ROEX, INC.
1999 STOCK INCENTIVE PLAN
1. GENERAL PROVISIONS
1.1 Purpose.
The 1999 Stock Incentive Plan (the "Plan") is intended to allow designated
officers and employees (all of whom are sometimes collectively referred to
herein as "Employees") and certain Non-Employee Directors of Roex, Inc. ("ROEX")
and its Subsidiaries which it may have from time to time (ROEX and such
Subsidiaries are referred to herein as the "Company") to receive certain options
("Stock Options") to purchase ROEX's common stock, no par value ("Common
Stock"), and to receive grants of Common Stock subject to certain restrictions
("Awards"). As used in this Plan, the term "Subsidiary" shall mean each
corporation which is a "subsidiary corporation" of ROEX within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code").
The purpose of this Plan is to provide Employees with equity-based compensation
incentives to make significant and extraordinary contributions to the long-term
performance and growth of the Company, and to attract and retain Employees of
exceptional ability.
1.2 Administration.
1.2.1 The Plan shall be administered by the Compensation Committee
(the "Committee") of, or appointed by, the Board of Directors of ROEX (the
"Board"). Each member of the Committee shall be a "disinterested person" as
that term is defined in Rule 16b-3 promulgated by the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act"), but no action of the Committee shall be
in valid if this requirement is not met. The Committee shall select one of
its members as Chairman and shall act by vote of a majority of a quorum, or
by unanimous written consent. A majority of its members shall constitute a
quorum. The Committee shall be governed by the provisions of ROEX's By-Laws
and of California law applicable to the Board, except as otherwise provided
herein or determined by the Board.
1.2.2 The Committee shall have full and complete authority, in its
discretion, but subject to the express provisions of the Plan: to approve
the Employees nominated by the management of the Company to be granted
Awards or Stock Options; to determine the number of Awards or Stock Options
to be granted to an Employee; to determine the time or times at which
Awards or Stock Options shall be granted; to establish the terms and
conditions upon which Awards or Stock Options may be exercised; to remove
or adjust any restrictions and condi tions upon Awards or Stock Options; to
specify, at the time of grant, provisions relating to exercisability of
Stock Options and to accelerate or otherwise modify the exercisability of
any Stock Options; and to adopt such rules and regulations and to make all
other determinations deemed necessary or desirable for the administration
of the Plan. All interpretations and constructions of the Plan by the
Committee, and all of its actions hereunder, shall be binding and
conclusive on all persons for all purposes.
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1.2.3 The Company hereby agrees to indemnify and hold harmless each
Committee member and each employee of the Company, and the estate and heirs
of such Committee member or employee, against all claims, liabilities,
expenses, penalties, damages or other pecuniary losses, including legal
fees, which such Committee member or employee, his or her estate or heirs
may suffer as a result of his or her responsibilities, obligations or
duties in connection with the Plan, to the extent that insurance, if any,
does not cover the payment of such items. No member of the Committee or the
Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Award or Stock Option granted pursuant to
the Plan.
1.3 Eligibility and Participation.
Employees eligible under the Plan shall be approved by the Committee
from those Employees who, in the opinion of the management of the Company,
are in positions which enable them to make significant and extraordinary
contributions to the long-term performance and growth of the Company. In
selecting Employees to whom Stock Options or Awards may be granted,
consideration shall be given to factors such as employment position, duties
and respon sibilities, ability, productivity, length of service, morale,
interest in the Company and recommendations of supervisors. No member of
the Committee shall be eligible to participate under the Plan or under any
other Company plan if such participation would contravene the standard of
paragraph 1.2.1 above relating to "disinterested persons."
1.4 Shares Subject to the Plan.
The maximum number of shares of Common Stock that may be issued
pursuant to the Plan shall be 1,000,000, subject to adjustment pursuant to
the provisions of paragraph 4.1. If shares of Common Stock awarded or
issued under the Plan are reacquired by the Company due to a forfeiture or
for any other reason, such shares shall be cancelled and thereafter shall
again be available for purposes of the Plan. If a Stock Option expires,
terminates or is cancelled for any reason without having been exercised in
full, the shares of Common Stock not purchased thereunder shall again be
available for purposes of the Plan.
