Document:

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                                                                    Exhibit 10.5

                                     AMENDED AND RESTATED AS OF JANUARY 20, 1998
                        TO REFLECT 2-FOR-1 STOCK SPLIT EFFECTED JANUARY 20, 1998

                          COMPAQ COMPUTER CORPORATION

                       NONQUALIFIED STOCK OPTION PLAN FOR
                             NON-EMPLOYEE DIRECTORS

     SECTION 1. AMENDMENT AND RESTATEMENT. The Compaq Computer Corporation
Nonqualified Stock Option Plan for Non-Employee Directors (the "Plan") amends
and restates in its entirety the Compaq Computer Corporation 1987 Nonqualified
Stock Option Plan for Non-Employee Directors.

     SECTION 2. PURPOSE. The purposes of the Plan are to attract and retain the
services of experienced and knowledgeable non-employee directors, to encourage
eligible directors of Compaq Computer Corporation (the "Company") to acquire a
proprietary and vested interest in the growth and performance of the Company,
and to generate an increased incentive for directors to contribute to the
Company's future success and prosperity, thus enhancing the value of the Company
for the benefit of its stockholders.

     SECTION 3. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:

     (a)  "Amendment Date" shall mean December 12, 1996, the effective date of
the amendment and restatement of the Plan.

     (b)  "Annual Retainer" shall mean the amount that an Eligible Director
would be entitled to receive for serving as a director in the year following an
Election Date, but shall not include fees associated with service on any
committee of the Board, any meeting fees, or any fees associated with other
services to be provided to the Company.

     (c)  "Board" shall mean the Board of Directors of the Company.

     (d)  "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.

     (e)  "Company" shall mean Compaq Computer Corporation.

     (f)  "Election Date" shall mean with respect to an Option hereunder the
date of the appointment, election, or re-election of the director that prompted
the grant of such Option.

     (g)  "Eligible Director" shall mean each director of the Company who is not
an employee of the Company or any of the Company's subsidiaries (as defined in
Section 425(f) of the Code).

     (h)  "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

     (i)  "Fair Market Value" shall mean with respect to the Common Stock (i)
the last sale price of the Common Stock on the date on which such value is
determined, as reported on the consolidated tape of New York Stock Exchange
issues or, if there shall be no trades on such date, on the date nearest
preceding such date; (ii) if the Common Stock is not then listed for trading on
the New York Stock Exchange, the last sale price of the Common Stock on the date
on which such value is determined, as reported on another recognized securities
exchange or on the NASDAQ National Market System if the Common Stock shall then
be listed and traded upon such exchange or system or, if there shall be no
trades on such date, on the date nearest preceding such date; or (iii) the mean
between the bid and asked quotations for such stock on such date (as reported by
a recognized stock quotation service) or, in the event that there shall be no
bid or asked quotations on such date, then upon the basis of the mean between
the bid and asked quotations on the date nearest preceding such date.

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     (j)  "Grant Notice" shall mean a written notice evidencing an Option
granted hereunder.

     (k)  "Option" shall mean any right granted to a Participant allowing such
Participant to purchase Shares at such price or prices and during such period or
periods as set forth under the Plan. All Options shall be nonqualified options
not entitled to special tax treatment under Section 422A of Code.

     (l)  "Participant" shall mean an Eligible Director who receives an Option
under the Plan.

     (m)  "Price Percentage" shall mean 50 percent unless adjusted in accordance
with Section 8(e).

     (n)  "Release Date" shall mean the fifth business day occurring after the
Company's earnings release for the preceding fiscal period. In calculating the
Release Date, the day of an earnings release shall be counted if the earnings
release is made before the opening of trading on the New York Stock Exchange and
shall not be counted if such release is made after the opening of trading.

     (o)  "Share Percentage" shall be 50 percent unless adjusted in accordance
with Section 8(e).

     (p)  "Shares" shall mean shares of the common stock, $.01 par value, of the
Company.

     (q)  "Window" shall mean a period of time beginning on a Release Date and
ending at the end of the second month of the fiscal quarter in which such
Release Date occurs.

     SECTION 4. ADMINISTRATION. The Plan shall be administered by the Board.
Subject to the terms of the Plan, the Board shall have the power to interpret
the provisions and supervise the administration of the Plan.

