UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Definitive Proxy Statement
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CHINA RESOURCES DEVELOPMENT, INC. - -------------------------------------------------------------------------------- (Name
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Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
China Resources Development, Inc.
(Name of Registrant as Specified In Its Charter)
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not applicable
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________________________________________________________________________________ [LOGO] -----------------------------------
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS To Be Held OctoberSTOCKHOLDERSTO BE HELD ON NOVEMBER 12,
20002002
To the
Shareholders: Notice is hereby givenStockholders of China Resources Development, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of
ShareholdersStockholders (the"Annual Meeting"“Annual Meeting”) ofCHINA RESOURCES DEVELOPMENT, INC.China Resources Development, Inc., a Nevada corporation (the"Company"“Company”), will be held atthe offices of Shenzhen Xubu Investment Company Limited,2:30 p.m., Hong Kong time, on November 12, 2002 at 26/F, Securities Building, 5020 Binhe Road, Fu Tian District, Shenzhen Province,People'sPeople’s Republic of China,on October 12, 2000, at 2:30 p.m., local time,for the following purposes:
1.
To
consider and ratify the issuance of 244,897 shares of the Company's Common Stock; 2. To consider and vote upon an amendmentelect two Class III members to theCompany's AmendedCompany’s Board of Directors to hold office until the Company’s annual meeting of stockholders to be held in 2005 andRestated 1995 Stock Option Plan to modify the pricing procedure for the exercise of nonqualified stock optionsuntil their successors are duly elected andto eliminate the requirement of shareholder approval for any modification of the Plan that would materially increase the benefits accruing to participants in the Plan; 3.qualified;
2.
To
elect directors in Class I; 4. To consider and vote upon the ratification ofratify the appointment ofErnst & YoungHorwath Gelfond Hochstadt Pangburn, P.C. as independent auditors of theCompany's independent accountantsCompany for the fiscal year ending December 31,2000;2002; and5.
3.
To transact such other business as may properly come before the Annual Meeting and any
adjournmentadjournments orpostponementpostponements thereof.Shareholders
All stockholders are cordially invited to attend; however, only stockholders of record at the close of business on
September 14, 2000,October 8, 2002 are entitled to notice of and to vote at the Annual Meeting or anyadjournment or postponementadjournments thereof.
The
Company's annual report on Form 10-K forBoard of Directors recommends that you vote FOR theyear ended December 31, 1999, is enclosed for your convenience. Please signBoard’s nominees to serve as Class III directors, anddate the enclosed proxy card and return it promptly in the accompanying envelope (no postage required if mailed in the United States) to ensure that your shares will be represented at the Annual Meeting. If you attend the Annual Meeting, you may vote your shares in person even if you have previously submitted a proxy.FOR Proposal Two.
By Order of the Board of Directors
/s/Wong
WahWa On----------------------------------------- Wong Wah OnCorporate Secretary
Hong Kong
October
2, 20008, 2002
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
CHINA RESOURCES DEVELOPMENT, INC.
Room
2005, 20/F., Universal Trade2105West Tower, Shun Tak Centre
3-5A Arbuthnot200 Connaught Road
Central,C.Sheung Wan, Hong Kong
----------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF
SHAREHOLDERSSTOCKHOLDERSTO BE HELD ON
OCTOBERNOVEMBER 12,
2000 This proxy statement and the2002
INTRODUCTION
The accompanying proxy
card are being furnished in connection with the solicitation of proxiesis solicited by the Board of Directors (the “Board”) of China Resources Development, Inc. (the “Company,” “we”,a Nevada corporation (the "Company"), from holders of the Company's outstanding shares of Common Stock, par value $0.001 per share (the "Common Stock"),“us” andfrom the holder of the Company's outstanding shares of Series B preferred stock (the "Preferred Stock"), forsimilar terms) to be voted at the Annual Meeting ofShareholdersStockholders to be heldOctoberon Tuesday, November 12,2000,2002 (the “Annual Meeting”), and any adjournments thereof. When such proxy is properly executed and returned, the shares it represents will be voted at the meeting as directed. If no specifications are indicated, the shares will be voted in accordance with the recommendation of the Board with respect to each matter submitted to the Company’s stockholders for approval. Abstentions and broker non-votes will not be voted, but will be counted for determining the presence of a quorum.
The cost of preparing and mailing the enclosed proxy materials, which is estimated to be approximately $25,000, will be borne by the Company. The Company may use the services of its officers and employees (who will receive no additional compensation) to solicit proxies. In addition to the use of the mails, proxies may be solicited by telephone, Mailgram, facsimile, telegraph, cable and personal interview. The Company intends to request banks and brokers holding shares of the Company’s Common Stock to forward copies of the proxy materials to those persons for whom they hold shares and to request authority for the
purposes set forth in the accompanying notice (the "Annual Meeting").execution of proxies. The Company willbearreimburse banks and brokers for their out-of-pocket expenses. The Company may also retain thecostsservices ofsoliciting proxies from its shareholders. In additiona solicitation firm tosoliciting proxiesaid in the solicitation of proxies. If it does so, the Company will pay the fees and expenses of such firm.
A list of stockholders entitled to vote at the Annual Meeting will be available for examination by
mail, directors, officers and employeesany stockholder for a proper purpose during normal business hours at the offices of the Companywithout receiving additional compensation therefor, may solicit proxies by telephone, by telegram or in person. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials tofor a period of at least ten days preceding thebeneficial owners of Common Stock held of record by such persons, and the Company will reimburse such brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith. This proxy statement is first being mailed to shareholders of the Company on or about October 2, 2000.Annual Meeting.VOTING AT THE ANNUAL MEETING
The shares entitled to vote at the Annual Meeting consist of shares of the Company’s Common Stock and Series B Preferred Stock, with each share entitling the holder to one vote. At the close of business on
September 14, 2000,October 8, 2002, the record date fordetermining shareholders entitled to notice of and to vote atthe Annual Meeting,(the "Record Date"),there were issued and outstandingand entitled to vote approximately 837,797837,823 shares of the Company’s Common Stock and 320,000 shares of the Company’s Series B Preferred Stock.AllThis Proxy Statement and the accompanying form ofthe outstanding shares of Common Stock and Preferred Stockproxy areentitledfirst being sent tovotestockholders onall matters which properly come before the annual meeting, and each shareholder will be entitled to one vote for each share of Common StockorPreferred Stock held.about October 10, 2002.
Each proxy that is properly signed and received prior to the Annual Meeting will, unless revoked, be voted in accordance with the instructions on such proxy. If no instruction is indicated, the shares will be voted FOR
ratification of the issuance of shares of Common Stock, FOR approval of the amendment to the Amended and Restated 1995 Stock Option Plan, FORthe election of the nominees for director listed in this proxy statement, FOR ratification of the appointment ofErnst & Young,Horwath Gelfond Hochstadt Pangburn, P.C., and FOR the approval of such other business that may properly come before the Annual Meeting or any postponement or adjournment thereof. Ashareholderstockholder who has given a proxy may revoke such proxy at any time before it is voted at the Annual Meeting by delivering a written notice of revocation or duly executed proxy bearing a later date to the Secretary of the Company or by attending the meeting and voting in person.
A quorum of
shareholdersstockholders is necessary to take action at the Annual Meeting. A majority of the outstanding shares of the Company’s Common Stock and Preferred Stock, counted together,of the Company,represented in person or by proxy, will constitute a quorum. Votes cast by proxy or in person at the Annual Meeting will be tabulated by theinspectorsinspector of election appointed for the Annual Meeting. Theinspectorsinspector of election will determine whether or not a quorum is present at the Annual Meeting. Theinspectorsinspector of election will treat abstentions as shares of Common Stock or Preferred Stock that are present and entitledto vote for purposes of determining the presence of a quorum. Under certain circumstances, a broker or other nominee may have discretionary authority to vote certain shares of Common Stock if instructions have not been received from the beneficial owner or other person entitled to vote. If a broker or nominee indicates on the proxy that it does not have instructions or discretionary authority to vote certain shares of Common Stock on a particular matter, those shares will not be considered as present for purposes of determining whether a quorum is present or whether a matter has been approved.
The two nominees for director who receive the greatest number of votes cast in person or by proxy at the Annual Meeting shall be elected as Class III directors of the Company. The vote required for adoption of the other proposals herein is the affirmative vote of a majority of the shares of Common Stock and Preferred Stock, counted together, present in person or represented by proxy at the Annual Meeting; and, for purposes of determining
shareholderstockholder approval of such proposals, abstentions will be treated as shares of Common Stock or Preferred Stock voted against adoption of such proposals.
2
CONVENTIONS
Unless otherwise specified, all references in this proxy statement to "U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or "RMB" or "Yuan" are to Renminbi Yuan, which is the lawful currency of the People's Republic of China ("China" or "PRC"). The Company and Billion Luck maintain their accounts in U.S. Dollars and Hong Kong Dollars, respectively. HARC and
the Operating Subsidiariesits subsidiaries maintain their accounts in Renminbi. The financial statements of the Company and its subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars are for theconveniencecon venience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange as quoted by the People's Bank of China (the "PBOC Rate") onJune 30, 2000,December 31, 2001, which was approximately U.S.$1.00 =Rmb8.28.Rmb 8.28. Translations from Hong Kong Dollars to U.S. Dollars have been made at the single rate of exchange as quoted by the Hongkong and Shanghai Banking Corporation Limited onJune 30, 2000,December 31, 2001, which was approximately US$1.00 = HK$7.80. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. No representation is made that the Renminbi or U.S. Dollaramountsamo unts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.
References to "Billion Luck" are to Billion Luck Company Ltd., a British Virgin Islands company, which is a wholly-owned subsidiary of the Company.
References to "Company" and "Registrant" are to China Resources Development, Inc., and include, unless the context requires otherwise, the operations of
Billion Luck, HARC, First Supply, and Second Supply (all as hereinafter defined).its subsidiaries.
References to
"Farming Bureau""HARC" are totheHainan Cihui Industrial Company Limited (formerly known as Hainan Zhongwei AgriculturalReclamation GeneralResources Companya division of the Ministry of Agriculture, the PRC government agency responsible for matters relating to agriculture. References to "First Supply" are to First Goods And Materials Supply And Sales Corporation,Limited), a company organized in the PRC, and awholly-ownedwholly owned subsidiary ofHARC.References to "Guilinyang Farm" are to Hainan Province Guilinyang State Farm, a PRC entity which is owned and controlled by the Farming Bureau. References to "Hainan" are to Hainan Province of the PRC. References to "Hainan State Farms" are to the rubber farms in Hainan controlled by the Farming Bureau. References to "HARC" are to Hainan Zhongwei Agricultural Resources Company Limited, a company organized in the PRC, whose capital is owned 56% by Billion Luck, 39% by the Farming Bureau and 5% bythe Company.References to "Operating Subsidiaries" are to the consolidated operations, assets and/or activities, as the context indicates, of First Supply, and Second Supply.
References to the "PRC" or "China" include all territory claimed by or under the control of the Central Government, except Hong Kong, Macau, and Taiwan.
References to "Second Supply" are to Second Goods And Materials Supply And Sales Corporation, a company organized in the PRC and a wholly-owned subsidiary of HARC. BENEFICIAL
3
SECURITY OWNERSHIP OF CERTAIN
SHAREHOLDERSBENEFICIAL OWNERSOF MORE THAN 5% OF THE COMPANY'S COMMON STOCKAND MANAGEMENT
The following table sets forth certain information known to the
knowledgeCompany regarding the beneficial ownership ofmanagement,shares of Common Stock and Series B Voting Preferred Stock as of September 30, 2002 by (i) each personor entity who isknown by thebeneficialCompany to be the owner of more than 5% of the outstanding shares of Common Stock and Preferred Stock combined, (ii) each of the Company's directors, (iii) each of the Company's executive officers, and (iv) all executive officers and directors as a group. Unless otherwise indicated, each person has sole investment and voting power with respect to all shares shown as beneficially owned.
