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Exhibit 10.5  

 
 

FORM OF OFFICER CONFIDENTIALITY AGREEMENT    
    

        This Confidentiality Agreement (this "Agreement"), dated as of [            ],
2007, is
by and among DG FastChannel, Inc., a Delaware corporation (the "Purchaser"), Haig S. Bagerdjian, and Alan R. Steel. All capitalized
terms used herein and not defined herein shall have the meanings assigned to such terms in the Merger Agreement (as defined below). 

        WHEREAS,
the Purchaser is a party to an Agreement and Plan of Merger and Reorganization, dated as of April 16, 2007, by and among the Purchaser, Point.360, a California
corporation (the "Company"), and New 360, a California corporation (as amended or supplemented, the "Merger
Agreement"), pursuant to which, among other things, the Purchaser shall acquire the ADS Business of the Company; 

        WHEREAS,
Messrs. Bagerdjian and Steel are officers of the Company and hold a substantial number of the issued and outstanding Shares (either directly or through ownership of
vested Company Options) for which they will receive valuable consideration as a consequence of the consummation of the Offer, and therefore have a material economic interest in the consummation of the
Transactions; and 

        WHEREAS,
in order to protect the goodwill related to the ADS Business, and as a condition of consummating the transactions contemplated by the Merger Agreement on the Acceptance Date,
the parties hereto are executing this Agreement. 

        NOW,
THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and in the Merger Agreement and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 

        SECTION
1.    CONFIDENTIALITY. 

        (a)   Messrs. Bagerdjian
and Steel have each had access to and contributed to information and materials of a highly sensitive nature (including Confidential
Information, as defined below) of the ADS Business. Messrs. Bagerdjian and Steel each agree that, on or prior to the third (3rd) anniversary of the Acceptance Date, unless Mr. Bagerdjian
or Mr. Steel, as applicable, first secures the written consent of an authorized representative of the Purchaser, he shall not use for himself or anyone else, or disclose to others, any
Confidential Information, except as may be necessary for Mr. Bagerdjian or Mr. Steel to carry out his duties under any agreement with the Purchaser (if applicable) or except to the
extent such use or disclosure is required by law or order of any Governmental Entity (in which event Mr. Bagerdjian or Mr. Steel shall, to the extent practicable, inform the Purchaser in
advance of any such required disclosure, shall cooperate with the Purchaser in all reasonable ways in obtaining a protective order or other protection in respect of such required disclosure, and shall
limit such disclosure to the extent reasonably possible while still complying with such requirement). 

        (b)   "Confidential Information" as used herein, means all information of a highly sensitive nature (whether or not
specifically identified as confidential) of the ADS Business, in any form or medium, that at or prior to the Acceptance Date was disclosed to Mr. Bagerdjian or Mr. Steel, as the case may
be, and that relates to the ADS Business, including, without limitation: (i) internal business information (including, without limitation, information relating to the strategic plans and
practices, business, accounting, financial or marketing plans, practices or programs, training practices and programs, salaries, bonuses, incentive plans and other compensation and benefits
information and accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, the ADS Business, its customers
and their confidential information; (iii) industry research compiled by, or on behalf of the ADS Business, including, without limitation, identities of potential target companies, management
teams and transaction sources; (iv) compilations of data and analyses, processes, methods, track and performance records, data and databases relating 

 

thereto;
provided, however, that "Confidential
Information" shall not include any information that (1) was already known to Mr. Bagerdjian or Mr. Steel, as applicable, at the time of its disclosure,
(2) after being disclosed to Mr. Bagerdjian or Mr. Steel was subsequently disclosed to Mr. Bagerdjian or Mr. Steel by a third party that was, to
Mr. Bagerdjian's or Mr. Steel's knowledge, entitled to disclose such information on a non-confidential basis, or (3) has become generally known to and widely available
for use within the industry other than as a result of a disclosure by Mr. Bagerdjian or Mr. Steel in violation of this Agreement. 

        SECTION
2.    MISCELLANEOUS. 

        (a)    Notices.    All notices and other communications hereunder shall be in writing and shall be deemed given if
delivered personally (notice deemed given upon receipt), telecopied (notice deemed given upon
confirmation of receipt) or sent by a nationally recognized overnight courier service, such as Federal Express (notice deemed given upon receipt of proof of delivery), to the parties at the following
addresses (or at such other address for a party as shall be specified by like notice): 

        (i)    if
to the Purchaser, to: 

DG
FastChannel, Inc.