     SECTION 5. SHARES SUBJECT TO THE PLAN.

     (a)  Total Number. Subject to adjustment as provided in this Section, the
total number of Shares as to which Options may be granted under the Plan shall
be 7,500,000 Shares. Any Shares issued pursuant to Options hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.

     (b)  Reduction of Shares Available.

          (i)  The grant of an Option will reduce the Shares as to which Options
may be granted by the number of Shares subject to such Option.

          (ii) Any Shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
Shares available for grants under the Plan.

     (c)  Increase of Shares Available. The lapse, cancellation, or other
termination of an Option that has not been fully exercised shall increase the
available Shares by the number of Shares that have not been issued upon exercise
of such Option.

     (d)  Other Adjustments. The total number and kind of shares available for
Options under the Plan or which may be allocated to any one Participant, the
number and kind of shares of Common Stock subject to outstanding Options, and
the exercise price for such Options shall be appropriately adjusted by the Board
for any increase or decrease in the number of outstanding Shares resulting from
a stock dividend, subdivision, combination of Shares, reclassification, or other
change in corporate structure affecting the Shares or for any conversion of the
Shares into or exchange of the Shares for other shares as a result of any merger
or consolidation (including a sale of assets) or other recapitalization as may
be necessary to maintain the proportionate interest of the Option holder.

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     SECTION 6. INITIAL OPTIONS. Initial Options shall be granted to Eligible
Directors as follows:

     (a)  Initial Grants. Each Eligible Director who is first elected or
appointed to the Board on or after April 25, 1996, shall be granted one Option
to acquire 31,250 Shares. In the event that the Election Date occurs during the
Window, such Option shall be granted on the Election Date with respect to such
Option. In the event that such Eligible Director's election or appointment does
not occur during the Window, then such Option shall be granted on the next
Release Date. Any Eligible Director who is elected or appointed to the Board as
the result of a merger of a subsidiary of the Company with Tandem Computers
Incorporated ("Tandem") will not be eligible for an initial grant as provided in
this Section 6(a). Any options to purchase common stock of Tandem held by such
Eligible Director at the time of the merger will be converted into options to
purchase Compaq Common Stock upon consummation of the merger. Such converted
options shall be assumed under this Plan and shall be exercisable on the first
anniversary date of the grant date of such options. This conversion to Options
under this Plan shall not be considered an initial grant as provided in this
Section 6(a).

     (b)  Terms and Conditions. Any Option granted under this Section 6 shall be
subject to the following terms and conditions:

          (i)  Option Price. The purchase price per Share purchasable under an
Option granted under Section 6 shall be 100% of the Fair Market Value of a Share
on the date of the grant of the Option.

          (ii) Exercisability. An Option granted under Section 6(a) shall be
exercisable on the first anniversary of the Election Date.

     SECTION 7. ANNUAL OPTIONS. Annual Options shall be granted to Eligible
Directors as follows:

     (a)  Reelected Directors. Each Eligible Director who is reelected to the
Board at an annual meeting of the Company's stockholders on or after the
Amendment Date and who has not received a grant under Section 6 during the
period since the most recent previous annual meeting of the Company's
stockholders shall be granted an Option to acquire 25,000 Shares on each
Election Date on which he is reelected.

     (b)  Chairman of the Board. Each Eligible Director who is elected or
re-elected Chairman of the Board by the Board at its meeting following an annual
meeting of the Company's stockholders on or after the Amendment Date and who has
not received a grant under Section 6 during the period since the most recent
annual meeting of the Company's stockholders shall be granted on each Election
Date on which he is elected or reelected Chairman of the Board an Option to
acquire 6,250 Shares in addition to any applicable Option granted under Section
7(a).

     (c)  Terms and Conditions. Any Option granted under this Section 7 shall be
subject to the following terms and conditions:

          (i)  Option Price. The purchase price per Share purchasable under an
Option shall be 100% of the Fair Market Value of a Share on the date of the
grant of the Option.

          (ii) Exercisability. An Option granted under this Section 7 shall be
exercisable (A) with respect to 50% of the Shares thereunder on the first
anniversary of the Election Date related to such Option and (B) with respect to
the remaining 50% of the Shares thereunder on the second anniversary of such
Election Date.

