SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
[X]
Filed by a Party other than the Registrant [ ]
[_]
Check the appropriate box:
[ ]
[_] Preliminary Proxy Statement
[ ]
[_] Soliciting Material Under Rule
[_] Confidential, forFor Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X]
[X] Definitive Proxy Statement
[ ]
[_] Definitive Additional Materials
[ ]
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
China Resources Development, Inc.
(Name
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
not
Not applicable
(Name
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x]
[X] No fee required.
[ ]
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)
1) Title of each class of securities to which transaction applies:
(2)
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
(3)
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set(set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
(5)
________________________________________________________________________________
5) Total fee paid:
[ ]
________________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[ ]
materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Formform or Scheduleschedule and the date of its filing.
(1)
1) Amount previously paid:
(2)
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
(3)
________________________________________________________________________________
3) Filing Party:
(4)
________________________________________________________________________________
4) Date Filed:
![[chinaresourcesdef14a001.jpg]](https://files.docoh.com/DEF 14A/0001116502-02-001450/chinaresourcesdef14a001.jpg)
________________________________________________________________________________
CHINA RESOURCES DEVELOPMENT, INC.
[COMPANY LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 12, 2002
DECEMBER 18, 2003
To the Stockholders of China Resources Development, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
“Annual Meeting”"Annual Meeting") of China Resources Development, Inc., a Nevada corporation
(the “Company”"Company"), will be held at 2:30 p.m., Hong Kong time, on November 12, 2002December 18, 2003
at 26/F, Securities Building, 5020 BinheRoom 2105, West Tower, Shun Tak Centre, 200 Connaught Road Fu Tian District, Shenzhen Province, People’s Republic of China,C., Sheung Wan,
Hong Kong, for the following purposes:
1.
To elect two Class IIII members to the Company’s BoardCompany's board of
Directorsdirectors to hold office until the Company’sCompany's annual meeting of
stockholders to be held in 20052006 and until their successors are
duly elected and qualified;
2.
To approve and adopt the Company's 2003 Equity Compensation
Plan;
3. To ratify the appointment of Horwath Gelfond Hochstadt
Pangburn, P.C. as independent auditors of the Company for the
fiscal year ending December 31, 2002;2003; and
3.
4. To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
All stockholders are cordially invited to attend; however, only
stockholders of record at the close of business on October 8, 2002November 14, 2003 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
The Board of Directors recommends that you vote
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR the Board’s nominees to serve as Class III directors, andTHE BOARD'S
NOMINEES TO SERVE AS CLASS I DIRECTORS, AND FOR Proposal Two.
PROPOSALS TWO AND THREE.
By Order of the Board of Directors
![[chinaresourcesdef14a002.jpg]](https://files.docoh.com/DEF 14A/0001116502-02-001450/chinaresourcesdef14a002.jpg)
/s/ Wong WaWah On
---------------------
Corporate Secretary
Hong Kong
October 8, 2002
November 19, 2003
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
ROOM 2105
West Tower, Shun Tak Centre
WEST TOWER, SHUN TAK CENTRE
200 Connaught RoadCONNAUGHT ROAD C.
Sheung Wan, Hong Kong
SHEUNG WAN, HONG KONG
____________________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOVEMBER 12, 2002
DECEMBER 18, 2003
____________________________________
INTRODUCTION
The accompanying proxy is solicited by the Boardboard of Directors (the “Board”)directors of China
Resources Development, Inc. (the “Company,” “we”, “us” and similar terms) to be voted at the Annual Meeting of Stockholders
to be held on Tuesday, November 12, 2002Thursday, December 18, 2003 (the “Annual Meeting”"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 Boardboard with respect to each matter submitted to the Company’sour
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 Companyus. We may use the
services of itsour 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 intendsWe intend to request banks and brokers holding shares of the Company’s Common Stockour
common stock to forward copies of the proxy materials to those persons for whom
they hold shares and to request authority for the execution of proxies. The CompanyWe will
reimburse banks and brokers for their out-of-pocket expenses. The CompanyWe may also retain
the services of a solicitation firm to aid in the solicitation of proxies. If it
does so, the Companywe will pay the fees and expenses of such firm.
This Proxy Statement and the accompanying form of proxy are first being
sent to our stockholders on or about November 19, 2003. A list of stockholders
entitled to vote at the Annual Meeting will be available for examination by any
stockholder for a proper purpose during normal business hours at theour offices of the Company for
a period of at least ten days preceding the Annual Meeting.
VOTING AT THE ANNUAL MEETING
The shares entitled to vote at the Annual Meeting consist of shares of
the Company’s Common Stockour common stock and Series B Preferred Stock,preferred stock, with each share of each class
entitling the holder to one vote. At the close of business on October 8, 2002,November 14, 2003,
the record date for the Annual Meeting, there were issued and outstanding 837,8231,143,823 shares of the Company’s Common Stockour
common stock and 320,000 shares of the Company’sour Series B Preferred Stock. This Proxy Statementpreferred stock issued and
the accompanying form of proxy are first being sent to stockholders on or about October 10, 2002.
outstanding.
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 the
election of the nominees for director listed in this proxy statement, FOR
approval and adoption of the 2003 Equity Compensation Plan, FOR ratification of
the appointment of 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. A stockholder 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 theour Corporate Secretary of the Company or by attending the meeting and voting in
person.
A quorum of stockholders is necessary to take action at the Annual
Meeting. A majority of the outstanding shares of the Company’s Common Stockour common stock and Preferred Stock,preferred
stock, counted together, represented in person or by proxy, will constitute a
quorum. Votes cast by proxy or in person at the Annual Meeting, in person or by proxy, will be
tabulated by the inspector of election appointed for the Annual Meeting. The inspector of election will determine whether or not a quorum is present at the Annual Meeting.election. The inspector of election will treat
abstentions as shares of Common Stockcommon stock or Preferred Stockpreferred stock that are present and
entitled to vote for purposes of determining the presence of a quorum.
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.I
directors. The vote required for adoption of the other proposals herein is the
affirmative vote of a majority of the shares of Common Stockcommon stock and Preferred Stock,preferred
stock, counted together, present in person or represented by proxy at the Annual
Meeting; and, for purposes of determining stockholder approval of such
proposals, abstentions will be treated as shares of Common Stockcommon stock or Preferred Stockpreferred
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 LuckWe
maintain theirour accounts in U.S. Dollars and Hong Kong Dollars, respectively. HARC and itsThe
accounts of our subsidiaries maintain their accountsare maintained in either Hong Kong Dollars or
Renminbi. TheOur consolidated 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 the con venienceconvenience 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") on December 31, 2001,2002 and September 30,
2003, which was approximately U.S.$1.00 = 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 HongkongHong Kong and Shanghai Banking Corporation Limited on December 31, 2001,2002
and September 30, 2003, 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. Dollar amo untsamounts 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.
2
References to "Billion Luck" are to Billion Luck Company Ltd., a
British Virgin Islands company, which is a wholly-owned subsidiary of the Company.
our wholly owned subsidiary.
References to "Company""China Resources", "we", "us", "our" and "Registrant"the like are to
China Resources Development, Inc., and include, unless the context requires
otherwise, the operations of itsour subsidiaries.
References to the "Farming Bureau" are to the Hainan Agricultural
Reclamation General Company, a division of the Ministry of Agriculture, the PRC
government agency responsible for matters relating to agriculture.
References to "Guilinyang Farm" are to Hainan Province Guilinyang State
Farm, a PRC entity owned and controlled by the Farming Bureau.
References to "HARC" are to Hainan Cihui Industrial Company Limited
(formerly known as Hainan Zhongwei Agricultural Resources Company Limited), a
company organized in the PRC, and aour wholly owned subsidiarysubsidiary.
References to "Hainan Weilin" are to Hainan Weilin Timber Limited
Liability Company, a limited liability company organized in the PRC, whose
capital was owned 58% by HARC. On April 30, 2001, HARC disposed of its 58%
interest in Hainan Weilin to the Company.
Farming Bureau.
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 "Xilian Mill" are to Xilian Timber Mill, a PRC entity
whose capital was owned 12.64% by HARC. On April 30, 2001, HARC disposed of its
interest in Xilian Mill to the Farming Bureau.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company regardingus
concerning the beneficial ownership of shares of Common Stockour common stock and Series B
Voting Preferred Stockpreferred stock as of September 30, 2002 by (i)November 14, 2003 by:
o each person known by the Companyus to be the owner of more than 5% of theour
outstanding shares of Common Stockcommon stock and Preferred Stock combined, (ii)preferred stock combined;
o each of the Company'sour directors (iii)and director nominees;
o each of the Company'sour executive officers,officers; and
(iv)o 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% |
__________
Amount and Nature of Beneficial Ownership(4)
--------------------------------------------
Common Stock Preferred Stock Percent
Name and Address of ------------ --------------- of
Beneficial Owner # of Shares % of Class # of Shares % of Class Vote
- ------------------------------------------------------------------------------------------------------------
Ching Lung Po 40,000 3.5% 320,000(1) 100% 24.6%
Tam Cheuk Ho 184,897(2) 16.1% -- -- 12.6%
Wong Wah On 184,897(3) 16.1% -- -- 12.6%
Lam Kwon Sing -- -- -- -- --
Ng Kin Sing -- -- -- -- --
Lo Kin Cheung -- -- -- -- --
Anka Capital Limited 144,897 12.7% -- -- 9.9%
Winsland Capital Limited -- -- 320,000 100% 21.9%
TurstNet Chambers
P.O. Box 3444, Road Town
Tortola, British Virgin Islands
Executive Officers and
Directors as a group
(of 3 persons) 264,897(1)(2)(3) 23.2% 320,000 100% 40.0%
_______________________
(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.
