Exhibit
10(e)


 


HEWLETT-PACKARD
COMPANY


 


1985
INCENTIVE COMPENSATION PLAN


 


 


PART 1.  PLAN ADMINISTRATION AND ELIGIBILITY


 


1.             PURPOSE


 


                The purpose of
this 1985 Incentive Compensation Plan (the “Plan”) of Hewlett-Packard Company
(the “Company”) is to encourage ownership in the Company by key personnel whose
long-term employment is considered essential to the Company’s continued
progress and thus to provide them with a further incentive to continue in the
employ of the Company or its subsidiaries. 
(The Company and all such subsidiaries are collectively referred to
hereinafter as the “Participating Companies.”)


 


II.            ADMINISTRATION


 


                The Board of
Directors (the “Board”) of the Company or any committee (the “Committee”) of
the Board that will satisfy Rule 16b-3 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and any regulations promulgated thereunder, as
from time to time in effect, including any successor rule (“Rule 16b-3”), shall
supervise and administer the Plan.  The
Committee shall consist solely of two or more non-employee directors of the
Company, who shall be appointed by the Board. 
A member of the Board shall be deemed to be a “non-employee director”
only if he satisfies such requirements as the Securities and Exchange Commission
may establish for non-employee directors under Rule 16b-3.  Members of the Board receive no additional
compensation for their services in connection with the administration of the
Plan.


 


                The Committee or
the Board shall from time to time designate the key employees of the
Participating Companies who shall be granted stock options, stock or cash
awards under the Plan and the amount and nature of the award granted to each
such employee.


 


                The Board or the
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan.  All questions of
interpretation of the Plan or of any shares issued under it shall be determined
by the Board or the Committee and such determination shall be final and binding
upon all persons having an interest in the Plan.  Any or all powers and discretion vested in the Board or the
Committee under this Plan may be exercised by any subcommittee so authorized by
the Board or the Committee and satisfying the requirements of Rule 16b-3 for
employees subject to Section 16 of the Exchange Act.  In addition, the Board or the Committee may delegate to the
Executive Committee of the Board of Directors the power to approve stock
options and stock awards to employees not subject to Section 16 of the Exchange
Act.


 


Delegation of Authority for the Day-to-Day Administration of
the Plan.  Except to the extent
prohibited by applicable law or applicable rules of a stock exchange, the Board
or 


 


 


 


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any of its committees as shall be administering
the Plan may delegate to one or more individuals the day-to-day administration
of the Plan and any of the functions assigned to it in this Plan. The
delegation may be revoked at any time.


 


III.           PARTICIPATION IN
THE PLAN


 


                Key employees of
the Company, including officers (with the exception of Messrs. David Packard
and William R. Hewlett), and directors of the Company who are also employed by
a Participating Company shall be eligible to participate in the Plan.


 


IV.           STOCK SUBJECT TO THE
PLAN


 


                The maximum number
of shares which may be optioned or awarded under the Plan shall be Ninety Six
Million (96,000,000) shares of the Company’s $0.0l par value Common Stock.  If a class of Preferred Stock is created and
authorized by the Company’s Certificate of Incorporation with amendment,
Preferred Stock may be used in lieu of Common Stock for awarded Plan
grants.  The limitation on the number of
shares which may be optioned or awarded under the Plan shall be subject under
the Plan shall be subject to adjustment as provided in Section XX of the Plan.


 


                The grant of a
stock award not pursuant to an option under the Plan (“Stock Award”) shall be
subject to such restrictions as the Committee shall determine to be
appropriate, including but not limited to restrictions on resale, repurchase
provisions, special vesting requirements or forfeiture provisions.


 


                If any outstanding
option under the Plan for any reason expires or is terminated without having
been exercised in full, or if any Stock Awards are forfeited, the forfeited
shares or shares allocable to the unexercised portion of such option shall
again become available for grant pursuant to the Plan.