Unless otherwise indicated the address of each beneficial owner is Room 2105, West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong.
Amount and Nature of
Beneficial Ownership(5)
Percent
Name and Address of
Common Stock
Preferred Stock
of
Beneficial Owner
# of Shares
% of Class
# of Shares
% of Class
Vote
Ching Lung Po
73,480(1)
8.4%
320,000(1)
100%
32.9%
Tam Cheuk Ho
284,897(2)
32.5%
─
─
23.8%
Wong Wah On
289,217(3)
33.0%
─
─
24.2%
Wan Yin Ling
─
─
─
─
─
Ng Kin Sing
─
─
─
─
─
Lo Kin Cheung
─
─
─
─
─
Worlder International
Company Limited
48,600(4)
5.8%
─
─
4.2%
21/F Great Eagle Centre
23 Harbour Road
Hong Kong
Anka Capital Limited
244,897
29.2%
─
─
21.2%
Winsland Capital Limited
33,480
4.0%
320,000
100%
30.5%
TurstNet Chambers
P.O. Box 3444, Road Town
Tortola, British Virgin Islands
Executive Officers and
Directors as a group
(of 6 persons)
402,697(1)(2)(3)
42.0%
320,000
100%
56.6%
__________
(1)
Shares registered to Winsland Capital Limited, a company beneficially owned by Mr. Ching. Also includes an option granted to Mr. Ching to purchase 40,000 shares of Common
Stock or Series B Preferred Stock outstanding asStock.(2)
Includes 244,897 shares registered to Anka Capital Limited, a company owned 50% by Mr. Tam. Mr. Tam disclaims beneficial ownership of
September 14, 2000,thenumber ofshares owned byeach such person andAnka Capital Limited, except to thepercentageextent of his pecuniary interest in the shares. Also includes an option granted to Mr. Tam to purchase 40,000 shares of Common Stock.(3)
Includes 244,897 shares registered to Anka Capital Limited, a company owned 50% by Mr. Wong. Mr. Wong disclaims beneficial ownership of the
outstandingsharesrepresented thereby.
(4)
Includes 13,500 shares registered to Silverich Limited, a wholly-owned subsidiary of Worlder International Company Limited.
(5)
The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of thesesaid shares.
(2) Of
4
Proposal 1
ELECTION OF DIRECTORS
Nominees And Directors
Article VIII of the 48,600Company’s Articles of Incorporation permits the Board of Directors to fix the number of directors at not less than three nor more than 25. At the annual meeting of stockholders held in 1996, an amendment to the Articles of Incorporation was approved, dividing the directors into three classes. Pursuant to the amendment, one class of directors is elected each year, to serve a three-year term.
Two Class III directors will be elected at the Annual Meeting. The nominees for Class III directors, if elected, will serve until the annual meeting of stockholders to be held in 2005 and until his successor is duly elected and qualified. Wan Ying Lin and Lo Kin Cheung both currently serve as Class III directors.
Both nominees have consented to being named herein and have indicated their intention to serve as Class III directors of the Company, if elected. Unless authority to do so is withheld, the persons named as proxies will vote the shares represented by such proxies for the election of Common Stock indicated, Worlder International
Company Limited ("Worlder") directly owns 35,100 shares,the named nominees. In case any of the nominees become unavailable for election to the Board of Directors, which is not anticipated, the persons named as proxies shall have full discretion and authority to vote or refrain from voting for any other nominees in accordance with their judgment. Vacancies on the Board may be filled by the remaining 13,500 shares represent sharesdirector or directors, even though less than a quorum, for the unexpired term of Common Stock owned by Silverich Limited, which
is wholly-owned by Worlder.
SHARE OWNERSHIP OF OFFICERS AND DIRECTORS
such vacant position.
The following table sets forth certain information with respectpersons have been nominated for election to the beneficial ownershipBoard of Common Stock as of September 14, 2000, by (i) eachDirectors:
Name | Age | Position | ||
Wan Ying Lin | 53 | Director | ||
Lo Kin Cheung | 38 | Director |
Business Experience
Mr. Wan Ying Lin has been a director of the Company (ii) each executive officersince February 4, 1998, and also serves as a member of the Audit committee. Mr. Wan graduated from the Guangxi Liuzhou Institute of Medical Specialty specializing in administration and management. From January 1986 through December 1987, he was the manager of Lam Ko Mould Company in charge of the China marketing and development division in Hong Kong. Then, in January 1988 through February 1993, he worked as the marketing manager of Wai Tong Trading Company in Hong Kong. In 1993, he joined the Hong Kong Prestressing Concrete Engineering Company Limited, where he serves as manager.
Mr. Lo Kin Cheung has been a director of the Company namedsince May 30, 2000, and also serves as a member of the Audit Committee. From September 2001 to present, Mr. Lo has been the chief financial officer of Lee Fung - Asco Printers Holdings Limited, a Hong Kong listed company, where he is responsible for the overall corporate financial operations. From March 1998 to August 2001, Mr. Lo was the executive director of Wiltec Holdings Limited, a Hong Kong listed company, where he was responsible for corporate development and day-to-day operations. From July 1986 until March 1998, Mr. Lo was the principal at Ernst & Young, Hong Kong. He is a fellow of both the Hong Kong Society of Accountants and the Chartered Association of Certified Accountants. He holds a Bachelor’s degree of Science from the University of Hong Kong.
5
Information Concerning the Board of Directors
During the year ended December 31, 2001 the Company’s Board of Directors held 6 meetings. Each member of the Board participated in each action of the Board.
Committees of the Board of Directors
The Audit Committee, which currently consists of Ng Kin Sing, Wan Ying Lin and Lo Kin Cheung, reviews the professional services provided by our independent auditors, the independence of our auditors from our management, our annual financial statements and our system of internal accounting controls. The Audit Committee also reviews other matters with respect to our accounting, auditing and financial reporting practices and procedures as it may find appropriate or may be brought to its attention. The Company’s Board of Directors has adopted a written Charter of the Audit Committee. The members of the Audit Committee are all independent, as defined in the summaryNational Association of Securities Dealers’ listing standards. The Audit Committee met on 4 occasions during the year ended December 31, 2001.
The Company does not have a formal compensation table,committee. The Board of Directors, acting as a compensation committee, periodically meets to discuss and (iii) alldeliberate on issues surrounding the terms and conditions of executive officer compensation, including base salaries, bonuses, awards of stock options and reimbursement of certain business related costs and expenses.
The Company does not have a formal nominating committee. The Board of Directors, acting as a nominating committee, recommends candidates who will be nominated as management’s slate of directors and executive officersat each annual meeting of stockholders. The Board of Directors will also consider candidates for directors nominated by stockholders. A stockholder who wishes to submit a candidate for consideration at the annual meeting of stockholders to be held in 2003, must notify the Secretary of the Company, as a group. Allin writing, no later than June 12, 2003. The written notice must include information with respectabout each proposed nominee, including name, age, business address, principal occupation, shares beneficially owned and other information required to beneficial ownership has
been furnished bybe included in proxy solicitations. The nomination notice must also include the respective director or executive officer (innominating stockho lder’s name and address, the casenumber of shares beneficially owned and a statement that such stockholder intends to nominate his candidate. A statement from the candidate must also be furnished, indicating the candidate’s desire and ability to serve as a director. Adherence to these procedures is a prerequisite to a stockholder’s right to nominate a candidate for director at the annual meeting.
Audit Committee Report
The following statement made by each of them). Unless otherwise indicated in a
footnote, each stockholder possesses sole voting and investment power with
respect to the shares indicated as beneficially owned.
The Audit Committee reviews our financial reporting process on behalf of the Board of Directors ofDirectors. Management has the Company.
FINANCIAL INFORMATION
The following financial information and management's discussion and
analysis of financial condition and results of operations are excerpted from the
Company's Form 10-Q quarterly reportprimary responsibility for the quarterly period ended June 30,
2000. This information supplements the information contained in the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1999, a copy
of which is provided herewith and incorporated herein by reference.
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Amounts in thousands, except share and per share data)
Management represented to the committee that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Amounts in thousands)
In addition, the committee has discussed with the independent auditors the auditor's independence from the Company and Article 10its management, including the matters in the written disclosures required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
6
The committee also discussed with our independent auditors the overall scope and plans for their respective audit. The committee meets with the independent auditors with and without management present, to discuss the results of Regulation S-X. Accordingly, they do not
include alltheir examinations, the evaluations of the informationCompany's internal controls, and footnotes required by generally
accepted accounting principles for completethe overall quality of our financial statements. reporting.
In reliance on the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results forreviews and discussions referred to above, the three-month and six-month
periods ended June 30, 2000, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000.
2. DISCONTINUED OPERATIONS AND BUSINESS RESTRUCTURING
In the fourth quarter of 1999, the Company initiated a plancommittee recommended to
restructure its business in Hainan, the PRC. On March 3, 2000, the Board of Directors, and the board has approved, that the audited consolidated financial statements be included in the Company’s Form 10-K for the year ended December 31, 2001, for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee
of the Board of Directors:
/s/ Ng Kin Sing
/s/ Wan Ying Lin
/s/ Lo Kin Cheung
Report of the Board of Directors on Executive Compensation
The following statement made by the Board of Directors, sitting as a Compensation Committee, shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, and shall not otherwise be deemed filed under either of such Acts.
The Company does not have a formal compensation committee. The Board of Directors, acting as a compensation committee, periodically meets to discuss and deliberate on issues surrounding the terms and conditions of executive officer compensation, including base salaries, bonuses, awards of stock options and reimbursement of certain business related costs and expenses.
In determining the compensation of the Company's executive officers, the Board of Directors takes into account all factors which it considers relevant, including business conditions, in general, and in the Company's line of business during the year in light of such conditions, the market compensation for executives of similar background and experience, the performance of the Company, approved a business restructuring
involving HARCin general, and certain subsidiaries of HARC (the "Restructuring").
The Restructuring resulted in the discontinuation of substantially allperformance of the existing operationsspecific executive officer under consideration, including the business area of the Company asfor which such executive officer is responsible. In light of December 31, 1999,
including its two principal linesthese factors, the Board of business,Directors determined that the distributionpayment of natural rubber and the procurement of materials, supplies and other
agricultural products (collectively the "Rubber and Procurement
Operations"). The financial data relateddiscretionary bonuses to the Company's indirect
investments in the Rubber and Procurement Operations prior to December
31, 1999 is classified as discontinued operationsexecutive officers was not appropriate for all periods
presented. The financial data of the Rubber and Procurement Operations
reflects the historical results of operations and cashflows of the
businesses that were considered part of the business segments of the
Rubber and Procurement Operations during each respective period.
On March 3, 2000, HARC and certain of its subsidiaries entered into an
Assets and Staff Transfer Agreement with the Farming Bureau, pursuant
to which HARC and certain of its subsidiaries transferred all the
assets, liabilities and staff related to the discontinued operations to
the Farming Bureau, effective from January 1, 2000. The consideration
for the net assets transferred was determined based on the lower of
their net book value or their fair value, as determined by an
independent professional valuer, as of December 31, 1999. Based on the
valuation, there were no material differences between the fair value
and the net book value (as determined under US GAAP) of those assets
and liabilities as of December 31, 1999, which was RMB70,527,000.
Net sales of the Rubber and Procurement Operations included in
discontinued operations totaled RMB105,315,000 for the six months ended
June 30, 1999. Loss from discontinued operations of Rubber and
Procurement Operations of RMB4,701,000 for the three months ended June
30, 1999 is reported without set-off of any income tax expenses.