     SECTION 8. OPTIONS IN LIEU OF CASH COMPENSATION. Options shall be granted
to Eligible Directors in lieu of cash compensation as follows:

     (a)  Election to Receive Option. An option shall be granted automatically
to any Eligible Director who prior to an Election Date on which such director is
re-elected to the Board by the Company's stockholders, files with the Secretary
of the Company an irrevocable election to receive an Option in lieu of all or a
portion of his or her Annual Retainer. On the following Election Date, each
Eligible Director making such a filing under this Section 8(a) shall be granted
an Option for the number of Shares determined under Section 8(b) below.

     (b)  Option Formula. The number of Option shares granted on an Election
Date to any Eligible Director under this Section 8 shall be equal to the nearest
number of whole shares determined in accordance with the following formula:

          (Elected Portion) (Annual Retainer)          =    Number of
          (Share Percentage) (Fair Market Value)            Shares

where Elected Portion refers to the portion of Annual Retainers elected under
Section 8(a) and Fair Market Value refers to the Fair Market Value of a Share on
the date of grant.

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     (c)  Option Price. The purchase price per Share covered by each Option
granted under this Section 8 shall be the Fair Market Value of a Share on the
date of grant multiplied by the Price Percentage.

     (d)  Exercisability. An Option granted under this Section 8 shall be
exercisable one year from the date of grant.

     (e)  Adjustment. In the event that any law, ruling, or regulation shall be
proposed, promulgated, or adopted after the Amendment Date that provides that a
higher Option price shall be required so that Options granted under Section 8 of
the Plan will be treated as options for tax purposes, the Share Percentage and
Price Percentage of Options granted hereafter under this Section 8 shall be
automatically adjusted to comply therewith; provided, however, the sum of the
Share Percentage and the Price Percentage shall remain 100 percent.

     SECTION 9. GENERAL TERMS. The following provisions shall apply to any
Option granted under the Plan.

     (a)  Option Period. Each Option shall expire ten years from its date of
grant. Each Option shall be subject to termination before its date of expiration
as hereinafter provided.

     (b)  Termination of Service as Director. If a Participant's service as a
director is terminated for any reason other than death, disability or retirement
due to a mandatory age retirement policy the Participant or his beneficiary
shall have the right to exercise any Option to the extent it was exercisable at
the date of such termination of service and shall not have been exercised. The
right to exercise such Option to the extent set forth herein shall continue
until the expiration of the Option.

     (c)  Death or Disability. If the Participant's service as a director is
terminated by death or disability, the Participant shall have the right to
exercise a prorated number of the Shares under any Option that is not fully
exercisable prior to such event, such number to be determined by multiplying (i)
the total number of Shares subject to such Option by (ii) a fraction equal to
(A) the total of number of completed months of service since the Election Date
related to such Option divided by (B) the total number of completed months of
service from the Election Date related to such Option until such Option would
have become fully exercisable. The right to exercise such Option to the extent
set forth herein shall continue until the expiration of the Option.

     (d)  Mandatory Age Retirement. If the Participant's service as a Director
is terminated as a result of any mandatory age retirement policy of the Board,
Options granted under the Plan shall become immediately exercisable with respect
to 100% of the Shares on the date of such mandatory retirement. The right to
exercise each such Option to the extent set forth herein shall continue until
the expiration of such Option.

     (e)  Method of Exercise. Any Option may be exercised by the Participant in
whole or in part at such time or times and by such methods as the Board may
specify. The applicable Option Agreement may provide that the Participant may
make payment of the Option price in cash, Shares, or such other consideration as
the Board may specify, or any combination thereof, having a Fair Market Value on
the exercise date equal to the total option price.

     SECTION 10. CHANGE IN CONTROL.

     (a)  Immediate Vesting. Notwithstanding any other provision of the Plan to
the contrary, upon a Change in Control, as defined below, all outstanding
Options shall vest and become immediately exercisable.

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     (b)  Change in Control. A "Change in Control" shall be deemed to have
occurred if: (i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years (not including any
period prior to January 18, 1989), individuals who at the beginning of such
period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii), or (iv) of this Section
10(b)) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the Board; (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no person acquires more than
30% of the combined voting power of the Company's then outstanding securities
shall not constitute a Change in Control of the Company; or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

     SECTION 11. AMENDMENTS AND TERMINATION.

