UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION STATEMENT
(AMENDMENT NO. 2)
Reg.ss.240.14c-101
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[_] Definitive Information Statement
CHINA WI-MAX COMMUNICATIONS, INC.
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
------------------------------------------
(Name of Person(s) Filing Information Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary 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 Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
CHINA WI-MAX COMMUNICATIONS, INC.
1905 Sherman Street, Suite 335
Denver, Colorado 80203
NOTICE OF ACTION TO BE TAKEN BY
THE SHAREHOLDERS
October __, 2009
To The Shareholders of China Wi-Max Communications, Inc.
The holders of a majority of the outstanding shares of Common Stock
(the "Majority Common Shareholders", which comprise ownership of 7,272,685
shares, or 50.53% of common stock out of a total of 14,394,004 total shares
issued and outstanding as of the record date of October 6, 2009) approved the
adoption of the following resolutions by written consent in lieu of a meeting
pursuant to the Nevada Revised Statutes, to be effective on or before
__________________, 2009.
The Board of Directors, including a majority of disinterested
Directors, of China Wi-Max Communications, Inc. (the "Board") approved the
following actions by written consent dated as of ___________________, 2009 as it
believes such actions are in the best interests of China Wi-Max Communications,
Inc. and its stockholders.
1. To increase the Company's authorized shares to one hundred million
shares of common stock and to approve the Certificate of Amendment of the
Articles of Incorporation to increase the authorized capital from 50,000,000 to
100,000,000 common shares.
2. Adoption of the 2009 China Wi-Max Communications, Inc. Stock Option
Award and Compensation Plan.
STEVEN T. BERMAN, PRESIDENT
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WE ARE NOT ASKING YOU FOR A CONSENT OR A PROXY, AND YOU
ARE NOT REQUESTED TO SEND US A PROXY.
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CHINA WI-MAX COMMUNICATIONS, INC.
1905 Sherman Street, Suite 335
Denver, Colorado 80203
October __, 2009
SHAREHOLDERS NOTICE OF ACTION
PROXIES ARE NOT BEING SOLICITED
The holders of a majority of the outstanding shares of Common Stock
(the "Majority Common Shareholders", which comprise ownership of 7,272,685
shares, or 50.53% of common stock out of a total of 14,394,004 total shares
issued and outstanding as of the record date of October 6, 2009) approved the
adoption of the following resolutions by written consent in lieu of a meeting
pursuant to the Nevada Revised Statutes, to be effective on or before
__________________, 2009.
The Board of Directors, including a majority of disinterested
Directors, of China Wi-Max Communications, Inc. (the "Board") approved the
following actions by written consent dated as of _________________, 2009 as it
believes such actions are in the best interests of China Wi-Max Communications,
Inc. and its stockholders.
Holders of the common stock of record as of ______________, 2009 are
entitled to submit their consent to the shareholder resolutions described in
this Information Statement, although no shareholder consents other than that of
the Majority Shareholders are required to be submitted in order for the
resolution to be adopted. The Company is not soliciting consents or proxies and
shareholders have no obligation to submit either of them. Whether or not
shareholders submit consents should not affect their rights as shareholders or
the prospects of the proposed shareholder resolutions being adopted. The
Majority Shareholders have consented to all of the shareholder resolutions
described in this Information Statement by a written consent. Other shareholders
who desire to submit their consents must do so by ______________, 2009 and once
submitted will not be revocable. The affirmative vote of the holders of a
majority of the outstanding common stock of the Company is required to adopt the
resolutions described in this Information Statement. Nevada law does not require
that the proposed transaction be approved by a majority of the disinterested
shareholders. A total of 14,394,004 shares of outstanding common stock were
entitled to vote on the Company's proposed actions described in this Information
Statement. The Majority Shareholders who submitted Consents to the Action
representing 7,272,685 shares constituting 50.53% of the issued and outstanding
shares.
THE COMPANY AND THE PROPOSALS
The Company has its executive offices at 1905 Sherman Street, Suite
335, Denver, Colorado 80203, and its telephone number is (303) 993-8028.