2. PROVISIONS RELATING TO STOCK OPTIONS
2.1 Grants of Stock Options.
The Committee may grant Stock Options in such amounts, at such times,
and to such Employees nominated by the management of the Company as the
Committee, in its discretion, may determine. Stock Options granted under
the Plan shall constitute "incentive stock options" within the meaning of
Section 422 of the Code, if so designated by the Committee on the date of
grant. The Committee shall also have the discretion to grant Stock Options
which do not constitute incentive stock options, and any such Stock Options
shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate fair market value (determined as of the time
an incentive stock option is granted) of the Common Stock with respect to
which incentive stock options are exercisable for the first time by any
Employee during any one calendar
year (under all plans of the Company and any parent or Subsidiary of the
Company) may not exceed the maximum amount permitted under Section 422 of
the Code (currently $100,000.00). Non-statutory stock options shall not be
subject to the limitations relating to incentive stock options contained in
the preceding sentence. Each Stock Option shall be evidenced by a written
agreement (the "Option Agreement") in a form approved by the Committee,
which shall be executed on behalf of the Company and by the Employee to
whom the Stock Option is granted, and which shall be subject to the terms
and conditions of this Plan. In the discretion of the Committee, Stock
Options may include provisions (which need not be uniform), authorized by
the Committee in its discretion, that accelerate an Employee's rights to
exercise Stock Options following a "Change in Control," upon termination of
such Employee employment by the Company without "Cause" or by the Employee
for "Good Reason," as such terms are defined in paragraph 3.1 hereof. The
holder of a Stock Option shall not be entitled to the privileges of stock
ownership as to any shares of Common Stock not actually issued to such
holder.
2.2 Purchase Price.
The purchase price (the "Exercise Price") of shares of Common Stock
subject to each Stock Option ("Option Shares") shall equal the fair market
value ("Fair Market Value") of such shares on the date of grant of such
Stock Option. Notwithstanding the foregoing, the Exercise Price of Option
Shares subject to an incentive stock option granted to an Employee who at
the time of grant owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or
Subsidiary shall be at least equal to 110% of the Fair Market Value of such
shares on the date of grant of such Stock Option. The Fair Market Value of
a share of Common Stock on any date shall be equal to the closing price (or
if no closing price is reported, the average of the last bid and asked
prices) of the Common Stock for the last preceding day on which ROEX's
shares were traded, and the method for determining the closing price shall
be determined by the Committee.
2.3 Option Period.
The Stock Option period (the "Term") shall commence on the date of
grant of the Stock Option and shall be ten years or such shorter period as
is determined by the Committee. Notwithstanding the foregoing, the Term of
an incentive stock option granted to an Employee who at the time of grant
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of any parent or Subsidiary shall
not exceed five years. Each Stock Option shall provide that it is
exercisable over its term in such periodic installments as the Committee in
its sole discretion may determine. Such provisions need not be uniform.
Notwithstanding the foregoing, but subject to the provisions of paragraphs
1.2.2 and 2.1, Stock Options granted to Employees who are subject to the
reporting requirements of Section 16(a) of the Exchange Act ("Section 16
Reporting Persons") shall not be exercisable until at least six months and
one day from the date the Stock Option is granted.
2.4 Exercise of Options.
2.4.1 Each Stock Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or
endorsement to the Company, attention of the Corporate Secretary, at
the principal office of the Company, together with payment of the
Exercise Price and an executed Notice and Agreement of Exercise in the
form prescribed by paragraph 2.4.2. Payment may be made (i) in cash,
(ii) by cashier's or certified check, (iii) by surrender of previously
owned shares of the Company's Common Stock valued pursuant to
paragraph 2.2 (if the Committee authorizes payment in stock in its
discretion), (iv) by withholding from the Option Shares which would
otherwise be issuable upon the exercise of the Stock Option that
number of Option Shares having an aggregate fair market value
(determined in the manner prescribed by paragraph 2.2) as of the date
of the exercise of the Stock Option equal to the exercise price of the
Stock Option, if such withholding is authorized by the Committee in
its discretion, or (v) in the discretion of the Committee, by the
delivery to the Company of the optionee's promissory note secured by
the Option Shares, bearing interest at a rate sufficient to prevent
the imputation of interest under Sections 483 or 1274 of the Code, and
having such other terms and conditions as may be satisfactory to the
Committee.