     (a)  Board Authority. The Board may amend, alter, or discontinue the Plan,
but no amendment, alteration, or discontinuation shall be made (i) that would
impair the rights of a Participant under an Option theretofore granted, without
the Participant's consent, or (ii) without the approval of the stockholders if
such approval is necessary to comply with any tax or regulatory requirement,
including for these purposes any approval requirement which is a prerequisite
for exemptive relief from Section 16(b) of the Exchange Act, or (iii) to Section
6, Section 7 or Section 8 more often than once every six months.

     (b)  Prior Stockholder and Participant Approval. Anything herein to the
contrary notwithstanding, in the event that amendments to the Plan are required
in order that the Plan or any other stock-based compensation plan of the Company
comply with the requirements of Rule 16b-3 issued under the Exchange Act as
amended from time to time or any successor rules promulgated by the Securities
and Exchange Commission related to the treatment of benefit and compensation
plans under Section 16 of the Exchange Act, the Board is authorized to make such
amendments without the consent of Participants or the stockholders of the
Company.

     SECTION 12. GENERAL PROVISIONS.

     (a)  Nontransferability. No Option shall be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant, except
by will or the laws of descent and distribution, provided, however, that an
Option may be transferable, to the extent set forth in the applicable Grant
Notice or agreement and in accordance with procedures adopted by the Board, if
such provisions do not disqualify such Option for exemption under Rule 16b-3.

     (b)  Compliance Requirements. All certificates for Shares delivered under
the Plan pursuant to any Option shall be subject to such stock-transfer orders
and other restrictions as the Board may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Shares are then listed, and any applicable
federal or state securities law, and the Board may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions. The Company shall not be required to issue or deliver any Shares
under the Plan prior to the completion of any registration or qualification of
such Shares under any federal or state law, or under any ruling or regulation of
any governmental body or national securities exchange that the Board in its sole
discretion shall deem to be necessary or appropriate.

     (c)  Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required by applicable law or the rules
of any stock exchange on which the Common Stock is then listed; and such
arrangements may be either generally applicable or applicable only in specific
cases.

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     (d)  Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable federal law.

     (e)  Conformity With Law. If any provision of this Plan is or becomes or is
deemed invalid, illegal, or unenforceable in any jurisdiction, or would
disqualify the Plan or any Option under any law deemed applicable by the Board,
such provision shall be construed or deemed amended in such jurisdiction to
conform to applicable laws or if it cannot be construed or deemed amended
without, in the determination of the Board, materially altering the intent of
the Plan, it shall be stricken and the remainder of the Plan shall remain in
full force and effect.

     SECTION 13. EXPIRATION. The Plan will expire when no Shares are available
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                                                                    Exhibit 10.6

                                                      Amended September 22, 1994

                            COMPAQ COMPUTER CORPORATION
                              1985 STOCK OPTION PLAN

                                     ARTICLE I
                                    DEFINITIONS

       1.01 "Board" shall mean the Board of Directors of the Company.

       1.02 "Code" shall mean the Internal Revenue Code of 1986, as amended.

       1.03 "Committee" shall mean the body comprised of the member or members
of the Board appointed by the Board to administer the Plan.

       1.04 "Common Stock" means the Company's $.01 par value common stock.

       1.05 "Company" shall mean Compaq Computer Corporation.

       1.06 "Fair Market Value" shall mean the value of a share of Common
Stock as determined by the Board. The Board shall determine the Fair Market
Value as follows:

       (i) If the Common Stock shall not then be listed and traded upon a
recognized securities exchange or in the NASDAQ National Market System, upon
the basis of the mean between the bid and asked quotations for such stock on
the Date of Grant (as reported by a recognized stock quotation service) or, in
the event that there shall be no bid or asked quotations on the Date of Grant,
then upon the basis of the mean between the bid and asked quotations on the
date nearest preceding the Date of Grant; or

       (ii) If the Common Stock shall then be listed and traded upon a
recognized securities exchange or in the NASDAQ National Market System, upon
the basis of the reported closing price at which shares of the Common Stock
were traded on such recognized securities exchange or system on the Date of
Grant or, if the Common Stock was not traded on said date, upon the basis of
the reported closing price on the date nearest preceding the Date of Grant.

       1.07 "Date of Grant" means the later of (i) the date on which the Board
approves the grant of an Option or (ii) the date on which the Optionee is
employed by the Company or a Subsidiary.

