1997 Director Stock Plan

HEWLETT-PACKARD
COMPANY



1997
DIRECTOR STOCK PLAN



(AMENDED
AND RESTATED, EFFECTIVE NOVEMBER 1, 2005)





PART 1.  PLAN
ADMINISTRATION AND ELIGIBILITY

I.              Purpose

The purpose of
this amended and restated 1997 Director Stock Plan (the “Plan”) of
Hewlett-Packard Company (“HP”) is to encourage ownership in HP by outside
directors of HP (each, a “Non-Employee Director,” or collectively, the “Non-Employee
Directors”) whose continued services are considered essential to HP’s continued
progress and thus to provide them with a further incentive to remain as
directors of HP.

II.            Administration

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

The
Board or the Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. All questions of interpretation of the Plan
or of any shares issued under it shall be determined by the Board or the
Committee and such determination shall be final and binding upon all persons
having an interest in the Plan. Any or all powers and discretion vested in the
Board or the Committee under this Plan may be exercised by any subcommittee so
authorized by the Board or the Committee and satisfying the requirements of Rule 16b-3.

III.           Participation in the
Plan



Each
member of the Board who is not an employee of HP or any of its subsidiaries or
affiliates and who is providing service to HP as a member of the Board at the
beginning of the Plan Year shall be eligible to receive an Annual Retainer (as
defined in Section XII below) under the Plan.

Any
member of the Board who enters service after the beginning of the Plan Year may
be eligible to receive a prorated Annual Retainer under the Plan as the Board
or the Committee determines in its discretion.



IV.           Stock Subject to the
Plan



The
maximum number of shares of HP’s $0.01 par value Common Stock (“Common Stock”)
which may be issued under the Plan shall be Two Million (2,000,000). The
limitation on the number of shares which may be issued under the Plan shall be
subject to adjustment as provided in Section X of the Plan.

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

PART 2.  TERMS OF
THE PLAN

V.            Effective Date of
the Plan



The
Plan shall take effect on the date of adoption by the shareholders of HP.  The Plan shall terminate on February 24,
2007, unless earlier terminated by the Board of Directors or the Committee.

VI.           Time for Granting
Options and Issuing Shares



No
options shall be granted, and no Common Stock Payments (as defined in Section VII
below) shall be made, after the date on which this Plan terminates. The
applicable terms of this Plan, and any terms and conditions applicable to the
options granted or the shares issued prior to such date,
shall survive the termination of the Plan and continue to apply to such options
and shares.

VII.         Terms and Conditions



A.            Compensation Alternatives.



1.             Within (i) 25 days after
the beginning of the Plan Year (as defined in Section XII below), or (ii) if
the Non-Employee Director elects to participate in the Hewlett-Packard Company
2005 Executive Deferred Compensation Plan (the “EDCP”) then in the calendar
year preceding the first day of the Plan Year, each Non-Employee Director will
be entitled to select one of the following alternative means of payment for the
value of his Annual Retainer:



(i)            A
minimum of seventy-five percent of the value of his Annual Retainer in the form
of a Common Stock payment (a “Common Stock Payment”) and the balance in cash (a
“Cash Payment”); or



(ii)           A
minimum of seventy-five percent of the value of his Annual Retainer in the form
of an option to purchase shares of Common Stock (an “Option Payment”) and a
Cash Payment.



2.             If any Non-Employee Director
fails to notify the Secretary of HP in writing by 25 days after the beginning
of the Plan Year of his desired means to receive payment of the Annual Retainer
for the Plan Year, then he shall be deemed to have elected an Option Payment
for fifty percent of the value of his Annual Retainer, with the remaining fifty
percent in cash. Any such election, or any modification or termination of such
an election, shall be filed with HP on a form prescribed by HP for this
purpose.  If a Non-Employee Director does
not elect to participate in the EDCP and does not select his or her means of
payment in Section VII(A)(1) above within the prescribed time, then
such Non-Employee Director shall not be permitted to participate in the EDCP
for the applicable Plan Year.



B.            Common Stock Payment.



1.             Date of Payment. The shares
constituting any Common Stock Payment shall be issued automatically one month
after the beginning of each Plan Year (or, if such date is not a business day,
on the next succeeding business day) (the “Grant Date”), with the first payment
under this Plan commencing March 1, 1997. Each award of a Common Stock
Payment shall be evidenced by an agreement which shall reflect the terms and
conditions of the Common Stock Payment and such additional terms and conditions
as may be determined by the Board or the Committee.



