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EXHIBIT 99.1
INNERLINX TECHNOLOGIES, INCORPORATED
1997 STOCK OPTION PLAN
This 1997 Stock Option Plan (the "Plan") provides for the grant of
options to acquire shares of common stock, without par value (the "Common
Stock") of INNERLINX TECHNOLOGIES, INCORPORATED, a Washington corporation (the
"Company"). Stock options granted under this Plan are referred to herein as
"Options." Options that qualify under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), are referred to in this Plan as "Incentive
Stock Options." Options granted under this Plan that do not qualify under
Section 422 of the Code are referred to as "Non-Statutory Stock Options."
1. PURPOSES.
The purposes of this Plan are to retain the services of valued key
employees of the Company and non-employee advisors or consultants as the Plan
Administrator shall select in accordance with Section 3 below, to encourage such
persons to acquire a greater proprietary interest in the Company, thereby
strengthening their incentive to achieve the objectives of the shareholders of
the Company, and to serve as an aid and inducement in the hiring of new
employees, consultants and other persons selected by the Plan Administrator.
2. ADMINISTRATION.
This Plan shall be administered by the Board of Directors of the Company
(the "Board"), except that the Board may, in its discretion, establish a
committee composed of members of the Board to administer this Plan, which
committee (the "Committee") may be an executive, compensation or other
committee, including a separate committee especially created for this purpose.
The Committee shall have such of the powers and authority vested in the Board
hereunder as the Board may delegate to it (including the power and authority to
interpret any provision of this Plan or of any Option). The members of any such
Committee shall serve at the pleasure of the Board. The Board, and/or the
Committee if one has been established by the Board, are referred to in this Plan
as the "Plan Administrator."
Following registration of any of the Company's securities under Section
12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Plan Administrator shall not take any action which is not in full compliance
with the exemptions from Section 16(b) of the Exchange Act provided by Rule
16b-3 or any successor rule or other rules of the Securities and Exchange
Commission, and any such action shall be void and of no effect.
Except as limited by Section 5(n) below, and subject to the provisions
of this Plan, and with a view to effecting its purpose, the Plan Administrator
shall have sole authority, in its absolute discretion, to (a) construe and
interpret this Plan; (b) define the terms used in this Plan; (c) prescribe,
amend and rescind rules and regulations relating to this Plan; (d) correct any
defect, supply any omission or reconcile any inconsistency in this Plan; (e)
determine the individuals to whom Options shall be granted under this Plan and
whether the Option is an Incentive Stock Option or a Non-Statutory Stock Option;
(f) determine the time or times at which Options shall be granted under this
Plan; (g) determine the number of shares of Common Stock subject to each Option,
the exercise price of each Option, the duration of each Option and the times at
which each Option shall become exercisable; (h) determine all other terms and
conditions of Options; and (i) make all other determinations necessary or
advisable for the administration of this Plan. All decisions, determinations and
interpretations made by the Plan Administrator shall be binding and conclusive
on all participants in this Plan and on their legal representatives, heirs and
beneficiaries.
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3. ELIGIBILITY.
Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Company or any Related
Corporation (as defined below), including employees who are directors of the
Company ("Employees"). Non-Statutory Stock Options may be granted to Employees
and non-employee directors, advisors and consultants as the Plan Administrator
shall select. Options may be granted in substitution for outstanding Options of
another corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization between such other corporation and the
Company or any subsidiary of the Company. Options also may be granted in
exchange for outstanding Options. Any person to whom an Option is granted under
this Plan is referred to as an "Optionee."
As used in this Plan, the term "Related Corporation," when referring to
a subsidiary corporation, shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock of one of the other
corporations in such chain. When referring to a parent corporation, the term
"Related Corporation" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the time of
granting of the Option, each of the corporations other than the Company owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock of one of the other corporations in such chain.
