EXHIBIT 99.1
1994 STOCK OPTION PLAN
AS AMENDED AS OF SEPTEMBER 26, 1997
OF
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
1. PURPOSES OF THE PLAN. This stock option plan (the "Plan")
is designed to provide an incentive to key employees (including officers and
directors who are key employees), Outside Directors (as defined in Paragraph 19)
and consultants of U.S.-China Industrial Exchange, Inc., a New York corporation
(the "Company"), and its present and future subsidiary corporations, as defined
in Paragraph 19 ("Subsidiaries"), and to offer an additional inducement in
obtaining the services of such individuals. The Plan provides for the grant of
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock
options ("NQSOs"), but the Company makes no warranty as to the qualification of
any option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Paragraph 12, the aggregate number of shares of Common Stock, $.0l par value per
share, of the Company ("Common Stock") for which options may be granted under
the Plan shall not exceed 500,000. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the Company. The Company
shall at all times during the term of the Plan reserve and keep available such
number of shares of Common Stock as will be sufficient to satisfy the
requirements of the Plan. Subject to the provisions of Paragraph 13, any shares
of Common Stock subject to an option which for any reason expires, is canceled
or is terminated unexercised or which ceases for any reason to be exercisable
shall again become available for the granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered
by the Board of Directors which, to the extent it shall determine, may delegate
its powers with respect to the administration of the Plan to a committee of the
Board of Directors (the "Committee") consisting of not less than two Directors
(or such greater number as required by law), each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 (or any successor rule
or regulation) promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). References in the Plan to determinations or actions by the
Committee shall be deemed to include determinations and actions by the Board of
Directors. A majority of the members of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, and any acts approved in writing by all members without a
meeting, shall be the acts of the Committee.
E-4
<PAGE>
Subject to the express provisions of the Plan, the Committee
shall have the authority, in its sole discretion, to determine the key
employees, Outside Directors and consultants who shall receive options; the
times when they shall receive options; whether an option granted to an employee
shall be an ISO or a NQSO; the number of shares of Common Stock to be subject to
each option; the term of each option; the date each option shall become
exercisable; whether an option shall be exercisable in whole, in part or in
installments, and, if in installments, the number of shares of Common Stock to
be subject to each installment; whether the installments shall be cumulative;
the date each installment shall become exercisable and the term of each
installment; whether to accelerate the date of exercise of any installment;
whether shares of Common Stock may be issued on exercise of an option as partly
paid, and, if so, the dates when future installments of the exercise price shall
become due and the amounts of such installments; the exercise price of each
option; the form of payment of the exercise price; the amount, if any, necessary
to satisfy the Company's obligation to withhold taxes; whether to restrict the
sale or other disposition of the shares of Common Stock acquired upon the
exercise of an option and to waive any such restriction; whether to subject the
exercise of all or any portion of an option to the fulfillment of contingencies
as specified in the Contract (as described in Paragraph 11), including without
limitations, contingencies relating to entering into a covenant not to compete
with the Company and its Parent and Subsidiaries, to financial objectives for
the Company, a Subsidiary, a division, a product line or other category, and/or
the period of continued employment of the optionee with the Company or its
Subsidiaries, and to determine whether such contingencies have been met; to
construe the respective Contracts and the Plan; with the consent of the
optionee, to cancel or modify an option, provided such option as modified would
be permitted to be granted on such date under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; and to
make all other determinations necessary or advisable for administering the Plan.
The determinations of the Committee on the matters referred to in this Paragraph
3 shall be conclusive. No member or former member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.
4. ELIGIBILITY; GRANTS. The Committee may, consistent with the
purposes of the Plan, grant options from time to time, to key employees
(including officers and directors who are key employees), Outside Directors and
consultants of the Company or any of its Subsidiaries. Options granted shall
cover such number of shares of Common Stock as the Committee may determine;
provided, however, that the maximum number of shares subject to options that may
be granted to any employee in any fiscal year of the Company under the Plan (the
"162(m) Maximum") may not exceed 100,000; and further, provided, that the
aggregate market value (determined at the time the option is granted) of the
shares of Common Stock for which any eligible employee may be granted ISOs under
the Plan or any other plan of the Company, or of a Parent or a Subsidiary of the
Company, which are exercisable for the first time by such optionee during any
calendar year shall not exceed $100,000. The $100,000 ISO limitation shall be
applied by taking ISOs into account in the order in which they were granted. Any
option (or the portion thereof) granted in excess of such amount shall be
treated as a NQSO.