(2)
Includes 244,897144,897 shares registered to Anka Capital Limited, a company
owned 50% by Mr. Tam. Mr. Tam disclaims beneficial ownership of the
shares owned by Anka Capital Limited, except to the extent 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 244,897144,897 shares registered to Anka Capital Limited, a company
owned 50% by Mr. Wong. Mr. Wong disclaims beneficial ownership of the
shares owned by Anka Capital Limited, except to the extent of his
pecuniary interest in the shares.
Also includes 4,320 shares registered to Brender Services Limited, a company beneficially owned by Mr. Wong and an option granted to Mr. Wong to purchase 40,000 shares of Common Stock.
(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 as deemed beneficially owned does not
constitute an admission of beneficial ownership of said shares.
by the named
stockholder.
4
Proposal 1
ELECTION OF
DIRECTORS
Nominees And Directors
Article VIII AND EXECUTIVE OFFICERS
The following table identifies our directors and executive officers as
of the Company’s Articlesdate of Incorporation permitsthis proxy statement, as well as their ages and the positions in
which they serve:
Age Position
--- --------
Ching Lung Po 57 Chairman of 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 2005President and until his successor is duly electedChief Executive Officer
Tam Cheuk Ho 41 Director and qualified. Wan Ying LinChief Financial Officer
Wong Wah On 40 Director, Secretary and Financial Controller
Lam Kwan Sing 34 Director
Ng Kin Sing 41 Director
Lo Kin Cheung both currently serve39 Director
Mr. Ching Lung Po has served as Class III directors.
Both nominees have consented to being named hereina director of China Resources since
February 4, 1998. He was appointed Chairman of the board of directors on January
25, 1999, Chief Executive Officer and have indicated their intention to serve as Class III directorsPresident of the Company if elected. Unless authority to do so is withheld,on February 1,
1999 and June 1, 1999, respectively. Mr. Ching has also been the persons named as proxies will vote the shares represented by such proxies for the electionChairman of the
named nominees. In case anyboard of directors and President of OVM International Holding Corp. (Pink
Sheets: OVMI.pk) since September 1996. Mr. Ching has been involved for more than
20 years in the management of production and technology for industrial
enterprises in PRC. He worked in Heilongjiang Suihua Electronic Factory as an
engineer from 1969 to 1976 and was the Head of the nominees become unavailableHeilongjiang Suihua
Industrial Science & Technology Research Institute from 1975 to 1976. Mr. Ching
joined the Heilongjiang Qingan Factory in 1976 and has been the General Manager
since 1976. In 1988, Mr. Ching started his own business and established the
Shenzhen Hongda Science & Technology Company Limited in Shenzhen, which
manufactures electronic products. Mr. Ching graduated from the Harbin Military
and Engineering Institute and holds the title of Senior Engineer.
Mr. Tam Cheuk Ho has been a director and the Chief Financial Officer of
China Resources since December 2, 1994. Prior to joining us, 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 election toaccounting 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 BoardHong Kong Society of Directors,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. Tam is also a director of Anka Capital
Limited, a privately held corporation, through which he 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 director or directors, even though less than a quorum, for the unexpired termone of such vacant position.
The following persons have been nominated for election to the Board of Directors:
| Name
| Age
| | Position
|
| | | | |
| Wan Ying Lin
| 53
| | Director
|
| | | | |
| Lo Kin Cheung
| 38
| | Director
|
Business Experience
our principal
stockholders.
Mr. Wan Ying LinWong Wah On has been a director of China Resources since December
30, 1997. Mr. Wong is also our Financial Controller and Secretary. He is
responsible for assisting our Chief Financial Officer with our 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 an audit supervisor at Ernst & Young,
Hong Kong. Mr. Wong is also a director of Anka Capital Limited, a privately held
5
corporation, through which he is one of our principal stockholders. He received
a professional diploma in Company Secretaryship and Administration from the Hong
Kong Polytechnic University. He is a fellow of both the Chartered Association of
Certified Accountants and the Hong Kong Society of Accountants, and an associate
of the Institute of Chartered Secretaries and Administrators. He is also a
certified public accountant in Hong Kong.
Mr. Lam Kwan Sing has been a director of China Resources since February 4, 1998,March
20, 2003, and also serves as a member of our audit committee. From 2002 to
present, Mr. Lam has been the Audit committee.executive director of Pacific Challenge Holdings
Limited, a Hong Kong listed company, where he is responsible for the overall
corporate finance and accounting operations. From 2000 to 2002, Mr. Wan graduated fromLam was the
Guangxi Liuzhou Institutebusiness development manager of Medical Specialty specializing in administration and management.China Development Corporation Limited, a Hong
Kong listed company. From January 1986 through December 1987,1997 to 2000, he was the business development manager
of Chung Hwa Development Holdings Limited, a Hong Kong listed company. From 1995
to 1997, Mr. Lam Ko Mould Companywas the assistant manager (Intermediaries supervision) of Hong
Kong Securities and Futures Commission. Mr. Lam holds a Bachelor's degree in
chargeAccountancy from the City University of the China marketing and development division in Hong Kong.
Then,Mr. Ng Kin Sing has been a director of China Resources since February
1, 1999, and also serves as a member of our audit committee. From April 1998 to
the present, Mr. Ng has been the managing director of Action Plan Limited, a
securities investment company. From November 1995 until March 1998, Mr. Ng was
sales and dealing director for NatWest Markets (Asia) Limited; and from May 1985
until October 1996, he was the dealing director of BZW Asia Limited, an
international securities brokerage house. Mr. Ng holds a Bachelor's degree in
January 1988 through February 1993, he worked asBusiness Administration from the marketing managerChinese University 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 CompanyChina Resources since May 30,
2000, and also serves as a member of the Audit Committee.our 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’sBachelor's
degree of Science from the University of Hong Kong.
5
At our annual meeting of stockholders held on November 12, 2002,
Messrs. Wan Ying Lin and Lo Kin Cheung were elected to serve as Class III
directors until the annual meeting to be held in 2005 and until their successors
have been duly elected and qualified. Messrs. Ching Lung Po and Ng Kin Sing
serve as Class II directors until the annual meeting to be held in 2004 and
until their successors have been duly elected and qualified. Messrs. Tam Cheuk
Ho and Wong Wah On, who have been nominated for reelection at the Annual Meeting
that is the subject of this proxy statement, currently serve as Class I
directors. Mr. Wan Ying Lin resigned as a director effective March 1, 2003, and
on March 20, 2003, Mr. Lam Kwan Sing was appointed to fill the vacancy created
by the resignation of Mr. Wan.
Our officers are elected annually at the first board of directors
meeting following the annual meeting of stockholders, and hold office until
their respective successors are duly elected and qualified, unless sooner
displaced.
6
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
- --------
Article VIII of our 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 I directors will be elected at the Annual Meeting. The
nominees for Class I directors, if elected, will serve until the annual meeting
of stockholders to be held in 2006 and until his successor is duly elected and
qualified. Tam Cheuk Ho and Wong Wah On are the Class I director nominees, each
of whom currently serves as a Class I director.
Both nominees have consented to being named herein and have indicated
their intention to serve as Class I directors, 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 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
director or directors, even though less than a quorum, for the unexpired term of
such vacant position.
The following persons have been nominated for election to our board of
directors:
Served as a
Name Age Positions Director Since
---- --- --------- --------------
Tam Cheuk Ho 41 Director December 1994
Wong Wah On 40 Director December 1997
Information Concerning the Board of Directors
- ---------------------------------------------
During the year ended December 31, 2001 the Company’s Board2002, our board of Directorsdirectors held
6four meetings. Each member of the Boardboard participated in each actionmeeting of the
Board.
board.
Committees of the Board of Directors
The Audit Committee,
- ------------------------------------
Our audit committee, which currently consists of Ng Kin Sing, Wan Ying LinLam Kwan
Sing 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 Committeeaudit 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 Board7
Our board of Directorsdirectors has adopted a written Charteraudit committee charter, a
copy of which is attached to this proxy statement as Appendix A. Each member of
our audit committee is an "independent director" within the Audit Committee. The membersmeaning of the Audit Committee are all independent, as defined inRule
4200(a)(14) of the National Association of Securities Dealers’ listing standards.Dealers, Inc. Marketplace
Rules. The Audit Committeeaudit committee met on 4four occasions during the year ended December
31, 2001.
The Company does2002.
We do not have a formal compensation committee. The Boardboard of Directors,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.
The Company does
We do not have a formal nominating committee. The Boardboard of Directors,directors,
acting as a nominating committee, recommends candidates who will be nominated as
management’smanagement's slate of directors at each annual meeting of stockholders. The
Boardboard of Directorsdirectors 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 2003,2004 must notify theour
Corporate Secretary, of the Company, in writing, no later than June 12, 2003.30, 2004. The written notice
must include information about each proposed nominee, including name, age,
business address, principal occupation, shares beneficially owned and other
information required to be included in proxy solicitations. The nomination
notice must also include the nominating stockho lder’sstockholder's name and address, the
number 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’scandidate's desire and ability to serve as a director.
Adherence to these procedures is a prerequisite to a stockholder’sstockholder's right to
nominate a candidate for director at the annual meeting.
Audit Committee Report
- ----------------------
The following statement made by the Audit Committee,our audit committee, shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of suchthose Acts.
The Audit Committee
Our audit committee reviews our financial reporting process on behalf
of the Boardboard of Directors.directors. Management has the primary responsibility for the
financial statements and the reporting process including the system of internal
controls.
Management represented to the committee that the Company'sour consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the committee has reviewed and discussed the consolidated
financial statements with management and the independent auditors. The committee
discussed with the independent auditors matters required to be discussed by
auditing standards generally accepted in the United States.
In addition, the committee has discussed with the independent auditors
the auditor's independence from the CompanyChina Resources and itsour management, including the matters inand has
received the written disclosures and letter required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
6
The audit committee has also discussed with the independent auditors the matters
required to be discussed by SAS 61.