750 W. John Carpenter Freeway, Suite 700

Irving, TX 75039

Attention: Chief Financial Officer

Telephone No.: (972) 581-2000

Facsimile No.: (972) 581-2100 

with
a copy to: 

Latham &
Watkins LLP

555 Eleventh Street NW, Suite 1000

Washington, DC 20004

Attention: William P. O'Neill

Telephone No.: (202) 637-2200

Facsimile No.: (202) 637-2201 

        (ii)   if
to Mr. Bagerdjian or Mr. Steel, to: 

c/o
Point.360

2777 North Ontario Street

Burbank, CA 91504

Telephone No.: (818) 565-1400

Facsimile No.: (818) 847-2503 

with
a copy to: 

Troy &
Gould PC

1801 Century Park East, Suite 1600

Los Angeles, CA 90067

Attention: William Gould

Telephone No.: (310) 780-1338

Facsimile No.: (310) 201-4746 

        (b)    Counterparts; Facsimile.    This Agreement may be executed manually or by facsimile by the parties hereto, in
any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each party and delivered to the
other party. 

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        (c)    Governing Law.    This Agreement shall be governed by, and construed in accordance with, the laws of the State
of California, without giving effect to conflicts of laws principles that would result in the application of the law of any other state. 

        (d)    Injunctive Relief.    The parties to this Agreement hereby agree that the remedy at law for any breach of this
Agreement is and will be inadequate, and in the event of a breach or threatened breach by Mr. Bagerdjian or Mr. Steel of this Agreement, the Purchaser shall be entitled to seek an
injunction restraining such party from the conduct that would constitute a breach of this Agreement. Nothing herein contained shall be construed as prohibiting the Purchaser from pursuing any other
remedies available to it for such breach or threatened breach, including, without limitation, the recovery of damages. 

        (e)    Assignment.    This Agreement shall not be assigned by any party hereto (whether by operation of law or
otherwise) without the prior written consent of the other party. Subject to the preceding sentence, but without relieving any party hereto of any obligation hereunder, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 

        (f)    Amendments; Waiver.    This Agreement may be amended or modified only by a written instrument signed by each of
the parties hereto. Any party may waive any provision of this Agreement or compliance therewith; provided that such waiver is set forth in an instrument
in writing signed by the party to be bound thereby. Any waiver or failure to insist on strict compliance with any agreement or obligation contained herein shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. 

        (g)    Severability.    If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by 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 by the Merger Agreement are not affected in any manner 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 the transactions contemplated by the Merger Agreement are fulfilled to the extent possible. 

        (h)    WAIVER OF JURY TRIAL.    EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH
WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 2(h). 

[Remainder
of this page intentionally left blank.] 

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above. 

	 	 	DG FASTCHANNEL, INC.
	

 	
 	

By:	

    

	 	 	 	Name: Scott K. Ginsburg
	 	 	 	Title: Chairman and CEO
	    	 	 	 
	

 	
 	

HAIG S. BAGERDJIAN
	

 	
 	

    

	    	 	 	 
	

 	
 	

ALAN R. STEEL
	

 	
 	

    

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FORM OF OFFICER CONFIDENTIALITY AGREEMENTExhibit
10(b)

 

As amended and restated effective
May 1, 2007

As amended and restated effective
November 21, 2002

As amended and restated effective
September 12, 2002

As amended and restated effective
October 27, 2000

 

HEWLETT-PACKARD COMPANY 2000
STOCK PLAN

 

1. PURPOSES OF THE PLAN.

 

The purpose of this Plan is to encourage ownership
in the Company by key personnel whose long-term employment is considered
essential to the Company’s continued progress and, thereby, encourage
recipients to act in the shareowner’s interest and share in the Company’s
success.

 

2. DEFINITIONS.

 

As used herein, the following definitions shall
apply:

 

(a)           “Administrator” means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)           “Affiliate” means any entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant ownership interest as determined by the Administrator.

 

(c)           “Applicable Laws” means the requirements relating to the
administration of stock option plans under U.S. federal and state laws, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign jurisdiction where Awards are, or
will be, granted under the Plan.

 

(d)           “Award” means a Cash Award, Stock Award, or Option
granted in accordance with the terms of the Plan.

 

(e)           “Awardee” means the holder of an outstanding Award.

 

(f)            “Award Agreement” means a written or electronic agreement
between the Company and an Awardee evidencing the terms and conditions of an
individual Award. The Award Agreement is subject to the terms and conditions of
the Plan.