5. EXERCISE PRICE. The exercise price of the shares of Common
Stock under each option shall be determined by the Committee; provided, however,
that the exercise
E-5
<PAGE>
price shall not be less than 100% of the fair market value of the Common Stock
subject to such option on the date of grant; and further provided, that if, at
the time an ISO is granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price of such ISO shall not be less than 110% of the fair
market value of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day
shall be (a) if the principal market for the Common Stock is a national
securities exchange, the average between the high and low sales prices per share
of the Common Stock on such day as reported by such exchange or on a
consolidated tape reflecting transactions on such exchange, (b) if the principal
market for the Common Stock is not a national securities exchange and the Common
Stock is quoted on the National Association of Securities Dealers Automated
Quotations System ("NASDAQ"), and (i) if actual sales price information is
available with respect to the Common Stock, the average between the high and low
sales prices per share of the Common Stock on such day on NASDAQ, or (ii) if
such information is not available, the average between the highest bid and the
lowest asked prices for the Common Stock on such day on NASDAQ, or (c) if the
principal market for the Common Stock is not a national securities exchange and
the Common Stock is not quoted on NASDAQ, the average between the highest bid
and lowest asked prices per share for the Common Stock on such day as reported
on the NASDAQ OTC Bulletin Board Service, National Quotation Bureau,
Incorporated or a comparable service; provided that if clauses (a), (b) and (c)
of this Paragraph are all inapplicable, or if no trades have been made or no
quotes are available for such day, the fair market value of a share of Common
Stock shall be determined by the Committee by any method consistent with
applicable regulations adopted by the Treasury Department relating to stock
options. The determination of the Committee shall be conclusive in determining
the fair market value of the stock.
6. TERM. The term of each option granted pursuant to the Plan
shall be such term as is established by the Committee, in its sole discretion,
at or before the time such option is granted; provided, however, that the term
of each ISO granted pursuant to the Plan shall be for a period not exceeding 10
years from the date of grant thereof, and further, provided, that if, at the
time an ISO is granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the term of the ISO shall be for a period not exceeding five years from
the date of grant. Options shall be subject to earlier termination as
hereinafter provided.
7. EXERCISE. An option (or any part or installment thereof),
to the extent then exercisable, shall be exercised by giving written notice to
the Company at its principal office (at present 7201 Wisconsin Avenue, Bethesda,
Maryland 20814, Attn.: Chairman of the Board), stating which ISO or NQSO is
being exercised, specifying the number of shares of Common Stock as to which
such option is being exercised and accompanied by payment in full of the
aggregate exercise price therefor (or the amount due on exercise if the Contract
permits installment payments) (a) in cash or by certified check or (b) if the
Contract at the time of grant so permits, with the authorization of the
Committee, with previously acquired shares of Common
E-6
<PAGE>
Stock having an aggregate fair market value, on the date of exercise, equal to
the aggregate exercise price of all options being exercised, or with any
combination of cash, certified check or shares of Common Stock.
The Committee may, in its discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
exercise notice, together with a copy of his irrevocable instructions to a
broker acceptable to the Committee to deliver promptly to the Company the amount
of sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
A person entitled to receive Common Stock upon the exercise of
an option shall not have the rights of a shareholder with respect to such shares
of Common Stock until the date of issuance of a stock certificate to him for
such shares; provided, however, that until such stock certificate is issued, any
option holder using previously acquired shares of Common Stock in payment of an
option exercise price shall continue to have the rights of a shareholder with
respect to such previously acquired shares.
8. TERMINATION OF RELATIONSHIP. Any employee to whom an option
was granted under the Plan whose employment with the Company (and its Parent and
Subsidiaries) has terminated for any reason other than his death or Disability
(as defined in Paragraph 19) may exercise such option, to the extent exercisable
on the date of such termination, at any time within three months after the date
of termination, but not thereafter and in no event after the date the option
would otherwise have expired; provided, however, that if his employment shall be
terminated either (a) for cause, or (b) without the consent of the Company, said
option shall terminate immediately. Options granted under the Plan shall not be
affected by any change in the status of the holder so long as he continues to be
a full-time employee of the Company, its Parent or any of the Subsidiaries
(regardless of having been transferred from one corporation to another).
For purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military, sick
leave or other bona fide leave of absence shall continue to be considered an
employee for purposes of the Plan during such leave if the period of the leave
does not exceed 90 days, or, if longer, so long as the individual's right to
reemployment with the Company (or a related corporation) is guaranteed either by
statute or by contract. If the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed by statute or by contract,
the employment relationship shall be deemed to have terminated on the 91st day
of such leave. In addition, for purposes of the Plan, an optionee's employment
with a Subsidiary or Parent of the Company shall be deemed to have terminated on
the date such corporation ceases to be a Subsidiary or Parent of the Company.
E-7
<PAGE>
The termination of an optionee's relationship as a consultant
or Outside Director of the Company or of a Subsidiary of the Company shall not
affect the option except as may otherwise be provided in the Contract.
Nothing in the Plan or in any option granted under the Plan
shall confer on any individual any right to continue in the employ or as a
consultant or director of the Company, its Parent or any of its Subsidiaries, or
interfere in any way with the right of the Company, its Parent or any of its
Subsidiaries to terminate such relationship at any time for any reason
whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE. If an optionee dies (a)
while he is employed by the Company, its Parent or any of its Subsidiaries, (b)
within three months after the termination of his employment (unless such
termination was for cause or without the consent of the Company) or (c) within
one year following the termination of his employment by reason of Disability,
the option may be exercised, to the extent exercisable on the date of his death,
by his executor, administrator or other person at the time entitled by law to
his rights under such option, at any time within one year after death, but not
thereafter and in no event after the date the option would otherwise have
expired.
Any optionee whose employment has terminated by reason of
Disability may exercise his option, to the extent exercisable upon the effective
date of such termination, at any time within one year after such date, but not
thereafter and in no event after the date the option would otherwise have
expired.
The death or Disability of a consultant or Outside Director to
whom an option has been granted under the Plan shall not affect the option,
except as may otherwise be provided in the Contract.
10. COMPLIANCE WITH SECURITIES LAW. It is a condition to the
exercise of any option that either (a) a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Common Stock to be issued upon such exercise shall be effective and
current at the time of exercise, or (b) there is an exemption from registration
under the Securities Act for the issuance of shares of Common Stock upon such
exercise. Nothing herein shall be construed as requiring the Company to register
shares subject to any option under the Securities Act.
The Committee may require the optionee to execute and deliver
to the Company his representations and warranties, in form and substance
satisfactory to the Committee, that (i) the shares of Common Stock to be issued
upon the exercise of the option are being acquired by the optionee for his own
account, for investment only and not with a view to the resale or distribution
thereof, and (ii) any subsequent resale or distribution of shares of Common
Stock by such optionee will be made only pursuant to (a) a Registration
Statement under the Securities Act which is effective and current with respect
to the shares of Common Stock being sold, or (b) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption,
the optionee shall prior to any offer of sale or sale of such shares of Common
Stock
E-8
<PAGE>
provide the Company with a favorable written opinion of counsel, in form
and substance satisfactory to the Company, as to the applicability of such
exemption to the proposed sale or distribution.
In addition, if at any time the Committee shall determine in
its discretion that the listing or qualification of the shares of Common Stock
subject to such option on any securities exchange or under any applicable law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of an option,
or the issuance of shares of Common Stock thereunder, such option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
11. STOCK OPTION CONTRACTS. Each option shall be evidenced
by an appropriate Contract which shall be duly executed by the Company and the
optionee, and shall contain such terms and conditions not inconsistent herewith
as may be determined by the Committee.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding
any other provisions of the Plan, in the event of any change in the outstanding
Common Stock by reason of a stock dividend, recapitalization, merger or
consolidation in which the Company is the surviving corporation, split-up,
spin-off, combination or exchange of shares or the like, the aggregate number
and kind of shares subject to the Plan, the aggregate number and kind of shares
subject to each outstanding option and the exercise price thereof, and the
number and kind of shares subject to the 162(m) Maximum shall be appropriately
adjusted by the Board of Directors, whose determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the
Company, (b) a merger or consolidation in which the Company is not the surviving
corporation, or (c) any other capital reorganization (other than a
recapitalization) in which more than 50% of the shares of Common Stock of the
Company entitled to vote are exchanged, any outstanding options shall terminate,
unless other provision is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was
adopted by the Board of Directors on April 27, 1994 and amended by the Board of
Directors on July 29, 1994, January 9, 1997 and September 26, 1997. No option
may be granted under the Plan after April 26, 2004. The Board of Directors,
without further approval of the Company's shareholders, may at any time suspend
or terminate the Plan, in whole or in part, or amend it from time to time in
such respects as it may deem advisable, including, without limitation, in order
that ISO granted hereunder meet the requirements for "incentive stock options"
under the Code, to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act, Section 162(m) of the Code and to conform to any change in
applicable law or to regulations or rulings of administrative agencies;
provided, however, that no amendment shall be effective without the requisite
prior or subsequent shareholder approval which would (a) except as contemplated
in Paragraph 12, increase the maximum number of shares of Common Stock for which
options may be granted under the Plan or the 162(m) Maximum, (b) materially
increase
E-9
<PAGE>
the benefits to participants under the Plan or (c) change the e ligibility
requirements for individuals entitled to receive options hereunder. No
termination, suspension or amendment of the Plan shall, without the consent of
the holder of an existing option affected thereby, adversely affect his rights
under such option. The power of the Committee to construe and administer any
options granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.