 


                Upon the grant of
a Stock Award or the exercise of an option, the Company may issue new shares or
reissue shares previously repurchased by or on behalf of the Company.  If shares are to be repurchased and
reissued, the Company shall determine, on or before the last day of each fiscal
quarter, the amount, if any, of the Company’s Common Stock to be purchased by a
broker or other independent agent designated by the Company (the “Broker”) in
the following quarter for delivery under the Plan.  Stock so purchased by the Broker shall be restored to the status
of authorized but unissued shares.  The
amounts of stock to be purchased may be all or less than all of the projected
requirements of the Plan.  It is not the
intent of the Company that purchases by the Broker exceed actual Plan
requirements for the quarter.  In such
an event, however, excess shares would be carried over to help satisfy Plan
requirements in the following quarter. 
To the extent that the amounts purchased by the Broker do not meet
actual Plan requirements, the Company shall issue original shares.  The Broker shall be free to purchase such
stock at such times, at such prices and in such amounts as the Broker deems
appropriate, whether through brokers or by purchase from securities dealers,
both on and off the 


 


 


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national exchanges, or by private sale or otherwise; provided that the
Broker shall purchase the full number of shares required by the Company to be
purchased for that quarter, and that such purchases shall be consistent with
such conditions as may be prescribed from time to time by law or by the
Securities and Exchange Commission (“SEC”) in any rule or regulation or in any
exemptive order or no-action letter issued by the SEC to the Company or the
Broker with respect to the making of such purchases, or otherwise.  As commitments for such purchases are made
by the Broker, the Company shall, upon written consent of the Broker, deliver
to the Broker the funds necessary to consummate such purchases and pay any
brokerage and related incidental charges. 
All amounts transferred to the Broker by the Company shall be promptly
invested in the Company’s Common Stock, in no event later than 30 days after
delivery of such funds by the Company.


 


 


PART 2.  OPTIONS AND STOCK APPRECIATION RIGHTS


 


V.            INCENTIVE STOCK
OPTIONS


 


                Any option granted
under the Plan may be designated by the Committee as a non-statutory option or
as an incentive stock option (“ISO”) entitled to special tax treatment under
Section 422A of the Internal Revenue Code of 1954, as amended to date and as
may be amended from time to time (the “Code”).


 


                No option intended
to qualify as an ISO may be granted under the Plan if such grant, together with
any applicable prior grants, would exceed any maximum established under the
Code for ISOs that may be granted to a single employee.  Should it be determined that any ISO granted
under the Plan exceeds such maximum, the ISO shall be null and void to the
extent, but only to the extent, of such excess.  Section 422A(b)(8) of the Code presently provides that the aggregate
fair market value (determined as of the time the ISO is granted) of the stock
for which any employee may be granted ISOs in any calendar year under all
incentive stock option plans of the Company shall not exceed $100,000 plus any
unused limit carryover (as defined in the Code) to such year.


 


                Nothing in this
section shall be deemed to prevent the grant of options in excess of the
maximum established by the Code where such excess amount is treated as a
non-statutory option not entitled to special tax treatment under Section 422A
of the Code.


 


VI.           TERMS, CONDITIONS
AND FORM OF OPTIONS


 


                Each option
granted under this Plan shall be authorized by action of the Committee and
shall be evidenced by a written agreement in such form as the Committee shall
from time to time approve, which agreements shall comply with and be subject to
the following terms and conditions:


 


                A.            OPTIONS NON-TRANSFERABLE.  Each option granted under the Plan by its
terms shall not be transferable by the optionee otherwise than by will, or by
the 


 


 


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laws of descent and distribution, and shall be exercised during the
lifetime of the optionee only by him. 
No option or interest therein may be transferred, assigned, pledged or
hypothecated by the optionee during his lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.


 


                B.            PERIOD OF OPTION.  No option may be exercised before the first
anniversary of the date upon which it was granted, nor may it be exercised as
to more than one-fourth of the number of shares covered thereby before the
second anniversary of such date, nor as to more than one-half of the number of
shares covered thereby before the third anniversary of such date; provided,
however, that any option granted pursuant to the Plan shall become exercisable
in full upon the retirement of the optionee because of age or total and
permanent disability or upon the death of the optionee.  No option shall be exercisable after the
expiration of ten (10) years from the date upon which such option is
granted.  Each option shall be subject
to termination before its date of expiration as hereinafter provided.


 


                C.            EXERCISE OF OPTIONS.  Options may be exercised only by written
notice to the Company at its head office accompanied by payment in cash of the
full consideration for the shares as to which they are exercised.  In addition, if and to the extent authorized
by the Committee, optionees may make all or any portion of any payment due to
the Company upon exercise of an option by delivery of any property (including
securities of the Company) other than cash, so long as such property
constitutes valid consideration for the stock under applicable law.