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       1.08 "Incentive Option" means an option to purchase Common Stock
granted pursuant to the provisions of the Plan, including the provisions of
Paragraphs 8.02, 8.03, 8.04, and 8.05 of the Plan.

       1.09 "Optionee" shall mean an employee of the Company to whom an Option
has been granted under the Plan.

       1.10 "Plan" shall mean the Compaq Computer Corporation 1985 Stock
Option Plan, the terms of which are set forth herein.

       1.11 "Incentive Stock Option Agreement" shall mean the any written
notice, agreement, or other instrument or document evidencing an Incentive
Option and under which the Optionee may purchase Common Stock pursuant to the
terms of the Plan.

       1.12 "Subsidiary" or "Subsidiaries" shall mean any corporation which is
a subsidiary corporation of the Company pursuant to Section 425(f) of the Code.

       1.13 "Successor" shall mean the legal representative of the estate of a
deceased Optionee or the person or persons who acquire the right to exercise
an Option by bequest or inheritance or by the reason of the death of any
Optionee.

       1.14 "Nonqualified Option" shall mean an option to purchase Common
Stock granted pursuant to the provisions of the Plan, but which is not subject
to the provisions of Paragraphs 8.02 and 8.05 of the Plan.

       1.15 "Nonqualified Stock Option Agreement" shall mean any written
notice, agreement, or other instrument or document evidencing a Nonqualified
Option and under which the Optionee may purchase Common Stock pursuant to the
terms of the Plan.

       1.16 "Option" shall refer to either or both Incentive Options and
Nonqualified Options granted pursuant to the terms of the Plan.

                                  ARTICLE II
                                   PURPOSE

       The purpose of the Plan is to advance the interests of the Company and
its stockholders by offering to employees of the Company and its Subsidiaries
the opportunity to acquire, or increase a proprietary interest in the Company
by the grant to employees of Incentive Options entitled to the income tax
benefits described in Section 422A of the Code under the terms set forth in
the Plan and by the grant to employees of Nonqualified Options. By so doing,
the Company seeks to motivate, obtain, and attract those highly competent
individuals upon whose judgment, initiative, leadership, and continuing
efforts the success of the Company depends.

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                                  ARTICLE III
                           EFFECTIVE DATE OF THE PLAN

       The Plan shall become effective on the date of its adoption by a
resolution of the Board. Within one year of such adoption, this Plan shall be
submitted to the stockholders of the Company entitled to vote thereon; should
a majority of the stockholders of the Company entitled to vote thereon fail to
approve the Plan within such year, this Plan shall automatically terminate.

                                   ARTICLE IV
                                   ELIGIBILITY

       Options may be granted only to officers and employees (including
officers and employees who are also directors) of the Company or any of its
Subsidiaries.

                                    ARTICLE V
                             ADMINISTRATION OF THE PLAN

       The Plan shall be administered by the Board. The Board may, in its
discretion, appoint a Committee to administer the Plan. The Committee shall
consist of three or more disinterested directors, none of whom shall be
eligible (or shall have been eligible for one year prior to appointment to the
Committee) to be granted Options under the Plan. The Committee shall serve at
the pleasure of the Board and shall exercise all powers of the Board granted
herein, other than the power to amend the Plan.

       The Board shall have the sole discretion and authority, subject to the
provisions of the Plan, to determine the employees to whom and the time or
times at which Options shall be granted, and the number of shares of the
Common Stock which shall be subject to each Option. Subject to the express
provisions of the Plan, the Board shall also have full and final authority to
interpret the Plan, and to make all other determinations and to take all other
actions it deems necessary or advisable for the proper administration of the
Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons. The majority of the members of the Board
shall constitute a quorum and any action taken by a majority present at a
meeting at which a quorum is present or any action taken without a meeting
evidenced by writing executed by a majority of the Board shall constitute the
action of the Board.

                                  ARTICLE VI
                       COMMON STOCK SUBJECT TO OPTIONS

       Subject to the adjustments specified below, the aggregate number of
shares of Common Stock that may be issued upon the exercise of all Options
that may be granted under the Plan shall not exceed 19,800,000 shares of the
Common Stock. Any shares subject to an Option which for

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any reason is surrendered, expires or is terminated unexercised as to such
shares may again be subject to an Option under the Plan.