2.             Number of Shares Subject to
Common Stock Payment. The total number of shares of Common Stock included in
each Common Stock Payment shall be determined by dividing the amount of the
Annual Retainer that is to be paid in stock by the Fair Market Value (as
defined in Section XII below) of a share of Common Stock on the Grant
Date. It shall be rounded up to the largest number of whole shares determined
as follows:

75% or more, if applicable, of Annual Retainer		= Number of Shares
Fair Market Value on the Grant Date

Any
payment for a fractional share automatically shall be paid in cash based upon
the Fair Market Value on the Grant Date of such fractional share.

3. Holding Period for Common Stock
Payment Shares. If the Committee does not expressly exercise its discretion to
change the vesting of the Common Stock Payment for a Plan Year, then the
vesting of such Common Stock Payment shall be the same as the last Plan Year in
which the Committee exercised its discretion.
The shares of Common Stock included in each Common Stock Payment shall
be deposited in certificate or book entry form in escrow with HP’s Secretary
until such shares vest. The Non-Employee
Director shall retain all rights in the shares while they are held in escrow,
including, but not limited to, voting rights and the right to receive
dividends; provided, however, that the Non-Employee Director shall not have the
right to pledge, sell or otherwise assign such shares until all restrictions
pertaining to such shares are terminated. Promptly after the shares vest, HP’s
Secretary shall release the shares from escrow and deliver any applicable stock
certificates to the Non-Employee Director or release any applicable
restrictions on the Non-Employee Director’s book entry account.

C. Option Payment.

Subject to Section VII.A. above, each Non-Employee Director may specify the amount of
his Annual Retainer to be received in the form of a non-statutory option not
entitled to special tax treatment under Section 422 of the Internal
Revenue Code of 1986, as amended. Each option granted under this Plan shall be
evidenced by a written agreement in such form as the Board or Committee shall from
time to time approve, which Agreements shall comply with and be subject to the
following terms and conditions and such additional terms and conditions as may
be determined by the Board or Committee:

1. Date of Payment. The option
constituting any Option Payment shall be granted automatically on the Grant
Date.

2. Number of Shares Subject to
Option. The number of shares to be subject to any option granted pursuant to
the Plan shall be an amount necessary to make such option equal in value, using
a modified Black-Scholes option valuation model, to that portion of the Annual
Retainer that the Non-Employee Director elected to receive in the form of an
option. The value of the option will be calculated by assuming that the value
of an option to purchase one share of Common Stock equals the product of (i) a
fraction determined by dividing 1 by the Multiplier, as defined below, and (ii) the
Fair Market Value of a share of Common Stock on the Grant Date.

The
number of shares represented by an option granted pursuant to the Plan shall be
determined by multiplying the number of shares determined in Section VII.B.2
above by a multiplier determined using a modified Black-Scholes option
valuation method (the “Multiplier”). The Board or the Committee shall determine
the Multiplier prior to the beginning of the Plan Year by considering the
following factors: (i) the Fair Market Value of the Common Stock on the
date the Multiplier is determined; (ii) the average length of time that
Company stock options are held by optionees prior to exercise; (iii) the
risk-free rate of return based on the term determined in (ii) above and
U.S. government securities rates; (iv) the annual dividend yield for the
Common Stock; and (v) the volatility of the Common Stock over the previous
ten-year period. For the Plan Year commencing March 1, 1997, the Board or
the Committee shall calculate the Multiplier by March 1, 1997. The number
of shares to be subject to the option shall be rounded up to the largest number
of whole shares determined as follows:

75% or more, if applicable, of Annual Retainer		x Multiplier = Number of Shares
Fair Market Value on the Grant Date

3. Price of Options. The exercise
price of the option will be the Fair Market Value of the Common Stock on the
date of grant.

4. Exercise of Options. Options may
be exercised only by written notice to HP at its head office accompanied by
payment in cash of the full consideration for the shares as to which they are
exercised.

5. Period of Option. The Committee
shall have the discretion to determine the exercisability of Shares subject to
the option; provided, however, that no option shall be exercisable after the
expiration of ten (10) years from the date upon which such option is
granted. If the Committee does not expressly
exercise its discretion to change the exercisability of the options for a Plan
Year, then the exercisability of such options shall be the same as the last
Plan Year in which the Committee expressly exercised its discretion.

6. Exercise by Representative
Following Death of Director. A Non-Employee Director, by written notice to HP,
may designate one or more persons (and from time to time change such
designation) including his legal representative, who, by reason of his death,
shall acquire the right to exercise all or a portion of the option. If the
person or persons so designated wish to exercise any portion of the option,
they must do so within the term of the option as provided in Section VII.C.5.
Any exercise by a representative shall be subject to the provisions of this
Plan.

