or all
of their pro rata shares of such Group Trust assets to the respective HP Master
Trust and Agilent Master Trust.

(c) Investment Management of Group Trust Assets. Effective as of the
-------------------------------------------
Distribution Date, HP and Agilent shall establish procedures to jointly manage
and invest the assets of the HP Master Trust and the Agilent Master Trust held
in the Group Trust that are attributable to the HP DPSP and the Agilent DPSP.
Such procedures may include the management of some or all of the Group Trust
assets by employees of HP or Agilent, or by outside investment managers.

(d) Assumption of Liabilities by Agilent DPSP. Effective as of the
-----------------------------------------
Distribution Date, all accrued benefits of the Agilent Transferred Employees
under the HP DPSP will be transferred to the Agilent DPSP. The Agilent DPSP
shall assume and be solely responsible for all Liabilities for or relating to
Agilent Transferred Employees under the HP DPSP as of the Distribution Date.

(e) Asset Allocation and Transfers.
------------------------------

(i) The Agilent DPSP assets shall be equal to the percentage
that the value of the accounts of Agilent Transferred Employees in the HP DPSP
bears to the total value of all participant accounts in the HP DPSP as of the
Distribution Date, adjusted to reflect the amounts of any HP DPSP and Agilent
DPSP benefit payments, if any, made to participants between the Distribution
Date and the DPSP Transfer Date described in Subsection 4.2(e)(ii) below.

(ii) As soon as reasonably practicable after the Distribution Date
(the "DPSP Transfer Date"), the percentage calculated in Subsection 4.2(e)(i)
above of the assets of the HP DPSP valued as of the DPSP Transfer Date shall be
transferred to the Agilent DPSP.

(f) No Distribution to Agilent Transferred Employees. The HP DPSP
------------------------------------------------
and the Agilent DPSP shall provide that no distribution of account balances
shall be made to any Agilent Transferred Employee on account of the Agilent
Group ceasing to be an Affiliate of the HP Group as of the Distribution Date.

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<PAGE>

ARTICLE V

NON-QUALIFIED AND OTHER PLANS
-----------------------------
5.1 Excess Benefit Plan.
-------------------

(a) Establishment of Agilent Excess Benefit Plan. Effective as of the
--------------------------------------------
Distribution Date, Agilent shall establish the Agilent Excess Benefit Plan which
shall be substantially identical in all Material Features to the HP Excess
Benefit Plan.

(b) Assumption of Liabilities by Agilent Excess Benefit Plan.
--------------------------------------------------------
Effective as of the Distribution Date, all accrued benefits of Agilent
Transferred Employees under the HP Excess Benefit Plan will be transferred to
the Agilent Excess Benefit Plan. The Agilent Excess Benefit Plan shall assume
and be solely responsible for all Liabilities for or relating to the accrued
benefits of the Agilent Transferred Employees under the HP Excess Benefit Plan
as of the Distribution Date. To the extent not attributable to accounts
maintained for the Agilent Transferred Employees under the HP Excess Benefit
Plan, such HP Excess Benefit Plan Liabilities shall be determined as described
in Subsection 3.2(b)(i)(A). Otherwise, such HP Excess Benefit Plan Liabilities
shall be equal to the value as of the Distribution Date of the accounts
maintained for the Agilent Transferred Employees under the HP Excess Benefit
Plan.

5.2 Executive Deferred Compensation Plan.
------------------------------------

(a) Establishment of Agilent Rabbi Trust. Effective no later than the
------------------------------------
Payroll Date, Agilent shall establish the Agilent Executive Deferred
Compensation Plan and the Agilent Rabbi Trust.

(b) Allocation and Assumption of Liabilities. HP shall determine the
----------------------------------------
amount of Liabilities under the HP Executive Deferred Compensation Plan as of
the Payroll Date, attributable to Agilent Employees. As soon as administratively
practicable thereafter, HP shall pay to Agilent or to the trustee of the Agilent
Rabbi Trust, as Agilent specifies, an amount of HP's assets equal to such
Liabilities. Coincident with the receipt of such transfer of assets, Agilent
shall assume all responsibilities and obligations attributable to such
Liabilities.

(c) Participation in Executive Deferred Compensation Plans. Effective
------------------------------------------------------
as of the Payroll Date, eligible Agilent Employees shall become eligible to
commence participation in the Agilent Executive Deferred Compensation Plan.
Agilent Employees who are currently participating in the HP Executive Deferred
Compensation Plan shall continue their participation in that Plan (according to
its terms) to the Payroll Date.

-21-
<PAGE>

5.3 Officers Early Retirement Plan. HP shall continue to administer the HP
------------------------------
Officers Early Retirement Plan for Agilent Employees who are in periodic pay
status as of October 31, 1999. Agilent shall reimburse HP for any and all costs
and expenses relating to such distributions and the related administration.

5.4 IRG. Agilent shall assume and be solely responsible for all
---
Liabilities for, or relating to, or arising from, the IRG of Agilent Employees
and Agilent Transferred Employees under the HP IRG. Whichever of HP or Agilent
pays such IRG benefit shall be entitled to reimbursement from the other based on
the applicable portion of such IRG benefit attributable to that individual's
employment with the other. HP and Agilent agree to cooperate with the other to
calculate such IRG benefits.

-22-
<PAGE>

ARTICLE VI

HEALTH AND WELFARE PLANS
------------------------

6.1 VEBA Asset Transfers.
--------------------

(a) Calculation of Liabilities and Reserves. This Section 6.1 shall
---------------------------------------
govern the transfer of assets from the HP VEBA to the Agilent VEBA. As soon as
reasonably practicable after the Distribution Date, HP shall engage actuaries
and cause to be determined for the HP VEBA the total benefit Liabilities as of
the Distribution Date for all participants in the following plans: (i) the HP
VEBA Income Protection Plan, using the actuarial assumptions set forth in
Schedule 6.1(a)(i); and (ii) the HP VEBA Survivor Protection Plan, using the
actuarial assumptions set forth in Schedule 6.1(a)(ii). As soon as reasonably
practicable after the Distribution Date, HP shall determine the total reserves
for the HP VEBA Voluntary Severance Incentive Plan as of the Distribution Date,
which shall be equal to the total of the maximum permissible reserves calculated
separately for the HP Employees and the Agilent Transferred Employees as of the
Distribution Date using the rules in Code Section 419A.

(b) Asset Allocations and Transfers.
-------------------------------

(i) The Agilent VEBA's share of the HP VEBA assets that are
allocated within the HP VEBA to each of the Plans described below shall be
determined as follows: (A) for the portions of the HP Health Plans funded
through the HP VEBA, assets equal to the percentage that the number of Agilent
Employees (solely for this purpose, defined as any individual who is either
actively employed by, or on any leave of absence from, the Agilent Group on the
Distribution Date) participating in, respectively, the medical (excluding HMO)
and the dental portions of the HP Health Plans funded through the HP VEBA bears
to the total number of participants in, respectively, the medical (excluding
HMO) and the dental portions of the HP Health Plans funded through the HP VEBA
as of the Distribution Date; (B) for the HP VEBA Income Protection Plan, assets
equal to the percentage that the benefit Liabilities for the Agilent Transferred
Employees on long-term disability bears to the total benefit Liabilities of all
of the participants on long-term disability in such Plan as of the Distribution
Date determined under Subsection 6.1(a) above; (C) for the HP VEBA Survivor
Protection Plan, assets equal to the percentage that the benefit Liabilities for
the Agilent Transferred Employees in, respectively, the active employee and
retiree life insurance portions of the HP VEBA Survivor Protection Plan bears to
the total benefit Liabilities of all of the participants in, respectively, the
active employee and retire life insurance portions of such Plan as of the
Distribution Date determined under Subsection 6.1(a) above; and (D) for the HP
VEBA Voluntary Severance Incentive Plan, assets equal to the percentage that the
reserves allocated to Agilent Transferred Employees bears to the total reserves
as of the Distribution Date determined under Subsection 6.1(a) above.

-23-
<PAGE>

(ii) As soon as reasonably practicable after the Distribution
Date (the "VEBA Transfer Date"), the proportions calculated in Subsection
6.1(b)(i) above of the assets allocated within the HP VEBA to each of the Plans
described in Subsection 6.1(b)(i) above valued as of the VEBA Transfer Date
shall be transferred to accounts within the Agilent VEBA maintained for the
corresponding Agilent Plans.

6.2 Assumption of Health and Welfare Plan Liabilities.
-------------------------------------------------

(a) General. Except as specified otherwise in this Agreement, as of
-------
the Distribution Date, all Liabilities for or relating to Agilent Transferred
Employees under the HP Health and Welfare Plans shall cease to be Liabilities of
the HP Health and Welfare Plans and shall be assumed by the corresponding
Agilent Health and Welfare Plans.

(b) Pending Treatments. Notwithstanding Subsection 6.2(a) above, all
------------------
treatments which have been pre-certified for or are being provided to an Agilent
Transferred Employee as of the Distribution Date shall be provided without
interruption under the appropriate HP Health and Welfare Plan until such
treatment is concluded or discontinued pursuant to applicable Plan rules and
limitations, but Agilent shall continue to be responsible for all Liabilities
relating to, arising out of, or resulting from such on-going treatments as of
the Distribution Date.

(c) Pending Commitments. Agilent shall assume, effective as of the
-------------------
Distribution Date, all Liabilities relating to, arising out of or resulting from
special commitments made by HP before the Distribution Date to provide benefits
to or with respect to Agilent Transferred Employees for care or services not
covered by any HP Health and Welfare Plans, but only if such special commitments
were made with prior written consent of the Agilent Vice President, Human
Resources or his or her authorized delegate, to the extent such commitments are
made after the Separation Date. Before the Distribution Date, HP shall transfer
to Agilent copies of all documentation, and a complete written description, of
the terms of all such special commitments to Agilent Transferred Employees.

6.3 Claims for Health and Welfare Plans.
-----------------------------------

(a) Administration of HP Claims. HP shall administer claims incurred
---------------------------
under the HP Health and Welfare Plans by Agilent Employees before the
Distribution Date but only to the extent that Agilent has not, before the
Distribution Date, established and assumed administrative responsibility for a
comparable Plan. Any determination made or settlements entered into by HP with
respect to such claims shall be final and binding. HP shall transfer to Agilent,
effective as of the Distribution Date, responsibility for administering all
claims incurred by Agilent Transferred Employees before the Distribution Date
(including any claims that were administered by HP as of, on, or after the
Distribution Date). Agilent shall administer such claims in a substantially
similar manner, using substantially similar methods and procedures, as HP used
in administering such claims. Agilent shall have sole and absolute discretionary
authority to make any necessary

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<PAGE>

determinations with respect to such claims, including entering into settlements
with respect to such claims.

(b) Outsourcing of Claims by HP. HP shall have the right to engage a
---------------------------
third party administrator, vendor, or insurance company to administer
("Outsource") claims incurred under the HP Health and Welfare Plans, including
claims incurred by Agilent Employees and Agilent Transferred Employees before
the Distribution Date. HP may determine the manner and extent of such
Outsourcing, including the selection of one or more third party administrators,
vendors, or insurance companies and the ability to transfer the liability for
such claims to one or more independent insurance companies. HP has Outsourced
administration of many HP Health and Welfare Plans, as set forth in Section 6.5
and the Schedule thereto. To the extent not otherwise set forth in Section 6.5
and the Schedule thereto, HP shall promptly notify Agilent of its intent to
further Outsource such claims, and the material terms and conditions of the
Outsourcing, before the effective date thereof.

(c) Outsourcing of Claims by Agilent. HP shall use its commercially
--------------------------------
reasonable best efforts for and on behalf of Agilent to procure Outsourcing
arrangements with its third party administrators, vendors, or insurance
companies with the Material Features of each of HP's current Outsourcing
arrangements. Agilent agrees, as of the Distribution Date or such other date as
Agilent and HP may mutually agree upon, to Outsource claims under the Agilent
Health and Welfare Plans pursuant to arrangements procured by HP.

6.4 Post-Distribution Transitional Arrangements.
-------------------------------------------

(a) Continuance of Elections, Co-Payments and Maximum Benefits.
----------------------------------------------------------

(i) As of the Distribution Date or such other date as HP and
Agilent may mutually agree, Agilent shall cause the Agilent Health and Welfare
Plans to recognize and maintain all coverage and contribution elections made by
Agilent Employees and Agilent Transferred Employees under the HP Health and
Welfare Plans and apply such elections under the Agilent Health and Welfare
Plans for the remainder of the period or periods for which such elections are by
their terms applicable. The transfer or other movement of employment between HP
to Agilent at any time upon or before the Distribution Date shall neither
constitute nor be treated as a "status change" or termination of employment
under the HP Health and Welfare Plans or the Agilent Health and Welfare Plans.

(ii) On and after the Distribution Date, Agilent shall cause the
Agilent Health Plans to recognize and give credit for (A) all amounts applied to
deductibles, out-of-pocket maximums, co-payments and other applicable benefit
coverage limits with respect to which such expenses have been incurred by
Agilent Transferred Employees under the HP Health Plans for the remainder of the
calendar year in which the Distribution Date occurs, and (B) all benefits paid
to Agilent Transferred Employees under the HP Health Plans for purposes of
determining when such persons have reached their lifetime maximum benefits under
the Agilent Health Plans.

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<PAGE>

(b) HCFA Administration. As of the Distribution Date, Agilent shall
-------------------
assume all Liabilities relating to, arising out of or resulting from claims
verified by HP or Agilent under the HCFA data match reports that relate to
Agilent Transferred Employees.

6.5 Vendor Arrangements. HP shall use its commercially reasonable best
-------------------
efforts for and on behalf of Agilent to procure, effective as of the
Distribution Date or such other date as HP and Agilent mutually agree upon: (a)
third party ASO Contracts with the Material Features of the ASO Contracts
entered into by HP, as set forth in Schedule 6.5(a) (the "ASO Contracts); (b)
Group Insurance Policies, with the Material Features of the Group Insurance
Policies entered into by HP, as set forth in Schedule 6.5(b) (the "Group
Insurance Policies"); and (c) HMO Agreements with the Material Features of the
HMO Agreements entered into by HP, as set forth in Schedule 6.5(c) (the "HMO
Agreements"). In each case, Agilent shall, as of the Distribution Date or such
other date as HP and Agilent mutually agree upon, establish, adopt and/or
implement such contracts, agreements or arrangements.

6.6 Group Long-Term Care Plan Asset Transfer.
----------------------------------------

(a) Calculation of Liabilities. This Section shall govern the
--------------------------
transfer of assets from the trust fund for the HP L-T Care Plan to a trust fund
for the Agilent L-T Care Plan that will be established by Agilent as of the
Distribution Date or such other date as HP and Agilent may mutually agree. As
soon as reasonably practicable after the Distribution Date, HP shall engage
actuaries and cause to be determined for the HP L-T Care Plan the total benefit
Liabilities for all participants in such Plan as of the Distribution Date using
the assumptions set forth in Schedule 6.6(a).

(b) Asset Allocation and Transfer.
-----------------------------

(i) The Agilent L-T Care Plan's share of the HP L-T Care Plan
assets shall be equal to the percentage that the benefit Liabilities for the
Agilent Transferred Employees bears to the total benefit Liabilities of all
participants in the HP L-T Care Plan determined under Subsection 6.6(a) above.

(ii) As soon as reasonably practicable after the Distribution
Date or such other date as HP and Agilent may mutually agree (the "HP L-T Care
Plan Transfer Date"), the proportion calculated in Subsection 6.6(b)(i) above of
the assets of the HP L-T Care Plan valued as of the HP L-T Care Plan Transfer
Date shall be transferred to the Agilent L-T Care Plan.

6.7 Group Universal Life: Group Universal Life Insurance Program Cash
-----------------------------------------------------------------
Value and Reserve Transfers.
- ---------------------------

(a) General. This Section shall govern the transfer of certain cash
-------
values and of a portion of the premium stabilization reserve from the insurance
contract maintained for the HP GUL

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<PAGE>

to an insurance contract for the Agilent GUL that will be established by Agilent
as of the Distribution Date or such other date as HP and Agilent may mutually
agree.

(b) Calculation of Liabilities. As soon as reasonably practicable
-------------------------
after the Distribution Date, the HP GUL program administrator (currently Kirke
Van Orsdel, a division of Seabury & Smith, Inc.) shall determine actuarially the
total HP GUL benefit Liabilities for all participants in the HP GUL as of the
Distribution Date. Such actuarial determination shall be made using actuarial
and other assumptions proposed by the HP GUL program administrator that have
been agreed to by HP and Agilent prior to the Distribution Date.

(i) The Agilent GUL cash values shall be equal to the total of
the cash values allocated to the accounts of the Agilent Transferred Employees
under the HP GUL as of the HP GUL Transfer Date as defined in Subsection
6.7(c)(iii) below.

(ii) The Agilent GUL's share of the HP GUL premium stabilization
reserve shall be equal to the percentage that the benefit Liabilities for the
Agilent Transferred Employees bears to the total benefit Liabilities of all of
the participants in the HP GUL determined under Subsection 6.7(b) above.

(iii) As soon as reasonably practicable after the Distribution
Date or such other date as HP and Agilent may mutually agree (the "HP GUL
Transfer Date"), the cash values described in Subsection 6.7(c)(i) above, and
the proportion calculated in Subsection 6.7(c)(ii) above of the amount of the HP
GUL premium stabilization reserve valued as of the HP GUL Transfer Date, shall
be transferred to the Agilent GUL.

6.8 IPP/State Voluntary Disability Plans. Effective on the Payroll Date,
------------------------------------
Agilent shall adopt state voluntary disability plans for California, New York
and New Jersey which are substantially identical in all Material Features to the
HP state voluntary disability plan for each such respective state. Each such
state voluntary disability plan shall be a component program under the HP Income
Protection Plan.

6.9 Business Travel Accident Insurance. Through the Distribution Date,
----------------------------------
Agilent shall remain a Participating Company in the HP business travel accident
insurance policy. HP shall be responsible for administering or causing to be
administered the HP business travel accident insurance policy with respect to
Agilent Employees. Agilent shall reimburse HP for any and all direct and
indirect expenses and costs attributable to Agilent Employees. HP shall use its
commercially reasonable best efforts for and on behalf of Agilent to procure a
business travel accident insurance policy with the Material Features of the HP
business travel accident policy, effective as of the Distribution Date or such
other date as HP and Agilent mutually agree upon. Accordingly, effective as of
the Distribution Date, Agilent shall be solely responsible for maintaining its
own business travel accident insurance policy.

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<PAGE>

6.10 Flexible Benefits Plan. Through December 31, 1999, Agilent and
----------------------
designated members of the Agilent Group shall remain Participating Companies in
the HP Flexible Benefits Plan. The existing elections for Agilent Employees
shall remain in effect through December 31, 1999. HP shall be responsible for
administering, or causing to be administered, the HP Flexible Benefits Plan for
Agilent Employees through December 31, 1999. Agilent shall reimburse HP for any
and all direct and indirect expenses and costs attributable to Agilent
Employees. Effective on January 1, 2000, Agilent shall establish, or caused to
be established, the Agilent Flexible Benefits Plan and shall be solely
responsible for implementing and maintaining the Agilent Flexible Benefits Plan.

6.11 Redeployment/Alternate Offer Program. Through the Payroll Date, HP
------------------------------------
shall be responsible for administering the Redeployment/Alternate Offer Program
with respect to Agilent Employees. HP and Agilent shall mutually agree on which
affected employees will be offered to participate in the Redeployment/Alternate
Offer Program. Agilent shall be responsible for providing HP with all the
necessary information regarding Agilent Employees and Agilent Terminated
Employees to the extent such employees are eligible for the
Redeployment/Alternate Offer Program. Agilent shall reimburse HP for any and all
direct and indirect expenses and costs attributable to Agilent Employees.
Effective as of the Payroll Date, Agilent shall assume all outstanding
commitments related to the HP Redeployment/Alternate Offer Program and after
such date Agilent shall be solely responsible for implementing and maintaining
its own Redeployment/Alternate Offer Program.

6.12 COBRA. HP shall be responsible through the Distribution Date, for
-----
compliance with the health care continuation coverage requirements of COBRA and
the HP Health and Welfare Plans with respect to Agilent Employees and qualified
beneficiaries (as such term is defined under COBRA). Agilent shall be
responsible for providing HP with all necessary employee change notices and
related information for covered dependents, spouses, qualified beneficiaries (as
such term is defined under COBRA), and alternate recipients pursuant to QMCSO,
in accordance with applicable HP COBRA policies and procedures. As soon as
administratively practicable after the Distribution Date, HP shall provide
Agilent, through hard copy, electronic format or such other mechanism as is
appropriate under the circumstances, with a list of all qualified beneficiaries
(as such term is defined under COBRA) that relate to the Agilent Group and the
relevant information pertaining to their coverage elections and remaining COBRA
time periods. Effective as of the Distribution Date, Agilent shall be solely
responsible for compliance with the health care continuation coverage
requirements of COBRA and the Agilent Health and Welfare Plans for Agilent
Transferred Employees and their qualified beneficiaries (as such term is defined
under COBRA).

6.13 Leave of Absence Programs and FMLA.
----------------------------------

(a) Allocation of Responsibilities After Payroll Date. Effective as
-------------------------------------------------
of the Payroll Date: (i) Agilent shall adopt Leave of Absence Programs which are
substantially identical in all Material Features to the HP Leave of Absence
Programs as in effect on the Payroll Date; (ii) Agilent shall honor all terms
and conditions of leaves of absence which have been granted to any Agilent

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<PAGE>

Employee under an HP Leave of Absence Program or FMLA before the Payroll Date by
HP, including such leaves that are to commence after the Payroll Date; (iii)
Agilent shall be solely responsible for administering leaves of absence and
complying with FMLA with respect to Agilent Employees and Agilent Transferred
Employees; and (iv) Agilent shall recognize all periods of service of Agilent
Employees and Agilent Transferred Employees with the HP Group, as applicable, to
the extent such service is recognized by the HP Group for the purpose of
eligibility for leave entitlement under the HP Leave of Absence Programs and
FMLA; provided, however, that no duplication of benefits shall, to the extent
permitted by law, be required by the foregoing.

(b) Disclosure. As soon as administratively practicable after the
----------
Payroll Date, HP shall provide to Agilent copies of all records pertaining to
the HP Leave of Absence Programs and FMLA with respect to all Agilent Employees
and Agilent Transferred Employees to the extent such records have not been
previously provided.

6.14 Post-Employment Programs. As soon as administratively practicable
------------------------
after the Distribution Date, HP shall provide Agilent, though hard copy,
electronic format or such other mechanism as is appropriate under the
circumstances, with a list detailing all Agilent Transferred Employees who are,
to the best knowledge of HP, eligible to participate in the HP Post-Employment
Programs as of the Distribution Date, and the type coverage and level of
coverage for which they are eligible, as applicable. Effective as of the
Distribution Date, Agilent shall be solely responsible for the Agilent Post-
Employment Programs for Agilent Transferred Employees.

6.15 HP Workers' Compensation Program.
--------------------------------

(a) Administration of Claims.
------------------------

(i) Through the Payroll Date or such other date as HP and
Agilent may mutually agree, HP shall continue to be responsible for the
administration of all claims that (A) are, or have been, incurred under the HP
WCP before the Payroll Date by Agilent Employees ("Agilent WCP Claims"), and (B)
have been historically administered by HP or its third party administrator.

(ii) Effective as of the Payroll Date or such other date as HP
and Agilent may mutually agree: (A) Agilent shall, to the extent Legally
Permissible (as defined in Subsection 6.15(a)(iv) below), be responsible for the
administration of all Agilent WCP Claims, and (B) HP shall be responsible for
the administration of all Agilent WCP Claims not administered by Agilent
pursuant to clause (A), regardless of whether it is under the self-insured or
insured portion of the HP WCP. Any determination made, or settlement entered
into, by or on behalf of either party or its insurance company with respect to
Agilent WCP Claims for which it is administratively responsible shall be final
and binding upon the other party. Agilent shall reimburse HP for any and all
direct and indirect costs and expenses related thereto.

(iii) Each party shall fully cooperate with the other with
respect to the administration and reporting of Agilent WCP Claims, the payment
of Agilent WCP Claims

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<PAGE>

determined to be payable, and the transfer of the administration of any Agilent
WCP Claims to the other party as determined under Subsection 6.15(a)(ii) above.
Either party shall have the right to "Outsource" (i.e., transfer the
administration of claims to a third party administrator or cause claims to be
paid through insurance) any and all Agilent WCP Claims for which it is
administratively responsible. HP has Outsourced administration of many Agilent
WCP claims, as set forth in the relevant portion of Schedule 6.5(a). To the
extent not otherwise set forth in Schedule 6.5(a), HP shall promptly notify
Agilent of its intent to further Outsource such WCP Claims, and the material
terms and conditions of the Outsourcing before the effective date thereof. HP
shall use its commercially reasonably best efforts for and on behalf of Agilent
to procure Outsourcing arrangements with its third party administrators,
vendors, or insurance companies with the Material Features of each of HP's
current Outsourcing arrangements. Agilent agrees, as of the Payroll Date, or
such other date as Agilent and HP may mutually agree, to Outsource Agilent WCP
Claims pursuant to arrangements procured by HP.

(iv) For purposes of this Subsection 6.15(a), "Legally
Permissible" shall be determined on a state-by-state basis, and shall mean that
administration of Agilent WCP Claims by Agilent both (A) is permissible under
the applicable state's workers' compensation laws (taking into account all
relevant facts, including that Agilent may have a self-insurance certificate in
that state), and (B) would not have a material adverse effect on HP's self-
insurance certificate within that state. If it is determined that, in a
particular state, it is Legally Permissible for Agilent to administer Agilent
WCP Claims, then Agilent shall be responsible for the administration of all
Agilent WCP Claims incurred in that state, whether previously administered by or
on behalf of HP. If it is determined that, in a particular state, it is not
Legally Permissible for Agilent to administer Agilent WCP Claims, then HP shall
be responsible for the administration of all Agilent WCP Claims incurred in that
state, whether previously administered by or on behalf of HP.

(b) Self-Insurance Status.
---------------------

(i) HP shall amend its certificates of self-insurance with
respect to workers' compensation and any other applicable policies to include
Agilent until the Distribution Date, and Agilent shall fully cooperate with HP
in obtaining such amendments. HP shall use its commercially reasonable best
efforts to obtain self-insurance status for workers' compensation for Agilent
effective as of the Distribution Date in those jurisdictions in which Agilent
conducts business, in which HP is self-insured, and where HP and Agilent
mutually agree that such status is beneficial to Agilent. Agilent hereby
authorizes HP to take all actions necessary and appropriate on its behalf in
order to obtain such self-insurance status. All costs incurred by HP in amending
such certificates, including without limitation filing fees, adjustments of
security and excess loss policies and amendments of safety programs, shall be
shared pro rata by HP and Agilent.

(ii) HP shall also arrange a contingent insured or other
arrangement for payment of workers' compensation claims, into which Agilent
shall enter if and to the extent that HP fails to obtain self-insured status for
Agilent as provided in Subsection 6.15(b)(i) above, unless Agilent obtains
another such arrangement that is effective as of the Distribution Date, in which
event

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<PAGE>

Agilent shall reimburse HP for any costs and expenses incurred by HP in
procuring such contingent arrangement.

(i) Effective as of the Payroll Date, in all states other than
those states where Agilent is to be self-insured pursuant to Subsection 6.15(b)
above, HP shall use its commercially reasonable best efforts to procure workers'
compensation insurance policies on behalf of Agilent from the issuing insurance
companies (as set forth in the relevant portion of Schedule 6.5(b)) or different
insurance companies which are substantially identical in all Material Features
to the policies previously maintained by HP; provided that the retention under
such Agilent policies shall be as determined by Agilent.

(ii) HP shall use its commercially reasonable best efforts to
maintain the premium rates for all workers' compensation insurance policies for
both HP and Agilent in effect for periods through the Distribution Date to be
based on the aggregate number of employees covered under the workers'
compensation insurance policies of both HP and Agilent. Any premiums due under
the separate workers' compensation insurance issued to Agilent shall be payable
by Agilent.

(d) Assumption of WCP Liabilities by Agilent. Effective as of the
----------------------------------------
Payroll Date, Agilent shall assume and be solely responsible for all Liabilities
for or relating to Agilent WCP Claims. Such Liabilities shall be determined and
allocated as established in Schedule 6.15(d).

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<PAGE>

ARTICLE VII

EQUITY AND OTHER COMPENSATION
-----------------------------

7.1 HP Variable Pay Plan. Employees of the Agilent Business (including,
--------------------
for this purpose, any employees of HP who are designated as employees of the
Agilent Business for purposes of the Separation) shall cease their participation
in the HP Variable Pay Plan effective November 1, 1999. Effective as of the
Payroll Date, Agilent shall establish a replacement variable pay plan for
Agilent Employees and Agilent Transferred Employees for Agilent fiscal period(s)
beginning on and after November 1, 1999 to be administered by the Compensation
Committee of the Agilent Board of Directors in accordance with Code Section
162(m).

7.2 HP Options and Stock Appreciation Rights.
----------------------------------------

(a) Option Assumption by Agilent. At the Distribution Date, each
----------------------------
outstanding HP Option held by Agilent Transferred Employees, whether vested or
unvested, other than Excluded Options (as defined in paragraph (b) below) shall
be, in connection with the Distribution, assumed by Agilent. Each HP Option so
assumed by Agilent shall continue to have, and be subject to, the same terms and
conditions set forth in the Stock Plans and as provided in the respective option
agreements governing such HP Option as of the Distribution Date, except that (i)
such HP Option shall be exercisable for that number of whole shares of Agilent
common stock equal to the quotient of the number of shares of HP common stock
that were issuable upon exercise of such HP Option as of the Distribution Date
divided by the Ratio, rounded down to the nearest whole number of shares of
Agilent common stock, and (ii) the per share exercise price for the shares of
Agilent common stock issuable upon exercise of such assumed HP Option shall be
equal to the product determined by multiplying the exercise price per share of
HP common stock at which such HP Option was exercisable as of the Distribution
Date by the Ratio, rounded up to the nearest whole cent.

(b) Excluded Options. Before the Distribution Date, HP shall offer
----------------
to Agilent Employees who hold HP Options that were granted before February 12,
1999, the opportunity to amend such HP Options so as to (i) waive the
accelerated vesting and option cancellation that would otherwise occur under the
HP Stock Plans in connection with the Distribution, and (ii) allow for the
assumption of such HP Options by Agilent in accordance with paragraph (a) above.
To the extent such Option holders do not agree to such amendment of their HP
Options, such HP Options, together with HP Options held by Agilent Transferred
Employees who retire from the HP Group on or before the Payroll Date ("Excluded
Options"), shall not be assumed under paragraph (a) above but shall instead be
governed by the applicable HP Stock Plans.

(c) Certain Non-U.S. Optionees. Except as may otherwise be agreed
--------------------------
upon by HP and Agilent and/or as set forth in Schedule 7.2(c), this Section 7.2
shall govern the treatment of HP Options held by non-U.S. Agilent Transferred
Employees.

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<PAGE>

(d) Stock Appreciation Rights. At the Distribution Date, each HP
-------------------------
stock appreciation right held by Agilent Transferred Employees, whether vested
or unvested, shall be, in connection with the Distribution, assumed by Agilent.
Each HP stock appreciation right so assumed by Agilent shall continue to have,
and be subject to, the same terms and conditions set forth in the Plans and in
the respective stock appreciation rights agreement governing such HP stock
appreciation right as of the Distribution Date, except that (i) such HP stock
appreciation right shall be measured with reference to that number of whole
shares of Agilent common stock equal to the quotient of the number of shares of
HP common stock relating to such stock appreciation right divided by the Ratio,
rounded down to the nearest whole number of shares of Agilent common stock, and
(ii) the per share grant price for the Agilent stock appreciation right shall be
equal to the product as determined by multiplying the grant price per share of
the HP stock appreciation right by the Ratio, rounded up to the nearest whole
cent.

7.3 HP Restricted Stock. Except as otherwise provided herein and subject
-------------------
to the terms of the applicable HP Stock Plans, on the Distribution Date, HP
Restricted Stock (including any Agilent common stock issued with respect to such
HP Restricted Stock in connection with the Distribution) held by Agilent
Transferred Employees shall be forfeited in accordance with the terms of the
applicable HP Stock Plans. Before the IPO, each Agilent Employee who holds HP
Restricted Stock shall be given the opportunity to elect to receive (a) Agilent
Options at the IPO, or (b) Agilent Restricted Stock at the Record Date, the
Distribution Date, or such other date as HP and Agilent may determine. The value
of an Agilent Employee's resulting Agilent Option or Agilent Restricted Stock
award shall be substantially equivalent to the value of his or her forfeited HP
Restricted Stock award determined (a) immediately before the IPO, in the case of
Agilent Options, and (b) immediately before the Record Date, the Distribution
Date, or such other date as HP and Agilent may determine, in the case of Agilent
Restricted Stock, in either case such value to be reasonably determined by
Agilent. The resulting Agilent Options or Agilent Restricted Stock, as
applicable, shall vest under circumstances substantially identical to the
vesting conditions applicable to the corresponding HP Restricted Stock, provided
that, in the case of HP Restricted Stock that is subject to performance-based
vesting, the resulting Agilent Options or Agilent Restricted Stock shall vest in
a manner prescribed by Agilent.

7.4 Stock Purchase Plan. Through October 31, 1999 or such later date as
-------------------
HP and Agilent may mutually agree, employees of the Agilent Business (including
for this purpose any employee of HP who is designated as an employee of the
Agilent Business for purposes of the Separation) shall continue to participate
in the HP Stock Purchase Plan. Effective on or before the IPO or such other date
as HP and Agilent may mutually agree, Agilent shall sponsor a Stock Purchase
Plan for the benefit of Agilent Employees and Agilent Transferred Employees that
is substantially similar in all Material Features to the corresponding HP Stock
Purchase Plan. [Decisions not yet made regarding the treatment of transfer
restrictions and/or employment vesting conditions applicable to shares of HP
common stock held by Agilent Employees under the HP Stock Purchase Plan.] In the
event an Agilent Employee who is participating in the Agilent Stock Purchase
Plan transfers employment to the HP Group before the Distribution Date, or in
the event an

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<PAGE>

HP Group Employee who is participating in the HP Stock Purchase Plan becomes an
Agilent Employee before the Distribution Date, such individual's Stock Purchase
Plan contributions and participation for the purchase period then in effect
shall, directly or indirectly, transfer to the Stock Purchase Plan of whichever
of HP or Agilent employs such individual on the last day of the applicable
purchase period. HP and Agilent agree to cooperate with the other to coordinate
any such transfer of Stock Purchase Plan participation.

7.5 Stock Service Award Program. Effective January 1, 2000 or such other
---------------------------
date as HP and Agilent may mutually agree, Agilent shall establish a stock
service award program for Agilent Employees and Agilent Transferred Employees.
The foregoing Agilent Plan shall be substantially identical in all Material
Features to the comparable HP Plan as in effect immediately prior thereto.

7.6 Cash Profit Sharing Program. Through October 31, 1999, employees of
---------------------------
the Agilent Business (including, for this purpose, any employees of HP who are
designated as employees of the Agilent Business for purposes of the Separation)
shall continue to participate in the HP Cash Profit Sharing Program as may be in
effect from time to time and HP shall retain all Liability relating thereto.
Effective on and after November 1, 1999, Agilent shall provide a Cash Profit
Sharing Program for the benefit of Agilent Employees and Agilent Transferred
Employees which has the Material Features of the HP Cash Profit-Sharing Program.
An Agilent Employee who transfers employment to the HP Group after the Payroll
Date but before the Distribution Date, or an HP Group employee who becomes an
Agilent Employee after the Payroll Date but before the Distribution Date, shall
receive a profit sharing benefit as calculated and paid under the Cash Profit
Sharing Program of whichever of HP or Agilent employs such individual on the
last day of the applicable fiscal half, based on the individual's eligible
compensation for the entire profit sharing period. Whichever of HP or Agilent
pays such benefit shall be entitled to reimbursement from the other based on the
portion of such benefit that relates to a transferred employee's pre-transfer
service. HP and Agilent agree to cooperate with the other to calculate such
profit sharing benefits and in connection with cost reimbursement policies and
procedures.

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<PAGE>

ARTICLE VIII

FRINGE AND OTHER BENEFITS
-------------------------

8.1 Employee Assistance Program. HP shall use its commercially reasonable
---------------------------
best efforts for and on behalf of Agilent to procure, effective as of the
Distribution Date or such other date as HP and Agilent may mutually agree,
contracts and/or arrangements with HP's vendors that contain the Material
Features of HP's contracts and/or arrangements providing for an employee
assistance program. Agilent shall enter into such contracts and/or arrangements
as procured by HP. Agilent shall cease to be a Participating Company in the HP
employee assistance program coincident with Agilent's establishment of the
Agilent employee assistance program. Agilent shall reimburse HP for any and all
direct and indirect costs and expense related to its participation in the HP
employee assistance program and HP's procurement of any and all contracts and/or
arrangements on behalf of Agilent.

8.2 Educational Assistance Program. Effective as of the Payroll Date or
------------------------------
such other date as Agilent and HP may mutually agree, Agilent shall provide an
Agilent educational assistance program to Agilent Employees which has the
Material Features of the HP educational assistance program. Agilent shall cease
to be a Participating Company in the HP educational assistance program
coincident with Agilent's establishment of the Agilent educational assistance
program. At such time, any and all outstanding approved reimbursements under the
HP educational assistance program for Agilent Employees shall be made by
Agilent. Furthermore, Agilent shall reimburse HP for any and all direct and
indirect costs and expenses related to its participation in the HP educational
assistance program.

8.3 Adoption Assistance Program. Effective as of the Payroll Date,
---------------------------
Agilent shall provide an Agilent adoption assistance program to Agilent
Employees which has the Material Features of the HP adoption assistance program.
As of the Payroll Date, the HP adoption assistance program shall cease to
provide reimbursement to any Agilent Employees and any and all outstanding
approved reimbursements shall be made by Agilent.

8.4 Cafeteria and Related Subsidies. HP shall continue to make its
-------------------------------
cafeterias, vending machines, catering services, and other food or beverage
provision facilities or systems (collectively, "Food Subsidy Programs"),
available to Agilent Employees on substantially similar terms and conditions as
are offered to employees of the HP Group until the Distribution Date. HP and
Agilent shall use their commercially reasonable best efforts to mutually agree
on the appropriate methods and/or processes to ensure continued tax-favored
status of HP's Food Subsidy Programs under the Code. Agilent shall reimburse HP
for any and all direct and indirect costs and expenses related to allowing
Agilent access to HP's Food Subsidy Program.

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<PAGE>

8.5 Credit Union. HP shall use its commercially reasonable best efforts
------------
to make the HP Employees' Federal Credit Union available to Agilent Employees on
substantially similar terms and conditions as are offered to employees of the HP
Group, through such date as Agilent and HP mutually agree. Agilent shall
reimburse HP for any and all direct and indirect costs and expenses related
thereto.

8.6 Employee Product Discounts. HP shall make qualified employee
--------------------------
discounts available to Agilent Employees on substantially similar terms and
conditions as such discounts are made available to employees of the HP Group
through the Distribution Date. Agilent shall reimburse HP for any and all direct
and indirect cost and expenses relating thereto.

8.7 Employee Scholarship Program. Through April 30, 2000, HP shall
----------------------------
continue to maintain and administer the HP employee scholarship program on
substantially the same terms and conditions as are currently in effect. Through
the Distribution Date, Agilent shall continue to withhold payroll deductions for
the HP employee scholarship program from Agilent Employees on the same terms and
conditions as are currently in effect. The annual selection made in April or
May, 2000 of eligible recipients for the HP employee scholarship program shall
be made from a pool of both Agilent and HP employees and shall be funded by the
HP employee scholarship program. Effective on May 1, 2000, Agilent Transferred
Employees shall no longer be eligible to participate in the HP employee
scholarship program. Effective on May 1, 2000, Agilent shall provide an Agilent
employee scholarship program to Agilent Transferred Employees which has the
Material Features of the HP employee scholarship program and to which Agilent
Employees and Agilent Transferred Employees payroll deductions shall be
contributed.

8.8 Recreational Properties. HP shall transfer title to certain of its
-----------------------
recreational facilities pursuant to Exhibit H to the Separation Agreement. HP
and Agilent mutually agree to establish policies to permit the employees of the
other party access to the recreational properties and facilities and to allocate
between them the costs and expenses associated therewith.

8.9 HP-Owned and Operated Aircraft. HP and Agilent shall use their
------------------------------
commercially reasonable best efforts to determine the terms and conditions
pursuant to which Agilent shall be entitled to use HP-owned and operated
aircraft through the Distribution Date or such other date as HP and Agilent may
mutually agree. Agilent shall reimburse HP for any and all direct and indirect
costs and expenses associated with the use by Agilent of HP-owned and operated
aircraft. Provided, however, that such terms, conditions and reimbursements
shall be consistent with all of the following: (a) Subpart F of Part 91 of the
Federal Aviation Regulations, as amended from time to time; and (b) the
representations made in, or arising from, HP's request for a private letter
ruling filed with the IRS under cover letter dated March 31, 1999.

8.10 HP-Owned Cars. HP and Agilent shall use their commercially
-------------
reasonable best efforts to determine the terms and conditions pursuant to which
Agilent shall be entitled to use HP-owned cars through the Distribution Date or
such other date as HP and Agilent may mutually agree.

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<PAGE>

8.11 Other Benefits. To the extent that HP maintains, sponsors or
--------------
provides other fringe benefits including, without limitation the benefits
specified in Schedule 8.11 to its employees, then HP shall, to the extent
permitted by law, continue to make such benefits available to Agilent Employees
on substantially similar terms and conditions as are offered to the employees of
the HP Group through the Distribution Date or such other date upon which Agilent
and HP mutually agree. Agilent shall reimburse HP for any and all direct and
indirect costs and expenses arising out of or relating to making any such fringe
benefits available to its employees. Agilent and HP agree to make commercially
reasonable best efforts to mutually agree on whether, when, and on what terms
any member of the Agilent Group shall maintain, sponsor or offer fringe
benefits.

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<PAGE>

ARTICLE IX

ADMINISTRATIVE PROVISIONS
-------------------------
9.1 Additional Service Level Agreements. On or prior to the Separation
-----------------------------------
Date, HP and Agilent will enter into interim service level agreements covering
the provisions of various interim services, including financial, accounting,
legal, and other services by HP to Agilent or, in certain circumstances, vice
versa. Such services shall, unless agreed to otherwise by HP and Agilent, be
provided in a manner consistent with Section 5.3 of the Separation Agreement.
Such service level agreements shall apply to such Subsidiaries and/or Affiliates
of HP and/or Agilent, as HP and Agilent shall mutually agree.

9.2 Payment of Liabilities, Plan Expenses and Related Matters.
---------------------------------------------------------

(a) Shared Costs. Agilent shall pay its share, as determined by HP in
------------
good faith, of any contributions made to any trust maintained in connection with
an HP Plan while Agilent is a Participating Company in that HP Plan.

(b) Contributions to Trusts. With respect to HP Plans to which
-----------------------
Agilent Employees and Agilent Transferred Employees make contributions, HP shall
use reasonable procedures to determine Agilent Liabilities associated with such
Plans, taking into account such contributions, settlements, refunds and similar
payments.

(c) Administrative Expenses Not Chargeable to a Trust. To the extent
-------------------------------------------------
not charged pursuant to Section 9.1 or another Ancillary Agreement (including,
without limitation, an interim service level agreement as contemplated by
Section 9.1 herein and Section 5.3 of the Separation Agreement), and to the
extent not otherwise agreed to by HP and Agilent, and to the extent not
chargeable to a trust established in connection with an HP Plan, Agilent shall
be responsible, through either direct payment or reimbursement to HP, for its
allocable share of expenses incurred by HP in the administration of (i) the HP
Plans while Agilent participates in such Plans, and (ii) the Agilent Plans, to
the extent HP administers such Plans. For this purpose, Agilent's allocable
share of such expenses shall be that portion of the total of such expenses as
the number of Agilent Employees and Agilent Transferred Employees who are
participants in the applicable Plan bears to the total number of participants in
such Plan.

9.3 Sharing of Participant Information. In addition to the
----------------------------------
responsibilities and obligations of HP and Agilent specified in Exhibit J to the
Separation Agreement, HP and Agilent shall share, or cause to be shared, all
participant information that is necessary or appropriate for the efficient and
accurate administration of each of the HP Plans and the Agilent Plans during the
respective periods applicable to such Plans as Agilent and HP may mutually
agree. HP and Agilent and their respective authorized agents shall, subject to
applicable laws of confidentiality and data protection, be given reasonable and
timely access to, and may make copies of, all information relating to the
subjects of

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<PAGE>

this Agreement in the custody of the other party or its agents, to the extent
necessary or appropriate for such administration.

9.4 Reporting and Disclosure Communications to Participants. While
-------------------------------------------------------
Agilent is a Participating Company in the HP Plans, Agilent shall take, or cause
to be taken, all actions necessary or appropriate to facilitate the distribution
of all HP Plan-related communications and materials to employees, participants
and beneficiaries, including (without limitation) summary plan descriptions and
related summaries of material modification(s), summary annual reports,
investment information, prospectuses, notices and enrollment material for the HP
Plans and Agilent Plans. Agilent shall reimburse HP for the costs and expenses
relating to the copies of all such documents provided to Agilent, except to the
extent such costs are charged pursuant to Section 9.1 (or are otherwise
addressed in this Agreement) or pursuant to an Ancillary Agreement. Agilent
shall assist, and Agilent shall cause each other applicable member of the
Agilent Group to assist, HP in complying with all reporting and disclosure
requirements of ERISA, including the preparation of Form Series 5500 annual
reports for the HP Plans, where applicable.

9.5 Audits Regarding Vendor Contracts. From the period beginning as of
---------------------------------
the Distribution Date and ending on such date as HP and Agilent may mutually
agree, HP and Agilent and their duly authorized representatives shall have the
right to conduct joint audits with respect to any vendor contracts that relate
to both the HP Health and Welfare Plans and the Agilent Health and Welfare
Plans. The scope of such audits shall encompass the review of all
correspondence, account records, claim forms, canceled drafts (unless retained
by the bank), provider bills, medical records submitted with claims, billing
corrections, vendor's internal corrections of previous errors and any other
documents or instruments relating to the services performed by the vendor under
the applicable vendor contracts. HP and Agilent shall agree on the performance
standards, audit methodology, auditing policy and quality measures, reporting
requirements, and the manner in which costs incurred in connection with such
audits will be shared.

9.6 Employee Identification Numbers. Until the Distribution Date, HP and
-------------------------------
Agilent shall not change any employee identification numbers assigned by HP. HP
and Agilent mutually agree to establish a policy pursuant to which employee
identification numbers assigned to either employees of HP or Agilent shall not
be duplicated between HP and Agilent.

9.7 Beneficiary Designations. Subject to Section 9.10, all beneficiary
------------------------
designations made by Agilent Employees and Agilent Transferred Employees for the
HP Plans shall be transferred to and be in full force and effect under the
corresponding Agilent Plans until such beneficiary designations are replaced or
revoked by the Agilent Employees and Agilent Transferred Employee who made the
beneficiary designation.

9.8 Requests for IRS and DOL Opinions. HP and Agilent shall make such
---------------------------------
applications to regulatory agencies, including the IRS and DOL, as may be
necessary or appropriate. Agilent and HP shall cooperate fully with one another
on any issue relating to the transactions contemplated by

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<PAGE>

this Agreement for which HP and/or Agilent elects to seek a determination letter
or private letter ruling from the IRS or an advisory opinion from the DOL.

9.9 Fiduciary Matters. HP and Agilent each acknowledge that actions
-----------------
contemplated to be taken pursuant to this Agreement may be subject to fiduciary
duties or standards of conduct under ERISA or other applicable law, and no party
shall be deemed to be in violation of this Agreement if such party fails to
comply with any provisions hereof based upon such party's good faith
determination that to do so would violate such a fiduciary duty or standard.

9.10 Consent of Third Parties. If any provision of this Agreement is
------------------------
dependent on the consent of any third party (such as a vendor) and such consent
is withheld, HP and Agilent shall use their commercially reasonable best efforts
to implement the applicable provisions of this Agreement. If any provision of
this Agreement cannot be implemented due to the failure of such third party to
consent, HP and Agilent shall negotiate in good faith to implement the provision
in a mutually satisfactory manner.

9.11 World Wide Web. Through the Distribution Date or such other date as
--------------
Agilent and HP may mutually agree, HP shall make its intranet site available to
Agilent Employees on substantially the same terms as such intranet site is made
available to HP Employees. Agilent shall reimburse HP for any and all costs and
expenses related thereto. HP and Agilent shall use their commercially reasonable
best efforts to mutually agree on the appropriate methods for Agilent to
establish its own intranet site.

9.12 Tax Cooperation. In connection with the interpretation and
---------------
administration of this Agreement, HP and Agilent shall take into account the
agreements and policies established pursuant to the Separation Agreement and the
parties' intent to qualify the Distribution as a tax-free reorganization under
Code Sections 368(a)(1)(D) and 355.

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<PAGE>

ARTICLE X

EMPLOYMENT-RELATED MATTERS
--------------------------

10.1 Terms of Agilent Employment. All basic terms and conditions of
---------------------------
employment for Agilent Employees and Agilent Transferred Employees including,
without limitation, their pay and benefits in the aggregate, shall remain
substantially the same as the terms and conditions that were in place when the
Agilent Employee or Agilent Transferred Employee was employed by the HP Group,
as applicable. Notwithstanding the foregoing, Agilent Employees and Agilent
Transferred Employees shall be required to execute a new agreement regarding
confidential information and proprietary developments in a form approved by
Agilent. In addition, nothing in the Separation Agreement, this Agreement, or
any Ancillary Agreement should be construed to change the at-will status of any
of the employees of the HP Group or the Agilent Group.

10.2 HR Data Support Systems. HP shall provide human resources data
-----------------------
support for Agilent Employees and Agilent Transferred Employees for a period
mutually agreed upon between HP and Agilent. HP and Agilent each reserves the
right to discontinue Agilent's access to any HP human resources data support
systems with reasonable notice. Agilent agrees to fully reimburse HP for any and
all associated costs and expenses relating to its use of the HP human resources
data support systems.

10.3 Non-Solicitation of Employees. Subject to Section 5.12 of the
-----------------------------
Separation Agreement, HP and Agilent each agree not to directly solicit or
recruit the other party's employees for a period of two (2) years following the
Distribution Date, if such solicitation or recruitment would be disruptive or
damaging or would interfere with the operation or business of the other party.
Notwithstanding the foregoing, this prohibition on solicitation does not apply
to actions taken by a party either: (a) as a result of an employee's affirmative
response to a general recruitment effort carried out through a public
solicitation or general solicitation, or (b) as a result of an employee's
initiative.

