Hewlett-Packard (HPQ)

9.     OPTION EXERCISE PRICE AND CONSIDERATION.

(a)

Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:



(i)

In the case of an Incentive Stock Option the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.



(ii)

In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than seventy-five percent (75%) of the Fair Market Value per Share on the Grant Date. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.



(iii)

Notwithstanding the foregoing, at the Administrator's discretion, Conversion Options (as defined in Section 4(b)(x)) may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the Grant Date and shall not be subject to the provisions of Section 6(d)(v) above.



(iv)

Other than in connection with a change in the Company's capitalization (as described in Section 14(a)), Options may not be repriced, replaced, regranted through cancellation or modified without shareowner approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price of such Incentive Stock Options or Nonstatutory Stock Options.



(b)

Vesting Period and Exercise Dates.    At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.



(c)

Form of Consideration.    The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the Grant Date. Acceptable forms of consideration may include:



(i)

cash;



(ii)

check or wire transfer (denominated in U.S. Dollars);



(iii)

other Shares which (A) in the case of Shares acquired upon exercise of an Option, have been owned by the Awardee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

6

(iv)

consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;



(v)

any combination of the foregoing methods of payment; or



(vi)

such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

7

10.   EXERCISE OF OPTION.

(a)

Procedure for Exercise; Rights as a Shareowner.    Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the respective Award Agreement. No Option may be exercised during any leave of absence other than an approved personal or medical leave with an employment guarantee upon return. An Option shall continue to vest during any authorized leave of absence and such Option may be exercised to the extent vested upon the Awardee's return to active employment status. An Option may not be exercised for a fraction of a Share.

An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option; (ii) full payment for the Shares with respect to which the related Option is exercised; and (iii) with respect to Nonstatutory Stock Options, payment of all applicable withholding taxes due upon such exercise.

Shares issued upon exercise of an Option shall be issued in the name of the Awardee or, if requested by the Awardee, in the name of the Awardee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareowner shall exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)

Termination of Employment.    Unless otherwise provided for by the Administrator in the Award Agreement, if an Awardee ceases to be an Employee, other than as a result of circumstances described in Sections 10(c), (d), (e) and (f) below, the Awardee's Option, whether vested or unvested, shall terminate immediately upon the Awardee's termination. On the date of the Awardee's termination of employment, the Shares covered by the unvested portion of his or her Option shall revert to the Plan. If, prior to termination of employment, the Awardee does not exercise his or her vested Option, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.



(c)

Disability or Retirement of Awardee.    Unless otherwise provided for by the Administrator in the Award Agreement, if an Awardee ceases to be an Employee as a result of the Awardee's total and permanent disability or retirement due to age, in accordance with the Company's or its Subsidiaries' retirement policy, all unvested Options shall immediately vest and the Awardee may exercise his or her Option within three (3) years of the date of such disability or retirement for a Nonstatutory Stock Option; within three (3) months of the date of such disability or retirement for an Incentive Stock Option; or if earlier, the expiration of the term of such Option. If the Awardee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.



(d)

Death of Awardee.    Unless otherwise provided for by the Administrator in the Award Agreement, if an Awardee dies while an Employee, all unvested Options shall immediately vest and all Options may be exercised for one (1) year following the Awardee's death. The

8

Option may be exercised by the beneficiary designated by the Awardee (as provided in Section 16), the executor or administrator of the Awardee's estate or, if none, by the person(s) entitled to exercise the Option under the Awardee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e)

Voluntary Severance Incentive Program.    If an Awardee ceases to be an Employee as a result of participation in the Company's or its Subsidiaries' voluntary severance incentive program approved by the Board or Executive Committee, all unvested Options shall immediately vest and all outstanding Options shall be exercisable for three (3) months following the Awardee's termination (or such other period of time as provided for by the Administrator) or, if earlier, the expiration of the term of such Option. If, after termination, of Awardee's employment the Awardee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.



(f)

Divestiture.    If an Employee ceases to be a Participant because of a divestiture of the Company, the Administrator may, in its sole discretion, make such Employee's outstanding Options fully vested and exercisable and provide that such Options remain exercisable for a period of time to be determined by the Administrator. The determination of whether a divestiture will occur shall be made by the Administrator in its sole discretion. If, after the close of the divestiture, the Awardee does not exercise his or her Option within the time specified therein, the Option shall terminate and the shares covered by such Option shall revert to the Plan.



(g)

Buyout Provisions.    At any time, the Administrator may, but shall not be required to, authorize the Company to offer to buy out for a payment in cash or Shares an Award previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Awardee in connection with such offer.

9.     OPTION EXERCISE PRICE AND CONSIDERATION.

(a)

Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise
of an Option shall be determined by the Administrator, subject to the following:








(i)

In
the case of an Incentive Stock Option the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.




(ii)

In
the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than seventy-five percent (75%) of the Fair Market
Value per Share on the Grant Date. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per
Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.




(iii)

Notwithstanding
the foregoing, at the Administrator's discretion, Conversion Options (as defined in Section 4(b)(x)) may be granted with a per
Share exercise price of less than 100% of the Fair Market Value per Share on the Grant Date and shall not be subject to the provisions of Section 6(d)(v) above.