 


                No option may be
exercised while the optionee is on any leave of absence from the Company other
than an approved Medical Leave.  Options
will continue to vest during any authorized leave of absence, and may be
exercised to the extent permitted by Section VI(B) upon the optionee’s return
to an active employment status.  No ISO
shall be exercisable while there is outstanding (within the meaning of Section
422A(c)(7) of the Code) any ISO (within the meaning of Section 422A(b) of the
Code) which was granted, before the granting of such ISO, to the holder of such
ISO permitting the purchase of stock of the Company, or of any corporation
which (at the time of the granting of such ISO) is a parent or subsidiary
corporation of the Company, or of a predecessor corporation of any such
corporations.


 


                D.            TERMINATION OF OPTIONS.  All rights of an employee in an option, to
the extent that it has not been exercised, shall terminate upon the termination
of his employment for any reason other than the death of the employee or
retirement because of age or total and permanent disability and in case of such
retirement three (3) months from the date thereof.  In the event of the death of the employee, the option shall
terminate upon failure of his designated representative to exercise the option
in accordance with the time period provided in subsection “E” below.  Notwithstanding the foregoing, 1.) If an
employee who is not a Section 16 officer terminates because of a divestiture by
the Company, any option granted pursuant to the Plan shall become exercisable in
full and the employee may exercise any such option which has not already been
exercised until the earlier of: (i) three months from the closing date of the
divestiture, or such longer date, if any, which the Committee may authorize, or
(ii) the expiration of the option.  2.) 


 


 


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If any employee who is not a Section 16 officer terminates as a result
of participation in a Company voluntary severance program approved by the
Executive Committee, any option granted pursuant to the Plan shall become exercisable
in full, and the employee may exercise any such option which has not already
been exercised until the earlier of (i) three months from the employee’s
termination date, or (ii) the expiration of the option.


 


                E.             EXERCISE BY REPRESENTATIVE FOLLOWING
DEATH OF EMPLOYEE.  The employee, by
written notice to the Company, may designate one or more persons (and from time
to time change such designation) including his legal representative, who, by
reason of his death, shall acquire the right to exercise all or a portion of
the option.  If the person or persons so
designated wish to exercise any portion of the option, they must do so within
one (1) year after the death of the employee or retired employee, as the case
may be.  All rights of the representative(s)
in the option shall terminate upon failure to exercise the option within the
time period set forth in this subsection E. 
Any exercise by a representative shall be subject to the provisions of
this Plan.


 


VII.          MODIFICATION,
EXTENSION AND RENEWAL OF OPTIONS


 


                The Company’s
Board of Directors and the Committee shall each have the power to modify,
extend or renew outstanding options and authorize the grant of new options in
substitution therefor, provided that any such action may not have the effect of
altering or impairing any rights or obligations of any option previously
granted without the consent of the optionee.


 


                The Board of
Directors and the Committee shall have the power to lower the exercise price of
an outstanding option not intended to qualify as an ISO under the Code;
provided, however, that the exercise price per share may not be reduced below
the fair market value of a share of Common Stock of the Company on the date the
action is taken to reduce the exercise price. 
Such fair market value shall be deemed to be the mean of the highest and
lowest quoted selling prices for such shares on that date as reported on The
New York Stock Exchange Composite Tape.


 


VIII.        OPTION PRICE


 


                The option price
per share for the shares covered by each option shall be not less than one
hundred percent (100%) of the fair market value of a share of Common Stock of
the Company on the date the option is granted. 
Such fair market value shall be deemed to be the mean of the highest and
lowest quoted selling prices for such shares on that date as reported on The
New York Stock Exchange Composite Tape.


 


IX.           LOANS FOR EXERCISE
OF OPTIONS


 


                Any option
agreement under this Plan entered into with an employee may, but need not,
provide that the Company shall lend to the employee who holds the option the
funds for any exercise of his option. 
Such loans shall be at a rate of interest adequate to 


 


 


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avoid imputation of income under Sections 483 and 7872 of the Code and
shall be for a term not to exceed fifteen (15) months from the date of exercise
of the related option, and shall be subject to such other terms and conditions
as shall be set forth in the option agreement, which terms and conditions shall
be determined by the Committee at the time of the grant of the option.  No such loan shall be secured directly or
indirectly by any margin security (as that term is from time to time defined in
the applicable Regulations of the Federal Reserve Board).