 

(g)           “Board” means the Board of Directors of the Company.

 

(h)           “Cash Awards” means cash awards granted pursuant to
Section 12 of the Plan.

 

(i)            “Code” means the United States Internal Revenue
Code of 1986, as amended.

 

(j)            “Committee” means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.

 

(k)           “Common Stock” means the common stock of the Company.

 

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(l)            “Company” means Hewlett-Packard Company, a Delaware
corporation.

 

(m)          “Consultant” means
any person, including an advisor, engaged by the Company or a Subsidiary to render
services to such entity or any person who is an advisor, director or consultant
of an Affiliate.

 

(n)           “Director” means a member of the Board.

 

(o)           “Employee” means a regular employee of the Company, any
Subsidiary or any Affiliate, including Officers and Directors, who is treated
as an employee in the personnel records of the Company or its Subsidiary for
the relevant period, but shall exclude individuals who are classified by the
Company or its Subsidiary as (A) leased from or otherwise employed by a
third party; (B) independent contractors; or (C) intermittent or
temporary, even if any such classification is changed retroactively as a result
of an audit, litigation or otherwise. An Awardee shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company
or its Subsidiary or (ii) transfers between locations of the Company or
between the Company, any Subsidiary, or any successor. Should an Awardee
transfer from the Company to Agilent Technologies, Inc. prior to the Distribution
Date (as defined in Section 1.20 of the Employees Matter Agreement between
Agilent Technologies, Inc. and the Company), the Awardee will cease to be
an Employee at the time of such transfer. Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute “employment”
by the Company.

 

(p)           “Exchange Act” means the Securities Exchange Act of 1934,
as amended.

 

(q)           “Fair Market Value” means, unless the Administrator deems
otherwise, as of any date, the closing sales price for such Common Stock as of
such date (or if no sales were reported on such date, the closing sales price
on the last preceding day on which a sale was made) as reported in such source
as the Administrator deems reliable.

 

(r)            “Grant Date” means the date selected by the
Administrator, from time to time, upon which Awards are granted to Participants
pursuant to this Plan.

 

(s)           “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

 

(t)            “Nonstatutory Stock Option” means an Option not intended to qualify as
an Incentive Stock Option.

 

(u)           “Officer” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

 

(v)           “Option” means a stock option granted pursuant to the
Plan. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options.

 

(w)          “Participant” means
an Employee, Director or Consultant.

 

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(x)            “Plan” means this 2000 Stock Plan.

 

(y)           “Restricted Stock” means shares of Common Stock acquired
pursuant to a grant of a Stock Award under Section 11 of the Plan.

 

(z)            “Share” means a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.

 

(aa)         “Stock Awards” means
right to purchase or receive Common Stock pursuant to Section 11 of the
Plan.

 

(bb)         “Subsidiary” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.

 

3. STOCK SUBJECT TO THE PLAN.

 

Subject to the provisions of Section 14 and
Section  6(d) of the Plan, the maximum aggregate number of Shares that may
be issued under the Plan is 250,000,000 Shares. The Shares may be authorized,
but unissued, or reacquired Common Stock. Preferred stock may be issued in lieu
of Common Stock for Awards.

 

If an Award expires or becomes unexercisable without
having been exercised in full, the unpurchased Shares which were subject
thereto, if any, shall become available for future grant or sale under the Plan
(unless the Plan has terminated). Shares of Restricted Stock that are either
forfeited or repurchased by the Company at their original purchase price shall
become available for future grant or sale under the Plan. Shares that are
tendered, whether by physical delivery or by attestation, to the Company by the
Awardee as full or partial payment of the exercise price of any Award or in payment
of any applicable withholding for federal, state, city, local or foreign taxes
incurred in connection with the exercise of any Award shall become available
for future grant or sale under the Plan; provided, however, that the total
number of Shares so tendered from which Incentive Stock Options may be granted
shall not exceed 250,000,000.

 

4. ADMINISTRATION OF THE PLAN.

 

(a)           Procedure.

 

(i)            Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Participants.

 

(ii)           Section 162. To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan
shall be administered by a Committee of two or more “outside directors” within
the meaning of Section 162(m) of the Code.

 

(iii)          Rule 16-3. To
the extent desirable to qualify transactions hereunder as exempt under
Rule 16b-3 promulgated under the Exchange Act (“Rule 16b-3”), the
transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.