10.4 Employment of Employees with U.S. Work Visas. Agilent Employees
--------------------------------------------

who, on the Payroll Date, are employed in the U.S. pursuant to a work or
training visa which authorizes employment only by the HP Group shall remain
employed by the HP Group until the visa is amended or a new visa is granted to
authorize employment by the Agilent Group and, at that time, shall become an
employee of the Agilent Group with substantially similar rights as all other
Agilent Employees. During the period from the Payroll Date until the amended or
new visa is issued, such employee shall continue to participate in HP Plans and
Agilent shall, as and when invoiced by HP, promptly reimburse HP for its direct
and indirect costs and expenses relating to compensation and benefits.

10.5 Confidentiality and Proprietary Information. No provision of the
-------------------------------------------
Separation Agreement or any Ancillary Agreement shall be deemed to release any
individual for any violation of the HP non-competition guideline or any
agreement or policy pertaining to confidential or

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<PAGE>

proprietary information of any member of the HP Group, or otherwise relieve any
individual of his or her obligations under such non-competition guideline,
agreement, or policy.

10.6 FTO. Effective as of the Payroll Date, Agilent shall establish
---
the Agilent FTO policy which is substantially identical in all Material Features
to the HP FTO policy. Effective as soon as administratively practicable after
the Payroll Date, HP shall transfer to Agilent all data and information relating
to the HP FTO policy. Effective as soon as administratively practicable
following the Payroll Date (or such other date as HP and Agilent may mutually
agree), Agilent shall assume all Liabilities attributable to Agilent Employees
under the HP FTO policy. In the event that an HP Employee or Agilent Employee
transfers his or her employment to the other party before the Distribution Date,
such transfer of employment shall not result in a payout or constitute a
termination event for purposes of the FTO policy, and no duplication of benefits
shall occur as a result of any such transfer of employment between HP and
Agilent. Furthermore, the Liability attributable to any Agilent Employee or HP
Employee who transfers employment between HP and Agilent prior to the
Distribution Date shall be assumed by the employer subsequent to the transfer.

10.7 Accrued Payroll, Bonuses, Profit Sharing and Commissions. HP
--------------------------------------------------------
shall retain all Liabilities relating to, arising out of, or attributable to
payroll, bonuses, profit sharing and commissions accrued by employees of the
Agilent Business through October 31, 1999. HP and Agilent shall agree on the
manner and method of payment for all payroll, bonuses, profit sharing and
commissions agreed to on behalf of employees who have been employed in the
Agilent Business on or before October 31, 1999. Effective on and after the
Payroll Date, Agilent shall establish its own payroll system for Agilent
Employees. Effective on and after November 1, 1999, Agilent shall establish its
own commission policy for Agilent Employees.

10.8 Payroll and Withholding.
-----------------------

(a) Income Reporting, Withholding. HP and Agilent will use their
-----------------------------
commercially reasonable best efforts to cause the HP human resources management
system ("HRMS") to be split into two separate systems on the Payroll Date.
Agilent shall perform the income reporting and withholding function under its
own employer identification number for Agilent Employees and other service
providers, commencing with service periods beginning on or after the Payroll
Date. HP shall perform the income reporting and withholding function for HP
Employees and other service providers.

(b) Delivery of, and Access to, Documents and Other Information.
-----------------------------------------------------------
Concurrently with the Payroll Date, HP shall cause to be delivered to
Agilent, the employee information set forth on all Forms W-4 executed by HP
Employees designated as Agilent Employees as of the Payroll Date. For the
period beginning on the Payroll Date and ending on the Distribution Date (and
for such additional period as HP and Agilent may mutually agree), HP shall make
reasonably available to Agilent all forms, documents or information, no matter
in what format stored, relating to compensation or payments made to any employee
or service provider of Agilent. Such information may include, but is not
limited to, information concerning employee payroll deductions, payroll

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<PAGE>

adjustments, records of time worked, tax records (e.g., Forms W-2, W-4, 940 and
941), and information concerning garnishment of wages or other payments.
Agilent agrees to fully reimburse HP for the cost associated with such
availability and access.

(c) Consistency of Tax Positions; Duplication. HP and Agilent
-----------------------------------------
shall individually and collectively make commercially reasonable best efforts to
avoid unnecessarily duplicated federal, state or local payroll taxes, insurance
or workers' compensation contributions, or unemployment contributions arising on
or after the Payroll Date. HP and Agilent shall take consistent reporting and
withholding positions with respect to any such taxes or contributions.

10.9 Personnel and Pay Records. For the period beginning on the
-------------------------
Payroll Date and ending on the Distribution Date (and for such additional period
as HP and Agilent may mutually agree), HP shall make reasonably available to
Agilent, subject to applicable laws on confidentiality and data protection, all
current and historic forms, documents or information, no matter in what format
stored, relating to pre-Payroll Date personnel, medical records, and payroll
information. Such forms, documents or information may include, but is not
limited to: (a) information regarding an Agilent Employee's ranking or
promotions; (b) the existence and nature of garnishment orders or other judicial
or administrative actions or orders affecting an employee's or service
provider's compensation; and (c) performance evaluations. Agilent shall fully
reimburse HP for the cost associated with such availability and access.

10.10 Unemployment Insurance Program.
------------------------------

(a) Coverage Through Distribution Date. Unless otherwise
----------------------------------
directed by Agilent, HP shall use its commercially reasonable best efforts to
cause Agilent to be covered under the HP Unemployment Insurance Program through
the Distribution Date. Agilent shall reimburse HP for its allocable share of
fees paid and related costs and expenses by HP to its unemployment insurance
vendor(s) for services rendered during such period. Agilent shall cooperate with
the unemployment insurance vendor(s) by providing information in its possession
that is necessary for administration of the HP Unemployment Insurance Program.

(b) Coverage Post-Distribution Date. Before the Distribution
-------------------------------
Date, HP shall use its commercially reasonable best efforts for and on behalf of
Agilent to procure an agreement with its unemployment insurance vendor(s) with
the Material Features of the HP unemployment insurance agreement, including,
without limitation, administration of all unemployment compensation claims of
Agilent Transferred Employees and Agilent Employees, regardless of whether such
claims were filed before, on, or after the Distribution Date.

(c) Tax Experience Rating. Unless otherwise directed by Agilent,
---------------------
HP shall take commercially reasonable best efforts to assist Agilent as well as
all members of the Agilent Group in retaining the HP experience rating on or
after the Payroll Date.

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<PAGE>

10.11 Non-Termination of Employment; No Third-Party Beneficiaries. No
-----------------------------------------------------------
provision of this Agreement, the Separation Agreement, or any Ancillary
Agreement shall be construed to create any right, or accelerate entitlement, to
any compensation or benefit whatsoever on the part of any Agilent Employee,
Agilent Transferred Employee or other future, present or former employee of HP
or Agilent under any HP Plan or Agilent Plan or otherwise. Without limiting the
generality of the foregoing: (a) neither the Distribution or Separation, nor the
termination of the Participating Company status of Agilent or any member of the
Agilent Group shall cause any employee to be deemed to have incurred a
termination of employment; and (b) no transfer of employment between HP and
Agilent before the Distribution Date shall be deemed a termination of employment
for any purpose hereunder.

10.12 Employment Litigation.
---------------------

(a) Claims to be Transferred to Agilent. On the Separation
-----------------------------------
Date, the legal responsibility for claims identified in Schedule 10.12(a) shall
be transferred in their entirety from HP to Agilent. Thereafter, Agilent shall
assume the defense of these claims. Agilent hereby indemnifies, defends and
holds harmless HP against these claims. Agilent shall reimburse HP for any
reasonable attorneys' fees and other expenses reasonably incurred by HP
subsequent to the Separation Date in connection with investigating and/or
defending against any such claim, including, without limitation, reimbursement
for any services provided by members of the HP legal staff.

(b) Claims to be Jointly Defended by HP and Agilent. HP and
-----------------------------------------------
Agilent shall jointly defend the claims identified in Schedule 10.12(b);
provided, however, that (i) Agilent shall indemnify and hold harmless HP against
any judgments entered against HP on the claims identified in Schedule 10.12(b)
or settlements of the claims identified in Schedule 10.12(b), provided, however,
that HP shall not compromise or settle any such claim regarding Agilent
Employees without the prior consent of Agilent, which such consent shall not be
unreasonably withheld or delayed, and provided further, however, that such
compromise or settlement shall release Agilent in full from any further
liability with respect to such claim; and (ii) Agilent and HP shall share pro
rata the attorneys' fees and all other expenses reasonably incurred subsequent
to the Separation Date in connection with defending against the unemployment
claims identified in Schedule 10.12(b) based on the number of employees of each
organization that are claimants in the litigation.

(c) Unscheduled Claims. Agilent shall have the sole
------------------
responsibility for all employment-related claims regarding Agilent Employees and
Agilent Transferred Employees that exist, or come into existence, on or after
the Separation Date arising out of or relating to their employment in the
Agilent Business or the Agilent Group.

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<PAGE>

ARTICLE XI

GENERAL PROVISIONS
------------------

11.1 Effect if Payroll, Separation, IPO and/or Distribution Does Not
---------------------------------------------------------------
Occur. Subject to Section 11.8, if the Separation, IPO and/or Distribution does
- ------
not occur, then all actions and events that are, under this Agreement, to be
taken or occur effective as of the Payroll Date, Separation Date, IPO, and/or
Distribution Date, or otherwise in connection with the Separation, IPO and/or
Distribution, shall not be taken or occur except to the extent specifically
agreed by Agilent and HP.

11.2 Relationship of Parties. Nothing in this Agreement shall be
-----------------------
deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, the understanding and agreement being that no provision contained
herein, and no act of the parties, shall be deemed to create any relationship
between the parties other than the relationship set forth herein.

11.3 Affiliates. Each of HP and Agilent shall cause to be performed,
----------
and hereby guarantee the performance of, any and all actions of the HP Group or
the Agilent Group, respectively.

11.4 Incorporation of Separation Agreement Provisions. The following
------------------------------------------------
provisions of the Separation Agreement are hereby incorporated herein by
reference, and unless otherwise expressly specified herein, such provisions
shall apply as if fully set forth herein (references in this Section to an
"Article" or "Section" shall mean Articles or Sections of the Separation
Agreement, and, except as expressly set forth below, references in the material
incorporated herein by reference shall be references to the Separation
Agreement): Section 5.4 (relating to Agreement for Exchange of Information);
Section 5.9 (relating to Dispute Resolution); Section 5.11 (relating to No
Representation and Warranty); Article V (relating to Covenants and Other
Matters); and Article VI (relating to Miscellaneous) other than Section 6.2
(relating to Governing Law).

11.5 Governing Law. To the extent not preempted by applicable federal
-------------
law, this Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of Delaware, irrespective of the choice of
law principles of the State of Delaware, as to all matters, including matters of
validity, construction, effect, performance and remedies.

11.6 Severability. If any term or other provision of this Agreement
------------
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible and in

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<PAGE>

an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the fullest possible extent.

11.7 Amendment. The Board of Directors of Agilent and HP may mutually
---------
agree to amend the provisions of this Agreement at any time or times, either
prospectively or retroactively, to such extent and in such manner as the Boards
mutually deem advisable. Each Board may delegate its amendment power, in whole
or in part, to one or more Persons or committees as it deems advisable.
Accordingly, each Board hereby gives its Vice President, Human Resources the
full power and authority to mutually adopt an amendment to this Agreement
(subject to each of their authority to amend Plans).

11.8 Termination. This Agreement may be terminated at any time prior
-----------
to the IPO Closing Date by and in the sole discretion of HP without the approval
of Agilent. This Agreement may be terminated at any time after the IPO Closing
Date and before the Distribution Date by mutual consent of HP and Agilent. In
the event of termination pursuant to this Section, no party shall have any
liability of any kind to the other party.

11.9 Conflict. In the event of any conflict between the provisions of
--------
this Agreement and the Separation Agreement, any Ancillary Agreement, or Plan,
the provisions of this Agreement shall control. In the event of any conflict
between the provisions of this Agreement and any Local Agreement, the provisions
of the Local Agreement shall control.

11.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same Agreement.

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<PAGE>

IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.

HEWLETT-PACKARD COMPANY

By:_________________________________________

Name:_______________________________________

Title: President and Chief Executive Officer

AGILENT TECHNOLOGIES, INC.

By:_________________________________________

Name:_______________________________________

Title: President and Chief Executive Officer

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<PAGE>

SCHEDULE 1.40

HEALTH AND WELFARE PLANS

Business Travel Accident Insurance
Cafeteria Plan
COBRA Program
Community Dental Network ("CDN")
Continued Group Medical Program
Dental Plan II
Dependent Care Reimbursement Plan
Group Universal Life Plan
Health Care Reimbursement Plan
HMOs (as set forth more fully in Schedule 6.5(c))
Income Protection Plan (STD & LTD)
- - California Voluntary Plan
- - New Jersey Voluntary Plan
- - New York Voluntary Plan
Leave of Absence Programs
- - FMLA Leave
- - Medical Leave
- - Military Leave
- - Personal Leave
Long Term Care Plan
Medical Plan Option A
Medical Plan Option B
Redeployment/Alternate Offer Program
Regular Dental Plan
SeniorMed Program
Supplemental Income Protection Plan
Survivor Protection Plan
- - Accidental Death & Dismemberment ("AD&D")
- - HP Life Insurance
- - Retiree Life
Voluntary Severance Incentive Plan
Workers' Compensation Program

-i-
<PAGE>

SCHEDULE 6.1(a)(i)

ACTUARIAL ASSUMPTIONS FOR HP VEBA

INCOME PROTECTION PLAN LIABILITIES

Actuarial Assumptions:
- ----------------------

1. Interest Rate: An interest rate of seven percent (7%) per annum is used
for discounting.

2. Termination of Disability Through Death or Recovery: The 1987
Commissioner's Group Disability Tables are used (Transactions, Society of
Actuaries, Vol. XXXIX, 1987).

3. Short-Term Disabilities: Statistics compiled by HP are assumed to
accurately reflect the Plan's short-term disability experience.

4. Unknown Payment Amounts: It is assumed that the average monthly payment
for long-term disability claims with unknown claims will increase linearly
over time.

5. Benefit Offsets: All short-term disabilities that are assumed to progress
to long-term disability status and all long-term claims with unknown claim
amounts are reduced by Social Security implicitly through the linear
regress used to determine unknown payment amounts.

6. Short-Term Disabilities Expected to Progress to Long-Term Disability
Status: A number of disabilities equal to the number of known disabilities
in the twelve (12)-month period ending twelve (12) months prior to the
Distribution Date are assumed to progress to long-term status.

7. Administrative Expenses: Assumed at approximately three and one-half
percent (3.5%) of benefit costs.

Methods:
- --------

Long-term disability reserves are determined from open long-term disability
claims and those short-term disability claims that are assumed to progress to
long-term disability status. The actual claim amount is valued, if known. An
assigned amount, determined using the assumptions described above, is valued for
unknown claim amounts. The full present value of future claim payments is
determined based upon the interest rate and termination of disability
assumptions.

Short-term disability reserves for known short-term disability claims are valued
based upon (1) expected future duration of the disability, (2) the average
weekly payment, and (3) the number of such known, open claims.

Short-term disability reserves for unknown short-term disability claims are
valued based upon (1) the average duration of the short-term disability claims
paid, (2) the average weekly benefit, (3) the

-ii-
<PAGE>

number of claims received in the measurement period, estimated at thirty-eight
percent (38%) of open claims, and (4) the number of working days necessary to
process a new claim.

-iii-
<PAGE>

SCHEDULE 6.1(a)(ii)

ACTUARIAL ASSUMPTIONS FOR HP VEBA

SURVIVOR PROTECTION PLAN LIABILITIES

Actuarial Methods and Assumptions
- ---------------------------------

1. Interest Rate: An interest rate of seven percent (7%) per annum is used
for discounting.

2. Mortality of Disabled Employees: Table V-A, of the Pension Benefit
Guaranty Corporation, for Disabled Male Participants Receiving Social
Security Disability Benefits.

3. Mortality of Nondisabled Employees: 1983 Group Annuity Mortality Table
Graduated, Unloaded Rates.

4. Preretirement Turnover: Rates used in the HP RP valuation. Rates are
based upon a combination of age and service. Employees eligible for
retirement benefits are assumed to retire in accordance with the retirement
probabilities.

5. Retirement: Rates used in the HP RP valuation. Early retirement starts at
age fifty five (55) with one hundred percent (100%) probability of
retirement assumed at age seventy (70). Employees not eligible for
retirement benefits are assumed to turn over in accordance with the
preretirement turnover probabilities.

Methods
- -------

Known claims reserves for continued protection for disabled employees are
determined from open disabled life claims. Unknown claims reserves for
continued protection for disabled employees are determined from those claims
that were opened in 1998 and the first half of 1999. Those claims have been
assumed to be equal in number and in average benefit to claims that were open
but unknown on the Distribution Date.

The past service liability for retiree death benefit protection is valued using
the Projected Unit Credit method. Under the Projected Unit Credit method, the
present value of future benefits is equal to the discounted value of the retiree
death benefit. That value is prorated over the working lifetime of the
employee. The portion of the proration that is attributable to past service is
called the Accumulated Benefit Obligation. All of the present value of future
benefits is included in the Accumulated Benefit Obligation for retired
employees. The present value of vested benefits is equal to the present value
of future benefits for those employees who have satisfied the Plan's age and
service retirement criteria, zero (0) for other employees.

-iv-
<PAGE>

SCHEDULE 6.5(a)

THIRD PARTY ASO CONTRACTS

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Plan Vendor Services
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Medical Plan Option A HealthCare Compare Claims Administration
Medical Plan Option B Administrative Services, Inc.
Regular Dental Plan "
Dental Plan II Automatic Data Processing, Inc. Open Enrollment Administration
Continued Group Medical dba:
Program (non-HMO) -ADP
SeniorMed Program (non-HMO) -Johnson & Higgins
Kirke-Van Orsdel, Inc.
("J&H/KVI")
-Health Benefits of America
- ---------------------------------------------------------------------------------------------------------------
Continued Group Medical Automatic Data Processing, Inc. Premium Collection
Program dba:
Senior Med Program -ADP and
Leave of Absence Program -Johnson & Higgins/Kirke- Open Enrollment Administration
(Medical Benefits) Van Orsdel, Inc.
COBRA Program ("J&H/KVI")
-Health Benefits of America
- ---------------------------------------------------------------------------------------------------------------
Medical Plan Option A Geo Access, Inc. Provides and maintains online
Medical Plan Option B database of service providers
Regular Dental Plan available under all indicated
Dental Plan II plans.
HMOs
- ---------------------------------------------------------------------------------------------------------------
Income Protection Plan (STD & LTD) Voluntary Plan Claims Administration
-California Voluntary Plan Administrators, Inc. ("VPA")
-New York Voluntary Plan
-New Jersey Voluntary Plan
- ---------------------------------------------------------------------------------------------------------------
Group Universal Life Plan Kirke Van Orsdel, a division of Premium Collection and Claims
Seabury & Smith, Inc. (KVI) Administration
- ---------------------------------------------------------------------------------------------------------------
Long Term Care Plan U.S. Care, Inc. Eligibility Determination and
Claims Administration
- ---------------------------------------------------------------------------------------------------------------
Health Care Reimbursement Plan United HealthCare Insurance Claims Administration
Dependent Care Reimbursement Plan Company
- ---------------------------------------------------------------------------------------------------------------
Workers' Compensation Program Sedgwick CMS, Inc. (Non-CA) Claims Administration
Presidium Inc. (CA)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

-v-
<PAGE>

SCHEDULE 6.5(b)

GROUP INSURANCE POLICIES

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Plan Insurer
- -------------------------------------------------------------------------------------------------
<S> <C>
HP Life Insurance Connecticut General Life Insurance Company (CIGNA)
Retiree Life
- -------------------------------------------------------------------------------------------------
Group Universal Life Plan Connecticut General Life Insurance Company (CIGNA)
- -------------------------------------------------------------------------------------------------
Business Travel Accident Insurance UNUM Life Insurance Company of America (UNUM)
- -------------------------------------------------------------------------------------------------
Workers' Compensation Program Old Republic Insurance Company
General Reinsurance Company
The Travelers Insurance Companies
- -------------------------------------------------------------------------------------------------
</TABLE>

-vi-
<PAGE>

SCHEDULE 6.5(c)

THIRD PARTY HMO CONTRACTS

Aetna U.S. Healthcare
AmeriHealth HMO, Inc.
Av-Med Health Plan
Blue Choice Healthcare Plan
Capital District Physicians Health Plan
Care Choices/Mercy Health Plans
ChoiceCare Health Plans, Inc.
CIGNA HealthCare of Colorado
CIGNA Healthcare/COMED
ConnectiCare, Inc.
FreeState Health Plan, Inc.
Group Health Cooperative of Puget Sound
Group Health Northwest
Harvard Pilgrim Health Care
Health Alliance Plan of Michigan
HealthAmerica PA, Inc.
Health Net
Health Plan of the Redwoods
HealthPlus
Healthsource New Hampshire
HMO Blue New England
HMO Blue of Idaho
HMO Illinois
Humana (Louisville)
Humana Health Plans of Puerto Rico
Humana/Wisconsin Health Organization
Independent Health
Intergroup of Arizona
Intergroup of Utah, Inc.
Kaiser Permanente-California
Kaiser Permanente-Colorado
Kaiser Permanente-Georgia
Kaiser Permanente-Hawaii
Kaiser Permanente-Mid-Atlantic States
Kaiser Permanente-North Carolina
Kaiser Permanente-NW Region
Lifeguard, Inc.
Matthew Thornton Health Plan, Inc.
Medica Choice
Medica Primary
Optimum Choice, Inc.
Oxford Health Plans
PacifiCare of California
PacifiCare of Colorado
PacifiCare of Oregon
PacifiCare of Texas
Preferred Care
Prepaid Health Plan (PHP)
Principal Health Care of Kansas City
Prudential HealthCare
Prudential HealthCare HMO
Prudential HealthCare of Indiana
QualChoice
QualMed
Regence HMO Oregon
Rush Prudential Health Plans
Texas Health Choice
Tufts Health Plan
United Health Care of Alabama
United HealthCare of Georgia
United HealthCare of the Midlands
United HealthCare of the Midwest, Inc.
United HealthCare of Ohio-Columbus
United HealthCare of Ohio-Dayton

-vii-
<PAGE>

SCHEDULE 6.6(a)

ASSUMPTIONS FOR HP LONG-TERM CARE

PLAN LIABILITIES

1. Administrative Expenses - Seven Dollars and Forty Three Cents ($7.43) per
member per month. Administrative expenses are assumed to increase for
inflation at three percent (3%) per year.

2. Voluntary Termination - three percent (3%) per year

3. Mortality - 1983 Group Annuity Mortality Table

4. Morbidity

Incidence and continuance rates are based on the 1985 Nursing Home Study
adjusted based on insurer experience, other studies and the effect of additional
benefits. Sample rates of incidence (probability of disability) and severity
(present value of incurred claims) are as follows:

Rate of Present Value of
Age Disability Incurred Claim
--- ---------- ----------------

$80 $ 120 $ 160
--- ------- -------

35 .000579 25,404 45,755 65,002
45 .001569 24,645 45,190 66,813
55 .002109 24,595 45,972 71,094
65 .006623 25,562 47,959 72,627
75 .029038 26,576 49,589 71,825
85 .109395 26,384 47,861 66,779
95 .189596 24,854 44,236 60,157

5. Discount Rate - six percent (6%)

-viii-
<PAGE>

SCHEDULE 6.15(d)

WCP CLAIMS

ACCRUED LIABILITIES ALLOCATION

HP Risk Management provides direction to liability programs within HP that
generate claims. These claims usually extend beyond a year. Federal
regulations require HP to estimate the ultimate cost of those claims and to
accrue that future cost on the books at a consolidated level.

Basis of Calculation: Actuarial analysis using the past ten (10) years of HP
claims history, supplemented by insurance industry data. Accrued amounts
represent projected ultimate claims cost, with an approximate eighty percent
(80%) confidence level. The worker's compensation accrual amount has been
discounted to NPV at sixty-five percent (65%) in accordance with tax and
accounting rules.

Self-Insured Liabilities to be Allocated:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Liability Estimated as of October 31, 1999 Proposed HP Proposed Agilent
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Workers' Compensation $50M $28M $22M
Liability
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

Historical Basis of Allocation Distribution:

1. Worker's Compensation: Distributed to entity on a performance based model.

a. Seventy-five percent (75%) on a three (3) year claims frequency
severity

b. Twenty-five percent (25%) exposure headcount and payroll

2. Proposed Basis of Allocation to HP and Agilent:

Use of existing model with the inclusion of proportionate share of
corporate and AGO costs

-ix-
<PAGE>

SCHEDULE 7.2(c)

OPTIONS HELD BY CERTAIN NON-U.S.

AGILENT TRANSFERRED EMPLOYEES

United Kingdom
- --------------

Notwithstanding anything in Section 7.2 to the contrary, unless otherwise
mutually agreed by HP and Agilent, United Kingdom ("UK") Agilent Employees
holding UK approved HP Options shall not be eligible for assumption by Agilent;
such HP Options shall remain exercisable in accordance with the terms of the
applicable HP Stock Plan; provided, however, that the exercise price and the
number of shares of HP common stock relating to such HP Options shall not be
adjusted by HP in connection with the Distribution. UK Agilent Transferred
Employees who (i) are actively employed by, or on leave of absence from, the
Agilent Group as of the Distribution Date, and (ii) hold such HP Options shall
receive additional Agilent Stock Options at the Distribution Date for a number
of shares of Agilent common stock and with exercise prices that are reasonably
determined by Agilent to provide a value which, when added to the value of such
HP Options immediately after the Distribution Date, provides value that is
substantially equivalent to the value of such HP Options immediately prior to
the Distribution Date.

France
- -------

Notwithstanding anything in Section 7.2 to the contrary, unless
otherwise mutually agreed by HP and Agilent, the exercise price and the number
of shares of HP common stock relating to Excluded Options held by French Agilent
Transferred Employees shall not be adjusted by HP in connection with the
Distribution. French Agilent Transferred Employees who are actively employed
by, or on leave of absence from, the Agilent Group as of the Distribution Date
and who hold such Excluded Options shall receive additional Agilent Stock
Options at the Distribution Date for a number of shares of Agilent common stock
and with the exercise prices that are reasonably determined by Agilent to
provide a value which, when added to the value of such Excluded Options
immediately after the Distribution Date, provides value that is substantially
equivalent to the value of such Excluded Options immediately prior to the
Distribution Date.

-x-
<PAGE>

SCHEDULE 8.11

FRINGE BENEFITS

Executive Physical Program

Executive Financial Services

Commuter Assistance Program

On-Site workout facilities

LifeWorks

-xi-
<PAGE>

SCHEDULE 10.12(a)

EMPLOYMENT LITIGATION

TRANSFERRED CLAIMS

Borbely, Daniel v. HP (98-0284), Employment Discrimination

Brown, Frances v. HP (92-0062), Employment

Carter, Kimberly v. HP (99-0001), Employment

Cirelli, Linda v HP (99-0056), Employment Discrimination

Garrett, Terry v. HP (95-0028), Employment Discrimination

Maier, Craig v. HP (97-0097), Employment Discrimination

Reed, Robert v. HP (98-0296), Employment

Serino, Kimberly v HP (98-0280), Employment Discrimination

Truong v. HP (98-0023), Employment

-xii-
<PAGE>

SCHEDULE 10.12(b)

EMPLOYMENT LITIGATION

JOINTLY DEFEND CLAIMS

[None]

-xiii-

<PAGE>

EXHIBIT 2.8

TAX SHARING AGREEMENT

BY AND AMONG

HEWLETT-PACKARD COMPANY

AND ITS AFFILIATES

AND

AGILENT TECHNOLOGIES, INC.

AND ITS AFFILIATES

Dated _____________, 1999
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1 Definitions................................................ 2
1.1 In General........................................... 2
----------
"Additional Restructuring Tax"....................... 2
"After Tax Amount" .................................. 2
"Agilent Affiliate" ................................. 2
"Agilent Business" .................................. 3
"Agilent Group" ..................................... 3
"Agilent Group Combined Tax Liability" .............. 3
"Agilent Group Federal Income Tax Liability"......... 3
"Agilent Historic Affiliate" ........................ 3
"Agilent VP" ........................................ 3
"Applicable Spinoff" ................................ 3
"Audit" ............................................. 3
"Benefitting Party" ................................. 3
"Carryback Period" .................................. 4
"Code" .............................................. 4
"Combined Group" .................................... 4
"Combined Return".................................... 4
"Consolidated Group" ................................ 4
"Consolidated Return" ............................... 4
"Consolidated Return Year" .......................... 4
"Contemplated Domestic Restructuring Taxes" ......... 4
"Contemplated Foreign Restructuring Taxes" .......... 4
"Deducting Party".................................... 4
"Determination" ..................................... 4
"Disputed Item" ..................................... 5
"Disputing Party".................................... 5
"Distribution Date" ................................. 5
"Domestic Restructuring" ............................ 5
"Domestic Restructuring Tax" ........................ 5
"Estimated Tax Installment Date" .................... 5
"Federal Income Tax" ................................ 5
"Federal Income Tax Benefit" ........................ 5
"Federal Tax" ....................................... 5
</TABLE>
<PAGE>

<TABLE>
<S> <C>
"Filing Party" ...................................... 6
"Final Determination" ............................... 6
"Final Notice of Disagreement" ...................... 6
"Foreign Restructuring Tax" ......................... 6
"Hewlett-Packard Affiliate" ......................... 6
"Hewlett-Packard Business"........................... 6
"Hewlett-Packard Group" ............................. 7
"Hewlett-Packard VP" ................................ 7
"Income Taxes" ...................................... 7
"Indemnifying Party" ................................ 7
"Indemnitee" ........................................ 7
"Initial Notice of Disagreement" .................... 7
"Initial Private Letter Ruling" ..................... 7
"Interest Accrual Period"............................ 7
"Interim Period"..................................... 7
"Japan Restructuring Tax"............................ 7
"Non-Disputing Party" ............................... 8
"Non-Federal Combined Tax"........................... 8
"Non-Federal Separate Tax"........................... 8
"Non-Filing Party" .................................. 8
"Payment Period"..................................... 8
"Post-Distribution Period"........................... 8
"Pre-Separation Period" ............................. 8
"Pre-Spinoff Period" ................................ 8
"Privilege" ......................................... 8
"Pro Forma Agilent Group Combined Return" ........... 8
"Pro Forma Agilent Group Consolidated Return" ....... 8
"Redetermination Amount" ............................ 9
"Restriction Period" ................................ 9
"Restructuring Tax" ................................. 9
"Ruling Documents" .................................. 9
"Separate Return" ................................... 9
"Separation Date".................................... 9
"Service" ........................................... 9
"Spinoff" ........................................... 9
"Supplemental Ruling" ............................... 9
"Supplemental Ruling Documents" ..................... 9
"Tax" ............................................... 10
"Tax Arbiter" ....................................... 10
"Tax Asset" ......................................... 10
"Tax Authority" ..................................... 10
"Tax Benefit" ....................................... 10
"Tax Detriment" ..................................... 10
</TABLE>
<PAGE>

<TABLE>
<S> <C>
"Tax Item" .......................................... 11
"Tax Law" ........................................... 11
"Tax Return" ........................................ 11
"Treasury Regulations" .............................. 11
1.2 Construction Principles ............................. 11
-----------------------

Section 2. Preparation and Filing of Tax Returns ..................... 11
2.1 In General .......................................... 11
----------
2.2 Provision of Tax Return Information.................. 12
-----------------------------------
2.3 Manner of Filing Tax Returns ........................ 13
----------------------------
2.4 Review of Tax Returns ............................... 15
---------------------
2.5 Agent ............................................... 16
-----

Section 3. Tax Sharing ............................................... 16
3.1 In General .......................................... 16
----------
3.2 Agilent Group Federal Income Tax Liability .......... 16
------------------------------------------
3.3 Agilent Group Combined Tax Liability ................ 17
------------------------------------
3.4 Cooperation ......................................... 17
-----------

Section 4. Payment of Taxes and Tax Sharing Amounts .................. 17
4.1 Federal Income Taxes ................................ 17
--------------------
4.2 Non-Federal Combined Taxes........................... 17
--------------------------
4.3 Non-Federal Separate Taxes........................... 17
--------------------------
4.4 Other Federal Taxes ................................. 18
-------------------
4.5 Tax Sharing Installment Payments..................... 18
--------------------------------
4.6 Tax Sharing True-up Payments ........................ 18
----------------------------
4.7 Redetermination Amounts ............................. 19
-----------------------

Section 5. Restructuring Taxes and Deconsolidation ................... 19
5.1 Liability for Restructuring Taxes.................... 20
---------------------------------
5.2 Agilent Representations ............................. 20
-----------------------
5.3 Hewlett-Packard Representations ..................... 23
-------------------------------
5.4 Private Letter Rulings .............................. 24
----------------------
5.5 Carrybacks .......................................... 25
----------
5.6 Allocation of Tax Items ............................. 26
-----------------------
5.7 Continuing Covenants ................................ 27
--------------------
5.8 Allocation of Tax Assets ............................ 27
------------------------
5.9 Japan Restructuring Taxes............................ 27
-------------------------
5.10 Japan Operating Taxes ............................... 29
---------------------

Section 6. Additional Obligations .................................... 30
6.1 Indemnification ..................................... 30
---------------
6.2 Treatment of Payments ............................... 31
---------------------
</TABLE>
<PAGE>

<TABLE>
<S> <C>
6.3 After Tax Amounts.................................... 31
-----------------
6.4 Interest............................................. 32
--------
6.5 Tax Records ......................................... 32
-----------

Section 7. Audits .................................................... 32
7.1 In General .......................................... 32
----------
7.2 Notice .............................................. 33
------
7.3 Participation Rights ................................ 33
--------------------
7.4 Limitations ......................................... 34
-----------
7.5 Failure to Notify, Etc .............................. 37
----------------------
7.6 Affirmative Claims .................................. 37
------------------
7.7 Remedies............................................. 38
--------

Section 8. Taxability and Reporting of Stock Options ................. 38
8.1 In General .......................................... 38
----------
8.2 Notices, Withholding, Reporting...................... 39
-------------------------------
8.3 Adjustments ......................................... 39
-----------

Section 9 Other Tax Matters.......................................... 39
9.1 Other Adjustments.................................... 39
-----------------
9.2 Research Tax Credit ................................. 40
-------------------
9.3 Gain Recognition Agreements ......................... 40
---------------------------

Section 10. Dispute Resolution ........................................ 40
10.1 Initial Notice of Disagreement ...................... 40
------------------------------
10.2 Negotiation ......................................... 41
-----------
10.3 Final Notice of Disagreement ........................ 42
----------------------------
10.4 Selection of Tax Arbiter ............................ 42
------------------------
10.5 Determination by Tax Arbiter ........................ 43
----------------------------

Section 11. Miscellaneous ............................................. 44
11.1 Effectiveness ....................................... 44
-------------
11.2 Notices ............................................. 44
-------
11.3 Changes in Law ...................................... 44
--------------
11.4 Confidentiality ..................................... 45
---------------
11.5 Successors .......................................... 45
----------
11.6 Affiliates .......................................... 45
----------
11.7 Authorization, Etc .................................. 46
------------------
11.8 Entire Agreement..................................... 46
----------------
</TABLE>
<PAGE>

<TABLE>
<S> <C>
11.9 Applicable Law, Jurisdiction......................... 46
----------------------------
11.10 Counterparts ........................................ 47
------------
11.11 Severability ........................................ 47
------------
11.12 No Third Party Beneficiaries ........................ 47
----------------------------
11.13 Waivers, Etc ........................................ 48
------------
11.14 Setoff .............................................. 48
------
</TABLE>
<PAGE>

TAX SHARING AGREEMENT
---------------------

THIS TAX SHARING AGREEMENT (this "Agreement"), dated as of _________,
1999, by and among Hewlett-Packard Company ("Hewlett-Packard"), a Delaware
corporation and each Hewlett-Packard Affiliate (as defined below), and Agilent
Technologies, Inc. ("Agilent"), a Delaware corporation and currently a direct,
wholly owned subsidiary of Hewlett-Packard, and each Agilent Affiliate (as
defined below) is entered into in connection with the Spinoff (as defined
below).

RECITALS
--------

WHEREAS, as set forth in the Master Separation and Distribution
Agreement dated as of August 12, 1999 (the "Master Agreement"), and subject to
the terms and conditions thereof, Hewlett-Packard wishes to transfer and assign
to Agilent substantially all of the assets and liabilities currently associated
with the Agilent Business (as defined below) and the stock, investments and
similar interests currently held by Hewlett-Packard in subsidiaries and other
entities that conduct such business (the "Separation");

WHEREAS, following the Separation, Hewlett-Packard and Agilent
currently contemplate that Agilent will make an initial public offering (the
"IPO") of Agilent Common Stock that will reduce Hewlett-Packard's ownership of
Agilent on a fully-diluted basis to not less than 80.1 percent;

WHEREAS, Agilent intends to distribute all of the proceeds of the IPO
to Hewlett-Packard and Hewlett-Packard intends to segregate such funds for
distribution to its creditors or shareholders (the "Cash Distribution");

WHEREAS, Hewlett-Packard intends to distribute all of its shares of
Agilent Common Stock, on a pro rata basis, to the holders of the common stock of
Hewlett-Packard, subject to the terms and conditions of the Master Agreement
(the "Public Distribution");

WHEREAS, prior to consummating the Separation and the Public
Distribution, various Hewlett-Packard Affiliates and the Agilent Affiliates will
have undertaken certain restructuring transactions designed to separate the
Agilent Business from the Hewlett-Packard Business in jurisdictions outside of
the United States, as defined in Section 7701(a)(9) of the Code, (the "Foreign
Restructuring"), and Hewlett-Packard World Trade, Inc., a wholly owned Delaware
subsidiary of Hewlett-Packard, will contribute all of its property relating to
the Agilent Business into Agilent World Trade, Inc., a newly formed Delaware
corporation, and will distribute all of the stock of Agilent World Trade, Inc.
to Hewlett-Packard (the "Internal Distribution");
<PAGE>

WHEREAS, the Separation, the Public Distribution, the Internal
Distribution and certain of the transactions involved in the Foreign
Restructuring are intended to qualify as tax free reorganizations and
distributions under Sections 368(a)(1)(D) and 355 of the Code; and

WHEREAS, in contemplation of the Public Distribution pursuant to which
Agilent and its domestic subsidiaries will cease to be members of the Hewlett-
Packard Group (as defined below), the parties hereto have determined to enter
into this Agreement, setting forth their agreement with respect to certain tax
matters.

AGREEMENT
---------

NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

Section 1. Definitions

1.1 In General. As used in this Agreement, the following capitalized
----------
terms shall have the following meanings:

"Additional Restructuring Tax" has the meaning set forth in Section
5.1(b) of this Agreement.

"After Tax Amount" means any additional amount necessary to reflect
the hypothetical Tax consequences of the receipt or accrual of any payment
required to be made under this Agreement (including payment of an additional
amount or amounts hereunder and the effect of the deductions available for
interest paid or accrued and for Taxes such as state and local income Taxes),
determined by using the highest marginal corporate Tax rate (or rates, in the
case of an item that affects more than one Tax) for the relevant taxable period
(or portion thereof).

"Agilent Affiliate" means any corporation or other entity directly or
indirectly controlled by Agilent.

"Agilent Business" has the meaning set forth in the Master Agreement.
<PAGE>

"Agilent Group" means the affiliated group of corporations as defined
in Section 1504(a) of the Code, or similar group of entities as defined under
corresponding provisions of the laws of other jurisdictions, of which Agilent
would be the common parent corporation if it were not a subsidiary of Hewlett-
Packard, and any corporation or other entity which may be, may have been or may
become a member of such group from time to time.

"Agilent Group Combined Tax Liability" means, with respect to any
taxable period, the Agilent Group's liability for Non-Federal Combined Taxes as
determined under Section 3.3 of this Agreement.

"Agilent Group Federal Income Tax Liability" means, with respect to
any taxable period, the Agilent Group's liability for Federal Income Taxes as
determined under Section 3.2 of this Agreement.

"Agilent Historic Affiliate" means any Agilent Affiliate that was a
Hewlett-Packard Affiliate on or before [March 2, 1999], including the companies
listed in Appendix G of this Agreement; provided, however, that any such
-------- -------
affiliate which was acquired by the Hewlett-Packard Group shall only be treated
as an Agilent Historic Affiliate with respect to periods before such
acquisition.

"Agilent VP" means the vice president of Agilent with authority over
Tax matters.

"Applicable Spinoff" means each of the transactions identified in
Appendix E of this Agreement, each of which is intended to qualify as a non-
recognition transaction under Sections 355 and/or 368(a) of the Code.

"Audit" includes any audit, assessment of Taxes, other examination by
any Tax Authority, proceeding, or appeal of such a proceeding relating to Taxes,
whether administrative or judicial, including proceedings relating to competent
authority determinations.

"Benefitting Party" has the meaning set forth in Section 8.3 of this
Agreement.

"Carryback Period" has the meaning set forth in Section 5.5 of this
Agreement.
<PAGE>

"Code" means the Internal Revenue Code of 1986, as amended.

"Combined Group" means a group of corporations or other entities that
files a Combined Return.

"Combined Return" means any Tax Return with respect to Non-Federal
Taxes filed on a consolidated, combined (including nexus combination, worldwide
combination, domestic combination, line of business combination or any other
form of combination) or unitary basis wherein Agilent or one or more Agilent
Affiliates join in the filing of such Tax Return (for any taxable period or
portion thereof) with Hewlett-Packard or one or more Hewlett-Packard Affiliates.

"Consolidated Group" means an affiliated group of corporations within
the meaning of Section 1504(a) of the Code that files a Consolidated Return.

"Consolidated Return" means any Tax Return with respect to Federal
Income Taxes filed on a consolidated basis wherein Agilent or one or more
Agilent Affiliates join in the filing of such Tax Return (for any taxable period
or portion thereof) with Hewlett-Packard or one or more Hewlett-Packard
Affiliates.

"Consolidated Return Year" means any taxable year for which a
Consolidated Return is filed.

"Contemplated Domestic Restructuring Taxes" means the Domestic
Restructuring Taxes set forth in Appendix C of this Agreement.

"Contemplated Foreign Restructuring Taxes" means the Foreign
Restructuring Taxes set forth in Appendix D of this Agreement.

"Deducting Party" has the meaning set forth in Section 8.3 of this
Agreement.

"Determination" has the meaning set forth in Section 10.5(a) of this
Agreement.

"Disputed Item" has the meaning set forth in Section 10.1(a) of this
Agreement.

"Disputing Party" has the meaning set forth in Section 10.1(a) of this
Agreement.

"Distribution Date" has the meaning set forth in the Master Agreement.
<PAGE>

"Domestic Restructuring" means the transactions undertaken by Hewlett-
Packard and Agilent (and their respective affiliates) designed to separate the
Agilent Business from the Hewlett-Packard Business in the United States, as
defined in Section 7701(a)(9) of the Code, including the Internal Distribution,
the Separation, the Cash Payment and the Public Distribution.

"Domestic Restructuring Tax" means any Tax imposed by the United
States, or any political subdivision thereof, upon Hewlett-Packard (or any
Hewlett-Packard Affiliate) or Agilent (or any Agilent Affiliate) directly in
connection with the Domestic Restructuring, together with reasonable
professional fees incurred in connection therewith.

"Estimated Tax Installment Date" means the estimated Tax installment
due dates prescribed in Section 6655(c) of the Code (presently February 15,
April 15, July 15 and October 15), and any other date on which an installment of
estimated Taxes is required to be made.

"Federal Income Tax" means any Tax imposed under Subtitle A of the
Code (including the Taxes imposed by Sections 11, 55, 59A, and 1201(a) of the
Code), and any interest, additions to Tax or penalties applicable or related
thereto, and any other income-based United States federal Tax which is
hereinafter imposed upon corporations.

"Federal Income Tax Benefit" means, with respect to any Carryback
Period, the amount determined under Section 5.5(a) of this Agreement.

"Federal Tax" means any Tax imposed or required to be withheld by any
Tax Authority of the United States.

"Filing Party" has the meaning set forth in Section 2.3(c) of this
Agreement.

"Final Determination" means any of (1) the final resolution of any Tax
(or other matter) for a taxable period, including related interest or penalties,
that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise, including (A) by the expiration
of a statute of limitations or a period for the filing of claims for refunds,
amending Tax Returns, appealing from adverse determinations, or recovering any
refund (including by offset), (B) by a
<PAGE>

decision, judgment, decree, or other order by a court of competent jurisdiction,
which has become final and unappealable, (C) by a closing agreement or an
accepted offer in compromise under Section 7121 or 7122 of the Code, or
comparable agreements under laws of other jurisdictions, (D) by execution of an
Internal Revenue Service Form 870 or 870AD, or by a comparable form under the
laws of other jurisdictions (excluding, however, with respect to a particular
Tax Item for a particular taxable period any such form that reserves (whether by
its terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the Tax Authority to assert a further deficiency with
respect to such Tax Item for such period), or (E) by any allowance of a refund
or credit, but only after the expiration of all periods during which such refund
or credit may be recovered (including by way of offset), or (2) the payment of
Tax by any member of the Consolidated Group or Combined Group with respect to
any Tax Item disallowed or adjusted by a Tax Authority provided that the party
liable for payment of such tax determines that no action should be taken to
recoup such payment.

"Final Notice of Disagreement" has the meaning set forth in Section
10.3(a) of this Agreement.

"Foreign Restructuring Tax" means any Tax imposed by any Tax Authority
upon Hewlett-Packard (or any Hewlett-Packard Affiliate) or Agilent (or any
Agilent Affiliate) directly in connection with the Foreign Restructuring,
together with reasonable professional fees incurred in connection therewith.

"Hewlett-Packard Affiliate" means any corporation or other entity
directly or indirectly controlled by Hewlett-Packard, but excluding Agilent or
any Agilent Affiliate.

"Hewlett-Packard Business" means any business of Hewlett-Packard other
than the Agilent Business.

"Hewlett-Packard Group" means the affiliated group of corporations as
defined in Section 1504(a) of the Code, or similar group of entities as defined
under corresponding provisions of the laws of other jurisdictions, of which
Hewlett-Packard is the common parent corporation, and any corporation or other
entity which may be, may have been or may become a member of such group from
time to time, but excluding any member of the Agilent Group.

"Hewlett-Packard VP" means the vice president of Hewlett-Packard with
authority over Tax matters.

"Income Taxes" means (1) any Tax based upon, measured by, or
calculated with respect to (A) net income or profits (including any capital
gains Tax, minimum Tax and any Tax on items of Tax preference, but not including
sales, use,
<PAGE>

real or personal property, gross or net receipts, transfer or similar Taxes) or
(B) multiple bases if one or more of the bases upon which such Tax may be based,
measured by, or calculated with respect to, is described in clause (A) above, or
(2) any U.S. state or local franchise Tax.

"Indemnifying Party" has the meaning set forth in Section 6.1(d) of
this Agreement.

"Indemnitee" has the meaning set forth in Section 6.1(d) of this
Agreement.

"Initial Notice of Disagreement" has the meaning set forth in Section
10.1(b) of this Agreement.

"Initial Private Letter Ruling" means the first private letter ruling
issued by the Service to Hewlett-Packard in connection with the Spinoff.

"Interest Accrual Period" has the meaning set forth in Section 6.4 of
this Agreement.

"Interim Period" means any taxable period that begins on or after the
Separation Date but before the Distribution Date.

"Japan Restructuring Tax" has the meaning set forth in Section 5.9(a)
of this Agreement.

"Non-Disputing Party" has the meaning set forth in Section 10.1(b) of
this Agreement.

"Non-Federal Combined Tax" means any Non-Federal Tax with respect to
which a Combined Return is filed or is required to be filed.

"Non-Federal Separate Tax" means any Non-Federal Tax other than a Non-
Federal Combined Tax.

"Non-Filing Party" has the meaning set forth in Section 2.4(a) of this
Agreement.

"Payment Period" has the meaning set forth in Section 6.4 of this
<PAGE>

Agreement.

"Post-Distribution Period" means a taxable period beginning on or
after the Distribution Date.

"Pre-Separation Period" means a taxable period beginning before the
Separation Date.

"Pre-Spinoff Period" means any Pre-Separation Period and/or Interim
Period.

"Privilege" means any privilege that may be asserted under applicable
law including, any privilege arising under or relating to the attorney-client
relation ship (including the attorney-client and work product privileges), the
accountant-client privilege, and any privilege relating to internal evaluation
processes.

"Pro Forma Agilent Group Combined Return" means a pro forma Non-
Federal Combined Tax Return or other schedule prepared pursuant to Section 3.3
of this Agreement.

"Pro Forma Agilent Group Consolidated Return" means a pro forma
consolidated Federal Income Tax Return or other schedule prepared pursuant to
Section 3.2 of this Agreement.

"Redetermination Amount" means, with respect to any Tax for any
taxable period, the amount determined under Section 4.7 of this Agreement.

"Restriction Period" means the period beginning on the date hereof and
ending thirty (30) months after the Distribution Date.

"Restructuring Tax" means a Domestic Restructuring Tax or a Foreign
Restructuring Tax, in each case including both Contemplated and Additional
Restructuring Taxes.

"Ruling Documents" means (1) the request for a ruling under Section
355 and various other Sections of the Code, filed with the Service in connection
with the Spinoff, together with any supplemental filings or ruling requests or
other materials subsequently submitted on behalf of Hewlett-Packard, its
subsidiaries and shareholders to the Service, the appendices and exhibits
thereto, and any rulings issued by the Service to Hewlett-Packard (or any
Hewlett-Packard Affiliate) in connection with the Spinoff or (2) any similar
filings submitted to, or rulings issued by, any other Tax Authority in
connection with the Spinoff.
<PAGE>

"Separate Return" means any Tax Return with respect to Non-Federal
Separate Taxes filed by Hewlett-Packard, Agilent, or any of their respective
affiliates.

"Separation Date" has the meaning set forth in the Master Agreement.

"Service" means the Internal Revenue Service.

"Spinoff" means the separation of the Agilent Business from the
Hewlett-Packard Business, and the Public Distribution.

"Supplemental Ruling" means (1) any ruling issued by the Service in
connection with the Spinoff other than the Initial Private Letter Ruling or (2)
any similar ruling issued by any other Tax Authority addressing the application
of a provision of the laws of another jurisdiction to the Spinoff.

"Supplemental Ruling Documents" has the meaning set forth in Section
5.4(b)(i) of this Agreement.

"Tax" includes any charges, fees, levies, imposts, duties, or other
assessments of a similar nature, including income, alternative or add-on
minimum, gross receipts, profits, lease, service, service use, wage, wage
withholding, employment, workers compensation, business occupation, occupation,
premiums, environ mental, estimated, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
withholding, social security, unemployment, disability, ad valorem, estimated,
highway use, commercial rent, capital stock, paid up capital, recording,
registration, property, real property gains, value added, business license,
custom duties, or other tax or governmental fee of any kind whatsoever, imposed
or required to be withheld by any Tax Authority including any interest,
additions to tax, or penalties applicable or related thereto.