2.4.2 Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and
of such Stock Option as evidenced by the Employee's execution and
delivery of a Notice and Agreement of Exercise in a form to be
determined by the Committee in its discretion. Such Notice and
Agreement of Exercise shall set forth the agreement of the Employee
that: (a) no Option Shares will be sold or otherwise distributed in
violation of the Securities Act of 1933 (the "Securities Act") or any
other applicable federal or state securities laws, (b) each Option
Share certificate may be imprinted with legends reflecting any
applicable federal and state securities law restrictions and
conditions, (c) the Company may comply with said securities law
restrictions and issue "stop transfer" instructions to its Transfer
Agent and Registrar without liability, (d) if the Employee is a
Section 16 Reporting Person, the Employee will furnish to the Company
a copy of each Form 4 or Form 5 filed by said Employee and will timely
file all reports required under federal securities laws, and (e) the
Employee will report all sales of Option Shares to the Company in
writing on a form prescribed by the Company.
2.4.3 No Stock Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal and
state securities laws, and all other legal requirements, have been
fully complied with. The Company will use reasonable efforts to
maintain the effectiveness of a Registration Statement under the
Securities Act for the issuance of Stock Options and shares acquired
thereunder, but there may be times when no such Registration Statement
will be currently effective. The exercise of Stock Options may be
temporarily suspended without liability to the Company during times
when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such
suspension is necessary to preclude violation of any requirements of
applicable law or regulatory bodies having jurisdiction over the
Company. If any Stock Option would expire for any reason except the
end of its term during such a suspension, then if exercise of such
Stock Option is duly tendered before its expiration, such Stock Option
shall be exercisable and exercised (unless the attempted exercise
is withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement
covering resales of Option Shares.
2.5 Continuous Employment.
Except as provided in paragraph 2.7 below, an Employee may not
exercise a Stock Option unless from the date of grant to the date of
exercise such Employee remains continuously in the employ of the Company.
For purposes of this paragraph 2.5, the period of continuous employment of
an Employee with the Company shall be deemed to include (without extending
the term of the Stock Option) any period during which such Employee is on
leave of absence with the consent of the Company, provided that such leave
of absence shall not exceed three months and that such Employee returns to
the employ of the Company at the expiration of such leave of absence. If
such Employee fails to return to the employ of the Company at the
expiration of such leave of absence, such Employee's employment with the
Company shall be deemed terminated as of the date such leave of absence
commenced. The continuous employment of an Employee with the Company shall
also be deemed to include any period during which such Employee is a member
of the Armed Forces of the United States, provided that such Employee
returns to the employ of the Company within 90 days (or such longer period
as may be prescribed by law) from the date such Employee first becomes
entitled to discharge. If an Employee does not return to the employ of the
Company within 90 days (or such longer period as may be prescribed by law)
from the date such Employee first becomes entitled to discharge, such
Employee's employment with the Company shall be deemed to have terminated
as of the date such Employee's military service ended.
2.6 Restrictions on Transfer.
Each Stock Option granted under this Plan shall be transferable only
by will or the laws of descent and distribution. No interest of any
Employee under the Plan shall be subject to attachment, execution,
garnishment, sequestration, the laws of bankruptcy or any other legal or
equitable process. Each Stock Option granted under this Plan shall be
exercisable during an Employee's lifetime only by such Employee or by such
Employee's legal representative.
2.7 Termination of Employment.
2.7.1 Upon an Employee's Retirement, Disability or death, (a) all
Stock Options to the extent then presently exercisable shall remain in
full force and effect and may be exercised pursuant to the provisions
thereof, including expiration at the end of the fixed term thereof,
and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by such Employee shall
terminate as of the date of such termination of employment and shall
not be exercisable thereafter.
2.7.2 Upon the termination of the employment of an Employee with
the Company for any reason other than the reasons set forth in
paragraph 2.7.1 hereof, (a) all Stock Options to the extent then
presently exercisable by such Employee shall remain exercisable only
for a period of 90 days after the date of such termination of
employment (except that the 90-day
period shall be extended to 12 months if the Employee shall die during
such 90-day period), and may be exercised pursuant to the provisions
thereof, including expiration at the end of the fixed term thereof,
and (b) unless otherwise provided by the Committee, all Stock Options
to the extent not then presently exercisable by such Employee shall
terminate as of the date of such termination of employment and shall
not be exercisable thereafter.