The net assets of the Rubber and Procurement Operations were as
follows:
December 31,
1999
RMB
Current assets 110,703
Property and equipment - net 1,547
Cost method investments 928
Current liabilities (42,651)
--------
Net assets of discontinued operations 70,527
=========
The Company and its subsidiaries accrued certain expenses totaling RMB3
million in relation to the Restructuring in the fourth quarter of 1999.
There were no other significant expenses in relation to the
Restructuring in the six months ended June 30, 2000.
Notwithstanding the discontinuation of the Rubber and Procurement
Operations, the Company has contemplated setting up several new lines
of business as part of the Restructuring. As of June 30, 2000, the
Company has set up two lines of business, namely, supermarket
operations and processing and sale of timber.
3. BUSINESS ACQUISITION
The Company has determined to engage in the information technology
market. As at June 30, 2000, the Company entered into an Acquisition
Agreement to acquire an 80% equity interest in Silver Moon Technologies
Limited, a British Virgin Islands corporation ("Silver Moon"), for
total consideration of US$1,500,000 (the "Purchase Consideration"). The
Company has satisfied the Purchase Consideration by issuing to Silver
Moon's former sole equity owner, E-link Investment Limited ("E-link"),
244,897 shares of the Company's unregistered restricted common stock,
$0.001 par value. The Acquisition Agreement is included in the
Company's Current Report on Form 8-K, dated June 30, 2000. The
principal business of Silver
Moon, and its wholly-owned subsidiary, Sky Creation Technology Limited,
a Hong Kong company, is the provision of online Internet healthcare
content, through its website, medi-china.com, which offers
health-related content in both English and Chinese, with a focus on
Chinese herbal medicine and therapies. The closing date of the
acquisition was on July 12, 2000.
4. INVENTORIES
June 30, December 31,
2000 1999
RMB RMB
Raw materials 182 -
Work in progress 1,110 -
Finished goods 1,504 1,702
-------- --------
2,796 1,702
======== ========
5. PROPERTY AND EQUIPMENT, NET
June 30, December 31,
2000 1999
RMB RMB
At cost:
Buildings and leasehold improvements 5,906 5,906
Machinery, equipment and motor
vehicles 10,638 6,392
-------- --------
16,544 12,298
Accumulated depreciation: (2,994) (2,443)
-------- --------
Net book value 13,550 9,855
======== ========
6. SEGMENT FINANCIAL INFORMATION
Six months ended
June 30, 2000
RMB
Net sales to external customers:
Supermarket operations, net sales to
unaffiliated customers 2,431
Processed timber, net sales to
Unaffiliated customers 1,282
----------
Total consolidated net sales 3,713
==========
Segment loss:
Supermarket operations (53)
Processed timber (695)
----------
Total segment profit/(loss) (748)
Reconciling items:
Corporate expenses (8,120)
Gain on trading of marketable securities 10,486
Interest income 4,574
Exchange loss (866)
----------
Total consolidated profit before
income taxes 5,326
==========
June 30,
2000
RMB
Segment assets:
Supermarket operations 6,306
Processed timber 8,422
----------
Total segment assets 14,728
Reconciling items:
Corporate assets 208,204
Investments 116,714
----------
Total consolidated assets 339,646
==========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATION
RESULTS OF OPERATIONS
The following table shows the selected unaudited condensed consolidated
income statement data of the Company and its subsidiaries for the three months
and six months ended June 30, 2000 and 1999. The data should be read in
conjunction with the unaudited Condensed Consolidated Financial Statements of
the Company and related notes thereto.
The discussions below are presented in the Company's primary operating
currency, which is the Renminbi Yuan ("RMB"). For information purposes only, the
amounts may be translated into U.S. dollars at an exchange rate of $1.00 =
RMB8.28, which represents the approximate single rate of exchange as quoted by
the People's Bank of China on June 30, 2000. No representation is made that RMB
amounts could have been, or could be, converted into U.S. dollars at that rate
or any other rate.
(Amounts in thousands) Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
RMB RMB RMB RMB
Net sales:
Supermarket operations 1,280 - 2,431 -
Processed timber 1,036 - 1,282 -
---------- ---------- ---------- ----------
2,316 - 3,713 -
---------- ---------- ---------- ----------
Gross profit/(loss) (232) - (131) -
Gross profit/(loss) margin (%) (10.02) - (3.53) -
Income/(loss) from continuing operations
before income taxes (3,185) 4,007 5,326 1,547
Income taxes 187 (620) (1,770) (620)
---------- ---------- ---------- ----------
Income/(loss) from continuing operations
before minority interest (2,998) 3,387 3,556 927
Minority interests 814 (1,874) (3,603) (1,874)
---------- ---------- ---------- ----------
Income/(loss) from continuing operations (2,184) 1,513 (47) (947)
Discontinued operations - (1,285) - (3,174)
---------- ---------- ---------- ----------
Net income/(loss) (2,184) 228 (47) (4,121)
========== ========== ========== ==========
NET SALES AND GROSS PROFIT
The Company previously engaged in marketing and distribution of natural
rubber and rubber products produced by the Hainan State Farms and non-state
farms in the PRC, and procurement of production materials and supplies,
including chemicals, farm equipment and machinery, automobiles and other
commodities, for use primarily by the Hainan State Farms and other unaffiliated
customers. Pursuant to a Shareholders' Agreement on Business Restructuring dated
March 3, 2000, among the Company, Billion Luck and the Farming Bureau, the
natural rubber distribution business and the procurement of materials and
supplies business ceased effective as of January1, 2000. Pursuant to an Assets
and Staff Transfer Agreement dated March 3, 2000, among the Farming Bureau,
HARC, First Supply, Second Supply and Sales Centre, the assets, liabilities and
staff related to the ceased businesses were transferred to the Farming Bureau
effective as of January 1, 2000. The restructuring resulted in the
discontinuation of substantially all of the existing operations of the Company
as of December 31, 1999. The Company has contemplated setting up several new
lines of business as part of the restructuring. As of June 30, 2000, the Company
has set up two lines of business, the supermarket operation and the processing
and sale of timber. The supermarket operation has gross profit and gross profit
margin of RMB420,000 (US$51,000) and 17.3%, respectively, for the first half of
2000. The sale of processed timber business has a gross loss of RMB551,000
(US$67,000) or 43.0% on sales for the first half of 2000, as the processing
factory is still in the start-up phase and is currently operated at one third of
its full capacity.
For the second quarter of 2000, the supermarket operation has gross
profit and gross profit margin of RMB224,000 (US$27,000) and 17.5%,
respectively, while the processed timber business has a gross loss of RMB455,000
(US$55,000) or 43.9% on sales for the same period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the first half of 2000
were RMB8.2 million (US$995,000), compared to RMB5.4 million (US$651,000) for
the corresponding period in 1999. The increase was mainly attributable to
selling and administrative expenses of HARC, which amounted to RMB2.7 million
(US$326,000) for the first half of 1999 and were grouped in the procurement of
materials and supplies business, which is shown as discontinued operations. For
the first half of 2000, selling and administrative expenses of HARC were grouped
as corporate administrative expenses.
Selling, general and administrative expenses for the second quarter of
2000 were RMB3.8 million (US$458,000), compared to RMB2.8 million (US$344,000)
for the corresponding period in 1999. The increase was mainly attributable to
selling and administrative of HARC, which amounted to RMB1.0 million
(US$122,000) for the second quarter of 1999 and were grouped in the procurement
of materials and supplies business, which is shown as discontinued operations.
For the second quarter of 2000, selling and administrative expenses of HARC were
grouped as corporate administrative expenses.
FINANCIAL INCOME, NET
Net financial income increased by more than thirteen times from
RMB271,000 (US$33,000) for the first half of 1999 to RMB3.7 million (US$448,000)
for the corresponding period in 2000. The increase was mainly attributable to
the interest received in the second quarter of 2000 on a RMB45 million (US$5.4
million) short-term loan to an unaffiliated third party, which amounted to
RMB4.2 million (US$507,000). The increase in interest income was partly offset
by an exchange loss amounting to RMB860,000 (US$104,000), arising from the
conversion of Renminbi to Hong Kong dollars.
Net financial income increased by more than nineteen times from
RMB192,000 (US$23,000) for the second quarter of 1999 to RMB3.7 million
(US$443,000) for the corresponding period in 2000. The increase was also
attributable to the reasons aforementioned.
OTHER INCOME, NET
Other income increased from RMB6.7 million (US$805,000) for the first
half of 1999 to RMB10.5 million (US$1.3 million) for the corresponding period in
2000 and from RMB6.7 million (US$805,000) for the second quarter of 1999 to a
loss of RMB2.5 million (US$300,000) for the corresponding period in 2000. Other
income in 1999 represented the dividend income received on a long-term
investment while the other income/(loss) in 2000 mainly represented a net
gain/(loss) on trading of marketable securities.
DISCONTINUED OPERATIONS
Discontinued operations for the first half of 1999 represented a loss
from operations of the discontinued rubber distribution and procurement of
materials and supplies businesses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's and its subsidiaries' primary liquidity needs are to fund
inventories and trade receivables and to expand business operations. The Company
has financed its working capital requirements primarily through internally
generated cash.
The Company has a working capital surplus of approximately RMB167
million (US$20.2 million) as of June 30, 2000, compared to that of approximately
RMB164 million (US$19.8 million) as of December 31, 1999. Net cash provided by
operating activities for the six months ended June 30, 2000 was approximately
RMB71.2 million (US$8.6 million), as compared to RMB8.4 million (US$1.0 million)
for the corresponding period in 1999. Net cash flows from the Company's
operating activities are attributable to the Company's income and changes in
operating assets and liabilities.
Pursuant to an Assets and Staff Transfer Agreement dated March 3, 2000,
the Farming Bureau purchased assets and assumed liabilities and staff related to
the ceased businesses effective as of January 1, 2000. The purchase price was
the lower of the book value or fair value of the net assets transferred (which
were not materially different), determined as of January 1, 2000, which amounted
to RMB70,527,000 (US$8,518,000).
There has been no other significant change in financial condition and
liquidity since the fiscal year ended December 31, 1999. 2001.
The CompanyBoard of Directors also believes that internally generated funds will be sufficientgranting stock options provides an additional incentive to satisfy its anticipated
working capital needs for at least the next twelve months.
MARKET RISK AND RISK MANAGEMENT POLICIES
All of the Company's sales and purchases are made domestically and are
denominated in Renminbi. Accordingly, the Company and its subsidiaries do not
have material market risk with respectexecutive officers to currency fluctuation. As the reporting
currency of the Company's consolidated financial statements is also Renminbi,
there is no significant translation difference arising on consolidation.
However, the Company may suffer exchange loss when it converts Renminbi to other
currencies, such as Hong Kong dollars or United States dollars.
The Company's interest income is most sensitive to changescontinue in the general level
of Renminbi interest rates. In this regard, changes in Renminbi interest rates
affect the interest earned on the Company's cash equivalents. As at June 30,
2000, the Company's cash equivalents are mainly Renminbi, Hong Kong Dollar and
United States Dollar deposits with financial institutions, bearing market
interest rates without fixed term.
As at June 30, 2000, the Company had short-term investments in
marketable securities in Hong Kong stock market with a total market value of
RMB981,000 (US$119,000). These investments expose the Company to market
risks that may cause the future value of these investments to be lower than the
original cost of such investments at the time of purchase.