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to a
total of One Million (1,000,000) shares of the Company's authorized but
unissued, or reacquired, Common Stock. The number of shares with respect to
which Options may be granted hereunder is subject to adjustment as set forth in
Section 5(m) hereof. If any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such
Option may again be subject to an Option to the same Optionee or to a different
person eligible under Section 3 of this Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements may
contain such additional provisions, not inconsistent with this Plan, as the Plan
Administrator in its discretion may deem advisable. All Options also shall
comply with the following requirements:
(a) Number of Shares and Type of Option.
Each Agreement shall state the number of shares of Common Stock to which
it pertains and whether the Option is intended to be an Incentive Stock Option
or a Non-Statutory Stock Option. In the absence of action to the contrary by the
Plan Administrator in connection with the grant of an Option, all Options shall
be Non-Statutory Stock Options. The aggregate fair market value (determined at
the Date of Grant, as defined below) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year (granted under this Plan and all other Incentive Stock
Option plans of the Company, a Related Corporation or a predecessor corporation)
shall not exceed $100,000, or such other limit as may be prescribed by the Code
as it may be amended from time to time. Any Option which exceeds the annual
limit shall not be void but rather shall be a Non-Statutory Stock Option.
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(b) Date of Grant.
Each Agreement shall state the date the Plan Administrator has deemed to
be the effective date of the Option for purposes of this Plan (the "Date of
Grant").
(c) Option Price.
Each Agreement shall state the price per share of Common Stock at which
it is exercisable. The exercise price shall be fixed by the Plan Administrator
at whatever price the Plan Administrator may determine in the exercise of its
sole discretion; provided, that the per share exercise price for any Option
granted following the effective date of registration of any of the Company's
securities under Section 12 of the Securities Exchange Act of 1934 shall not be
less than the fair market value per share of the Common Stock at the Date of
Grant as determined by the Plan Administrator in good faith; provided further,
that the per share exercise price for an Incentive Stock Option shall not be
less than the fair market value per share of the Common Stock at the Date of
Grant as determined by the Plan Administrator in good faith; provided further,
that with respect to Incentive Stock Options granted to greater-than-10 percent
shareholders of the Company (as determined with reference to Section 424(d) of
the Code), the exercise price per share shall not be less than 110 percent of
the fair market value per share of the Common Stock at the Date of Grant; and,
provided further, that Incentive Stock Options granted in substitution for
outstanding Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted Option of the other corporation, subject to any adjustment
consistent with the terms of the transaction pursuant to which the substitution
is to occur.
(d) Duration of Options.
At the time of the grant of the Option, the Plan Administrator shall
designate, subject to paragraph 5(g) below, the expiration date of the Option,
which date shall not be later than 10 years from the Date of Grant in the case
of Incentive Stock Options; provided, that the expiration date of any Incentive
Stock Option granted to a greater-than-10 percent shareholder of the Company (as
determined with reference to Section 424(d) of the Code) shall not be later than
five years from the Date of Grant. In the absence of action to the contrary by
the Plan Administrator in connection with the grant of a particular Option, and
except in the case of Incentive Stock Options as described above, all Options
granted under this Plan shall expire 10 years from the Date of Grant.
(e) Vesting Schedule.
No Option shall be exercisable until it has vested. The vesting schedule
for each Option shall be specified by the Plan Administrator at the time of
grant of the Option; provided, that if no vesting schedule is specified at the
time of grant, the entire Option shall vest according to the following schedule:
NUMBER OF YEARS PERCENTAGE OF TOTAL OPTION
FOLLOWING DATE OF GRANT TO BE EXERCISABLE
1 20%
2 40%
3 60%
4 80%
5 100%
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(f) Acceleration of Vesting.
The vesting of one or more outstanding Options may be accelerated by the
Plan Administrator at such times and in such amounts as it shall determine in
its sole discretion. The vesting of Options also shall be accelerated under the
circumstances described in Section 5(m) below.
(g) Term of Option.