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 their examinations, the evaluations of the Company'sour internal controls, and the overall
quality of our financial reporting.
8
In reliance on the reviews and discussions referred to above, the
committee recommended to the Boardboard of Directors,directors, and the board has approved,
that theour audited consolidated financial statements be included in the Company’sour Annual
Report on Form 10-K10-KSB for the year ended December 31, 2001,2002, for filing with the
Securities and Exchange Commission.
Submitted by the Audit Committee
of the Board of Directors:
/s/
/s/ Ng Kin Sing
/s/ Wan Ying Lin
/s/
/s/ Lam Kwan Sing
/s/ Lo Kin Cheung
Report of the Board of Directors on Executive Compensation
- ----------------------------------------------------------
The following statement made by the Boardboard of Directors,directors, sitting as a
Compensation Committee,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 suchthose Acts.
The Company does
We do not have a formal compensation committee. The Boardboard of Directors,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'sour executive officers, the Boardboard of
Directorsdirectors takes into account all factors which it considers relevant, including
business conditions, in general, and in the Company'sour line of business during the year in
light of such conditions, the market compensation for executives of similar
background and experience, theour performance, of the Company, in general, and the performance of
the specific executive officer under consideration, including the business area
of the Company for which such executive officer is responsible. In light of these factors, the
Boardboard of Directorsdirectors determined that the payment of discretionary bonuses to
executive officers was not appropriate for the fiscal year ended December 31,
2001.
2002.
The Boardboard of Directorsdirectors also believes that granting stock optionsequity-based awards
provides an additional incentive to our executive officers to continue in
the service of the Companyproviding their services and gives themprovides an interest similar toaligned with stockholders in
the success of the Company.our success. In the future, the Boardboard of Directorsdirectors intends to make use of
stock options,equity-based compensation, 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/
/s/ Ching Lung Po
/s/
/s/ Tam Cheuk Ho
/s/
/s/ Wong Wah On
/s/ Wan Ying Lin
/s/
/s/ Lam Kwan Sing
/s/ Ng Kin Sing
/s/
/s/ Lo Kin Cheung
7
9
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The current Boardboard of Directorsdirectors includes Ching Lung Po, Tam Cheuk Ho and
Wong Wah On, each of whom also serves as an executive officer of the Company.officer. As a result,
these directors discuss and participate in deliberations of the Boardboard of
Directorsdirectors on matters relating to the terms of executive compensation. In this
regard, a director whose executive compensation is voted upon by the Boardboard of
Directorsdirectors 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 Companyus for the fiscal year ended December 31,
2001,2002, none of the Company’sour directors, officers, or shareholdersstockholders beneficially owning more
than 10% of any class of our equity securities of the Company, failed to file any forms necessary underrequired
by Section 16(a) of the Securities Exchange Act of 1934 during the most recent
fiscal year.
10
EXECUTIVE COMPENSATION
----------------------
Summary Compensation Table
- --------------------------
The following table shows, for each of the three years ended December
31, 2001,2002, the cash and other compensation paid by the Companyus to itsour 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 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 stock option plan and adjusted as a result of the one-for-ten reverse stock split) of the Common Stock on December 31, 2001, was US$2.78 per share.
8
Long-Term
Annual Compensation Compensation
------------------- ------------
Other Securities All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
(US$) (US$) (US$) (US$)
- ----------------------------------------------------------------------------------------------------------------
Ching Lung Po, President 2002 133,333 -0- -0- -0- -0-
and Chief Executive Officer 2001 276,923 -0- -0- 40,000 -0-
2000 276,923 -0- -0- -0- -0-
Tam Cheuk Ho, Chief 2002 230,769 -0- -0- -0- -0-
Financial Officer 2001 230,769 -0- -0- 40,000 -0-
2000 230,769 -0- -0- -0- -0-
Wong Wah On, Secretary 2003 153,846 -0- -0- -0- -0-
and Financial Controller 2002 153,846 -0- -0- 40,000 -0-
2001 153,846 -0- -0- -0- -0-
Option/SAR Grants Table
The following table sets forth information with respect to the grant of
options to purchase shares of Common Stockcommon stock during the fiscal year ended December
31, 20012002 to each person named in the Summary Compensation Table.
Potential Realiz-
able Value At
Assumed Rates
Number
% Of
Of Stock Price
Of Shares
Total Options
Appreciation For
Underlying
Granted To
Exercise Or
Option Term
Options
Employees In
Base Price
Expiration
Name
Granted (1)
Fiscal Year (1)
$/Share (2)
Date
5%($) 10%($)
Ching Lung Po
40,000
24.54%
$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 granted no Stock Appreciation Rights ("SARs"). For information regarding stock options issued pursuant to the Company's Stock Option Plan, see "Stock Options," hereinbelow.
(2)
As of 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 stock option plan) of the common stock on December 31, 2001, was US$2.78 per share.
Number % Of
Of Shares Total Options
Underlying Granted To Exercise Or
Options Employees In Base Price Expiration
Name Granted Fiscal Year $/Share Date
- ----------------------------------------------------------------------------------------------------------------
Ching Lung Po -- -- -- --
Tam Cheuk Ho -- -- -- --
Wong Wah On -- -- -- --
Aggregated Option Exercises and Fiscal Year-End Option Value Table
- ------------------------------------------------------------------
The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stockcommon stock during the fiscal year ended
December 31, 20012002 by each person named in the Summary Compensation Table.
Number of Shares
Values of Unexercised
Shares
($)
Underlying Unexercised
In the Money Options
Acquired on
Value
Options At Year End
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 (2) -0- / -0-
Tam Cheuk Ho -- -- 40,000/40,000 (2) -0- / -0-
Wong Wah On -- -- 40,000/40,000 (2) -0- / -0-
11
________________________
(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 on the difference between the closing price of the Company's Common Stockour common
stock on the OTC Bulletin Board of $2.78$1.50 per share on December 31,
2001,2002, and the exercise price of the options.
9
(2) These options were exercised subsequent to December 31, 2002.
Securities Authorized for Issuance Under Equity Compensation Plans
- ------------------------------------------------------------------
The following table sets forth information relating to our outstanding
stock option plans as of December 31, 2002:
Number of Securities
Number of Securities to Remaining Available for
Be Issued Upon Weighted-average Future Issuance Under
Exercise Of Outstanding Exercise Price of Equity Compensation
Options, Outstanding Options, Plan (excluding securities
Warrants and Rights Warrants and Rights reflected in column a)
- ------------------------------------------------------------------------------------------------------------------------
Equity Compensation
Plans Approved by
Security Holders 209,455 $2.95 46,455
Equity Compensation
Plans Not Approved by
Security Holders 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
Total 209,455 $2.95 46,455
Stock Option Plan
The Company
- -----------------
We have adopted a Stock Option Plan (the "Plan""1995 Plan") as of March 31,
1995. The 1995 Plan allows the Boardboard of Directors,directors, or a committee thereof at the
Board'sboard's discretion, to grant stock options to our officers, directors, key
employees, consultants and affiliates of the Company.affiliates. Initially, 24,000 shares of common stock
could be issued and sold pursuant to options granted under the 1995 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 Boardboard of Directors,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 our behalf or for or on behalf of the Company or itsour subsidiaries.
The Boardboard of Directors,directors, or a committee appointed by the Boardboard (the
"Committee"), is vested with authority to (i)(a) select persons to participate in
the Plan; (ii)(b) determine the form and substance of grants made under the 1995
Plan to each participant, and the conditions and restrictions, if any, subject
12
to which grants will be made; (iii)(c) interpret the Plan; and (iv)(d) adopt, amend, or
rescind such rules and regulations for carrying out the 1995 Plan as it may deem
appropriate. The Boardboard of Directorsdirectors has the power to modify or terminate the
1995 Plan and from time to time may suspend, and if suspended may reinstate, any
or all of the provisions of the 1995 Plan except that (i) no modification,
suspension, or termination of the 1995 Plan may, without the consent of the
grantee affected, alter or impair any grant previously made under the 1995 Plan;
and (ii) no modification shall become effective without prior consent of the shareholders of the Companyour
stockholders that would (a) increase the maximum number of shares reserved for
issuance under the 1995 Plan, except for certain adjustments allowed by the 1995
Plan; or (b) change the classes of employees eligible to participate in the 1995
Plan.
The 1995 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 our stock or the stock of the Company or any of itsour
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 80% of the fair market
value of the shares on the date the option is granted, as the Committee
determines.
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.common stock. The fair
market value of shares of Common Stockcommon 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 certain officers, directors, employees and consultant to purchase 24,000 shares of the Company's Common Stock: All of the stock options were issued in accordance with the terms of the Plan at an exercise price of US$378 (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$42 (the fair market value of the Common Stock as of May 20, 1996). By virtue of this action, the outstanding options would have been exercisable beginning on May 20, 1997, and until May 20, 2006.
On December 30, 1996, the shareholders of the Companyour stockholders adopted an amendment to the 1995
Plan (a) to change the number of shares of Common Stockcommon stock subject to the 1995 Plan
to that number of shares which would, in the aggregate and if deemed
outstanding, constitute 20% of the Company'sour then-outstanding shares of Common Stock,common stock, as
determined at the time of granting stock options, and (b) to allow Nonqualified
Stock Options, as defined in the 1995 Plan, to be exercisable in less than one
year.
As of June 15, 2001, the board of directors adopted the recommendations of the committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan and granted stockDecember 31, 2002, options to purchase 163,000 shares ofhad been
granted under the Company's Common Stock to1995 Plan. During the following officers, directorsfiscal year ended December 31, 2002, no
options were granted under the 1995 Plan 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 stockno options previously granted were cancelled.
exercised.