2.7.3 For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement from the employ of
the Company on or after the date on which such Employee attains the
age of sixty-five (65) years; and
(b) "Disability" shall mean total and permanent incapacity of an Employee,
due to physical impairment or legally established mental incompetence,
to perform the usual duties of such Employee's employment with the
Company, which disability shall be determined: (i) on medical evidence
by a licensed physician designated by the Committee, or (ii) on
evidence that the Employee has become entitled to receive primary
benefits as a disabled employee under the Social Security Act in
effect on the date of such disability.
2.8 Grants of Options to Non-Employee Directors.
Each member of the Board who is not an Employee (a "Non- Employee
Director:), whether or not such member is a member of the Committee, shall
automatically be granted non-statutory Stock Options to purchase 5,000
shares of Common Stock on each anniversary of such Non-Employee Director's
continuous service on the Board. The term of each such Stock Option granted
to a Non-Employee Director shall commence on the date of grant and shall be
for ten years thereafter. Each such Stock Option granted to a Non-Employee
Director shall first be exercisable six months and one day from the later
of the date of grant or the date of shareholder approval of this Plan, and
thereafter shall be exercisable at any time until the expiration of its
term, whether or not the Non-Employee Director is a member of the Board at
the time of exercise or later enters the employ of the Company.
Notwithstanding the foregoing or any other provision of this Plan, all
unexercised Stock Options held by a Non-Employee Director shall
automatically terminate as of the date his or her directorship is
terminated, if such directorship is terminated on account of any act of
fraud, embezzlement, misappropriation or conversion of assets or
opportunities of the Company. Upon termination of such Stock Options, such
Non-Employee Director shall forfeit all rights and benefits under this
Plan. Notwith-standing the provisions of paragraph 4.4, the provisions of
this paragraph 2.8 may not be amended more than once every six months,
other than to comport with changes in the Code or the regulations
thereunder. The Committee shall not grant any Awards to Non-Employee
Directors and shall have no discretion as to (a) the selection of
Non-Employee Directors to whom Stock Options may be granted, (b) the number
of Stock Options granted to any Non-Employee Director, (c) the times at
which or the periods within which Stock Options may be granted to, or
exercised by, Non-Employee Directors, or (d) except to the limited extent
provided in paragraph 2.2, the price at which any Stock Option granted to a
Non-Employee Director may be exercised. Except as specifically set forth in
this
paragraph 2.8, Stock Options granted to Non-Employee Directors will be
governed by all of the other terms and provisions of this Plan.
3. PROVISIONS RELATING TO AWARDS
3.1 Grant of Awards.
Subject to the provisions of the Plan, the Committee shall have full
and complete authority, in its discretion, but subject to the express
provisions of this Plan, to (i) grant Awards pursuant to the Plan, (ii)
determine the number of shares of Common Stock subject to each Award
("Award Shares"), (iii) determine the terms and conditions (which need not
be identical) of each Award, including the consideration (if any) to be
paid by the Employee for such Common Stock, which may, in the Committee's
discretion, consist of the delivery of the Employee's promissory note
meeting the requirements of paragraph 2.4.1, (iv) establish and modify
performance criteria for Awards, and (v) make all of the determinations
necessary or advisable with respect to Awards under the Plan. Each award
under the Plan shall consist of a grant of shares of Common Stock subject
to a restriction period (after which the restrictions shall lapse), which
shall be a period commencing on the date the award is granted and ending on
such date as the Committee shall determine (the "Restriction Period"). The
Committee may provide for the lapse of restrictions in installments, for
acceleration of the lapse of restrictions upon the satisfaction of such
performance or other criteria or upon the occurrence of such events as the
Committee shall determine, and for the early expiration of the Restriction
Period upon an Employee's death, Disability or Retirement as defined in
paragraph 2.7.3, or, following a Change of Control, upon termination of an
Employee's employment by the Company without "Cause" or by the Employee for
"Good Reason," as those terms are defined herein. For purposes of this
Plan:
"Change of Control" shall be deemed to occur (a) on the date the
Company first has actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d) (2) of the Exchange Act) has become the beneficial
owner (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 40% or more of the
combined voting power of the Company's then outstanding securities, or (b)
on the date the shareholders of the Company approve (i) a merger of the
Company with or into any other corporation in which the Company is not the
surviving corporation or in which the Company survives as a subsidiary of
another corporation, (ii) a consolidation of the Company with any other
corporation, or (iii) the sale or disposition of all or substantially all
of the Company's assets or a plan of complete liquidation.