 


X.            STOCK APPRECIATION
RIGHTS


 


                This section shall
apply to employees who hold options heretofore or hereafter granted under the
Plan (“Options”) and who are or may hereafter be subject to Section 16 of the
Securities Exchange Act of 1934.  The Committee
may, but shall not be required to, grant to such employees stock appreciation
rights as herein provided with respect to not more than the number of shares
from time to time subject to the Options held by such employees. The stock
appreciation rights shall be integral parts of the respective Options and shall
have no existence apart therefrom.


 


                A stock
appreciation right shall be the right of the holder thereof to elect to
surrender part or all of any Option which is wholly exercisable, or of any
exercisable portion of an Option which is partially exercisable, and receive in
exchange therefor cash or shares (valued at current fair market value) or a
combination thereof.  Such cash or
shares or combination shall have an aggregate value (“Appreciation”) equal to
the excess of the current fair market value of one (1) share over the Option
price of one (1) share specified in such Option multiplied by the number of
shares subject to such Option or the portion thereof which is surrendered.  The current fair market value of a share
shall be the mean of the highest and lowest quoted selling prices for shares as
reported on The New York Stock Exchange Composite Tape on the day on which a
stock appreciation right is exercised, or if no sale was made on such date,
then on the next preceding day on which such a sale was made.  No fractional share shall be issued on the
exercise of a stock appreciation right, and settlement therefor shall be made
in cash.


 


                Each stock
appreciation right granted under this Plan shall be subject to the following
terms and conditions: (1) each stock appreciation right shall be evidenced by a
written agreement between the Company and the holder in such form as the
Committee shall authorize; (2) each stock appreciation right granted under the
Plan by its terms shall not be transferable by the holder otherwise than by
will or by the law of descent and distribution, and shall be exercised during
the lifetime of the holder only by him. 
No stock appreciation right or interest therein may be transferred,
assigned, pledged or hypothecated by the holder during his lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process; (3) all rights of an employee in a stock appreciation right,
to the extent that it has not been exercised, shall terminate upon the death of
the employee or the termination of his employment for any reason other than
retirement because of age or total and permanent disability, and in case of
such retirement three (3) months from the date thereof; provided, however, that
the employee, by written notice to the Company, may designate one or more
persons (and 


 


 


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from time to time change such designation), including his legal
representative, who, by reason of his death, shall acquire the right to
exercise all or a portion of the rights accrued under the stock appreciation
right as of the date of his death.  If
the person or persons so designated wish to exercise any portion of the stock
appreciation right, they must do so within one (1) year after the death of the
employee or retired employee, as the case may be, and such exercise shall be
subject to the provisions of this Plan; (4) the life of stock appreciation
rights shall be coterminous with the life of the Options.


 


                The holder of a
stock appreciation right may exercise the same by (1) filing with the Secretary
of the Company a written election, which election shall be delivered by the
Secretary to the Committee, specifying (a) the Option or portion thereof to be
surrendered, (b) the percentage of the Appreciation which he desires to receive
in cash, if any; and (2) surrendering such Option for cancellation or partial
cancellation, as the case may be; provided, however, that any election which
specifies that the holder of a stock appreciation right desires to receive any
portion of the Appreciation in cash shall be of no force or effect unless and
until the Committee shall have consented to such election.


 


                No stock
appreciation right or related Option may be exercised during the first six
months of its term, except in the event of death or total and permanent
disability of the holder occurs prior to the expiration of this six-month
period.


 


                The Committee
shall have the sole discretion to consent to approve or disapprove, in whole or
in part, any election to receive any portion of the Appreciation in cash.


 


                Upon exercise of a
stock appreciation right, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares covered by the Option, or the
portion thereof, which is surrendered in connection with such exercise.


 


                Nothing in the
Plan shall be construed to give any eligible employee any right to be granted a
stock appreciation right.  Neither the
Plan nor the granting of a stock appreciation right nor any other action taken
pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will employ the holder of a
stock appreciation right for any period of time or in any position or at any
particular rate of compensation.  The
holder of a stock appreciation right shall have no rights as a stockholder with
respect to the shares covered by his stock appreciation right until the date of
issuance to him of a stock certificate therefor, and, except as otherwise
specifically provided in the stock option agreement for the Options, no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such certificate is issued.