Report on Repricing of Options
- ------------------------------
No options were repriced during the year ended December 31, 2001.
2002.
Director Compensation
- ---------------------
During the fiscal years ended December 31, 2002 and 2001, and 2000,our directors of the Company
did not receive compensation for their services as such.
Employment and Consulting Agreements
- ------------------------------------
On February 1, 1999, the Companywe entered into a Service Agreement with Ching
Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching has beenis employed by the Company as anour
Chief Executive Officer and to perform such duties as the Boardboard of Directorsdirectors
shall from time to time determine. Mr. Ching shall receivereceives a base salary of
HK$2,160,000 (US$276,923) annually, which is adjusted on each anniversary of the
Service Agreement to reflect a change in the applicable consumer price index or
13
such greater amount as our board of directors may determine. The Service
Agreement has a term of two years and is automatically renewed unless earlier
terminated as provided therein. On June 1, 2003, we entered into a Supplemental
Service Agreement with Ching Lung Po, reducing his base salary to HK$240,000
(US$30,769) per annum, with all other terms of the Service Agreement remaining
in full force and effect.
On February 1, 1999, we entered into an Employment Agreement with Tam
Cheuk Ho. In accordance with the Employment Agreement, Mr. Tam is employed as
our Chief Financial Officer and to perform such duties as the board of directors
shall befrom time to time determine. Mr. Tam receives a base salary of
HK$1,800,000 (US$230,769) annually, which is 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 Boardour board of Directorsdirectors may determine. The Employment
Agreement has a term of two years and shall beis automatically renewed unless earlier
terminated as provided therein.
On February 1, 1999, the Companywe entered into an Employment Agreement with Tam Cheuk Ho.Wong
Wah On. In accordance with the terms of the Employment Agreement, Mr. Tam has beenWong is employed by the Company as the Chiefour
Financial OfficerController and Corporate Secretary and to perform such duties as the
Boardboard of Directorsdirectors shall from time to time determine. Mr. Tam shall receiveWong receives a base
salary of HK$1,800,0001,200,000 (US$230,769)153,846) annually, which base salary shall beis 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 Boardour board of Directorsdirectors may
determine. The Employment Agreement has a term of two years and shall beis automatically
renewed unless earlier terminated as provided therein.
11
On February 1, 1999, the Company entered into an Employment Agreement with Wong Wah On. In accordance with the terms of the Employment 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 Directors 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 Board 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 haswe have no employment contracts with any of
itsour officers or directors and maintainswe maintain no retirement, fringe benefit or
similar plans for the benefit of its officers or directors. The CompanyWe 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 deemswe deem
appropriate to attract and retain the services of such persons.
The Company does
We do not pay fees to directors for their attendance at meetings of the
Boardboard of Directorsdirectors or of committees; however, the Companywe may adopt a policy of making
such payments in the future. The Company willWe reimburse out-of-pocket expenses incurred by
directors in attending Boardboard and committee meetings.
During
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
On January 31, 1994, the fiscal yearFarming Bureau, Guilinyang Farm, and Billion
Luck entered into a Contract On Investment For The Setting Up Of Hainan
Agricultural Resources Company Ltd. pursuant to which such parties agreed to
establish HARC as a limited liability joint stock company under the Rules for
Standardized Incorporated Companies in the PRC and the regulations of Hainan
Province. The agreement provided that HARC's total initial capitalization of
Rmb100 million (US$12 million) in assets and cash was to be contributed as
follows: the Farming Bureau (39%), Guilinyang Farm (5%) and Billion Luck (56%).
On July 15, 1994, the Farming Bureau and HARC entered into a Rental
Agreement for the rental of 532 square meters of a building located in Haikou
City, PRC, in which HARC's corporate headquarters are located. Such rental
agreement is for a period of 10 years at an annual rental of Rmb170,240
(US$20,560) payable in equal semi-annual installments. On July 1, 2001, pursuant
to mutual agreement, both parties agreed to terminate the rental agreement. For
each of the two years ended December 31, 2001 no holderand 2002, HARC paid rental of
stock options exercised such options. All stock options grantedRmb85,000 (US$10,266) and nil, respectively, to the Farming Bureau.
14
On September 1, 2000, China Resources and Anka Consultants Limited, a
private Hong Kong company that is owned by certain of our directors, entered
into an office sharing agreement, based upon which our head office in Hong Kong
is shared on Julyan equal basis between the two parties. The lease was for a period
of 2 years from September 1, 1995 either lapsed due2000 to termination of employment or were cancelled,August 31, 2002 and all options granted on June 15, 2001 remained outstanding. Also during such fiscal year, no long-term incentive plans or pension plans werewas renewed for another
two years from September 1, 2002. The office sharing agreement also provides
that China Resources and Anka shall share certain costs and expenses in
effectconnection with respect to anyits use of the Company's officers, directors or employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As disclosed above under Stock Optionsoffice. For the Company has adopted a Stock Option Planyears ended December 31, 2001 and
2002, we paid rental expenses to grant stock optionAnka Consultants Limited amounted to officers, directors, key employees, consultantsHK$288,000
(US$37,000) and affiliatesHK$268,000 (US$34,000), respectively.
On April 30, 2001, Billion Luck, through its nominees, acquired 39%
minority equity interest in HARC from the Farming Bureau, for total
consideration of Rmb129,405,000 (US$15,629,000). Concurrent with the
Company.
As disclosed above under Executive Compensation Ching Lung Po, Tam Cheuk Ho and Wong Wah On are parties to employmentacquisition, HARC entered into several agreements with the Company.
Farming Bureau to
dispose of certain assets, including 24,877,008 shares of Hainan Sundiro
Motorcycle Co. Ltd., for consideration of Rmb70 million (US$8,454,000), a 12.64%
equity interest in Xilian Mill for consideration of Rmb5 million (US$603,865)
and 58% interest in Hainan Weilin for consideration of Rmb3.8 million
(US$459,000).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION
OF THE DIRECTOR NOMINEES.
12
Proposal
15
PROPOSAL 2
APPROVAL AND ADOPTION OF THE 2003 EQUITY COMPENSATION PLAN
At the Annual Meeting, stockholders will be requested to approve and
adopt our 2003 Equity Compensation Plan (the "2003 Plan"). In 1995, our board of
directors and stockholders adopted the 1995 Plan as a method of providing
incentives to continued performance by our officers, directors and employees.
Since adoption of the 1995 plan, we rewarded deserving participants through the
grant of options from time-to-time. The number of shares available for issuance
under the 1995 plan has now been depleted.
On October 9, 2003, the board of directors adopted the 2003 Equity
Compensation Plan (the "2003 Plan"). The 2003 Plan is more flexible than the
1995 Stock Option Plan by, among other things, enabling the board to grant
various incentive equity awards not limited to stock options. The board of
directors believes that it is in our best interests to approve and adopt the
2003 Plan and recommends a vote "FOR" the 2003 Plan. A description of the 2003
Plan follows and a complete copy of the 2003 Plan is attached as Appendix B to
this Proxy Statement. Stockholders are urged to review the entire 2003 Plan
prior to determining whether to vote for its approval.
We have reserved a number of shares of common stock equal to 20% of our
issued and outstanding common stock, from time-to-time, for issuance pursuant to
options granted ("Plan Options") or for restricted stock awarded ("Stock
Grants") under the 2003 Plan. Stock Appreciation Rights may be granted as a
means of allowing participants to pay the exercise price of Plan Options. Stock
Grants may be made upon such terms and conditions as the board or committee
designated by the board determines. Stock Grants may include deferred stock
awards under which receipt of Stock Grants is deferred, with vesting to occur
upon such terms and conditions as the board or committee determines.
The purpose of the 2003 Plan is to increase our employees', advisors',
consultants' and non-employee directors' proprietary interest in our company,
and to align more closely their interests with the interests of our
stockholders, as well as to enable us to attract and retain the services of
experienced and highly qualified employees and non-employee directors. The Plan
will be administered by our board of directors or a committee designated by the
board. The board or committee will determine, from time to time, those of our
officers, directors, employees and consultants to whom Stock Grants and Plan
Options will be granted, the terms and provisions of the respective Stock Grants
and Plan Options, the dates such Plan Options will become exercisable, the
number of shares subject to each Plan Option, the purchase price of such shares
and the form of payment of such purchase price. Plan Options and Stock Grants
will be awarded based upon the fair market value of our common stock at the time
of the award All questions relating to the administration of the 2003 Plan, and
the interpretation of the provisions thereof are to be resolved at the sole
discretion of the board or committee.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of common stock owned
by the eligible person and to receive a new Plan Option to purchase shares of
common stock equal in number to the tendered shares. Any Incentive Option
granted under the 2003 Plan must provide for an exercise price of not less than
100% of the fair market value of the underlying shares on the date of such
grant, but the exercise price of any Incentive Option granted to an eligible
employee owning more than 10% of our common stock must be at least 110% of such
fair market value as determined on the date of the grant.
16
The term of each Plan Option and the manner in which it may be
exercised is determined by our board or the committee, provided that no Plan
Option may be exercisable more than 10 years after the date of its grant and, in
the case of an Incentive Option granted to an eligible employee owning more than
10% of our common stock, no more than five years after the date of the grant. In
any case, the exercise price of any stock option granted under the Plan will not
be less than 85% of the fair market value of the common stock on the date of
grant. The exercise price of Non-Qualified Options shall be not less than 100%
of fair market value on the date of grant.
The per share purchase price of shares subject to Plan Options granted
under the 2003 Plan may be adjusted in the event of certain changes in our
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors and key employees of and consultants to us and our
subsidiaries will be eligible to receive Non-Qualified Options under the Plan.
Only our officers, directors and employees who are employed by us or by any of
our subsidiaries thereof are eligible to receive Incentive Options.