"Cause," when used with reference to termination of the employment of
an Employee by the Company for "Cause," shall mean:
(a) the Employee's continuing wilful and material breach of his or her
duties to the Company after he or she receives a demand from the Chief
Executive of the Company specifying the manner in which he or she has
wilfully and materially breached such duties, other than any such
failure resulting from Disability of the Employee or his or her
resignation for "Good Reason," as defined herein; or
(b) the conviction of the Employee of a felony; or
(c) the Employee's commission of fraud in the course of his or her
employment with the Company, such as embezzlement or other material
and intentional violation of law against the Company; or
(d) the Employee's gross misconduct causing material harm to the Company.
"Good Reason" shall mean any one or more of the following, occurring
following or in connection with a Change of Control and within 90 days
prior to the Employee's resignation, unless the Employee shall have
consented thereto in writing:
(a) the assignment to the Employee of duties inconsistent with his or her
executive status prior to the Change of Control or a substantive
change in the officer or officers to whom he or she reports from the
officer or officers to whom he or she reported immediately prior to
the Change of Control; or
(b) the elimination or reassignment of a majority of the duties and
responsibilities that were assigned to the Employee immediately prior
to the Change of Control; or
(c) a reduction by the Company in the Employee's annual base salary as in
effect immediately prior to the Change of Control; or
(d) the Company's requiring the Employee to be based anywhere outside a
35-mile radius from his or her place of employment immediately prior
to the Change of Control, except for required travel on the Company's
business to an extent substantially consistent with the Employee's
business travel obligations immediately prior to the Change of
Control; or
(e) the failure of the Company to grant the Employee a performance bonus
reasonably equivalent to the same percentage of salary the Employee
normally received prior to the Change of Control, given comparable
performance by the Company and the Employee; or
(f) the failure of the Company to obtain a satisfactory Assumption
Agreement (as defined in paragraph 4.12 of the Plan) from a successor,
or the failure of such successor to perform such Assumption Agreement.
3.2 Incentive Agreements.
Each Award granted under the Plan shall be evidenced by a written
agreement (an "Incentive Agreement") in a form approved by the Committee
and executed by the Company and the Employee to whom the Award is granted.
Each Incentive Agreement shall be
subject to the terms and conditions of the Plan and other such terms and
conditions as the Committee may specify.
3.3 Waiver of Restrictions.
The Committee may modify or amend any Award under the Plan or
waive any restrictions or conditions applicable to such Awards; provided,
however, that the Committee may not undertake any such modifications, amendments
or waivers if the effect thereof materially increases the benefits to any
Employee, or adversely affects the rights of any Employee without his or her
consent.
3.4 Terms and Conditions of Awards.
3.4.1 Upon receipt of an Award of shares of Common Stock under
the Plan, even during the Restriction Period, an Employee shall be the
holder of record of the shares and shall have all the rights of a
shareholder with respect to such shares, subject to the terms and
conditions of the Plan and the Award.
3.4.2 Except as otherwise provided in this paragraph 3.4, no
shares of Common Stock received pursuant to the Plan shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of
during the Restriction Period applicable to such shares. Any purported
disposition of such Common Stock in violation of this paragraph 3.4.2
shall be null and void.
3.4.3 If an Employee's employment with the Company terminates
prior to the expiration of the Restriction Period for an Award,
subject to any provisions of the Award with respect to the Employee's
death, Disability or Retirement, or Change of Control, all shares of
Common Stock subject to the Award shall be immediately forfeited by
the Employee and reacquired by the Company, and the Employee shall
have no further rights with respect to the Award. In the discretion of
the Committee, an Incentive Agreement may provide that, upon the
forfeiture by an Employee of Award Shares, the Company shall repay to
the Employee the consideration (if any) which the Employee paid for
the Award Shares on the grant of the Award. In the discretion of the
Committee, an Incentive Agreement may also provide that such repayment
shall include an interest factor on such consideration from the date
of the grant of the Award to the date of such repayment.