                                 ARTICLE VII
                   ADJUSTMENTS AND CHANGE IN CONTROL

       701.  ADJUSTMENT.  The total number of shares of Common Stock
available for Options under the Plan or which may be allocated to any one
employee, the number of shares of Common Stock subject to outstanding Options
and the exercise price for such Options shall be appropriately adjusted by
the Board for any increase or decrease in the number of outstanding shares of
Common Stock resulting from a stock dividend, subdivision or combination of
shares or reclassification, as may be necessary to maintain the proportionate
interest of the Option holder. In the event of a merger or consolidation of
the Company or a tender offer for shares of Common Stock, the Board may make
such adjustments with respect to Options under the Plan and take such other
action as it deems necessary or appropriate to reflect or in anticipation of
such merger, consolidation or tender offer including, without limitation, the
substitution of new Options, the termination or adjustment of outstanding
Options, and the acceleration of Options.

       7.02  IMMEDIATE VESTING.  Notwithstanding any other provision of the
Plan to the contrary, upon a Change in Control, as defined below, all
outstanding Awards shall vest, become immediately exercisable or payable, or
have all restrictions lifted as may apply to the type of Award; provided,
however, that unless otherwise determined by the Committee at the time of
award or thereafter, if it is determined that the Net After-Tax Amount to be
realized by any optionee, taking into account the accelerated vesting
provided for by this paragraph 7.02 as well as all other payments to be
received by such optionee in connection with such Change in Control, would be
higher if options did not vest in accordance with the foregoing paragraph
7.02, then and to such extent the options shall not vest. The determination
of whether any such option should not vest shall be made by a nationally
recognized accounting firm selected by the Company, which shall be instructed
to consider that (i) stock options shall be vested in the order in which they
were granted and within each grant in the order in which they would otherwise
have vested and (ii) unless and to the extent any other plan, arrangement or
contract of the Company pursuant to which any such payment is to be received
provides to the contrary, such other payment shall be deemed to have occurred
after any acceleration of options.

       7.03  CHANGE IN CONTROL. A "Change in Control" shall be deemed to have
occurred if: (i) any "person" as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under
any employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company's then outstanding securities;
(ii) during any period of two consecutive years (not including any period
prior to January 18, 1989), individuals who at the beginning of such period
constitute the Board of Directors, and any new

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director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause
(i), (iii), or (iv) of this paragraph whose election by the Board of
Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two year period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority of the Board of Directors;
(iii) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 30% of the combined voting
power of the Company's then outstanding securities shall not constitute a
Change in Control of the Company; or (iv) the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets.

       7.04  NET AFTER-TAX AMOUNT.  "Net After-Tax Amount" shall mean the net
amount of compensation, assuming for this purpose only that all vested
options are exercised upon such Change in Control, to be received (or deemed
to have received) by such optionee in connection with such Change in Control
under any option agreement and under any other plan, arrangement or contract
of the company to which such optionee is a party, after giving effect to all
income and excise taxes applicable to such payments.

                                 ARTICLE VIII
                      TERMS AND CONDITIONS OF OPTIONS

       8.01  OPTION GRANT AND AGREEMENT.  Each Incentive Option and each
Nonqualified Option granted prior to September 22, 1994 shall be evidenced by
a written Incentive Stock Option Agreement or a written Nonqualified Stock
Option Agreement, as applicable, dated as of the Date of Grant and executed
by the Company and the Optionee, which Agreement shall set forth the
applicable terms and conditions provided in this Article VIII and such other
provisions which the Board, in its discretion, may deem appropriate. Each
Incentive Option and each Nonqualified Option granted on or after September
22, 1994, shall be evidenced by a Stock Option Agreement in the form of a
written notice to the Participant receiving an option, which notice shall set
forth the applicable terms and conditions provided in this Article VIII and
such other provisions which the Board, in its discretion may deem appropriate.

       8.02  PARTICIPATION LIMITATION.  In accordance with rules and
procedures established by the Committee, the aggregate Fair Market Value
(determined as of the time of grant) of the stock subject to Incentive Stock
Options as defined by Section 422A of the Code ("Section 422A") held by any
optionee that become exercisable for the first time by such optionee during
any calendar year under the Plan (and under any other benefit plans of the
Company or of any parent or

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subsidiary corporation of the Company) shall not exceed $100,000 or, if
different the maximum limitation in effect at the time of grant under Section
422A or any successor provision, and any regulations promulgated thereunder.
The terms of any Incentive Option granted hereunder shall comply in all
respects with the provisions of Section 422A, or any successor provision, and
any regulations promulgated thereunder."