All Plan Options are nonassignable and nontransferable, except by will
or by the laws of descent and distribution and, during the lifetime of the
optionee, may be exercised only by such optionee. If an optionee's employment is
terminated for any reason, other than his death or disability or termination for
cause, the Plan Option granted may be exercised on the earlier of the expiration
date or 90 days following the date of termination. If the optionee dies during
the term of his employment, the Plan Option granted to him shall lapse to the
extent unexercised on the earlier of the expiration date of the Plan Option or
the date one year following the date of the optionee's death. If the optionee is
permanently and totally disabled, the Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability. The board or committee may impose
additional terms and conditions on the exercise or any Plan Options or Stock
Grants.
The board of directors may amend, suspend or terminate the 2003 Plan at
any time, except that no amendment shall be made which (a) increases the total
number of shares subject to the 2003 Plan or changes the minimum purchase price
therefore (except in either case in the event of adjustments due to changes in
our capitalization), (b) affects outstanding Plan Options or any exercise right
thereunder, (c) extends the term of any Plan Option beyond ten years, or (d)
extends the termination date of the 2003 Plan.
Unless the Plan shall be earlier suspended or terminated by the board
or committee, the 2003 Plan shall continue until such time as no further awards
are available for grant and all outstanding awards are no longer outstanding;
provided, however, that no Incentive Stock Options may be made after ten years
from the effective date of the 2003 Plan. No termination of the 2003 Plan shall
not affect the validity of any Plan Options or Stock Grants previously awarded
thereunder.
No Plan Options or Stock Grants have yet been granted or awarded. Under
rules established by Nasdaq, on which our shares are listed, establishment of
the 2003 Plan requires the affirmative approval of out stockholders at the
Annual Meeting. The 2003 will become effective upon receipt of stockholder
approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE
2003 EQUITY COMPENSATION PLAN.
17
PROPOSAL TO RATIFY3
RATIFICATION OF THE APPOINTMENT OF HORWATH GELFOND HOCHSTADT
PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY
At
The appointment of Horwath Gelfond Hochstadt Pangburn, P.C. as our
independent auditors for the Annual Meeting, stockholdersfiscal year ending December 31, 2003 will be
requestedsubmitted for ratification by our stockholders.
Fees to ratifyHorwath Gelfond Hochstadt Pangburn, P.C.
- ------------------------------------------------
The following table shows the Boardfees that we paid or accrued for the
audit and other services provided by Horwath Gelfond Hochstadt Pangburn, P.C.
for the 2002 fiscal year and by Ernst & Young for the 2001 fiscal year.
Fiscal 2002 Fiscal 2001
----------- -----------
Audit Fees $49,940 $69,872
Audit-Related Fees -- --
Tax Fees 6,800 7,051
All Other Fees -- --
------- -------
Total $56,740 $76,923
======= =======
Audit Fees -- This category includes the audit of Directors’ engagementour annual financial
statements, review of financial statements included in our Form 10-QSB Quarterly
Reports and services that are normally provided by the independent auditors in
connection with engagements for those fiscal years. This category also includes
advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.
Audit-Related Fees -- This category consists of assurance and related
services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under "Audit Fees." The services for the fees disclosed under
this category include consultation regarding our correspondence with the SEC and
other accounting consulting.
Tax Fees -- This category consists of professional services rendered by
Horwath Gelfond Hochstadt Pangburn, P.C. for tax compliance and tax advice. The
services for the fees disclosed under this category include tax return
preparation and technical tax advice.
All Other Fees -- This category consists of fees for other
miscellaneous items.
Although the board of directors is submitting the appointment of
Horwath Gelfond Hochstadt Pangburn, P.C. for stockholder approval, it reserves
the fiscal year ending 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 decisionright to change accountants has been approved by the Company’s Boardselection 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 hereof, we did not consult with Horwath Gelfond Hochstadt Pangburn, P.C. regardingas
auditors, at any oftime during the matters 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 Company’s consolidated financial statements for the most recent fiscal year, and for the review of the Company’s financial information includedif it deems such change to be in
its Annual Report on Form 10-K and its quarterly reports on Form 10-Q during the year 2001 was HK $545,000 (US $69,872).
All Other Fees: The aggregate fees, including expenses, billed for all other services rendered to the Company by Ernst & 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 Annual Meeting.
The approval of Proposal 2 by the stockholders requires that the votes cast favoring Proposal 2 exceed the votes cast opposing Proposal 2.
our best interests, even after stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF HORWATH GELFOND
HOCHSTADT PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY.
13
COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2003.
18
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company whichthat are intended to be presented by such
stockholders at the annual meeting of stockholders to be held in 20032004 must be
received by the Companyus no later than June 12, 2003,30, 2004, 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 Annual 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
ADDITIONAL INFORMATION
Our Annual Report on Form 10-K10-KSB (without exhibits), including audited
consolidated financial statements as at and for the years ended December 31,
2002 and 2001, 2000 and 1999, and the Company’sour Quarterly Report on Form 10-QSB, including unaudited
consolidated financial statements as at and for the three and sixnine months ended
JuneSeptember 30, 2002,2003, accompany this proxy statement.
19
APPENDIX A
CHINA RESOURCES DEVELOPMENT, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee (the "committee") of
China Resources Development, Inc. (the "Company"). The committee shall review
and reassess the charter at least annually
Members of the committee shall be appointed by the board of directors and may be
replaced by the board of directors. The board of directors shall designate one
member of the committee as its chairperson.
MEMBERSHIP
The committee shall consist of at least three directors. Each member of the
committee shall meet the independence and experience requirements of (a) Section
10A(m)(3) or successor provision of the Securities Exchange Act of 1934 (the
"Exchange Act"), and all rules and regulations promulgated by the SEC and (b)
the rules, regulations and standards imposed by Nasdaq or other marketplace on
which the Company's securities may be listed, from time to time (the
"Independence Requirements").
Each member of the committee shall be financially literate, as determined by the
Company's board of directors in the exercise of its reasonable business
judgment, or must become financially literate within a reasonable period of time
after his or her appointment to the committee. In addition, at least one member
of the committee shall have employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight. At least one
member of the committee shall be an "audit committee financial expert," within
the meaning of Item 401(e) of Regulation S-B or other rule of similar
applicability to which the Company is subject.
A-1
Notwithstanding the foregoing, (a) one director who does not meet the
Independence Requirements, who is not an employee of the Company or an immediate
family member of an employee, may be appointed to the committee, if the board of
directors, under exceptional and limited circumstances, determines that
membership on the committee by the individual is required by the best interests
of the Company and its shareholders; provided that the board discloses in the
next annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination, and (b) for so long as the
Company reports under Regulation S-B, the board of directors may provide that
the committee is to consist of not less than two members, a majority of whom
shall satisfy the Independence Requirements.
PROCEDURES
The committee shall meet quarterly, or as often as it otherwise determines.
Special meetings may be convened as the committee deems necessary or
appropriate. A majority of the members of the committee shall constitute a
quorum to transact business. Members of the committee may participate in a
committee meeting by means of telephone conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Except in extraordinary circumstances as determined
by the Chairman of the committee, notice shall be delivered to all committee
members at least 48 hours in advance of the scheduled meeting. Minutes of each
meeting will be kept and distributed to the entire board.
The affirmative vote of a majority of the members of the committee present at
the time of a vote will be required to approve any action of the committee.
Subject to the requirements of any applicable law, rule or regulation, any
action required, or permitted to be taken, at a meeting of the committee may be
taken without a meeting if consent in writing, setting forth the action so
taken, is signed by all of the members of the committee. Such written consent
shall have the same force as a unanimous vote of the committee.
A-2
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility relating to the Company's financial
statements and the financial reporting process, the systems of internal
accounting and financial controls, the annual independent audit of the Company's
financial statements, and legal compliance and ethics programs as may be
established by management and the board. In so doing, it is the responsibility
of the committee to maintain free and open communication between the committee,
the independent auditors and management of the Company. In discharging its
oversight role, the committee is empowered to investigate any matter brought to
its attention with full access to all books, records, facilities, and personnel
of the Company and the power to retain outside counsel, or other experts for
this purpose.
RESPONSIBILITIES AND PROCESSES
The audit committee shall be directly responsible for the appointment,
compensation, oversight, termination and replacement of the Company's
independent auditor (subject, if applicable, to shareholder ratification), and
shall have the sole authority to approve all audit engagement fees and terms and
all non-audit engagements with the independent auditors. The committee may
consult with management, but, except as expressly provided herein, shall not
delegate these responsibilities.
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
o The committee shall convey to management and the independent auditors
that the independent auditors are ultimately accountable to the board
and the audit committee, as representatives of the Company's
shareholders.