 


 


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PART 3.  STOCK AND CASH AWARDS


 


XI.           STOCK AND CASH AWARD
DETERMINATION


 


                The Committee may
grant an eligible employee Stock Awards or awards of cash (“Cash Awards”) at
such times and in such amounts as the Committee may designate which in its
opinion fully reflect the performance level and potential of such
employee.  The Committee shall designate
whether such awards are payable in Common Stock, cash, or a combination
thereof.  Such awards shall be made in
accordance with such guidelines as the Committee may from time to time
adopt.  Stock and Cash Awards shall be
independent of any grant of an option under this Plan, and shall be made
subject to such restrictions as the Committee may determine to be appropriate.


 


XII.         PAYMENT OF STOCK OR
CASH AWARDS


 


                A.            No employee shall have the right to
receive payment of any Stock or Cash Award until notified of the amount of such
award, in writing, by the Committee or its authorized delegate.


 


                B.            Payment of cash awards shall be made
in a lump sum or in annual installments over such period as the Committee may
designate, which period shall not exceed five years, provided that the
Committee may from time to time designate minimum installment amounts.


 


                C.            After an award of Common Stock subject
to restrictions (“Restricted Stock”), certificates for such shares will be
deposited in escrow with the Company’s Secretary.  The Employee shall retain all rights in the Restricted Stock
while it is held in escrow including but not limited to voting rights and the
right to receive dividends, except that the Employee shall not have the right
to transfer or assign such shares until all restrictions pertaining to such
shares are terminated at which time the applicable stock certificates shall be
released from escrow and delivered to the employee by the Company’s Secretary.


 


                D.            The Committee may permit, on such
terms as it deems appropriate, use of Restricted Stock as partial or full
payment upon exercise of a stock option under a Company Incentive Stock Option
Plan or this Plan.  In the event shares
of Restricted Stock are so tendered as consideration for the exercise of an
option, a number of the shares issued upon the exercise of said option, equal
to the number of shares of Restricted Stock used as consideration therefor,
shall be subject to the same Restrictions as the Restricted Stock so submitted
plus any additional Restrictions that may be imposed by the Committee.


 


XIII.        TERMINATION OF
RESTRICTIONS ON STOCK AWARDS


 


                The Committee will
establish the period or periods after which the Restrictions on Restricted
Stock will lapse.


 


                The Committee may
in its discretion permit an employee to elect to receive in lieu of shares of
Restricted Stock, at the expiration of the restrictions, a cash payment equal
to the fair market value of the Restricted Stock on the date restrictions
lapse.  Fair market 


 


 


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value shall be the mean of the high and low prices of such stock on The
New York Stock Exchange Composite Tape on the date in question, or if no sales
of such stock were made on that date, the mean of the high and low prices of
such stock on the next preceding day on which sales were made.


 


XIV.        DEATH OR TOTAL AND PERMANENT DISABILITY
OF A PARTICIPATING EMPLOYEE HOLDING RESTRICTED STOCK


 


                By written notice
to the Company, an employee who has received a grant of Restricted Stock may
designate one or more persons (and from time to time change such designation)
who, by reason of his death, shall acquire the right to receive any vested but
unpaid awards held by the employee at the time of his death.  Such awards shall be paid to the designated
representative at such time and in such manner as if the employee were living.


 


                In the event of
total and permanent disability of an employee who has participated in the Plan,
any unpaid but vested award shall be paid to the employee if legally competent
or to a committee or other legally designated guardian or representative if the
employee is legally incompetent.


 


                After the death or
total and permanent disability of an employee, the Committee may in its sole
discretion at any time terminate Restrictions upon stock awarded to the
employee.  A request to the Committee
for the termination of Restrictions or the acceleration of payments not yet due
may be made by the employee’s beneficiary or representative, or by a totally
and permanently disabled employee.


 


                If at the time of
the employee’s death, there is no effective beneficiary designation as to all
or some portion of the awards hereunder, such awards or such portion thereof
shall be paid to or on the order of the legal representative of the employee’s
estate.  In the event of uncertainty as
to the interpretation or effect of any notice of designation, the Committee’s
decision with respect thereto shall be conclusive.