YEAR 2000 ISSUE
The Year 2000 issue is the result of information technology systems and
embedded systems using a two-digit format, as opposed to four digits, to
indicate the year. The Company and its subsidiaries use a limited amount of
computer software primarily in connection with their accounting and financial
reporting systems. Such programs have been upgraded so that they are year 2000
compatible. In addition to software issues, certain of the computer hardwareservice of the Company and gives them an interest similar to stockholders in the success of the Company. In the future, the Board of Directors intends to make use of stock options, along with other traditional salary and bonus components of executive compensation packages, to provide incentives to attract and maintain qualified executive officers.
Submitted by the Board of Directors,
Sitting as a Compensation Committee:
/s/ Ching Lung Po
/s/ Tam Cheuk Ho
/s/ Wong Wah On
/s/ Wan Ying Lin
/s/ Ng Kin Sing
/s/ Lo Kin Cheung
7
Compensation Committee Interlocks and Insider Participation
The current Board of Directors includes Ching Lung Po, Tam Cheuk Ho and Wong Wah On, each of whom also serves as an executive officer of the Company. As a result, these directors discuss and participate in deliberations of the Board of Directors on matters relating to the terms of executive compensation. In this regard, a director whose executive compensation is voted upon by the Board of Directors must abstain from such vote.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4, and 5, and amendments thereto, and reports, furnished to the Company for the fiscal year ended December 31, 2001, none of the Company’s directors, officers, or shareholders beneficially owning more than 10% of any class of equity securities of the Company, failed to file any forms necessary under Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows, for each of the three years ended December 31, 2001, the cash and other compensation paid by the Company to its subsidiaries have been replaced with more current
technology.
President and Chief Executive Officer and each other executive officer whose annual compensation was $100,000 or more.
Annual Compensation | Long Term Compensation | |||||
Name and Principal Position | Year | Salary (US$) | Bonus (US$) | Other Annual Compensation (US$) | Securities Underlying Options (1) | All Other Compensation (US$) |
Ching Lung Po, President and Chief Executive Officer | 2001 | 276,923 | -0- | -0- | 40,000 | -0- |
2000 | 276,923 | -0- | -0- | -0- | -0- | |
1999 | 253,846 | -0- | -0- | -0- | -0- | |
Tam Cheuk Ho, Director and Chief Financial Officer | 2001 | 230,769 | -0- | -0- | 40,000 | -0- |
2000 | 230,769 | -0- | -0- | 60 | -0- | |
1999 | 212,538 | -0- | -0- | 60 | -0- | |
Wong Wah On, Director, Secretary and Financial Controller | 2001 | 153,846 | -0- | -0- | 40,000 | -0- |
2000 | 153,846 | -0- | -0- | 60 | -0- | |
1999 | 141,026 | -0- | -0- | 60 | -0- |
__________
(1)
As of June 30, 2000,December 31, 2001, none of the stock options held by Mr. Ching, Mr. Tam and Mr. Wong were exercisable. None of such options was “in-the-money” at such date, as the fair market value (as defined in the Company has not experienced any disruptions or
failures to its normal operationsstock option plan and adjusted as a result of the transition into calendar
year 2000.
PROPOSAL 1 - RATIFICATION OF THE ISSUANCE OF SHARES OF COMMON STOCK
The Board of Directorsone-for-ten reverse stock split) of the Company recommends thatCommon Stock on December 31, 2001, was US$2.78 per share.
8
Option/SAR Grants Table
The following table sets forth information with respect to the shareholders
ratify the issuancegrant of 244,897options to purchase shares of Common Stock during the Company's unregistered restricted
common stock, $0.001 par value ("Newly Issued Shares"). Such shares are listed
for trading on The Nasdaq SmallCap Market, except thatfiscal year ended December 31, 2001 to each person named in the shares are restricted
and therefore not freely tradable thereon. The Newly IssuedSummary Compensation Table.
Potential Realiz-
able Value At
Assumed Rates
Number
% Of
Of Stock Price
Of Shares were issued
in connection with the following transaction:
The Board of Directors of the Company, at a special meeting held on
June 30, 2000, voted to approve the acquisition of an 80% equity interest in
Silver Moon Technologies Limited ("Silver Moon"
Total Options
Appreciation For
Underlying
Granted To
Exercise Or
Option Term
Options
Employees In
Base Price
Expiration
Name
Granted (1)
Fiscal Year (1)
$/Share (2)
Date
5%($), a British Virgin Islands
corporation, for total consideration of U.S. 10%($)
Ching Lung Po
40,000
24.54%
$1,500,000 (the "Purchase
Consideration"). The principal business of Silver Moon and its wholly-owned
subsidiary, Sky Creation Technology Limited, a Hong Kong company, is the
provision of online Internet healthcare content, through its website,
medi-china.com, which offers health-related content in both English and Chinese,
with a focus on Chinese herbal medicine and therapies. 2.95
6/15/04
$18,600
$39,058
Tam Cheuk Ho
40,000
24.54%
$2.95
6/15/04
$18,600
$39,058
Wong Wah On
40,000
24.54%
$2.95
6/15/04
$18,600
$39,058
__________
(1)
The Company has satisfiedgranted no Stock Appreciation Rights ("SARs"). For information regarding stock options issued pursuant to the Purchase ConsiderationCompany's Stock Option Plan, see "Stock Options," hereinbelow.
(2)
As of December 31, 2001, none of the stock options held by issuingMr. Ching, Mr.Tam and Mr. Wong were exercisable. None of such options was "in-the-money" at such date, as the fair market value (as defined in the Company stock option plan) of the common stock on December 31, 2001, was US$2.78 per share.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth information with respect to Silver Moon's former sole equity owner,
E-link Investment Limited ("E-link"), the Newly Issued Shares. The numberexercise of options to purchase shares issued wasof Common Stock during the fiscal year ended December 31, 2001 by each person named in the Summary Compensation Table.
Number of Shares
Values of Unexercised
Shares
($)
Underlying Unexercised
In the Money Options
Acquired on
Value
Options At Year End
at Year End (1)
Name
Exercise
Realized
Exercisable/Unexercisable
Exercisable/Unexercisable
Ching Lung Po
─
─
40,000/40,000
-0- / -0-
Tam Cheuk Ho
─
─
40,000/40,000
-0- / -0-
Wong Wah On
─
─
40,000/40,000
-0- / -0-
__________
(1)
Value based upon a per share price of $6.125, which wason the difference between the closing
bid price of the Company's common stock as quotedCommon Stock on The Nasdaq SmallCap Marketthe OTC Bulletin Board of $2.78 per share on June 29, 2000. Neither E-link nor Silver Moon is affiliated with any officer,
director or significant shareholderDecember 31, 2001, and the exercise price of the Company.
The issuance of the Newly Issued Shares to E-link will effect the
existing shareholders by diluting their shares in the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ISSUANCE OF SHARES OF COMMON STOCK.
PROPOSAL 2 - AMENDMENT OF THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN TO
MODIFY THE PRICING PROCEDURE FOR THE EXERCISE OF NONQUALIFIED STOCK OPTIONS
AND TO ELIMINATE THE REQUIREMENT OF SHAREHOLDER APPROVAL OF ANY MODIFICATION
OF THE PLAN THAT WOULD MATERIALLY INCREASE THE BENEFITS ACCRUING TO
PARTICIPANTS IN THE PLAN
Description of theoptions.
9
Stock Option Plan
The Company adopted the 1995a Stock Option Plan (the "Plan") as of March 31, 1995. On
December 30, 1996, the shareholders of the Company adopted an amendment to the
Plan. The Plan allows the Board of Directors, or a committee thereof at the Board's discretion, to grant stock options to officers, directors, key employees, consultants and affiliates of the Company. Initially, 2,400,00024,000 shares of Common Stock of the Companycommon stock could be issued and sold pursuant to options granted under the Plan. "Incentive Stock Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), may be granted to employees, including officers, whether or not they are members of the Board of Directors, and nonqualified stock options may be granted to any such employee or officer and to directors, consultants, and affiliates who perform substantial services for or on behalf of the Company or its subsidiaries.
The Board of Directors, or a committee appointed by the Board (the "Committee"), is vested with authority to (i) select persons to participate in the Plan; (ii) determine the form and substance of grants made under the Plan to each participant, and the conditions and restrictions, if any, subject to which grants will be made; (iii) interpret the Plan; and (iv) adopt, amend, or rescind such rules and regulations for carrying out the Plan as it may deem appropriate. The Board of Directors has the power to modify or terminate the Plan and from time to time may suspend, and if suspended may reinstate, any or all of the provisions of the Plan except that (i) no modification, suspension, or termination of the Plan may, without the consent of the grantee affected, alter or impair any grant previously made under the Plan; and (ii) no modification shall become effective without prior consent of the shareholders of the Company that would (a) increase the maximum number of shares reserved for issuance under the Plan, except for certain adjustments allowed by the Plan; or (b) change the classes of employees eligible to participate in the Plan; or (c) materially
increase the benefits accruing to participants in the Plan. The proposed
amendment would eliminate the requirement that the Board of Directors must
obtain the consent of the shareholders of the Company for any modification that
would materially increase the benefits accruing to participants in the Plan (see
below).
The Plan provides that the price per share deliverable upon the exercise of each Incentive Stock Option shall not be less than 100% of the fair market value of the shares on the date the option is granted, as the Committee determines. In the case of the grant of any Incentive Stock Option to an employee who, at the time of the grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, such price per share, if required by the Code at the time of grant, shall not be less than 110% of the fair market value of the shares on the date the option is granted. The price per share deliverable upon the exercise of each nonqualified stock option shall not be less than the higher of (i) the net tangible assets
per share of the Company as of the end of the fiscal year immediately preceding
the date of such granting; or (ii) 80% of the fair market value of the shares on the date the option is granted, as the Committee determines. The proposed
amendment would eliminate the "net tangible assets" threshold described in item
(i) in the preceding sentence (see below).
Options may be exercised in whole or in part upon payment of the exercise price of the shares to be acquired. Payment shall be made in cash or, in the discretion of the Committee, in shares previously acquired by the participant or in a combination of cash and shares of Common Stock. The fair market value of shares of Common Stock tendered on exercise of options shall be determined on the date of exercise.
As of July 1, 1995, pursuant to the recommendation of a committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan, the board of directors granted options to the followingcertain officers, directors, employees and directorsconsultant to purchase 24,000 shares of the Company's Common Stock:
Yiu Yat Hung (former director) 6,000 shares
Tam Cheuk Ho 6,000 shares
Han Jian Zhun (former director) 6,000 shares
Wong Wah On 6,000 shares
Li Fei Lie 100,000 shares
In addition, the board of directors granted options to the following employees
and consultant to purchase shares of the Company's Common Stock:
Brender Services Limited 100,000 shares
Cheung Yu Shum 500,000 shares
Tse Chi Kai 300,000 shares
Ma Sin Ling 500,000 shares
Cheung Siu Yin 10,000 shares
Woo Pui Yan 10,000 shares
Kwok Kwan Hung 386,000 shares
Fu Yang Guang 200,000 shares
Lin Jia Ping 270,000 shares All of the stock options were issued in accordance with the terms of the Plan at an exercise price of US$3.78378 (the fair market value of the Common Stock as of July 1, 1995) and would have been exercisable beginning on July 1, 1996, and until July 1, 2005.
10
As of May 20, 1996, the board of directors, in accordance with the recommendation, with respect to stock options granted to directors and officers, of a committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan, reduced the exercise prices of all of the outstanding options to US$0.4242 (the fair market value of the Common Stock as of May 20, 1996). By virtue of this action, the outstanding options are nowwould have been exercisable beginning on May 20, 1997, and until May 20, 2006.