A-3
o The committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board and other
applicable laws, rules and regulations. The committee shall ensure its
receipt from the outside auditors of a formal written statement
delineating all relationships between the auditor and the Company,
consistent with ISB Standard 1, and the committee shall be responsible
for engaging in a dialogue with the auditor with respect to any
disclosed relationship or services that may impact the objectivity and
independence of the auditor and for taking or recommending that the
full board take appropriate action to oversee the outside auditor.
o The committee shall discuss with the independent auditors the overall
scope and plans for their respective audits including the adequacy of
staffing and compensation. Also, the committee shall discuss with
management and the independent auditors the adequacy and effectiveness
of the accounting and financial controls, including the Company's
system to monitor and manage business risk, and legal and ethical
compliance programs. Further, the committee shall meet separately with
independent auditors, with and without management present, to discuss
the results of their examinations.
o The committee shall review with management and the independent auditors
the interim financial statements prior to the filing of the Company's
Quarterly Report on Form 10-QSB. Also, the committee shall discuss the
results of the quarterly review and any other matters required to be
communicated to the committee by the independent auditors under
generally accepted auditing standards. The chair of the committee may
represent the entire committee for the purposes of this review.
o The committee shall review with management and the independent auditors
the annual financial statements to be included in the Company's Annual
Report on Form 10-KSB (or the annual report to shareholders if
distributed prior to the filing of Form 10-KSB). Also, the committee
shall discuss the results of the annual audit and any other matters
required to be communicated to the committee by the independent
auditors under generally accepted auditing standards.
o The committee shall review and discuss with management and the
independent auditor (a) major issues regarding accounting principles
and financial statement presentations, including any significant
changes in the Company's selection of application of accounting
principles, and major issues as to the adequacy of the Company's
internal controls and any special audit steps adopted in light of
material control deficiencies, (b) analyses prepared by management
A-4
and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation
of the Company's financial statements, including analyses of the effect
of alternative generally accepted accounting principles ("GAAP")
methods on the financial statements, (c) the types of information to be
disclosed and the types of presentation to be made relating to earning
press releases as well as other financial information and earnings
guidance provided to analysts and rating agencies, and (d) the effect
of regulatory and accounting initiatives, as well as off-balance sheet
structures, on the Company's financial statements.
o The committee shall review and discuss with management and the
independent auditor any report of the independent auditor regarding (a)
all critical accounting policies and practices to be used by the
independent auditor, (b) alternative treatments of financial
information within GAAP that have been discussed with management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent auditor, or
(c) any other material written communications between the independent
auditor and management, including any management letter or schedule of
unadjusted differences.
o The committee shall approve all audit and non-audit engagements of the
Company's independent auditors in advance. The committee shall not
approve any engagements of the Company's outside auditors with respect
to those services set forth in Section 10A(g)(1) through (9) of the
Exchange Act. In the event the Audit Committee approves any non-audit
services by the Company's independent auditors, such approval shall be
disclosed in periodic reports required by Section 13(a) of the Exchange
Act.
o The committee shall make regular reports to the board of directors and
shall review with the board any issues that arise with respect to (a)
the quality or integrity of the Company's financial statements, (b) the
Company's compliance with legal or regulatory requirements that may
have a material impact on the Company's financial statements, or (c)
the performance and independence of the Company's independent auditors.
In addition, the committee annually shall review its own performance.
A-5
o The Committee shall discuss with the independent auditor the matters
required to be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit. In particular, discuss (a) the
adoption of, or changes to, the Company's significant auditing and
accounting principles and practices as suggested by the independent
auditor or management; (b) the management letter provided by the
independent auditor and the Company's response to that letter; and (c)
any audit problems or difficulties encountered in the course of the
audit work, including any restrictions on the scope of activities or on
access to requested information.
o The committee shall obtain assurance from the independent auditor that
each audit of the Company's financial statements has complied with the
requirements of Section 10A of the Exchange Act.
o The committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
A-6
APPENDIX B
----------
CHINA RESOURCES DEVELOPMENT, INC.
2003 EQUITY INCENTIVE PLAN
CHINA RESOURCES DEVELOPMENT, INC.
2003 EQUITY INCENTIVE PLAN
1. SECTION PURPOSE; DEFINITIONS.
1.1 Purpose. The purpose of the China Resources Development, Inc. 2003
Equity Incentive Plan is to enable the Company to offer to its employees,
officers, directors and consultants whose past, present and/or potential
contributions to the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire a proprietary
interest in the Company. The various types of long-term incentive awards that
may be provided under the Plan will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Agreement" means the agreement between the Company and
the Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Committee" means the Equity Incentive Committee of the
Board or any other committee of the Board that the Board may designate to
administer the Plan or any portion thereof. If no Committee is so designated,
then all references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company,
$.001 par value per share.
(f) "Company" means China Resources Development, Inc., a
corporation organized under the laws of the State of Nevada.
(g) "Deferred Stock" means Common Stock to be received under
an award made pursuant to Section 8, below, at the end of a specified deferral
period.
(h) "Disability" means physical or mental impairment as
determined under procedures established by the Committee for purposes of the
Plan.
(i) "Effective Date" means the date set forth in Section 12.1,
below.
B-1
(j) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock is listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the
last sale price of the Common Stock in the principal trading market for the
Common Stock on such date, as reported by the exchange or Nasdaq, as the case
may be; (ii) if the Common Stock is not listed on a national securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is traded
in the over-the-counter market, the closing bid price for the Common Stock on
such date, as reported by the OTC Bulletin Board or the National Quotation
Bureau, Incorporated or similar publisher of such quotations; and (iii) if the
fair market value of the Common Stock cannot be determined pursuant to clause
(i) or (ii) above, such price as the Committee shall determine, in good faith.
(k) "Holder" means a person who has received an award under
the Plan.
(l) "Incentive Stock Option" means any Stock Option intended
to be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(m) "Nonqualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
(n) "Normal Retirement" means retirement from active
employment with the Company or any Subsidiary on or after age 65.
(o) "Other Stock-Based Award" means an award under Section 9,
below, that is valued in whole or in part by reference to, or is otherwise based
upon, Common Stock.
(p) "Parent" means any present or future "parent corporation"
of the Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means the China Resources Development, Inc. 2003
Equity Incentive Plan, as hereinafter amended from time to time.
(r) "Repurchase Value" shall mean the Fair Market Value in the
event the award to be repurchased under Section 10.2 is comprised of shares of
Common Stock and the difference between Fair Market Value and the Exercise Price
(if lower than Fair Market Value) in the event the award is a Stock Option or
Stock Appreciation Right; in each case, multiplied by the number of shares
subject to the award.
(s) "Restricted Stock" means Common Stock received under an
award made pursuant to Section 7, below, that is subject to restrictions under
said Section 7.
(t) "SAR Value" means the excess of the Fair Market Value (on
the exercise date) over the exercise price that the participant would have
otherwise had to pay to exercise the related Stock Option, multiplied by the
number of shares for which the Stock Appreciation Right is exercised.
(u) "Stock Appreciation Right" means the right to receive from
the Company, on surrender of all or part of the related Stock Option, without a
cash payment to the Company, a number of shares of Common Stock equal to the SAR
Value divided by the Fair Market Value (on the exercise date).
(v) "Stock Option" or "Option" means any option to purchase
shares of Common Stock granted pursuant to the Plan.
B-2
(w) "Stock Reload Option" means any option granted under
Section 5.3 of the Plan.
(x) "Subsidiary" means any present or future "subsidiary
corporation" of the Company, as such term is defined in Section 424(f) of the
Code.
2. SECTION ADMINISTRATION.
2.1 Committee Membership. The Plan shall be administered by the Board
or a Committee. Committee members shall serve for such term as the Board may in
each case determine, and shall be subject to removal at any time by the Board.
The Committee members, to the extent possible and deemed to be appropriate by
the Board, shall be "non-employee directors" as defined in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and "outside directors" within the meaning of Section 162(m) of the Code.
2.2 Powers of Committee. The Committee shall have full authority to
award, pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Deferred Stock, (v) Stock
Reload Options and/or (vi) Other Stock-Based Awards. For purposes of
illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):
(a) To select the officers, employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Reload Stock Options
and/or Other Stock-Based Awards may from time to time be awarded hereunder;
(b) To determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share exercise price or types of consideration
paid upon exercise of such options, such as other securities of the Company or
other property, any restrictions or limitations, and any vesting, exchange,
surrender, cancellation, acceleration, termination, exercise or forfeiture
provisions, as the Committee shall determine);
(c) To determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;
(d) To determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with or
apart from other equity awarded under this Plan and cash awards made by the
Company or any Subsidiary outside of this Plan;
(e) To permit a Holder to elect to defer a payment under the
Plan under such rules and procedures as the Committee may establish, including
the crediting of interest on deferred amounts denominated in cash and of
dividend equivalents on deferred amounts denominated in Common Stock;
(f) To determine the extent and circumstances under which
Common Stock and other amounts payable with respect to an award hereunder shall
be deferred that may be either automatic or at the election of the Holder; and
(g) To substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new awards
of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.
B-3
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 11, below, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award under the Plan (and to determine the form and substance of
all Agreements relating thereto), and to otherwise supervise the administration
of the Plan. Subject to Section 11, below, all decisions made by the Committee
pursuant to the provisions of the Plan shall be made in the Committee's sole
discretion and shall be final and binding upon all persons, including the
Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options (including but limited to Stock Reload Options or Stock
Appreciation rights granted in conjunction with an Incentive Stock Option) or
any Agreement providing for Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be so exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Holder(s) affected, to disqualify any Incentive Stock
Option under such Section 422.
3. SECTION STOCK SUBJECT TO PLAN.
3.1 Number of Shares. The total number of shares of Common Stock
reserved and available for issuance under the Plan shall be such number of
shares as is equal to 20% of the total number of shares of Common Stock
outstanding from time-to-time. No award under the Plan shall be invalidated by
reason of a decrease in the number of outstanding shares of Common Stock;
provided that the award was made from shares validly available under the Plan at
the time the award is made.
Shares of Common Stock under the Plan may consist, in whole or in part,
of authorized and unissued shares or treasury shares. If any shares of Common
Stock that have been granted pursuant to a Stock Option cease to be subject to a
Stock Option, or if any shares of Common Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred Stock award, Reload Stock Option
or Other Stock-Based Award granted hereunder are forfeited or any such award
otherwise terminates without a payment being made to the Holder in the form of
Common Stock, such shares shall again be available for issuance in connection
with future grants and awards under the Plan. If a Holder pays the exercise
price of a Stock Option by surrendering any previously owned shares and/or
arranges to have the appropriate number of shares otherwise issuable upon
exercise withheld to cover the withholding tax liability associated with the
Stock Option exercise, then the number of shares available under the Plan shall
be increased by the lesser of (i) the number of such surrendered shares and
shares used to pay taxes; and (ii) the number of shares purchased under such
Stock Option.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, dividend (other than a cash dividend)
payable on shares of Common Stock, stock split, reverse stock split, combination
or exchange of shares, or other extraordinary or unusual event occurring after
the grant of an award which results in a change in the shares of Common Stock of
the Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award
or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final,
binding and conclusive.