 


XV.         RESTRICTIONS AND
FORFEITURE OF STOCK AWARDS


 


                The Company’s
obligation to deliver stock certificates held in escrow is subject to the
condition that the employee remain an active employee of the Company or be under
contract to provide services to the Company as provided in Section XVI hereof
for the entire deferral and/or restriction period, including mandatory and
optional deferrals.  If the employee
fails to meet this condition, the employee’s right to any such unpaid amounts
or undelivered stock certificates shall be forfeited.  This provision may be waived by the Committee in exceptional
circumstances.


 


 


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XVI.        RETIREMENT OF EMPLOYEE
HOLDING STOCK AWARD


 


                If the employee
retires due to age, the Company’s obligation to make any payment due thereafter
under the Stock Award feature of the Plan is subject to the condition that for
the entire period of deferral or restriction, including mandatory and optional
deferrals:


 


                A.            The employee shall render as an
independent contractor and not as an employee, such advisory or consultative
services to the Company as shall be reasonably requested by the Board or the
Executive Committee of the Board in writing from time to time, consistent with
the state of the retired employee’s health and any employment or other
activities in which such employee may be engaged.  For purposes of this Plan, the employee shall not be required to
devote a major portion of time to such services and shall be entitled to
reimbursement for any reasonable out-of-pocket expenses incurred in connection
with the performance of such services;


 


                B.            The employee shall not render
services for any organization or engage directly or indirectly in any business
which, in the opinion of the Committee, competes with, or is in conflict with
the interest of, the Company.  The
employee shall be free, however, to purchase as an investment or otherwise,
stock or other securities of such organizations so long as they are listed upon
a recognized securities exchange or traded over-the-counter, or so long as such
investment does not represent a substantial investment to the employee or a
significant (greater than 10%) interest in the particular organization.  For the purposes of this subparagraph, a
company (other than a subsidiary) which engages in the business of producing,
leasing or selling products or providing services of the type now or at any
time hereafter made or provided by the Company, shall be deemed to compete with
the Company;


 


                C.            The employee shall not, without
prior written authorization from the Company, disclose to anyone outside the
Company, or use in other than the Company’s business, any confidential
information or material relating to the business of the Company, either during
or after employment with the Company; and


 


                D.            The employee shall disclose promptly
and assign to the Company all right, title and interest in any invention or
idea, patentable or not, made or conceived by the employee during employment by
the Company, relating in any manner to the actual or anticipated business,
research or development work of the Company and shall do anything reasonably
necessary to enable the Company to secure a patent where appropriate in the
United States and in foreign countries.


 


 


PART 4.  GENERAL PROVISIONS


 


XVII.       ASSIGNMENTS


 


                The rights and
benefits under this Plan may not be assigned except for the designation of a
beneficiary as provided in Sections VI and XIV.


 


 


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XVIII.   TIME FOR GRANTING
OPTIONS OR STOCK AWARDS


 


                All options for
shares and Stock Awards subject to this Plan shall be granted, if at all, not
later than ten (10) years after the adoption of this Plan by the Company’s
Board of Directors.


 


 


XIX.     LIMITATION OF RIGHTS


 


                A.            NO RIGHT TO AN OPTION OR STOCK
AWARD.  Nothing in the Plan shall be
construed to give any personnel of the Participating Companies any right to be
granted an option or Stock or Cash Award.


 


                B.            NO EMPLOYMENT RIGHT.  Neither the Plan, nor the granting of an
option or Stock or Cash Award nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding, express or
implied, that any of the Participating Companies will employ a grantee for any
period of time or in any position, or at any particular rate of compensation.


 


                C.            NO STOCKHOLDERS’ RIGHTS FOR
OPTIONS.  An optionee shall have no
rights as a stockholder with respect to the shares covered by his options until
the date of the issuance to him of a stock certificate therefore, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such certificate is issued.


 


XX.      CHANGES IN PRESENT
STOCK


 


                In the event of
any merger, consolidation, reorganization, recapitalization, stock dividend,
stock split, or other change in the corporate structure or capitalization
affecting the Company’s present Common Stock, appropriate adjustment shall be
made by the Board of Directors in the number (including the aggregate numbers
specified in Section IV) and kind of shares which are or may become subject to
options and stock awards granted or to be granted hereunder, and in the option
price of shares which are subject to options granted hereunder.