On December 30, 1996, the shareholders of the Company adopted an amendment to the Plan (a) to change the number of shares of Common Stock subject to the Plan to that number of shares which would, in the aggregate and if deemed outstanding, constitute 20% of the Company's then-outstanding shares of Common Stock, as determined at the time of granting stock options, and (b) to allow Nonqualified Stock Options, as defined in the Plan, to be exercisable in less than one year (no currently outstanding options were changed by such amendment).
By virtueyear.
As of June 15, 2001, the board of directors adopted the recommendations of the one-for-ten reverse stock split approved by the shareholders on
December 30, 1996, and made effectivecommittee of disinterested persons appointed by the board of directors on December 31,
1996, the number of shares subject to each outstanding option was reduced by a
factor of ten, and the exercise price for the outstanding options was increased
to US$4.20 per share (the fair market value of the Common Stock as of May 20,
1996, multiplied by ten). Other terms of the outstanding options were not
affected. Also, by virtue of the one-for-ten reverse stock split approved by the
shareholders on May 28, 1999, and made effective by the board of directors on
June 11, 1999, the number of shares subject to each outstanding option was
further reduced by a factor of ten, and the exercise price for the outstanding
options was increased to US$42.0 per share (the fair market value of the Common
Stock as of May 20, 1996, multiplied by 100). Other terms of the outstanding
options were not affected, and the following stock options, which have been
grantedin accordance with respect to 24,000 shares of Common Stock, remain outstanding:
Yiu Yat Hung (former director) 60 shares
Tam Cheuk Ho 60 shares
Han Jian Zhun (former director) 60 shares
Wong Wah On 60 shares
Li Fei Lie 1,000 shares
Brender Services Limited 1,000 shares
Cheung Yu Shum 5,000 shares
Tse Chi Kai 3,000 shares
Ma Sin Ling 5,000 shares
Cheung Siu Yin 100 shares
Woo Pui Yan 1000 shares
Kwok Kwan Hung 3,860 shares
Fu Yang Guang 2,000 shares
Lin Jia Ping 2,700 shares
For more information concerning the terms of the Plan and thegranted stock options currently outstanding pursuant thereto, please see "Stock Options" under
Item 12to purchase shares of the Company's Form 10-K annual report forCommon Stock to the fiscalfollowing officers, directors and employees: Ching Lung Po - 40,000 shares, Tam Cheuk Ho - 40,000 shares, Wong Wah On - 40,000 shares, Ma Sin Ling - 30,000 shares, Tse Chi Kai - 10,000 shares, Fu Yang Guang - 1,000 shares, Lin Jia Ping - 1,000 shares, Yu Jing Song - 1,000 shares. On the same date, all stock options previously granted were cancelled.
Report on Repricing of Options
No options were repriced during the year ended December 31, 1999, a copy of which is provided herewith and incorporated herein
by reference. A copy of the Plan is attached hereto as Addendix A.
Market Value of the Shares Underlying Options
As of September 14, 2000, the market value of the shares of Common
Stock underlying the options is $6.25 per share based on the closing bid
quotation on such date of the Common Stock as reported by The Nasdaq SmallCap
Market.
U.S. Federal Income Tax Consequences
The following is a brief summary of the general U.S. Federal income tax
consequences to participants and the Company of participation in the Plan. This
summary is not intended to be exhaustive and does not describe foreign, state or
local tax consequences, nor does it describe consequences based on particular
circumstances. For these reasons, each participant should consult with a tax
advisor as to specific questions relating to tax consequences of participation
in the Plan.
Incentive Stock Options. The following general rules are applicable to
holders of Incentive Stock Options ("ISOs") and to the Company for U.S. Federal
income tax purposes under existing law:
1. In general, no taxable income results to the optionee upon
the grant of an ISO or upon the issuance of shares to him upon the exercise of
the ISO, and no tax deduction is allowed to the Company upon either grant or
exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed
of within (i) two years following the date the option was granted or (ii) one
year following the date the shares are transferred to the optionee pursuant to
the ISO exercise, the difference between the amount realized on any subsequent
disposition of the shares and the exercise price will be generally treated as
capital gain or loss to the optionee.
3. If shares acquired upon exercise of an ISO are disposed of
before the expiration of one or both of the requisite holding periods (a
"Disqualifying Disposition"), then in most cases the lesser of (i) any excess of
the fair market value of the shares at the time of exercise of the ISO over the
exercise price or (ii) the actual gain on disposition will be treated as
compensation to the optionee and will be taxed as ordinary income in the year of
such disposition.
4. In any year that an optionee recognizes compensation income
on a Disqualifying Disposition of stock acquired by exercising an ISO, the
Company generally will be entitled to a corresponding deduction for income tax
purposes in an amount equal to the amount of ordinary income recognized, if any,
by the optionee.
5. Any excess of the amount realized by the optionee as the
result of a Disqualifying Disposition over the sum of (i) the exercise price and
(ii) the amount of ordinary income recognized under the above rules will be
treated as capital gain.
6. Capital gain or loss recognized on a disposition of shares
will be long-term capital gain or loss if the optionee's holding period for the
shares exceeds one year.
7. In addition to the tax consequences described above, the
exercise of ISOs may result in a further "minimum tax" under the Code. The Code
provides that an "alternative minimum tax" will be applied against a taxable
base which is equal to "alternative minimum taxable income," reduced by a
statutory exemption. In general, the amount by which the value of the Common
Stock received upon exercise of the ISO exceeds the exercise price is included
in the optionee's alternative minimum taxable income. A taxpayer is required to
pay the higher of his regular tax liability or the alternative minimum tax. A
taxpayer who pays alternative minimum tax attributable to the exercise of an ISO
may be entitled to a tax credit against his regular tax liability in later
years.
Nonqualified Stock Options. The following general rules are applicable
to holders of Nonqualified Stock Options ("NQSOs") and to the Company for U.S.
Federal income tax purposes under existing law:
1. The optionee generally does not realize any taxable income
upon the grant of an option, and the Company is not allowed a business expense
deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation
income at the time of exercise of the option in an amount equal to the excess,
if any, of the fair market value of the shares on the date of exercise over the
exercise price.
3. When the optionee sells the shares, he generally will
recognize a capital gain or loss in an amount equal to the difference between
the amount realized upon the sale of the shares and his basis in the shares
(generally, the exercise price plus the amount taxed to the optionee as
compensation income). If the optionee's holding period for the shares exceeds
one year, such gain or loss will be a long-term capital gain or loss.
4. The Company will generally be entitled to a tax deduction
in the year in which, and in an amount equal to, ordinary compensation income is
recognized by the optionee.
Special Rules for Restricted Stock. Officers, directors and 10%
shareholders of the Company may in some instances acquire Common Stock subject
to special rules under Section 83 of the Code because of certain U.S. securities
laws restrictions on resale ("Restricted Stock"). If an optionee acquires
Restricted Stock, the amount included in compensation income (in the case of a
NQSO, or of an ISO if a Disqualifying Disposition of such stock is made) or in
alternative minimum taxable income (in the case of an ISO) generally will be
determined as of some later date, not more than six months after exercise, and
will equal the difference between the amount paid for the Restricted Stock and
its fair market value at that
time, unless the optionee files a timely election under Section 83(b) of the
Code electing to determine the amount of income at the time of exercise.
ERISA. The Plan is not an employee benefit plan which is subject to the
provisions of the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the provisions of 401(a) of the Code are not applicable to the
Plan.
Proposed Amendments to the Plan
The Board of Directors of the Company recommends that the shareholders
adopt an amendment to the Amended and Restated 1995 Stock Option Plan to modify
the pricing procedure for the exercise of nonqualified stock options and to
eliminate the requirement of shareholder approval of any modification of the
Plan that would materially increase the benefits accruing to participants in the
Plan. If the proposed amendment is adopted, Sections 6(a) of the Plan will be
amended as follows (bracketed text indicates deletions, text in italics
indicates additions):
(a) Price. The price per share deliverable upon the exercise
of each Incentive Stock Option shall not be less than 100% of
the Fair Market Value of the shares on the date the option is
granted, as the Committee determines. In the case of the grant
of any Incentive Stock Option to an employee who, at the time
of the grant, owns more than 10% of the total combined voting
power of all classes of stock of the Company or any of its
subsidiaries, such price per share, if required by the Code at
the time of grant, shall not be less than 110% of the Fair
Market Value of the shares on the date the option is granted.
The price per share deliverable upon the exercise of each
Nonqualified Stock Option shall not be less than [the higher
of (i) the net tangible assets per share of the Company as of
the end of2001.
Director Compensation
During the fiscal year immediately preceding the date of
such grant, or (ii)] 80% of the Fair Market Value of the
shares on the date the option is granted, as the Committee
determines.
Also, if the proposed amendment is adopted, Section 13 of the Plan will be
amended as follows (bracketed text indicates deletions, text in italics
indicates additions):
13. Terminationyears ended December 31, 2001 and Modification of the Plan.
----------------------------------------
The Board of Directors, without further approval of the
shareholders, may modify or terminate the Plan and from time
to time may suspend, and if suspended, may reinstate any or
all of the provisions of the Plan, except that (i) no
modification, suspension or termination of the Plan may,
without the consent of the grantee affected, alter or impair
any grant previously made under the Plan, and (ii) no
modification shall become effective without prior approval of
the stockholders of the Company that would (a) increase
(except as provided in Section 12) the maximum number of
shares reserved for issuance under the Plan; or (b) change the
classes of employees eligible to be participants[; or (iii)
materially increase the benefits accruing to participants in
the Plan].
With the consent of the grantee affected thereby, the
Committee may amend or modify the grant of any outstanding
option in any manner to the extent that the Committee would
have had the authority to make such grant as so modified or
amended, including without limitation to change the date or
dates as of which an option becomes exercisable. The Committee
shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan
that may be dictated by requirements of Federal or
state laws applicable to the Company or that may be authorized
or made desirable by such laws.
The Board of Directors believes that the adoption of this amendment to
the Plan is in the best interest of the Company and the shareholders. The
amendment will allow the Committee greater flexibility in setting the price of
nonqualified stock options. Also, the elimination of the shareholder approval
requirement will allow the Board of Directors to modify the Plan in an
expeditious and efficient manner.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ADOPTION OF THE AMENDMENT TO THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN TO
MODIFY THE PRICING PROCEDURE FOR THE EXERCISE OF NONQUALIFIED STOCK OPTIONS AND
TO ELIMINATE THE REQUIREMENT OF SHAREHOLDER APPROVAL OF ANY MODIFICATION OF THE
PLAN THAT WOULD MATERIALLY INCREASE THE BENEFITS ACCRUING TO PARTICIPANTS IN THE
PLAN.
PROPOSAL 3 - ELECTION OF DIRECTORS
Since the 1999 annual meeting, the Company's Board of Directors was
comprised of seven directors, and, according to Article VIII of the Company's
Articles of Incorporation, the membership of the Board may be increased to no
more than 25 directors or decreased to no fewer than three directors by action
of the Board of Directors. At the 1996 annual meeting, the shareholders approved
an amendment to the Articles of Incorporation to divide the directors into three
classes. One class of directors is to be elected each year for a three-year
term. However, as three classes of directors were newly established, the Class I
directors were elected at the 1996 annual meeting for one-year terms, the Class
II directors were elected for two-year terms and the Class III directors were
elected for normal three-year terms. At the annual meeting held in 1997, Messrs.
Tam Cheuk Ho and Wong Wah On were elected to serve in Class I until the annual
meeting to be held in 2000, and until their successors have been duly elected and
qualified. Therefore, in accordance with the Articles of Incorporation and the
actions taken at the 1996 annual meeting, the election of directors in Class I
is to be conducted at the 2000 Annual Meeting.