Vested Options shall terminate, to the extent not previously exercised,
upon the occurrence of the first of the following events: (i) the expiration of
the Option, as designated by the Plan Administrator in accordance with Section
5(d) above; (ii) the expiration of 90 days from the date of an Optionee's
termination of employment or contractual relationship with the Company or any
Related Corporation for any reason whatsoever other than death or Disability (as
defined below) unless, in the case of a Non-Statutory Stock Option, the exercise
period is extended by the Plan Administrator until a date not later than the
expiration date of the Option; or (iii) the expiration of one year from (A) the
date of death of the Optionee or (B) cessation of an Optionee's employment or
contractual relationship with the Company or any Related Corporation by reason
of Disability (as defined below) unless, in the case of a Non-Statutory Stock
Option, the exercise period is extended by the Plan Administrator until a date
not later than the expiration date of the Option. If an Optionee's employment or
contractual relationship with the Company or any Related Corporation is
terminated by death, any Option held by the Optionee shall be exercisable only
by the person or persons to whom such Optionee's rights under such Option shall
pass by the Optionee's will or by the laws of descent and distribution of the
state or county of the Optionee's domicile at the time of death. "Disability"
shall mean that a person is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or that has lasted or can be expected to last for
a continuous period of not less than 12 months. The Plan Administrator shall
determine whether an Optionee has incurred a Disability on the basis of medical
evidence acceptable to the Plan Administrator. Upon making a determination of
Disability, the Committee shall, for purposes of the Plan, determine the date of
an Optionee's termination of employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above, unvested
Options shall terminate immediately upon termination of employment of, or other
contractual relationship with, the Optionee by the Company for any reason
whatsoever, including death or Disability. If, in the case of an Incentive Stock
Option, an Optionee's relationship with the Company changes (e.g., from an
employee to a non-employee, such as a consultant, or a non-employee director),
such change shall not necessarily constitute a termination of an Optionee's
contractual relationship with the Company but rather the Optionee's Incentive
Stock Option shall automatically be converted into a Non-Statutory Stock Option.
For purposes of this Plan, transfer of employment between or among the Company
and/or any Related Corporation shall not be deemed to constitute a termination
of employment with the Company or any Related Corporations. For purposes of this
subsection with respect to Incentive Stock Options, employment shall be deemed
to continue while the Optionee is on military leave, sick leave or other bona
fide leave of absence (as determined by the Plan Administrator). The foregoing
notwithstanding, employment shall not be deemed to continue beyond the first 90
days of such leave, unless the Optionee's reemployment rights are guaranteed by
statute or by contract.
Unvested Options shall terminate immediately upon any material breach
(as determined by the Plan Administrator) by Optionee of any employment,
noncompetition, nondisclosure or similar agreement by and between the Company
and Optionee.
(h) Exercise of Options.
Options shall be exercisable, either all or in part, at any time after
vesting, until termination. If less than all of the shares included in the
vested portion of any Option are purchased, the remainder may be purchased at
any subsequent time prior to the expiration of the Option term. No portion of
any Option for less than fifty (50) shares (as adjusted pursuant to Section 5(m)
below) may be exercised; provided, that if the vested portion of
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any Option is less than fifty (50) shares, it may be exercised with respect to
all shares for which it is vested. Only whole shares may be issued pursuant to
an Option, and to the extent that an Option covers less than one share, it is
unexercisable. Options or portions thereof may be exercised by giving written
notice to the Company, which notice shall specify the number of shares to be
purchased, and be accompanied by payment in the amount of the aggregate exercise
price for the Common Stock so purchased, which payment shall be in the form
specified in Section 5(i) below. The Company shall not be obligated to issue,
transfer or deliver a certificate of Common Stock to any Optionee, or to his
personal representative, until the aggregate exercise price has been paid for
all shares for which the Option shall have been exercised and adequate provision
has been made by the Optionee for satisfaction of any tax withholding
obligations associated with such exercise. During the lifetime of an Optionee,
Options are exercisable only by the Optionee.