"Tax Arbiter" means a nationally recognized tax attorney or tax
accountant that is a member of a nationally recognized law firm or accounting
firm which firm is independent of both parties.

"Tax Asset" means any Tax Item that has accrued for Tax purposes, but
has not been used during a taxable period, and that could reduce a Tax in
another
<PAGE>

taxable period, including a net operating loss, net capital loss, investment tax
credit, foreign tax credit, charitable deduction or credit related to
alternative minimum tax.

"Tax Authority" means any governmental authority or any subdivision,
agency, commission or authority thereof or any quasi-governmental or private
body having jurisdiction over the assessment, determination, collection or
imposition of any Tax (including the Service).

"Tax Benefit" means a reduction in the Tax liability of a taxpayer (or
of the affiliated group of which it is a member) for any taxable period. Except
as otherwise provided in this Agreement, a Tax Benefit shall be deemed to have
been realized or received from a Tax Item in a taxable period only if and to the
extent that the Tax liability of the taxpayer (or of the affiliated group of
which it is a member) for such period, after taking into account the effect of
the Tax Item on the Tax liability of such taxpayer in all prior periods, is less
than it would have been if such Tax liability were determined without regard to
such tax item.

"Tax Detriment" means an increase in the Tax liability of a taxpayer
(or of the affiliated group of which it is a member) for any taxable period.
Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed
to have been realized or received from a Tax Item in a taxable period only if
and to the extent that the Tax liability of the taxpayer (or of the affiliated
group of which it is a member) for such period, after taking into account the
effect of the Tax Item on the Tax liability of such taxpayer in all prior
periods, is more than it would have been if such Tax liability were determined
without regard to such tax item.

"Tax Item" means any item of income, gain, loss, deduction or credit,
or other attribute that may have the effect of increasing or decreasing any Tax.

"Tax Law" means any federal, state, local or foreign law with respect
to Taxes, including the Code and Treasury Regulations.

"Tax Return" means any return, report, certificate, form or similar
statement or document (including, any related or supporting information or
schedule attached thereto and any information return, amended tax return, claim
for refund or declaration of estimated tax) required to be supplied to, or filed
with, a Tax Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.

"Treasury Regulations" means the final, temporary and proposed income
tax regulations promulgated under the Code, as such regulations may be amended
from time to time (including corresponding provisions of succeeding
<PAGE>

regulations).

1.2 Construction Principles. As used in this Agreement, words in any
-----------------------
gender shall be deemed to include all other genders, the singular shall be
deemed to include the plural and vice versa, and the captions and section
headings are inserted for convenience of reference only and are not intended to
have any significance for the interpretation of, or construction of, the
provisions of this Agreement.

Section 2. Preparation and Filing of Tax Returns

2.1 In General.
----------

(a) Hewlett-Packard shall have the responsibility for the
preparation and filing of (1) all Tax Returns with respect to Hewlett-Packard,
any Hewlett-Packard Affiliate, Agilent and/or any Agilent Affiliate (other than
returns required to be filed after October 31, 1999 of an Agilent Historic
Affiliate) for any Pre-Separation Period and (2) all Consolidated Returns and
all Combined Returns for any Interim Period.

(b) Except as provided in Section 2.1(a) of this Agreement,
Agilent shall have the responsibility for the preparation and filing of all Tax
Returns for (1) Agilent and any Agilent Affiliate which are required to be filed
for any Interim Period and any Post-Distribution Period and (2) any Agilent
Historic Affiliate which are required to be filed after October 31, 1999 for any
Pre-Separation Period.

2.2 Provision of Tax Return Information.
-----------------------------------

(a) Agilent shall provide Hewlett-Packard all documents and
information, and make available employees and officers of Agilent as Hewlett-
Packard reasonably requests, on a mutually convenient basis during normal
business hours, to aid Hewlett-Packard in preparing any Tax Return described in
Section 2.1(a) of this Agreement to the extent that such Tax Return relates to
the business, assets or activities that are transferred to Agilent (or any
Agilent Affiliate), any Pro Forma Agilent Group Consolidated Returns described
in Section 4.6(a) of this Agreement, and any Pro Forma Agilent Group Combined
Returns described in Section 4.6(b) of this Agreement, or to contest any Audit
of any such Tax Return. Without limiting the foregoing, in this regard, Agilent
agrees to provide (1) the
<PAGE>

information set forth in Appendix A to this Agreement, on or before the dates
set forth therein, with respect to Consolidated Returns, and (2) the information
set forth in Appendix B to this Agreement, on or before the dates set forth
therein, with respect to Combined Returns.

(b) In the case of any Tax Return for a Pre-Spinoff Period described
in Section 2.1(a) of this Agreement, Hewlett-Packard shall provide employees of
Agilent responsible for preparing its Tax Returns with access to each such Tax
Return, and will provide Agilent with a copy of that portion of each such Tax
Return to the extent it relates to Agilent or any Agilent Affiliate, together
with all related Tax accounting work papers, not later than five (5) days after
the receipt of a written request therefor. In addition, Hewlett-Packard will
provide employees of Agilent responsible for preparing its Tax Returns with
access to any private letter rulings, together with any requests therefor and
related documents, issued to Hewlett-Packard prior to the Distribution Date, and
will provide Agilent with a copy of such rulings or documents to the extent that
the issues discussed therein are relevant to Agilent or an Agilent Affiliate,
not later than five (5) days after the receipt of a written request therefor.

(c) After the date of this Agreement, Hewlett-Packard shall afford
Agilent access to employees and officers of Hewlett-Packard as Agilent
reasonably requests, on a mutually convenient basis during normal business hours
to aid Agilent in preparing any Tax Return described in Section 2.1(b) of this
Agree ment or to contest any Audit of any such Tax Return.

(d) Notwithstanding any other provision of this Agree ment, no member
of the Hewlett-Packard Group shall be required to provide Agilent or any Agilent
Affiliate access to or copies of (1) any information that relates to Hewlett-
Packard or any Hewlett-Packard Affiliate and not to the business or assets of
Agilent or any Agilent Affiliate, (2) any information as to which any member of
the Hewlett-Packard Group is entitled to assert the protection of any Privilege,
or (3) any information as to which any member of the Hewlett-Packard Group is
subject to an obligation with a third-party to maintain the confidentiality of
such information. Hewlett-Packard shall use reasonable efforts to separate any
such information from any other information to which Agilent is entitled to
under this Agreement. To the extent that Hewlett-Packard redacts or otherwise
withholds any information pursuant to this Section 2.2(d), Hewlett-Packard shall
provide Agilent with an index of such information.

(e) To the extent that Agilent acquires Tax Return software from
Hewlett-Packard, any information that relates solely to Hewlett-Packard (and not
to the business or assets of Agilent) that is included in such software shall be
deleted from such software as soon as practicable (unless such
<PAGE>

removal would adversely affect the Agilent information included in such
software) and Agilent shall inform Hewlett-Packard of the deletions that are
made.

2.3 Manner of Filing Tax Returns.
----------------------------

(a) All Tax Returns filed after the date of this Agreement by
Hewlett-Packard, any Hewlett-Packard Affiliate, Agilent and/or any Agilent
Affiliate shall be (1) prepared in a manner that is consistent with (A) the
Ruling Documents and (B) Sections 5.6 and 5.8 of this Agreement, and (2) filed
on a timely basis (including extensions) by the party responsible for such
filing under Section 2.1 of this Agreement.

(b) Hewlett-Packard and Agilent, for itself and the Agilent
Affiliates, agree to file all Tax Returns for any Pre-Spinoff Period, and to
take all other actions in a manner consistent with the position that Agilent and
the Agilent Affiliates are part of any Consolidated Group and any Combined Group
for all days through and including the Distribution Date.

(c) Except as otherwise provided in this Section 2.3 or Sections
2.4 and 7.6 of this Agreement, the party that is required to file a return under
Section 2.1 of this Agreement (the "Filing Party") shall have the exclusive
right to determine (1) the manner in which such Tax Return shall be prepared and
filed, including the elections, methods of accounting, positions, conventions
and principles of taxation to be used and the manner in which any Tax Item shall
be reported, (2) whether any extensions may be requested, (3) the elections that
will be made in such Tax Return, (4) whether any amended Tax Returns shall be
filed, (5) whether any claims for refund shall be made, (6) whether any refunds
shall be paid by way of refund or credited against any liability for the related
Tax, and (7) whether to retain outside specialists to prepare such Tax Return,
whom to retain for such purpose and the scope of any such retainer.

(d) In the event that a Tax Item affects a Tax Return described
in Section 2.1(a) of this Agreement and also affects a Tax Return de scribed in
Section 2.1(b) of this Agreement that is filed after the date of this Agree
ment, Agilent or the Agilent Affiliate preparing, or causing the preparation of,
such Tax Return under Section 2.1(b) of this Agreement shall conform the
treatment of such Tax Item in such Tax Return described in Section 2.1(b) of
this Agreement to the treatment of such Tax Item in the applicable Tax Return
described in Section 2.1(a) of this Agreement.
<PAGE>

(e) Any Tax Return described in (1) Section 2.1(a) of this
Agreement (but only with respect to Tax Items of Agilent or an Agilent
Affiliate) or (2) Section 2.1(b) of this Agreement, in either case which Tax
Return is filed after the date of this Agreement, shall be prepared on a basis
consistent with the elections, methods of accounting, positions, conventions and
principles of taxation and the manner in which any Tax Item or other information
is reported as reflected on the most recently filed prior Tax Returns involving
similar matters. The preceding sentence shall not apply (1) to the extent
otherwise required by Section 2.3(a)(1) of this Agreement, (2) if Agilent
obtains Hewlett-Packard's prior written consent (which consent shall not be
unreasonably withheld), or (3) if there is a change in controlling law.

(f) Any Tax Return filed by Hewlett-Packard or Agilent with
respect to any Pre-Spinoff Period will be filed in conformance with Hewlett-
Packard's existing intercompany pricing guidelines and rulings, except to the
extent that Agilent enters into an advanced pricing agreement with the Service
that provides for different intercompany pricing guidelines and any such
agreement does not result in any Tax Detriment to Hewlett-Packard with respect
to the Interim Period.

2.4 Review of Tax Returns.
---------------------

(a) The Filing Party shall provide the other party (the "Non-
Filing Party") a draft copy of any Tax Return that the Filing Party has pre
pared, together with all related Tax and accounting work papers, not later than
___________ (__) days before the due date, including extensions, for filing such
Tax Return with the applicable Tax Authority; provided, however, that Hewlett -
-------- -------
Packard may redact portions of any such Tax Return or related work papers to the
extent that the information set forth therein does not reasonably relate to
Agilent or any Agilent Affiliate. To the extent that Hewlett-Packard makes any
such redactions, Hewlett-Packard will provide an index of such redactions to
Agilent.

(b) The Filing Party shall accept any request by the Non-Filing
Party, that is made not later than one hundred five (105) days before the due
date, including extensions, for filing the applicable Tax Return, to incorporate
any election, method of accounting or other position, convention or principle of
taxation on such Tax Return to the extent that it relates to a Tax Item with
respect to the Non-Filing Party or any affiliate thereof, or the activities or
business of either,
<PAGE>

provided that, if reasonably requested by the Filing Party, and if the amount of
Taxes to which such request relates for which the Non-Filing Party could be
liable under this Agreement does not exceed one million dollars ($1,000,000.00),
the Non-Filing Party produces a written opinion of nationally recognized tax
counsel that there is substantial authority (within the meaning of Section 6662
of the Code) in support of such election, method of accounting or other
position, convention or principle of taxation.

(c) Hewlett-Packard shall make its employees reasonably
available, to the extent consistent with Hewlett-Packard's process for preparing
a Consolidated Return or a Combined Return, at mutually convenient times during
normal business hours to discuss information pertinent to Agilent or any Agilent
Affiliate contained in such Consolidated Return or Combined Return prior to the
date on which Hewlett-Packard intends to file such Consolidated Return or
Combined Return.

2.5 Agent. Agilent hereby irrevocably designates, and agrees to
-----
cause each Agilent Affiliate to so designate, Hewlett-Packard as its sole and
exclusive agent and attorney-in-fact to take such action (including execution of
documents) as Hewlett-Packard, in its sole discretion, may deem appropriate in
any and all matters (including Audits) relating to any Tax Return described in
Section 2.1(a) of this Agreement; provided, however, that Hewlett-Packard shall
-------- -------
not exercise its rights as agent and attorney-in-fact in any manner that is
inconsistent with the rights granted to Agilent under this Agreement, and
nothing in this Section 2.5 shall limit the rights granted to Agilent under this
Agreement.

Section3. Tax Sharing

3.1 In General.
----------

(a) Except as otherwise provided in this Agreement, Hewlett-
Packard shall be responsible for, and shall indemnify and hold harmless Agilent
against, all Taxes that relate to Hewlett-Packard, any Hewlett-Packard
Affiliate, Agilent or any Agilent Affiliate for all Pre-Separation Periods other
than (1) Restructuring Taxes or (2) Taxes of an Agilent Historic Affiliate for
periods before its acquisition by the Hewlett-Packard Group.

(b) For each Interim Period, Agilent shall be liable for an
amount equal to the sum of the Agilent Group Federal Income Tax Liability and
the
<PAGE>

Agilent Group Combined Tax Liability for such taxable period.

3.2 Agilent Group Federal Income Tax Liability. No later than
------------------------------------------
_________ (__) days after the filing of the Consolidated Return for the Interim
Period, Hewlett-Packard and Agilent shall prepare a Pro Forma Agilent Group
Consolidated Return. The Agilent Group Federal Income Tax Liability shall be
the Agilent Group's liability for Federal Income Taxes for such taxable period,
as determined on such Pro Forma Agilent Group Consolidated Return prepared:

(a) on the basis of the Consolidated Return for such period,
determined by including only Tax Items of members of the Agilent Group which are
included in the Consolidated Return and by allocating Tax Assets to the Agilent
Group to the extent that the Tax Asset was created by a member of the Agilent
Group and such Tax Asset was actually utilized on the relevant Consolidated
Return; and

(b) applying the highest marginal corporate Tax rate in effect
for such taxable period (or any portion thereof).

3.3 Agilent Group Combined Tax Liability. With respect to any
------------------------------------
Interim Period, the Agilent Group Combined Tax Liability shall be the sum for
such taxable period of the Agilent Group's liability for each Non-Federal
Combined Tax, as determined on a Pro Forma Agilent Group Combined Return
prepared in a manner consistent with the principles and procedures set forth in
Section 3.2 of this Agreement.

3.4 Cooperation. Hewlett-Packard shall make its employees available
-----------
to Agilent, at mutually convenient times during normal business hours, as
Agilent reasonably requests, to explain each Pro Forma Agilent Group
Consolidated Return prepared after the date of this Agreement pursuant to
Section 3.2 of this Agreement and each Pro Forma Agilent Group Combined Return
prepared after the date of this Agreement pursuant to Section 3.3 of this
Agreement. Hewlett-Packard shall accept all reasonable suggestions made by
Agilent to incorporate any election, method of accounting or other position,
convention or principle of taxation on such Pro Forma Agilent Group Consolidated
Returns and Pro Forma Agilent Group Combined Returns, provided that, if
--------
requested by Hewlett-Packard, Agilent produces a written opinion of nationally
recognized tax counsel that there is substantial authority (within the meaning
of Section 6662 of the Code) in support of such election, method of accounting
or other position, convention or principle of taxation.
<PAGE>

Section 4. Payment of Taxes and Tax Sharing Amounts

4.1 Federal Income Taxes. Hewlett-Packard shall pay (or cause to be
--------------------
paid) to the Service all Federal Income Taxes, if any, of any Consolidated Group
due and payable for all Pre-Spinoff Periods.

4.2 Non-Federal Combined Taxes. Hewlett-Packard shall pay (or cause
--------------------------
to be paid) to the appropriate Tax Authorities all Non-Federal Combined Taxes,
if any, of any Combined Group due and payable for all Pre-Spinoff Periods.

4.3 Non-Federal Separate Taxes. Agilent shall pay (or cause to be
--------------------------
paid) to the appropriate Tax Authorities all Non-Federal Separate Taxes, if any,
that relate to the Agilent Group and any Agilent Affiliate, and Hewlett-Packard
shall pay (or cause to be paid) to the appropriate Tax Authorities all Non-
Federal Separate Taxes, if any, that relate to the Hewlett-Packard Group or any
Hewlett-Packard Affiliate.

4.4 Other Federal Taxes. The parties shall each pay (or cause to be
-------------------
paid) to the appropriate Tax Authorities all of their respective Federal Taxes
(excluding Federal Income Taxes for Pre-Spinoff Periods, which are governed by
Section 4.1 of this Agreement), if any.

4.5 Tax Sharing Installment Payments.
--------------------------------

(a) Federal Income Taxes. Not later than _________ (__) business
--------------------
days prior to each Estimated Tax Installment Date with respect to Federal Income
Taxes for any Interim Period, Hewlett-Packard shall notify Agilent of its
determination, under the principles of Section 6655 of the Code, of the
estimated amount of the related installment of the Agilent Group Federal Income
Tax Liability. Agilent shall pay to Hewlett-Packard not later than such
Estimated Tax Installment Date the amount thus determined.

(b) Non-Federal Combined Taxes. Not later than ________ (__)
--------------------------
business days prior to each Estimated Tax Installment Date with respect to Non-
Federal Combined Taxes for any Interim Period, Hewlett-Packard shall notify
Agilent of its determination of the estimated amount of the related installment
of the Agilent Group Combined Tax Liability. Agilent shall pay to Hewlett-
Packard not later than such Estimated Tax Installment Date the amount thus
determined.

4.6 Tax Sharing True-up Payments.
----------------------------
<PAGE>

(a) Federal Income Taxes. Not later than _________ (__) business
--------------------
days after a Consolidated Return is filed with respect to any Interim Period,
Hewlett-Packard shall deliver to Agilent a Pro Forma Agilent Group Consolidated
Return reflecting the Agilent Group Federal Income Tax Liability. Not later than
_______ (__) business days after the date of delivery, Agilent shall pay to
Hewlett-Packard, or Hewlett-Packard shall pay to Agilent, as appropriate, an
amount equal to the difference, if any, between the Agilent Group Federal Income
Tax Liability for such period and the aggregate amount paid by Agilent with
respect to such period under Section 4.5(a) of this Agreement.

(b) Non-Federal Combined Taxes. Not later than ______ (__) days
---------------------------
after a Combined Return is filed with respect to any Interim Period, Hewlett-
Packard shall deliver to Agilent a schedule based upon the Pro Forma Agilent
Group Combined Returns for such period reflecting the Agilent Group Combined Tax
Liability for such period. Not later than ________ (__) business days after the
date of delivery, Agilent shall pay to Hewlett-Packard, or Hewlett-Packard shall
pay to Agilent, as appropriate, an amount equal to the difference, if any,
between the Agilent Group Combined Tax Liability for such period and the amount
paid by Agilent with respect to such period under Section 4.5(b) of this
Agreement.

4.7 Redetermination Amounts.
-----------------------

(a) For any Interim Period, in the event of a redetermination of
any Tax Item of any member of a Consolidated Group or Combined Group (other than
Tax Items relating to Additional Restructuring Taxes, which are the subject to
Section 5 of this Agreement), as a result of a refund of Taxes paid, a Final
Determination or any settlement or compromise with any Tax Authority, Hewlett-
Packard and Agilent shall prepare jointly, in accordance with the principles and
procedures set forth in Section 3 of this Agreement, revised Pro Forma Agilent
Consolidated Returns and/or revised Pro Forma Agilent Combined Returns, as
appropriate, to reflect the redetermination of such Tax Item as a result of such
refund, Final Determination, settlement or compromise. Agilent shall pay to
Hewlett-Packard, or Hewlett-Packard shall pay to Agilent, as appropriate, an
amount equal to the difference, if any, between the Tax liability reflected on
such revised pro forma tax returns and the Tax liability for such period as
originally computed pursuant to Section 3 of this Agreement.

(b) To the extent that Agilent is compensated for the use of a
Tax Asset on a Consolidated Return or Combined Return, and such use
<PAGE>

permanently prevents Hewlett-Packard from using a Tax Asset in a subsequent
period, then Agilent shall reimburse Hewlett-Packard for such amount.

(c) To the extent that Hewlett-Packard receives a refund with
respect to Taxes paid on a Separate Return of an Agilent Historic Affiliate for
any Pre-Separation Period, Hewlett-Packard shall pay the amount of such refund
to Agilent.

Section 5. Restructuring Taxes and Deconsolidation

5.1 Liability for Restructuring Taxes.
---------------------------------

(a) In General. Except as otherwise provided in this
----------
Agreement, all Contemplated Domestic Restructuring Taxes and all Contemplated
Foreign Restructuring Taxes shall be the obligation of the entity that is liable
for such Taxes under the Tax Law.

(b) Increases in Restructuring Taxes. In the event that
--------------------------------
Hewlett-Packard, any Hewlett-Packard Affiliate, Agilent, or any Agilent
Affiliate incurs any Domestic Restructuring Taxes or Foreign Restructuring Taxes
other than Contemplated Domestic Restructuring Taxes or Contemplated Foreign
Restructuring Taxes, the amount of such additional Taxes (the "Additional
Restructuring Taxes") shall be allocated between Hewlett-Packard and Agilent as
follows:

(i) Liability for Breach of Representation. To the
--------------------------------------
extent that any Additional Restructuring Taxes are primarily attributable to a
breach of representation made by Agilent pursuant to Section 5.2 of this
Agreement, then one hundred percent (100%) of the amount of such Additional
Restructuring Taxes shall be allocated to Agilent. To the extent that any
Additional Restructuring Taxes are primarily attributable to a breach of
representation made by Hewlett-Packard pursuant to Section 5.3 of this
Agreement, then one hundred percent (100%) of the amount of such Additional
Restructuring Taxes shall be allocated to Hewlett-Packard.

(ii) Other Liability. Except as provided in Section
---------------
5.1(b)(i), any Additional Restructuring Taxes shall be allocated eighty-two
percent (82%) to Hewlett-Packard and eighteen percent (18%) to Agilent.

5.2 Agilent Representations and Covenants. Agilent, for itself
-------------------------------------
and the Agilent Affiliates, hereby represents, warrants and covenants that:

(a) Agilent has reviewed the information and representations
made in the Ruling Documents (and any Supplemental Ruling
<PAGE>

Documents) and, to its knowledge, all of such information or representations
that relate to Agilent or any Agilent Affiliate, or the business or operations
of either, including the representations set forth in Appendix F to this
Agreement, are true, correct and complete.

(b) Agilent will not, and will cause each Agilent Affiliate not
to, take any action, or fail or omit to take any action, that would cause any of
the information or representations made in the Ruling Documents or Supplemental
Ruling Documents that relate to Agilent or any Agilent Affiliate, or the
business or operations of either, including the representations set forth in
Appendix F to this Agreement, to be untrue, regardless of whether such
information or representations were included in the Initial Private Letter
Ruling (or any Supplemental Ruling).

(i) enter into, or otherwise be a party to, any
transaction or arrangement (including, without limitation, stock issuances,
stock acquisitions, and transactions involving the stock or substantially all of
the assets of Agilent or any Agilent Affiliate) pursuant to which one or more
persons acquire stock of Agilent or any Agilent Affiliate representing a "50-
percent or greater interest" within the meaning of Section 355(d)(4) of the Code
that would cause Section 355(e) of the Code to apply to any Applicable Spinoff;
or

(ii) take or fail to take any other action (including,
without limitation, any cessation, transfer to affiliates or disposition of its
active trade or business, and certain reacquisitions of its stock and payments
of extraordinary dividends to its shareholders) that would cause any Applicable
Spinoff to fail to qualify for nonrecognition of gain or loss under Section 355
of the Code.

(d) During the Restriction Period:

(i) neither Agilent nor any Agilent Affiliate will,
directly or indirectly, in a single transaction or in a series of transactions
specified below, which, when aggregated with all other such specified
transactions undertaken during the Restriction Period, would involve the
acquisition (determined under the principles of Section 355 of the Code) by one
or more persons of more than thirty-five percent (35%) of the stock of Agilent
or any Agilent Affiliate (including stock issued by Agilent in the IPO):
<PAGE>

(1) issue stock or other equity interests of Agilent
or any Agilent Affiliate (including, without limitation, options, rights,
warrants or securities exercisable for, or convertible into stock of
Agilent or any Agilent Affiliate, or any similar arrangement); or

(2) redeem, purchase or otherwise reacquire any of its
capital stock (other than through stock purchases meeting the requirements
of section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696);

(ii) Agilent will not liquidate or merge with or into
any other entity; and

(iii) no Agilent Affiliate will liquidate or merge with or
into any other entity [(other than in an intragroup liquidation or merger that
would not affect the qualification of an Applicable Spinoff as a reorganization
under Sections 368(a) and/or 355 of the Code)];

unless (1) Hewlett-Packard consents in writing, which consent shall not be
unreasonably withheld, or (2) Hewlett-Packard obtains, at Agilent's request, a
Supplemental Ruling from the applicable Tax Authority that such transaction or
series of transactions will not adversely affect the Tax treatment of any
Applicable Spinoff. If the Service issues guidance or Treasury Regulations are
issued under Section 355(e) of the Code, the parties hereby agree to meet to
review the conditions and requirements set forth in this Section 5.2(d) and to
consider making appropriate revisions thereto. Not later than five (5) days
prior to consummating any of the transactions described in the preceding
sentence, Agilent shall provide notice of such transaction to the Agilent VP and
(except as otherwise prohibited by any confidentiality agreement with a third-
party) to the Hewlett-Packard VP. Nothing in this Section 5.2(d) shall limit
the liability of either party to this Agreement for any Restructuring Taxes that
are the responsibility of such party under this Agreement.

(e) [Need to insert representations with respect to the foreign
law aspects of the Foreign Restructuring.]

(f) [Need to insert representations with respect to the
<PAGE>

state/local law aspects of the Domestic Restructuring.]

(g) Agilent recognizes that any failure by it or any Agilent
Affiliate to comply with their obligations under this Section 5.2 may result in
Additional Restructuring Taxes which could cause irreparable harm to Hewlett-
Packard, the Hewlett-Packard Affiliates and their stockholders, and that such
persons may be inadequately compensated by monetary damages for such failure.
Accordingly, if (1) Agilent or any Agilent Affiliate shall fail to comply with
any obligation under this Section 5.2 which would be reasonably foreseeable to
result in any Additional Restructuring Taxes, and (2) Agilent shall fail to
provide Hewlett-Packard with a written opinion of nationally recognized tax
counsel that such failure to comply with such obligation will not result in any
increase in Taxes of Hewlett-Packard or any Hewlett-Packard Affiliate, and such
opinion is provided to Hewlett-Packard for its review and approval, which
approval will not be unreasonably withheld, then Hewlett-Packard and each
Hewlett-Packard Affiliate shall be entitled to injunctive relief in addition to
all other remedies.

5.3 Hewlett-Packard Representations. Hewlett-Packard, for itself and
-------------------------------
the Hewlett-Packard Affiliates, hereby represents, warrants and covenants that:

(a) Hewlett-Packard will not, and will cause each Hewlett-Packard
Affiliate not to, take any action, or fail or omit to take any action, that
would cause any of the information or representations made in the Ruling
Documents or Supplemental Ruling Documents to be untrue, regardless of whether
such information or representations were included in the Initial Private Letter
Ruling (or any Supplemental Ruling).

(b) Neither Hewlett-Packard nor any Hewlett-Packard Affiliate
will, directly or indirectly, during the Restriction Period:

(i) enter into, or otherwise be a party to, any
transaction or arrangement (including, without limitation, stock issuances,
stock acquisitions, and transactions involving the stock or substantially all of
the assets of Hewlett-Packard or any Hewlett-Packard Affiliate) pursuant to
which one or more persons acquire stock of Hewlett-Packard or any Hewlett-
Packard Affiliate representing a "50-percent or greater interest" within the
meaning of Section 355(d)(4) of the Code that would cause Section 355(e) of the
Code to apply to any Applicable Spinoff; or
<PAGE>

(d) [Need to insert representations with respect to the
state/local law aspects of the Domestic Restructuring.]

(e) Hewlett-Packard recognizes that any failure by it or any
Hewlett-Packard Affiliate to comply with their obligations under this Section
5.3 may result in Additional Restructuring Taxes which could cause irreparable
harm to Agilent, the Agilent Affiliates and their stockholders, and that such
persons may be inadequately compensated by monetary damages for such failure.
Accordingly, if (1) Hewlett-Packard or any Hewlett-Packard Affiliate shall fail
to comply with any obligation under this Section 5.3 which would be reasonably
foreseeable to result in any Additional Restructuring Taxes, and (2) Hewlett-
Packard shall fail to provide Agilent with a written opinion of nationally
recognized tax counsel that such failure to comply with such obligation will not
result in any increase in Taxes of Agilent any Agilent Affiliate, and such
opinion is provided to Agilent for its review and approval, which approval will
not be unreasonably withheld, then Agilent and each Agilent Affiliate shall be
entitled to injunctive relief in addition to all other remedies.

5.4 Private Letter Rulings.
----------------------

(a) Information. Hewlett-Packard has provided Agilent with a copy
-----------
of the Initial Private Letter Ruling and copies of the Ruling Documents
submitted on or prior to the date hereof, and shall provide Agilent with copies
of any additional Ruling Documents prepared after the date hereof prior to the
submission of such Ruling Documents to a Tax Authority.

(b) Supplemental Rulings.
--------------------

(i) In General. Hewlett-Packard agrees that at the
----------
reasonable request of Agilent, Hewlett-Packard shall cooperate with Agilent and
use its reasonable best efforts to seek to obtain, as expeditiously as
<PAGE>

possible, a Supplemental Ruling or other guidance from the Service or any other
Tax Authority for the purpose of confirming (1) the continuing validity of (A)
the Initial Private Letter Ruling, (B) any similar ruling issued by any Tax
Authority addressing the application of a provision of the laws of another
jurisdiction to the Internal Distribution or the Public Distribution and/or (C)
any Supplemental Rulings issued previously, and (2) compliance on the part of
Agilent or an Agilent Affiliate with its obligations under Section 5.2 of this
Agreement. However, Hewlett-Packard shall not be obligated to seek a
Supplemental Ruling if it reasonably believes that seeking such Supplemental
Ruling would adversely affect Hewlett-Packard or any Hewlett-Packard Affiliate.
Further, in no event shall Hewlett-Packard be required to file any Supplemental
Ruling unless Agilent represents that (1) it has read the request for the
Supplemental Ruling and any materials, appendices and exhibits submitted or
filed therewith (the "Supplemental Ruling Documents") and (2) all information
and representations, if any, relating to Agilent and any Agilent Affiliate
contained in the Supplemental Ruling Documents are true, correct and complete in
all material respects. Agilent shall reimburse Hewlett-Packard for all costs and
expenses incurred by Hewlett-Packard in obtaining a Supplemental Ruling
requested by Agilent. Agilent hereby agrees that only Hewlett-Packard shall
apply for a Supplemental Ruling. Agilent further agrees that it shall not seek
any guidance (whether written or oral) from the Service or any other Tax
Authority concerning the Spinoff except as set forth in this Section 5.4(b).

(ii) Participation Rights. If Hewlett-Packard determines to
--------------------
obtain a Supplemental Ruling or other guidance after the date of this Agreement:
(1) Hewlett-Packard shall keep Agilent informed in a timely manner of all
material actions taken or proposed to be taken by Hewlett-Packard in connection
therewith; (2) Hewlett-Packard shall (A) reasonably in advance of the submission
of any such Supplemental Ruling Documents, provide Agilent with a draft copy
thereof, (B) reasonably consider Agilent's comments on such draft copy, and (C)
provide Agilent with a final copy; and (3) to the extent that such Supplemental
Ruling relates to Agilent or any Agilent Affiliate, Hewlett-Packard shall (A)
incorporate Agilent's comments on all submissions of Supplemental Ruling
Documents, and (B) provide Agilent with notice reasonably in advance of, and
Agilent shall have the right to attend, any meetings with the Tax Authority
(subject to the approval of the Tax Authority) that relate to such Supplemental
Ruling.

5.5 Carrybacks.
----------

(a) In General. Hewlett-Packard agrees to pay to Agilent the
----------
Federal Income Tax Benefit from the use in any Pre-Spinoff Period (the
"Carryback Period") of a carryback of any Tax Asset of the Agilent Group from a
Post-Distribution Period; provided, however, that if such carryback permanently
-------- -------
<PAGE>

prevents Hewlett-Packard from using a Tax Asset, Agilent shall reimburse
Hewlett-Packard for such payment. The Federal Income Tax Benefit of a carryback
of a Tax Asset shall be considered equal to the greater of (1) the increase in
the amount Hewlett-Packard would have paid Agilent or (2) the decrease in the
amount Agilent would have paid Hewlett-Packard had the amount of such Tax Asset
applied to the Carryback Period arisen in such Carryback Period and the
provisions of Section 3 of this Agreement applied to such period. If subsequent
to the payment by Hewlett-Packard to Agilent of the Federal Income Tax Benefit
of a carryback of a Tax Asset of the Agilent Group, there shall be a Final
Determination which results (1) in a disallowance or a reduction of the Tax
Asset so carried back or (2) a reduction in the amount of such Federal Income
Tax Benefit, Agilent shall repay to Hewlett-Packard any amount which would not
have been payable to Agilent pursuant to this Section 5.5 had the amount of the
benefit been determined in light of these events. Agilent shall indemnify
Hewlett-Packard and hold it harmless from and against any interest, addition to
Tax or penalty payable by any member of the Hewlett-Packard Group as a result of
any such event. Nothing in this Section 5.5 shall require Hewlett-Packard to
file an amended Tax Return or claim for refund of Federal Income Taxes;
provided, however, that Hewlett-Packard shall use its reasonable best efforts to
- -------- -------
use any carryback of a Tax Asset of the Agilent Group that is carried back under
this Section 5.5. Nothing in this Agreement is intended to limit the ability of
Agilent and the Agilent Affiliates to implement Tax planning strategies designed
to reduce or eliminate any carryback of any Tax Assets of the Agilent Group from
any Post-Distribution Period to any Interim Period.

(b) Net Operating Losses. Notwithstanding any other
--------------------
provision of this Agreement, unless Hewlett-Packard otherwise expressly agrees
in writing, Agilent hereby expressly agrees to elect (under Section 172(b)(3) of
the Code and, to the extent feasible, any similar provision of any state, local
or foreign Tax Law) to relinquish any right to carryback net operating losses
(in which event no payment shall be due from Hewlett-Packard to Agilent in
respect of such net operating losses).

5.6 Allocation of Tax Items. All Tax computations for (1) any
-----------------------
Interim Periods ending on the Distribution Date and (2) the immediately
following taxable period of Agilent or any Agilent Affiliate, shall be made
pursuant to the principles of Section 1.1502-76(b) of the Treasury Regulations
or of a corresponding provision under the laws of other jurisdictions, as
determined by Hewlett-Packard, taking into account all reasonable suggestions
made by Agilent with respect thereto. [Discuss whether to elect to ratably
allocate under 1.1502-76(b)(2)(ii).]
<PAGE>

5.7 Continuing Covenants. Hewlett-Packard and Agilent agree (1)
--------------------
not to take, or to cause their respective affiliates to take, any action
reasonably expected to result in an increased Tax liability to the other, a
reduction in a Tax Asset of the other or an increased liability to the other
under this Agreement and (2) to take (or cause their respective affiliates to
take) any action reasonably requested by the other that would reasonably be
expected to result in a Tax Benefit or avoid a Tax Detriment to the other,
provided that such action does not result in any additional cost not fully
compensated for by the requesting party. The parties hereby acknowledge that the
preceding sentence is not intended to limit, and therefore shall not apply to,
the rights of the parties with respect to matters otherwise covered by this
Agreement.

5.8 Allocation of Tax Assets.
------------------------

(a) In General. Hewlett-Packard and Agilent shall cooperate
----------
in determining the allocation of any Tax Assets among Hewlett-Packard, each
Hewlett-Packard Affiliate, Agilent and each Agilent Affiliate that is occasioned
by the Spinoff. The parties hereby agree that in the absence of controlling
legal authority, Tax Assets shall be allocated to the legal entity that incurred
the cost or burden associated with the creation of such Tax Asset.

(b) Earnings and Profits. Before the first anniversary of
--------------------
the Public Distribution, Hewlett-Packard will advise Agilent in writing of the
decrease in Hewlett-Packard earnings and profits attributable to the Public
Distribution under Section 312(h) of the Code, as well as the amounts of any
allocations required under Temp. Treas. Reg. (S) 7.367(b)-10T or Treas. Reg.
(S)(S) 1.1248-2 or -3, as a result of the Spinoff; provided however, that
-------- -------
Hewlett-Packard shall provide Agilent with estimates of such amounts (determined
in accordance with past practice) prior to such anniversary as reasonably
requested by Agilent.

5.9 Japan Restructuring Taxes.
-------------------------

(a) In General. Agilent shall be liable for the Contemplated
----------
Restructuring Tax set forth on Appendix D to this Agreement and any Additional
Restructuring Tax with respect to the sale of the Hewlett-Packard Business by
Hewlett-Packard Japan to [Hewlett-Packard KK] ("Japan Restructuring Tax").
Hewlett-Packard or a Hewlett-Packard Affiliate shall provide Agilent or an
Agilent Affiliate with funding as of November 1, 1999 in an amount equal to the
sum of:

(i) one hundred percent (100%) of the amount of any
Contemplated Japan Restructuring Tax to the extent that the parties
<PAGE>

reasonably expect any foreign tax credits attributable thereto to be allocated
to [Hewlett-Packard KK] for Federal Income Tax purposes; plus

(ii) sixty percent (60%) of the amount of the
remaining Contemplated Japan Restructuring Tax.

In addition, Hewlett-Packard or a Hewlett-Packard Affiliate shall further pay
Agilent (or an Agilent Affiliate designated by Agilent) eighty-two percent (82%)
of any Additional Japan Restructuring Tax that is imposed with respect to such
sale.

(b) Use of Foreign Tax Credits by Hewlett-Packard. To the extent
---------------------------------------------
that Hewlett-Packard or a Hewlett-Packard Affiliate receives a Tax Benefit
attributable to an increase in foreign tax credits (other than credits taken
into account under paragraph (a)(i) of this Section 5.9) by reason of the Japan
Restructuring Tax (such Tax Benefit determined by measuring the incremental
impact on Hewlett-Packard's liability solely as a result of the Japan
Restructuring Tax), Hewlett-Packard shall pay Agilent forty percent (40%) of its
Tax Benefit, to the extent that such credits relate to the Contemplated Japan
Restructuring Tax, and eighteen percent (18%) of its Tax Benefit, to the extent
that such credits relate to an Additional Japan Restructuring Tax. The preceding
sentence shall apply to a Tax Benefit with respect to Hewlett-Packard's
liability on the Consolidated Return for the fiscal year ending October 31, 2000
only to the extent that such Tax Benefit is not attributable to foreign tax
credits treated as used on the Pro Forma Agilent Consolidated Return for such
period.

(c) Use of Foreign Tax Credits by Agilent. To the extent that
-------------------------------------
Agilent receives a Tax Benefit attributable to an increase in foreign tax
credits by reason of the Japan Restructuring Tax (such Tax Benefit determined by
measuring the incremental impact on Agilent's liability solely as a result of
the credit for Japan Restructuring Tax), Agilent shall pay Hewlett-Packard sixty
percent (60%) of its Tax Benefit, to the extent that such credits relate to the
Contemplated Japan Restructuring Tax, and eighty-two percent (82%) of its Tax
Benefit, to the extent that such credits relate to an Additional Japan
Restructuring Tax. For purposes of the preceding sentence Agilent shall be
treated as receiving a Tax Benefit for the Interim Period only to the extent any
credits are treated as used on the Pro Forma Agilent Consolidated Return for
such period.

(d) Subsequent Adjustments. If taking into account subsequent
----------------------
events (including, for example, carrybacks of other foreign tax credits
<PAGE>

and Final Determinations that affect foreign tax credit computations) one of the
parties determines that it did not receive any portion of the Tax Benefit for
which it previously had made a payment to the other party pursuant to paragraph
(b) or (c) of this Section 5.9, Agilent shall pay Hewlett-Packard, or Hewlett-
Packard shall pay Agilent, as appropriate, an amount such that the net payment
(if any) equals the portion of the net Tax Benefit (taking into account such
subsequent events) specified in paragraph (b) or (c) of this Section 5.9.

5.1 Japan Operating Taxes.
---------------------

(a) Fiscal Year 1999 and Prior Periods. If Agilent or any
----------------------------------
Agilent Affiliate receives any Tax Benefit attributable to Japanese income Taxes
accrued by Hewlett-Packard Japan with respect to its fiscal year 1999 or any
prior period, Agilent shall pay the amount of such Tax Benefit to Hewlett-
Packard; for this purpose Agilent's Tax Benefit shall be determined by measuring
the incremental impact on Agilent's liability prior to taking into account the
impact of any Japan Restructuring Tax, but after the impact of all other Tax
Items to Agilent.

(b) Fiscal Year 2000. If Hewlett-Packard or any Hewlett-Packard
----------------
Affiliate receives any Tax Benefit attributable to Japanese income Taxes accrued
by Hewlett-Packard Japan with respect to its fiscal year 2000 (and such Tax
Benefit is not otherwise reimbursed under Section 5 of this Agreement), Hewlett-
Packard shall pay the amount of such Tax Benefit to Agilent; for this purpose
Hewlett-Packard's Tax Benefit shall be determined by measuring the incremental
impact on Hewlett-Packard's liability prior to taking into account the impact,
of any Japan Restructuring Tax, but after the impact of all other Tax Items to
Hewlett-Packard.

(c) Subsequent Adjustments. If taking into account subsequent
----------------------
events (including, for example, carrybacks of other foreign tax credits and
Final Determinations that affect foreign tax credit computations) one of the
parties determines that it did not receive any portion of the Tax Benefit for
which it previously had made a payment to the other party pursuant to paragraph
(a) or (b) of this Section 5.10, Agilent shall pay Hewlett-Packard, or Hewlett-
Packard shall pay Agilent, as appropriate, an amount such that the net payment
(if any) equals the portion of the net Tax Benefit (taking into account such
subsequent events) specified in paragraph (a) or (b) of this Section 5.10.

Section 6. Additional Obligations
<PAGE>

6.1 Indemnification.
---------------

(a) In General. Hewlett-Packard and each Hewlett-Packard
----------
Affiliate shall jointly and severally indemnify Agilent, each Agilent Affiliate
and their respective directors, officers and employees, and hold them harmless
from and against any and all Taxes for which Hewlett-Packard or any Hewlett-
Packard Affiliate is liable under this Agreement and any loss, cost, damage or
expense, including reasonable attorneys' fees and costs, that is attributable
to, or results from the failure of Hewlett-Packard, any Hewlett-Packard
Affiliate or any director, officer or employee to make any payment required to
be made under this Agreement. Agilent and each Agilent Affiliate shall jointly
and severally indemnify Hewlett-Packard, each Hewlett-Packard Affiliate and
their respective directors, officers and employees, and hold them harmless from
and against any and all Taxes for which Agilent or any Agilent Affiliate is
liable under this Agreement and any loss, cost, damage or expense, including
reasonable attorneys' fees and costs, that is attributable to, or results from,
the failure of Agilent, any Agilent Affiliate or any director, officer or
employee to make any payment required to be made under this Agreement.

(b) Inaccurate or Incomplete Information. Hewlett-Packard and
------------------------------------
each Hewlett-Packard Affiliate shall jointly and severally indemnify Agilent,
each Agilent Affiliate and their respective directors, officers and employees,
and hold them harmless from and against any cost, fine, penalty, or other
expense of any kind attributable to the negligence of Hewlett-Packard or any
Hewlett-Packard Affiliate in supplying Agilent or any Agilent Affiliate with
inaccurate or incomplete information, in connection with the preparation of any
Tax Return. Agilent and each Agilent Affiliate shall jointly and severally
indemnify Hewlett-Packard, each Hewlett-Packard Affiliate and their respective
directors, officers and employees, and hold them harmless from and against any
cost, fine, penalty, or other expenses of any kind attributable to the
negligence of Agilent or any Agilent Affiliate in supplying Hewlett-Packard or
any Hewlett-Packard Affiliate with inaccurate or incomplete information, in
connection with the preparation of any Tax Return.

(c) No Indemnification for Tax Attributes. Nothing in this
-------------------------------------
Agreement shall be construed as a guarantee of the existence or amount of any
loss, credit, carryforward, basis or other Tax attribute, whether past, present
or future, of Hewlett-Packard, any Hewlett-Packard Affiliate, Agilent or any
Agilent Affiliate.

(d) Payments. Except as otherwise provided under this Agreement,
--------
to the extent that one party (the "Indemnifying Party") has an indemnification
obligation to the other party (the "Indemnitee") pursuant to this
<PAGE>

Agreement, the Indemnitee shall provide the Indemnifying Party with its
calculation of the amount of such indemnification payment. Such calculation
shall provide sufficient detail to permit the Indemnifying Party to reasonably
understand the calculations. All indemnification payments shall be made to the
Indemnitee or to the appropriate Tax Authority as specified by the Indemnitee
within the prescribed for payment in this agreement, or if no period is
prescribed, within thirty (30) days after delivery by the Indemnitee to the
Indemnifying Party of written notice of a payment by or the incurrence of such
an amount based on a Final Determination, together with a computation of the
amounts due.

(e) Electronic Payments. Any payment required under this
-------------------
Agreement in an amount in excess of one million dollars ($1,000,000.00) shall be
made by electronic funds transfer of immediately available funds.

6.2 Treatment of Payments. Unless otherwise required by any Final
---------------------
Determination, the parties agree to treat any payments (other than payments of
interest pursuant to Sections 5.5 or 6.4 of this Agreement and payments of After
Tax Amounts pursuant to Section 6.3 of this Agreement) pursuant to this
Agreement as relating back to the last taxable period beginning on or before the
Distribution Date and, accordingly, as not includible in income.

6.3 After Tax Amounts. If pursuant to a Final Determination it is
-----------------
determined that the receipt or accrual of any payment made under this Agreement
(other than payments of interest pursuant to Sections 5.5 or 6.4 of this
Agreement) is subject to any Tax, the party making such payment shall be liable
for (a) the After Tax Amount with respect to such payment and (b) interest at
the rate described in Section 6.4 of this Agreement on the amount of such Tax
from the date such Tax accrues through the date of payment of such After Tax
Amount. A party making a demand for a payment pursuant to this Agreement and
for a payment of an After Tax Amount with respect to such payment shall
separately specify and compute such After Tax Amount. However, a party may
choose not to specify an After Tax Amount in a demand for payment pursuant to
this Agreement without thereby being deemed to have waived its right
subsequently to demand an After Tax Amount with respect to such payment.

6.4 Interest. Payments pursuant to this Agreement that are not made
--------
within the period prescribed in this Agreement (the "Payment Period") shall bear
interest for the period from and including the date immediately following the
last date of the Payment Period through and including the date of payment (the
<PAGE>

"Interest Accrual Period") at a per annum rate equal to the prime rate as
published in The Wall Street Journal on the date of determination, plus two
percent (2%). Such interest will be payable at the same time as the payment to
which it relates and shall be calculated on the basis of a year of 365 days and
the actual number of days for which due.

6.5 Tax Records. The parties hereby agree to retain and provide
-----------
on demand books, records, documentation and other information relating to any
Tax Return until [the later of (1) the expiration of the applicable statute of
limitations (giving effect to any extension, waiver or mitigation thereof) and
(2) in the event any claim is made under this Agreement for which such
information is relevant, until a Final Determination with respect to such claim]
[need to compare to general records retention agreement].

Section 7. Audits

7.1 In General.
----------

(a) Except as otherwise provided in this Agreement, the
Filing Party shall have the right to control, contest, and represent the
interests of Hewlett-Packard, any Hewlett-Packard Affiliate, Agilent or any
Agilent Affiliate in any Audit relating to any Tax Return that the Filing Party
is responsible for filing under Section 2.1 of this Agreement and to resolve,
settle or agree to any deficiency, claim or adjustment proposed, asserted or
assessed in connection with or as a result of any such Audit. The Filing Party's
rights shall extend to any matter pertaining to the management and control of an
Audit, including execution of waivers, choice of forum, scheduling of
conferences and the resolution of any Tax Item.

(b) Notwithstanding Section 7.1(a), for so long as Hewlett-
Packard owns fifty percent (50%) or more of the outstanding stock (by vote or
value) of Agilent, the entering into of any resolution, settlement or agreement
or any decision in connection with (including the entering into of) any judicial
or administrative proceeding relating to Taxes by Agilent or any Agilent
Affiliate shall be subject to Hewlett-Packard's review and approval, which
approval shall not be unreasonably withheld.

7.2 Notice. If after the date of this Agreement, Hewlett-Packard
------
(or any Hewlett-Packard Affiliate) or Agilent (or any Agilent Affiliate)
receives written notice of, or relating to, an Audit from a Tax Authority that
asserts, proposes or recommends a deficiency, claim or adjustment that, if
sustained, could result in Taxes for which the other party is responsible under
this Agreement, then the party receiving such notice shall provide a copy of
such notice to such other party within ten (10) days of receipt thereof.
<PAGE>

7.3 Participation Rights.
--------------------

(a) If a Tax Authority asserts, proposes or recommends a
deficiency, claim or adjustment that, if sustained, would result in Taxes for
which the Non-Filing is responsible under this Agreement, then the Filing Party
shall keep the Non-Filing Party informed in a timely manner of all material
actions taken or proposed to be taken by the Filing Party in connection with
such deficiency, claim or adjustment.

(b) In the case of an Audit with respect to a Tax Item for
which the Non-Filing Party would be primarily responsible under this Agreement,
the Filing Party shall:

(i) in the case of any material correspondence
or filing submitted to the Tax Authority or any judicial authority that relates
to the merits of such deficiency, claim or adjustment (1) reasonably in advance
of such submission, but subject to applicable time constraints imposed by such
Tax Authority or judicial authority, provide the Non-Filing Party with a draft
copy of the portion of such correspondence or filing that relates to such
deficiency, claim or adjustment, (2) incorporate, subject to applicable time
constraints imposed by such Tax Authority or judicial authority, the Non-Filing
Party's comments and changes on such draft copy of such correspondence or
filing, and (3) provide the Non-Filing Party with a final copy of the portion of
such correspondence or filing that relates to such deficiency, claim or
adjustment; and

(ii) provide the Non-Filing Party with notice
reasonably in advance of, and the Non-Filing Party shall have the right to
attend, any meetings with the Tax Authority (including meetings with examiners)
or hearings or proceedings before any judicial authority to the extent they
relate to such deficiency, claim or adjustment.