The nominees for Class I, if elected, will serve a three-year term
until the annual meeting to be held in 2003 and until their successors have duly
elected and qualified. Messrs. Tam Cheuk Ho and Wong Wah On are currently
serving as directors of the Company. Both nominees have consented to being named
herein and have indicated their intention to serve as directors of the Company,
if elected. Unless authority to do so is withheld, the persons named as proxies
will vote the shares represented by such proxies for the election of the
nominees. In case any of the nominees shall become unavailable for election to
the Board of Directors, which is not anticipated, the persons named as proxies
shall have full discretion and authority to vote or refrain from voting for any
other nominees in accordance with their judgment. Vacancies on the Board of
Directors may be filled by the remaining director or directors, even though less
than a quorum, for the unexpired term of such vacant position.
The nominees and certain information about them are set forth below:
Class I Directors:
Mr. Tam Cheuk Ho has been a director and the Chief Financial Officer of
the Company since December 1994. Prior to joining the Company, from July 1984
through January 1992, he worked as
Audit Manager at Ernst & Young, Hong Kong, and from February 1992 through
September 1992, as Financial Controller at Tack Hsin Holdings Limited, a listed
company in Hong Kong, where he was responsible for accounting and financial
functions. From October 1992 through December 1994, Mr. Tam was Finance Director
of Hong Wah (Holdings) Limited. He is a fellow of both the Hong Kong Society of
Accountants and the Chartered Association of Certified Accountants. He is also a
certified public accountant in Hong Kong. He holds a bachelor's degree in
Business Administration from the Chinese University of Hong Kong.
Mr. Wong Wah On has been a director of the Company since December 30,
1997. Mr. Wong is also the Financial Controller and Secretary of the Company and
member of the supervisory committee of HARC. He is responsible for assisting the
Chief Financial Officer with the Company's treasury, accounting and secretarial
functions. From October 1992 through December 1994, Mr. Wong was the Deputy
Finance Director of Hong Wah (Holdings) Limited. From July 1988 through October
1992, he was the audit supervisor at Ernst & Young, Hong Kong. He received a
professional diploma in Company Secretaryship and Administration from the Hong
Kong Polytechnic University and is a fellow of the Chartered Association of
Certified Accountants, the Hong Kong Society of Accountants, and the Institute
of Chartered Secretaries and Administrators. He is also a certified public
accountant in Hong Kong.
Information Regarding Board of Directors and Committees
The Company's Board of Directors held eight (8) meetings during 1999,
and all other actions of the Board were taken pursuant to unanimous written
consents. The Board of Directors does not have a compensation or nominating
committee. The Board has established an audit committee consisting of two
"independent" directors, Ng Kin Sing and Wan Ying Lin. The Board as a whole
operates as a committee to nominate directors and to administer the Company's
Amended and Restated 1995 Stock Option Plan (except that a committee of three
disinterested persons was formed to act with respect to stock options issued to
directors). Each director other than Li Shunxing and Ng Kin Sing attended all of
the meetings of the Board of Directors during the period for which he was a
director. During 1999, Li Shunxing did not attend six of the meetings and Ng Kin
Sing did not attend one of the meetings.
The Board of Directors, acting as a nominating committee, will consider
candidates for directors nominated by shareholders. A shareholder who wishes to
submit a candidate for consideration at the 2001 annual meeting must notify the
Secretary of the Company in writing no later than March 1, 2001. The
shareholder's written notice must include information about each proposed
nominee, including name, age, business address, principal occupation, shares
beneficially owned and other information required in proxy solicitations. The
nomination notice must also include the nominating shareholder's name and
address and the number of shares of stock beneficially owned by the shareholder.
The shareholder must also furnish a statement from the candidate indicating that
the candidate wishes and is able to serve as a director. These procedures, and a
statement that the shareholder intends to make the nomination, are prerequisites
to a stockholder nominating a candidate at the annual meeting.
Compensation of Directors
During 1999, directors of the Company did not receive compensation for their serviceservices as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES DESCRIBED ABOVE.
PROPOSAL 4 - APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to ratificationsuch.
Employment and Consulting Agreements
On February 1, 1999, the Company entered into a Service Agreement with Ching Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching has been employed by the shareholders,Company as an Chief Executive Officer and to perform such duties as the Board of Directors has
reappointed Ernst & Young, Certified Public Accountants, as independent
accountantsshall from time to audit the consolidated financial statementstime determine. Mr. Ching shall receive a base salary of HK$2,160,000 (US$276,923) annually, which base salary shall be adjusted on each anniversary of the Company forEmployment Agreement to reflect a change in the year 2000. Ernst & Young has servedapplicable consumer price index or such greater amount as the Company's Independent Accountants
since MarchBoard of 1995.
IfDirectors may determine. The Employment Agreement has a term of two years and shall be automatically renewed unless earlier terminated as provided therein.
On February 1, 1999, the shareholders should failCompany entered into an Employment Agreement with Tam Cheuk Ho. In accordance with the terms of the Employment Agreement, Mr. Tam has been employed by the Company as the Chief Financial Officer and to ratify the appointment of Ernst &
Youngperform such duties as its independent accountants, the Board of Directors would reconsidershall from time to time determine. Mr. Tam shall receive a base salary of HK$1,800,000 (US$230,769) annually, which base salary shall be adjusted on each anniversary of the appointment. It is expected that representativesEmployment Agreement to reflect a change in the applicable consumer price index or such greater amount as the Company's Board of Ernst & Young willDirectors may determine. The Employment Agreement has a term of two years and shall be present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so and will be available to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER INFORMATION
For other information regardingautomatically renewed unless earlier terminated as provided therein.
11
On February 1, 1999, the Company including Executive
Compensation, Financial and Other Information, Management's Discussion and
Analysis of Financial Condition and Results of Operations, Certain Relationships
and Related Transactions and Complianceentered into an Employment Agreement with Section 16(a)Wong Wah On. In accordance with the terms of the Securities
Exchange ActEmployment Agreement, Mr. Wong has been employed by the Company as the Financial Controller and Corporate Secretary and to perform such duties as the Board of 1934, as amended, please see the appropriate ItemsDirectors shall from time to time determine. Mr. Wong shall receive a base salary of HK$1,200,000 (US$153,846) annually, which base salary shall be adjusted on each anniversary of the Employment Agreement to reflect a change in the applicable consumer price index or such greater amount as the Company's Form 10-K annual reportBoard of Directors may determine. The Employment Agreement has a term of two years and shall be automatically renewed unless earlier terminated as provided therein.
Except for the foregoing, the Company has no employment contracts with any of its officers or directors and maintains no retirement, fringe benefit or similar plans for the benefit of its officers or directors. The Company may, however, enter into employment contracts with its officers and key employees, adopt various benefit plans and begin paying compensation to its officers and directors as it deems appropriate to attract and retain the services of such persons.
The Company does not pay fees to directors for their attendance at meetings of the Board of Directors or of committees; however, the Company may adopt a policy of making such payments in the future. The Company will reimburse out-of-pocket expenses incurred by directors in attending Board and committee meetings.
During the fiscal year ended December 31, 1999, a
copy2001, no holder of which is provided herewithstock options exercised such options. All stock options granted on July 1, 1995 either lapsed due to termination of employment or were cancelled, and incorporated herein by this reference.
This proxy statement and the Form 10-K provided herewith may contain
forward-looking statements. Shareholders are cautioned that anyall options granted on June 15, 2001 remained outstanding. Also during such forward-looking statement is not a guarantee of future performance and involves
risks and uncertainties, and that actual results may differ materially from
thosefiscal year, no long-term incentive plans or pension plans were in this proxy statement and the Form 10-K as a result of various factors.
The information contained in this proxy statement and the Form 10-K, including
without limitation the information under the heading, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," identifies
important factors that could cause such differences. Witheffect with respect to any such
forward-looking statement that includes a statement of its underlying
assumptionsthe Company's officers, directors or bases,employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As disclosed above under Stock Options the Company cautions that, while it believes such
assumptions or bases to be reasonable and has formed them in good faith, assumed
facts or bases almost always vary from actual results, and the differences
between assumed facts or bases and actual results can be material depending on
the circumstances. When, in any forward-looking statement, the Company, or its
management, expresses an expectation or belief as to future results, that
expectation or belief is expressed in good faith and is believed to haveadopted a
reasonable basis, but there can be no assurance that the stated expectation or
belief will result or be achieved or accomplished.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
To be considered for inclusion in next year's proxy materials,
shareholder proposals to be presented at the Company's 2001 annual meeting must
be in writing and be received by the Company no later than March 1, 2001.
OTHER BUSINESS
The Board of Directors does not know of any business to be brought
before the Annual Meeting other than the matters described in the Notice of
Annual Meeting. However, if any other matter are properly presented for action,
it is the intention of each person named in the accompanying proxy to vote said
proxy in accordance with his judgment on such matters.
INCORPORATION BY REFERENCE
The Company's annual report on Form 10-K for the year ended December
31, 1999, is herein incorporated by reference.
ADDENDIX A
CHINA RESOURCES DEVELOPMENT, INC.
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
1. Purpose.
-------
The plan shall be known as The China Resources Development, Inc., Stock Option Plan (the "Plan"). The purpose of the Plan shall be to promote
the long-term growth and profitability of China Resources Development,
Inc. (the "Company"), and its subsidiaries by (i) providing certain
officers, key employees, directors, consultants, and affiliates of the
Company and its subsidiaries with incentives to improve stockholder
values and contribute to the success of the Company and (ii) enabling
the Company to attract, retain and reward the best available persons
for positions of substantial responsibility. Grants of incentive or
nonqualified stock options, or any combination of the foregoing, may be
made under the Plan.
2. Definitions.
-----------
(a) "Incentive Stock Option" means an option conforming to the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
(b) "Nonqualified Stock Option" means anygrant stock option other than an
Incentive Stock Option.
(c) "Subsidiary" and "subsidiaries" mean a corporation or corporations
of which outstanding shares representing 50% or more of the combined
voting power of such corporation or corporations are owned directly or
indirectly by the Company.
(d) "Disability" means a permanent and total disability as defined in
Section 72(m)(7) of the Code.
(e) "Retirement" means termination of one's employment with the
approval of the Committee.
(f) "Cause" means the occurrence of one of the following:
(i) Conviction for a felony or for any crime or offense lesser
than a felony involving the property of the Company or a subsidiary.
(ii) Conduct that has caused demonstrable and serious injury to the
Company or a subsidiary, monetary or otherwise, as evidenced by a final
determination of a court or governmental agency of competent
jurisdiction in effect after exhaustion or lapse of all rights of
appeal.
(iii) Gross dereliction of duty or other grave misconduct, as
determined by the Company.
(g) "Competition" is deemed to occur if a participant who has
terminated employment subsequently obtains a position as a full-time or
part-time employee, as a member of the board of directors, or as a
consultant or advisor with or to, or acquires an ownership interest in
excess of five percent (5%) of, a corporation, partnership, firm or
other entity that engages in any of the businesses of the Company or
any subsidiary with which the participant was involved in a management
role at any time during the last five years of his employment with the
Company or any subsidiary.
(h) "Change in Control" shall mean an event that would be required to
be reported in response to Item 1 of Form 8-K or any successor form
thereto promulgated under the Securities Exchange Act of 1934
("Exchange Act") if the Company were subject to such Act (or that is so
required if and when the Company is subject to such Act).
(i) "Fair Market Value" of a share of Common Stock of the Company shall
mean, with respect to the date in question, the average of the closing
bid and asked prices as quoted by the National Association of
Securities Dealers through its OTC Bulletin Board or its automated
quotation system ("NASDAQ"); or, if the Company's Common Stock is
listed or admitted to unlisted trading privileges on a national stock
exchange, either (x) the average of the highest and lowest
officially-quoted selling prices on such exchange or (y) the closing
sale price of such stock, as selected by the Committee; or if the
Company's Common Stock is not quoted by the NASD or NASDAQ, traded on
such an exchange, or otherwise traded publicly, the value determined,
in good faith, by the Committee.