 

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(iv)          Other Administration.
The Board may delegate to the Executive Committee of the Board (the “Executive
Committee”) the power to approve Awards to Participants who are not
(A) subject to Section 16 of the Exchange Act or (B) at the time
of such approval, “covered employees” under Section 162(m) of the
Code.

 

(v)           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 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.

 

(b)           Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

 

(i)            to select the Participants to whom Awards may
be granted hereunder;

 

(ii)           to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

 

(iii)          to approve forms of agreement for use under the Plan;

 

(iv)          to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and conditions include,
but are not limited to, the exercise price, the time or times when an Award may
be exercised (which may or may not be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or the Shares relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;

 

(v)           to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan;

 

(vi)          to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local
laws and procedures. Without limiting the generality of the foregoing, the
Administrator is specifically authorized (A) to adopt the rules and
procedures regarding the conversion of local currency, withholding procedures
and handling of stock certificates which vary with local requirements,
(B) to adopt sub-plans and Plan addenda as the Administrator deems
desirable, to accommodate foreign tax laws, regulations and practice;

 

(vii)         to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans and Plan
addenda;

 

(viii)        to modify or amend each Award, including the discretionary authority to
extend the post-termination exercisability period of Options longer than is 

 

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otherwise provided for in the Plan, provided,
however, that any such amendment is subject to Section 15(c) of the
Plan and may not impair any outstanding Award unless agreed to in writing by
the Awardee;

 

(ix)           to allow Awardees to satisfy withholding tax obligations by electing to
have the Company withhold from the Shares to be issued upon exercise of an
Award that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined. All elections by an Awardee to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable;

 

(x)            to authorize conversion or substitution under
the Plan of any or all outstanding stock options or outstanding stock
appreciation rights held by service providers of an entity acquired by the
Company (the “Conversion Options”). Any conversion or substitution shall be
effective as of the close of the merger or acquisition. The Conversion Options
may be Nonstatutory Stock Options or Incentive Stock Options, as determined by
the Administrator; provided, however, that with respect to the conversion of
stock appreciation rights in the acquired entity, the Conversion Options shall
be Nonstatutory Stock Options. Unless otherwise determined by the Administrator
at the time of conversion or substitution, all Conversion Options shall have
the same terms and conditions as Options generally granted by the Company under
the Plan;

 

(xi)           to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the
Administrator;

 

(xii)          to make all other determinations deemed necessary or advisable for
administering the Plan and any Award granted hereunder.

 

(c)           Effect of Administrator’s
Decision. The Administrator’s
decisions, determinations and interpretations shall be final and binding on all
Awardees.

 

5. ELIGIBILITY.

 

Awards may be granted to Participants, provided,
however, that Incentive Stock Options may be granted only to Employees of the
Company or any Subsidiary.

 

6. LIMITATIONS.

 

(a)           Each Option shall be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Awardee during any calendar year (under all plans of the
Company and any Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options shall be taken into account in the order in which they were
granted. The Fair Market Value of the 

 

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Shares shall be determined as of the time the Option
with respect to such Shares is granted.

 

(b)           For purposes of Incentive Stock Options, no leave of absence may exceed
ninety (90) days, unless reemployment upon expiration of such leave is guaranteed
by statute or contract. If reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on the 91st day of such leave an
Awardee’s employment with the Company shall be deemed terminated for Incentive
Stock Option purposes and any Incentive Stock Option held by the Awardee shall
cease to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option three (3) months thereafter.

 

(c)           No Participant shall have any claim or right to be granted an Award and
the grant of any Award shall not be construed as giving a Participant the right
to continue in the employ of the Company, its Subsidiaries or Affiliates.
Further, the Company, its Subsidiaries and Affiliates expressly reserve the
right, at any time, to dismiss a Participant at any time without liability or
any claim under the Plan, except as provided herein or in any Award Agreement
entered into hereunder.

 

(d)           The following limitations shall apply to grants of Awards:

 

(i)            No Participant shall be granted, in any
fiscal year of the Company, Options to purchase more than 10,000,000 Shares.

 

(ii)           In connection with his or her initial service, a Participant may be
granted Options to purchase up to an additional 10,000,000 Shares which shall
not count against the limit set forth in subsection (i) above.

 

(iii)          If an Option is cancelled in the same fiscal year of the Company in
which it was granted (other than in connection with a transaction described in
Section 14), the cancelled Option will be counted against the limits set
forth in subsections (i) and (ii) above.

 

(iv)          The maximum aggregate number of Shares underlying Stock Awards that may
be granted under this Plan is twenty million (20,000,000) Shares.