(c) If the Filing Party is reasonably satisfied that it will
not adversely affect the exercise of any of the Filing Party's rights described
in Section 7.1(a) of this Agreement with respect to other items, the Filing
Party shall accept any suggestions made by the Non-Filing Party with respect to
the resolution or settlement of, or agreement to, any deficiency, claim or
adjustment proposed, asserted or assessed in connection with or as a result of
any Audit with respect to a Tax Item for which the Non-Filing Party would be
primarily responsible under this Agreement.
<PAGE>

(d) At the Filing Party's reasonable request (or upon the Filing
Party's consent to a request by the Non-Filing Party, which consent shall not be
unreasonably withheld), the Non-Filing Party shall assume responsibility for (1)
presenting the merits with respect to (A) any deficiency, claim or adjustment
that, if sustained, would result in Taxes for which the Non-Filing Party is
responsible under this Agreement, or (B) subject to Section 7.6 of this
Agreement, any affirmative claim relating to a Tax Item of the Non-Filing Party,
or (2) resolving, settling or agreeing to any such deficiency, claim or
adjustment. Any such request (or consent) by the Filing Party shall be subject
to the Non-Filing Party's continued compliance with the conditions of Section
7.4 of this Agreement and to such other conditions as the Filing Party
reasonably determines to be appropriate to preserve the Filing Party's rights
described in Section 7.1(a) of this Agreement.

7.4 Limitations.
-----------

(a) In General. The Filing Party shall have no obligation to contest,
----------
or to continue to contest, any deficiency, claim or adjustment and the Non-
Filing Party shall have no rights to participate under Section 7.3 of this
Agreement unless:

(i) if the amount in controversy with respect to any Tax
Item for which the Non-Filing Party could be liable does not exceed one million
dollars ($1,000,000.00), or if the amount in controversy relates to a
Restructuring Tax for which the Filing Party could be primarily responsible
under this Agreement, within thirty (30) days of a reasonable request by the
Filing Party, the Non-Filing Party shall deliver to the Filing Party a written
opinion of nationally recognized tax counsel to the effect that the Non-Filing
Party's position with respect to such deficiency, claim or adjustment is
supported by substantial authority (within the meaning of Section 6662 of the
Code);

(ii) the Non-Filing Party shall have agreed to be bound
by a Final Determination of such deficiency, claim or adjustment;

(iii) the Non-Filing Party shall have agreed to pay, and
shall be currently paying, all reasonable out of pocket costs and expenses
incurred by the Filing Party to contest such deficiency, claim or assessment
including reasonable outside attorney's, accountants' and investigatory fees and
disbursements;

(iv) the Non-Filing Party shall have advanced to the
Filing Party, on an interest-free basis (and with no additional net after-tax
cost to the Filing Party), the amount of Tax in controversy (but not in excess
of either (A) the amount of Tax for which the Non-Filing Party could be liable
under
<PAGE>

this Agreement or (B) the amounts actually expended by the Filing Party) to the
extent necessary for the contest to proceed in the forum selected by the Filing
Party, in its sole discretion;

(v) the Non-Filing Party shall have provided to the
Filing Party all documents and information, and shall have made available
employees and officers of the Non-Filing Party, as may be necessary, useful or
reasonably required by the Filing Party in contesting such deficiency, claim or
adjustment; and

(vi) the contest of such deficiency, claim or adjustment
shall involve no material danger of the sale, forfeiture or loss of, or the
creation of any lien on, any asset of the Filing Party (except if the Non-Filing
Party shall have adequately bonded such lien or otherwise made provision to
protect the interests of the Filing Party in a manner reasonably satisfactory to
the Filing Party).

(b) Settlement. The Filing Party may resolve, settle or agree to any
----------
deficiency, claim or adjustment proposed, asserted or assessed in connection
with any Audit of any Tax Return that it is responsible for filing under Section
2.1 of this Agreement without the Non-Filing Party's consent only if:

(i) such resolution, settlement or agreement relates to
(A) a Tax Item that does not exceed one million dollars ($1,000,000.00) for
which the Non-Filing Party could be liable, or (B) a Restructuring Tax for which
the Filing Party could be primarily responsible under this Agreement;

(ii) the Non-Filing Party has been afforded a reasonable
opportunity to have the merits of such deficiency, claim or adjustment presented
to the relevant Tax Authority; and

(ii) the Filing Party is not otherwise continuing to
pursue a contest with respect to another deficiency, claim or adjustment for
such taxable period at the same administrative level and the Non-Filing Party
fails to deliver to the Filing Party, within thirty (30) days of a reasonable
request by the Filing Party, a written opinion of nationally recognized tax
counsel, to the effect that the Non-Filing Party's position with respect to such
deficiency, claim or adjustment should be reversed or substantially modified
upon appeal in a manner favorable to the Non-Filing Party.
<PAGE>

(c) Litigation. The Filing Party shall only have an obligation to
----------
appeal in a judicial forum a determination of any Tax Authority that, if
sustained, would result in:

(i) a liability of the Non-Filing Party under this
Agreement with respect to (A) a Tax Item that does not exceed one million
dollars ($1,000,000.00), or (B) a Restructuring Tax for which the Filing Party
could be primarily responsible under this Agreement, if within sixty (60) days
of a request by the Filing Party, the Non-Filing Party shall deliver to the
Filing Party a written opinion of nationally recognized tax counsel to the
effect that such determination should be reversed or substantially modified upon
appeal in a manner favorable to the Non-Filing Party; or

(ii) a liability of the Non-Filing Party under this
Agreement that is not described in Section 7.4(c)(i), if within sixty (60) days
of a request by the Filing Party, the Non-Filing Party shall deliver to the
Filing Party a written opinion of nationally recognized tax counsel to the
effect that it is more likely than not that such determination would be reversed
or substantially modified upon appeal in a manner favorable to the Non-Filing
Party.

For purposes of this Section 7.4(c), a "determination" of any Tax Authority does
not include any settlement described in Section 7.4(b) of this Agreement.

(d) Waiver. Notwithstanding any other provision of this Section 7.4,
------
the Filing Party may resolve, settle, or agree to any deficiency, claim or
adjustment for any taxable period that, if sustained, would result in (1) a
Redetermination Amount resulting from a redetermination of a Tax Item of the
Non-Filing Party or (2) any Restructuring Taxes for which the Non-Filing Party
could be responsible under this Agreement if the Filing Party notifies the Non-
Filing Party in writing that it waives the payment by the Non-Filing Party for
such taxable period of any amount that would not be payable by the Non-Filing
Party under this Agreement but for such deficiency, claim or adjustment (but not
including amounts described in Section 7.4(a)(iii) of this Agreement that relate
to the conduct to date of the contest). In such event, the Filing Party shall
promptly reimburse the Non-Filing Party for all amounts previously advanced by
the Non-Filing Party to the Filing Party in connection with such deficiency,
claim or adjustment under Section 7.4(a)(iv) of this Agreement. In addition,
the Filing Party shall reimburse the Non-Filing Party for any Tax Detriment that
directly results from the settlement of such deficiency, claim or adjustment.
No waiver by the Filing Party under this Section 7.4(d) with respect to any
deficiency, claim or adjustment relating to any single Tax Item, position, issue
or transaction or relating to any single Tax for any one taxable period shall
operate as a waiver with respect to any other deficiency, claim or adjustment.
<PAGE>

7.5 Failure to Notify, Etc. The failure of the Filing Party promptly
-----------------------
to notify the Non-Filing Party of any matter relating to a particular Tax for a
taxable period or to take any action specified in Section 7.3 of this Agreement
shall not relieve the Non-Filing Party of any liability and/or obligation which
it may have to the Filing Party under this Agreement with respect to such Tax
for such taxable period except to the extent that the Non-Filing Party's rights
hereunder are materially prejudiced by such failure and in no event shall such
failure relieve the Non-Filing Party of any other liability and/or obligation
which it may have to the Filing Party.

7.6 Affirmative Claims.
------------------

(a) In General. Subject to the principles of Sections 7.3 and
----------
7.4 of this Agreement, Hewlett-Packard shall assert any affirmative claim
(including, without limitation, by filing an amended return or claim for refund)
relating to a Tax Item of a member of the Agilent Group to the relevant Tax
Authority provided that (1) Agilent agrees in advance to provide full
compensation to Hewlett-Packard for any cost or detriment to Hewlett-Packard or
a Hewlett-Packard Affiliate that would result from successfully asserting such
claim, and (2) Agilent reasonably requests that such claim be asserted within
the applicable time period set forth in Section 7.6(b) or 7.6(c) of this
Agreement. Hewlett-Packard may, in its sole discretion, assert any affirmative
claim that does not satisfy the foregoing conditions or that is not described in
Section 7.6(b) or 7.6(c) of this Agreement.

(b) Consolidated Return Years. Agilent shall request that
-------------------------
Hewlett-Packard assert any affirmative claims relating to a Tax Item of a member
of the Agilent Group for a Consolidated Return Year no later than the date that
is one hundred eighty (180) days after the date on which Hewlett-Packard
delivers written notice to Agilent that an examination of the Consolidated
Return for the applicable Consolidated Return Year is to begin.

(c) Combined Returns. Agilent shall request that Hewlett-Packard
----------------
assert any affirmative claims relating to a Tax Item of a member of the Agilent
Group for a Pre-Spinoff Period for which a Combined Return has been filed no
later than the date that is one hundred eighty (180) days (but subject to
applicable time constraints imposed by the Tax Authority) after the date on
which Hewlett-Packard delivers written notice to Agilent that an examination of
the Combined Return for the applicable Pre-Spinoff Period has begun or is to
begin.
<PAGE>

7.7 Remedies. The parties hereby agrees that the sole and exclusive
--------
remedy for a breach by the Filing Party of the Filing Party's obligations to the
Non-Filing Party with respect to a deficiency, claim or adjustment relating to
the redetermination of a Tax Item of the Non-Filing Party for a taxable period
shall be a reduction in the amount that would otherwise be payable by the Non-
Filing Party for such taxable period or an increase in amount that would
otherwise be payable by the Filing Party for such taxable period, in either case
because of the breach. The parties further agree that no claim against the
Filing Party and no defense to the Non-Filing Party's liabilities to the Filing
Party under this Agreement shall arise from the resolution by the Filing Party
of any deficiency, claim or adjustment relating to the redetermination of any
Tax Item of the Filing Party.

Section 8. Taxability and Reporting of Stock Options

8.1 In General. To the extent permitted by the Tax Law, Hewlett-
----------
Packard shall claim all Tax deductions arising by reason of exercises of options
to purchase shares of Hewlett-Packard stock, and Agilent shall claim all Tax
deductions arising by reason of exercises of options to purchase shares of
Agilent stock. In addition, to the extent permitted by the Tax Law, Hewlett-
Packard shall take all Tax deductions arising by reason of the lapse of any
restrictions with respect to shares of Hewlett-Packard stock, Agilent stock or
other property subject to a substantial risk of forfeiture (within the meaning
of Section 83) held by an employee of Hewlett-Packard, and Agilent shall take
all Tax deductions arising by reason of the lapse of any restrictions with
respect to shares of Agilent stock, Hewlett-Packard stock or other property
subject to a substantial risk of forfeiture (within the meaning of Section 83)
held by an employee of Agilent. The parties hereto agree to report all Tax
deductions with respect to stock options and other equity issued to their
employees consistently with this Section 8.1.

8.2 Notices, Withholding, Reporting. Hewlett-Packard shall promptly
-------------------------------
notify Agilent of any post-Distribution Date event giving rise to income to any
Agilent Group employees or former employees in connection with exercises of
options to purchase shares of Hewlett-Packard stock, or the lapse of any
restrictions with respect to shares of Hewlett-Packard stock or other property
subject to a substantial risk of forfeiture (within the meaning of Section 83).
If required by the Tax Law, Agilent shall withhold applicable Taxes and satisfy
applicable Tax reporting obligations in connection therewith.

8.3 Adjustments. If, pursuant to a Final Determination, all or any
-----------
<PAGE>

part of a Tax deduction taken pursuant to Section 8.1 of this Agreement is
disallowed to the party entitled to such deduction under Section 8.1 of this
Agreement (the "Deducting Party"), then, to the extent permitted by the Tax Law,
the other party (the "Benefitting Party") shall take such deduction. To the
extent that the Benefitting Party obtains a Tax Benefit as a result of a
deduction described in this Section 8.3, the Benefitting Party shall make a
payment to the Deducting Party in an amount equal to such Tax Benefit.

Section 9. Other Tax Matters

9.1 Other Adjustments. Except as otherwise provided under this
-----------------
Agreement, if, pursuant to a Final Determination, a party to this Agreement
suffers an unanticipated Tax Detriment and, as a result, the other party to this
Agreement obtains a corresponding unanticipated Tax Benefit, and such Tax
Detriment is not otherwise compensated under this Agreement, then the party
obtaining such Tax Benefit shall make a payment to the other party in an amount
equal to such Tax Benefit.

9.2 Research Tax Credit. Within 180 days after the Distribution
-------------------
Date, Hewlett-Packard will furnish the Agilent Group, pursuant to Section 41 of
the Code, a draft of the base period information the Agilent Group will need to
properly compute its research tax credits for Post-Distribution Periods, and
within thirty (30) days of receipt of such draft, Agilent shall provide Hewlett-
Packard with any comments thereon. Hewlett-Packard shall reasonably consider
all reasonable suggestions on such draft, and shall provide the final base
period information to Agilent no later than 240 days after the Distribution
Date.

9.3 Gain Recognition Agreements.
---------------------------

(a) In General. Agilent shall give Hewlett-Packard at least
----------
sixty (60) days prior written notice in the event that any time prior to the
date which is five (5) years after the Distribution Date, Agilent (or any
Agilent Affiliate) directly or indirectly disposes of all or any portion of the
ownership interest in, or all or substantially all of the assets of, any entity
identified on Appendix H of this Agreement. Such notice shall describe any such
disposition in sufficient detail to enable Hewlett-Packard (1) to comply with
the requirements of Section 367 of the Code, applicable Treasury Regulations
thereunder and any Gain Recognition Agreement entered into with the Service, and
(2) if applicable, to enter into a revised Gain Recognition Agreement with the
Service under Section 367 of the Code and the applicable Treasury Regulations
thereunder.

(b) Gain Recognition Agreement Taxes. If a Tax Authority
--------------------------------
determines that any member of the Hewlett-Packard Group has failed to
<PAGE>

comply with the terms of any Gain Recognition Agreement executed by a member of
the Hewlett-Packard Group during a Pre-Separation Period, and such non-
compliance is attributable to any action or omission by a member of the Agilent
Group after the Distribution Date, the Agilent Group shall indemnify and hold
harmless the Hewlett-Packard Group for any Tax Detriment arising therefrom.

Section 10. Dispute Resolution

10.1 Initial Notice of Disagreement.
------------------------------

(a) In the event of any disagreement regarding the application or
interpretation of the Tax Law under this Agreement, the party (the "Disputing
Party") disputing such application or interpretation shall have thirty (30) days
from the delivery of a schedule or other notice in which such application or
interpretation is made to register its disagreement with all or a portion of
such interpretation (each such disagreement a "Disputed Item"). Any other
disagreements under this Agreement shall be resolved under the dispute
resolution procedures set forth in the Master Agreement.

(b) The Disputing Party shall register its disagreement by
delivering to the other party (the "Non-Disputing Party") within such thirty
(30) day period a written notice (an "Initial Notice of Disagreement") that (1)
specifically enumerates each Disputed Item, (2) describes the grounds for the
Disputing Party's disagreement with each Disputed Item, and (3) states the
amount in dispute (or a good faith estimate thereof) with respect to each
Disputed Item.

(c) The failure of the Disputing Party within the thirty (30) day
period described in Section 10.1(b) to deliver an Initial Notice of
Disagreement, that satisfies the requirements of Section 10.1(b), with respect
to all or a portion of any application or interpretation described in Section
10.1(a) shall be deemed to constitute (1) an acceptance and acknowledgment by
such party of its liability for the required payment or portion thereof and (2)
a waiver by such party of its right to a Determination by a Tax Arbiter pursuant
to Section 10.5 of this Agreement with respect to such payment or portion
thereof.

10.2 Negotiation. The Disputing Party and the Non-Disputing Party
-----------
shall in good faith attempt to resolve their disagreements over each Disputed
Item enumerated in the Initial Notice of Disagreement as follows:
<PAGE>

(a) Within thirty (30) days following delivery of an Initial
Notice of Disagreement, the Hewlett-Packard VP and the Agilent VP shall meet and
make a good faith attempt to resolve such dispute and shall continue to
negotiate in good faith in an effort to resolve the dispute without the
necessity of any formal proceedings.

(b) If the Hewlett-Packard VP and Agilent VP are unable to agree
within thirty (30) days of their first meeting, then the chief financial
officers of Hewlett-Packard and Agilent shall meet within thirty (30) days after
the end of the first thirty (30) day negotiating period in an attempt to resolve
the dispute.

(c) During the course of negotiations under this Section 10.2,
all reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such negotiations will be left to the discretion of the
negotiating teams and may include the preparation of agreed upon statements of
fact or written statements of position furnished to the other party.

10.3 Final Notice of Disagreement.
----------------------------

(a) If the parties are unable to resolve any dispute pursuant to
the negotiation procedures described in Section 10.2, the Disputing Party shall
have ten (10) days after the end of the second thirty (30) day period described
in Section 10.2(b) to register its continued disagreement with any Disputed Item
and to elect to seek a Determination by a Tax Arbiter with respect to such
Disputed Item pursuant to Section 10.5 of this Agreement. The Disputing Party
shall do so by delivering to the Non-Disputing Party within such ten (10) day
period a written notice (a "Final Notice of Disagreement") that (1) specifically
enumerates each Disputed Item with respect to which it elects to seek a
Determination by a Tax Arbiter, (2) describes the grounds for the Disputing
Party's continued disagreement with each such Disputed Item, and (3) states the
amount in dispute (or a good faith estimate thereof) with respect to each such
Disputed Item.

(b) The failure of the Disputing Party within the ten (10) day
period described in Section 10.3(a) to deliver a Final Notice of Disagreement,
that satisfies the requirements of Section 10.3(a), with respect to all or a
portion of the payment described in Section 10.1(a) shall be deemed to
constitute (1) an acceptance and acknowledgment by such party of its liability
for such payment or portion thereof and (2) a waiver by such party of its right
to a Determination by a
<PAGE>

Tax Arbiter pursuant to Section 10.5 of this Agreement with respect to such
Disputed Item.

(c) Any dispute, controversy, or claim relating to or arising out
of a Disputed Item contained in a Notice of Final Disagreement shall be finally
settled by arbitration before a Tax Arbiter pursuant to the provisions of this
Section 10.

10.4 Selection of Tax Arbiter. If the Disputing Party delivers a
------------------------
Final Notice of Disagreement to the Non-Disputing Party, the parties shall,
within ten (10) days after such delivery, jointly select an Tax Arbiter to make
a Determination with respect to each Disputed Item enumerated in the Final
Notice of Disagreement. If the parties cannot jointly agree on an Tax Arbiter
to make such Determination within such ten (10) day period, then each party
shall select a Tax Arbiter, and such Tax Arbiters shall select a third Tax
Arbiter, who shall make a Determination in accordance with Section 10.5.

10.5 Determination by Tax Arbiter.
----------------------------

(a) The Tax Arbiter shall determine the appropriate outcome based
upon this Agreement (the "Determination") with respect to each Disputed Item.
The Tax Arbiter shall have ninety (90) days from the date that he or she is
selected pursuant to Section 10.4 of this Agreement in which to make such
Determinations, unless the Disputing Party and the Non-Disputing Party mutually
agree upon an extension of such period or the Tax Arbiter, in its discretion,
determines that an extension of such period is warranted by exceptional
circumstances. The Disputing Party and the Non-Disputing Party shall provide the
Tax Arbiter with such information or documentation as the Tax Arbiter deems in
its discretion to be necessary for it to make the Determinations requested of
it. Any Determination by the Tax Arbiter (as well as any allocation of costs and
expenses pursuant to Section 10.5(b) of this Agreement) shall be in writing,
shall be delivered to the Disputing Party and the Non-Disputing Party, and shall
be final and binding upon them and enforced as an arbitration award under the
United States Arbitration Act, 9 U.S.C. (S)(S) 1-16. The parties explicitly
waive any right to seek any judicial review of the substance of the
Determination of the Tax Arbiter. The Tax Arbiter shall be entitled to use, at
the sole cost and expense of the Disputing Party and the Non-Disputing Party,
whatever resources it deems necessary, including accounting and technical
services. Any proceedings relating to the Determination shall take place in
[Palo Alto, California].

(b) The Disputing Party and the Non-Disputing Party shall be jointly
and severally liable to the Tax Arbiter for all costs and expenses associated
with retaining the Tax Arbiter. As between themselves, except as otherwise
<PAGE>

provided in this Section 10.5(b), the Disputing Party and the Non-Disputing
Party shall share equally the costs and expenses associated with retaining an
Tax Arbiter. Where a Determination with respect to a Disputed Item is not less
than eighty percent (80%) of the amount claimed to be due from the Disputing
Party, the Tax Arbiter may, in its discretion, allocate to the Disputing Party
more than fifty percent (50%) of the costs and expenses associated with such
Determination. Where a Determination with respect to a Disputed Item is less
than fifty percent (50%) of the amount claimed to be due from the Disputing
Party, the Tax Arbiter may, in its discretion, allocate to the Non-Disputing
Party more than fifty percent (50%) of the costs and expenses associated with
such Determination.

Section 11. Miscellaneous

11.1 Effectiveness. This Agreement shall become effective upon
-------------
execution by both parties hereto.

11.2 Notices. Any notice, request, instruction or other document
-------
to be given or delivered under this Agreement by any party to another party
shall be in writing and shall be deemed to have been duly given or delivered
when (1) delivered in person, (2) deposited in the United States mail, postage
prepaid and sent certified mail, return receipt requested or (3) delivered to
Federal Express or similar service for overnight delivery to the address of the
party set forth below:

If to Hewlett-Packard or any Hewlett-Packard Affiliate, to the
Hewlett-Packard VP, with a copy to the General Counsel of Hewlett-Packard, at:

Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304

If to Agilent or any Agilent Affiliate, to the Agilent VP, with a
copy to the General Counsel of Agilent:

Agilent Technologies Inc.
395 Page Mill Road
Palo Alto, California 94304

Any party may, by written notice to the other parties, change the address or the
party to which any notice, request, instruction or other document is to be
delivered.
<PAGE>

11.3 Changes in Law.
--------------

(a) Any reference to a provision of the Code or a law of another
jurisdiction shall include a reference to any applicable successor provision or
law.

(b) If, due to any change in applicable law or regulations or
their interpretation by any court of law or other governing body having
jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated thereby shall become
impracticable or impossible, the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such provision.

11.4 Confidentiality. Each party shall hold and cause its directors,
---------------
officers, employees, advisors and consultants to hold in strict confidence,
unless compelled to disclose by judicial or administrative process or, in the
opinion of its counsel, by other requirements of law, all information (other
than any such information relating solely to the business or affairs of such
party) concerning the other parties hereto furnished it by such other party or
its representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (1) in the public domain through no fault
of such party or (2) later lawfully acquired from other sources not under a duty
of confidentiality by the party to which it was furnished), and each party shall
not release or disclose such information to any other person, except its
directors, officers, employees, auditors, attorneys, financial advisors, bankers
and other consultants who shall be advised of and agree to be bound by the
provisions of this Section 11.5. Each party shall be deemed to have satisfied
its obligation to hold confidential information concerning or supplied by the
other party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.

11.5 Successors. This Agreement shall be binding on and inure to the
----------
benefit and detriment of any successor, by merger, acquisition of assets or
otherwise, to any of the parties hereto, to the same extent as if such successor
had been an original party.

11.6 Affiliates. Each of the parties hereto shall cause to be
----------
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any of such party's affiliates;
provided, however, that (1) if it is contemplated that an Agilent Affiliate may
- -------- -------
cease to be an Agilent Affiliate as a result of a transfer of its stock or other
ownership interests to a third party in exchange for consideration in an amount
approximately
<PAGE>

equal to the fair market value of the stock or other ownership interests
transferred and such consideration is not distributed outside of the Agilent
Group to the shareholders of Agilent then Agilent shall request in writing no
later than thirty (30) days prior to such cessation that Hewlett-Packard execute
a release of such Agilent Affiliate from its obligations under this Agreement
effective as of such transfer provided that Agilent shall have confirmed in
writing its obligations and the obligations of its remaining Agilent Affiliates
with respect to their own obligations and those of the departing Agilent
Affiliate and that such departing Agilent Affiliate shall have executed a
release of any rights it may have against Hewlett-Packard or any Hewlett-Packard
Affiliate by reason of this Agreement, and (2) if it is contemplated that a
Hewlett-Packard Affiliate may cease to be a Hewlett-Packard Affiliate as a
result of a transfer of its stock or other ownership interests to a third party
in exchange for consideration in an amount approximately equal to the fair
market value of the stock or other ownership interests transferred and such
consideration is not distributed outside of the Hewlett-Packard Group to the
shareholders of Hewlett-Packard then Hewlett-Packard shall request in writing no
later than thirty (30) days prior to such cessation that Agilent execute a
release of such Hewlett-Packard Affiliate from its obligations under this
Agreement effective as of such transfer provided that Hewlett-Packard shall have
confirmed in writing its obligations and the obligations of its remaining
Hewlett-Packard Affiliates with respect to their own obligations and the
obligations of the departing Hewlett-Packard Affiliate and that such departing
Hewlett-Packard Affiliate shall have executed a release of any rights it may
have against Agilent or any Agilent Affiliate by reason of this Agreement.

11.7 Authorization, Etc. Each of the parties hereto hereby represents
-------------------
and warrants that it has the power and authority to execute, deliver and perform
this Agreement, that this Agreement has been duly authorized by all necessary
corporate action on the part of such party, that this Agreement constitutes a
legal, valid and binding obligation of each such party and that the execution,
delivery and performance of this Agreement by such party does not contravene or
conflict with any provision of law or of its charter or bylaws or any agreement,
instrument or order binding on such party.

11.8 Entire Agreement. This Agreement contains the entire agreement
----------------
among the parties hereto with respect to the subject matter hereof and
supersedes any prior Tax sharing agreements between Hewlett-Packard (or any of
its Affiliates) and Agilent (or any of its Affiliates) and such prior tax
sharing agreements shall have no further force and effect.
<PAGE>

11.9 Applicable Law; Jurisdiction. This Agreement shall be governed
----------------------------
by and construed and enforced in accordance with the laws of the State of
Delaware without giving effect to laws and principles relating to conflicts of
law. Each party to this Agreement irrevocably and unconditionally consent to
submit to the exclusive jurisdiction of the Chancery Court in and for New Castle
County, Delaware and of the courts of the United States of America located in
the State of Delaware for any actions, suits or proceedings arising out of or
relating to this agreement and the transactions contemplated hereby (and agree
not to commence any action, suit or proceeding relating thereto except in such
courts), and further agree that service of any process, summons, notice or
document by U.S. registered mail at the address set forth in Section 11.2 of
this Agreement shall be effective service of process for any action, suit or
proceeding brought against you in any such court. You hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit
or proceeding arising out of this agreement or the transactions contemplated
hereby, in the Chancery Court in and for New Castle County, Delaware and of the
courts of the United States of America located in the State of Delaware, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.

11.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

11.11 Severability. If any term, provision, covenant, or restriction
------------
of this Agreement is held by a court of competent jurisdiction (or an arbitrator
or arbitration panel) to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants, and restrictions set forth herein shall remain
in full force and effect, and shall in no way be affected, impaired, or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants, and restrictions without including any of such which may be hereafter
declared invalid, void, or unenforceable. In the event that any such term,
provision, covenant or restriction is held to be invalid, void or unenforceable,
the parties hereto shall use their best efforts to find and employ an alternate
means to achieve the same or substantially the same result as that contemplated
by such terms, provisions, covenant, or restriction.

11.12 No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of Hewlett-Packard, the Hewlett-Packard Affiliates, Agilent and the
Agilent Affiliates. This Agreement should not be deemed to confer upon third
parties any remedy, claim, liability, reimbursement, cause of action or other
rights in excess of those existing without this Agreement.
<PAGE>

11.13 Waivers, Etc. No failure or delay on the part of the parties in
-------------
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. No modification or waiver of any provision of this Agreement nor consent
to any departure by the parties therefrom shall in any event be effective unless
the same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.

11.13 Setoff. All payments to be made by any party under this
------
Agreement may be netted against payments due to such party under this Agreement,
but otherwise shall be made without setoff, counterclaim or withholding, all of
which are hereby expressly waived.

IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by a duly authorized officer as of the date first above
written.

HEWLETT-PACKARD COMPANY
on behalf of itself and its Affiliates

By________________________________________
Name:
Title:

AGILENT TECHNOLOGIES INC.
on behalf of itself and its Affiliates

By________________________________________
Name:
Title:
<PAGE>

APPENDIX A

Information to be Provided to Hewlett-Packard by Agilent
With respect to Consolidated Returns
<PAGE>

APPENDIX B

Information to be Provided to Hewlett-Packard by Agilent
With respect to Combined Returns
<PAGE>

APPENDIX C

Contemplated Domestic Restructuring Taxes
<PAGE>

APPENDIX D

Contemplated Foreign Restructuring Taxes
<PAGE>

APPENDIX E

Applicable Spinoffs
<PAGE>

APPENDIX F

Certain Agilent Representations
<PAGE>

APPENDIX G

Certain Agilent Representations
<PAGE>

APPENDIX H

Gain Recognition Agreements

<PAGE>

EXHIBIT 2.9

MASTER IT SERVICE LEVEL AGREEMENT

This IT Service Level Agreement (the "Agreement") is effective as of __________,
1999 (the "Effective Date"), between HEWLETT-PACKARD COMPANY, a Delaware
corporation ("HP"), having an office at 3000 Hanover Street, Palo Alto,
California 94304 and Agilent Technologies, Inc., a Delaware corporation
("Agilent"), having an office at 3000 Hanover Street, Palo Alto, California
94304.

1.Definitions. For the purpose of this Agreement, the following capitalized
- -------------
terms shall have the following meanings:

1.1 "Ancillary Agreements" shall have the meaning set forth in Separation
--------------------
and Distribution Agreement.

1.2 "Additional Services" shall have the meaning set forth in Section 3.2.
-------------------

1.3 "Cover Sheet" shall have the meaning set forth in Section 2.
-----------

1.4 "Distribution Date" shall have the meaning set forth in the Separation
-----------------
and Distribution Agreement.

1.5 "Impracticable" shall have the meaning set forth in Section 7.2.
-------------

1.6 "Providing Company" shall mean, with respect to any particular
-----------------
Service, the party or its Subsidiaries identified on the applicable Cover Sheet
as the party to provide such Service.

1.7 "Receiving Company" shall mean, with respect to any particular
-----------------
Service, the party or its Subsidiaries identified on the applicable Cover Sheet
as the party to receive such Service.

1.8 "Separation and Distribution Agreement" shall mean that certain Master
-------------------------------------
Separation and Distribution Agreement between HP and Agilent.

1.9 "Separation Date" shall have the meaning set forth in the Separation
---------------
and Distribution Agreement.

1.10 "Service(s)" shall have the meaning set forth in Section 3.1.
----------

1.11 "Subsidiary" shall have the meaning set forth in the Separation and
----------
Distribution Agreement.

1.12 "System" shall mean the software, hardware, data store or maintenance
------
and support components or portions of such components of a set of information
technology assets identified in the corresponding Exhibit A attached hereto.
---------

-1-
<PAGE>

2. Cover Sheets. This Agreement will govern individual IT services. Each
- ---------------
Service shall be covered by a copy of this Agreement with a cover sheet in the
form attached hereto (each cover sheet, a "Cover Sheet"). The Agreement for
each Service shall also include the following Exhibits, as appropriate for that
Service:

Exhibit A: Statement of Services
Exhibit B: Compensation
Exhibit C: Software License Terms (if applicable)
Exhibit D: Confidential Disclosure Agreement
Exhibit E: Escalation Teams

For each Service, the parties shall set forth, among other things, the
identities of the Providing Company and the Receiving Company, the time period
during which the Service will be provided, a summary of the Service to be
provided and approval by each party on a Cover Sheet; a description of the
Service on the corresponding Exhibit A; and the estimated charge, if any, for
---------
the Service and any other terms applicable thereto on the corresponding Exhibit
-------
B. Obligations regarding each Agreement shall be effective upon execution of
- -
the Cover Sheet. Each Agreement, all the Exhibits and its Cover Sheet shall be
defined as the "Agreement" and incorporated herein wherever reference to it is
made.

3. Services.
- -----------

3.1 Services Generally. Except as otherwise provided herein, for the term
-----------------------
determined pursuant to Section 4 hereof, Providing Company shall provide or
cause to be provided to Receiving Company the services described in the Exhibit
-------
A's attached hereto. The service described on a single Exhibit A shall be
- --- ---------
referred herein as a "Service". Collectively, the services described on all the

Exhibit A's (including Additional Services) shall be referred herein as
- ---------
"Services".

3.2 Additional Services. From time to time after the Effective Date, the
------------------------
parties may identify additional services that one party will provide to the
other party in accordance with the terms of this Agreement (the "Additional
Services"). Accordingly, the parties shall execute additional Cover Sheets and
complete additional Sets of Exhibits for such Additional Services pursuant to
Section 2. Except as set forth in Section 3.3, the parties may agree in writing
on Additional Services during the term of this Agreement.

3.3 Obligations as to Additional Services. Except as set forth in the next
------------------------------------------
sentence, the Providing Company shall be obligated to perform, at a reasonable
charge, any Additional Service that: (A) was provided by the Providing Company
immediately prior to the Separation Date and that Receiving Company reasonably
believes was inadvertently or unintentionally omitted from the list of Services
or (B) is essential to effectuate an orderly transition under the Separation and
Distribution Agreement unless such performance would significantly disrupt
Providing Company's operations or materially increase the scope of its
responsibility under this Agreement. If Providing Company reasonably believes
the performance of Additional Services required under subparagraphs (A) or (B)
would significantly disrupt its operations or materially increase the scope of
its responsibility under this Agreement, the Providing Company and Receiving
Company shall negotiate in good faith to establish terms under which Providing
Company can provide such Additional Services, but the Providing Company shall
not be obligated to provide such Additional Services if, following good faith
negotiation, it is unable to reach agreement on such terms.

-2-
<PAGE>

4. Term. The term of this Agreement shall commence on the Effective Date and
- -------
shall remain in effect until November 1, 2001 (the "Expiration Date"), unless
earlier terminated under Section 8. This Agreement may be extended by the
parties in writing either in whole or with respect to one or more of the
Services, provided, however, that such extension shall only apply to the
Services for which the Agreement was extended. The parties shall be deemed to
have extended this Agreement with respect to a specific Service if the Cover
Sheet for such Service specifies a completion date beyond the aforementioned
Expiration Date. The parties may agree on an earlier expiration date respecting
a specific Service by specifying such date on the Cover Sheet for that Service.
Services shall be provided up to and including the date set forth in the
applicable Cover Sheet, subject to earlier termination as provided herein.

5. Compensation.
- ----------------

5.1 Charges for Services. Receiving Company shall pay Providing Company
-------------------------
the charges, if any, set forth on the Exhibit B's for each of the Services
listed therein as adjusted, from time to time, in accordance with the process
and procedures established under Section 5.4 hereof. Such fees shall include the
direct and indirect costs of providing the Services plus five percent (5%).
However, if the term of this Agreement is extended beyond the Expiration Date as
provided in Section 4, Agilent will reimburse HP such costs plus 10% for the
Services. Wherever practical, fees shall be based on actual incurred costs, not
budgeted or estimated costs. The parties also intend for charges to be easy to
administer and justify and, therefore, they hereby acknowledge it may be
counterproductive to try to recover every cost, charge or expense particularly
those that are insignificant or de minimis. The parties shall use good faith
efforts to discuss any situation in which the actual charge for a Service is
reasonably expected to exceed the estimated charge, if any, set forth on an
Exhibit B for a particular Service, provided, however, that the incurrence of
charges in excess of any such estimate shall not justify stopping the provision
of, or payment for, Services under this Agreement.

5.2 Payment Terms. Providing Company shall bill Receiving Company monthly
------------------
for all charges pursuant to this Agreement. Such bills shall be accompanied by
reasonable documentation or other reasonable explanation supporting such
charges. Receiving Company shall pay Providing Company for all Services
provided hereunder within thirty (30) days after receipt of an invoice therefor.
Late payments shall bear interest at the Prime Rate plus two percent (2%) per
annum.

5.3 Performance Under Ancillary Agreements. Notwithstanding anything to
-------------------------------------------
the contrary contained herein, Receiving Company shall not be charged under this
Agreement for any obligations that are specifically required to be performed
under the Separation and Distribution Agreement or any other Ancillary Agreement
and any such other obligations shall be performed and charged for (if
applicable) in accordance with the terms of the Separation and Distribution
Agreement or such other Ancillary Agreement.

5.4 Error Correction; True-Ups; Accounting. Before the Separation Date,
-------------------------------------------
the parties shall agree on a process and procedure for conducting internal
audits and making adjustments to charges as a result of the movement of
employees and functions between parties, the discovery of errors or omissions in
charges, as well as a true-up of amounts owed. The parties shall set forth

-3-
<PAGE>

the agreed upon process and procedure in Schedule I hereto. In no event shall
----------
such processes and procedures extend beyond one (1) year after completion of a
Service.

5.5 Pricing Adjustments. In the event of a tax audit adjustment relating
------------------------
to the pricing of any or all Services provided pursuant to this Agreement in
which it is determined by a taxing authority that any of the charges,
individually or in combination, did not result in an arm's-length payment, as
determined under internationally accepted arm's-length standards, then the
parties, including a Providing Company subcontractor providing or receiving
Services hereunder, may agree to make corresponding adjustments to the charges
in question for such period to the extent necessary to achieve arm's-length
pricing. Any adjustment made pursuant to this Section 5.5 shall be reflected in
the parties' legal books and records, and the resulting overpayment or
underpayment shall create an obligation to be paid in the manner specified in
Section 5.2.

6. General Obligations; Standard of Care.
- -----------------------------------------

6.1 Performance Metrics: Providing Company. Subject to Section 7.3, the
-------------------------------------------
Providing Company shall maintain sufficient resources to perform its obligations
hereunder. Specific performance metrics for the Providing Company for a
specific Service may be set forth in the corresponding Exhibit A. Where none is
---------
set forth, the Providing Company shall use reasonable efforts to provide
Services in accordance with the policies, procedures and practices in effect
before the date hereof and shall exercise the same care and skill as it
exercises in performing similar services for itself. In addition, where none is
set forth for Services in which a System is replicated or transferred, the
Providing Company will use reasonable efforts to replicate and/or transfer each
System so that it has substantially the same functionality for Receiving Company
as it did immediately before the date hereof taking into account changes
reasonably expected and customary in a new operating environment.

6.2 Disclaimer of Warranties. PROVIDING COMPANY MAKES NO WARRANTIES,
----------------------------
EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT
TO THE SERVICES, SOFTWARE OR OTHER DELIVERABLES PROVIDED BY IT HEREUNDER.

6.3 Performance Metrics: Receiving Company. Specific performance metrics
------------------------------------------
for the Receiving Company for a specific Service may be set forth in the
corresponding Exhibit A. Where none is set forth, the Receiving Company shall
---------
use reasonable efforts, in connection with receiving Services, to follow the
policies, procedures and practices in effect before the date hereof including
providing information and documentation sufficient for Providing Company to
perform the Services as they were performed before the date hereof and making
available, as reasonably requested by the Providing Company, sufficient
resources and timely decisions, approvals and acceptances in order that
Providing Company may accomplish its obligations hereunder in a timely manner.

6.4 Transitional Nature of Services; Changes. The parties acknowledge the
--------------------------------------------
transitional nature of the Services and that Providing Company may make changes
from time to time in the manner of performing the Services if Providing Company
is making similar changes in performing similar services for itself and if
Providing Company furnishes to Receiving Company reasonable notice regarding
such changes. Notwithstanding the foregoing, for a period of six (6) months
from the Effective Date, Providing Company will not make any material change to
Systems affecting Receiving Company without first providing thirty (30) days
prior written notice

-4-
<PAGE>

and obtaining Receiving Company's prior written consent, which consent shall not
be unreasonably withheld or delayed.

6.5 Responsibility for Errors; Delays. Providing Company's sole
--------------------------------------
responsibility to Receiving Company:

(a) for errors or omissions in Services, shall be to furnish
correct information, payment and/or adjustment in the
Services, at no additional cost or expense to Receiving
Company; provided, Receiving Company must promptly advise
Providing Company of any such error or omission of which it
becomes aware after having used reasonable efforts to detect
any such errors or omissions in accordance with the standard
of care set forth in Section 6.1;

(b) for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts,
subject to Section 7.3, to make the Services available
and/or to resume performing the Services as promptly as
reasonably practicable;

(c) for an error, bug, fault or deficiency in a replicated or
transferred System (a "System Error") that did not exist in
the System immediately before the Separation Date, shall be
to use reasonable efforts, subject to Section 7.3 and taking
into account the importance of the affected System to the
Receiving Company's business operations, to cooperate with
Receiving Company to correct such System Error at no
additional cost or expense to Receiving Company (such
correction may take the form of new or revised software or
an appropriate work-around); provided, Receiving Company
must advise Providing Company of any such System Error
within sixty (60) days after completion of the activities
set forth in (A) the Exhibit A for the System containing a
---------
System Error or (B) the Exhibit A for any feeder System
---------
that caused the System Error, whichever is later; and

(d) for failure to complete any of the Services related to
replication or transfer of System(s) because of
Impracticability, shall be to use reasonable efforts,
subject to Section 7.3, to make the Systems available to
Receiving Company from a Providing Company facility until
Providing Company can resume replication or transfer
activities or until the parties devise an appropriate
alternative approach pursuant to Section 6.6.

6.6 Good Faith Cooperation; Consents. The parties will use good faith
-------------------------------------
efforts to cooperate with each other in all matters relating to the provision
and receipt of Services. Such cooperation shall include exchanging information,
providing electronic access to Systems used in connection with Services,
performing true-ups and adjustments and obtaining all third party consents,
licenses, sublicenses or approvals necessary to permit each party to perform its
obligations hereunder (including by way of example, not by way of limitation,
rights to use third party software needed for the performance of Services). The
costs of obtaining such third party consents, licenses, sublicenses or approvals
shall be borne by the Receiving Company. The parties will maintain
documentation supporting the information contained in the Exhibits and cooperate
with each other in making such information available as needed in the event of a
tax audit, whether in the United States or any other country.

6.7 Alternatives. If Providing Company reasonably believes it is unable to
-----------------
provide any Service because of a failure to obtain necessary consents, licenses,
sublicenses or approvals

-5-
<PAGE>

pursuant to Section 6.6 or because of Impracticability, the parties shall
cooperate to determine the best alternative approach. Until such alternative
approach is found or the problem otherwise resolved to the satisfaction of the
parties, the Providing Company shall use reasonable efforts, subject to Section
7.2 and Section 7.3, to continue providing the Service or, in the case of
Systems, to support the function to which the System relates or permit Receiving
Company to have access to the System so Receiving Company can support the
function itself. To the extent an agreed upon alternative approach requires
payment above and beyond that which is included in the Providing Company's
charge for the Service in question, the parties shall share equally in making
any such payment unless they otherwise agree in writing.

7. Certain Limitations.
- ----------------------

7.1 Service Boundaries. Except as provided in an Exhibit A for a specific
---------------------- ---------
Service: (i) Providing Company shall be required to provide the Services only to
the extent and only at the locations such Services are being provided by
Providing Company for the Receiving Company immediately prior to the Effective
Date; and (ii) the Services will be available only for purposes of conducting
the business of the Receiving Company substantially in the manner it was
conducted prior to the Effective Date.

7.2 Impracticability. Providing Company shall not be required to provide
--------------------
any Service to the extent the performance of such Service becomes
"Impracticable" as a result of a cause or causes outside the reasonable control
of Providing Company including unfeasible technological requirements, or to the
extent the performance of such Services would require Providing Company to
violate any applicable laws, rules or regulations or would result in the breach
of any software license or other applicable contract.

7.3 Additional Resources. Except as provided in an Exhibit A for a
------------------------ ---------
specific Service, in providing the Services, Providing Company shall not be
obligated to: (i) hire any additional employees; (ii) maintain the employment of
any specific employee; (iii) purchase, lease or license any additional equipment
or software; or (iv) pay any costs related to the transfer or conversion of
Receiving Company's data to Receiving Company or any alternate supplier of
Services.

8. Termination.
- --------------

8.1 Termination. The Receiving Company may terminate this Agreement, either
---------------
with respect to all or with respect to any one or more of the Services provided
to such Receiving Company hereunder, for any reason or for no reason, at any
time upon six (6) months prior written notice to the Providing Company. In
addition, subject to the provisions of Section 16 below, either party may
terminate this Agreement with respect to a specific Service if the other party
materially breaches a material provision with regard to that particular Service
and does not cure such breach (or does not take reasonable steps required under
the circumstances to cure such breach going forward) within sixty (60) business
days after being given notice of the breach; provided, however, that the non-
terminating party may request that the parties engage in a dispute resolution
negotiation as specified in Section 16 below prior to termination for breach.

8.2 Survival. Those Sections of this Agreement that, by their nature, are
------------
intended to survive termination will survive in accordance with their terms.
Notwithstanding the foregoing, in the event of any termination with respect to
one or more, but less than all Services, this Agreement shall continue in full
force and effect with respect to any Services not terminated hereby.

-6-
<PAGE>

8.3 User Ids, Passwords. The parties shall use good faith efforts at the
-----------------------
termination or expiration of this Agreement or any specific Service hereto, to
ensure that all applicable user IDs and passwords are canceled and, subject to
Section 7.3, that any applicable data pertaining solely to the other parties are
deleted or removed from Systems.

9. Relationship Between the Parties. The relationship between the parties
- -----------------------------------
established under this Agreement is that of independent contractors and neither
party is an employee, agent, partner, or joint venturer of or with the other.
Providing Company will be solely responsible for any employment-related taxes,
insurance premiums or other employment benefits respecting its personnel's
performance of Services under this Agreement. Receiving Company agrees to grant
Providing Company personnel access to sites, systems and information (subject to
the provisions of confidentiality stated below) as necessary for Providing
Company to perform it obligations hereunder. Providing Company personnel agree
to obey any and all security regulations and other published policies of
Receiving Company.

10. Subcontractors. Providing Company may engage a "Subcontractor" to perform
- ------------------
all or any portion of Providing Company's duties under this Agreement, provided
that any such Subcontractor agrees in writing to be bound by confidentiality
obligations at least as protective as the terms of Section 13 regarding
confidentiality below, and provided further that Providing Company remains
responsible for the performance of such Subcontractor. As used in this
Agreement, "Subcontractor" will mean any individual, partnership, corporation,
firm, association, unincorporated organization, joint venture, trust or other
entity engaged to perform hereunder.

11. Intellectual Property.
- -------------------------

11.1 Unless otherwise agreed by the parties under the Ancillary Agreements
or any separate license or technology agreement, if Providing Company supplies
Receiving Company with a deliverable that in whole or in part consists of
software, firmware, or other computer code (referred to as a "Software
Deliverable"), such Software Deliverables will be supplied in object code form
only and will be subject to the Providing Company software license terms
attached hereto as Exhibit C. In the event that such Software Deliverables are
---------
licensed to Providing Company by third parties, Receiving Company agrees to be
bound by any different or additional conditions that are required by such third
parties and are communicated in writing by Providing Company to Receiving
Company.

11.2 This Agreement and the performance of this Agreement will not affect
the ownership of any copyrights or other intellectual property rights allocated
in the Ancillary Agreements.

11.3 Neither party will gain, by virtue of this Agreement, any rights of
ownership of copyrights, patents, trade secrets, trademarks or any other
intellectual property rights owned by the other.

11.4 Except as set forth in Section 11.2, Providing Company will own all
copyrights, patents, trade secrets, trademarks and other intellectual property
rights subsisting in the Software Deliverables and other works developed by
Providing Company for purposes of this Agreement.

11.5 Receiving Company grants Providing Company a non-exclusive, worldwide,
royalty-free license to use, copy, and make derivative works of, distribute,
display, perform and transmit Providing Company's pre-existing copyrighted works
or other intellectual property rights solely to the extent necessary to perform
its obligations under this Agreement.

-7-
<PAGE>

12. Infringement Defense. To the extent Providing Company delivers or licenses
- ------------------------
any Software deliverables to Receiving Company after the Separation Date in
performance of this Agreement, Providing Company agrees to defend Receiving
Company and its directors, officers, employees and agents against any and all
claims, actions or suits (any of the foregoing, a "Claim") incurred by or
asserted against Receiving Company based upon infringement of a third party
patent or other intellectual property right. Receiving Company agrees to notify
Providing Company promptly of any Claim and permit Providing Company at
Providing Company's expense to defend such Claim and will cooperate in the
defense thereof. Providing Company agrees to pay any awards or settlement
amounts arising from a Claim. Neither Providing Company nor Receiving Company
will enter into or permit any settlement of any such Claim without the express
written consent of the other party. Receiving Company may, at its option and
expense, have its own counsel participate in any proceeding that is under the
direction of Providing Company and will cooperate with Providing Company and its
insurer in the disposition of any such matter.

13. Confidentiality. During the term of this Agreement, a party (the
- -------------------
"Recipient") may receive or have access to certain information of the other
party (the "Discloser") that is marked as "Confidential Information," including,
though not limited to, information or data related to either party's products
(including the discovery, invention, research, improvement, development,
manufacture, or sale thereof), processes, or general business operations
(including sales, costs, profits, pricing methods, organization, employee or
customer lists and processes), and any information obtained through access to
any information assets or information systems (including computers, networks,
voice mail, etc.), which, if not otherwise described above, is of such a nature
that a reasonable person would believe to be confidential. The Recipient will
protect the confidentiality of Confidential Information under the terms of the
Confidential Disclosure Agreement attached as Exhibit D.
---------

14. Limitation of Liability. NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY
- ---------------------------
LOST PROFITS, LOSS OF DATA, LOSS OF USE, COST OF COVER, BUSINESS INTERRUPTION
OR OTHER SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES,
HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING FROM THE PERFORMANCE OF,
OR RELATING TO, THIS AGREEMENT. THE FOREGOING LIMITATION WILL NOT LIMIT
PROVIDING COMPANY'S OBLIGATIONS WITH RESPECT TO PAYMENT OF DAMAGES OF ANY KIND
INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY CLAIM UNDER ANY INDEMNITY OR
INFRINGEMENT DEFENSE PROVISIONS SPECIFIED HEREIN.

15. Force Majeure. Each party will be excused for any failure or delay in
- -----------------
performing any of its obligations under this Agreement, other than the
obligations of Receiving Company to make certain payments to Providing Company
pursuant to Section 5 hereof for services rendered, if such failure or delay is
caused by Force Majeure. "Force Majeure" means any act of God or the public
enemy, any accident, explosion, fire, storm, earthquake, flood, or any other
circumstance or event beyond the reasonable control of the party relying upon
such circumstance or event.