3. Administration.
--------------
A. The Plan shall be administered by a the Board of Directors
or by a committee appointed by the Board of Directors
consisting of at least three of its members. No member of the
Committee, while a member, shall be eligible to participate in
the Plan. Subject to the provisions of the Plan, and subject
to ratification of the grant by the Board of Directors (if so
required by applicable state law), the Committee shall be
authorized to (i) select persons to participate in the Plan,
(ii) determine the form and substance of grants made under the
Plan to each participant, and the conditions and restrictions,
if any, subject to which such grants will be made, (iii)
interpret the Plan and (iv) adopt, amend, or rescind such
rules and regulations for carrying out the Plan as it may deem
appropriate. Decisions of the Committee on all matters
relating to the Plan shall be in the Committee's sole
discretion and shall be conclusive and binding on all parties,
including the Company, its stockholders, and the participants
in the Plan, unless otherwise determined by the Board of
Directors. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be
determined in accordance with applicable Federal and state
laws and rules and regulations promulgated pursuant thereto.
The Committee and shall keep full records and accounts of its
proceedings and transactions, and all such transactions shall
be reported to the Board of Directors. No member of the Board
of Directors or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan
or any stock option granted under it.
B. The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as
it may determine. Acts by a majority of the Committee, or acts
reduced to and approved in writing by a majority of the
members of the Committee, shall be the valid acts of the
Committee. All references in this Plan to the
Committee shall mean the Board of Directors if no Committee
has been appointed. From time to time the Board of Directors
may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and
thereafter administer the Plan.
C. Notwithstanding the provisions of paragraph 3.A., stock
options may be granted to members of the Board of Directors;
however, no stock option shall be granted to any person who
is, at the time of the proposed grant, a member of the Board
of Directors unless such grant has been approved by a majority
vote of the other members of the Board of Directors. All
grants of stock options to members of the Board shall in all
other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Member of the
Board of Directors who either (i) are eligible for stock
options pursuant to the Plan or (ii) have been granted stock
options may vote on any matters affecting the administration
of the Plan or the grant of any stock options pursuant to the
Plan, except that no such member shall act upon the granting
to himself of stock options, but any such member may be
counted in determining the existence of a quorum at any
meeting of the Board of Directors during which such action is
taken with respect to the granting to him of stock options.
D. Notwithstanding any other provision of this paragraph 3, in
the event the Company registers any equity security pursuant
to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any grants of stock options to
directors made at any time from the effective date of such
registration until six months after the termination of such
registration shall be made only by the Board of Directors;
provided however, that if a majority of the Board of Directors
is eligible to participate in the Plan or in any other stock
option or other stock plan of the Company or any of its
affiliates, or has been so eligible at any time within the
preceding year, any grant of stock options to directors must
be made by, or in accordance with the recommendation of, a
committee consisting of three or more persons who may, but
need not be, directors or employees of the Company appointed
by the Board of Directors but having full authority to act in
the matter, none of whom is eligible to participate in this
Plan or any other stock option or other stock plan of the
Company or any of its affiliates, or has been eligible at any
time within the preceding year. The requirements imposed by
the preceding sentence shall also apply with respect to grants
to officers who are not also directors. Once appointed, the
committee shall continue to serve until otherwise directed by
the Board of Directors.
4. Shares Available for the Plan.
-----------------------------
Subject to adjustments as provided in Section 12, the number of shares
of Common Stock of the Company (hereinafter the "shares") which may be
issued pursuant to the Plan is that number of shares which would, in
the aggregate and if deemed outstanding, constitute 20% of the
Company's then-outstanding shares of Common Stock, as determined at the
time of granting stock options. Such shares may represent authorized
but unissued shares. If any grant under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited as to any shares,
such unpurchased or forfeited shares shall thereafter be available for
further grants under the Plan.
5. Participation.
-------------
Participation in the Plan shall be limited to those officers, directors, key employees, consultants and affiliates of the CompanyCompany.
As disclosed above under Executive Compensation Ching Lung Po, Tam Cheuk Ho and its subsidiaries selected by the Committee. Nothing in the Plan or in
any grant thereunder shall confer any right on an employeeWong Wah On are parties to continue
in the employ of the Company or shall interfere in any wayemployment agreements with the rightCompany.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE DIRECTOR NOMINEES.
12
Proposal 2
PROPOSAL TO RATIFY THE APPOINTMENT OF HORWATH GELFOND HOCHSTADT PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY
At the Annual Meeting, stockholders will be requested to ratify the Board of the Company to terminate an employee at any time.
Incentive or nonqualified stock options, or any combination thereof,
may be granted to such persons andDirectors’ engagement of Horwath Gelfond Hochstadt Pangburn, P.C. for such number of shares as the
Committee shall determine (such individuals to whom grants are made
being herein called "optionees"). A grant of any type made hereunder in
any one year to an eligible employee shall neither guarantee nor
preclude a further grant of that or any other type to such employee in
that year or subsequent years.
The maximum number of shares with respect to which incentive or
nonqualified options, or any combination thereof, may be granted to any
single individual in any one calendar year shall not exceed 500,000
shares.
6. Incentive and Nonqualified Options.
----------------------------------
The Committee may from time to time grant to eligible participants
Incentive Stock Options, Nonqualified Stock Options, or any combination
thereof. The options granted shall take such form as the Committee
shall determine, subject to the following terms and conditions.
(a) Price. The price per share deliverable upon the exercise of each
Incentive Stock Option shall not be less than 100% of the Fair Market
Value of the shares on the date the option is granted, as the Committee
determines. In the case of the grant of any Incentive Stock Option to
an employee who, at the time of the grant, owns more than 10% of the
total combined voting power of all classes of stock of the Company or
any of its subsidiaries, such price per share, if required by the Code
at the time of grant, shall not be less than 110% of the Fair Market
Value of the shares on the date the option is granted.
The price per share deliverable upon the exercise of each Nonqualified
Stock Option shall not be less than the higher of (i) the net tangible
assets per share of the Company as of the end of the fiscal year immediately precedingending December 31, 2002.
The Company’s auditor for the fiscal year ended December 31, 2001 was Ernst & Young. Ernst & Young was dismissed as the Company’s principal accountant on April 30, 2002. Ernst & Young’s reports on the financial statements for the last two fiscal years did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. The decision to change accountants has been approved by the Company’s Board of Directors. The Company had no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to Ernst & Young’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report. During the two most recent fiscal years ended December 31, 2001, and the subsequent period through the date of such grant, or (ii) 80%hereof, we did not consult with Horwath Gelfond Hochstadt Pangburn, P.C. regarding any of the Fair
Market Valuematters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.
Fees to Auditors
Audit Fees: The aggregate fees, including expenses, billed by Ernst & Young in connection with the audit of the shares onCompany’s consolidated financial statements for the datemost recent fiscal year and for the option is granted, as the
Committee determines.
(b) Cash Exercise. Options may be exercised in whole or in part upon
paymentreview of the exercise price ofCompany’s financial information included in its Annual Report on Form 10-K and its quarterly reports on Form 10-Q during the shares to be acquired. Payment
shall be made in cash or, in the discretion of the Committee, in shares
previously acquired by the participant or a combination of cash and
shares of Common Stock.year 2001 was HK $545,000 (US $69,872).
All Other Fees: The Fair Market Value of shares of Common Stock
tendered on exercise of options shall be determined on the date of
exercise.
(c) Cashless Exercise. Options may be exercised in whole or in part
upon delivery to the Secretary of the Company of an irrevocable written
notice of exercise. The date on which such notice is received by the
Secretary shall be the date of exercise of the option, provided that
within five business days of the delivery of such notice the funds to
payaggregate fees, including expenses, billed for exercise of the option are deliveredall other services rendered to the Company by a broker
acting on behalfErnst & Young during year 2001 was HK $55,000 (US $7,051). These non-audit fees relate to corporate compliance, tax services, SEC consulting services and registration filing services performed for the Company.
General
It is not expected that representatives of either Ernst & Young or Horwath Gelfond Hochstadt Pangburn, P.C. will be present at the optionee either in connection with the saleAnnual Meeting.
The approval of the shares underlying the option or in connection with the making of a
margin loan to the optionee to enable payment of the exercise price of
the option. In connection with the foregoing, the Company will provide
a copy of the notice of exercise of the option to the aforesaid broker
upon receiptProposal 2 by the Secretary of such notice and will deliver to such
broker, within five business days of the delivery of such notice to the
Company, a certificate or
certificates (as requested by the broker) representing the number of
shares underlying the option that have been sold by such broker for the
optionee.
(d) Terms of Options. The term during which each option may be
exercised shall be determined by the Committee, but in no event shall
an Incentive Stock Option be exercisable in whole or in part in less
than one year or, in the case of a Nonqualified Stock Option, more than
ten years and one day from the date it is granted, or, in the case of
an Incentive Stock Option, ten years from the date it is granted; and,
in the case of the grant of an Incentive Stock Option to an employee
who at the time of the grant owns more than 10% of the total combined
voting power of all classes of stock of the Company or any of its
subsidiaries, in no event shall such option be exercisable, if required
by the Code at the time of grant, more than five years from the date of
the grant. All rights to purchase shares pursuant to an option shall,
unless sooner terminated, expire at the date designated by the
Committee. The Committee shall determine the date on which each option
shall become exercisable and may provide that an option shall become
exercisable in installments. The shares constituting each installment
may be purchased in whole or in part at any time after such installment
becomes exercisable, subject to such minimum exercise requirement as is
designated by the Committee. The Committee may accelerate the time at
which any option may be exercised in whole or in part. Unless otherwise
provided herein, an optionee may exercise an option only if he or she
is, and has continuously been since the date the option was granted, an
employee of the Company or a subsidiary. Prior to the exercise of the
option and delivery of the stock represented thereby, the optionee
shall have no rights to any dividends or be entitled to any voting
rights on any stock represented by outstanding options.
(e) Limitations on Grants. If required by the Code at the time of grant
of an Incentive Stock Option, the aggregate Fair Market Value
(determined as of the grant date) of shares for which such option is
exercisable for the first time during any calendar year may not exceed
US$100,000.
(f) Termination of Employment; Change in Control. If a participant
ceases to be an officer, employee, or director of the Company or any
subsidiary due to death or Disability, each of the participant's
options that was granted at least one year prior to death or Disability
shall become fully vested and exercisable and shall remain so for a
period of one year from the date of termination of employment, but in
no event after its expiration date; and all options granted to such
participant less than one year prior to death or Disability shall be
forfeited.
If a participant ceases to be an officer, employee or director
of the Company or any subsidiary upon the occurrence of his or her
Retirement, each of his or her options granted at least one year prior
to Retirement shall become fully vested and exercisable and shall
remain so for a period of five years from the date of Retirement, but
in no event after its expiration date, providedstockholders requires that the participant
does not engage in Competition during that five-year period unless he
receives written consent to do so fromvotes cast favoring Proposal 2 exceed the Board. Notwithstanding the
foregoing, Incentive Stock Options not exercised by such participant
within 90 days after Retirement will cease to qualify as Incentive
Stock Options and will be treated as Nonqualified Stock Options under
the Plan if required to be so treated under the Code. All options
granted to such participant less than one year prior to Retirement
shall be forfeited.
If a participant ceases to be an officer or employeevotes cast opposing Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF HORWATH GELFOND HOCHSTADT PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY.