7. Options Nontransferable. Each
option granted under the Plan by its terms shall not be transferable by the
optionee otherwise than by will, or by the laws of descent and distribution,
and shall be exercised during the lifetime of the optionee only by him. No
option or interest therein may be transferred, assigned, pledged or
hypothecated by the optionee during his lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.

D. Cash Payment

Each
Cash Payment shall be made in four equal installments during the Plan Year,
unless the Non-Employee Director elects in a timely manner to participate in
the EDCP.

E. Form of Issuance of Shares

Shares
issued under the Plan shall be in either book entry form or in certificate form
pursuant to the instructions given by the Non-Employee Director to HP’s
transfer agent.

F. Transferability

In the
event of a Non-Employee Director’s death, all of such person’s rights to
receive any accrued but unpaid Common Stock Payment or Option Payment will
transfer to the maximum extent permitted by law to such person’s beneficiary.
Each Non-Employee Director may name, from time to time, any beneficiary or
beneficiaries (which may be named contingently or successively) as his
beneficiary for purposes of this Plan. Each designation shall be on a form
prescribed by the Committee, will be effective only when delivered to HP and
when effective will revoke all prior designations by the Non-Employee Director.
If a Non-Employee Director dies with no such beneficiary designation in effect,
such person’s beneficiary shall be his estate and such person’s payments will
be transferable by will or pursuant to laws of descent and distribution
applicable to such person.

G. Termination

Any
member of the Board who terminates service prior to the end of the Plan Year
may have his Annual Retainer prorated, including a forfeiture of options, stock
or cash payment, if any, as the Board or the Committee determines in its
discretion.

PART 3. GENERAL
PROVISIONS

VIII. Assignments

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

IX. Limitation of Rights

No
Right to Continue as a Director. Neither
the Plan, nor the issuance of shares of Common Stock nor any other action taken
pursuant to the Plan, shall constitute or be evidence
of any agreement or understanding, express or implied, that HP will retain a
director for any period of time, or at any particular rate of compensation.

No
Stockholders’ Rights for Options. An optionee shall have no rights as a
stockholder with respect to the shares covered by his options until the date of
the issuance to him of a stock certificate therefor or the making of a book
entry with HP’s transfer agent, and no adjustment will be made for dividends or
other rights for which the record date is prior to the date such certificate is
issued.

X. Changes in Present
Stock

In the
event of any merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, or other change in the corporate structure or
capitalization affecting HP’s present Common Stock, at the time of such event
the Board or the Committee shall make appropriate adjustments to the number
(including the aggregate numbers specified in Section IV) and kind of
shares to be issued under the Plan and the price of any Stock Option or Common
Stock Payment.

XI. Amendment of the
Plan

The
Board shall have the right to amend, modify, suspend or terminate the Plan at
any time for any purpose; provided, that following the
approval of the Plan by HP’s shareholders, HP will seek shareholder approval
for any change to the extent required by applicable law, regulation or rule.

XII. Definitions

“Annual
Retainer” shall mean the amount to which a Non-Employee Director will be
entitled to receive for serving as a director in a relevant Plan Year, but
shall not include reimbursement for expenses, fees associated with service on
any committee of the Board or fees with respect to any other services to be
provided to HP. “Fair Market Value”

shall be the mean of the highest and lowest quoted selling prices for the
Common Stock as reported on the New York Stock Exchange Composite Tape on the
date in question, or if no sales of such stock were made on that date, the mean of the
highest and lowest prices of the Common Stock on the next preceding day on
which sales were made.

“Plan
Year” shall mean the year beginning the day after HP’s annual meeting and
ending on the day of HP’s next annual meeting, as the case may be, for any
relevant year.

XIII. Compliance with Section 16
of the Exchange Act

It is HP’s
intent that the Plan comply in all respects with Rule 16b-3. If any
provision of this Plan is found not to be in compliance with such rule and
regulations, the provision shall be deemed null and void, and the remaining
provisions of the Plan shall continue in full force and effect. All
transactions under this Plan shall be executed in accordance with the
requirements of Section 16 of the Exchange Act and regulations promulgated
thereunder. The Board or the Committee may, in its sole discretion, modify the
terms and conditions of this Plan in response to and consistent with any
changes in applicable law, rule or regulation.

XIV. Notice

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

XV. Governing Law

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