(i) Payment Upon Exercise of Option.
Upon the exercise of any Option, the aggregate exercise price shall be
paid to the Company in cash or by certified or cashier's check. In addition,
upon approval of the Plan Administrator, an Optionee may pay for all or any
portion of the aggregate exercise price by (i) delivering to the Company shares
of Common Stock previously held by such Optionee, (ii) having shares withheld
from the amount of shares of Common Stock to be received by the Optionee or
(iii) delivery of an irrevocable subscription agreement obligating the Optionee
to take and pay for the shares of Common Stock to be purchased within one year
of the date of such exercise. The shares of Common Stock received or withheld by
the Company as payment for shares of Common Stock purchased upon the exercise of
Options shall have a fair market value at the date of exercise (as determined by
the Plan Administrator) equal to the aggregate exercise price (or portion
thereof) to be paid by the Optionee upon such exercise.
(j) Rights as a Shareholder.
An Optionee shall have no rights as a shareholder with respect to any
shares covered by an option until such Optionee becomes a record holder of such
shares, irrespective of whether such Optionee has given notice of exercise.
Subject to the provisions of Section 5(m) hereof, no rights shall accrue to an
Optionee and no adjustments shall be made on account of dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights declared on, or created in, the Common Stock for which the
record date is prior to the date the Optionee becomes a record holder of the
shares of Common Stock covered by the Option, irrespective of whether such
Optionee has given notice of exercise.
(k) Transfer of Option.
Options granted under this Plan and the rights and privileges conferred
by this Plan may not be transferred, assigned, pledged or hypothecated in any
manner (whether by operation of law or otherwise) other than by will or by
applicable laws of descent and distribution or, with respect to Non-Statutory
Stock Options, pursuant to a qualified domestic relations order, and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of
any right or privilege conferred by this Plan contrary to the provisions hereof,
or upon the sale, levy or any attachment or similar process upon the rights and
privileges conferred by this Plan, such Option shall thereupon terminate and
become null and void.
(l) Securities Regulation and Tax Withholding.
(1) Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such shares
shall comply with all relevant provisions of law, including, without limitation,
any applicable state securities laws, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations thereunder and the requirements of
any stock exchange upon which such shares may then be listed, and such issuance
shall be further subject to the approval of counsel for the Company with respect
to such compliance, including the availability of an exemption from registration
for the issuance and sale of such shares.
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The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any
shares under this Plan, or the unavailability of an exemption from registration
for the issuance and sale of any shares under this Plan, shall relieve the
Company of any liability with respect to the nonissuance or sale of such shares.
As a condition to the exercise of an Option, the Plan Administrator may
require the Optionee to represent and warrant in writing at the time of such
exercise that the shares are being purchased only for investment and without any
then-present intention to sell or distribute such shares. At the option of the
Plan Administrator, a stop-transfer order against such shares may be placed on
the stock books and records of the Company, and a legend indicating that the
stock may not be pledged, sold or otherwise transferred unless an opinion of
counsel is provided stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on the certificates representing
such shares in order to assure an exemption from registration. The Plan
Administrator also may require such other documentation as may from time to time
be necessary to comply with federal and state securities laws. THE COMPANY HAS
NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES OF STOCK
ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) As a condition to the exercise of any Option granted
under this Plan, the Optionee shall make such arrangements as the Plan
Administrator may require for the satisfaction of any federal, state or local
withholding tax obligations that may arise in connection with such exercise.
(3) The issuance, transfer or delivery of certificates of
Common Stock pursuant to the exercise of Options may be delayed, at the
discretion of the Plan Administrator, until the Plan Administrator is satisfied
that the applicable requirements of the federal and state securities laws and
the withholding provisions of the Code have been met.
(m) Stock Dividend, Reorganization or Liquidation.