13
STOCKHOLDER PROPOSALS
Proposals of the
Company or any subsidiary due to Cause, all of his or her options shall
be forfeited.
If a participant ceases to be an officer or employee of the
Company or any subsidiary for any reason other than death, Disability,
Retirement or Cause, each of his or her options that was
exercisable on the date of termination shall remain exercisable for,
and shall otherwise terminate at the end of, a period of 90 days after
the date of termination of employment, but in no event after its
expiration date; provided that the participant does not engage in
Competition during such 90-day period unless he or she receives written
consent to do so from the Board. All of the participant's options that
were not exercisable on the date of such termination shall be
forfeited.
Notwithstanding anything to the contrary herein, if a
participant ceases to be an officer, employee or director of the
Company or any subsidiary, for any reason other than Cause, the
Committee at its sole discretion may accelerate the vesting of any
option so that it will become fully vested and exercisable as of the
date of such participant's termination of employment. If there is a
Change in Control of the Company, there will be an automatic
acceleration of the vesting of any outstanding option so that it will
become fully vested and exercisable as of the date of the Change in
Control.
7. Withholding of Taxes.
--------------------
The Company may require, as a condition to any grant under the Plan or
to the delivery of certificates for shares issued hereunder, that the
grantee pay to the Company, in cash, any federal, state or local taxes
of any kind required by law to be withheld with respect to any grant or
any delivery of shares. The Committee, in its sole discretion, may
permit participants to pay such taxes through the withholding of shares
otherwise deliverable to such participant in connection with such grant
or the delivery to the Company of shares otherwise acquired by the
participant. The Fair Market Value of shares of Common Stock withheld
by the Company or tendered to the Company for the satisfaction of tax
withholding obligations under this section shall be determined on the
date such shares are withheld or tendered. The Company, to the extent
permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a
grantee any federal, state or local taxes of any kind required by law
to be withheld with respect to any grant or to the delivery of shares
under the Plan, or to retain or sell without notice a sufficient number
of the shares to be issued to such grantee to cover any such taxes,
provided that the Company shall not sell any such shares if such sale
would be considered a sale by such grantee for purposes of Section 16
of the Exchange Act.
8. Written Agreement.
-----------------
Each employee to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions,
consistent with the provisions of the Plan, as may be established by
the Committee.
9. Transferability.
---------------
No option granted under the Plan shall be transferable by an employee
otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. An option may be exercised only by the optionee or his
guardian or legal representative; provided that Incentive Stock Options
may be exercised by such guardian or legal representative only if
permitted by the Code and any regulations promulgated thereunder.
10. Listing and Registration.
------------------------
If the Committee determines that the listing, registration, or
qualification upon any securities exchange or under any law of shares
subject to any option is necessary or desirable as a condition
of, or in connection with, the granting of same or the issue or
purchase of shares thereunder, no such option may be exercised in whole
or in part or no shares issued unless such listing, registration or
qualification is effected free of any conditions not acceptable to the
Committee.
11. Transfer of Employee.
--------------------
Transfer of an employee from the Company to a subsidiary, from a
subsidiary to the Company, and from one subsidiary to another shall not
be considered a termination of employment. Nor shall it be considered a
termination of employment if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing
intact the employment relationship; in such a case, the employment
relationship shall be continued until the date when an employee's right
to reemployment shall no longer be guaranteed either by law or by
contract.
12. Adjustments.
-----------
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, distribution of
assets, or any other change in the corporate structure or shares of the
Company, the Committee shall make such adjustments as it deems
appropriate in the number and kind of shares reserved for issuance
under the Plan, in the number and kind of shares covered by grants made
under the Plan, and in the exercise price of outstanding options. In
the event of any merger, consolidation or other reorganization in which
the Company is not the surviving or continuing corporation, all options
that were granted hereunder and that are outstanding on the date of
such event shall be assumed by the surviving or continuing corporation.
13. Termination and Modification of the Plan.
----------------------------------------
The Board of Directors, without further approval of the shareholders,
may modify or terminate the Plan and from time to time may suspend, and
if suspended, may reinstate any or all of the provisions of the Plan,
except that (i) no modification, suspension or termination of the Plan
may, without the consent of the grantee affected, alter or impair any
grant previously made under the Plan, and (ii) no modification shall
become effective without prior approval of the stockholders of the Company that would (a) increase (except as provided in Section 12) the
maximum number of shares reserved for issuance under the Plan; (b)
change the classes of employees eligiblewhich are intended to be participants; or (iii)
materially increase the benefits accruing to participants in the Plan.
With the consent of the grantee affected thereby, the Committee may
amend or modify the grant of any outstanding option in any manner to
the extent that the Committee would have had the authority to make such
grant as so modified or amended, including without limitation to change
the date or dates as of which an option becomes exercisable. The
Committee shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan that may
be dictated by requirements of federal or state laws applicable to the
Company or that may be authorized or made desirablepresented by such laws.
14. Commencement Date; Termination Date.
-----------------------------------
The date of commencement of the Plan shall be March 31, 1995. Unless
previously terminated, the Plan shall terminate at the close of
business on March 31, 2005.
15. Cash Awards.
-----------
The Committee may authorize cash awards to any participant receiving
shares under the Plan in order to assist such participant in meeting
his or her tax obligations with respect to such shares.
16. Provisions Applicable Solely to Insiders.
----------------------------------------
The following provisions shall apply only to persons who are subject to
Section 16 of the Securities Exchange Act of 1934 with respect to
securities of the Company ("Insiders"):
(a) No Insider shall be permitted to transfer any securities of the
Company acquired by him, except to the extent permitted by 17 C.F.R.
ss.240.16a-2(d)(1), upon the exercise of any Incentive Stock Option or
Nonqualified Stock Option, until at least six months and one day after
the later of (i) the day on which such security is granted to the
participant or (ii) the day on which the exercise or conversion price
of such security is fixed.
(b) An Insider may elect to have shares withheld from a grant made
under the Plan or tender shares to the Company in order to satisfy the
tax withholding consequences of a grant made under the Plan, only
during the period beginning on the third business day following the
date on which the Company releases the financial information specified
in 17 C.F.R. ss.240.16b-3(e)(1)(ii) and ending on the twelfth business
day following such date.
(c) Notwithstanding Section 19 (b)(ii) hereof, an Insider may elect to
have shares withheld from a grant made under the Plan in order to
satisfy tax withholding consequences thereof by providing the Company
with a written election to so withhold at least six months in advance
of the withholding of shares otherwise issuable upon exercise of an
option.
The China Resources Development, Inc., 1995 Stock Option Plan was
amended and restated pursuant to (i) a resolution of the Board of Directors of
the corporation unanimously adopted at a special meeting of the Board held on
November 29, 1996, and (ii) a vote by the shareholders of the corporation
holding at least a majority of each class of stock outstanding and entitled to
vote,stockholders at the annual meeting of shareholdersstockholders to be held in 2003 must be received by the Company no later than June 12, 2003, in order to have them included in the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for action at the Meeting. However, if any other matter is properly presented, it is the intention of the persons named in the enclosed form of proxy to vote in accordance with their best judgment on such matters.
ACCOMPANYING REPORTS
The Company’s Annual Report on Form 10-K (without exhibits), including audited consolidated financial statements as at and for the years ended December 31, 2001, 2000 and 1999, and the Company’s Quarterly Report on Form 10-QSB, including unaudited consolidated financial statements as at and for the three and six months ended June 30, 1996.
PROXY FOR 2002, accompany this proxy statement.
CHINA RESOURCES DEVELOPMENT, INC.
ANNUAL MEETING OF SHAREHOLDERS
OctoberSTOCKHOLDERS
November 12, 2000
This Proxy is Solicited on
Behalf of the Board of Directors
2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CHINA RESOURCES DEVELOPMENT, INC.
The undersigned hereby appoints Ching Lung Po and Li Fei Lie,
or either of them acting singly in the absence of the other, as attorneys and as
proxies,proxy with full power of substitution and hereby authorizes him to represent and to vote, as designated below, all of the shares of Common Stock and
Preferred Stockcommon stock of China Resources Development, Inc. (the "Company"), whichheld of record by the undersigned is entitled to voteon October 8, 2002 at the Annual Meeting of Shareholders of the
CompanyStockholders to be held on October 12, 2000, at 2:30 p.m., local time, at the offices
of Shenzhen Xubu Investment Company Limited,26/F, Securities Building, 5020 Binhe Road, Fu Tian District, Shenzhen Province, People'sPeople’s Republic of China, on Tuesday, November 12, 2002 at 2:30 p.m., Hong Kong time, and at anyall adjournments thereof, with all powers the undersigned would possess if personally present. In his or postponements thereof, uponher discretion, the matters described in the accompanying Proxy Statement and upon other business that may properly come before the meeting.
Said proxy is directedauthorized to vote as instructed on the matters set forth below and
otherwise at his discretion. Receipt of a copy of the Notice of said meeting and
Proxy Statement is hereby acknowledged.
1. PROPOSAL TO RATIFY THE ISSUANCE of 244,897 shares of the
Company's Common Stock, par value $0.001. (The Board of Directors recommends a
vote FOR)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL TO AMEND the Amended and Restated 1995 Stock
Option Plan to modify the pricing procedure for the exercise of nonqualified
stock options and to eliminate the requirement of shareholder approval for any
modification of the Plan that would materially increase the benefits accruing to
participants in the Plan. (The Board of Directors recommends a vote FOR)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ELECTION OF NOMINEES FOR DIRECTORS in Class I. SHAREHOLDERS
MAY WITHHOLD THEIR VOTE FOR ANY NOMINEES BY STRIKING OUT THE NAME OF SUCH
NOMINEE OR NOMINEES:
Tam Cheuk Ho and Wong Wah Oh
[ ] FOR [ ] WITHHOLD AUTHORITY
all nominees listed to vote for all nominees listed
4. PROPOSAL TO RATIFY THE SELECTION of Ernst & Young,
Certified Public Accountants, as the Company's independent accountants for the
fiscal year ending December 31, 2000. (The Board of Directors recommends a vote
FOR)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transactupon such other business as may properly come before the meetingmeeting.
1.
Election of Directors
Nominees: Wan Ying Lin and any adjournment or postponement thereof.
Lo Kin Cheung.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY
[ ] FOR all nominees,
except as noted below:
Nominee exception(s)
2.
Proposal to ratify the appointment of Horwath Gelfond Hochstadt Pangburn, P.C. independent auditors of the Company for the fiscal year ending December 31, 2002 to serve at the pleasure of the Board of Directors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
Number of Shares: Name of Owner:
--------------- -----------------------------
of Common Stock (Please type or print)
Signature:
---------------------------------
Title or Capacity:
(if applicable) -------------------------
(Please type or print)
Date:
--------------------------------------
Name of Owner:
-----------------------------
(Please type or print)
Signature:
---------------------------------
Title or Capacity:
(if applicable) -------------------------
(Please type or print)
Date:
--------------------------------------
This Proxy when properly executed will be voted in the manner directed herein
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” PROPOSALS 1 AND 2.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF 2002 ANNUAL MEETING AND PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH.
DATED:
(Signature)
(Signature if jointly held)
(Printed name(s))
Please sign exactly as name appears herein. When shares are held by the undersigned stockholder. If no direction is made, this proxy will be voted
FOR proposals 1 through 5. IfJoint Tenants, both should sign, and for signing as attorney, as executor, as administrator, trustee or guardian, please give your full title as such. If stock is held jointly, each
owner should sign.
by a corporation, please sign in the full corporate name by the president or other authorized officer. If held by a partnership, please sign in the partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THETHIS PROXY CARD PROMPTLY
USING
IN THE ENCLOSED ENVELOPE
ENVELOPE. THANK YOU.