B-4
4. SECTION ELIGIBILITY.
Awards may be made or granted to employees, officers, directors and
consultants who are deemed to have rendered or to be able to render significant
services to the Company or its Subsidiaries and who are deemed to have
contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an
employee of the Company or a Subsidiary at the time of grant.
5. SECTION STOCK OPTIONS.
5.1 Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the authority to grant Incentive Stock Options or
Non-Qualified Stock Options, or both types of Stock Options which may be granted
alone or in addition to other awards granted under the Plan. To the extent that
any Stock Option intended to qualify as an Incentive Stock Option does not so
qualify, it shall constitute a separate Nonqualified Stock Option.
5.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) Option Term. The term of each Stock Option shall be fixed
by the Committee; provided, however, that an Incentive Stock Option may be
granted only within the ten-year period commencing from the Effective Date and
may only be exercised within ten years of the date of grant [or five years in
the case of an Incentive Stock Option granted to an optionee who, at the time of
grant, owns Common Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company ("10% Stockholder")].
(b) Exercise Price. The exercise price per share of Common
Stock purchasable under a Stock Option shall be determined by the Committee at
the time of grant and may not be less than 100% of the Fair Market Value on the
day of grant; provided, however, that the exercise price of an Incentive Stock
Option granted to a 10% Stockholder shall not be less than 110% of the Fair
Market Value on the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee and as set forth in Section 10, below. If the Committee provides,
in its discretion, that any Stock Option is exercisable only in installments,
i.e., that it vests over time, the Committee may waive such installment exercise
provisions at any time at or after the time of grant, in whole or in part, based
upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option, by giving written notice of exercise to the Company specifying
the number of shares of Common Stock to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, which shall be in cash or,
if provided in the Agreement, either in shares of Common Stock (including
Restricted Stock and other contingent awards under this Plan) or partly in cash
and partly in such Common Stock, or such other means which the Committee
determines are consistent with the Plan's purpose and applicable law. Cash
payments shall be made by wire transfer, certified or bank check or personal
check, in each case payable to the order of the Company; provided, however, that
the Company shall not be required to deliver certificates for shares of Common
B-5
Stock with respect to which an Option is exercised until the Company has
confirmed the receipt of good and available funds in payment of the purchase
price thereof. Payments in the form of Common Stock shall be valued at the Fair
Market Value on the date prior to the date of exercise. Such payments shall be
made by delivery of stock certificates in negotiable form that are effective to
transfer good and valid title thereto to the Company, free of any liens or
encumbrances. Subject to the terms of the Agreement, the Committee may, in its
sole discretion, at the request of the Holder, deliver upon the exercise of a
Nonqualified Stock Option a combination of shares of Deferred Stock and Common
Stock; provided that, notwithstanding the provisions of Section 8 of the Plan,
such Deferred Stock shall be fully vested and not subject to forfeiture. A
Holder shall have none of the rights of a Stockholder with respect to the shares
subject to the Option until such shares shall be transferred to the Holder upon
the exercise of the Option.
(e) Transferability. Except as may be set forth in the
Agreement, no Stock Option shall be transferable by the Holder other than by
will or by the laws of descent and distribution, and all Stock Options shall be
exercisable, during the Holder's lifetime, only by the Holder (or, to the extent
of legal incapacity or incompetency, the Holder's guardian or legal
representative).
(f) Termination by Reason of Death. If a Holder's employment
by the Company or a Subsidiary terminates by reason of death, any Stock Option
held by such Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, shall thereupon automatically terminate,
except that the portion of such Stock Option that has vested on the date of
death may thereafter be exercised by the legal representative of the estate or
by the legatee of the Holder under the will of the Holder, for a period of one
year (or such other greater or lesser period as the Committee may specify at
grant) from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the
Committee at the time of grant and set forth in the Agreement, shall thereupon
automatically terminate, except that the portion of such Stock Option that has
vested on the date of termination may thereafter be exercised by the Holder for
a period of one year (or such other greater or lesser period as the Committee
may specify at the time of grant) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section
13.3, below, and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the Company
or a Subsidiary at the time of grant and if such Holder's employment by the
Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate.
(i) Additional Incentive Stock Option Limitation. In the case
of an Incentive Stock Option, the aggregate Fair Market Value (on the date of
grant of the Option) with respect to which Incentive Stock Options become
exercisable for the first time by a Holder during any calendar year (under all
such plans of the Company and its Parent and Subsidiary) shall not exceed
$100,000.
(j) Buyout and Settlement Provisions. The Committee may at any
time, in its sole discretion, offer to repurchase a Stock Option previously
granted, based upon such terms and conditions as the Committee shall establish
and communicate to the Holder at the time that such offer is made.
B-6
5.3 Stock Reload Option. If a Holder tenders shares of Common Stock to
pay the exercise price of a Stock Option ("Underlying Option"), and/or arranges
to have a portion of the shares otherwise issuable upon exercise withheld to pay
the applicable withholding taxes, the Holder may receive, at the discretion of
the Committee, a new Stock Reload Option to purchase that number of shares of
Common Stock equal to the number of shares tendered to pay the exercise price
and the withholding taxes (but only if such shares were held by the Holder for
at least six months). Stock Reload Options may be any type of option permitted
under the Code and will be granted subject to such terms, conditions,
restrictions and limitations as may be determined by the Committee, from time to
time. Such Stock Reload Option shall have an exercise price equal to the Fair
Market Value as of the date of exercise of the Underlying Option. Unless the
Committee determines otherwise, a Stock Reload Option may be exercised
commencing one year after it is granted and shall expire on the date of
expiration of the Underlying Option to which the Reload Option is related.
6. SECTION STOCK APPRECIATION RIGHTS.
6.1 Grant and Exercise. The Committee may grant Stock Appreciation
Rights to participants who have been, or are being granted, Stock Options under
the Plan as a means of allowing such participants to exercise their Stock
Options without the need to pay the exercise price in cash. In the case of a
Nonqualified Stock Option, a Stock Appreciation Right may be granted either at
or after the time of the grant of such Nonqualified Stock Option. In the case of
an Incentive Stock Option, a Stock Appreciation Right may be granted only at the
time of the grant of such Incentive Stock Option.
6.2 Terms and Conditions. Stock Appreciation Rights shall be subject to
the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be
exercisable as shall be determined by the Committee and set forth in the
Agreement, subject to the limitations, if any, imposed by the Code, with respect
to related Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate
and shall no longer be exercisable upon the termination or exercise of the
related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be
exercisable upon such terms and conditions as shall be determined by the
Committee and set forth in the Agreement and by surrendering the applicable
portion of the related Stock Option. Upon such exercise and surrender, the
Holder shall be entitled to receive a number of shares of Common Stock equal to
the SAR Value divided by the Fair Market Value on the date the Stock
Appreciation Right is exercised.
(d) Shares Affected Upon Plan. The granting of a Stock
Appreciation Right shall not affect the number of shares of Common Stock
available under for awards under the Plan. The number of shares available for
awards under the Plan will, however, be reduced by the number of shares of
Common Stock acquirable upon exercise of the Stock Option to which such Stock
Appreciation Right relates.
7. SECTION RESTRICTED STOCK.
7.1 Grant. Shares of Restricted Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be awarded, the number of shares to be awarded, the price
(if any) to be paid by the Holder, the time or times within which such awards
may be subject to forfeiture ("Restriction Period"), the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
awards.
B-7
7.2 Terms and Conditions. Each Restricted Stock award shall be subject
to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be
represented by a stock certificate or certificates registered in the name of the
Holder to whom such Restricted Stock shall have been awarded. During the
Restriction Period, certificates representing the Restricted Stock and any
securities constituting Retained Distributions (as defined below) shall bear a
legend to the effect that ownership of the Restricted Stock (and such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms and conditions provided in the Plan and the
Agreement. Such certificates shall be deposited by the Holder with the Company,
together with stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock and any securities constituting Retained Distributions that
shall be forfeited or that shall not become vested in accordance with the Plan
and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The Holder
will have the right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as the Board may
in its sole discretion designate, pay or distribute on such Restricted Stock and
to exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Stock, with the exceptions that (i) the Holder
will not be entitled to delivery of the stock certificate or certificates
representing such Restricted Stock until the Restriction Period shall have
expired and unless all other vesting requirements with respect thereto shall
have been fulfilled; (ii) the Company will retain custody of the stock
certificate or certificates representing the Restricted Stock during the
Restriction Period; (iii) other than regular cash dividends and other cash
equivalent distributions as the Board may in its sole discretion designate, pay
or distribute, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Stock (and such
Retained Distributions will be subject to the same restrictions, terms and
conditions as are applicable to the Restricted Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained Distributions shall
have been made, paid or declared shall have become vested and with respect to
which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or
otherwise established by the Committee with respect to any Restricted Stock or
Retained Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the
Restriction Period with respect to each award of Restricted Stock and the
satisfaction of any other applicable restrictions, terms and conditions (i) all
or part of such Restricted Stock shall become vested in accordance with the
terms of the Agreement, subject to Section 10, below, and (ii) any Retained
Distributions with respect to such Restricted Stock shall become vested to the
extent that the Restricted Stock related thereto shall have become vested,
subject to Section 10, below. Any such Restricted Stock and Retained
Distributions that do not vest shall be forfeited to the Company and the Holder
shall not thereafter have any rights with respect to such Restricted Stock and
Retained Distributions that shall have been so forfeited.