 

(v)           The maximum aggregate number of Shares underlying Non-Statutory Stock
Options with an exercise price of less than Fair Market Value on the Grant Date
that may be granted under Section 9(a)(ii) of this Plan is thirty million
(30,000,000) Shares.

 

(vi)          The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company’s capitalization as described in
Section 14.

 

7. TERM OF PLAN.

 

Subject to Section 20 of the Plan, the Plan
shall become effective upon its adoption by the Board. It shall continue in
effect for a term of ten (10) years from the later of the date the Plan or
any amendment to add shares to the Plan is adopted by the Board unless
terminated earlier under Section 15 of the Plan.

 

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8. TERM OF AWARD.

 

The term of each Award shall be determined by the
Administrator and stated in the Award Agreement. In the case of an Option, the
term shall be ten (10) years from the Grant Date or such shorter term as
may be provided in the Award Agreement; provided that the term may be 10  1/2
years in certain jurisdictions outside the United States as determined by the
Administrator.

 

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;

 

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(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;

 

(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.

 

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.

 

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(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 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.

 

9

 

(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.

 

11. STOCK AWARDS.

 

(a)           General. Stock Awards may be issued either alone, in
addition to, or in tandem with other Awards granted under the Plan. After the
Administrator determines that it will offer a Stock Award under the Plan, it
shall advise the Awardee in writing or electronically, by means of an Award
Agreement, of the terms, conditions and restrictions related to the offer,
including the number of Shares that the Awardee shall be entitled to receive or
purchase, the price to be paid, if any, and, if applicable, the time within
which the Awardee must accept such offer. The offer shall be accepted by
execution of an Award Agreement in the form determined by the Administrator.
The Administrator will require that all shares subject to a right of repurchase
or forfeiture be held in escrow until such repurchase right or risk of
forfeiture lapses.

 

(b)           Forfeiture. Unless the Administrator determines
otherwise, the Award Agreement shall provide for the forfeiture of the unvested
Restricted Stock upon the Awardee ceasing to be an Employee except as provided
below in Sections 11(c), (d) and (e). To the extent that the Awardee
purchased the Restricted Stock, the Company shall have a right to repurchase
the unvested Restricted Stock at the original price paid by the Awardee upon
Awardee ceasing to be a Participant for any reason, except as provided below in
Sections 11(c), (d) and (e).

 

(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, the Award shall continue to vest, provided the following
conditions are met:

 

(i)            The Awardee shall not render services for any
organization or engage directly or indirectly in any business which, in the
opinion of the Administrator, competes with, or is in conflict with the
interest of, the Company. The Awardee shall be free, however, to purchase as an
investment or otherwise stock or other securities of such organizations as long
as they are listed upon a recognized securities exchange or traded over-the-counter,
or as long as such investment does not represent a substantial investment to
the Awardee or a significant (greater than 10%) interest in the particular organization.
For the purposes of this subsection, a company (other than a Subsidiary) which
is engaged 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;

 

(ii)           The Awardee shall not, without prior written authorization from the
Company, use in other than the Company’s business, any confidential 

 

10

 

information or material relating to the business of
the Company, either during or after employment with the Company;

 

(iii)          The Awardee 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 Awardee 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; and

 

(iv)          An Awardee retiring due to age shall render, as a Consultant 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 in writing from
time to time, consistent with the state of the retired Awardee’s health and any
employment or other activities in which such Awardee may be engaged. For
purposes of this Plan, the Awardee 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.

 

(d)           Death of Awardee. Unless otherwise provided for by the
Administrator in the Award Agreement, if an Awardee dies while an Employee, the
Stock Award shall immediately vest and all forfeiture provisions and repurchase
rights shall lapse as to a prorated number of shares determined by dividing the
number of whole months since the Grant Date by the number of whole months
between the Grant Date and the date that the Stock Award would have fully
vested (as provided for in the Award Agreement). The vested portion of the
Stock Award shall be delivered to 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 receive the vested Stock
Award under the Awardee’s will or the laws of descent or distribution.

 

(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, the Stock Award shall immediately vest and all forfeiture
provisions and repurchase rights shall lapse as to a prorated number of shares
determined by dividing the number of whole years since the Grant Date by the
number of whole years between the Grant Date and the date that the Stock Award
would have fully vested (as provided for in the Award Agreement).

 

(f)            Rights as a Shareowner. Unless otherwise provided for by the
Administrator, once the Stock Award is accepted, the Awardee shall have the
rights equivalent to those of a shareowner, and shall be a shareowner when his
or her acceptance of the Stock Award is entered upon the records of the duly
authorized transfer agent of the Company.