 


XXI.        EFFECTIVE DATE OF THE
PLAN


 


                The Plan shall
take effect on the date of adoption by the Board of Directors of the Company,
subject to approval by the shareholders of the Company at a meeting held within
twelve (12) months after the date of such adoption.  Options and Stock or Cash Awards may be granted under the Plan at
any time after the adoption of the Plan by the Board of Directors of the
Company and prior to the termination of this Plan.


 


XXII.      AMENDMENT OF THE PLAN


 


                The Board or the
Committee may suspend or discontinue the Plan or revise or amend it in any
respect whatsoever; provided, however, that the Company may seek 


 


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stockholder approval of an amendment if determined to be required by or
advisable by any law or regulation, including without limitation, any
regulations of the Securities and Exchange Commission or the Internal Revenue
Service, the rules of any stock exchange on which the Company’s stock is listed
or other applicable law or regulation.


 


XXIII.   NOTICE


 


                Any written notice
to the Company required by any of the provisions of this Plan shall be
addressed to the Secretary of the Company and shall become effective when it is
received.


 


XXIV.     COMPANY BENEFIT PLANS


 


                Nothing contained
in this Plan shall prevent the employee prior to death, or the employee’s
dependents or beneficiaries after the employee’s death, from receiving, in
addition to any awards provided for under this Plan and any salary, any
payments under a Company retirement plan or which may be otherwise payable or
distributable to such employee, or to the employee’s dependents or
beneficiaries under any other plan or policy of the Company or otherwise.


 


XXV.      UNFUNDED PLAN


 


                Insofar as it
provides for awards of Stock or cash, this Plan shall be unfunded.  Although bookkeeping accounts may be
established with respect to employees who are granted awards of Stock under
this Plan, any such accounts will be used merely as a bookkeeping convenience.  Except for the holding of Restricted Stock
in escrow pursuant to Section XII C, the Company shall not be required to
segregate any assets which may at any time be represented by awards of Stock or
cash, nor shall this Plan be construed as providing for such segregation, nor
shall the Company nor the Board nor the Committee be deemed to be a trustee of
Stock or cash to be awarded under the Plan. 
Any liability of the Company to any employee with respect to an award of
Stock or cash under this Plan shall be based solely upon any contractual
obligations which may be created by the Plan; no such obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company.  Neither the
Company nor the Board nor the Committee shall be required to give any security
or bond for the performance of any obligation which may be created by this
Plan.


 


XXVI.    GOVERNING LAW


 


                This Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
law of the State of California and construed accordingly.


 


 


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XXVII.   BUYOUT PROVISIONS


 


                At any time, the Committee may, but shall not
be required to, authorize the Company to offer to buy out for a payment in cash
or shares an option, stock appreciation right, Stock Award or Restricted Stock
previously granted based on such terms and conditions as the Committee shall
establish and communicate to the holder of such option, stock appreciation
right, Stock Award or Restricted Stock in connection with such offer.


 


 


	
  11/30/84

  	
  Adopted by the Board of Directors

  
	
  2/26/85

  	
  Approved by the Stockholders

  
	
  1/18/90

  	
  Part 3, Section XIII amended by the Executive
  Compensation and Stock Option Committee

  
	
  7/17/91

  	
  Part 1, Section II amended by the Executive Compensation
  and Stock Option Committee

  
	
  4/13/95

  	
  Payment date for two for one stock split (record
  date 3/24/95)

  
	
  7/15/96

  	
  Payment date for two for one stock split (record
  date 6/21/96)

  
	
  11/21/96

  	
  Part 1, Section II, Part 2, Section X and Part 4,
  Section XXII amended by the Compensation Committee

  
	
  5/15/97

  	
  Part 2, Section VI D amended by the Compensation
  Committee

  
	
  5/20/98

  	
  The Company reincorporated in the State of Delaware

  
	
  10/27/00

  	
  Payment date for two for one stock split in the form
  of a stock dividend (record date 9/27/00)

  
	
  9/12/02

  	
  Part 4, Section XXVII added and plan restated by HR
  & Compensation Committee

  
	
  11/21/02

  	
  Part 1, Section II added new paragraph and plan
  restated by HR & Compensation Committee

  



 


 


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