16. Dispute Resolution.
- ----------------------

16.1 Negotiation. The parties shall make a good faith attempt to resolve
----------------
any dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is
given by either party to the other party, the parties' first tier

-8-
<PAGE>

negotiating teams specified in Exhibit E shall meet and make a good faith
---------
attempt to resolve such dispute or claim and shall continue to negotiate in good
faith in an effort to resolve the dispute or claim or renegotiate the applicable
section or provision without the necessity of any formal proceedings. If the
first tier negotiating teams are unable to agree within thirty (30) days of
their first meeting, then the parties' second tier negotiating teams specified
in Exhibit E shall meet within thirty (30) days after the end of the first
---------
thirty (30) day negotiating period to attempt to resolve the matter. During the
course of negotiations under this Section 16.1, all reasonable requests made by
one party to the other for information, including requests for copies of
relevant documents, will be honored. The specific format for such negotiations
will be left to the discretion of the designated negotiating teams but may
include the preparation of agreed upon statements of fact or written statements
of position furnished to the other party.

16.2 Nonbinding Mediation. In the event that any dispute or claim arising
-------------------------
out of or related to this Agreement is not settled by the parties within fifteen
(15) days after the first meeting of the second tier negotiating teams under
Section 16.1, the parties will attempt in good faith to resolve such dispute or
claim by nonbinding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules. The mediation shall be held within
thirty (30) days of the end of such fifteen (15) day negotiation period of the
second tier negotiating teams. Except as provided below in Section 16.3, no
litigation for the resolution of such dispute may be commenced until the parties
try in good faith to settle the dispute by such mediation in accordance with
such rules and either party has concluded in good faith that amicable resolution
through continued mediation of the matter does not appear likely. The costs of
mediation shall be shared equally by the parties to the mediation. Any
settlement reached by mediation shall be recorded in writing, signed by the
parties, and shall be binding on them.

16.3 Proceedings. Nothing herein, however, shall prohibit either party from
----------------
initiating litigation or other judicial or administrative proceedings if such
party would be substantially harmed by a failure to act during the time that
such good faith efforts are being made to resolve the dispute or claim through
negotiation or mediation. In the event that litigation is commenced under this
Section 16.3, the parties agree to continue to attempt to resolve any dispute
according to the terms of Sections 16.1 and 16.2 during the course of such
litigation proceedings under this Section 16.3.

17. Miscellaneous.
- -----------------

17.1 Entire Agreement. This Agreement, the Separation and Distribution
---------------------
Agreement and the other Ancillary Agreements constitute the entire agreement
between the parties with respect to the subject matter hereof and shall
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.

17.2 Governing Law. This Agreement will be governed by and construed in
------------------
accordance with the laws of the State of California regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable thereto.

17.3 Descriptive Headings. The descriptive headings herein are inserted
--------------------
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.

17.4 Notices. All notices and other communications hereunder will be in
------------
writing and will be deemed to have been duly given when delivered in person, by
telecopy with answer back, by

-9-
<PAGE>

express or overnight mail delivered by a nationally recognized air courier
(delivery charges prepaid), or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties as follows:

if to HP:
c/o HP Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: General Counsel
Telecopy: (650)

if to Agilent:
c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: General Counsel
Telecopy: (650)

or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person will be deemed effective upon
delivery. Any notice or communication sent by telecopy or by air courier will
be deemed effective on the first business day at the place at which such notice
or communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail will be deemed effective on the third business day at the place
from which such notice or communication was mailed following the day on which
such notice or communication was mailed. As used in this Agreement, "business
day" means day other than a Saturday, a Sunday or a day on which banking
institutions located in the State of California are authorized or obligated by
law or executive order to close.

17.6 Nonassignability. Except as specifically permitted under Section 10
---------------------
above, neither party may, directly or indirectly, in whole or in part, whether
by operation of law or otherwise, assign or transfer this Agreement, without the
other party's prior written consent, and any attempted assignment, transfer or
delegation without such prior written consent shall be voidable at the sole
option of such other party. Notwithstanding the foregoing, each party (or its
permitted successive assignees or transferees hereunder) may assign or transfer
this Agreement as a whole without consent to an entity that succeeds to all or
substantially all of the business or assets of such party. Without limiting the
foregoing, this Agreement will be binding upon and inure to the benefit of the
parties and their permitted successors and assigns.

17.7 Severability. If any term or other provision of this Agreement is
-----------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible.

17.8 No Waiver; Remedies Cumulative. No failure or delay on the part of
-----------------------------------
any party in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any provision of
this Agreement, nor will any single or partial

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<PAGE>

exercise of any such right preclude other or further exercise of any other
right. All rights and remedies existing under this Agreement are cumulative to,
and not exclusive of, any rights or remedies otherwise available.

17.9 Amendment. No change or amendment will be made to this Agreement
--------------
except by an instrument in writing signed on behalf of each of the parties to
such Agreement.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives.

HEWLETT-PACKARD COMPANY

By:
Title:

AGILENT TECHNOLOGIES, INC.

By:
Title:

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<PAGE>

EXHIBIT 2.10

Real Estate Matters Agreement

between

Hewlett-Packard Company

and

Agilent Technologies, Inc.

______________, 1999
<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I PROPERTY IN THE UNITED STATES.......................................... 1

Section 1.1 Owned Property................................................... 1
Section 1.2 Leased Property.................................................. 1
Section 1.3 Sublease Properties.............................................. 2
Section 1.4 New Lease Properties............................................. 2
Section 1.5 Obtaining the Lease Consents..................................... 2
Section 1.6 Occupation by Agilent............................................ 3
Section 1.7 Obligation to Complete........................................... 4
Section 1.8 Form of Transfer................................................. 5
Section 1.9 Casualty; Lease Termination...................................... 6
Section 1.10 Tenant's Fixtures and Fittings................................... 6
Section 1.11 Services......................................................... 6
Section 1.12 Adjustments...................................................... 6
Section 1.13 Costs............................................................ 7

ARTICLE II PROPERTY OUTSIDE THE UNITED STATES.................................... 7

ARTICLE III MISCELLANEOUS........................................................ 8

Section 3.1 Entire Agreement................................................. 8
Section 3.2 Governing Law.................................................... 8
Section 3.3 Notices.......................................................... 8
Section 3.4 Parties in Interest.............................................. 8
Section 3.5 Counterparts..................................................... 8
Section 3.6 Binding Effect; Assignment....................................... 8
Section 3.7 Severability..................................................... 9
Section 3.8 Failure or Indulgence Not Waiver................................. 9
Section 3.9 Amendment........................................................ 9
Section 3.10 Authority........................................................ 9
Section 3.11 Interpretation................................................... 9

ARTICLE IV DEFINITIONS........................................................... 9
</TABLE>
<PAGE>

REAL ESTATE MATTERS AGREEMENT

This Real Estate Matters Agreement (this "Agreement") is entered into on
_________, 1999 between Hewlett-Packard Company, a Delaware corporation ("HP"),
and Agilent Technologies, Inc., a Delaware corporation ("Agilent"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Separation Agreement (as defined below).

RECITALS

WHEREAS, HP has transferred or will transfer to Agilent effective as of the
Separation Date, substantially all of the business and assets of the Agilent
Business owned by HP in accordance with the Master Separation and Distribution
Agreement dated as of ____________, 1999 between the parties (the "Separation
Agreement").

WHEREAS, the parties desire to set forth certain agreements regarding real
estate matters.

NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I

PROPERTY IN THE UNITED STATES

SECTION 1.1 Owned Property

(a) HP shall convey or cause its applicable Subsidiary to convey each of
the Owned Properties (together with all rights and easements appurtenant
thereto) to Agilent, subject to the other provisions of this Agreement and (to
the extent not inconsistent with the provisions of this Agreement) the terms of
the Separation Agreement and the other Ancillary Agreements. Such conveyance
shall be completed on the Separation Date.

(b) Subject to the completion of the conveyance to Agilent of the relevant
Owned Property, with respect to each Owned Property which is a Leaseback
Property, Agilent shall grant to HP a lease of that part of the relevant Owned
Property identified in the Colocation Sites Spreadsheet and HP shall accept the
same. Such lease shall be completed immediately following completion of the
transfer of the relevant Owned Property to Agilent.

SECTION 1.2 Leased Property

(a) HP shall assign or cause its applicable Subsidiary to assign, and
Agilent shall accept and assume, HP's or its Subsidiary's interest in the Leased
Properties, subject to the other provisions of this Agreement and (to the extent
not inconsistent with the provisions of this Agreement) the terms of the
Separation Agreement and the other Ancillary Agreements. Such assignment shall
be completed on the later of: (i) the Separation Date; and (ii) the earlier of
(A) the tenth (10th) business day after the relevant Lease Consent has been
granted and (B) the date agreed upon by the parties in accordance with Section
1.7(a) below.
<PAGE>

(b) Subject to the completion of the assignment to Agilent of the relevant
Leased Property, with respect to each Leased Property which is also a Leaseback
Property, Agilent shall grant to HP a sublease of that part of the relevant
Leased Property identified in the Colocation Sites Spreadsheet and HP shall
accept the same. Such sublease shall be completed immediately following
completion of the transfer of the relevant Leased Property to Agilent.

SECTION 1.3 Sublease Properties

HP shall grant or cause its applicable Subsidiary to grant to Agilent a
sublease of that part of the relevant Sublease Property identified in the
Colocation Sites Spreadsheet and Agilent shall accept the same, subject to the
other provisions of this Agreement and (to the extent not inconsistent with the
provisions of this Agreement) the terms of the Separation Agreement and the
other Ancillary Agreements. Such sublease shall be completed on the later of:
(a) the Separation Date; and (b) the earlier of (i) the tenth (10th) business
day after the relevant Lease Consent has been granted and (ii) the date agreed
upon by the parties in accordance with Section 1.7(a) below.

SECTION 1.4 New Lease Properties

HP shall grant or cause its applicable Subsidiary to grant to Agilent a
lease of those parts of the New Lease Properties identified in the Colocation
Sites Spreadsheet and Agilent shall accept the same, subject to the other
provisions of this Agreement and (to the extent not inconsistent with the
provisions of this Agreement) the terms of the Separation Agreement and the
other Ancillary Agreements. Such lease shall be completed on the Separation
Date.

SECTION 1.5 Obtaining the Lease Consents

(a) Except with respect to any Properties which the parties agree should
be dealt with by the Service Level Agreements referred to in Section 1.11 below,
HP confirms that, with respect to each Leased Property, Sublease Property and
Leaseback Property which is a Leased Property, an application has been made or
will be made by the Separation Date to the relevant Landlord for the Lease
Consents required with respect to the transactions contemplated by this
Agreement.

(b) HP and Agilent will each use their reasonable commercial efforts to
obtain the Lease Consents, but HP shall not be required to commence judicial
proceedings for a declaration that a Lease Consent has been unreasonably
withheld or delayed, nor shall HP be required to pay any consideration in excess
of that required by the Relevant Lease or that which is typical in the open
market to obtain the relevant Lease Consent.

(c) Agilent and HP will promptly satisfy the lawful requirements of the
Landlord, and Agilent will take all steps to assist HP in obtaining the Lease
Consents, including, without limitation:

(i) if properly required by the Landlord, entering into an agreement
with the relevant Landlord to observe and perform the tenant's obligations
contained in the Relevant Lease throughout the remainder of the term of the
Relevant Lease, subject to any statutory limitations of such liability;

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<PAGE>

(ii) if properly required by the Landlord, providing a guarantee,
surety or other security (including, without limitation, a security deposit) for
the obligations of Agilent as tenant under the Relevant Lease, and otherwise
taking all steps which are necessary and which Agilent is capable of doing to
meet the lawful requirements of the Landlord so as to ensure that the Lease
Consents are obtained; and

(iii) using all reasonable commercial efforts to assist HP with
obtaining the Landlord's consent to the release of any guarantee, surety or
other security which HP or its Subsidiary may have previously provided to the
Landlord and, if required, offering the same or equivalent security to the
Landlord in order to obtain such release.

Notwithstanding the foregoing, (1) except with respect to guarantees, sureties
or other security referenced in Section 1.5(c)(ii) above, Agilent shall not be
required to obtain a release of any obligation entered into by HP or its
Subsidiary with any Landlord or other third party with respect to any Property
and (2) Agilent shall not communicate directly with any of the Landlords unless
Agilent can show HP reasonable grounds for doing so.

(d) If, with respect to any Leased Properties, HP and Agilent are unable
to obtain a release by the Landlord of any guarantee, surety or other security
which HP or its Subsidiary has previously provided to the Landlord, Agilent
shall indemnify, defend, protect and hold harmless HP and its Subsidiary from
and after the Separation Date against all losses, costs, claims, damages, or
liabilities incurred by HP or its Subsidiary as a result of such guarantee,
surety or other security.

SECTION 1.6 Occupation by Agilent

(a) Subject to compliance with Section 1.6(b) below, in the event that the
Actual Completion Date for any Leased Property or Sublease Property does not
occur on the Separation Date, Agilent shall, commencing on the Separation Date,
be entitled to occupy and receive the rental income from the relevant Property
(except to the extent that the same is a Retained Part) as a licensee upon the
terms and conditions contained in HP's Lease (as to Leased Properties) or upon
the terms and conditions contained in the Sublease Form (as to Sublease
Properties). Such license shall not be revocable prior to the date for
completion as provided in Sections 1.2(a) and 1.3 unless an enforcement action
or forfeiture by the relevant Landlord due to Agilent's occupation of the
Property constituting a breach of HP's Lease cannot, in the reasonable opinion
of HP, be avoided other than by requiring Agilent to immediately vacate the
relevant Property, in which case HP may by notice to Agilent immediately require
Agilent to vacate the relevant Property. Agilent will be responsible for all
costs, expenses and liabilities incurred by HP or its applicable Subsidiary as a
consequence of such occupation, except for any losses, claims, costs, demands
and liabilities incurred by HP or its Subsidiary as a result of any enforcement
action taken by the Landlord against HP or its Subsidiary with respect to any
breach by HP or its Subsidiary of the Relevant Lease in permitting Agilent to so
occupy the Property without obtaining the required Lease Consent, for which HP
or its Subsidiary shall be solely responsible. Agilent shall not be entitled to
make any claim or demand against, or obtain reimbursement from, HP or its
applicable Subsidiary with respect to any costs, losses, claims, liabilities or
damages incurred by Agilent as a consequence of being obliged to vacate the
Property or in obtaining alternative premises, including, without limitation,
any enforcement action which a Landlord may take against Agilent.

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<PAGE>

(b) In the event that the Actual Completion Date for any Leased Property
or Sublease Property does not occur on the Separation Date, whether or not
Agilent occupies a Property as licensee as provided in Section 1.6(a) above,
Agilent shall, effective as of the Separation Date, (i) pay HP all rents,
service charges, insurance premiums and other sums payable by HP or its
applicable Subsidiary under any Relevant Lease (as to Leased Properties) or
under the Sublease Form (as to Sublease Properties), (ii) observe the tenant's
covenants, obligations and conditions contained in HP's Lease (as to Leased
Properties) or in the Sublease Form (as to Sublease Properties) and (iii)
indemnify, defend, protect and hold harmless HP and its applicable Subsidiary
from and against all losses, costs, claims, damages and liabilities arising on
account of any breach thereof by Agilent.

(c) HP shall supply promptly to Agilent copies of all invoices, demands,
notices and other communications received by HP or its or its applicable
Subsidiaries or agents in connection with any of the matters for which Agilent
may be liable to make any payment or perform any obligation pursuant to Section
1.6(b), and shall, at Agilent's cost, take any steps and pass on any objections
which Agilent may have in connection with any such matters. Agilent shall
promptly supply to HP any notices, demands, invoices and other communications
received by Agilent or its agents from any Landlord while Agilent occupies any
Property without the relevant Lease Consent.

SECTION 1.7 Obligation to Complete

(a) If, with respect to any Leased Property or Sublease Property, at any
time the relevant Lease Consent is formally and unconditionally refused in
writing, HP and Agilent shall commence good faith negotiations and use
commercially reasonable efforts to determine how to allocate the applicable
Property, based on the relative importance of the applicable Property to the
operations of each party, the size of the applicable Property, the number of
employees of each party at the applicable Property and the potential risk and
liability to each party in the event an enforcement action is brought by the
applicable Landlord. Such commercially reasonable efforts shall include
consideration of alternate structures to accommodate the needs of both parties
and the allocation of the costs thereof, including entering into amendments of
the size, term or other terms of the Relevant Lease, restructuring a proposed
lease assignment to be a sublease and relocating one party. If the parties are
unable to agree upon an allocation of the Property within fifteen (15) days
after commencement of negotiations between the parties as described above, then
either party may, by delivering written notice to the other, require that the
matter be referred to the Chief Financial Officers of both parties. In such
event, the Chief Financial Officers shall use commercially reasonable efforts to
determine the allocation of the Property, including having a meeting or
telephone conference within ten (10) days thereafter. If the parties are unable
to agree upon the allocation of an applicable Property within fifteen (15) days
after the matter is referred to the Chief Financial Officers of the parties as
described above, the disposition of the applicable Property and the risks
associated therewith shall be allocated between the parties as set forth in
subparts (b) and (c) of this section below.

(b) If, with respect to any Leased Property, the parties are unable to
agree upon the allocation of a Property as set forth in Section 1.7(a), HP may
by written notice to Agilent elect to apply to the relevant Landlord for consent
to sublease all of the relevant Property to Agilent for the remainder of the
Relevant Lease term less three (3) days at a rent equal to the rent from time to
time under the

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<PAGE>

Relevant Lease, but otherwise on substantially the same terms and conditions as
the Relevant Lease. If HP makes such an election, until such time as the
relevant Lease Consent is obtained and a sublease is completed, the provisions
of Section 1.6 will apply and, on the grant of the Lease Consent required to
sublease the Leased Property in question, HP shall sublease or cause its
applicable Subsidiary to sublease to Agilent the relevant Property in accordance
with Section 1.3.

(c) If the parties are unable to agree upon the allocation of a Property
as set forth in Section 1.7(a) and HP does not make an election pursuant to
Section 1.7(b) above, HP may elect by written notice to Agilent to require
Agilent to vacate the relevant Property immediately or by such other date as may
be specified in the notice served by HP (the "Notice Date"), in which case
Agilent shall vacate the relevant Property on the Notice Date but shall
indemnify HP and its applicable Subsidiary from and against all costs, claims,
losses, liabilities and damages in relation to the relevant Property arising
from and including the Separation Date to and including the later of the Notice
Date and date on which Agilent vacates the relevant Property, except for any
costs, losses, damages, claims and liabilities incurred by HP or its Subsidiary
with respect to any enforcement action taken by the Landlord against HP or its
Subsidiary with respect to any breach by HP or its Subsidiary of the Relevant
Lease in permitting Agilent to so occupy the Property without obtaining the
required Lease Consent. Agilent shall not be entitled to make any claim or
demand against or obtain reimbursement from HP or its applicable Subsidiary with
respect to any costs, losses, claims, liabilities or damages incurred by Agilent
as a consequence of being obliged to vacate the Property or obtaining
alternative premises, including, without limitation, any enforcement action
which a Landlord may take against Agilent.

SECTION 1.8 Form of Transfer

(a) The transfer or assignment to Agilent of each relevant Owned Property
and Leased Property shall be in substantially the form attached in Schedule 1 or
2, as applicable, with such amendments as are reasonably required by HP with
respect to a particular Property, including, without limitation, in all cases
where a relevant Landlord has required a guarantor or surety to guarantee the
obligations of Agilent contained in the relevant Lease Consent or any other
document which Agilent is required to complete, the giving of such guarantee by
a guarantor or surety, and the giving by Agilent and any guarantor or surety of
Agilent's obligations of direct obligations to HP or third parties where
required under the terms of any of the Lease Consent or any covenant, condition,
restriction, easement, lease or other encumbrance to which the Property is
subject.

(b) The subleases to be granted to Agilent with respect to the Sublease
Properties shall be substantially in the form of the Sublease Form and shall
include such amendments which in the reasonable opinion of HP are necessary with
respect to a particular Property or the relevant Lease Consent. Such amendments
shall be submitted to Agilent for approval, which approval shall not be
unreasonably withheld or delayed.

(c) The leases and subleases to be granted by Agilent to HP with respect
to the Leaseback Properties shall be substantially in the form of the Lease Form
or the Sublease Form, as applicable, with such amendments as are, in the
reasonable opinion of HP, necessary with respect to a particular Property. Such
amendments shall be submitted to Agilent for approval, which approval shall not
be unreasonably withheld.

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<PAGE>

(d) The leases to be granted to Agilent with respect to the New Lease
shall be substantially in the form of the Lease Form and shall include such
amendments which in the reasonable opinion of HP are necessary with respect to a
particular Property. Such amendments shall be submitted to Agilent for approval,
which approval shall not be unreasonably withheld or delayed.

SECTION 1.9 Casualty; Lease Termination

The parties hereto shall grant and accept transfers, assignments, leases or
subleases of the Properties as described in this Agreement, regardless of any
casualty damage or other change in the condition of the Properties. In addition,
subject to HP's obligations in Section 5.6 of the Separation Agreement, in the
event that HP's Lease with respect to a Leased Property or a Sublease Property
is terminated prior to the Separation Date, (a) HP shall not be required to
assign or sublease such Property, (b) Agilent shall not be required to accept an
assignment or sublease of such Property and (c) neither party shall have any
further liability with respect to such Property hereunder.

SECTION 1.10 Tenant's Fixtures and Fittings

The provisions of the Separation Agreement and the other Ancillary
Agreements shall apply to any trade fixtures and personal property located at
each Property (excluding any trade fixtures and personal property owned by third
parties).

SECTION 1.11 Services

(a) HP and Agilent each agree that, on or about the Separation Date, they
shall each enter into a Service Level Agreement with the other whereby, with
respect to each of the Sublease Properties, the New Lease Properties and the
Leaseback Properties, each party shall agree to supply to, or perform for the
benefit of, the other party (and the other party shall accept) such Real Estate
Services as each party currently supplies to or performs for the benefit of the
other with respect to such Properties, on the same terms and conditions as
currently apply, and at the cost and other terms as set forth in the Service
Level Agreements.

(b) Notwithstanding anything to the contrary herein, the parties agree and
acknowledge that there may be circumstances in which the parties mutually agree
that a formal lease or sublease will not be entered into in order to establish
shared occupancy of a Property, in which case such occupancy shall be (and the
Service Level Agreement referenced in Section 1.11(a) above shall provide that
the applicable party may occupy the relevant Property) on the terms and
conditions set forth in Sections 2-28 of the Lease Form or the terms and
conditions set forth in Sections 3 through the first sentence of Section 17 of
the Sublease Form, respectively.

SECTION 1.12 Adjustments

(a) HP and Agilent each acknowledge and agree that Additional Properties
may be acquired by HP prior to the Separation Date. Such Additional Properties
shall be treated hereunder as Owned Properties, Leased Properties, Sublease
Properties, New Lease Properties and/or Leaseback Properties by mutual agreement
of the parties based on whether the Additional Property was acquired by or for
the Agilent Business or HP's other businesses. In the event that the parties are

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<PAGE>

unable to agree by the Separation Date as to how any Additional Property is to
be treated, the matter shall be determined in accordance with the procedure set
forth in Section 1.7(a) above. In the event that the parties are unable to agree
within ten (10) business days of the Separation Date as to the allocation of an
Additional Property, the matter in dispute shall be determined in accordance
with the following guidelines:

(i) Properties which are occupied as to fifty percent (50%) or more
of the total area for the purposes of the Agilent Business shall be treated as
Owned Properties or Leased Properties (as appropriate) and the part which is not
occupied by the Agilent Business or a third party shall be treated as a
Leaseback Property; and

(ii) Properties which are occupied as to less than fifty percent (50%)
for the purposes of the Agilent Business shall be treated as Sublease Properties
or New Lease Properties (as appropriate).

(b) Following agreement or determination with respect to the Additional
Properties, the parties shall enter into and complete all such documents as may
be required to give effect to such agreement or determination.

(c) HP and Agilent each acknowledge and agree that their respective
requirements with regard to each of the Properties may alter between the date of
this Agreement and the Separation Date, in which case the parties may mutually
agree in writing to re-characterize the relevant Property as an Owned Property,
Leased Property, Sublease Property, New Lease Property and/or Leaseback Property
as appropriate.

SECTION 1.13 Costs

HP shall pay all reasonable costs and expenses incurred in connection with
obtaining the Lease Consents, including, without limitation, Landlord's consent
fees and attorneys' fees and any costs and expenses relating to re-negotiation
of HP's Leases. HP shall also pay all reasonable costs and expenses in
connection with the transfer of the Owned Properties and Leased Properties,
including title insurance premiums, escrow fees, recording fees, and any
transfer taxes arising as a result of the transfers.

ARTICLE II

PROPERTY OUTSIDE THE UNITED STATES

With respect to each of the properties located outside the United States
listed in the Owned and Leased Property Spreadsheet and the Colocation Sites
Spreadsheet, as well as any additional properties acquired by HP or a Subsidiary
prior to the Separation Date, HP and Agilent shall each enter into (if
necessary) or procure that its relevant Subsidiary enter into an agreement with
the other party or such Subsidiary of the other party as the other party may
direct whereby the parties thereto agree to transfer, assign, lease, sublease,
or leaseback, as the case may be, such property, as specified in such
spreadsheets in accordance with the Non-US Plan (or with respect to any
additional

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<PAGE>

properties, in the manner agreed upon by the parties in accordance with the
applicable agreement). Such transfers, assignments, leases, subleases or
leasebacks shall, so far as the law in the jurisdiction in which such property
is located permits, be on terms and conditions substantially the same as the
terms and conditions of this Agreement. In the event of a conflict between the
terms of this Agreement and the terms of such local agreements, the terms of the
local agreements shall prevail.

ARTICLE III

MISCELLANEOUS

SECTION 3.1 Entire Agreement. This Agreement, the Separation Agreement,
the other Ancillary Agreements and the Exhibits and Schedules referenced or
attached hereto and thereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof.

SECTION 3.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto. Notwithstanding the foregoing, the applicable
Property transfers shall be performed in accordance with the laws of the state
in which the applicable Property is located.

SECTION 3.3 Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and addressed to the attention of
the party's General Counsel at the address of its principal executive office or
such other address as a party may request by notifying the other in writing.

SECTION 3.4 Parties in Interest. This Agreement, including the Schedules
and Exhibits hereto, and the other documents referred to herein, shall be
binding upon and inure solely to the benefit of each party hereto and their
legal representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.

SECTION 3.5 Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

SECTION 3.6 Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives and successors. This Agreement may not be assigned by any party
hereto. The Schedules and/or Exhibits attached hereto

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<PAGE>

or referred to herein are an integral part of this Agreement and are hereby
incorporated into this Agreement and made a part hereof as if set forth in full
herein.

Section 3.7 Severability. If any term or other provision of this Agreement
or the Schedules or Exhibits attached hereto is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the fullest extent possible.

Section 3.8 Failure or Indulgence Not Waiver. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.

Section 3.9 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such agreement.

Section 3.10 Authority. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.

Section 3.11 Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

ARTICLE IV

DEFINITIONS

The following terms, as used herein, shall have the following meanings:

Actual Completion Date means, with respect to each Property, the date upon which
completion of the transfer, assignment, lease or sublease of that Property
actually takes place.

-9-
<PAGE>

Additional Properties means any leased or owned properties acquired by HP in the
United States after the date of the Separation Agreement and before the
Separation Date.

Colocation Sites Spreadsheet means the spreadsheet prepared by HP entitled
"Colocation Sites" dated July 20, 1999, as updated from time to time prior to
the Separation Date by mutual written agreement of the parties.

HP's Lease means, in relation to each Property, the lease(s) or sublease(s) or
license(s) under which HP or its applicable Subsidiary holds such Property and
any other supplemental document completed prior to the Actual Completion Date.

Landlord means the landlord under HP's Lease, and its successors and assigns,
and includes the holder of any other interest which is superior to the interest
of the landlord under HP's Lease.

Lease Consents means all consents, waivers or amendments required from the
Landlord or other third parties under the Relevant Leases to assign the
Relevant Leases to Agilent or to sublease the Sublease Properties to Agilent or
to sublease the Leaseback Properties to HP.

Lease Form means the form lease attached hereto as Schedule 4.

Leaseback Properties means each of (a) those Owned Properties located in the
United States identified as "Owned" and listed in the "Leaseback Properties"
area of the Colocation Sites Spreadsheet, with respect to part of which Agilent
is to grant a lease to HP and (b) those Leased Properties located in the United
States identified as "Leased" and listed in the "Leaseback Properties" area of
the Colocation Spreadsheet, with respect to part of which Agilent is to grant a
sublease to HP.

Leased Properties means those Properties located in the United States identified
as "Leased" and listed in the Owned and Leased Properties Spreadsheet.

New Lease Properties means those Properties located in the United States
identified as "Owned" and listed in the "Sublease and New Lease Properties" area
of the Colocation Sites Spreadsheet.

Owned and Leased Properties Spreadsheet means the spreadsheet prepared by HP
entitled "Owned & Leased Properties to be Transferred" dated July 20, 1999, as
updated from time to time prior to the Separation Date by mutual written
agreement of the parties.

Owned Properties means those Properties located in the United States identified
as "Owned" and listed in the Owned and Leased Properties Spreadsheet.

Property means the Owned Properties, the Leased Properties, the Sublease
Properties, the New Lease Properties, the Leaseback Properties and the
Additional Properties.

Real Estate Services means any services relating to the occupation or use of a
Property or the carrying out of either the Agilent Business or HP's other
businesses at a Property, including, without limitation, cleaning, garbage
disposal, repair, maintenance, receptionist services, utilities, mail delivery,
copying and facsimile services.

-10-
<PAGE>

Relevant Leases means those of HP's Leases with respect to which the Landlord's
consent is required for assignment or sublease to a third party or which
prohibit assignments or subleases.

Retained Parts means those parts of the Owned Properties and the Leased
Properties which, following transfer or assignment to Agilent, are intended to
be leased or subleased to HP and those parts of the Sublease Properties and the
New Lease Properties which will not, and which are not intended to, be leased or
subleased to Agilent in accordance with this Agreement.

Sublease Form means the form sublease attached hereto as Schedule 3.

Sublease Property means those Properties located in the United States identified
as "Leased" and listed in the "Sublease and New Lease Properties" area of the
Colocation Sites Spreadsheet.

[SIGNATURES ON FOLLOWING PAGE]

-11-
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day
and year first above written.

HEWLETT-PACKARD COMPANY

By:
_________________________________________
Name:
Title: President and Chief Executive Officer

AGILENT TECHNOLOGIES, INC.

By:
_________________________________________
Name:
Title: President and Chief Executive Officer
<PAGE>

Schedule 1
----------

Form Transfer for Owned Properties

-1-
<PAGE>

Schedule 2
----------

Form Transfer for Leased Properties

-2-
<PAGE>

Schedule 3
----------

Form Sublease for Sublease Properties
and Leased Leaseback Properties

-3-
<PAGE>

Schedule 4
----------

Form Lease for New Lease Properties
and Owned Leaseback Properties

-4-

<PAGE>

EXHIBIT 2.11

ENVIRONMENTAL MATTERS AGREEMENT

Between

Hewlett-Packard Company

and

Agilent Technologies, Inc.

_________________________, 1999
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. FACILITY REMEDIATION.......................................... 1

Section 1.1. Responsibility For Remediation..................... 1
Section 1.2. Standard of Performance............................ 2
Section 1.3. Performance and Planning of Remedial Activities.... 2
Section 1.4. Compliance With Laws............................... 3
Section 1.5. Safety............................................. 3
Section 1.6. Confidentiality.................................... 4
Section 1.7. Insurance.......................................... 4
Section 1.8. Construction Activities and Repair Activities...... 4

ARTICLE II. SITE ACCESS AND SUPPORT...................................... 5

Section 2.1. Site Access........................................ 5
Section 2.2. Utilities and Support Services..................... 6
Section 2.3. Site Activities.................................... 6

ARTICLE III. REGULATORY PROCESSES........................................ 6

Section 3.1. Procedures For Remediation and Other Work.......... 6
Section 3.2. Communications..................................... 7
Section 3.3. Regular Meetings................................... 7
Section 3.4. HP Project Managers/Agilent Liaison................ 7
Section 3.5. Inspection......................................... 7
Section 3.6. Notifications...................................... 7
Section 3.7. Dispute Resolution................................. 8

ARTICLE IV. INDEMNITY AND LIENS.......................................... 8

Section 4.1. Indemnity.......................................... 8
Section 4.2. Liens.............................................. 9
Section 4.3. Limitation on Liability............................ 9

ARTICLE V. MISCELLANEOUS................................................. 9

Section 5.1. Sale of an Agilent Schedule 2 Facility............. 9
Section 5.2. Notices............................................ 9
Section 5.3. Governing Law...................................... 10
Section 5.4. Counterparts....................................... 10
Section 5.5. Parties in Interest................................ 10
Section 5.6. Assignment......................................... 11
Section 5.7. Authority.......................................... 11
Section 5.8. Interpretation..................................... 11
Section 5.9. Amendments......................................... 11
Section 5.10. Severability....................................... 11
Section 5.11. Failure or Indulgence Not Waiver................... 12
</TABLE>

-i-
<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.12. Entire Agreement................................ 12
Section 5.13. Authority....................................... 12

ARTICLE VI. DEFINITIONS............................................... 12

Section 6.1. Agilent Group................................... 12
Section 6.2. Agilent Indemnitees............................. 12
Section 6.3. Agilent Schedule 2 Facilities................... 12
Section 6.4. Authorized Tenant............................... 12
Section 6.5. Claims Committee................................ 13
Section 6.6. Construction Activity........................... 13
Section 6.7. Environmental Conditions........................ 13
Section 6.8. Environmental Laws.............................. 13
Section 6.9. Exacerbation.................................... 13
Section 6.10. Governmental Authority.......................... 13
Section 6.11. Hazardous Materials............................. 13
Section 6.12. HP Group........................................ 13
Section 6.13. HP Indemnitees.................................. 14
Section 6.14. HP's Remediation Obligation..................... 14
Section 6.15. Incremental Construction Costs.................. 14
Section 6.16. Losses.......................................... 14
Section 6.17. Person.......................................... 14
Section 6.18. Release......................................... 14
Section 6.19. Remedial Activities............................. 14
Section 6.20. Remedial Activity Plans......................... 14
Section 6.21. Repair Activity................................. 15
</TABLE>

EXHIBITS
--------

Exhibit 1 - Agilent Schedule 2 Facilities
Exhibit 2 - Orders from a Governmental Authority

-ii-
<PAGE>

ENVIRONMENTAL MATTERS AGREEMENT

This Environmental Matters Agreement (this "Agreement") is entered into on
_________, 1999 by and between Hewlett-Packard Company, a Delaware corporation
("HP"), and Agilent Technologies, Inc., a Delaware corporation ("Agilent").
Capitalized terms used in this Agreement and not otherwise defined in this
Agreement shall have the meaning ascribed to them in the Separation Agreement,
Assignment Agreement or Indemnification Agreement (as defined below), as
applicable.

RECITALS

WHEREAS, HP hereby and by certain other instruments of even date herewith
transfers or will transfer to Agilent effective as of the Separation Date, the
Agilent Business in accordance with the Master Separation and Distribution
Agreement dated as of August 12, 1999 between the parties ("Separation
Agreement") and the Ancillary Agreements, including, but not limited to the
General Assignment and Assumption Agreement ("Assignment Agreement"), attached
as Exhibit C to the Separation Agreement, and the Indemnification and Insurance
Matters Agreement ("Indemnification Agreement"), attached as Exhibit K to the
Separation Agreement. It is the intent of the parties hereto, by this Agreement
and the other agreements and instruments provided for in the Separation
Agreement, to convey to Agilent the Agilent Business.

WHEREAS, under the terms of, the Indemnification Agreement, HP has agreed
to indemnify, defend and hold harmless Agilent from and against costs associated
with certain Environmental Conditions at the Agilent Schedule 2 Facilities.

WHEREAS, HP hereby agrees to perform remedial activities at the Agilent
Schedule 2 Facilities, consistent with such indemnity obligations and under the
terms and conditions of this Agreement.

WHEREAS, HP and Agilent desire to establish general requirements and mutual
obligations with respect to the performance by HP of remedial activities at the
Agilent Schedule 2 Facilities as set forth above.

NOW THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I.

FACILITY REMEDIATION

Section 1.1. Responsibility For Remediation. At its own cost and expense, HP
shall perform, or cause to be performed, any and all Remedial Activities that
are necessary to fulfill HP's Remediation Obligation. To the extent legally
permitted, HP shall also take all responsibility as generator for any Hazardous
Materials generated by performance of these Remedial Activities. To the extent
required by Environmental Laws, HP will also obtain any permits, authorizations
or approvals necessary to
<PAGE>

conduct HP's Remediation Obligation, except such permits, if any, as must under
applicable laws be obtained by a member of the Agilent Group, or otherwise by an
owner or tenant of the relevant Agilent Schedule 2 Facility.

Section 1.2. Standard of Performance. HP's Remediation Obligation shall be
performed in accordance with: (i) any applicable Remedial Activity Plans, as
approved by the Governmental Authority; and (ii) all applicable Environmental
Laws as enforced by the Governmental Authority[ies] with jurisdiction over the
Remedial Activities or HP's Remediation Obligation. Notwithstanding the
foregoing or anything to the contrary in this Agreement, in the event Agilent or
any successor-in-interest to Agilent at an Agilent Schedule 2 Facility decides
to change the use of such facility from its existing use on the Separation Date
(for example from industrial to commercial use or commercial to residential
use), in no event shall HP's Remediation Obligation require HP to comply with
any stricter standard applied to such Agilent Schedule 2 Facility as a result of
such change in use. Further, HP's Remedial Activities shall be performed in such
a manner as to minimize, to the greatest extent feasible, the impact on the use
of the Agilent Schedule 2 Facility and the ongoing operations of any member of
the Agilent Group or other Authorized Tenant of the Agilent Schedule 2 Facility.

Section 1.3. Performance and Planning of Remedial Activities.

(a) Information to be Provided by HP to Agilent. HP shall provide to
-------------------------------------------
Agilent in a timely fashion, a copy of: (i) any documents submitted to any
Governmental Authority regarding any Remedial Activities performed or to be
performed by or on behalf of HP under this Agreement, and (ii) analytical
results of any environmental sampling conducted on any Agilent Schedule 2
Facilities by or on behalf of HP under this Agreement.

(b) Agilent Opportunity to Comment. HP shall provide Agilent with a
------------------------------
reasonable opportunity to timely review and comment upon, prior to their
submission to the Governmental Authority, any report, plan, proposal or other
document that: (i) proposes the performance of any Remedial Activities that
would disrupt or interfere with the then current day to day operations of any
Authorized Tenant of the Agilent Schedule 2 Facilities; (ii) involves the
construction on any of the Agilent Schedule 2 Facilities of any above ground
remedial fixtures (other than repair and maintenance of any such fixtures or
equipment as are present at the Agilent Schedule 2 Facilities on the Separation
Date); (iii) proposes any remedy or closure at any of the Agilent Schedule 2
Facilities which allows Environmental Conditions to remain on the Agilent
Schedule 2 Facility after remediation has been completed; or (iv) involves the
setting of health and safety standards with respect to exposure to Hazardous
Materials at any Agilent Schedule 2 Facility.

(c) Agilent Participation. Agilent, or its designated representative,
---------------------
shall have the right, but not the obligation, to be present and at any meeting
with or hearing before any Governmental Authority regarding any proposed
Remedial Activities or proposed Remedial Activity Plans described in Section 1.3
(b) above. HP and Agilent further agree to confer in good faith in advance of
any such meeting or hearing with respect to any outstanding matters to be
addressed at such meeting or hearing and for the purpose of resolving such
matter to their mutual satisfaction and presenting a unified position to the
Governmental Authority, to the extent consistent with the respective positions
of the parties. If the parties cannot reach agreement after such consultation
and Agilent reasonably
<PAGE>

determines that any proposed Remedial Activities or Remedial Activity Plans will
have an adverse impact on the use of, or operations on a particular Agilent
Schedule 2 Facility, then Agilent shall have the right to make objections to
such proposals to the relevant Governmental Authority.

(d) Consultation With Agilent. HP agrees to consult fully with Agilent
-------------------------
regarding any proposed Remedial Activities or proposed Remedial Activity Plans
described in Section 1.3(b) above. HP and Agilent agree to use good faith best
efforts to reach agreement on such Remedial Activities or Remedial Activity
Plans. In the event that the parties cannot reach agreement after such
consultation and Agilent reasonably determines that any proposed Remedial
Activities or Remedial Activity Plans will have an adverse impact on the use of,
or operations on a particular Agilent Schedule 2 Facility, Agilent shall have
the right to make objections to such proposals to the relevant Governmental
Authority. The parties also agree that in the event they cannot reach agreement,
HP may submit to the Governmental Authority its proposed Remedial Activities or
proposed Remedial Activity, as required to meet any deadline which is not, by
its terms, subject to extension, to avoid fines and penalties or for the
protection of human health, and HP may also proceed with implementation of any
aspects of such Remedial Activities or Remedial Activity Plans.

(e) Performance of the Remedial Activities. Following approval of any
--------------------------------------
Remedial Activity Plans by the applicable Governmental Authority, HP shall
proceed with appropriate diligence and expedition to implement and complete the
Remedial Activities in accordance with the Remedial Activity Plans and this
Agreement.

(f) Agilent's Assistance. Agilent shall use, or cause the relevant member
--------------------
of the Agilent Group or other Authorized Tenant of the Agilent Schedule 2
Facilities to use, its reasonable best efforts to assist HP in the development,
approval, and implementation of Remedial Activity Plans in accordance with
applicable laws, including applicable Environmental Laws.

Section 1.4. Compliance With Laws. HP shall require that its employees,
consultants, contractors, and subcontractors perform all Remedial Activities
under this Agreement in accordance with applicable laws, including applicable
Environmental Laws.

Section 1.5. Safety. HP shall be responsible for the maintenance of order and
discipline of its employees, consultants, contractors, and subcontractors
engaged in the performance of Remedial Activities under this Agreement, and HP
shall require that such Remedial Activities be performed in compliance, in all
material respects, with applicable laws, regulations, rules, ordinances, codes
or requirements of any Governmental Authority (including those relating to
occupational safety and health). Except in case of emergency and to the extent
that prior notice of such policies is given to HP, HP also will require its
employees, consultants, contractors, and subcontractors engaged in performance
of Remedial Activities on behalf of HP under this Agreement to observe any
health, safety and environmental and site security policies established by
Agilent, or by any other Authorized Tenant, for third-party contractors and
other non-employees who perform work or services at the Agilent Schedule 2
Facility. Agilent shall have the right to require that a contractor,
subcontractor or other representative of HP discontinue any Remedial Activities
to the extent such activities pose an imminent risk to property, health, safety
or the environment. In such instance, Agilent shall immediately notify HP by
telephone that it has taken such action.
<PAGE>

Section 1.6. Confidentiality. HP shall treat as confidential property and not
disclose to others during or subsequent to the term of this Agreement, any
information marked "confidential" regarding any Agilent Group member's or
Agilent Schedule 2 Facility Authorized Tenant's plans, programs, facility,
processes, products, costs, equipment, operations or customers which may come
into the knowledge of HP or its employees, consultants, contractors or
subcontractors, unless required by law or ordered to disclose such by a court or
administrative body after prior notice to Agilent of the request or order to
disclose. HP shall also treat as confidential any non-public information that is
disclosed to HP regarding matters covered under Section 5.1, including, without
limitation, the identity of any potential purchaser of an Agilent Schedule 2
Facility and any terms and conditions of the purchase and sale agreement for an
Agilent Schedule 2 Facility. Agilent shall treat as confidential any non-public
information relating to HP that is disclosed to Agilent regarding matters
covered under Section 5.1, including, without limitation, any terms and
conditions of the purchase and sale agreement for an Agilent Schedule 2 Facility
affecting HP's Remediation Obligation. Agilent shall treat as confidential any
proprietary remediation technology or information utilized by HP in performance
of this Agreement. This provision shall not apply to any information which at
the time of disclosure is publicly available or in the public domain through no
fault of the disclosing party. Upon request, HP and Agilent agree to require
their consultants, contractors and subcontractors who will receive confidential
information to sign a confidentiality agreement substantially similar to the
terms of this provision.

Section 1.7. Insurance.

(a) The consultants, contractors and subcontractors who perform Remedial
Activities under this Agreement shall provide and maintain (or HP shall provide
and maintain), comprehensive general liability insurance and comprehensive
automobile liability insurance naming Agilent, and any Authorized Tenant of the
applicable Agilent Schedule 2 Facility, as additional insureds and providing
coverage for claims for damages for bodily injury, including wrongful death, and
property damage which may arise from or in connection with the performance of
any Remedial Activities. Minimum amounts required are:

Bodily Injury - $2,000,000 each person, $2,000,000 each accident

Property Damage - $2,000,000 each accident

Errors and Omissions - $1,000,000 each occurrence

Workers' Compensation Insurance - In the amount required by law

(b) Before commencing Remedial Activities at any Agilent Schedule 2
Facility, the party providing the insurance set forth in Section 1.7(a) above
shall provide Agilent with certificates of insurance or other appropriate
evidence that the insurance required by Section 1.7(a) above has been obtained.

Section 1.8. Construction Activities and Repair Activities.
<PAGE>

(a) The provisions of this Section 1.8 shall apply to any Construction
Activity or Repair Activity by Agilent or by any Authorized Tenant which
involves disturbance or invasion of any Environmental Condition that is part of
HP's Remediation Obligation.

(b) If testing conducted in the proposed construction or repair area
before initiation of the Construction Activity or the Repair Activity
demonstrates that the proposed construction or repair area contains an
Environmental Condition in the soil or subsurface that is part of HP's
Remediation Obligation and, further, if Agilent provides notice to HP of such
Environmental Condition and of said proposed Construction Activity or Repair
Activity in the manner provided in Section 5.2, then HP shall (i) promptly and
diligently conduct HP's Remediation Obligation of such Environmental Condition
identified by the testing to the extent required by the standard of performance
set out in Section 1.2 above; and (ii) HP shall reimburse Agilent or the
Authorized Tenant for all reasonable Incremental Construction Costs resulting
from such Construction Activity or Repair Activity. In the event Agilent or an
Authorized Tenant anticipates incurring Incremental Construction Costs, Agilent
shall provide HP reasonable advance notice before the costs are incurred.

(c) In the event, as a result of any Construction Activity or Repair
Activity, any of the then existing above ground or underground remediation
systems (including, without limitation, pump and treat equipment, underground
piping, monitoring or extraction wells, carbon absorption systems and the like)
are damaged or destroyed, or are required to otherwise be relocated, Agilent
shall reimburse HP for all costs associated with such damage, destruction or
removal.

ARTICLE II.

SITE ACCESS AND SUPPORT

Section 2.1. Site Access.

(a) Agilent shall afford or cause to be afforded to HP and to HP's
employees, consultants, contractors and subcontractors, reasonable access on the
terms set forth in this Section 2.1 to all of the Agilent Schedule 2 Facilities
for the purpose of performing Remedial Activities:

(i) HP shall provide reasonable advance notice to the Agilent
Liaison (as defined in Sections 3.4 and 5.2) of the need for access to any of
the Agilent Schedule 2 Facilities, including the purpose and scope of work to be
performed, the nature and duration of the access, and such other information as
Agilent may reasonably request.

(ii) Remedial Activities for which Agilent shall be responsible for
providing access include, without limitation, borings, excavations, monitoring,
assessments and evaluations, and construction, installation, operation, and
maintenance of necessary equipment and supporting facilities for the treatment
of soil and groundwater, and all other Remedial Activities, in all cases as
described in the applicable Remedial Activity Plans or as otherwise reasonably
required to fulfill HP's Remediation Obligation.

(b) Agilent shall provide HP with access to and use of those areas
necessary for HP's performance of Remedial Activities under this Agreement,
including areas for groundwater treatment
<PAGE>

equipment and storage and staging of materials and equipment. HP agrees that
with respect to its use of any portion of an Agilent Schedule 2 Facility for
Remedial Activities, HP shall provide secondary containment for any above ground
treatment systems and any Hazardous Materials to be stored on-site overnight or
for any longer period (excluding contaminated soils which shall be safely
maintained and secured until removal from the Agilent Schedule 2 Facility). HP
shall also provide and be responsible for proper security with respect to such
storage and treatment system areas.

Section 2.2. Utilities and Support Services. It is HP's intent not to utilize
any Agilent utilities or similar support services for implementation of HP's
Remediation Obligation under this Agreement. If HP requests any such utilities
or support services from Agilent for use by HP, or HP's employees, consultants,
contractors, and subcontractors engaged in the performance of Remedial
Activities under this Agreement, Agilent agrees that it will negotiate in good
faith with HP to reach an agreement to provide such utilities and support
services.

Section 2.3. Site Activities. Agilent, its employees, consultants, lessees,
contractors, subcontractors or others under Agilent's control or direction, and
any Authorized Tenant of any portion of the Agilent Schedule 2 Facility, shall
use, operate, and conduct their activities and operations at the Agilent
Schedule 2 Facility in a manner that will interfere to the least extent feasible
with the Remedial Activities conducted by or on behalf of HP under this
Agreement. Agilent shall provide prior written notice to the HP Project Manager
(as defined in Sections 3.4 and 5.2) of the need for, scope and duration of any
activity, process, or operation at the Agilent Schedule 2 Facility (including
without limitation excavation, demolition, landscaping or groundwater pumping)
that could have a material adverse effect on the performance of Remedial
Activities by HP. Agilent shall provide such notice promptly upon becoming aware
of such potential adverse effect. Agilent shall also provide in a timely fashion
to HP any analytical results of soil or groundwater sampling at an Agilent
Schedule 2 Facility performed by or on behalf of Agilent, or which otherwise
comes in to the possession of Agilent.

ARTICLE III.

REGULATORY PROCESSES

Section 3.1. Procedures For Remediation and Other Work.

(a) The parties hereto retain all rights to appeal, seek relief from, or
otherwise contest any order or other action by any Governmental Authority with
jurisdiction over the matters that are the subject of this Agreement, in a
manner consistent with this Agreement and the Indemnification Agreement.

(b) Agilent agrees to support and cooperate with HP, as necessary, in any
such challenge by HP of a requirement as to which Agilent has previously agreed
with HP. HP agrees that it will not challenge any decision in a manner which
will interfere with the operation of the applicable Agilent Schedule 2 Facility.
HP further agrees to be responsible for any penalties which may accrue against
or be incurred by Agilent or any member of the Agilent Group or Authorized
Tenant of the Agilent Schedule 2 Facility as a result of such challenge by HP
during the pendency of any such challenge and
<PAGE>

to promptly pay any such penalties within the time permitted by law but in any
event promptly after exhaustion of any administrative or judicial appeals.