 

11

 

12. CASH AWARDS.

 

Cash Awards may be granted either alone, in addition
to, or in tandem with other Awards granted under the Plan. After the
Administrator determines that it will offer a Cash Award, it shall advise the
Awardee in writing or electronically, by means of an Award Agreement, of the
terms, conditions and restrictions related to the Cash Award.

 

13. NON-TRANSFERABILITY OF AWARDS.

 

Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by beneficiary designation, will or by the
laws of descent or distribution and may be exercised, during the lifetime of
the Awardee, only by the Awardee. If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as
the Administrator deems appropriate.

 

14.          ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.

 

(a)           Changes in Capitalization. Subject to any required action by the
shareowners of the Company, the number and kind of shares of Common Stock
covered by each outstanding Award, and the number and kind of shares of Common
Stock which have been authorized for issuance under the Plan but as to which no
Awards have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Award, as well as the price per share of
Common Stock covered by each such outstanding Award, shall be proportionately
adjusted for any increase or decrease in the number or kind of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award.

 

(b)           Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Awardee as soon
as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Option to be fully vested
and exercisable until ten (10) days prior to such transaction. In
addition, the Administrator may provide that any restrictions on any Award shall
lapse prior to the transaction, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed transaction.

 

(c)           Merger or Asset Sale. In the event there is a change of control of
the Company, as determined by the Board, the Board may, in its discretion,
(A) provide for the assumption or substitution of, or adjustment to, each
outstanding Award; (B) accelerate the vesting of Options and terminate any
restrictions on Cash 

 

12

 

Awards or Stock Awards; and (C) provide for the
cancellation of Awards for a cash payment to the Awardee.

 

15. AMENDMENT AND TERMINATION OF THE PLAN.

 

(a)           Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

 

(b)           Shareowner Approval. The Company shall obtain shareowner approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

 

(c)           Effect of Amendment or
Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of
any Award, unless mutually agreed otherwise between the Awardee and the
Administrator, which agreement must be in writing and signed by the Awardee and
the Company. Termination of the Plan shall not affect the Administrator’s
ability to exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such termination.

 

16. DESIGNATION OF BENEFICIARY.

 

(a)           An Awardee may file a written designation of a beneficiary who is
to receive the Awardee’s rights pursuant to Awardee’s Award or the Awardee may
include his or her Awards in an omnibus beneficiary designation for all
benefits under the Plan. To the extent that Awardee has completed a designation
of beneficiary while employed with Hewlett-Packard Company, such beneficiary
designation shall remain in effect with respect to any Award hereunder until
changed by the Awardee.

 

(b)           Such designation of beneficiary may be changed by the Awardee at any
time by written notice. In the event of the death of an Awardee and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Awardee’s death, the Company shall allow the executor or
administrator of the estate of the Awardee to exercise the Award, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may allow the spouse or one or more dependents
or relatives of the Awardee to exercise the Award.

 

17. LEGAL COMPLIANCE.

 

Shares shall not be issued pursuant to the exercise
of an Option or Stock Award unless the exercise of such Option or Stock Award
and the issuance and delivery of such Shares shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

 

18. INABILITY TO OBTAIN AUTHORITY.

 

To the extent the Company is unable to or the
Administrator deems it infeasible to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, the 

 

13

 

Company
shall be relieved of any liability with respect to the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

19. RESERVATION OF SHARES.

 

The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

20. SHAREOWNER APPROVAL.

 

The Plan shall be subject to approval by the
shareowners of the Company within twelve (12) months of the date the Plan
is adopted. Such shareowner approval shall be obtained in the manner and to the
degree required under Applicable Laws.

 

21. NOTICE.

 

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

 

22. GOVERNING LAW.

 

This Plan and all determinations made and actions
taken pursuant hereto shall be governed by the substantive laws, but not the
choice of law rules, of the state of Delaware.

 

23. UNFUNDED PLAN.

 

Insofar as it provides for Awards, the Plan shall be
unfunded. Although bookkeeping accounts may be established with respect to
Participants who are granted Awards of Shares 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 11, the Company
shall not be required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as providing for such
segregation, nor shall the Company nor the Administrator be deemed to be a
trustee of stock or cash to be awarded under the Plan. Any liability of the
Company to any Awardee with respect to an Award 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 Administrator shall be
required to give any security or bond for the performance of any obligation
which may be created by this Plan.

 

14

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