(iv)

Other
than in connection with a change in the Company's capitalization (as described in Section 14(a)), Options may not be repriced, replaced,
regranted through cancellation or modified without shareowner approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price of such Incentive
Stock Options or Nonstatutory Stock Options.







(b)

Vesting Period and Exercise Dates.    At the time an Option is granted, the Administrator shall
fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.




(c)

Form of Consideration.    The Administrator shall determine the acceptable form of consideration
for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the Grant Date.
Acceptable forms of consideration may include:








(i)

cash;




(ii)

check
or wire transfer (denominated in U.S. Dollars);




(iii)

other
Shares which (A) in the case of Shares acquired upon exercise of an Option, have been owned by the Awardee for more than six months on the
date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

6

(iv)

consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;




(v)

any
combination of the foregoing methods of payment; or




(vi)

such
other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

7

NAME="page_ki72002_1_8">




































10.   EXERCISE OF OPTION.

(a)

Procedure for Exercise; Rights as a Shareowner.    Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the respective Award Agreement. No Option may be
exercised during any leave of absence other than an approved personal or medical leave with an employment guarantee upon return. An Option shall continue to vest during any authorized leave of absence
and such Option may be exercised to the extent vested upon the Awardee's return to active employment status. An Option may not be exercised for a fraction of a Share.

An
Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the
Option; (ii) full payment for the Shares with respect to which the related Option is exercised; and (iii) with respect to Nonstatutory Stock Options, payment of all applicable
withholding taxes due upon such exercise.





Shares
issued upon exercise of an Option shall be issued in the name of the Awardee or, if requested by the Awardee, in the name of the Awardee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareowner shall
exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.





Exercising
an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option
is exercised.










(b)

Termination of Employment.    Unless otherwise provided for by the Administrator in the Award
Agreement, if an Awardee ceases to be an Employee, other than as a result of circumstances described in Sections 10(c), (d), (e) and (f) below, the Awardee's Option, whether
vested or unvested, shall terminate immediately upon the Awardee's termination. On the date of the Awardee's termination of employment, the Shares covered by the unvested portion of his or her Option
shall revert to the Plan. If, prior to termination of employment, the Awardee does not exercise his or her vested Option, the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.




(c)

Disability or Retirement of Awardee.    Unless otherwise provided for by the Administrator in the
Award Agreement, if an Awardee ceases to be an Employee as a result of the Awardee's total and permanent disability or retirement due to age, in accordance with the Company's or its Subsidiaries'
retirement policy, all unvested Options shall immediately vest and the Awardee may exercise his or her Option within three (3) years of the date of such disability or retirement for a
Nonstatutory Stock Option; within three (3) months of the date of such disability or retirement for an Incentive Stock Option; or if earlier, the expiration of the term of such Option. If the
Awardee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.




(d)

Death of Awardee.    Unless otherwise provided for by the Administrator in the Award Agreement, if
an Awardee dies while an Employee, all unvested Options shall immediately vest and all Options may be exercised for one (1) year following the Awardee's death. The

8

Option
may be exercised by the beneficiary designated by the Awardee (as provided in Section 16), the executor or administrator of the Awardee's estate or, if none, by the person(s) entitled to
exercise the Option under the Awardee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.










(e)

Voluntary Severance Incentive Program.    If an Awardee ceases to be an Employee as a result of
participation in the Company's or its Subsidiaries' voluntary severance incentive program approved by the Board or Executive Committee, all unvested Options shall immediately vest and all outstanding
Options shall be exercisable for three (3) months following the Awardee's termination (or such other period of time as provided for by the Administrator) or, if earlier, the expiration of the
term of such Option. If, after termination, of Awardee's employment the Awardee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.




(f)

Divestiture.    If an Employee ceases to be a Participant because of a divestiture of the Company,
the Administrator may, in its sole discretion, make such Employee's outstanding Options fully vested and exercisable and provide that such Options remain exercisable for a period of time to be
determined by the Administrator. The determination of whether a divestiture will occur shall be made by the Administrator in its sole discretion. If, after the close of the divestiture, the Awardee
does not exercise his or her Option within the time specified therein, the Option shall terminate and the shares covered by such Option shall revert to the Plan.




(g)

Buyout Provisions.    At any time, the Administrator may, but shall not be required to, authorize
the Company to offer to buy out for a payment in cash or Shares an Award previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Awardee in
connection with such offer.

9. OPTION EXERCISE PRICE AND CONSIDERATION.

(a)           Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:

(i)            In the case of an Incentive Stock Option the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.

(ii)           In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than seventy-five percent (75%) of the Fair Market Value per Share on the Grant Date. In the case of a Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.

(iii)          Notwithstanding the foregoing, at the Administrator’s discretion, Conversion Options (as defined in Section 4(b)(x)) may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the Grant Date and shall not be subject to the provisions of Section 6(d)(v) above.

(iv)          Other than in connection with a change in the Company’s capitalization (as described in Section 14(a)), Options may not be repriced, replaced, regranted through cancellation or modified without shareowner approval if the effect of such repricing, replacement, regrant or modification would be to reduce the exercise price of such Incentive Stock Options or Nonstatutory Stock Options.

(b)           Vesting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.

(c)           Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the Grant Date. Acceptable forms of consideration may include:

(i)            cash;

7