Section 3.2. Communications. In the event of any written notices or other
written communication or action by a Governmental Authority relating to or
affecting the Remedial Activities or any Remedial Activity Plans, or any
communication from the public evidencing any concerns about the Remedial
Activities or Environmental Conditions, the party receiving such notice,
communication, or action shall provide a copy to the other party in a timely
fashion (or, with respect to any written notice by a Governmental Authority that
any Remedial Activities or Environmental Conditions violate Environmental Laws,
within five (5) business days of the receipt of such notice) in accordance with
Section 5.2. Subject to Agilent's rights under Sections 1.3(c) and (d) above, HP
shall be responsible for all contacts and communications with Governmental
Authorities in connection with HP's Remediation Obligation and any other matters
arising under this Agreement which are the obligation of HP. HP also agrees to
promptly reimburse Agilent for any reasonable "out-of-pocket" costs (excluding
any internal Agilent charges for administration, management or supervision or
other internal charges) incurred by Agilent in providing support to HP during
such challenge.

Section 3.3. Regular Meetings. HP shall schedule, as appropriate, regular
meetings with Agilent to provide information on the status of HP's Remediation
Obligation, including without limitation, the development, approval, and
implementation of Remedial Activity Plans, and to consult with and coordinate
with Agilent HP's Remedial Activities under this Agreement.

Section 3.4. HP Project Managers/Agilent Liaison. For consultation and
coordination with Agilent regarding HP's Remedial Activities under this
Agreement, and to manage their respective activities and responsibilities under
this Agreement, HP shall designate a Project Manager and Agilent shall designate
an Agilent Liaison for each Agilent Schedule 2 Facility. Designation of a
Project Manager and of an Agilent Liaison shall be by notice as provided in
Section 5.2 of this Agreement. HP may replace any of its Project Managers, and
Agilent may replace any of its Liaisons, by providing the same notice under
Section 5.2.

Section 3.5. Inspection. Agilent shall have the right to inspect and observe the
Remedial Activities performed by or on behalf of HP under this Agreement, at
reasonable times and after reasonable prior notice to HP. Inspection or failure
to inspect by Agilent shall not constitute a waiver of any provision of this
Agreement, or of any of Agilent's rights hereunder. However, Agilent's right or
exercise of inspection shall not extend to or include any right or authority to
supervise or direct any of HP's employees, consultants, contractors or
subcontractors in their performance of any Remedial Activities.

Section 3.6. Notifications. HP, Agilent, and any Authorized Tenant shall notify
the other parties within ten (10) days following the occurrence of any Release
that causes contamination to soil or groundwater on any Agilent Schedule 2
Facility or otherwise: (i) requires investigation, monitoring, remediation or
removal under the Environmental Laws; (ii) may adversely affect any Remedial
Activities or Remedial Activity Plans; (iii) is reported to such party's
insurance carrier; or (iv) is reported to any Governmental Authority under
Environmental Laws. HP also agrees to give Agilent prompt advance notice (if and
to the extent HP has notice) of any inspection to be performed on any
<PAGE>

Agilent Schedule 2 Facility by any Governmental Authority in connection with the
Remedial Activities or HP's Remediation Obligation. Agilent also agrees to give
HP prompt advance notice (if and to the extent Agilent has notice) of any
inspection to be performed on any Agilent Schedule 2 Facility by any
Governmental Authority with jurisdiction over the Remedial Activities or HP's
Remediation Obligation.

Section 3.7. Dispute Resolution. If a dispute or disagreement occurs between HP
and Agilent concerning any matter arising under this Agreement, the HP Project
Manager and the Agilent Liaison shall consult and attempt to resolve the dispute
or disagreement. If the HP Project Manager and Agilent Liaison are unable to
reach an agreement on the dispute or disagreement within fifteen (15) days (or
such other longer period of time as may be mutually agreed to in writing by the
HP Project Manager and the Agilent Liaison), then the dispute or disagreement
shall be referred to the Claims Committee. If the Claims Committee is unable to
reach an agreement on the dispute within thirty (30) days, then the dispute
shall be handled in accordance with the Dispute Resolution procedures set forth
in the Section 5.9 of the Separation Agreement. In no event shall the existence
of a dispute or disagreement between HP and Agilent, or their consultation under
this Section 3.7 to attempt to resolve it, delay the filing or submission of any
document, or the performance of any action or activity, beyond the legally
required deadline nor prevent either party from pursuing any remedy to which it
is entitled under the Indemnification Agreement.

ARTICLE IV.

INDEMNITY AND LIENS
Section 4.1. Indemnity.

(a) Indemnification by HP. In addition to, and without in any way
limiting the indemnification obligations of HP in the Indemnification Agreement,
HP shall protect, indemnify, defend and hold harmless the Agilent Indemnitees
and any Authorized Tenant from and against any Liabilities and Environmental
Actions to the extent arising at any time out of, relating to, or resulting from
the negligence or willful misconduct of any member of the HP Group or their
agents, employees, consultants or contractors in connection with the Remedial
Activities or any other obligations of HP under this Agreement.

(b) Indemnification by Agilent. In addition to, and without in any way
limiting the indemnification obligations of Agilent in the Indemnification
Agreement, Agilent shall protect, indemnify, defend and hold harmless the HP
Indemnitees from and against any Liabilities and Environmental Actions to the
extent arising at any time out of, relating to, or resulting from: (i)
Exacerbation, to the extent caused by the operations or activities of any member
of the Agilent Group or their agents, employees, consultants, contractors or
Authorized Tenants occurring at any Agilent Schedule 2 Facility; or (ii) the
negligence or willful misconduct of any member of the Agilent Group, or their
agents, employees, consultants, contractors or Authorized Tenants at any Agilent
Schedule 2 Facility in connection with the Remedial Activities or any
obligations of Agilent under this Agreement.
<PAGE>

Section 4.2. Liens. HP shall not permit or suffer any mechanics' or
materialmen's or other liens arising from the provision of labor or materials
for work performed as part of or in connection with any Remedial Activities
undertaken by or on behalf of HP under this Agreement. If Agilent becomes aware
of any such liens, Agilent shall provide prompt notice of said lien to HP, but
failure to provide such notice shall relieve HP from its obligations only to the
extent of the prejudice caused thereby. If any such liens attach or claims
therefor are made, then, within ten (10) days after receipt of notice thereof,
HP will procure the discharge thereof by payment, bond, or such other means as
may be required or permitted by applicable law.

Section 4.3. Limitation on Liability. IN NO EVENT SHALL ANY MEMBER OF THE
AGILENT GROUP OR ANY MEMBER OF THE HP GROUP BE LIABLE TO THE OTHER UNDER THIS
ARTICLE IV FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT
SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED,
HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S
INDEMNIFICATION OBLIGATIONS UNDER SECTION 4.1 WITH RESPECT TO ANY LOSSES
ASSERTED AGAINST AN INDEMNIFIED PARTY BY ANY THIRD PARTIES (INCLUDING, WITHOUT
LIMITATION, ANY GOVERNMENTAL AUTHORITIES).

ARTICLE V.

MISCELLANEOUS

Section 5.1. Sale of an Agilent Schedule 2 Facility. In the event that any
member of the Agilent Group decides to sell an Agilent Schedule 2 Facility at
which HP (or its agents or permitted assignees) is continuing to perform
Remedial Activities, Agilent shall promptly notify HP of the intent to sell.
Agilent shall permit HP to: (i) participate in the negotiations with third
parties regarding environmental issues and environmental disclosures related to
the sale of the Agilent Schedule 2 Facility; and (ii) promptly review and
comment to Agilent or the third party upon any portion of a draft purchase and
sale agreement for an Agilent Schedule 2 Facility that addresses environmental
liabilities and obligations so that HP has the reasonable opportunity to
minimize any adverse impact of the sale of an Agilent Schedule 2 Facility on
HP's Remediation Obligations; provided that HP shall not have the right to
prevent Agilent from selling the Agilent Schedule 2 Facility.

Section 5.2. Notices.

(a) All notices or other communications hereunder shall be made in writing
and shall be given either by personal delivery, by nationally recognized
overnight courier (with charges prepaid) or by facsimile transmission (with
telephone confirmation), and shall be deemed to have been given or made if
personally delivered, on the day of such personal delivery; if sent by overnight
courier, on the next business day following the date deposited with such
overnight courier service; or if by facsimile transmission, on the business day
transmitted to receiving facsimile machine with receipt confirmed by
<PAGE>

telephone, in each case addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):

If to HP:

[List one general contact to notify at HP, and if applicable one specific
contact at the relevant member of the HP for each Agilent Schedule 2 Facility]

Attention:

Telephone:

Facsimile:

If to Agilent:

[List one general contact to notify at Agilent, and if applicable one
specific contact at the relevant member of the Agilent Group for each Agilent
Schedule 2 Facility]

Attention:

Telephone:

Facsimile:

(b) Notice provided, as specified in this section, to the HP Project
Manager or Agilent Liaison, as applicable, shall also satisfy the requirements
of this section.

(c) Either party may change its address or designated individual for
notice under this section by delivery of written notice to the other party as
provided in this section.

Section 5.3. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

Section 5.4. Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

Section 5.5. Parties in Interest. This Agreement shall be binding upon HP,
HP's Subsidiaries, Agilent and Agilent's Subsidiaries. This Agreement shall
inure solely to the benefit of the Agilent Indemnitees and the HP Indemnitees
and their respective permitted assigns, and except as set forth in this Section
5.5, nothing in this Agreement, express or implied, is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
<PAGE>

HP hereby agrees to execute, for the benefit of any Agilent Indemnitee,
such documents as may be reasonably requested by such Agilent Indemnitee,
evidencing HP's agreement that the obligations of HP set forth in this Agreement
inure to the benefit of and are enforceable by such Agilent Indemnitee. Agilent
hereby agrees to execute, for the benefit of any HP Indemnitee, such documents
as may be reasonably requested by such HP Indemnitee, evidencing Agilent's
agreement that the obligations of Agilent set forth in this Agreement inure to
the benefit of and are enforceable by such HP Indemnitee.

Section 5.6. Assignment. Neither party may assign this Agreement without the
express written consent of the other party, which consent can only be withheld
if the party denying consent, in the reasonable exercise of its discretion,
determines that such assignment would materially increase its obligations, or
materially diminish its rights under this Agreement. This Agreement shall be
deemed to constitute a separate Agreement for each Agilent Schedule 2 Facility
such that the Agreement can be separately assigned to a third party by either HP
or Agilent (subject to the conditions of this Section 5.6) with respect to one
or more Agilent Schedule 2 Facilit[ies], and not assigned as to other Agilent
Schedule 2 Facilities.

Section 5.7. Authority. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.

Section 5.8. Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule hereto and in the table of contents to this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

Section 5.9. Amendments. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.

Section 5.10. Severability. If any term or other provision of this Agreement or
the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an
<PAGE>

acceptable manner to the end that transactions contemplated hereby are fulfilled
to the fullest extent possible.

Section 5.11. Failure or Indulgence Not Waiver. No failure or delay on the
part of either party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.

Section 5.12. Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof.

Section 5.13. Authority. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.

ARTICLE VI.

DEFINITIONS

Section 6.1. Agilent Group. "Agilent Group" means Agilent, each Subsidiary
and Affiliated Company of Agilent immediately after the Separation Date or that
is contemplated to be a Subsidiary or Affiliated Company of Agilent pursuant to
the Non-US Plan and each Person that becomes a Subsidiary or Affiliate Company
of Agilent after the Separation Date.

Section 6.2. Agilent Indemnitees. "Agilent Indemnitees" means Agilent, each
member of the Agilent Group and each of their respective directors, officers and
employees.

Section 6.3. Agilent Schedule 2 Facilities. "Agilent Schedule 2 Facilities"
means the real property, groundwater, surface water and improvements thereon
which shall be owned or occupied by a member of the Agilent Group on and after
the Separation Date and which are identified on a disclosure schedule entitled
"The Agilent Schedule 2 Facilities", which schedule shall be delivered to
Agilent by HP on the Separation Date and attached to this Agreement as
Exhibit 1.
- ------- -

Section 6.4. Authorized Tenant. "Authorized Tenant" means, any owner, lessee,
sublessee or other party with a contractual right to occupy all or any portion
of an Agilent Schedule 2 Facility (or their agents, employees, consultants,
contractors) during the period of time that any Agilent Group
<PAGE>

member has the contractual right to occupy (as an owner, tenant or otherwise)
such Agilent Schedule 2 Facility.

Section 6.5. Claims Committee. "Claims Committee" means a committee composed
of (i) either the General Counsel or Associate General Counsel of HP and (i)
either the General Counsel or Associate General Counsel of Agilent.

Section 6.6. Construction Activity. "Construction Activity" means any
expansion or modification of any existing improvement or construction of a new
improvement by any member of the Agilent Group or any Authorized Tenant on any
Agilent Schedule 2 Facility.

Section 6.7. Environmental Conditions. "Environmental Conditions" means the
presence in the environment, including the soil, groundwater, surface water or
ambient air, of any Hazardous Material at a level which requires investigation
or remediation (including, without limitation, investigation, study, health or
risk assessment, monitoring, removal, treatment or transport) under any
Environmental Laws.

Section 6.8. Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.

Section 6.9. Exacerbation. "Exacerbation" means any exacerbation, aggravation
or worsening of any Environmental Conditions on, under or about any of the
Agilent Schedule 2 Facilities that is caused by any member of the Agilent Group
or an Authorized Tenant to such an extent that: (i) Remedial Activities that
were not previously required as part of HP's Remediation Obligation become
necessary to fulfill HP's Remediation Obligation, or (ii) HP otherwise incurs
additional costs with respect to HP's Remediation Obligation.

Section 6.10. Governmental Authority. "Governmental Authority" means any
federal, state, local, foreign or international court, government, department,
commission, board, bureau, agency, official or other regulatory, administrative
or governmental authority.

Section 6.11. Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.

Section 6.12. HP Group. "HP Group" means HP, each Subsidiary and Affiliated
Company of HP (other than any member of the Agilent Group) immediately after the
Separation Date, after giving effect to the Non-US Plan and each Person that
becomes a Subsidiary or Affiliate Company of HP after the Separation Date.
<PAGE>

Section 6.13. HP Indemnitees. "HP Indemnitees" means HP, each member of the HP
Group and each of their respective directors, officers and employees.

Section 6.14. HP's Remediation Obligation. "HP's Remediation Obligation" means
all Remedial Activities (as defined below) which are necessary or required in
order to comply with and fulfill Environmental Laws (including without
limitation the orders of Governmental Authorities listed on Exhibit 2 to this
---------
Agreement and any consent decrees, consent agreement, or memorandums of
understanding with Governmental Authorities, and permits, approvals, plans,
settlement agreements) and that are applicable to Environmental Conditions on,
under or about any Agilent Schedule 2 Facility as to which HP is obligated to
indemnify Agilent under Section 1.4(b)(i) of the Indemnification Agreement.

Section 6.15. Incremental Construction Costs. "Incremental Construction Costs"
means, with respect to any Construction Activity in an area of any of the
Agilent Schedule 2 Facilities that is affected by Environmental Conditions, the
excess of (A) costs reasonably incurred by Agilent or any Authorized Tenant in
connection with the Construction Activity to the extent such costs are
necessitated by the presence of the Environmental Conditions, over (B) the costs
that would have been incurred by Agilent or any Authorized Tenant in connection
with the Construction Activity had such Environmental Conditions not been
present.

Section 6.16. Losses. "Losses" means all losses, damages, claims, obligations,
suits, judgments, fines, penalties, liabilities, costs and expenses of any kind
or character.

Section 6.17. Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.

Section 6.18. Release. "Release" means any release, spilled, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the indoor or outdoor environment, without limitation, the
movement Hazardous Materials through ambient air, soil, surface water,
groundwater, wetlands, land or subsurface strata.

Section 6.19. Remedial Activities. "Remedial Activities" means any activities
undertaken or required to be undertaken by or on behalf of HP in the performance
of HP's Remediation Obligation including, without limitation: reporting,
investigation, feasibility study, remediation, treatment, removal, transport,
disposal, characterization, sampling, health assessment, risk assessment,
encapsulation, monitoring, study, report, assessment or analysis of
Environmental Conditions

Section 6.20. Remedial Activity Plans. "Remedial Activity Plans" means any plan
or other document prepared by or on behalf of HP which describes the
specifications for construction, operation, maintenance, performance,
termination or completion of any Remedial Activities that are part of HP's
Remedial Obligation, including any changes, modifications or amendments thereto.
<PAGE>

Section 6.21. Repair Activity. "Repair Activity" means any repair, maintenance
or replacement of any improvements, utilities, fixtures and equipment or
tangible personal property that are present on any Agilent Schedule 2 Facility
as of the Separation Date.

[SIGNATURES ON FOLLOWING PAGE]
<PAGE>

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed in its name and on its behalf, all as of the date first written
above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:______________________ By:_______________________

Name:____________________ Name:_____________________

Title:___________________ Title:____________________
<PAGE>

EXHIBIT 1
---------

Agilent Schedule 2 Facilities
[To be attached on the Separation Date]
<PAGE>

EXHIBIT 2
---------

Orders from a Governmental Authority
[To be attached on the Separation Date]

<PAGE>

EXHIBIT 2.12

MASTER CONFIDENTIAL DISCLOSURE AGREEMENT

between

HEWLETT-PACKARD COMPANY

and

AGILENT TECHNOLOGIES, INC.

Effective as of ___________, 1999
<PAGE>

MASTER CONFIDENTIAL DISCLOSURE AGREEMENT

This Master Confidential Disclosure Agreement (the "Agreement") is
effective as of __________, 1999 (the "Effective Date"), between Hewlett-Packard
Company, a Delaware corporation ("HP"), having an office at 3000 Hanover Street,
Palo Alto, California 94304 and Agilent Technologies, Inc., a Delaware
corporation ("Agilent"), having an office at 3000 Hanover Street, Palo Alto,
California 94304.

WHEREAS, the Board of Directors of HP has determined that it is in the best
interest of HP and its stockholders to separate HP's existing businesses into
two independent businesses;

WHEREAS, also as part of the foregoing, the parties further desire to enter
into this Agreement to provide for the protection of their Confidential
Information (as defined below).

NOW, THEREFORE, in consideration of the mutual promises of the parties, and
of good and valuable consideration, it is agreed by and between the parties as
follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement the following capitalized terms are
defined in this Article I and shall have the meaning specified herein:

1.1 AFFILIATED COMPANY. "Affiliated Company" means, with respect to HP, any
entity in which HP holds a 50% or less ownership interest and that is listed on
Exhibit A hereto and, with respect to Agilent, any entity in which Agilent holds
a 50% or less ownership interest and that is listed on Exhibit A hereto;
provided, however, that any such entity listed in Exhibit A shall be considered
to be an Affiliated Company under this Agreement only if it agrees in writing to
be bound by the terms and conditions of this Agreement. Exhibit A may be amended
from time to time after the date hereof upon mutual consent of the parties.

1.2 ANCILLARY AGREEMENTS. "Ancillary Agreements" means the items and
agreements listed in Section 2.1 of the Master Separation Agreement and all
agreements and documents contemplated by such agreements.

1.3 CONFIDENTIAL INFORMATION.

(a) "Confidential Information" means information, technical data and
know-how which is not otherwise in the public domain and of which the owner
actively undertakes to restrict or
<PAGE>

control the disclosure to Third Parties in a manner reasonably intended to
maintain its confidentiality, and which is either (i) the subject of any
Transaction Agreement and known to or in the possession of the Receiving Party
as of the Separation Date or (ii) disclosed to the Receiving Party pursuant to
any Transaction Agreement during the period from the Separation Date to November
1, 2001. Confidential Information may include information relating to, by way of
example, research, products, services, customers, markets, software,
developments, inventions, processes, designs, drawings, engineering, marketing
or finances, and may be in writing, disclosed orally or learned by inspection of
computer programming code, equipment or facilities.

(b) Confidential Information of Third Parties that is known to, in the
possession of or acquired by a Receiving Party pursuant to a relationship with
the Disclosing Party shall be deemed the Disclosing Party's Confidential
Information for purposes herein.

(c) Notwithstanding the foregoing provisions of this Section 1.3,
Confidential Information shall exclude information that: (i) was in the
Receiving Party's possession before receipt from the Disclosing Party and
obtained from a source other than the Disclosing Party and other than through
the prior relationship of the Disclosing Party and the Receiving Party before
the Separation Date; (ii) is or becomes a matter of public knowledge through no
fault of the Receiving Party; (iii) is rightfully received by the Receiving
Party from a Third Party without a duty of confidentiality; (iv) is disclosed by
the Disclosing Party to a Third Party without a duty of confidentiality on the
Third Party; (v) is independently developed by the Receiving Party; (iv) is
disclosed under operation of law; or (vii) is disclosed by the Receiving Party
with the Disclosing Party's prior written approval.

1.4 CONFIDENTIALITY PERIOD. "Confidentiality Period" means, (i) with
respect to Confidential Information that is not Highly Confidential Information,
three (3) years, and (ii) with respect to Highly Confidential Information, ten
(10) years, after either (A) the Separation Date with respect to Confidential
Information of the Disclosing Party that is known to or in the possession of the
Receiving Party as of the Separation Date or (B) the date of disclosure with
respect to Confidential Information that is disclosed by the Disclosing Party to
the Receiving Party after the Separation Date. Notwithstanding the foregoing,
the Confidentiality Period with respect to Highly Confidential Information
described in Section 1.7(ii) shall continue only for so long as the restriction
in Article IV of the ICBD Technology Agreement continues with respect to such
Highly Confidential Information, but, in any event no less than three (3) years.

1.5 DISCLOSING PARTY. "Disclosing Party" means the party owning or
disclosing the relevant Confidential Information.

1.6 DISTRIBUTION DATE. "Distribution Date" has the meaning set forth in the
Master Separation Agreement.

1.7 HIGHLY CONFIDENTIAL INFORMATION. "Highly Confidential Information"
means Confidential Information that is (i) source code for products that are
commercially released or for which substantial steps have been taken to
commercialization; (ii) ICBD Technology (as defined in the ICBD Technology
Agreement) that is Confidential Information; or (iii) listed in the Highly
Confidential Information Database.

-2-
<PAGE>

1.8 HIGHLY CONFIDENTIAL INFORMATION DATABASE. "Highly Confidential
Information Database" means the Highly Confidential Information Database, as it
may be updated by the parties upon mutual agreement to add Highly Confidential
Information.

1.9 ICBD TECHNOLOGY AGREEMENT. "ICBD Technology Agreement" means the ICBD
Technology Ownership and License Agreement between the parties.

1.10 MASTER SEPARATION AGREEMENT. "Master Separation Agreement" means the
Master Separation and Distribution Agreement between the parties.

1.11 PERSON. "Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, and a governmental entity or any
department, agency or political subdivision thereof.

1.12 RECEIVING PARTY. "Receiving Party" means the non-owning party or
recipient of the relevant Confidential Information.

1.13 SEPARATION DATE. "Separation Date" means 12:01 a.m., Pacific Time,
November 1, 1999 or such other date as may be fixed by the Board of Directors of
HP.

1.14 SUBSIDIARY. "Subsidiary" means with respect to any specified Person,
any corporation, any limited liability company, any partnership or other legal
entity of which such Person owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of the members
of the board of directors or similar governing body. Unless the context
otherwise requires, reference to HP and its Subsidiaries shall not include the
subsidiaries of HP that will be transferred to Agilent after giving effect to
the Separation (as defined in the Master Separation Agreement), including the
actions taken pursuant to the Non-US Plan (as defined in the Master Separation
Agreement). For example, if HP owns 70% of the stock of another corporation, and
that corporation owns 60% of the equity interest of a limited liability company,
then that corporation is a Subsidiary of HP but that limited liability company
is not. However, if such corporation owns 90% of the equity interest of a
limited liability company, then that limited liability company is a Subsidiary
of HP. For the avoidance of doubt, this definition of Subsidiary is different
from the definition of Subsidiary in the Master Separation Agreement.

1.15 THIRD PARTY. "Third Party" means a Person other than HP and its
Subsidiaries and Affiliated Companies and Agilent and its Subsidiaries and
Affiliated Companies.

1.16 TRANSACTION AGREEMENTS. "Transaction Agreements" means the Master
Separation Agreement and the Ancillary Agreements.

ARTICLE II

CONFIDENTIALITY

2.1 CONFIDENTIALITY AND NON-USE OBLIGATIONS. During the Confidentiality
Period, the Receiving Party shall (i) protect the Confidential Information of
the Disclosing Party by using the same degree of care, but no less than a
reasonable degree of care, to prevent the

-3-
<PAGE>

unauthorized use, dissemination, or publication of the Confidential Information
as Receiving Party uses to protect its own confidential information of a like
nature, (ii) not use such Confidential Information in violation of any use
restriction in any Transaction Agreement, and (iii) not disclose such
Confidential Information to any Third Party, except as expressly permitted under
this Agreement, in the Transaction Agreements or in any other agreements entered
into between the parties in writing, without prior written consent of the
Disclosing Party.

2.2 DISCLOSURE TO SUBLICENSEES. The Receiving Party has the right to
disclose to its sublicensees permitted under a Transaction Agreement portions of
Confidential Information as reasonably necessary in the exercise of the
Receiving Party's sublicense rights under such Transaction Agreement, subject to
the sublicensee's agreement in writing to confidentiality and non-use terms at
least as protective of the Disclosing Party as the provisions of this Agreement.

2.3 CONTRACT MANUFACTURERS AND FOUNDRIES. The Receiving Party has the right
to disclose to its contract manufacturers and foundries permitted under any
Transaction Agreement portions of the Confidential Information as reasonably
necessary in the exercise of the Receiving Party's "have made" rights under any
Transaction Agreement, subject to the contract manufacturer's and foundry's
agreement in writing to confidentiality and non-use terms at least as protective
of the Disclosing Party as the provisions of this Agreement.

2.4 RESIDUALS. Notwithstanding any other provision of this Agreement, the
Receiving Party shall be free, and the Disclosing Party hereby grants to the
Receiving Party the right, to use for any purpose the Residuals resulting from
access to or work with the Confidential Information of the Disclosing Party.
"Residuals" means information retained in the unaided memory of an individual
who has had access to Confidential Information without conscious attempt by such
individual to memorize such information. The Receiving Party shall have no
obligation to pay royalties for any use of Residuals.

2.5 COMPELLED DISCLOSURE. If the Receiving Party or any of its respective
Subsidiaries or Affiliated Companies believes that it will be compelled by a
court or other authority to disclose Confidential Information of the Disclosing
Party, it shall (i) give the Disclosing Party prompt written notice so that the
Disclosing Party may take steps to oppose such disclosure, but in any event the
Receiving Party shall not be prohibited from complying with such requirement and
(ii) cooperate with the Disclosing Party in its attempts to oppose such
disclosure.

2.6 NO RESTRICTION ON DISCLOSING PARTY. Nothing in this Agreement shall
restrict the Disclosing Party from using, disclosing, or disseminating its own
Confidential Information in any way.

2.7 NO RESTRICTION ON REASSIGNMENT. This Agreement shall not restrict
reassignment of the Receiving Party's employees.

2.8 THIRD PARTY RESTRICTIONS. Nothing in the Agreement supersedes any
restriction imposed by Third Parties on their Confidential Information, and
there is no obligation on the Disclosing Party to conform Third Party agreements
to the terms of this Agreement.

-4-
<PAGE>

ARTICLE III

WARRANTY DISCLAIMER

EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL CONFIDENTIAL INFORMATION IS
PROVIDED ON AN "AS IS, WHERE IS" BASIS AND THAT NEITHER PARTY NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATED COMPANIES HAS MADE OR WILL MAKE ANY WARRANTY
WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE,
ENFORCEABILITY OR NON-INFRINGEMENT.

ARTICLE IV

CONFIDENTIALITY OF AGREEMENT

Each party agrees that the terms and conditions of the Transaction
Agreements marked as confidential shall be treated as Confidential Information
and that neither party will disclose such terms or conditions to any Third Party
without the prior written consent of the other party, provided, however, that
each party may disclose such terms and conditions of such agreements marked as
confidential:

(a) as required by any court or other governmental body (subject to
Section 2.5);

(b) as otherwise required by law (subject to Section 2.5);

(d) in confidence to banks, investors and other financing sources and
their advisors;

(e) in connection with the enforcement of this Agreement or rights
under this Agreement; or

(f) in confidence, in connection with an actual or prospective merger
or acquisition or similar transaction.

ARTICLE V

TERM AND TERMINATION

5.1 TERM. This Agreement shall remain in full force and effect unless and
until terminated by the mutual written agreement of the parties.

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<PAGE>

5.2 SURVIVAL. Articles II (with respect to Confidential Information
acquired or disclosed prior to the date of termination), III, IV, VI, VII and
VIII shall survive any termination of this Agreement.

ARTICLE VI

DISPUTE RESOLUTION

6.1 NEGOTIATION. The parties shall make a good faith attempt to resolve any
dispute or claim arising out of or related to this Agreement through
negotiation. Within thirty (30) days after notice of a dispute or claim is given
by either party to the other party, the parties' first tier negotiating teams
(as determined by each party's Director of Intellectual Property or his or her
delegate) shall meet and make a good faith attempt to resolve such dispute or
claim and shall continue to negotiate in good faith in an effort to resolve the
dispute or claim or renegotiate the applicable section or provision without the
necessity of any formal proceedings. If the first tier negotiating teams are
unable to agree within thirty (30) days of their first meeting, then the
parties' second tier negotiating teams (as determined by each party's Director
of Intellectual Property or his or her delegate) shall meet within thirty (30)
days after the end of the first thirty (30) day negotiating period to attempt to
resolve the matter. During the course of negotiations under this Section 6.1,
all reasonable requests made by one party to the other for information,
including requests for copies of relevant documents, will be honored. The
specific format for such negotiations will be left to the discretion of the
designated negotiating teams but may include the preparation of agreed upon
statements of fact or written statements of position furnished to the other
party.

6.2 NONBINDING MEDIATION. In the event that any dispute or claim arising
out of or related to this Agreement is not settled by the parties within fifteen
(15) days after the first meeting of the second tier negotiating teams under
Section 6.1, the parties will attempt in good faith to resolve such dispute or
claim by nonbinding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules. The mediation shall be held within
thirty (30) days of the end of such fifteen (15) day negotiation period of the
second tier negotiating teams. Except as provided below in Section 6.3, no
litigation for the resolution of such dispute may be commenced until the parties
try in good faith to settle the dispute by such mediation in accordance with
such rules and either party has concluded in good faith that amicable resolution
through continued mediation of the matter does not appear likely. The costs of
mediation shall be shared equally by the parties to the mediation. Any
settlement reached by mediation shall be recorded in writing, signed by the
parties, and shall be binding on them.

6.3 PROCEEDINGS. Nothing herein, however, shall prohibit either party from
initiating litigation or other judicial or administrative proceedings if such
party would be substantially harmed by a failure to act during the time that
such good faith efforts are being made to resolve the dispute or claim through
negotiation or mediation. In the event that litigation is commenced under this
Section 6.3, the parties agree to continue to attempt to resolve any dispute or
claim according to the terms of Sections 6.1 and 6.2 during the course of such
litigation proceedings under this Section 6.3.

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<PAGE>

ARTICLE VII

LIMITATION OF LIABILITY.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

8.1 EXPORT RESTRICTIONS. Both parties shall adhere to all applicable laws,
regulations and rules relating to the export of technical data, and shall not
export or reexport any technical data, any products received from Disclosing
Party, or the direct product of such technical data, to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.

8.2 NO IMPLIED LICENSES. Nothing contained in this Agreement shall be
construed as conferring any rights by implication, estoppel or otherwise, under
any intellectual property right, other than the rights expressly granted in this
Agreement with respect to Confidential Information. Neither party is required
hereunder to furnish or disclose to the other any technical or other
information.

8.3 INFRINGEMENT SUITS. Neither party shall have any obligation hereunder
to institute any action or suit against Third Parties for misappropriation of
any of its Confidential Information or to defend any action or suit brought by a
Third Party that alleges infringement of any intellectual property rights by the
Receiving Party's authorized use of the Disclosing Party's Confidential
Information.

8.5 ENTIRE AGREEMENT. This Agreement, the Master Separation Agreement and
the other Ancillary Agreements constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof. Notwithstanding the foregoing, the parties
agree that any agreements entered into between them on or after the Separation
Date for the protection of specific Confidential Information shall supersede the
terms of this Agreement with respect to such Confidential Information.

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<PAGE>

8.7 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.

if to HP:

c/o Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
Attention: Associate General Counsel and
Director of Intellectual Property
Telecopy: (650) 852-8194

if to Agilent:

c/o Agilent Technologies, Inc.
3000 Hanover Street
Palo Alto, CA 94304
Attention: Assistant General Counsel and
Director of Intellectual Property
Telecopy: (650) 813-3095

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by e-mail, telecopy or by air
courier shall be deemed effective on the first Business Day following the day on
which such notice or communication was sent. Any notice or communication sent
by registered or certified mail shall be deemed effective on the third Business
Day following the day on which such notice or communication was mailed. As used
in this Section 8.8, "Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions located in the State of California
are authorized or obligated by law or executive order to close.

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<PAGE>

foregoing,each party (or its permitted successive assignees or transferees
hereunder) may assign or transfer this Agreement as a whole without consent to a
Person that succeeds to all or substantially all of the business or assets of
such party. Without limiting the foregoing, this Agreement will be binding upon
and inure to the benefit of the parties and their permitted successors and
assigns.

8.10 SEVERABILITY. If any term or other provision of this Agreement is
determined by a nonappealable decision of a court, administrative agency or
binding arbitrator by any court or in any binding arbitration to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.

8.12 AMENDMENT. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
such agreement.

8.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which, taken together, shall be considered to be one and
the same instrument.

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<PAGE>

WHEREFORE, the parties have signed this Master Confidential Disclosure
Agreement effective as of the date first set forth above.

HEWLETT-PACKARD COMPANY AGILENT TECHNOLOGIES, INC.

By:___________________________ By:______________________________

Name:_________________________ Name:____________________________

Title:________________________ Title:___________________________

<PAGE>

EXHIBIT A
TO MASTER CONFIDENTIAL DISCLOSURE AGREEMENT

AFFILIATED COMPANIES

1. Hewlett-Packard Company Affiliated Companies
--------------------------------------------

ImagineCard

Idea LLC

Intria-HP

Intria-HP Potomac

Ericsson-HP Telecom (Sweden)

Ericsson-HP Telecom (France)

Hua-Pua

Putial Ome

PT Berka Services

Liquidity Management Group

Hugin Expert

Syc

Sopura Systems

2. Agilent Affiliated Companies
----------------------------

Chartered Semiconductor Partners Singapore

LumiLEDS

<PAGE>

EXHIBIT 2.13

Indemnification and Insurance Matters Agreement

between

Hewlett-Packard Company

and

Agilent Technologies, Inc.

______________, 1999
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I. MUTUAL RELEASES; INDEMNIFICATION............................................................................ 1

Section 1.1. Release of Pre-Closing Claims...................................................................... 1
Section 1.2. Indemnification by Agilent......................................................................... 2
Section 1.3. Indemnification by HP.............................................................................. 2
Section 1.4. Indemnification With Respect to Environmental Actions and Conditions............................... 3
Section 1.5. Procedures for Defense, Settlement and Indemnification of Third Party Claims....................... 4
Section 1.6. Agilent Contingent Liabilities In Excess of $50 Million............................................ 6
Section 1.7. Additional Matters................................................................................. 7
Section 1.8. Survival of Indemnities............................................................................ 7
Section 1.9. Alleged Infringement or Misappropriation against HP for Products Ordered from the Agilent Business. 7
Section 1.10. Claims of Alleged Infringement or Misappropriation against Agilent for Products from HP Business... 8
Section 1.11. Reimbursement For Certain Losses and Liabilities Not Covered By HP's Insurance Policies............ 9

ARTICLE II. INSURANCE MATTERS.......................................................................................... 10

Section 2.1. Agilent Insurance Coverage During the Transition Period............................................ 10
Section 2.2. Cooperation and Agreement Not to Release Carriers.................................................. 11
Section 2.3. Agilent Insurance Coverage After the Insurance Transition Period................................... 11
Section 2.4. Responsibilities for Self-insured Obligations...................................................... 11
Section 2.5. Procedures With Respect to Insured Agilent Liabilities............................................. 11
Section 2.6. Insufficient Limits of Liability for HP Liabilities and Agilent Liabilities........................ 12
Section 2.7. Cooperation........................................................................................ 13
Section 2.8. No Assignment or Waiver............................................................................ 13
Section 2.9. No Liability....................................................................................... 13
Section 2.10. No Restrictions.................................................................................... 13
Section 2.11. Further Agreements................................................................................. 13
Section 2.12. Agreement Regarding Insurance Covering Environmental Actions....................................... 14
Section 2.13. Matters Governed by Employee Matters Agreement..................................................... 14

ARTICLE III. MISCELLANEOUS............................................................................................. 14

Section 3.1. Entire Agreement................................................................................... 14
Section 3.2. Governing Law...................................................................................... 14
Section 3.3. Notices............................................................................................ 14
Section 3.4. Parties in Interest................................................................................ 15
Section 3.5. Other Agreements Evidencing Indemnification Obligations............................................ 15
Section 3.6. Counterparts....................................................................................... 15
Section 3.7. Assignment......................................................................................... 15
Section 3.8. Severability....................................................................................... 15
Section 3.9. Failure or Indulgence Not Waiver................................................................... 15
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
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<S> <C>
Section 3.10. Amendment............................................ 16
Section 3.11. Authority............................................ 16
Section 3.12. Interpretation....................................... 16

ARTICLE IV. DEFINITIONS.................................................. 16

Section 4.1. Action............................................... 16
Section 4.2. Affiliated Company................................... 16
Section 4.3. Agilent Business..................................... 16
Section 4.4. Agilent Contingent Liability......................... 17
Section 4.5. Agilent Contracts.................................... 17
Section 4.6. Agilent Covered Parties.............................. 17
Section 4.7. Agilent Facilities................................... 17
Section 4.8. Agilent Group........................................ 17
Section 4.9. Agilent Indemnitees.................................. 17
Section 4.10. Agilent Liabilities.................................. 18
Section 4.11. Agilent Schedule 1 Facilities........................ 18
Section 4.12. Agilent Schedule 2 Facilities........................ 18
Section 4.13. Assets............................................... 18
Section 4.14. Assignment Agreement................................. 18
Section 4.15. Change of Control.................................... 18
Section 4.16. Claims Committee..................................... 19
Section 4.17. Commingled Claims.................................... 19
Section 4.18. Coverage Amount...................................... 19
Section 4.19. Employee Matters Agreement........................... 19
Section 4.20. Environmental Actions................................ 19
Section 4.21. Environmental Conditions............................. 19
Section 4.22. Environmental Laws................................... 19
Section 4.23. Excess Portion....................................... 20
Section 4.24. Hazardous Materials.................................. 20
Section 4.25. HP Business.......................................... 20
Section 4.26. HP Facilities........................................ 20
Section 4.27. HP Group............................................. 20
Section 4.28. HP Indemnitees....................................... 20
Section 4.29. Indemnitee........................................... 20
Section 4.30. Insurance Policies................................... 20
Section 4.31. Insurance Proceeds................................... 20
Section 4.32. Insurance Transition Period.......................... 20
Section 4.33. Insured Agilent Liability............................ 20
Section 4.34. IPO Liabilities...................................... 21
Section 4.35. IPO Registration Statement........................... 21
</TABLE>

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<PAGE>

TABLE OF CONTENTS
(continued)

<TABLE>
<CAPTION>
Page
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<S> <C>
Section 4.36. Liabilities........................................ 21
Section 4.37. Non-US Plan........................................ 21
Section 4.38. Person............................................. 21
Section 4.39. Pre-Separation Third Party Site Liabilities........ 21
Section 4.40. Prime Rate......................................... 21
Section 4.41. Related Agilent Contingent Liabilities............. 21
Section 4.42. Release............................................ 21
Section 4.43. Separation......................................... 22
Section 4.44. Separation Agreement............................... 22
Section 4.45. Separation Date.................................... 22
Section 4.46. Shared Agilent Percentage.......................... 22
Section 4.47. Shared HP Percentage............................... 22
Section 4.48. Shared Percentage.................................. 22
Section 4.49. Subsidiary......................................... 22
Section 4.50. Tax Sharing Agreement.............................. 22
Section 4.51. Taxes.............................................. 22
Section 4.52. Third Party Claim.................................. 22

</TABLE>

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<PAGE>

INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

This Indemnification and Insurance Matters Agreement (this "Agreement") is
entered into on _________, 1999 between Hewlett-Packard Company, a Delaware
corporation ("HP"), and Agilent Technologies, Inc., a Delaware corporation
("Agilent"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Article IV below.

RECITALS

WHEREAS, HP and its Subsidiaries have transferred or will transfer to
Agilent and its Subsidiaries effective as of the Separation Date, substantially
all of the assets of the Agilent Business in accordance with the Master
Separation and Distribution Agreement dated as of August 12, 1999 between the
parties (the "Separation Agreement").

WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.

NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

ARTICLE I.

MUTUAL RELEASES; INDEMNIFICATION

SECTION 1.1. Release of Pre-Closing Claims.

(a) Agilent Release. Except as provided in Section 1.1(c), effective as of
the Separation Date, Agilent does hereby, for itself and as agent for each
member of the Agilent Group, remise, release and forever discharge the HP
Indemnitees from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Separation Date, including in connection with the transactions and
all other activities to implement any of the Separation, the IPO and the
Distribution.

(b) HP Release. Except as provided in Section 1.1(c), effective as of the
Separation Date, HP does hereby, for itself and as agent for each member of the
HP Group, remise, release and forever discharge the Agilent Indemnitees from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution), whether arising under any contract or agreement, by operation
of law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation Date,
including in connection with the transactions and all other activities to
implement any of the Separation, the IPO and the Distribution.
<PAGE>

(c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall impair
any right of any Person to enforce the Separation Agreement or any Ancillary
Agreement (including this Agreement), in each case in accordance with its terms.

(d) No Actions as to Released Claims. Agilent agrees, for itself and as
agent for each member of the Agilent Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against HP or any member of the HP Group,
or any other Person released pursuant to Section 1.1(a), with respect to any
Liabilities released pursuant to Section 1.1(a). HP agrees, for itself and as
agent for each member of the HP Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Agilent or any member of the
Agilent Group, or any other Person released pursuant to Section 1.1(b), with
respect to any Liabilities released pursuant to Section 1.1(b).

(e) Further Instruments. At any time, at the request of any other party,
each party shall cause each member of its respective Group to execute and
deliver releases reflecting the provisions hereof.

SECTION 1.2. Indemnification by Agilent. Except as otherwise provided in
this Agreement, Agilent shall, for itself and as agent for each member of the
Agilent Group, indemnify, defend (or, where applicable, pay the defense costs
for) and hold harmless the HP Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon the HP Indemnitees, or
which are imposed upon the HP Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):

(i) the Agilent Business, any Agilent Liability or any Agilent
Contract;

(ii) any breach by Agilent or any member of the Agilent Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and

(iii) any IPO Liabilities in excess of the Shared HP Percentage.

In the event that any member of the Agilent Group makes a payment to the HP
Indemnitees hereunder, and any of the HP Indemnitees subsequently diminishes the
Liability on account of which such payment was made, either directly or through
a third-party recovery, HP will promptly repay (or will procure an HP Indemnitee
to promptly repay) such member of the Agilent Group the amount by which the
payment made by such member of the Agilent Group exceeds the actual cost of the
associated indemnified Liability. This Section 1.2 shall not apply to any
Liability indemnified under Section 1.4.

SECTION 1.3. Indemnification by HP. Except as otherwise provided in this
Agreement, HP shall, for itself and as agent for each member of the HP Group,
indemnify, defend (or, where applicable, pay the defense costs for) and hold
harmless the Agilent Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon the Agilent Indemnitees, or which

-2-
<PAGE>

are imposed upon the Agilent Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):

(i) the HP Business or any Liability of the HP Group other than the
Agilent Liabilities;

(ii) any breach by HP or any member of the HP Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and

(iii) any IPO Liabilities in excess of the Shared Agilent Percentage.

In the event that any member of the HP Group makes a payment to the Agilent
Indemnitees hereunder, and any of the Agilent Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery, Agilent will promptly repay (or will
procure an Agilent Indemnitee to promptly repay) such member of the HP Group the
amount by which the payment made by such member of the HP Group exceeds the
actual cost of the indemnified Liability. This Section 1.3 shall not apply to
any Liability indemnified under Section 1.4.

SECTION 1.4. Indemnification With Respect to Environmental Actions and
Conditions.

(a) Indemnification by Agilent. Agilent shall, for itself and as agent for
each member of the Agilent Group, indemnify, defend and hold harmless the HP
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:

(i) Except as arising out of the operations of the HP Group on and
after the Separation Date, Environmental Conditions (x) arising out of
operations occurring on and after the Separation Date at any of the Agilent
Schedule 2 Facilities, or (y) on any of the Agilent Schedule 2 Facilities
arising from an event causing contamination that first occurs on or after the
Separation Date (including any Release of Hazardous Materials occurring after
the Separation Date that migrates to any of the Agilent Schedule 2 Facilities);
and

(ii) Except as arising out of the operations of the HP Group on and
after the Separation Date or as a result of a Release from any HP Facilities,
Environmental Conditions on, under, about or arising out of operations occurring
at any time, whether before or after the Separation Date, at any of the Agilent
Schedule 1 Facilities (including any Release of Hazardous Materials occurring
after the Separation Date that migrates at any time to any of the Agilent
Schedule 1 Facilities);

(b) Indemnification by HP. HP shall, for itself and as agent for each
member of the HP Group, indemnify, defend and hold harmless the Agilent
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:

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<PAGE>

(i) Environmental Conditions (x) existing on, under, about or in
the vicinity of any of the Agilent Schedule 2 Facilities prior to the Separation
Date (including any Release of Hazardous Materials occurring prior to the
Separation Date which migrates to any of the Agilent Schedule 2 Facilities after
the Separation Date), or (y) arising out of operations occurring on or before
the Separation Date at any of the Agilent Schedule 2 Facilities;

(ii) Except as arising out of the operations of the Agilent Group
on and after the Separation Date, Environmental Conditions on, under, about or
arising out of operations occurring at any time, whether before or after the
Separation Date, at any of the HP Facilities; and

(iii) Pre-Separation Third Party Site Liabilities.

(c) Agreement Regarding Payments to Indemnitee. In the event an
Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental Action for which the Indemnifying Party is obligated
to indemnify under this Section 1.4, and the Indemnitee subsequently receives
any payment from a third party on account of the same financial obligation
covered by the payment made by the Indemnifying Party for that Environmental
Action or otherwise diminishes the financial obligation, the Indemnitee will
promptly pay the Indemnifying Party the amount by which the payment made by the
Indemnifying Party, exceeds the actual cost of the financial obligation.

SECTION 1.5. Procedures for Defense, Settlement and Indemnification of
Third Party Claims.

(a) Notice of Claims. If an HP Indemnitee or an Agilent Indemnitee (as
applicable) (an "Indemnitee") shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the HP Group or the Agilent Group of any claim or of the commencement by any
such Person of any Action (collectively, a "Third Party Claim") with respect to
which a party (an "Indemnifying Party") may be obligated to provide
indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or 1.4, or any
other section of the Separation Agreement or any Ancillary Agreement (including
this Agreement), HP and Agilent (as applicable) will ensure that such Indemnitee
shall give such Indemnifying Party written notice thereof within 30 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the delay
or failure of any Indemnitee or other Person to give notice as provided in this
Section 1.5(a) shall not relieve the related Indemnifying Party of its
obligations under this Article I, except to the extent that such Indemnifying
Party is actually and substantially prejudiced by such delay or failure to give
notice.

(b) Claims Involving Commingled Products or Employees. If a Third Party
Claim (including a claim relating to the Year 2000 problem) involves (i) a
commingled product with components supplied by both the Agilent Business and the
HP Business, (ii) an employee, consultant or contractor that was employed by
both the Agilent Business and the HP Business or (iii) any similar claims
involving both the Agilent Business and the HP Business (collectively,
"Commingled

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<PAGE>

Claims"), the Claims Committee shall have the power to resolve whether and to
the extent any Commingled Claim is an Agilent Contingent Liability.

(c) Claims Committee. Any of the parties may refer any dispute regarding
the provisions of this Article I to the Claims Committee for resolution. All
determinations of the Claims Committee, if unanimous, shall be binding on all of
the parties and their respective successors and assigns. The Claims Committee
shall reach a resolution that minimizes expenses for all parties and seeks to
avoid hiring multiple counsel. In determining whether a Commingled Claim is an
Agilent Contingent Liability, the Claims Committee shall consider whether the
event, act or omission giving rise the Liability relates primarily to the
Agilent Business. In the event a Liability arises from both an event, act or
omission relating primarily to the Agilent Business and an event, act or
omission relating primarily to the HP Business, the Claims Committee shall
apportion the Liability in accordance with relative fault, and it may re-
apportion the Liability as it learns of additional facts bearing on that
assessment. In the event that the Claims Committee cannot reach a unanimous
determination as to the nature, status or handling of any such claims within 30
days after such referral (unless the Claims Committee unanimously agrees to a
longer time period), the issue will be submitted for resolution pursuant to the
procedures set forth in the dispute resolution provisions contained in Section
5.9 of the Separation Agreement.

(d) Defense of Commingled Claims. With respect to Commingled Claims, the
party whose business sold the product, who last employed the employee or whose
business is primarily related to the event, act or omission giving rise to the
potential Liability shall manage the defense of, and may seek to settle or
compromise, any such Commingled Claims. If the party managing the defense of
such Commingled Claim is an Indemnitee with respect thereto, the costs and
expenses of such defense shall be borne by the Indemnifying Party to the extent
of the indemnity provided in the Separation Agreement, this Agreement or any
Ancillary Agreement.

(e) Defense of Claims Involving IPO Liabilities. HP shall manage the
defense of, and may seek to settle or compromise, any Third Party Claim
involving IPO Liabilities, and the costs and expenses thereof shall be included
in the calculation of the amount of the indemnification obligations pursuant to
Section 1.2(iii) and Section 1.3(iii) of this Agreement.

(f) Defense By Indemnifying Party. Other than in the case of a Commingled
Claim or a Third Party Claim involving IPO Liabilities, an Indemnifying Party
will manage the defense of and (unless the Indemnifying Party has specified any
reservations or exceptions to the obligation to manage the defense or to
indemnify that have been referred to, but not resolved by, the Claims Committee)
may settle or compromise any Third Party Claim. Within 30 days after the receipt
of notice from an Indemnitee in accordance with Section 1.5(a) (or sooner, if
the nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee that the Indemnifying Party will assume responsibility for
managing the defense of such Third Party Claim, which notice shall specify any
reservations or exceptions.

(g) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it will assume responsibility as provided in Section
1.5(f), such Indemnitee may manage the defense of such Third

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<PAGE>

Party Claim; provided, however, that the Indemnifying Party shall reimburse all
such costs and expenses in the event it is ultimately determined, in accordance
with the procedures governing the Claims Committee, that the Indemnifying Party
is obligated to indemnify the Indemnitee with respect to such Third Party Claim.