3.4.4 The Committee may require under such terms and conditions
as it deems appropriate or desirable that (i) the certificates for
Common Stock delivered under the Plan are to be held in custody by the
Company or a person or institution designated by the Company until the
Restriction Period expires, (ii) such certificates shall bear a legend
referring to the restrictions on the Common Stock pursuant to the
Plan, and (iii) the Employee shall have delivered to the Company a
stock power endorsed in blank relating to the Common Stock.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Change in Capitalization.
4.1.1 The number and class of shares subject to each outstanding
Stock Option, the Exercise Price thereof (but not the total price),
the maximum number of Stock Options that may be granted under the
Plan, the minimum number of shares as to which a Stock Option may be
exercised at any one time, and the number and class of shares subject
to each outstanding Award, shall be proportionately adjusted in the
event of any increase or decrease in the number of the issued shares
of Common Stock which results from a split-up or consolidation of
shares, payment of a stock dividend or dividends exceeding a total of
5% for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities
according to their terms), a combination of shares or other like
capital adjustment, so that (i) upon exercise of the Stock Option, the
Employee shall receive the number and class of shares such Employee
would have received had such Employee been the holder of the number of
shares of Common Stock for which the Stock Option is being exercised
upon the date of such change or increase or decrease in the number of
issued shares of the Company, and (ii) upon the lapse of restrictions
of the Award Shares, the Employee shall receive the number and class
of shares such Employee would have received if the restrictions on the
Award Shares had lapsed on the date of such change or increase or
decrease in the number of issued shares of the Company.
4.1.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which ROEX is not
the surviving corporation or in which ROEX survives as a wholly-owned
subsidiary of another corporation, or upon a sale of all or
substantially all of the property of the Company to another
corporation, or any dividend or distribution to shareholders of more
than 10% of the Company's assets, adequate adjustment or other
provisions shall be made by the Company or other party to such
transaction so that there shall remain and/or be substituted for the
Option Shares and Award Shares provided for herein, the shares,
securities or assets which would have been issuable or payable in
respect of or in exchange for such Option Shares and Award Shares then
remaining, as if the Employee had been the owner of such shares as of
the applicable date. Any securities so substituted shall be subject to
similar successive adjustments.
4.2 Withholding Taxes.
The Company shall have the right at the time of exercise of any Stock
Option, the grant of an Award, or the lapse of restrictions on Award
Shares, to make adequate provision for any federal, state, local or foreign
taxes which it believes are or may be required by law to be withheld with
respect to such exercise ("Tax Liability"), to ensure the payment of any
such Tax Liability. The Company may provide for the payment of any Tax
Liability by any of the following means or a combination of such means, as
determined by the Committee in its sole and absolute discretion in the
particular case: (i) by requiring the Employee to tender a cash payment to
the Company, (ii) by withholding from the Employee's salary, (iii) by
withholding from the Option Shares which would otherwise be issuable upon
exercise of the Stock Option, or from the Award Shares on their grant or
date of lapse of restrictions, that number of Option Shares or
Award Shares having an aggregate fair market value (determined in the
manner prescribed by paragraph 2.2) as of the date the withholding tax
obligation arises in an amount which is equal to the Employee's Tax
Liability or (iv) by any other method deemed appropriate by the Committee.
Satisfaction of the Tax Liability of a Section 16 Reporting Person may be
made by the method of payment specified in clause (iii) above only if the
following two conditions are satisfied:
(a) the withholding of Option Shares or Award Shares and the exercise of
the related Stock Option occur at least six months and one day
following the date of grant of such Stock Option or Award; and
(b) the withholding of Option Shares or Award Shares is made either (i)
pursuant to an irrevocable election ("Withholding Election") made by
such Employee at least six months in advance of the withholding of
Options Shares or Award Shares, or (ii) on a day within a ten-day
"window period" beginning on the third business day following the date
of release of the Company's quarterly or annual summary statement of
sales and earnings.
Anything herein to the contrary notwithstanding, a Withholding Election may be
disapproved by the Committee at any time.