(1) If (i) the Company shall at any time be involved in a
transaction described in Section 424(a) of the Code (or any successor provision)
or any "corporate transaction" described in the regulations thereunder; (ii) the
Company shall declare a dividend payable in, or shall subdivide or combine, its
Common Stock or (iii) any other event with substantially the same effect shall
occur, the Plan Administrator shall, with respect to each outstanding Option,
proportionately adjust the number of shares of Common Stock and/or the exercise
price per share so as to preserve the rights of the Optionee substantially
proportionate to the rights of the Optionee prior to such event, and to the
extent that such action shall include an increase or decrease in the number of
shares of Common Stock subject to outstanding Options, the number of shares
available under Section 4 of this Plan shall automatically be increased or
decreased, as the case may be, proportionately, without further action on the
part of the Plan Administrator, the Company or the Company's shareholders.
(2) If the Company is liquidated or dissolved, the Plan
Administrator shall allow the holders of any outstanding Options to exercise all
or any part of the unvested portion of the Options held by them; provided,
however, that such Options must be exercised prior to the effective date of such
liquidation or dissolution. If the Option holders do not exercise their Options
prior to such effective date, each outstanding Option shall terminate as of the
effective date of the liquidation or dissolution.
(3) The foregoing adjustments in the shares subject to
Options shall be made by the Plan Administrator, or by any successor
administrator of this Plan, or by the applicable terms of any assumption or
substitution document.
(4) The grant of an Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
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6. EFFECTIVE DATE; TERM.
This Plan shall be effective as of April 25, 1997. Incentive Stock
Options may be granted by the Plan Administrator from time to time thereafter
until April 24, 2002. Non-Statutory Stock Options may be granted until this Plan
is terminated by the Board in its sole discretion. Termination of this Plan
shall not terminate any Option granted prior to such termination. Any Incentive
Stock Options granted by the Plan Administrator prior to the approval of this
Plan by a majority of the shareholders of the Company shall be granted subject
to ratification of this Plan by the shareholders of the Company within 12 months
after this Plan is adopted by the Board, and if shareholder ratification is not
obtained, each and every Incentive Stock Option shall become a Non-Statutory
Stock Option.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. SHAREHOLDERS AGREEMENT.
Upon exercise of any Options granted pursuant to this Plan, all
Optionees shall .execute and become parties to the then current shareholders
agreement of the Company.
9. NO RIGHT TO OPTIONS OR TO EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way constitute
any form of agreement or understanding binding on the Company or any Related
Corporation, express or implied, that the Company or any Related Corporation
will employ or contract with an Optionee for any length of time.
10. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
11. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified by
the Company for all reasonable expenses and liabilities of any type or nature,
including attorneys' fees, incurred in connection with any action, suit or
proceeding to which they or any of them are a party by reason of, or in
connection with, this Plan or any Option granted under this Plan, and against
all amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Company), except to the
extent that such expenses relate to matters for which it is adjudged that such
Plan Administrator member is liable for willful misconduct; provided, that
within 15 days after the institution of any such action, suit or proceeding, the
Plan Administrator member involved therein shall, in writing, notify the
.Company of such action, suit or proceeding, so that the Company may have the
opportunity to make appropriate arrangements to prosecute or defend the same.
12. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate this
Plan and Options granted under this Plan; provided, that no amendment with
respect to an outstanding Option shall be made over the objection of the
Optionee thereof; and provided further, that the approval of the holders of a
majority of the Company's outstanding shares of voting capital stock is required
within 12 months before or after the adoption by
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the Plan Administrator of any amendment that will permit the granting of Options
to a class of persons other than those currently eligible to receive Options
under this Plan or that would cause this Plan to no longer comply with Rule
16b-3 under the Exchange Act or any other rule of the Securities and Exchange
Commission or other regulatory requirements. Without limiting the generality of
the foregoing, the Plan Administrator may modify grants to persons who are
eligible to receive Options under this Plan who are foreign nationals or
employed outside the United States to recognize differences in local law, tax
policy or custom.