(h) No Settlement By Indemnitee Without Consent. Unless the Indemnifying
Party has failed to manage the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party.

(i) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding Section 1.5(f) above, no party shall consent to entry of any
judgment or enter into any settlement of a Third Party Claim without the consent
of the other party (such consent not to be unreasonably withheld) if the effect
of such judgment or settlement is to (A) permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against the other party or (B) affect the other party in a material
fashion due to the allocation of Liabilities and related indemnities set forth
in the Separation Agreement, this Agreement or any other Ancillary Agreement.

SECTION 1.6. Agilent Contingent Liabilities In Excess of $50 Million.

(a) Excess Portions. Notwithstanding anything to the contrary in this
Agreement or the Assignment Agreement, if the aggregate amount paid by the
Agilent Group, less any related Insurance Proceeds and any other amounts
recovered (including by way of set off) from third parties unaffiliated with HP,
in respect of any single Agilent Contingent Liability or any Related Agilent
Contingent Liabilities is in excess of $50 million, arising from written demands
made or suits or similar proceedings filed within four years following the
Separation Date that demand or seek monetary damages, services or non-monetary
relief, Agilent shall be entitled to reimbursement from HP for the Shared HP
Percentage of the Excess Portion.

(b) Insurance Proceeds. In the event that after any payment is made by HP
to Agilent in accordance with the allocation set forth in Section 1.6(a), any
member of the Agilent Group receives any Insurance Proceeds or obtains any other
amounts that, in any such case, would reduce the amount paid by the Agilent
Group in respect of the applicable Agilent Contingent Liability or Liabilities,
Agilent will promptly notify HP of the receipt of such Insurance Proceeds or
otherwise and will promptly reimburse HP for the amount of any payment that
Agilent would not have been entitled to receive if it had received such
Insurance Proceeds on or prior to the date it received a payment pursuant to
this Section.

(c) Notice of Agilent Contingent Liabilities Involving an Excess Portion.
Agilent agrees to use its reasonable commercial efforts to advise HP if it
becomes aware of one or more Agilent Contingent Liabilities that may, in the
aggregate, result in payments of $50 million or more; provided, however, that no
delay or failure to give any such notice shall relieve HP of any obligation
pursuant to this Agreement unless it is actually and substantially prejudiced as
a result of such delay or failure.

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(d) Termination Upon Assignment or Change of Control. Notwithstanding
anything to the contrary in this Agreement or any other Ancillary Agreement, the
right to receive reimbursement under this Section 1.6 may not be assigned or
delegated by Agilent and shall terminate upon a Change of Control of Agilent
(other than as a result of the Distribution).

SECTION 1.7. Additional Matters.

(a) Cooperation in Defense and Settlement. With respect to any Third Party
Claim that implicates both Agilent and HP in a material fashion due to the
allocation of Liabilities, responsibilities for management of defense and
related indemnities set forth in the Separation Agreement, this Agreement or any
of the Ancillary Agreements, the parties agree to cooperate fully and maintain a
joint defense (in a manner that will preserve the attorney-client privilege with
respect thereto) so as to minimize such Liabilities and defense costs associated
therewith. The party that is not responsible for managing the defense of such
Third Party Claims shall, upon reasonable request, be consulted with respect to
significant matters relating thereto and may, if necessary or helpful, associate
counsel to assist in the defense of such claims.

(b) Substitution. In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article I shall not be altered.

(c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.

(d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).

SECTION 1.8. Survival of Indemnities. Subject to Section 1.6(d) and
Section 3.7, the rights and obligations of the members of the HP Group and the
Agilent Group under this Article I shall survive the sale or other transfer by
any party of any Assets or businesses or the assignment by it of any Liabilities
or the sale by any member of the HP Group or the Agilent Group of the capital
stock or other equity interests of any Subsidiary to any Person.

SECTION 1.9. Alleged Infringement or Misappropriation against HP for
Products Ordered from the Agilent Business.

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(a) Definitions. As used in this Section 1.9, the following terms have the
following meanings. "Agilent Product" means any product of the Agilent Business
that was or is furnished by the Agilent Business prior to the Separation Date or
(to the extent that there is no separate agreement between the purchaser and
seller governing the purchase and sale of such product) on or after the
Separation Date. "Eligible Buyer" means any member of the HP Group, HP
Subcontractors and other third parties mutually agreed to in writing by the
parties who purchase Agilent Products from the Agilent Business. "HP
Subcontractors" means third party entities which perform contract work for any
member of the HP Group and which acquire Agilent Products from the Agilent
Business. HP Subcontractors are independent contractors of a member of the HP
Group, and are not legally related to any member of the HP Group as agent,
employee, partner, joint venture or other manner.

(b) Obligation. Agilent shall manage the defense of any third party claim,
suit, or proceeding brought against any member of the HP Group, any Eligible
Buyer, or their customers insofar as it is based on a claim that any Agilent
Product constitutes an infringement of any third party's patent, copyright,
trademark, trade name, or unauthorized trade secret use; provided that (i)
Agilent is notified promptly in writing of such claim and is supplied with
information and assistance as reasonably necessary, and (ii) Agilent is given
sole control to handle the defense or settlement of any such claim, suit or
proceeding. Agilent agrees to pay all damages and costs awarded therein against
HP, any Eligible Buyer, or their customers.

(c) Enjoined Products. In case any Agilent Product or any part thereof in
such suit is held to constitute an infringement for which Agilent is liable and
its use is enjoined, Agilent shall, at its own expense and at its option, either
(i) procure for HP, the Eligible Buyers and their customers the right to
continue to use the Agilent Product, or (ii) if applicable, replace the Agilent
Product with a noninfringing Agilent Product of equivalent function and
performance, or modify it so it becomes noninfringing without detracting from
function or performance; provided, however, that if any of the foregoing
alternatives are not reasonably possible, then (iii) accept return of the
Agilent Product and refund to HP or the Eligible Buyer, as applicable, the price
paid for the infringing Agilent Product less a reasonable sum for past use.

(d) Exceptions. Notwithstanding the foregoing, Agilent shall have no
responsibility for claims arising from (i) modifications of the Agilent Product
made by HP or any Eligible Buyer if such claim would not have arisen but for
such modifications, or (ii) combination or use of the Agilent Product with
products not supplied by Agilent if such claim would not have arisen but for
such combination or use, or (iii) Agilent's compliance with HP's designs or
specifications, or (iv) Agilent Product use prohibited by specifications or
related application notes.

SECTION 1.10. Claims of Alleged Infringement or Misappropriation against
Agilent for Products from HP Business.

(a) Definitions. As used in this Section 1.10, the following terms have
the following meanings. "HP Product" means any product of the HP Business that
was or is furnished by the HP Business prior to the Separation Date or (to the
extent that there is no separate agreement between the purchaser and seller
governing the purchase and sale of such product) on or after the Separation

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Date. "Eligible Buyer" means any member of the Agilent Group, Agilent
Subcontractors and other third parties mutually agreed to in writing by the
parties who purchase HP Products from the HP Business. "Agilent Subcontractors"
means third party entities which perform contract work for any member of the
Agilent Group and which acquire HP Products from the HP Business. Agilent
Subcontractors are independent contractors of a member of the Agilent Group, and
are not legally related to any member of the Agilent Group as agent, employee,
partner, joint venture or other manner.

(b) Obligation. HP shall manage the defense of any third party claim,
suit, or proceeding brought against any member of the Agilent Group, any
Eligible Buyer, or their customers insofar as it is based on a claim that any HP
Product constitutes an infringement of any third party's patent, copyright,
trademark, trade name, or unauthorized trade secret use; provided that (i) HP is
notified promptly in writing of such claim and is supplied with information and
assistance as reasonably necessary, and (ii) HP is given sole control to handle
the defense or settlement of any such claim, suit or proceeding. HP agrees to
pay all damages and costs awarded therein against Agilent, any Eligible Buyer,
or their customers.

(c) Enjoined Products. In case any HP Product or any part thereof in such
suit is held to constitute an infringement for which HP is liable and its use is
enjoined, HP shall, at its own expense and at its option, either (i) procure for
Agilent, the Eligible Buyers and their customers the right to continue to use
the HP Product, or (ii) if applicable, replace the HP Product with a
noninfringing HP Product of equivalent function and performance, or modify it so
it becomes noninfringing without detracting from function or performance;
provided, however, that if any of the foregoing alternatives are not reasonably
possible, then (iii) accept return of the HP Product and refund to Agilent or
the Eligible Buyer, as applicable, the price paid for the infringing HP Product
less a reasonable sum for past use.

(d) Exceptions. Notwithstanding the foregoing, HP shall have no
responsibility for claims arising from (i) modifications of the HP Product made
by Agilent or any Eligible Buyer if such claim would not have arisen but for
such modifications, or (ii) combination or use of the HP Product with products
not supplied by HP if such claim would not have arisen but for such combination
or use, or (iii) HP's compliance with Agilent's designs or specifications, or
(iv) HP Product use prohibited by specifications or related application notes.

SECTION 1.11. Reimbursement For Certain Losses and Liabilities Not Covered
By HP's Insurance Policies. Except as set forth in Section 1.2(iii) and Section
1.3(iii), notwithstanding anything to the contrary in this Agreement or the
Assignment Agreement, if:

(a) the Agilent Group suffers one or more losses of real property,
personal property or business interruption resulting therefrom arising from an
earthquake occurring between the Separation Date and Distribution Date; or

(b) the Agilent Group suffers one or more first-party property losses
between the Separation Date and the Distribution Date of a type that is covered
by HP's Insurance Policies or that is covered by standard form insurance
policies in use at the time; or

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(c) events, acts or omissions occur between the Separation Date and the
Distribution Date that give rise to one or more Third Party Claims that result
in an Agilent Liability (including the costs of defending against such claims)
of a type that is covered by HP's Insurance Policies or that is covered by
standard form insurance policies in use at the time, but only to the extent that
suits or similar proceedings are filed or written demands are made in connection
with such Third Party Claims within four years following the Distribution Date
that seek or demand monetary damages, services or non-monetary relief; or

(d) Releases first occur between the Separation Date and the Distribution
Date that give rise to one or more Environmental Actions that result in an
Agilent Liability (including the costs of defending against such Environmental
Actions), but only to the extent that suits or similar proceedings are filed,
orders or decrees are issued, written notice that such Environmental Action will
be commenced is received by Agilent or HP, or written demands are made in
connection with such Environmental Actions within four years following the
Distribution Date that seek or demand monetary damages, services or non-monetary
relief; and

(e) the aggregate amount of Agilent's loss and Liabilities described in
clauses (a), (b), (c) and (d), exclusive of amounts covered by HP's Insurance
Policies or other insurance policies that provide coverage to Agilent, exceeds
$20 million,

then HP shall reimburse Agilent to the extent that the aggregate amount of
Agilent's loss and Liabilities described in clauses (a), (b), (c) and (d),
exclusive of amounts covered by HP's Insurance Policies or other insurance
policies that provide coverage to Agilent, exceeds $20 million, exceeds $20
million.

(f) Interpretation. In the case of any Agilent Liability a portion of
which arises out of events, acts or omissions occurring prior to the Separation
Date and a portion of which arises out of events, acts or omissions occurring
on or after the Separation Date but prior to the Distribution Date, only that
portion that arises out of events, acts or omissions occurring on or after the
Separation Date and prior to the Distribution Date shall be subject to this
Section 1.11. In the case of any Agilent Liability a portion of which arises out
of events, acts or omissions occurring prior to the Distribution Date and a
portion of which arises out of events, acts or omissions occurring on or after
the Distribution Date, only that portion that arises out of events, acts or
omissions occurring prior to the Distribution Date shall be subject to this
Section 1.11. For purposes of the foregoing, an Agilent Liability shall be
deemed to have arisen out of events, acts or omission occurring on or after the
Separation Date and before the Distribution Date if all the elements necessary
for the assertion of a claim with respect to such Agilent Liability shall have
occurred on or prior to Distribution Date, such that the claim, were it asserted
in an Action on or after the Separation Date but prior to the Distribution Date,
would not be dismissed by a court on ripeness or similar grounds. For purposes
of clarification of the foregoing, the parties agree that no Agilent Liability
relating to, arising out of or resulting from any obligation of any Person to
perform the executory portion of any contract or agreement existing as of the
Distribution Date, or to satisfy any obligation accrued under any Plan (as
defined in the Employee Matters Agreement) as of the Separation Date, shall be
subject to this Section 1.11. For purposes of determining whether a claim
relating to the Year 2000 problem is subject to this Section 1.11, claims
relating to products shipped on or after the Separation Date but prior to the
Distribution Date shall be deemed to have arisen during such period. This
Section 1.11(f) shall not apply to any Agilent Liability covered by Section
1.11(d).

ARTICLE II.

INSURANCE MATTERS

SECTION 2.1. Agilent Insurance Coverage During the Transition Period.

(a) Maintain Comparable Insurance. Throughout the period beginning on the
Separation Date and ending on the Distribution Date (i.e., the "Insurance
Transition Period"), HP shall, subject to insurance market conditions and other
factors beyond its control, maintain policies of insurance, including for the
benefit of Agilent or any of its Subsidiaries, directors, officers, employees or
other covered parties (collectively, the "Agilent Covered Parties") which are
comparable to those maintained generally by HP; provided, however, that if HP
determines that (i) the amount or scope of such coverage will be reduced to a
level materially inferior to the level of coverage in existence immediately
prior to the Insurance Transition Period or (ii) the retention or deductible
level applicable to such coverage, if any, will be increased to a level
materially greater than the levels in existence immediately prior to the
Insurance Transition Period, HP shall give Agilent notice of such determination
as promptly as practicable. Upon notice of such determination, Agilent shall be
entitled to no less than 60 days to evaluate its options regarding continuance
of coverage hereunder and may cancel its interest in all or any portion of such
coverage as of any day within such 60 day period. Except as provided below,
during the Insurance Transition Period, such

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policies of insurance shall cover Agilent Covered Parties for liabilities and
losses insured prior to the Distribution Date.

(b) Reimbursement for Premiums. Agilent shall promptly pay or reimburse
HP, as the case may be, for premium expenses, and Agilent Covered Parties shall
promptly pay or reimburse HP for any costs and expenses which HP may incur in
connection with the insurance coverages maintained pursuant to this Section 2.1,
including but not limited to any subsequent premium adjustments. All payments
and reimbursements by Agilent and Agilent Covered Parties to HP shall be made
within fifteen (15) days after Agilent's receipt of an invoice from HP.

SECTION 2.2. Cooperation and Agreement Not to Release Carriers. Each of
HP and Agilent will share such information as is reasonably necessary in order
to permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of HP and Agilent, at the request of the other, shall cooperate
with and use commercially reasonable efforts to assist the other in recoveries
for claims made under any insurance policy for the benefit of any insured party,
and neither HP nor Agilent, nor any of their Subsidiaries, shall take any action
which would intentionally jeopardize or otherwise interfere with either party's
ability to collect any proceeds payable pursuant to any insurance policy. Except
as otherwise contemplated by the Separation Agreement, this Agreement or any
Ancillary Agreement, after the Separation Date, neither HP nor Agilent shall
(and shall ensure that no member of their respective Groups shall), without the
consent of the other, provide any insurance carrier with a release, or amend,
modify or waive any rights under any such policy or agreement, if such release,
amendment, modification or waiver would adversely affect any rights or potential
rights of any member of the other Group thereunder. However, nothing in this
Section 2.2 shall (A) preclude any member of any Group from presenting any claim
or from exhausting any policy limit, (B) require any member of any Group to pay
any premium or other amount or to incur any Liability, (C) require any member of
any Group to renew, extend or continue any policy in force or (D) except as
otherwise provided in Section 2.12, apply to HP in connection with rights to
coverage for Environmental Actions under Insurance Policies in effect prior to
the Separation Date.

SECTION 2.3. Agilent Insurance Coverage After the Insurance Transition
Period. From and after expiration of the Insurance Transition Period, Agilent,
and Agilent alone, shall be responsible for obtaining and maintaining insurance
programs for its risk of loss and such insurance arrangements shall be separate
and apart from HP's insurance programs. Notwithstanding the foregoing, HP, upon
the request of Agilent, shall use all commercially reasonable efforts to assist
Agilent in the transition to its own separate insurance programs from and after
the Insurance Transition Period, and shall provide Agilent with any information
that is in the possession of HP and is reasonably available and necessary to
either obtain insurance coverages for Agilent or to assist Agilent in preventing
unintended self-insurance, in whatever form.

SECTION 2.4. Responsibilities for Self-insured Obligations. Agilent will
reimburse HP for all amounts necessary to exhaust or otherwise satisfy all
applicable self-insured retentions, amounts for fronted policies, deductibles
and retrospective premium adjustments and similar amounts not covered by
Insurance Policies in connection with Agilent Liabilities and Insured Agilent
Liabilities.

SECTION 2.5. Procedures With Respect to Insured Agilent Liabilities.

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(a) Reimbursement. Agilent will reimburse HP for all amounts incurred to
pursue insurance recoveries from Insurance Policies for Insured Agilent
Liabilities.

(b) Management of Claims. The defense of claims, suits or actions giving
rise to potential or actual Insured Agilent Liabilities will be managed (in
conjunction with HP's insurers, as appropriate) by the party that would have had
responsibility for managing such claims, suits or actions had such Insured
Agilent Liabilities been Agilent Liabilities.

Section 2.6. Insufficient Limits Of Liability For Hp Liabilities And
Agilent Liabilities

(a) Insufficient Limits of Liability. In the event that there are
insufficient limits of liability available under HP's Insurance Policies in
effect prior to the Distribution Date to cover the Liabilities of HP and/or
Agilent that would otherwise be covered by such Insurance Policies, then to the
extent that other insurance is not available to HP and/or Agilent for such
Liabilities an adjustment will be made in accordance with the following
procedures:

(i) Each party will be allocated an amount equal to their Shared
Percentage of the lesser of (A) the available limits of liability available
under HP's Insurance Policies in effect prior to the Distribution Date net of
uncollectible amounts attributable to insurer insolvencies, and (B) the proceeds
received from HP's Insurance Policies if the Liabilities are the subject of
disputed coverage claims and, following consultation with each other, HP and/or
Agilent agree to accept less than full policy limits from HP's and Agilent's
insurers (the "Coverage Amount").

(ii) A party who receives more than its share of the Coverage Amount
(the "Overallocated Party") agrees to reimburse the other party (the
"Underallocated Party") to the extent that the Liabilities of the Underallocated
Party that would have been covered under such Insurance Policies (subject to the
limitations of Section 2.12) is less than the Underallocated Party's share of
the Coverage Amount.

(iii) This Section 2.6(a) shall terminate three years following the
Distribution Date; provided, however, that either party may extend the three
year period applicable to these provisions by up to five additional two-year
periods, or as otherwise shall be agreed to in order to accomplish the
allocation objective set forth above and in order to have access to any
available coverage under the Insurance Policies.

(b) Illustrations. The following illustrations are intended to provide
guidance concerning how this Section is intended to apply to claims implicating
insurance policies issued prior to the Distribution Date. The effects of Section
1.11 are not considered in these illustrations.

(i) Illustration No. 1. Ten separate claims are brought arising from
ten separate "occurrences," each resulting in an Agilent Liability of $10
million. The self-insured retention is $10 million "per occurrence." Result:
This Section is inapplicable. Agilent may pursue self-insurance, to the extent
it is permitted to do so by law, subject to reimbursement of HP under Section
2.4 of this Agreement.

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(ii) Illustration No. 2. Ten separate claims are brought arising from
ten separate "occurrences," each resulting in an Agilent Liability of $40
million, for a total of $400 million. Fifteen separate claims are brought
arising from fifteen separate "occurrences," each resulting in an HP Liability
of $40 million, for a total of $600 million. The limits of liability in the
Insurance Policies applicable to the claims is $200 million. The self-insured
retention is $10 million "per occurrence." Therefore, Agilent and HP each incur
the first $10 million "per occurrence," leaving a remaining liability (after the
payment of self-insured retentions) of $30 million "per occurrence," or $300
million in the aggregate for Agilent and $450 million in the aggregate for HP.
The Agilent Liabilities are incurred prior to the HP Liabilities, and paid for
by HP's Insurance Policies in effect prior to the Distribution Date, which are
exhausted by these payments. This leaves Agilent with an additional liability of
$100 million (plus its self-insured retentions of $100 million). Result: The
$200 million limit is split 82/18: $164 million is allocated to HP and $36
million is allocated to Agilent. Agilent should pay HP $164 million, HP's share
of the Coverage Amount.

(iii) Illustration No. 3. Same as Illustration No. 2, except that HP's
claims ($200 million) were paid for by HP's Insurance Policies in effect prior
to the Distribution Date, which are exhausted by these payments. This leaves
Agilent with a liability of $300 million (plus its self-insured retentions of
$100 million). HP should pay Agilent $36 million.

Section 2.7. Cooperation . HP and Agilent will cooperate with each other
in all respects, and they shall execute any additional documents which are
reasonably necessary, to effectuate the provisions of this Article II.

Section 2.8. No Assignment Or Waiver . This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy of
any member of the HP Group in respect of any Insurance Policy or any other
contract or policy of insurance.

Section 2.9. No Liability . Agilent does hereby, for itself and as agent
for each other member of the Agilent Group, agree that no member of the HP Group
or any HP Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices of HP and its Subsidiaries as in effect at any
time prior to the Distribution Date, including as a result of the level or scope
of any such insurance, the creditworthiness of any insurance carrier, the terms
and conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.

Section 2.10. No Restrictions . Nothing in this Agreement shall be deemed
to restrict any member of the Agilent Group from acquiring at its own expense
any other insurance policy in respect of any Liabilities or covering any period.

Section 2.11. Further Agreements. The Parties acknowledge that they
intend to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is determined
that any action undertake pursuant to the Separation Agreement, this Agreement
or any Ancillary Agreement is violative of any insurance, self-insurance or
related financial responsibility law or regulation, the parties agree to work
together to do whatever is

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necessary to comply with such law or regulation while trying to accomplish, as
much as possible, the allocation of financial obligations as intended in the
Separation Agreement, this Agreement and any Ancillary Agreement.

Section 2.12. Agreement Regarding Insurance Covering Environmental Actions
Notwithstanding anything to the contrary in this Agreement (including Article II
hereof), the Separation Agreement or any Ancillary Agreement:

(a) Except as set forth in Section 2.12(b), Agilent shall not make any
claim against, or be entitled to any proceeds from, any primary, umbrella or
excess general liability policy in effect prior to the Separation Date for any
Environmental Actions;

(b) In the event that a claim arises out of an Environmental Action in
connection with an Agilent Schedule 1 Facility and the claim could be covered
under any primary, umbrella or excess general liability policy in effect prior
to the Separation Date, and provided that at the time the claim is made HP has
not fully and finally released or agreed to release (at HP's sole discretion)
the insurance carrier with respect to coverage applicable to that claim under
such policy, Agilent shall be permitted to submit the claim to HP for submission
to the relevant insurance carrier, HP shall control all negotiations on the
claim and the policy with the insurance carrier and Agilent shall be entitled to
an equitable apportionment of any proceeds received by HP from the policy.

Section 2.13. Matters Governed By Employee Matters Agreement. This Article
II shall not apply to any insurance policies that are the subject of the
Employee Matters Agreement.

ARTICLE III.

MISCELLANEOUS

Section 3.1. Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof.

Section 3.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.

Section 3.3. Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and

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addressed to the attention of the party's General Counsel at the address of its
principal executive office or such other address as a party may request by
notifying the other in writing.

Section 3.4. Parties In Interest. This Agreement, including the Schedules
and Exhibits hereto, and the other documents referred to herein, shall be
binding upon HP, HP's Subsidiaries, Agilent and Agilent's Subsidiaries and inure
solely to the benefit of the Agilent Indemnitees and the HP Indemnitees and
their respective permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.

Section 3.5. Other Agreements Evidencing Indemnification Obligations. HP
hereby agrees to execute, for the benefit of any Agilent Indemnitee, such
documents as may be reasonably requested by such Agilent Indemnitee, evidencing
HP's agreement that the indemnification obligations of HP set forth in this
Agreement inure to the benefit of and are enforceable by such Agilent
Indemnitee. Agilent hereby agrees to execute, for the benefit of any HP
Indemnitee, such documents as may be reasonably requested by such HP Indemnitee,
evidencing Agilent's agreement that the indemnification obligations of Agilent
set forth in this Agreement inure to the benefit of and are enforceable by such
HP Indemnitee.

Section 3.6. Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

Section 3.7. Assignment. The rights and obligations in this Agreement may
not be assigned or delegated by any party hereto, in whole or in part, without
the express prior written consent of the other party hereto.

Section 3.8. Severability. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.

Section 3.9. Failure Or Indulgence Not Waiver. No failure or delay on the
part of either party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.

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<PAGE>

Section 3.10. Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.

Section 3.11. Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other action, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.

Section 3.12. Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

ARTICLE IV.

DEFINITIONS

Section 4.1. Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international governmental authority or any arbitration
or mediation tribunal.

Section 4.2. Affiliated Company. "Affiliated Company" means, with respect
to HP, any entity in which HP holds a 50% or less ownership interest that is
listed on Schedule 7.1(a) to the Separation Agreement and, with respect to
Agilent, any entity in which Agilent holds a 50% or less ownership interest and
that is listed on Schedule 7.1(b) to the Separation Agreement. Schedules 7.1(a)
and 7.1(b) may be amended from time to time after the date hereof upon mutual
written consent of the parties.

Section 4.3. Agilent Business. "Agilent Business" means (a) the business
and operations of the business entities of HP currently known under the
following names, as described in the IPO Registration Statement and as such
business and operations will continue following the Separation Date: (i) the
Test and Measurement Organization, (ii) the Semiconductor Products Group, (iii)
the Chemical Analysis Group, (iv) the Healthcare Solutions Group and (v) the
portion of HP Labs and infrastructure organizations related to these businesses
and (b) except as otherwise expressly provided herein, any terminated, divested
or discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Agilent Business as then
conducted.

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<PAGE>

Section 4.4. Agilent Contingent Liability. "Agilent Contingent Liability"
means any Liability, other than Liabilities for Taxes (which are governed by the
Tax Sharing Agreement), of a member of the HP Group or the Agilent Group that
primarily relates to the Agilent Business, whenever arising, to any Person other
than a member of the HP Group or the Agilent Group, if and to the extent that
(i) such Liability arises out of the events, acts or omissions occurring as of
the Separation Date and (ii) the existence or scope of the obligation of a
member of the HP Group or the Agilent Group as of the Separation Date with
respect to such Liability was not acknowledged, fixed or determined in any
material respect, due to a dispute or other uncertainty as of the Separation
Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Separation Date (it being understood that the existence of a
litigation or other reserve with respect to any Liability shall not be
sufficient for such Liability to be considered acknowledged, fixed or
determined). In the case of any Liability a portion of which arises out of
events, acts or omissions occurring prior to the Separation Date and a portion
of which arises out of events, acts or omissions occurring on or after the
Separation Date, only that portion that arises out of events, acts or omissions
occurring prior to the Separation Date shall be considered an Agilent Contingent
Liability. For purposes of the foregoing, a Liability shall be deemed to have
arisen out of events, acts or omissions occurring prior to the Separation Date
if all the elements necessary for the assertion of a claim with respect to such
Liability shall have occurred on or prior to the Separation Date, such that the
claim, were it asserted in an Action on or prior to the Separation Date, would
not be dismissed by a court on ripeness or similar grounds. For purposes of
clarification of the foregoing, the parties agree that no Liability relating to,
arising out of or resulting from any obligation of any Person to perform the
executory portion of any contract or agreement existing as of the Separation
Date, or to satisfy any obligation accrued under any Plan (as defined in the
Employee Matters Agreement) as of the Separation Date, shall be deemed to be an
Agilent Contingent Liability. For purposes of determining whether a claim
relating to the Year 2000 problem is an Agilent Contingent Liability, claims
relating to products shipped prior to the Separation Date shall be deemed to
have arisen prior to the Separation Date.

Section 4.5. Agilent Contracts. "Agilent Contracts" has the meaning set
forth in Section 4.8 of the Assignment Agreement.

Section 4.6. Agilent Covered Parties. "Agilent Covered Parties" shall have
the meaning set forth in Section 2.1(a) of this Agreement.

Section 4.7. Agilent Facilities. "Agilent Facilities" means the total of
the Agilent Schedule 1 Facilities and the Agilent Schedule 2 Facilities.

Section 4.8. Agilent Group. "Agilent Group" means Agilent, each Subsidiary
and Affiliated Company of Agilent immediately after the Separation Date or that
is contemplated to be a Subsidiary or Affiliated Company of Agilent pursuant to
the Non-US Plan and each Person that becomes a Subsidiary or Affiliate Company
of Agilent after the Separation Date.

Section 4.9. Agilent Indemnitees. "Agilent Indemnitees" means Agilent,
each member of the Agilent Group and each of their respective directors,
officers and employees.

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Section 4.10. Agilent Liabilities. "Agilent Liabilities" has the meaning
set forth in Section 1.3 of the Assignment Agreement.

Section 4.11. Agilent Schedule 1 Facilities. "Agilent Schedule 1
Facilities" means the real property, groundwater, surface water and improvements
on those properties listed on the Owned and Leased Properties Spreadsheet (as
defined in the Real Estate Matters Agreement) excluding the Agilent Schedule 2
Facilities. In the event that, prior to the Separation Date, any property listed
on the Owned and Leased Properties Spreadsheet dated July 20, 1999 is
transferred to a third party (excluding any member of the HP Group or the
Agilent Group), HP and Agilent shall mutually agree, for the purposes of the
indemnification obligations set forth in Section 1.4 of this Agreement, whether
such property shall be considered an Agilent Schedule 1 Facility or an HP
Facility.

Section 4.12. Agilent Schedule 2 Facilities. "Agilent Schedule 2
Facilities" means the real property, groundwater, surface water and improvements
thereon which shall be owned or occupied by a member of the Agilent Group on and
after the Separation Date and which are identified on a disclosure letter
entitled "The Agilent Schedule 2 Facilities," which disclosure letter shall be
delivered to Agilent by HP on the Separation Date.

Section 4.13. Assets. "Assets" has the meaning set forth in Section 4.14 of
the Assignment Agreement.

Section 4.14. Assignment Agreement. "Assignment Agreement" means the
General Assignment and Assumption Agreement attached as Exhibit C to the
Separation Agreement.

Section 4.15. Change of Control. "Change of Control" with respect to any
Person means the occurrence of any of the following events:

(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of such Person representing 50% or more of the total
voting power represented by such Person's then outstanding voting securities; or

(ii) A change in the composition of the Board of Directors of
such Person occurring within a two-year period as a result of which fewer than a
majority of the directors are "Incumbent Directors." "Incumbent Directors" shall
mean directors who either (A) are directors of such Person as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
with the affirmative votes (either by a specific vote or by approval of the
proxy statement of such Person in which such person is named as a nominee for
election as a director without objection to such nomination) of at least three-
quarters of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors of such Person); or

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<PAGE>

(iii) The consummation of (A) a merger or consolidation of such
Person with any other corporation, other than a merger or consolidation which
would result in the voting securities of such Person outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or the entity
that controls such surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of such Person, such surviving
entity or the entity that controls such Person or such surviving entity
outstanding immediately after such merger or consolidation, or (B) the sale or
disposition by such Person of all or substantially all such Person's assets; or

(iv) The shareholders of such Person approve a plan of complete
liquidation of such Person.

Section 4.16. Claims Committee. "Claims Committee" means a committee
composed of (i) either the General Counsel or Associate General Counsel of HP
and (i) either the General Counsel or Associate General Counsel of Agilent.

Section 4.17. Commingled Claims. "Commingled Claims" has the meaning set
forth in Section 1.5(b) of this Agreement.

Section 4.18. Coverage Amount. "Coverage Amount" has the meaning set forth
in Section 2.6(a) of this Agreement.

Section 4.19. Employee Matters Agreement. "Employee Matters Agreement"
means the Employee Matters Agreement attached as Exhibit E to the Separation
Agreement.

Section 4.20. Environmental Actions. "Environmental Actions" means any
notice, claim, act, cause of action, order, decree or investigation by any third
party (including, without limitation, any Governmental Authority) alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, damage to
flora or fauna caused by Environmental Conditions, real property damages,
personal injuries or penalties) arising out of, based on or resulting from the
Release of any Hazardous Materials. "Environmental Actions" shall not include
any personal injury claim made by any employee of the Agilent Group or the HP
Group arising during the course or scope of the employment of such employee for
the HP Group or for the Agilent Group.

Section 4.21. Environmental Conditions. "Environmental Conditions" means
the presence in the environment, including the soil, groundwater, surface water
or ambient air, of any Hazardous Material at a level which requires
investigation or remediation (including, without limitation, investigation,
study, health or risk assessment, monitoring, removal, treatment or transport)
under any Environmental Laws.

Section 4.22. Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating

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<PAGE>

to the treatment, storage, disposal, transport or handling of Hazardous
Materials, or to the exposure of any individual to a Release of Hazardous
Materials.

Section 4.23. Excess Portion. "Excess Portion" means that portion, if any,
of the aggregate amount actually paid by Agilent (together with any members of
the Agilent Group), in respect of any single Agilent Contingent Liability or any
Related Agilent Contingent Liabilities that is in excess of $50 million.

Section 4.24. Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.

Section 4.25. HP Business. "HP Business" means any business of HP other
than the Agilent Business.

Section 4.26. HP Facilities. "HP Facilities" means all of the real property
and improvements thereon owned or occupied at any time on or before the
Separation Date by HP, whether for the HP Business or the Agilent Business,
excluding the Agilent Facilities.

Section 4.27. HP Group. "HP Group" means HP, each Subsidiary and Affiliated
Company of HP (other than any member of the Agilent Group) immediately after the
Separation Date, after giving effect to the Non-US Plan and each Person that
becomes a Subsidiary or Affiliate Company of HP after the Separation Date.

Section 4.28. HP Indemnitees. "HP Indemnitees" means HP, each member of the
HP Group and each of their respective directors, officers and employees.

Section 4.29. Indemnitee. "Indemnitee" has the meaning set forth in Section
1.5(a) hereof.

Section 4.30. Insurance Policies. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.

Section 4.31. Insurance Proceeds. "Insurance Proceeds" means those monies:

(a) received by an insured from an insurance carrier; or

(b) paid by an insurance carrier on behalf of the insured;

from Insurance Policies.

Section 4.32. Insurance Transition Period. "Insurance Transition Period"
has the meaning set forth in Section 2.1 of this Agreement.

Section 4.33. Insured Agilent Liability. "Insured Agilent Liability" means
any Agilent Liability to the extent that (i) it is covered under the terms of
HP's Insurance Policies in effect prior

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<PAGE>

to the Distribution Date and (ii) Agilent is not a named insured under, or
otherwise entitled to the benefits of, such Insurance Policies.

Section 4.34. IPO Liabilities. "IPO Liabilities" means any Liabilities of
the Agilent Group or the HP Group relating to, arising out of or resulting from
any untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, with respect to all
information contained in any IPO Registration Statement or any preliminary,
final or supplemental prospectus forming a part of a IPO Registration Statement.

Section 4.35. IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act to
be filed with the SEC registering the shares of common stock of Agilent to be
issued in the IPO, together with all amendments thereto.

Section 4.36. Liabilities. "Liabilities" has the meaning set forth in the
Assignment Agreement.

Section 4.37. Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit M of the Separation Agreement.

Section 4.38. Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.

Section 4.39. Pre-Separation Third Party Site Liabilities. "Pre-Separation
Third Party Site Liabilities" means any and all Environmental Actions arising
out of Hazardous Materials found on, under or about any landfill any waste
storage, transfer or recycling site and resulting from or arising out of
Hazardous Materials stored, treated, recycled disposed or otherwise handled at
such site prior to the Separation Date (whether for the operation of the Agilent
Business or for the operation of any past or presently (as of the date hereof)
existing HP Business as operated on or before the Separation Date).

Section 4.40. Prime Rate. "Prime Rate" means the prime rate as published in
the Wall Street Journal on the date of determination.

Section 4.41. Related Agilent Contingent Liabilities. "Related Agilent
Contingent Liabilities" means any set or group of Agilent Contingent Liabilities
arising from any single Action (including any group of Actions that are
consolidated as a single Action and any Action or Actions certified as a class
action) or any Action that is brought or threatened to be brought as a class
action and that is settled.

Section 4.42. Release. "Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air, soil,
surface water, groundwater, wetlands, land or subsurface strata.

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<PAGE>

Section 4.43. Separation. "Separation" means the transfer and contribution
from HP to Agilent, and Agilent's receipt and assumption of, directly or
indirectly, substantially all of the Assets and Liabilities currently associated
with the Agilent Business and the stock, investments or similar interests
currently held by HP in subsidiaries and other entities that conduct such
business.

Section 4.44. Separation Agreement. "Separation Agreement" means the Master
Separation and Distribution Agreement dated as of August 12, 1999, of which this
is an Exhibit thereto.

Section 4.45. Separation Date. "Separation Date" means 12:01 a.m., Pacific
Time, November 1, 1999, or such date as may be fixed by the Board of Directors
of HP.

Section 4.46. Shared Agilent Percentage. "Shared Agilent Percentage" means
18%.

Section 4.47. Shared HP Percentage. "Shared HP Percentage" means 82%.

Section 4.48. Shared Percentage. "Shared Percentage" means the Shared
Agilent Percentage or the Shared HP Percentage, as the case may be.

Section 4.49. Subsidiary. "Subsidiary" means with respect to any specified
Person, any corporation, any limited liability company, any partnership or other
legal entity of which such Person or its Subsidiaries owns, directly or
indirectly, more than 50% of the stock or other equity interest entitled to vote
on the election of the members of the board of directors or similar governing
body. Unless context otherwise requires, reference to HP and its Subsidiaries
shall not include the subsidiaries of HP that will be transferred to Agilent
after giving effect to the Separation, including the actions taken pursuant to
the Non-US Plan.

Section 4.50. Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Separation Agreement.

Section 4.51. Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.

Section 4.52. Third Party Claim. "Third Party Claim" has the meaning set
forth in Section 1.5(a) of this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

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<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.

HEWLETT PACKARD COMPANY

By:________________________________
Name:
Title: President and Chief Executive
Officer

AGILENT TECHNOLOGIES, INC.

By:________________________________
Name:
Title: President and Chief Executive
Officer

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<PAGE>

EXHIBIT 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION

HP MEASUREMENT, INC.

HP Measurement, Inc., a corporation organized and existing under the laws
of the State of Delaware, does hereby certify:

1. The name of the corporation is HP Measurement, Inc. HP Measurement,
Inc. was originally incorporated under the same name, and the original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on May 4, 1999.

2. Pursuant to Sections 242 and 228 of the General Corporation Law of the
State of Delaware, the amendments and restatement herein set forth have been
duly approved by the Board of Directors and stockholders of HP Measurement, Inc.

3. Pursuant to Section 245 of the General Corporation Law of the State of
Delaware, this Amended and Restated Certificate of Incorporation restates and
integrates and amends the provisions of the Amended and Restated Certificate of
Incorporation of this corporation.

4. The text of the Restated Certificate of Incorporation is hereby
restated and amended to read in its entirety as follows:

ARTICLE I

The name of the Corporation is Agilent Technologies, Inc. (the
"Corporation").

ARTICLE II

The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, Wilmington, Delaware 19801, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware, as
the same exists or may hereafter be amended.

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<PAGE>

ARTICLE IV

The Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock, par value $0.01 per share ("Common
Stock") and Preferred Stock, par value $0.01 per share ("Preferred Stock"). The
total number of shares of Common Stock that the Corporation shall have authority
to issue is 2,000,000,000. The total number of shares of Preferred Stock that
the Corporation shall have authority to issue is 125,000,000. The Preferred
Stock may be issued from time to time in one or more series.

The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of all outstanding
Preferred Stock.

The Board of Directors is hereby authorized, subject to limitations
prescribed by law and the provisions of this Article IV, by resolution to
provide for the issuance of the shares of Preferred Stock in one or more series,
and to establish from time to time the number of shares to be included in each
such series, and to fix the designation, powers, privileges, preferences, and
relative participating, optional or other rights, if any, of the shares of each
such series and the qualifications, limitations or restrictions thereof.

The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:

A. The number of shares constituting that series (including an
increase or decrease in the number of shares of any such series (but not
below the number of shares in any such series then outstanding)) and the
distinctive designation of that series;

B. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;

C. Whether that series shall have the voting rights (including
multiple or fractional votes per share) in addition to the voting rights
provided by law, and, if so, the terms of such voting rights;

D. Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such privileges, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;

E. Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption rates;

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<PAGE>

F. Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and the amount
of such sinking funds;

G. The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of that
series; and

H. Any other relative rights, preferences and limitations of that
series.

No holders of shares of the Corporation of any class, now or hereafter
authorized, shall have any preferential or preemptive rights to subscribe for,
purchase or receive any shares of the Corporation of any class, now or hereafter
authorized, or any options or warrants for such shares, or any rights to
subscribe for, purchase or receive any securities convertible to or exchangeable
for such shares, which may at any time be issued, sold or offered for sale by
the Corporation, except in the case of any shares of Preferred Stock to which
such rights are specifically granted by any resolution or resolutions of the
Board of Directors adopted pursuant to this Article IV.

ARTICLE V

Effective as of the time at which Hewlett-Packard Company, a Delaware
corporation, and its affiliates shall cease to be the beneficial owner of an
aggregate of at least a majority of the then outstanding shares of Common Stock
(the "Trigger Date"), any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by such holders. Effective as of the Trigger Date, except as otherwise
required by law and subject to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to dividends or upon
liquidation, special meetings of stockholders of the Corporation for any purpose
or purposes may be called only by the Board of Directors or by the Chairman of
the Board of Directors of the Corporation and, effective as of the Trigger Date,
any power of stockholders to call a special meeting is specifically denied. No
business other than that stated in the notice shall be transacted at any special
meeting.

ARTICLE VI

The Corporation is to have perpetual existence.

ARTICLE VII

For the management of the business and for the conduct of affairs of the
Corporation, and in further definition, limitation and regulation of powers of
the Corporation, of its directors and of its stockholders or any class thereof,
as the case may be, it is further provided that:

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<PAGE>

A. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors of this Corporation shall be fixed and may be changed from time to
time by resolution of the Board of Directors.

B. The Directors, other than those who may be elected by the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, shall be classified, with respect to
the time for which they severally hold office, into three classes, as nearly
equal in number as possible, one class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in 2000, another class
to be originally elected for a term expiring at the annual meeting of
stockholders to be held in 2001, and another class to be originally elected for
a term expiring at the annual meeting of stockholders to be held in 2002, with
each class to hold office until its successor is duly elected and qualified. At
each succeeding annual meeting of stockholders, directors elected to succeed
those directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election.

C. Notwithstanding the foregoing provisions of this Article VII,
each director shall serve until his or her successor is duly elected and
qualified or until his or her death, resignation or removal. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.

D. Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes unless the Board of
Directors determines by resolution that any such vacancies or newly created
directorships shall be filled by stockholders, and except as otherwise provided
by law, shall be filled only by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors and not by the stockholders.

E. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, alter, amend or repeal the Bylaws of the Corporation.

F. The directors of the Corporation need not be elected by written
ballot unless the Bylaws of the Corporation so provide.

G. Advance notice of stockholder nomination for the election of
directors and of any other business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.

ARTICLE VIII

A. To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.

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<PAGE>

B. The Corporation may indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.

C. Neither any amendment nor repeal of this Article VIII, nor the adoption
of any provision of this Corporation=s Certificate of Incorporation inconsistent
with this Article VIII, shall eliminate or reduce the effect of this Article
VIII, in respect of any matter occurring, or any action or proceeding accruing
or arising or that, but for this Article VIII, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent provision.

ARTICLE IX

Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.

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<PAGE>

ARTICLE X

Except as provided in Article VIII above, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by the
laws of the state of Delaware, and all rights conferred upon stockholders herein
are granted subject to this reservation. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of all shares of the Corporation
entitled to vote generally in the election of directors (the "Voting Stock")
then outstanding, voting together as a single class shall be required to alter,
amend, adopt any provision inconsistent with or repeal Article V or VII or this
sentence.

IN WITNESS WHEREOF, HP Measurement, Inc. has caused this Amended and
Restated Certificate of Incorporation to be executed by D. Craig Nordlund, its
Secretary this 29th day of July 1999.

/s/ D. CRAIG NORDLUND
----------------------------------
D. CRAIG NORDLUND
Associate General Counsel
and Secretary

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<PAGE>

Exhibit 3.2

BYLAWS

AGILENT TECHNOLOGIES, INC.
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TABLE OF CONTENTS
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ARTICLE I - CORPORATE OFFICES........................................... 1

1.1 Registered Office............................................ 1
1.2 Other Offices................................................ 1

ARTICLE II - MEETINGS OF STOCKHOLDERS................................... 1

2.1 Place of Meetings............................................ 1
2.2 Annual Meeting............................................... 1
2.3 Special Meeting.............................................. 2
2.4 Organization................................................. 2
2.5 Notice of Stockholders' Meetings............................. 3
2.6 Manner of Giving Notice; Affidavit of Notice................. 3
2.7 Quorum....................................................... 3
2.8 Adjourned Meeting; Notice.................................... 4
2.9 Voting....................................................... 4
2.10 Validation of Meetings; Waiver of Notice; Consent............ 4
2.11 No Stockholder Action by Written Consent..................... 4
2.12 Record Date for Stockholder Notice; Voting; Giving Consents.. 4
2.13 Proxies...................................................... 5
2.14 Inspectors of Election....................................... 5

ARTICLE III - DIRECTORS................................................. 6

3.1 Powers....................................................... 6
3.2 Number....................................................... 6
3.3 Election and Term of Office of Directors..................... 6
3.4 Resignation and Vacancies.................................... 6
3.5 Removal...................................................... 7
3.6 Place of Meetings; Meetings by Telephone..................... 7
3.7 Regular Meetings............................................. 7
3.8 Special Meetings; Notice..................................... 7
3.9 Quorum....................................................... 8
3.10 Waiver of Notice............................................. 8
3.11 Adjournment.................................................. 8
3.12 Notice of Adjournment........................................ 8
3.13 Board Action by Written Consent Without a Meeting............ 8
3.14 Organization................................................. 8
3.15 Fees and Compensation of Directors........................... 9

ARTICLE IV - COMMITTEES................................................. 9

4.1 Committees of Directors...................................... 9
4.2 Meetings and Action of Committees............................ 9
4.3 Committee Minutes............................................ 9
4.4 Executive Committee.......................................... 9
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ARTICLE V - OFFICERS.................................................... 9

5.1 Officers..................................................... 9
5.2 Election of Officers......................................... 10
5.3 Terms of Office and Compensation............................. 10
5.4 Removal; Resignation of Officers and Vacancies............... 10
5.5 Chairman of the Board........................................ 10
5.6 Vice Chairman of the Board................................... 10
5.7 Chairman of Executive Committee.............................. 10
5.8 President.................................................... 10
5.9 Vice Presidents.............................................. 11
5.10 Secretary.................................................... 11
5.11 Chief Financial Officer...................................... 12

ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS............................................. 12

6.1 Indemnification of Directors and Officers.................... 12
6.2 Indemnification of Others.................................... 12
6.3 Insurance.................................................... 13
6.4 Expenses..................................................... 13
6.5 Non-Exclusivity of Rights.................................... 13
6.6 Survival of Rights........................................... 13
6.7 Amendments................................................... 13

ARTICLE VII - RECORDS AND REPORTS....................................... 14

7.1 Maintenance and Inspection of Records........................ 14
7.2 Inspection by Director....................................... 14
7.3 Representation of Shares of Other Corporations............... 14

ARTICLE VIII - GENERAL MATTERS.......................................... 14

8.1 Record Date for Purposes Other than Notice and Voting........ 14
8.2 Checks; Drafts; Evidences of Indebtedness.................... 14
8.3 Corporate Contracts and Instruments; How Executed............ 15
8.4 Fiscal Year.................................................. 15
8.5 Stock Certificates........................................... 15
8.6 Special Designation on Certificates.......................... 15
8.7 Lost Certificates............................................ 15
8.8 Construction; Definitions.................................... 15
8.9 Provisions Additional to Provisions of Law................... 15
8.10 Provisions Contrary to Provisions of Law..................... 16
8.11 Notices...................................................... 16

ARTICLE IX - AMENDMENTS................................................. 16
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BYLAWS
OF
AGILENT TECHNOLOGIES, INC.

ARTICLE I

CORPORATE OFFICES

1.1 Registered Office. The registered office of the corporation
shall be fixed in the Certificate of Incorporation of the corporation.

1.2 Other Offices. The board of directors may at any time establish
branch or subordinate offices at any place or places where the corporation is
qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 Place of Meetings. Meetings of stockholders shall be held at
any place within or outside the State of Delaware designated by the board of
directors. In the absence of any such designation, stockholders' meetings shall
be held at the registered office of the corporation.

2.2 Annual Meeting.

(a) The annual meeting of stockholders shall be held each year on a
date and at a time designated by the board of directors. At the
meeting, directors shall be elected, and any other proper
business may be transacted.

(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting,
business must be: (A) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the
board of directors, (B) otherwise properly brought before the
meeting by or at the direction of the board of directors, or
(C) otherwise properly brought before the meeting by a
stockholder. For nominations or other business to be properly
brought before a stockholders meeting by a stockholder pursuant
to clause (C) of the preceding sentence, the stockholder must
have given timely notice thereof in writing to the Secretary of
the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the corporation not less than
one hundred twenty (120) calendar days in advance of the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that (i) no annual meeting was held
in the previous year or (ii) the date of the annual meeting has
been changed by more than thirty (30) days from the date of the
previous year's meeting, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on
the later of: (i) the day one hundred twenty (120) calendar
days in advance of such meeting or (ii) the day ten (10)
calendar days following the day on which public announcement of
the date of the meeting is first made. For purposes of
determining whether a stockholder's notice shall have been
delivered in a timely manner for the annual meeting of
stockholders in 2000, the first anniversary of the previous
year's meeting shall be deemed to be February 23, 2000. In no
event shall the public announcement of an adjournment of a
stockholders meeting commence a new time period for the giving
of a stockholder's notice as described above. A stockholder's
notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (a) a
brief description of the business desired to be brought before
the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such
business, (c) the class number of shares of the corporation
which are
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owned beneficially by such stockholder, (d) any material
interest of the stockholder in such business, and (e) any other
information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "1934 Act") (or any successor thereto) in
such stockholder's capacity as a proponent of a stockholder
proposal. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this
paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that
business was not properly brought before the meeting and in
accordance with the provisions of this paragraph (b), and, if
he should so determine, he shall so declare at the meeting that
any such business not properly brought before the meeting shall
not be transacted.