       8.03  OPTION PRICE.  The per share Option price of the Common Stock
subject to each Option shall be determined by the Board but the per share
price shall not be less than the Fair Market Value of the Common Stock on the
Date of Grant.

       8.04  OPTION PERIOD.  Each Option granted must be granted within ten
years from the date of the Plan's adoption by the Board. The period of
exercise of each Option shall be set forth in the applicable Option
Agreement; provided that such period shall not exceed ten years from the Date
of Grant.

       8.05  TEN PERCENT SHAREHOLDER LIMITATIONS.  In any case in which an
Incentive Option is granted to an employee who, at the time the Incentive
Option is granted, owns more that ten percent (10%) of the total combined
voting power of all classes of stock of the Company, its parent or
subsidiary, the per share Incentive Option price of the Common Stock subject
to each Incentive Option shall be determined by the Board but the share price
not be less than one hundred and ten percent of the Fair Market Value of the
Common Stock on the Date of Grant; furthermore, the period for exercise, of
each such Incentive Option shall not exceed five (5) years from the Date of
Grant. For the purposes of the immediately preceding sentence, an employee
shall be considered owning the shares of Common Stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants. In addition, the stock
owned directly or indirectly, by or for a corporation, partnership, estate or
trust shall be considered as owned proportionately by or for its
shareholders, partners or beneficiaries.

       8.06  EXERCISE OF OPTIONS.  Incentive Options and Nonqualified Options
shall become exercisable in whole or in part and at such time or times as
shall be set forth in the Incentive Stock Option Agreement or Nonqualified
Stock Option Agreement, as applicable. Options shall be exercised by notice
of intent to exercise the Option with respect to a specified number of whole
shares delivered to the Company at its principal office, and payment in full
to the Company in the amount of the option price for the number of shares of
the Common Stock with respect to which the Option is then being exercised.
The payment of the Option price shall be made in cash or, with the consent of
the Board, in whole or in part in Common Stock valued at Fair Market Value
which is owned by the Optionee.

       8.07  NON-TRANSFERABILITY OF OPTIONS; TRANSFER UPON DEATH OF OPTIONEE.
No Option shall be transferable or assignable by the Optionee, other than by
will or the laws of descent and distribution. Each Option shall be
exercisable during the Optionee's lifetime, only by the Optionee.

                                       6

<Page>

       8.08 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT.

       (a) If the Optionee's employment with the Company is terminated for
any reason other than death, disability, or retirement, the Optionee's right
to exercise any Stock Option shall terminate, and such Option shall expire,
on the earlier of (A) the first anniversary of such termination of employment
or (B) the date such Option would have expired had it not been for the
termination of employment. The Optionee shall have the right to exercise such
Option prior to such expiration to the extent it was exercisable at the date
of such termination of employment and shall not have been exercised.

       (b) If the Optionee's employment with the Company is terminated by
reason of death, disability, or retirement, the Optionee's right to exercise
any Stock Option shall terminate, and such Option shall expire, on the
earlier of (A) the third anniversary of such termination of employment or (B)
the date such Option would have expired had it not been for the termination
of employment. The Optionee (or his successor if his employmnet is terminated
by death) shall have the right to exercise such Option prior to such
expiration to the extent it was exercisable at the date of such termination
of employment and shall not have been exercised.

       (c) Notwithstanding the foregoing, the Board may in its discretion
provide in an Option Agreement that such option shall terminate at a date
earlier or later than that set forth above, provided such date shall not be
beyond the earlier of (i) three years from the last day of Optionee's
employment or (ii) the date such Option would have expired had it not been
for the termination of the Optionee's employment.

       (d) The term "disability" as used in this paragraph means total and
permanent disability. The terms "disability" and "retirement" shall be
determined in accordance with applicable Company personnel policies as
interpreted in the exercise of the Board's discretion.

       (e) No transfer of an Option by an Optionee by will or by the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice of the same and an
authenticated copy of the will and/or such other evidence as the Board may
deem necessary to establish the validity of the transfer and the acceptance
of the transferee or transferees of the terms and conditions of such Option.