14. NON-TRANSFERABILITY OF OPTIONS. No option granted under
the Plan shall be transferable otherwise than by will or the laws of descent and
distribution, and options may be exercised, during the lifetime of the holder
thereof, only by him or his legal representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process.
15. WITHHOLDING TAXES. The Company may withhold cash and/or,
with the authorization of the Committee, shares of Common Stock to be issued
with respect thereto having an aggregate fair market value equal to the amount
which it determines is necessary to satisfy its obligation to withhold Federal,
state and local income taxes or other taxes incurred by reason of the grant or
exercise of an option, its disposition, or the disposition of the underlying
shares of Common Stock. Alternatively, the Company may require the holder to pay
to the Company such amount, in cash, promptly upon demand. The Company shall not
be required to issue any shares of Common Stock pursuant to any such option
until all required payments have been made. Fair market value of the shares of
Common Stock shall be determined in accordance with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such
legend or legends upon the certificates for shares of Common Stock issued upon
exercise of an option under the Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as it determines,
in its discretion, to be necessary or appropriate to (a) prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act, (b) implement the provisions of the Plan or any agreement between the
Company and the optionee with respect to such shares of Common Stock, or (c)
permit the Company to determine the occurrence of a "disqualifying disposition,"
as described in Section 421(b) of the Code, of the shares of Common Stock
transferred upon the exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the
issuance of shares of Common Stock upon the exercise of an option granted under
the Plan, as well as all fees and expenses incurred by the Company in connection
with such issuance.
17. USE OF PROCEEDS. The cash proceeds from the sale of shares
of Common Stock pursuant to the exercise of options under the Plan shall be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors may determine.
E-10
<PAGE>
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN
CONSTITUENT CORPORATIONS. Anything in this Plan to the contrary notwithstanding,
the Board of Directors may, without further approval by the shareholders,
substitute new options for prior options of a Constituent Corporation (as
defined in Paragraph 19) or assume the prior options of such Constituent
Corporation.
19. DEFINITIONS.
(1) Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of the Code.
(2) Parent. The term "Parent" shall have the same definition
as "parent corporation" in Section 424(e) of the Code.
(3) Constituent Corporation. The term "Constituent
Corporation" shall mean any corporation which engages with the Company, its
Parent or any Subsidiary in a transaction to which Section 424(a) of the Code
applies (or would apply if the option assumed or substituted were an ISO), or
any Parent or any Subsidiary of such corporation.
(4) Disability. The term "Disability" shall mean a permanent
and total disability within the meaning of Section 22(e)(3) of the Code.
(5) Outside Director. The term "Outside Director" shall mean
an individual who, on the date of grant of a NQSO hereunder, is a director of
the Company but is not a common law employee of the Company or of any of its
Subsidiaries or its Parent.
20. GOVERNING LAW. The Plan, such options as may be granted
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of New York.
21. PARTIAL INVALIDITY. The invalidity or illegality of any
provision herein shall not affect the validity of any other provision.
22. SHAREHOLDER APPROVAL. The September 26, 1997 amendment to the
Plan shall be subject to approval at the next duly held meeting of the Company's
shareholders at which a majority of the outstanding voting shares are present,
in person or by proxy, and voting on the Plan. No options granted pursuant to
the amendment may be exercised prior to such approval, provided that the date of
grant of any options granted thereunder shall be determined as if the amendment
to the Plan had not been subject to such approval. Notwithstanding the
foregoing, if the amendment to the Plan is not approved by a vote of the
shareholders of the Company on or before September 25, 1998, the amendment and
any options granted thereunder shall terminate, but the Plan as in effect prior
to the amendment and all options granted thereunder shall remain in full force
and effect.
E-11