(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible
for election as directors. Nominations of persons for election
to the board of directors of the corporation may be made at a
meeting of stockholders by or at the direction of the board of
directors or by any stockholder of the corporation entitled to
vote in the election of directors at the meeting who complies
with the notice procedures set forth in this paragraph (c).
Such nominations, other than those made by or at the direction
of the board of directors, shall be made pursuant to timely
notice in writing to the secretary of the corporation in
accordance with the provisions of paragraph (b) of this Section
2.2. Such stockholder's notice shall set forth (i) as to each
person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age,
business address and residence address of such person, (B) the
principal occupation or employment of such person, (C) the
class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nominations are to be made by
the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of
proxies for elections of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the 1934 Act (or
any successor thereto) (including without limitation such
person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected);
and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this
Section 2.2. At the request of the board of directors, any
person nominated by a stockholder for election as a director
shall furnish to the secretary of the corporation that
information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation
unless nominated in accordance with the procedures set forth in
this paragraph (c). The chairman of the meeting shall, if the
facts warrant, determine and declare at the meeting that a
nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he
shall so declare at the meeting, and the defective nomination
shall be disregarded.

2.3 Special Meeting. A special meeting of the stockholders may be
called at any time by the board of directors or the chairman of the board. In
addition, prior to the Trigger Date (as defined in the Certificate of
Incorporation), the corporation will call a special meeting of stockholders
promptly upon request by Hewlett-Packard Company, a Delaware corporation, so
long as such entity is a stockholder of the corporation. Special meetings of the
stockholders may not be called by any other person or persons. Only such
business shall be considered at a special meeting of stockholders as shall have
been stated in the notice for such meeting.

2.4 Organization. Meetings of stockholders shall be presided over
by the chairman of the board, if any, or in his or her absence by the vice
chairman of the board, if any, or in his or her absence, or in the absence of
the foregoing persons by a chairman of the meeting, which chairman must be an
officer or director of the Company, designated by the board of directors. The
secretary or in his or her absence an assistant secretary or in the absence of
the secretary and all assistant secretaries a person whom the chairman of the
meeting shall appoint shall act as secretary of the meeting and keep a record of
the proceedings thereof.

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The board of directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the board of directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting and matters which are to be voted
on by ballot. Unless and to the extent determined by the board of directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.

2.5 Notice of Stockholders' Meetings. All notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 2.6 of
these Bylaws not less than ten (10) nor more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date, and hour of the
meeting and (i) in the case of a special meeting, the purpose or purposes for
which the meeting is called (no business other than that specified in the notice
may be transacted) or (ii) in the case of the annual meeting, those matters
which the board of directors, at the time of giving the notice, intends to
present for action by the stockholders (but any proper matter may be presented
at the meeting for such action). The notice of any meeting at which directors
are to be elected shall include the name of any nominee or nominees who, at the
time of the notice, the board intends to present for election.

2.6 Manner of Giving Notice; Affidavit of Notice. Notice of any
meeting of stockholders shall be given either personally or by mail, telecopy,
telegram or other electronic or wireless means. Notices not personally delivered
shall be sent charges prepaid and shall be addressed to the stockholder at the
address of that stockholder appearing on the books of the corporation or given
by the stockholder to the corporation for the purpose of notice. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or at the time of transmission when sent by telecopy, telegram or other
electronic or wireless means.

An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice or report.

2.7 Quorum. The holders of a majority in voting power of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum is not
present or represented at any meeting of the stockholders, then either (i) the
chairman of the meeting or (ii) the stockholders by the vote of the holders of a
majority of the stock, present in person or represented by proxy shall have
power to adjourn the meeting in accordance with Section 2.8 of these Bylaws.

When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the Certificate of Incorporation or these Bylaws, a vote of a greater number
or voting by classes is required, in which case such express provision shall
govern and control the decision of the question.

If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.

2.8 Adjourned Meeting; Notice. Any stockholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the voting power of the shares represented at
that meeting, either in person or by proxy. In the absence of a quorum, no other
business may be transacted at that meeting except as provided in Section 2.7 of
these Bylaws.

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When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than thirty (30) days from the date set
for the original meeting, then notice of the adjourned meeting shall be given.
Notice of any such adjourned meeting shall be given to each stockholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.5 and 2.6 of these Bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.

2.9 Voting. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.12 of these Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgers and joint owners, and to voting trusts and other voting agreements).

Except as may be otherwise provided in the Certificate of
Incorporation, by these Bylaws or required by law, each stockholder shall be
entitled to one vote for each share of capital stock held by such stockholder.

Any stockholder entitled to vote on any matter may vote part of the
shares in favor of the proposal and refrain from voting the remaining shares or,
except when the matter is the election of directors, may vote them against the
proposal; but if the stockholder fails to specify the number of shares which the
stockholder is voting affirmatively, it will be conclusively presumed that the
stockholder's approving vote is with respect to all shares which the stockholder
is entitled to vote.

2.10 Validation of Meetings; Waiver of Notice; Consent. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though they had been
taken at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy.

Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
these Bylaws, a written waiver thereto, signed by the person entitled to notice,
whether before or after the time stated therein, will be deemed equivalent to
notice. Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders need be specified
in any written waiver of notice unless so required by the Certificate of
Incorporation or these Bylaws.

2.11 No Stockholder Action by Written Consent. Effective as of the
Trigger Date, any action required or permitted to be taken by the stockholders
of the corporation must be effected at a duly called annual or special meeting
of such holders and may not be effected by any consent in writing by such
holders.

2.12 Record Date for Stockholder Notice; Voting; Giving Consents.
For purposes of determining the stockholders entitled to notice of any meeting
or to vote thereat, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting, and in such event only stockholders of record on
the date so fixed are entitled to notice and to vote, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Certificate of Incorporation, by these
Bylaws, by agreement or by applicable law.

If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.

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A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.

The record date for any other purpose shall be as provided in Section
8.1 of these Bylaws.

2.13 Proxies. Every person entitled to vote for directors, or on any
other matter, shall have the right to do so either in person or by one or more
agents authorized by a written proxy filed with the secretary of the
corporation. A written proxy may be in the form of a telegram, cablegram, or
other means of electronic transmission which sets forth or is submitted with
information from which it can be determined that the telegram, cablegram, or
other means of electronic transmission was authorized by the person. No such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power.
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of Section 212(e) of the General Corporation Law
of Delaware. A stockholder may revoke any proxy which is not irrevocable by
attending the meeting and voting in person or by filing an instrument in writing
revoking the proxy or by filing another duly executed proxy bearing a later date
with the secretary of the corporation.

A proxy is not revoked by the death or incapacity of the maker unless,
before the vote is counted, written notice of such death or incapacity is
received by the corporation.

2.14 Inspectors of Election. Before any meeting of stockholders, the
board of directors shall appoint an inspector or inspectors of election to act
at the meeting or its adjournment. The number of inspectors shall be either one
(1) or three (3). If any person appointed as inspector fails to appear or fails
or refuses to act, then the chairman of the meeting may, and upon the request of
any stockholder or a stockholder's proxy shall, appoint a person to fill that
vacancy.

Such inspectors shall:

(a) determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and
effect of proxies;

(b) receive votes, ballots or consents;

(d) count and tabulate all votes or consents;

(e) determine when the polls shall close;

(f) determine the result; and

(g) do any other acts that may be proper to conduct the election or
vote with fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three (3) inspectors of election, the decision, act or certificate
of a majority is effective in all respects as the decision, act or certificate
of all. Any report or certificate made by the inspectors of election is prima
facie evidence of the facts stated therein.

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ARTICLE III

DIRECTORS

3.1 Powers. Subject to the provisions of the General Corporation
Law of Delaware and to any limitations in the Certificate of Incorporation or
these Bylaws relating to action required to be approved by the stockholders or
by the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the board of directors.

3.2 Number. The authorized number of directors shall be fixed and
may be changed from time to time by resolution of the Board of Directors.

No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
If for any cause, the directors shall not have been elected at an annual
meeting, they may be elected as soon thereafter as convenient at a special
meeting of the stockholders called for that purpose in the manner provided in
these Bylaws.

3.3 Election and Term of Office of Directors. Except as provided in
the Certificate of Incorporation or Section 3.4 of these Bylaws, directors shall
be classified, with respect to the time for which they severally hold office,
into three classes, as nearly equal in number as possible, one class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 2000, another class to be originally elected for a term expiring at
the annual meeting of stockholders to be held in 2001, and another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 2002, with each class to hold office until its successor is duly
elected and qualified. At each succeeding annual meeting of stockholders,
directors elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual meeting of
stockholders after their election, with each director to hold office until such
person's successor shall have been elected and qualified or until such person's
earlier resignation or removal. Each director, including a director elected or
appointed to fill a vacancy, shall hold office until his successor is elected
and qualified or until his earlier resignation or removal.

Directors need not be stockholders unless so required by the
Certificate of Incorporation or by these Bylaws; wherein other qualifications
for directors may be prescribed.

Election of directors need not be by written ballot unless so required
by the Certificate of Incorporation or by these Bylaws; wherein other
qualifications for directors may be prescribed.

3.4 Resignation and Vacancies. Any director may resign effective on
giving written notice to the chairman of the board, the president, the secretary
or the board of directors, unless the notice specifies a later time for that
resignation to become effective. If the resignation of a director is effective
at a future time, the board of directors may elect a successor to take office
when the resignation becomes effective.

Unless otherwise provided in the Certificate of Incorporation or these
Bylaws:

(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single class
may be filled by a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director.
Each director so elected shall hold office for the remainder of
the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until a
successor has been elected and qualified.

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(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the
provisions of the Certificate of Incorporation, vacancies and
newly created directorships of such class or classes or series
may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole
remaining director so elected.

If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders solely for he
purpose of electing directors in accordance with the provisions of the
Certificate of Incorporation or these Bylaws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of the General Corporation Law of Delaware.

If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten percent (10%) of the total number of the then outstanding
shares having the right to vote for such directors, summarily order an election
to be held to fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.

3.5 Removal. Unless otherwise restricted by statute, by the
Certificate of Incorporation or by these Bylaws, any director or the entire
board of directors may be removed from office only for cause by the holders of a
majority of the shares then entitled to vote at an election of directors.

3.6 Place of Meetings; Meetings by Telephone. Regular meetings of
the board of directors may be held at any place within or outside the State of
Delaware that has been designated from time to time by resolution of the board
of directors. In the absence of such a designation, regular meetings shall be
held at the principal executive office of the corporation. Special meetings of
the board of directors may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.

Any meeting, regular or special, may be held by conference telephone
or similar communication equipment, so long as all directors participating in
the meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.

3.7 Regular Meetings. Regular meetings of the board of directors
may be held without notice if the times of such meetings are fixed by the board
of directors.

3.8 Special Meetings; Notice. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the chairman
of the board, the vice chairman of the board, the president, the chairman of the
executive committee, any vice president or the secretary or by any two (2) or
more of the directors.

Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by mail, telecopy, telegram
or other electronic or wireless means, charges prepaid, addressed to each
director at that director's address as it is shown on the records of the
corporation or if the address is not readily ascertainable, notice shall be
addressed to the director at the city or place in which the meetings of
directors are regularly held. If the notice is mailed, it shall be deposited in
the United States mail at least four (4) days before the time of the holding of
the meeting. If the notice is delivered personally or by telephone, telecopy,
telegram or other electronic or wireless means, it shall be delivered personally
or by telephone or other electronic or wireless means or to the telegraph
company at least twenty-four (24) hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice

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has reason to believe will promptly communicate it to the director. If the
meeting is to be held at the principal executive office of the corporation, the
notice need not specify the place of the meeting. Moreover, a notice of special
meeting need not state the purpose of such meeting, and, unless indicated in the
notice thereof, any and all business may be transacted at a special meeting.

3.9 Quorum. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to fill vacancies in
the board of directors as provided in Section 3.4 and to adjourn as provided in
Section 3.11 of these Bylaws. Every act or decision done or made by a majority
of the directors present at a duly held meeting at which a quorum is present
shall be regarded as the act of the board of directors, subject to the
provisions of the Certificate of Incorporation and applicable law.

A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.

3.10 Waiver of Notice. Notice of a meeting need not be given to any
director (i) who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or (ii)
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such directors. The transactions of any
meeting of the board, however called and noticed or wherever held, are as valid
as though had at a meeting duly held after regular call and notice if a quorum
is present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice. All such waivers shall be filed with
the corporate records or made part of the minutes of the meeting. A waiver of
notice need not specify the purpose of any regular or special meeting of the
board of directors.

3.11 Adjournment. A majority of the directors present, whether or
not constituting a quorum, may adjourn any meeting to another time and place.

3.12 Notice of Adjournment. Notice of the time and place of holding
an adjourned meeting need not be given if announced unless the meeting is
adjourned for more than twenty-four (24) hours. If the meeting is adjourned for
more than twenty-four (24) hours, then notice of the time and place of the
adjourned meeting shall be given before the adjourned meeting takes place, in
the manner specified in Section 3.8 of these Bylaws, to the directors who were
not present at the time of the adjournment.

3.13 Board Action by Written Consent Without a Meeting. Any action
required or permitted to be taken by the board of directors may be taken without
a meeting, provided that all members of the board of directors individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.

3.14 Organization. Meetings of the board of directors shall be
presided over by the chairman of the board, if any, or in his or her absence by
the vice chairman of the board, if any, or in his or her absence by the chairman
of the executive committee, if any, or in his or her absence by the president,
if any, or in his or her absence by the executive vice president. In the absence
of all such directors, a president pro tem chosen by a majority of the directors
present shall preside at the meeting. The secretary shall act as secretary of
the meeting, but in his or her absence the chairman of the meeting may appoint
any person to act as secretary of the meeting.

3.15 Fees and Compensation of Directors. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
board of directors. This Section 3.15 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.

ARTICLE IV

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COMMITTEES

4.1 Committees of Directors. The board of directors may designate
one (1) or more committees, each consisting of one or more directors, to serve
at the pleasure of the board of directors. The board of directors may designate
one (1) or more directors as alternate members of any committee, who may replace
any absent member at any meeting of the committee. Any committee, to the extent
provided in the resolution of the board, shall have all the authority of the
board, but no such committee shall have the power or authority to (i) approve or
adopt or recommend to the stockholders any action or matter that requires the
approval of the stockholders or (ii) adopt, amend or repeal any Bylaw of the
corporation.

4.2 Meetings and Action of Committees. Meetings and actions of
committees shall be governed by, and held and taken in accordance with, the
provisions of Article III of these Bylaws, Section 3.6 (place of meetings),
Section 3.7 (regular meetings), Section 3.8 (special meetings and notice),
Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11
(adjournment), Section 3.12 (notice of adjournment), and Section 3.13 (action
without meeting), with such changes in the context of those Bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these Bylaws.

4.3 Committee Minutes. Each committee shall keep regular minutes of
its meetings and report the same to the board of directors when required.

4.4 Executive Committee. In the event that the board of directors
appoints an executive committee, such executive committee, in all cases in which
specific directions to the contrary shall not have been given by the board of
directors, shall have and may exercise, during the intervals between the
meetings of the board of directors, all the powers and authority of the board of
directors in the management of the business and affairs of the corporation
(except as provided in Section 4.1 hereof) in such manner as the executive
committee may deem in the best interests of the corporation.

ARTICLE V

OFFICERS

5.1 Officers. The officers of this corporation shall consist of a
president, one or more vice presidents, a secretary and a chief financial
officer who shall be chosen by the Board of Directors and such other officers,
including but not limited to a chairman of the board, a vice chairman of the
board, a chairman of the executive committee and a treasurer as the board of
directors shall deem expedient, who shall be chosen in such manner and hold
their offices for such terms as the board of directors may prescribe. Any two or
more of such offices may be held by the same person. The board of directors may
designate one or more vice presidents as executive vice presidents or senior
vice presidents. Either the chairman of the board, the vice chairman of the
board, the chairman of the executive committee, or the president, as the board
of directors may designate from time to time, shall be the chief executive
officer of the corporation. The board of directors may from time to time
designate the president or any executive vice president as the chief operating
officer of the corporation. Any vice president, treasurer or assistant
treasurer, or assistant secretary respectively may exercise any of the powers of
the president, the chief financial officer, or the secretary, respectively, as
directed by the board of directors and shall perform such other duties as are
imposed upon such officer by the Bylaws or the board of directors.

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5.2 Election of Officers. In addition to officers elected by the
board of directors in accordance with Sections 5.1 and 5.3, the corporation may
have one or more appointed vice presidents. Such vice presidents may be
appointed by the chairman of the board or the president and shall have such
duties as may be established by the chairman or president. Vice presidents
appointed pursuant to this Section 5.2 may be removed in accordance with Section
5.4.

5.3 Terms of Office and Compensation. The term of office and salary
of each of said officers and the manner and time of the payment of such salaries
shall be fixed and determined by the board of directors and may be altered by
said board from time to time at its pleasure, subject to the rights, if any, of
said officers under any contract of employment.

5.4 Removal; Resignation of Officers and Vacancies. Any officer of
the corporation may be removed at the pleasure of the board of directors at any
meeting or, except in the case of an officer chosen by the board of directors,
at the pleasure of any officer who may be granted such power by a resolution of
the board of directors. Any officer may resign at any time upon written notice
to the corporation without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. If any vacancy occurs in any
office of the corporation, the board of directors may elect a successor to fill
such vacancy for the remainder of the unexpired term and until a successor is
duly chosen and qualified.

5.5 Chairman of the Board. The chairman of the board, if such an
officer be elected, shall have general supervision, direction and control of the
corporation's business and its officers, and, if present, preside at meetings of
the stockholders and the board of directors and exercise and perform such other
powers and duties as may from time to time be assigned to him by the board of
directors or as may be prescribed by these Bylaws. The chairman of the board
shall report to the board of directors.

5.6 Vice Chairman of the Board. The vice chairman of the board of
directors, if there shall be one, shall, in the case of the absence, disability
or death of the chairman, exercise all the powers and perform all the duties of
the chairman of the board. The vice chairman shall have such other powers and
perform such other duties as may be granted or prescribed by the board of
directors.

5.7 Chairman of Executive Committee. The chairman of the executive
committee, if there be one, shall have the power to call meetings of the board
of directors to be held subject to the limitations prescribed by law or by these
Bylaws, at such times and at such places as the chairman of the executive
committee shall deem proper. The chairman of the executive committee shall have
such other powers and be subject to such other duties as the board of directors
may from time to time prescribe.

5.8 President. The powers and duties of the president are:

(a) To call meetings of the board of directors to be held, subject
to the limitations prescribed by law or by these Bylaws, at
such times and at such places as the president shall deem
proper.

(b) To affix the signature of the corporation to all deeds,
conveyances, mortgages, leases, obligations, bonds,
certificates and other papers and instruments in writing which
have been authorized by the board of directors or which, in the
judgment of the president, should be executed on behalf of the
corporation, and to sign certificates for shares of stock of
the corporation.

(c) To have such other powers and be subject to such other duties
as the board of directors may from time to time prescribe.

5.9 Vice Presidents. In case of the absence, disability or death of
the president, the elected vice president, or one of the elected vice
presidents, shall exercise all the powers and perform all the duties of the
president. If there is more than one elected vice president, the order in which
the elected vice presidents shall succeed to the powers and duties

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of the president shall be as fixed by the board of directors. The elected vice
president or elected vice presidents shall have such other powers and perform
such other duties as may be granted or prescribed by the board of directors.

Vice presidents appointed pursuant to Section 5.2 shall have such
powers and duties as may be fixed by the chairman or president, except that such
appointed vice presidents may not exercise the powers and duties of the
president.

5.10 Secretary. The powers and duties of the secretary are:

(a) To keep a book of minutes at the principal office of the
corporation, or such other place as the board of directors may
order, of all meetings of its directors and stockholders with
the time and place of holding, whether regular or special, and,
if special, how authorized, the notice thereof given, the names
of those present at directors' meetings, the number of shares
present or represented at stockholders' meetings and the
proceedings thereof.

(b) To keep the seal of the corporation and affix the same to all
instruments which may require it.

(c) To keep or cause to be kept at the principal office of the
corporation, or at the office of the transfer agent or agents,
a share register, or duplicate share registers, showing the
names of the stockholders and their addresses, the number of
and classes of shares, and the number and date of cancellation
of every certificate surrendered for cancellation.

(d) To keep a supply of certificates for shares of the corporation,
to fill in all certificates issued, and to make a proper record
of each such issuance; provided, that so long as the
corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of
shares, of the corporation, such duties with respect to such
shares shall be performed by such transfer agent or transfer
agents.

(e) To transfer upon the share books of the corporation any and all
shares of the corporation; provided, that so long as the
corporation shall have one or more duly appointed and acting
transfer agents of the shares, or any class or series of
shares, of the corporation, such duties with respect to such
shares shall be performed by such transfer agent or transfer
agents, and the method of transfer of each certificate shall be
subject to the reasonable regulations of the transfer agent to
which the certificate is presented for transfer, and also, if
the corporation then has one or more duly appointed and acting
registrars, to the reasonable regulations of the registrar to
which the new certificate is presented for registration; and
provided, further that no certificate for shares of stock shall
be issued or delivered or, if issued or delivered, shall have
any validity whatsoever until and unless it has been signed or
authenticated in the manner provided in Section 8.5 hereof.

(f) To make service and publication of all notices that may be
necessary or proper, and without command or direction from
anyone. In case of the absence, disability, refusal, or neglect
of the secretary to make service or publication of any notices,
then such notices may be served and/or published by the
president or a vice president, or by any person thereunto
authorized by either of them or by the board of directors or by
the holders of a majority of the outstanding shares of the
corporation.

(g) Generally to do and perform all such duties as pertain to the
office of secretary and as may be required by the board of
directors.

5.11 Chief Financial Officer. The powers and duties of the chief
financial officer are:

(a) To supervise the corporate-wide treasury functions and
financial reporting to external bodies.

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(b) To have the custody of all funds, securities, evidence of
indebtedness and other valuable documents of the corporation
and, at the chief financial officer's discretion, to cause any
or all thereof to be deposited for account of the corporation
at such depositary as may be designated from time to time by
the board of directors.

(c) To receive or cause to be received, and to give or cause to be
given, receipts and acquittances for monies paid in for the
account of the corporation.

(d) To disburse, or cause to be disbursed, all funds of the
corporation as may be directed by the board of directors,
taking proper vouchers for such disbursements.

(e) To render to the president and to the board of directors,
whenever they may require, accounts of all transactions and of
the financial condition of the corporation.

(f) Generally to do and perform all such duties as pertain to the
office of chief financial officer and as may be required by the
board of directors.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS

6.1 Indemnification of Directors and Officers. The corporation
shall, to the maximum extent and in the manner permitted by the General
Corporation Law of Delaware, indemnify each of its directors and officers
against expenses (including attorneys' fees), judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with any
proceeding, arising by reason of the fact that such person is or was an agent of
the corporation; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and executive
officers and, provided, further, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized in advance by the
board of directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the General Corporation Law of Delaware or (iv) such
indemnification is required to be made pursuant to an individual contract. For
purposes of this Section 6.1, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.

6.2 Indemnification of Others. The corporation shall have the
power, to the maximum extent and in the manner permitted by the General
Corporation Law of Delaware, to indemnify each of its employees and agents
(other than directors and officers) against expenses (including attorneys'
fees), judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the fact that
such person is or was an agent of the corporation. For purposes of this Section
6.2, an "employee" or "agent" of the corporation (other than a director or
officer) includes any person (i) who is or was an employee or agent of the
corporation, (ii) who is or was serving at the request of the corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was an employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.

6.3 Insurance. The corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against

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any liability asserted against him or her and incurred by him or her in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of the General Corporation Law of Delaware.

6.4 Expenses. The corporation shall advance to any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding, upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise; provided, however, that the corporation shall not be
required to advance expenses to any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless the proceeding was
authorized in advance by the board of directors of the corporation.

Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 6.5, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director
of the corporation in which event this paragraph shall not apply) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.

6.5 Non-Exclusivity of Rights. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the General Corporation Law of Delaware.

6.6 Survival of Rights. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.

6.7 Amendments. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.

ARTICLE VII

RECORDS AND REPORTS

7.1 Maintenance and Inspection of Records. The corporation shall,
either at its principal executive office or at such place or places as
designated by the board of directors, keep a record of its stockholders listing
their names and addresses and the number and class of shares held by each
stockholder, a copy of these Bylaws as amended to date, accounting books and
other records.

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Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

7.2 Inspection by Director. Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to his or her position as a
director. The Court of Chancery is hereby vested with the exclusive jurisdiction
to determine whether a director is entitled to the inspection sought. The Court
may summarily order the corporation to permit the director to inspect any and
all books and records, the stock ledger, and the stock list and to make copies
or extracts therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such other
and further relief as the Court may deem just and proper.

7.3 Representation of Shares of Other Corporations. The president
or any other officer of this corporation authorized by the board of directors is
authorized to vote, represent, and exercise on behalf of this corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority herein granted may be
exercised either by such person directly or by any other person authorized to do
so by proxy or power of attorney duly executed by such person having the
authority.

ARTICLE VIII

GENERAL MATTERS

8.1 Record Date for Purposes Other than Notice and Voting. For
purposes of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any other lawful action, the board
of directors may fix, in advance, a record date, which shall not be more than
sixty (60) days before any such action. In that case, only stockholders of
record at the close of business on the date so fixed are entitled to receive the
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise provided in the
Certificate of Incorporation, by these Bylaws, by agreement or by law.

If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.

8.2 Checks; Drafts; Evidences of Indebtedness. From time to time,
the board of directors shall determine by resolution which person or persons may
sign or endorse all checks, drafts, other orders for payment of money, notes or
other evidences of indebtedness that are issued in the name of or payable to the
corporation, and only the persons so authorized shall sign or endorse those
instruments.

8.3 Corporate Contracts and Instruments; How Executed. The board
of directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.

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8.4 Fiscal Year. The fiscal year of this corporation shall begin
on the first day of November of each year and end on the last day of October of
the following year.

8.5 Stock Certificates. There shall be issued to each holder of
fully paid shares of the capital stock of the corporation a certificate or
certificates for such shares. Every holder of shares of the corporation shall be
entitled to have a certificate signed by, or in the name of the corporation by,
the chairman or vice chairman of the board of directors, or the president or a
vice president, and by the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of such corporation representing the number of shares
registered in certificate form. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate has
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he or
she were such officer, transfer agent or registrar at the date of issue.

8.6 Special Designation on Certificates. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.

8.7 Lost Certificates. The corporation may issue a new share
certificate or new certificate for any other security in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate or the owner's legal representative to give the
corporation a bond (or other adequate security) sufficient to indemnify it
against any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate. The board of directors may
adopt such other provisions and restrictions with reference to lost
certificates, not inconsistent with applicable law, as it shall in its
discretion deem appropriate.

8.8 Construction; Definitions. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
General Corporation Law of Delaware shall govern the construction of these
Bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.

8.9 Provisions Additional to Provisions of Law. All restrictions,
limitations, requirements and other provisions of these Bylaws shall be
construed, insofar as possible, as supplemental and additional to all provisions
of law applicable to the subject matter thereof and shall be fully complied with
in addition to the said provisions of law unless such compliance shall be
illegal.

8.10 Provisions Contrary to Provisions of Law. Any article,
section, subsection, subdivision, sentence, clause or phrase of these Bylaws
which upon being construed in the manner provided in Section 8.9 hereof, shall
be contrary to or inconsistent with any applicable provisions of law, shall not
apply so long as said provisions of law shall remain in effect, but such result
shall not affect the validity or applicability of any other portions of these
Bylaws, it being hereby declared that these Bylaws would have been adopted and
each article, section, subsection, subdivision, sentence, clause or phrase
thereof, irrespective of the fact that any one or more articles, sections,
subsections, subdivisions, sentences, clauses or phrases is or are illegal.

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8.11 Notices. Any reference in these Bylaws to the time a notice
is given or sent means, unless otherwise expressly provided, the time a written
notice by mail is deposited in the United States mails, postage prepaid; or the
time any other written notice is personally delivered to the recipient or is
delivered to a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient; or the time any
oral notice is communicated, in person or by telephone or wireless, to the
recipient or to a person at the office of the recipient who the person giving
the notice has reason to believe will promptly communicate it to the recipient.

ARTICLE IX

AMENDMENTS

Subject to Section 6.7 hereof, the original or other bylaws of the
corporation may be adopted, amended or repealed (1) at any annual or special
meeting of stockholders, by the affirmative vote of the holders of a majority of
the voting power of the stock issued and outstanding and entitled to vote
thereat, provided, however, that any proposed alteration or repeal of, or the
adoption of any By-Law inconsistent with, Section 2.2, 2.3, 2.5 or 2.11 of
Article II of the By-Laws or with Section 3.2, 3.3, 3.4 or 3.5 of Article III of
the By-Laws or this sentence, by the stockholders shall require the affirmative
vote of the holders of at least 80% of the voting power of all Voting Stock then
outstanding, voting together as a single class; and, provided, further, however,
that in the case of any such stockholder action at a special meeting of
stockholders, notice of the proposed alteration, repeal or adoption of the new
By-Law or By-Laws must be contained in the notice of such special meeting, or
(2) by the affirmative vote of a majority of the Board of Directors. The fact
that the power to amend these By-Laws has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal bylaws.

Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.

<PAGE>

Exhibit 10.8

YOKOGAWA ELECTRIC CORPORATION
AND
HEWLETT-PACKARD COMPANY
AGREEMENT FOR THE REDEMPTION AND SALE OF SHARES AND
TERMINATION OF JOINT VENTURE RELATIONSHIP

Preamble

THIS AGREEMENT BY AND BETWEEN YOKOGAWA ELECTRIC CORPORATION AND HEWLETT-PACKARD
COMPANY IS DATED JULY 6, 1999, AND IS BASED ON THE FOLLOWING FACTS:

1. Yokogawa Electric Corporation, a corporation organized and existing under
the laws of Japan, hereinafter called YOKOGAWA; and Hewlett-Packard Company, a
corporation organized and existing under the laws of the State of Delaware,
U.S.A., hereinafter called HP, established as of August 13, 1963, a joint
venture company formerly known as Yokogawa-Hewlett-Packard, Ltd. and now known
as Hewlett-Packard Japan Ltd., a Japanese corporation, hereinafter referred to
as HPJ, which was fifty-one per cent (51%) owned by YOKOGAWA and forty-nine per
cent (49%) owned by HP.

2. In accordance with the Yokogawa-Hokushin Electric Corporation - Hewlett-
Packard Company Agreement for Yokogawa-Hewlett-Packard, Ltd. last executed on
August 23, 1983 ("the 1983 JVA"), YOKOGAWA and HP agreed among other things to
change the ownership of HPJ resulting in HP's owning seventy-five per cent (75%)
of HPJ and YOKOGAWA's owning twenty-five per cent (25%) of HPJ.

3. HP's ownership interest in HPJ is held by two wholly-owned subsidiaries of
HP, Hewlett-Packard World Trade, Inc. ("HPWT"), which owns ten per cent (10%) of
HPJ, and Hewlett-Packard Europe B.V. ("HPE"), which owns sixty-five per cent
(65%) of HPJ.

4. YOKOGAWA has now decided to dispose of its twenty-five per cent (25%)
ownership interest in HPJ and HP now wishes to own one hundred per cent (100%)
of HPJ.

5. YOKOGAWA and HP have determined that it is in the best interests of their
respective companies to terminate their joint venture relationship with respect
to HPJ.

THEREFORE, THE PARTIES AGREE AS FOLLOWS:
<PAGE>

Article 1

Definitions

1.1 "Agreement" shall mean this agreement.

1.2 "HP Affiliate" shall mean any company in which HP, either directly or
indirectly owns more than fifty per cent (50%) of the voting stock.

1.3 "Party(ies)" shall mean YOKOGAWA and HP, either singly or collectively.

1.4 "Initial Redemption Shares" shall mean three hundred eighty-eight thousand
nine hundred three (388,903) shares of HPJ stock owned by YOKOGAWA.

1.5 "Initial Redemption Date" shall mean a date prior to January 31, 2000, as
mutually agreed by the Parties.

1.6 "Redemption" shall mean a redemption of shares in HPJ in accordance with
Article 212-2 of the Japanese Commercial Code.

1.7 "Remaining Shares" shall mean one hundred fifty-five thousand five hundred
sixty-two (155,562) shares of HPJ stock owned by YOKOGAWA.

1.8 "Sale Date" shall mean a date after April 1, 2000, and prior to May 1,
2000, as mutually agreed by the Parties.

1.9 "Sale Shares" shall mean three hundred eighty-eight thousand nine hundred
three (388,903) shares of HPJ stock owned by YOKOGAWA.

1.10 "Share Price" shall mean sixty-four thousand two hundred eighty-three
(64,283) Japanese Yen.

1.11 "Shares" shall mean all of the shares of HPJ owned by YOKOGAWA which
correspond to the sum of the Initial Redemption Shares, the Sale Shares and the
Remaining Shares.

1.12 "Weighted Share Price" shall equal the Share Price plus three and seven
tenths percent (3.7%) compounded annually from February 1, 2000, until the date
of payment.
<PAGE>

Article 2

Redemption and Sale of Shares

2.1 On the Initial Redemption Date, HP will cause HPJ to redeem the Initial
Redemption Shares and YOKOGAWA will tender such Initial Redemption Shares in
exchange for Twenty-five Billion Japanese Yen ((Yen)25,000,000,000) (the
"Initial Redemption Price").

2.2 On the Sale Date, HP will purchase and YOKOGAWA will sell the Sale Shares
in exchange for Twenty-five Billion Japanese Yen ((Yen)25,000,000,000) (the
"Sale Price").

2.3 With respect to the Remaining Shares, the Parties agree as follows:

2.3.1 Commencing with HPJ's shareholder meeting following the close of HPJ's
fiscal year 2000 ending as of October 31, 2000, HP will use its best
efforts, taking into account all potential tax consequences, to cause HPJ
to redeem the Remaining Shares. This redemption will be conducted using
HPJ's current and retained earnings at a price per share equal to the
Weighted Share Price multiplied by 1.089. This formula is based on the
assumption that YOKOGAWA will be subject to tax equal to eighty-two (82)
Yen for each one thousand (1,000) Yen received by way of the redemption of
the Remaining Shares. If this assumption should change at any time,
including the case in which YOKOGAWA's tax burden is reduced pursuant to
2.3.5 below, the formula shall be changed to reflect YOKOGAWA's tax cost
with respect to such redemptions.

2.3.2 YOKOGAWA shall have and is hereby granted a put option ("Put Option") to
sell and to require HP or its designated HP Affiliate or Affiliates to
purchase some or all of the Remaining Shares as specified by YOKOGAWA from
time to time. Except as provided in 2.3.3 below, the price for the
Remaining Shares sold and purchased pursuant to this Put Option shall be
the Weighted Share Price without adjustment for taxes paid by YOKOGAWA.
This Put Option shall expire on March 31, 2003.

2.3.3 On the expiration of the Put Option, YOKOGAWA shall be deemed to have
exercised the Put Option with respect to any of the Remaining Shares still
owned by YOKOGAWA and HP or its designated HP Affiliate will be required
to purchase such Remaining Shares at the Weighted Share Price multiplied
by 1.69. This formula is based on the assumption that YOKOGAWA will be
subject to tax equal to four hundred eight (408) Yen for each one thousand
(1,000) Yen received by
<PAGE>

way of the sale of the Remaining Shares upon expiration of the Put Option.
If this assumption should change at any time, including the case in which
YOKOGAWA's tax burden is reduced pursuant to 2.3.5 below, the formula
shall be changed to reflect YOKOGAWA's tax cost with respect to such sale.

2.3.4 HP or its designated HP Affiliate or Affiliates shall have and are hereby
granted a call option ("Call Option") to purchase and to require YOKOGAWA
to sell to HP or its Affiliates some or all of the Remaining Shares as
specified by HP from time to time. The price for the Remaining Shares sold
and purchased pursuant to this Call Option shall be the Weighted Share
Price multiplied by 1.69. This formula is based on the assumption that
YOKOGAWA will be subject to tax equal to four hundred eight (408) Yen for
each one thousand (1,000) Yen received by way of the sale of the Remaining
Shares pursuant to this Call Option. If this assumption should change at
any time, the formula shall be changed to reflect YOKOGAWA's tax cost with
respect to such sale. The Call Option shall expire on expiration of the
Put Option.

2.3.5 YOKOGAWA will, in its sole discretion, consider utilizing available tax
losses to minimize its taxes with respect to the transactions contemplated
in 2.3.1 and 2.3.3 above (including minimization of the gross up multiples
in 2.3.1 and 2.3.3).

Article 3

Terms

3.1 YOKOGAWA represents and warrants to HP that YOKOGAWA is the lawful owner
and holder of, and has good and negotiable title to, the Shares and that the
Shares are free and clear of any mortgages, burdens, debts, doubts, liens,
retention rights, commitments, attachments, pledges, options, preemptive rights,
obligations, charges or encumbrances of any kind whatsoever.

3.2 The Redemption Price, the Sale Price and the payments made pursuant to
Article 2.3 above constitute the only consideration to be paid by HP and HP
Affiliates for the Shares.

3.3 On or before November 1, 1999, YOKOGAWA will deliver to HPJ letters of
resignation of Mr. Fumio Mizoguchi as a director of HPJ and Jouichi Ueba as a
statutory auditor of HPJ.

3.4 HP shall pay or cause HPJ and its designated HP Affiliate(s) to pay to
YOKOGAWA the Initial Redemption Price, the Sale Price and the consideration paid
pursuant to Article 2.3 above in immediately available
<PAGE>

Japanese Yen no later than the end of business hours of the Redemption Date and
the Sale Date, as the case may be, by wire transfer to an account designated by
YOKOGAWA in writing. The account information will be provided by YOKOGAWA at
least four (4) business days prior to the payment.

Article 4

Miscellaneous Terms

4.1 This Agreement represents the entire understanding of the Parties and
supersedes all other previous representations, negotiations, commitments,
writings and agreements, oral or written, agreed prior to the signing of this
Agreement pertaining to HPJ, including but not limited to the 1983 JVA which is
hereby terminated. However, neither Party anticipates that the termination of
the joint venture with respect to HPJ will have any adverse effect on other
relationships between the Parties.

4.2 YOKOGAWA shall exercise and HP shall cause its HP Affiliates to exercise
their respective voting rights in HPJ at future General Shareholders Meetings of
HPJ for the purpose of implementing this Agreement. HP assures that all of the
necessary and required legal steps, including without limitation HPJ's board
approval, shall be duly and timely taken by HPJ.

4.3 The Parties agree that the terms of this Agreement are confidential and may
not be disclosed without the prior written consent of the other party. To this
end, the Parties shall agree on a communications plan and agree not to make any
statements to third parties which are inconsistent with the agreed plan. The
obligations of confidentiality imposed hereunder shall not apply to terms which:

a. are or become a matter of public knowledge through no fault of any party
hereto or

b. are disclosed under operation of law.

4.4 No Party shall have any right to assign or transfer any rights provided to
it hereunder to any person, firm or corporation without the prior written
consent of the other Party; provided, however, that HP may assign its rights and
obligations under Article 2.2 above to an HP Affiliate.

4.5 This Agreement shall be construed and enforced according to the laws of
Japan.

4.6 The Parties shall use best efforts to resolve amicably all disputes which
may arise between them, out of, in relation to or in connection with this
<PAGE>

Agreement. If any such dispute is not resolved within a reasonable period of
time, and in any case not more than sixty (60) days, after written notice by one
Party to the other Party, such dispute shall be finally settled by arbitration
in Geneva, Switzerland, in accordance with the then existing Rules of
Arbitration of the International Chamber of Commerce by three (3) arbitrators to
be selected in accordance with said rules. The language of the arbitration shall
be English.

4.7 All notices, requests, demands or other communications required or
permitted by, or resulting from this Agreement, by either of the Parties hereto
to the other shall be given to or made as follows:

To: Yokogawa Electric Corporation
9-32, 2-chome, Naka-cho
Musashino-shi, Tokyo, Japan
Attention: General Counsel
Fax No.: 81-422-52-5941

To: Hewlett-Packard Company
3000 Hanover Street
Palo Alto, California 94304 USA
Attention: General Counsel
Fax No.: (650) 852-8019

Any notice so given shall be deemed to be received in case of fax twenty-four
(24) hours after dispatch, or in the case of letter: (a) upon receipt, or
fourteen (14) days after posting, whichever is less, for airmail sent between
Japan and the United States or any other country, or (b) upon receipt or seven
(7) days after posting, whichever is less, for mail sent within Japan, the
United States or any other country.

Either Party may amend the information set forth in this Article at any time by
written notice to the other Party.

4.8 This Agreement shall not be amended, altered, extended or modified except
by an instrument in writing expressly referring to this Agreement and signed by
the Parties hereto.
<PAGE>

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE EXECUTED
ON THE DAY AND YEAR WRITTEN ABOVE.

YOKOGAWA ELECTRIC CORPORATION

By: /s/ Isao Uchida
------------------------------------
Isao Uchida
President and Chief Executive Officer

HEWLETT-PACKARD COMPANY

By: /s/ Lewis E. Platt
------------------------------------
Lewis E. Platt
Chairman, President and Chief Executive Officer

Witnessed by:

HEWLETT-PACKARD JAPAN, LTD.

By: /s/ Katsuto Kohtani
------------------------------------
Katsuto Kohtani
Chairman

<PAGE>

EXHIBIT 10.9

AGILENT TECHNOLOGIES, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is entered into as of
____________, ___ by and between Agilent Technologies, Inc., a Delaware
corporation (the "Company") and ____________________________________
("Indemnitee").

RECITALS
--------

A. The Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries, the significant increases in the cost of such insurance and the
general reductions in the coverage of such insurance.

B. The Company and Indemnitee further recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited.

C. Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee and other directors, officers,
employees, agents and fiduciaries of the Company may not be willing to continue
to serve in such capacities without additional protection.

D. The Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce Indemnitee to continue to provide services to the Company,
wishes to provide for the indemnification and advancing of expenses to
Indemnitee to the maximum extent permitted by law.

E. In view of the considerations set forth above, the Company desires that
Indemnitee be indemnified by the Company as set forth herein.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. Indemnification.
---------------

(a) Indemnification of Expenses. The Company shall indemnify
---------------------------
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mecha-

-1-
<PAGE>

nism, or any hearing, inquiry or investigation that Indemnitee in good faith
believes might lead to the institution of any such action, suit, proceeding or
alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other (hereinafter a "Claim") by reason of (or
arising in part out of) any event or occurrence related to the fact that
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or any subsidiary of the Company, or is or was serving at the request
of the Company as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action or inaction on the part of Indemnitee while serving in such
capacity (hereinafter an "Indemnifiable Event") against any and all expenses
(including attorneys' fees and all other costs, expenses and obligations
incurred in connection with investigating, defending, being a witness in or
participating in (including on appeal), or preparing to defend, be a witness in
or participate in, any such action, suit, proceeding, alternative dispute
resolution mechanism, hearing, inquiry or investigation), judgments, fines,
penalties and amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld) of
such Claim and any federal, state, local or foreign taxes imposed on Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement
(collectively, hereinafter "Expenses"), including all interest, assessments and
other charges paid or payable in connection with or in respect of such Expenses.
Such payment of Expenses shall be made by the Company as soon as practicable but
in any event no later than five days after written demand by Indemnitee therefor
is presented to the Company.

(b) Reviewing Party. Notwithstanding the foregoing, (i) the
---------------
obligations of the Company under Section 1(a) shall be subject to the condition
that the Reviewing Party (as described in Section 10(e) hereof) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) hereof is involved) that Indemnitee would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee pursuant to
Section 2(a) (an "Expense Advance") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect thereto (as to which all rights of appeal therefrom have been
exhausted or lapsed). Indemnitees' obligation to reimburse the Company for any
Expense Advance shall be unsecured and no interest shall be charged thereon. If
there has not been a Change in Control (as defined in Section 10(c) hereof), the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Legal Counsel referred to in

-2-
<PAGE>

Section 1(c) hereof. If there has been no determination by the Reviewing Party
or if the Reviewing Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law, Indemnitee
shall have the right to commence litigation seeking an initial determination by
the court or challenging any such determination by the Reviewing Party or any
aspect thereof, including the legal or factual bases therefor, and the Company
hereby consents to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding
on the Company and Indemnitee.

(c) Change in Control. The Company agrees that if there is a Change
-----------------
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control) then, with respect to all matters
thereafter arising concerning the rights of Indemnitees to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims, liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

(d) Mandatory Payment of Expenses. Notwithstanding any other
-----------------------------
provision of this Agreement other than Section 9 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit, proceeding, inquiry or investigation referred to in Section (1)(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee in connection
therewith.

2. Expenses; Indemnification Procedure.
-----------------------------------

(a) Advancement of Expenses. The Company shall advance all Expenses
-----------------------
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
days after written demand by Indemnitee therefor to the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to Indemnitees' right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this

-3-
<PAGE>

Agreement (or such other address as the Company shall designate in writing to
Indemnitee). In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitees'
power.

(c) No Presumptions; Burden of Proof. For purposes of this Agreement,
--------------------------------
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its
---------------
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In
addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that Indemnitee has not met such standard of conduct or did not
have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
applicable law, shall be a defense to Indemnitee's claim or create a presumption
that Indemnitee has not met any particular standard of conduct or did not have
any particular belief. In connection with any determination by the Reviewing
Party or otherwise as to whether Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.

(d) Notice to Insurers. If, at the time of the receipt by the Company
------------------
of a notice of a Claim pursuant to Section 2(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.

(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
hereunder to pay the Expenses of any Claim, the Company shall be entitled to
assume the defense of such Claim with counsel approved by Indemnitee, which
approval shall not be unreasonably withheld, upon the delivery to Indemnitee of
written notice of its election so to do. After delivery of such notice, approval
of such counsel by Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same Claim;
provided that, (i) Indemnitee shall have the right to employ Indemnitees'
counsel in any such Claim at Indemnitee expense and (ii) if (A) the employment
of counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there is a conflict of interest
between the Company and Indemnitee in the conduct of any such defense, or (C)
the Company shall not continue to retain such counsel to defend such Claim, then
the fees and expenses of Indemnitee counsel shall be at the expense of the
Company. The Company shall have the right to conduct such defense as it sees fit
in its sole discretion, including the right to settle any claim against
Indemnitee without the consent of the Indemnitee.

-4-
<PAGE>

3. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------

(a) Scope. The Company hereby agrees to indemnify Indemnitee to the
-----
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify a
member of its Board of Directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its Board of Directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 8(a) hereof.

(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of
stockholders or disinterested directors, the General Corporation Law of the
State of Delaware, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action Indemnitee took or did
not take while serving in an indemnified capacity even though Indemnitee may
have ceased to serve in such capacity.

4. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Certificate of Incorporation, Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.

5. Partial Indemnification. If Indemnitee is entitled under any provision
-----------------------
of this Agreement to indemnification by the Company for some or a portion of
Expenses incurred in connection with any Claim, but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion of such Expenses to which Indemnitee are entitled.

6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
----------------------
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

-5-
<PAGE>

7. Liability Insurance. To the extent the Company maintains liability
-------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.

8. Exceptions. Any other provision herein to the contrary
----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement :

(a) Excluded Action or Omissions. (i) To indemnify Indemnitee for
----------------------------
Indemnitee's acts, omissions or transactions from which Indemnitee or the
Indemnitee may not be indemnified under applicable law; or (ii) to indemnify
Indemnity for Indemnity's intentional acts or transactions in violation of the
Company's policies;

(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, or (iii) as
otherwise required under Section 145 of the Delaware General Corporation Law,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be;

(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous; or

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

9. Period of Limitations. No legal action shall be brought and no cause
---------------------
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
-------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

-6-
<PAGE>

10. Construction of Certain Phrases.
-------------------------------

(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee, agent or fiduciary of the Company
which imposes duties on, or involves services by, such director, officer,
employee, agent or fiduciary with respect to an employee benefit plan, its
participants or its beneficiaries; and if Indemnitee acted in good faith and in
a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "not opposed to the best interests of the
Company" as referred to in this Agreement.

(c) For purposes of this Agreement a "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, (A) who is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 10% or more of the
combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by 5% or more over the
percentage so owned by such person, or (B) becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing more than 20% of the total voting power represented by
the Company's then outstanding Voting Securities, (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or (iii)

-7-
<PAGE>

the stockholders of the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of transactions) all or substantially all of the
Company's assets.

(d) For purposes of this Agreement, "Independent Legal Counsel" shall
mean an attorney or firm of attorneys, selected in accordance with the
provisions of Section 1(c) hereof, who shall not have otherwise performed
services for the Company or Indemnitee within the last three years (other than
with respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnity agreements).

(e) For purposes of this Agreement, a "Reviewing Party" shall mean
any appropriate person or body consisting of a member or members of the
Company's Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to the particular Claim for which Indemnitee are
seeking indemnification, or Independent Legal Counsel.

(f) For purposes of this Agreement, "Voting Securities" shall mean
any securities of the Company that vote generally in the election of directors.

11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.

12. Binding Effect; Successors and Assigns. This Agreement shall be
--------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect with respect to Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary of the Company or of any other enterprise at the
Company's request.

-8-
<PAGE>

13. Attorneys' Fees. In the event that any action is instituted by
---------------
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous. In the event of an action instituted by or in
the name of the Company under this Agreement to enforce or interpret any of the
terms of this Agreement, Indemnitee shall be entitled to be paid all Expenses
incurred by Indemnitee in defense of such action (including costs and expenses
incurred with respect to Indemnitee counterclaims and cross-claims made in such
action), and shall be entitled to the advancement of Expenses with respect to
such action, unless, as a part of such action, a court having jurisdiction over
such action determines that each of Indemnitee material defenses to such action
was made in bad faith or was frivolous.

14. Notice. All notices and other communications required or permitted
------
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid, or (d) one day after the business day of delivery by
facsimile transmission, if delivered by facsimile transmission, with copy by
first class mail, postage prepaid, and shall be addressed if to Indemnitee, at
the Indemnitee address as set forth beneath Indemnitee signatures to this
Agreement and if to the Company at the address of its principal corporate
offices (attention: Secretary) or at such other address as such party may
designate by ten days' advance written notice to the other party hereto.

15. Consent to Jurisdiction. The Company and Indemnitee each hereby
-----------------------
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.

16. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be

-9-
<PAGE>

construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.

17. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed and enforced in accordance with the laws of the State of Delaware, as
applied to contracts between Delaware residents, entered into and to be
performed entirely within the State of Delaware, without regard to the conflict
of laws principles thereof.

18. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

19. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

20. Integration and Entire Agreement. This Agreement sets forth the
--------------------------------
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

21. No Construction as Employment Agreement. Nothing contained in this
---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

-10-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

AGILENT TECHNOLOGIES, INC.

______________________________________
By:

______________________________________
Title:

Address:

AGREED TO AND ACCEPTED BY:

Signature: ___________________________

Name: ________________________________

Address: _____________________________

-11-

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated August 13, 1999, relating to the consolidated financial
statements of Agilent Technologies, Inc., which appears in such Registration
Statement. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

San Jose, California
August 13, 1999

<PAGE>
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