8. SECTION DEFERRED STOCK.
8.1 Grant. Shares of Deferred Stock may be awarded either alone or in
addition to other awards granted under the Plan. The Committee shall determine
the eligible persons to whom and the time or times at which grants of Deferred
Stock will be awarded, the number of shares of Deferred Stock to be awarded to
any person, the duration of the period ("Deferral Period") during which, and the
conditions under which, receipt of the shares will be deferred, and all the
other terms and conditions of the awards.
B-8
8.2 Terms and Conditions. Each Deferred Stock award shall be subject to
the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period [or
the Additional Deferral Period referred to in Section 8.2 (d) below, where
applicable], share certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered by
the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred
Stock shall not have any rights of a Stockholder by virtue of such award until
the expiration of the applicable Deferral Period and the issuance and delivery
of the certificates representing such Common Stock. The shares of Common Stock
issuable upon expiration of the Deferral Period shall not be deemed outstanding
by the Company until the expiration of such Deferral Period and the issuance and
delivery of such Common Stock to the Holder.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral
Period with respect to each award of Deferred Stock and the satisfaction of any
other applicable restrictions, terms and conditions all or part of such Deferred
Stock shall become vested in accordance with the terms of the Agreement, subject
to Section 10, below. Any such Deferred Stock that does not vest shall be
forfeited to the Company and the Holder shall not thereafter have any rights
with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and
the Committee may at any time, defer the receipt of an award (or an installment
of an award) for an additional specified period or until a specified event
("Additional Deferral Period"). Subject to any exceptions adopted by the
Committee, such request must generally be made at least one year prior to
expiration of the Deferral Period for such Deferred Stock award (or such
installment).
9. SECTION OTHER STOCK-BASED AWARDS.
Other Stock-Based Awards may be awarded, subject to
limitations under applicable law, that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, shares
of Common Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, purchase rights, shares of Common
Stock awarded which are not subject to any restrictions or conditions,
convertible or exchangeable debentures, or other rights convertible into shares
of Common Stock and awards valued by reference to the value of securities of or
the performance of specified Subsidiaries. Other Stock-Based Awards may be
awarded either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company. Each other Stock-Based Award shall
be subject to such terms and conditions as may be determined by the Committee.
10. SECTION ACCELERATED VESTING AND EXERCISABILITY.
10.1 Non-Approved Transactions. If any "person" [as such term is used
in Sections 13(d) and 14(d) of the Exchange Act of 1934, as amended ("Exchange
Act")], is or becomes the "beneficial owner" (as referred in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company's then
outstanding securities in one or more transactions, and the Board does not
authorize or otherwise approve such acquisition, then the vesting periods of any
and all Stock Options and other awards granted and outstanding under the Plan
shall be accelerated and all such Stock Options and awards will immediately and
entirely vest, and the respective holders thereof will have the immediate right
to purchase and/or receive any and all Common Stock subject to such Stock
Options and awards on the terms set forth in this Plan and the respective
agreements respecting such Stock Options and awards.
B-9
10.2 Approved Transactions. The Committee may, in the event of an acquisition of
substantially all of the Company's assets or at least 50% of the combined voting
power of the Company's then outstanding securities in one or more transactions
(including by way of merger or reorganization) which has been approved by the
Company's Board of Directors, (i) accelerate the vesting of any and all Stock
Options and other awards granted and outstanding under the Plan, and (ii)
require a Holder of any award granted under this Plan to relinquish such award
to the Company upon the tender by the Company to Holder of cash in an amount
equal to the Repurchase Value of such award.
11. SECTION AMENDMENT AND TERMINATION.
The Board may at any time, and from time to time, amend alter, suspend
or discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder's consent.
12. SECTION TERM OF PLAN.
12.1 Effective Date. The Plan shall become effective at such time as it
has been approved by (i) the Company's Board of Directors and (ii) stockholders
owning more than fifty percent (50%) of the Company's outstanding voting
securities on the record date for determining those stockholders entitled to
vote upon approval of the Plan (the "Effective Date").
12.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time as no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may be made only during the
ten-year period following the Effective Date.
13. SECTION GENERAL PROVISIONS.
13.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms, of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within ten (10) days after the Agreement has been delivered to the
Holder for his or her execution.
13.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.
13.3 Employees.
(a) Engaging in Competition With the Company; Disclosure of
Confidential Information. If a Holder's employment with the Company or a
Subsidiary is terminated for any reason whatsoever, and within three months
after the date thereof such Holder either (i) accepts employment with any
competitor of, or otherwise engages in competition with, the Company or (ii)
discloses to anyone outside the Company or uses any confidential information or
B-10
material of the Company in violation of the Company's policies or any agreement
between the Holder and the Company, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
that was realized or obtained by such Holder at any time during the period
beginning on that date that is six months prior to the date such Holder's
employment with the Company is terminated.
(b) Termination for Cause. The Committee may, if a Holder's
employment with the Company or a Subsidiary is terminated for cause, annul any
award granted under this Plan to such employee and, in such event, the
Committee, in its sole discretion, may require such Holder to return to the
Company the economic value of any award that was realized or obtained by such
Holder at any time during the period beginning on that date that is six months
prior to the date such Holder's employment with the Company is terminated.
(c) No Right of Employment. Nothing contained in the Plan or
in any award hereunder shall be deemed to confer upon any Holder who is an
employee of the Company or any Subsidiary any right to continued employment with
the Company or any Subsidiary, nor shall it interfere in any way with the right
of the Company or any Subsidiary to terminate the employment of any Holder who
is an employee at any time.
13.4 Investment Representations; Company Policy. The Committee may
require each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan to represent to and agree with the Company in
writing that the Holder is acquiring the shares for investment purposes, without
a view to the distribution thereof. Each person acquiring shares of Common Stock
pursuant to a Stock Option or other award under the Plan shall be required to
abide by all policies of the Company in effect at the time of such acquisition
and thereafter with respect to the ownership and trading of the Company's
securities.
13.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of Stock Options and the awarding of Common Stock and cash otherwise
than under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
13.6 Withholding Taxes. Not later than the date as of which an amount
must first be included in the gross income of the Holder for Federal income tax
purposes with respect to any option or other award under the Plan, the Holder
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such amount. If permitted
by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company or any Subsidiary.
13.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Nevada.
13.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
B-11
13.9 Non-Transferability. Except as otherwise expressly provided in the
Plan or the Agreement, no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
13.10 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the Securities Act
of 1933, as amended and the Securities Exchange Act of 1934, as amended, and
(ii) the rules and regulations of any securities exchange on which the Common
Stock may be listed.
13.11 Conflicts. If any of the terms or provisions of the Plan or an
Agreement conflict with the requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so conflict
with such requirements. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed incorporated herein and therein with the
same force and effect as if such provision had been set out at length herein and
therein. If any of the terms or provisions of any Agreement conflict with any
terms or provisions of the Plan, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of the Plan.
Additionally, if any Agreement does not contain any provision required to be
included therein under the Plan, such provision shall be deemed incorporated
therein with the same force and effect as if such provision had been set out at
length therein.
13.12 Non-Registered Stock. The shares of Common Stock to be issued
under this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register the
Common Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system, including the Nasdaq National
Market and Nasdaq SmallCap Market.
B-12
INITIAL PLAN
- ------------
Date Plan Approved by Board of Directors: October 9, 2003
Date Plan Approved by Stockholders:
------------------------
PLAN AMENDMENTS
- ---------------
DATE AMENDMENT DATE AMENDMENT
APPROVED BY APPROVED BY
BOARD OF STOCKHOLDERS, IF SECTION DESCRIPTION OF
DIRECTORS NECESSARY AMENDED AMENDMENT
--------- --------- ------- ---------
B-13
CHINA RESOURCES DEVELOPMENT, INC.
ANNUAL MEETING OF STOCKHOLDERS
November 12, 2002
December 18, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CHINA RESOURCES DEVELOPMENT, INC.
The undersigned hereby appoints Ching Lung Po proxy with power of
substitution and hereby authorizes him to represent and to vote, as designated
below, all of the shares of common stock of China Resources Development, Inc.
held of record by the undersigned on October 8, 2002November 14, 2003 at the Annual Meeting of
Stockholders to be held at 26/F, Securities Building, 5020 BinheRoom 2105, West Tower, Shun Tak Centre, 200 Connaught
Road Fu Tian District, Shenzhen Province, People’s Republic of China,C., Sheung Wan, Hong Kong, on Tuesday, November 12, 2002Thursday, December 18, 2003 at 2:30 p.m.,
Hong Kong time, and at all adjournments thereof, with all powers the undersigned
would possess if personally present. In his or her discretion, the Proxy is
authorized to vote upon such other business as may properly come before the
meeting.
1.
Election of Directors
Nominees:
Wan Ying LinTam Cheuk Ho and Lo Kin Cheung.
Wong Wah On.
[ ] FOR all nominees
[ ] WITHHOLD AUTHORITY
[ ] FOR all nominees,
except as noted below:
Nominee exception(s)
exception
----------------------
2.
Proposal to authorize and adopt the Company's 2003 Equity Compensation
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Horwath Gelfond Hochstadt
Pangburn, P.C. independent auditors of the Company for the fiscal year
ending December 31, 20022003 to serve at the pleasure of the Board of
Directors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER.UNDERSIGNEDSTOCKHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED “FOR”"FOR"
PROPOSALS 1, 2 AND 2.
3.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF 20022003 ANNUAL MEETING
AND PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH.
DATED:
---------------------------------
(Signature)
(Signature
---------------------------------
(Signature if jointly held)
(Printed
---------------------------------
(Printed name(s))
Please sign exactly as name appears herein. When shares are held by Joint
Tenants, both should sign, and for signing as attorney, as executor, as
administrator, trustee or guardian, please give full title as such. If held 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 THIS PROXY
IN THE ENCLOSED ENVELOPE. THANK YOU.