4.3 Relationship to Other Employee Benefit Plans.
Stock Options and Awards granted hereunder shall not be deemed to be
salary or other compensation to any Employee for purposes of any pension,
thrift, profit-sharing, stock purchase or any other employee benefit plan
now maintained or hereafter adopted by the Company.
4.4 Amendments and Termination.
The Board of Directors may at any time suspend, amend or terminate
this Plan. No amendment, except as provided in paragraph 2.8, or
modification of this Plan may be adopted, except subject to stockholder
approval, which would: (a) materially increase the benefits accruing to
Employees under this Plan, (b) materially increase the number of securities
which may be issued under this Plan (except for adjustments pursuant to
paragraph 4.1 hereof), or (c) materially modify the requirements as to
eligibility for participation in the Plan.
4.5 Successors in Interest.
The provisions of this Plan and the actions of the Committee shall be
binding upon all heirs, successors and assigns of the Company and of
Employees.
4.6 Other Documents.
All documents prepared, executed or delivered in connection with this
Plan (including, without limitation, Option Agreements and Incentive
Agreements) shall be, in substance and form, as established and modified by
the Committee; provided, however, that all such
documents shall be subject in every respect to the provisions of this Plan,
and in the event of any conflict between the terms of any such document and
this Plan, the provisions of this Plan shall prevail.
4.7 No Obligation to Continue Employment.
This Plan and grants hereunder shall not impose any obligation on the
Company to continue to employ any Employee. Moreover, no provision of this
Plan or any document executed or delivered pursuant to this Plan shall be
deemed modified in any way by any employment contract between an Employee
(or other employee) and the Company.
4.8 Misconduct of an Employee.
Notwithstanding any other provision of this Plan, if an Employee
commits fraud or dishonesty toward the Company or wrongfully uses or
discloses any trade secret, confidential data or other information
proprietary to the Company, or intentionally takes any other action
materially inimical to the best interests of the Company, as determined by
the Committee, in its sole and absolute discretion, such Employee shall
forfeit all rights and benefits under this Plan.
4.9 Term of Plan.
This Plan was adopted by the Board effective May 12, 1999. No Stock
Options or Awards may be granted under this Plan after May 12, 2009.
4.10 Governing Law.
This Plan shall be construed in accordance with, and governed by, the
laws of the State of California.
4.11 Shareholder Approval.
No Stock Option shall be exercisable, or Award granted, unless and
until the Shareholders of the Company have approved this Plan and all other
legal requirements have been fully complied with.
4.12 Assumption Agreements.
The Company will require each successor, (direct or indirect, whether
by purchase, merger, consolidation or otherwise), to all or substantially
all of the business or assets of the Company, prior to the consummation of
each such transaction, to assume and agree to perform the terms and
provisions remaining to be performed by the Company under each Incentive
Agreement and Stock Option and to preserve the benefits to the Employees
thereunder. Such assumption and agreement shall be set forth in a written
agreement in form and substance satisfactory to the Committee (an
"Assumption Agreement"), and shall include such adjustments,
if any, in the application of the provisions of the Incentive Agreements
and Stock Options and such additional provisions, if any, as the Committee
shall require and approve, in order to preserve such benefits to the
Employees. Without limiting the generality of the foregoing, the Committee
may require an Assumption Agreement to include satisfactory undertakings by
a successor:
(a) to provide liquidity to the Employees at the end of the Restriction
Period applicable to Common Stock awarded to them under the Plan, or
on the exercise of Stock Options;
(b) if the succession occurs before the expiration of any period specified
in the Incentive Agreements for satisfaction of performance criteria
applicable to the Common Stock awarded thereunder, to refrain from
interfering with the Company's ability to satisfy such performance
criteria or to agree to modify such performance criteria and/or waive
any criteria that cannot be satisfied as a result of the succession;
(c) to require any future successor to enter into an Assumption Agreement;
and
(d) to take or refrain from taking such other actions as the Committee may
require and approve, in its discretion.
The Committee referred to in this paragraph 4.12 is the Committee appointed by a
Board of Directors in office prior to the succession then under consideration.
4.13 Compliance With Rule 16B-3.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent that any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
IN WITNESS WHEREOF, this Plan has been executed effective as of the 12th
day of May, 1999.
ROEX, INC.
By: Rodney H. Burreson
President