       (f) In the event an Optionee holds an Incentive Stock Option, such
option to the extent not exercised during the 90 days after termination of
employment, automatically will be deemed a Nonqualified Stock Option and such
Option will be exercisable during the remainder of the time set forth above;
provided that in the event that employment is terminated because of death or
the Optionee dies in such 90-day period, the Option will continue to be an
Incentive Stock Option to the extent provided by Section 421 or Section 422A
of the Code, or any successor provision, and any regulations promulgated
thereunder.

       8.09 LEAVE WITHOUT PAY. Any time spent by a Participant in the status
of "leave without pay" shall be disregarded for purposes of determining the
extent to which an Option or any portion thereof has vested. The meaning of
the term "leave without pay" shall be determined by

                                       7
<Page>

the Committee and shall include but not be limited to periods during which
the Participant is receiving payments under the Company's Long-Term
Disability Plan.

       8.10 RIGHTS OF STOCKHOLDER. Optionee or his Successor shall have no
rights as a stockholder with respect to any shares subject to an Option until
the certificates evidencing the shares purchased are properly delivered to
such Optionee or his Successor.

                                   ARTICLE IX
                         RESTRICTIONS ON ISSUING SHARES

       The exercise of each Option shall be subject to the condition that if
at any time the Board shall determine in its discretion that the listing,
registration or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or federal law, or
that the consent or approval of any regulatory body is necessary or desirable
as a condition of or in connection with such exercise of delivery or purchase
of shares pursuant to the Plan, then in any such event, such exercise shall
not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Board.

       In addition, the exercise of each Option shall be subject to the
condition that, if required by the Board, Optionee shall give satisfactory
assurance in writing, signed by Optionee, his successor or legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof; provided that
such assurance shall be deemed inapplicable to (i) any sale of such shares by
such Optionee made in accordance with the terms of a registration statement
covering such sale, which has therefore been (or may hereafter be) filed and
become effective under the Securities Act of 1933, as amended, and with
respect to which no stop order suspending the effectiveness thereof has been
issued, and (ii) any other sale of such shares with respect to which, in the
opinion of counsel for the Company, such assurance is not required to be
given in order to comply with the provisions of the Securities Act of 1933,
as amended.

                                   ARTICLE X
               AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN

       The Board shall have the right to amend, suspend or terminate the Plan
at any time; provided, however, that no such action shall affect any Option
granted without the consent of the Optionee or his Successor of the Option.
In addition, unless duly approved by a majority of the holders of Common
Stock entitled to vote thereon at a meeting (which may be the annual
meeting), or the equivalent of said meeting, duly called and held for such
purpose, no amendment or change shall be made in the Plan (a) increasing the
total number of shares which may be issued under the Plan (except for
adjustments for recapitalization, stock dividends and other changes in the
corporate structure and except as contemplated in Article VII), (b) changing
the minimum

                                       8
<Page>

purchase price hereinbefore specified for the Common Stock subject to the
Options, (c) changing the maximum period during which the Options may be
exercised, (d) increasing the maximum number of shares for which Incentive
Options may be granted to any one employee, or (e) extending the period
during which Options may be granted under the Plan. It is contemplated that
the Incentive Options issued pursuant to the Plan qualify as "Incentive Stock
Options" within the meaning of Section 422A of the Code. Accordingly, the
Board shall administer the Plan and make such amendments as to accomplish
this purpose.

                                   ARTICLE XI
                                  MISCELLANEOUS

       11.01 EMPLOYMENT. Nothing in the Plan, any Option granted pursuant to
the Plan, or in any Incentive Stock Option Agreement or Nonqualified Stock
Option Agreement shall confer upon any employee the right to continue in the
employ of the Company or any Subsidiary.

       11.02 OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option, incentive or other compensation plans in
effect for the Company or any Subsidiary or preclude the Company from
establishing any other forms of incentive or other compensation for employees
of the Company or any Subsidiary.

       11.03 PLAN BINDING ON SUCCESSORS. The Plan shall be binding on the
successors and assigns of the Company.

       11.04 USE OF PROCEEDS. The proceeds from the sale of Common Stock,
pursuant to Options granted under the Plan, shall constitute general funds of
the Company.

                                       9

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