Additional information regarding the Company, its business, its stock,
and its financial condition are included in the Company's Form 10-K annual
report and its Form 10-Q quarterly reports. Copies of the Company's Form 10-Q
for its quarter ending June 30, 2009, as well as the Company's Form 10-K for
December 31, 2008 are available upon request to: Steven Berman, President,
China-Wi Max Communications, Inc., 1905 Sherman Street, Suite 335, Denver,
Colorado 80203.
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PROPOSALS ADOPTED BY SHAREHOLDER ACTION BY WRITTEN CONSENT
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PROPOSAL #1
To increase the Company's authorized shares to one hundred million shares of
common stock and to approve the Certificate of Amendment of the Articles of
Incorporation to increase the authorized capital from 50,000,000 to 100,000,000
common shares.
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We believe an increase in the authorized shares in our Articles of
Incorporation is in the best interest of our corporation because we believe we
have insufficient shares to accomplish growth or capital raising in the future
because we have currently only 50,000,000 shares authorized.
We do not have current plans to acquire assets. We do not have plans to
engage in any new business or investment opportunity at this time. We do however
intend to raise additional capital in the future with stock sales but have not
specified any offering parameters, nor timing.
DISCUSSION OF BACKGROUND FOR PROPOSED ACTION
Pursuant to this Proxy Statement, you, as stockholders, are informed
that this action is to increase the number of shares of stock that the Company
is authorized to issue to 100 million shares of common stock from 50 million.
The shares of common stock to be authorized have full voting rights and
have no dividend or interest rates, conversion prices, redemption prices,
maturity dates, or other matters and are to be identical in rights to the
existing common stock. There are no pre-emptive rights regarding the shares of
common stock.
It is emphasized that in the future management of the Company may
effect transactions having a potentially adverse impact upon the Company's
stockholders pursuant to the authority and discretion of the Company's
management to complete share issuances without submitting any proposal to the
stockholders for their consideration. Holders of the Company's securities should
not anticipate that the Company necessarily will furnish such holders with any
documentation concerning the proposed issuance prior to any share issuances. All
determinations (except involving a merger where the number of shares of common
stock of the Company issued will equal more than 20% of the issued and
outstanding shares of common stock of the Company prior to the transaction)
involving share issuances are in the discretion and business judgment of the
Board of Directors in their exercise of fiduciary responsibility, but require a
determination by the Board that the shares are being issued for fair and
adequate consideration.
FUTURE DILUTIVE TRANSACTIONS
It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's stockholders pursuant to
the authority and discretion of the Company's management to complete share
issuances without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders with any documentation
concerning the proposed issuance prior to any share issuances. All
determinations (except in some cases involving a merger where the number of
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shares of common stock of the Company issued will equal more than 20% of the
issued and outstanding shares of common stock of the Company prior to the
transaction) involving share issuances are in the discretion and business
judgment of the Board of Directors in their exercise of fiduciary
responsibility, but require a determination by the Board that the shares are
being issued for fair and adequate consideration.
The issuance of additional shares in future transactions will allow,
the following types of actions or events to occur without the current
stockholders being able to effectively prevent such actions or events:
1. Dilution may occur due to the issuance of additional shares. The
percentage ownership of the Company by the existing shareholders may be diluted
from 100% to approximately 20% if all of the increased share authorization were
issued.
2. Control of the Company by stockholders may change due to new
issuances.
3. The election of the Board of Directors will be dominated by new
large stockholders, effectively blocking current stockholders from electing
directors.
4. Business plans and operations may change.
5. Mergers, acquisitions, or divestitures may occur which are approved
by the holders of the newly issued shares.
In the future event that the Board continues to issue shares for
capital, services, or acquisitions, the present management and stockholders of
the Company most likely will not have control of a majority of the voting shares
of the Company. It is likely that the Company may acquire other compatible
business opportunities through the issuance of common stock of the Company.
Although the terms of any such transaction cannot be predicted, this could
result in substantial additional dilution in the equity of those who were
stockholders of the Company prior to such issuance. There is no assurance that
any future issuance of shares will be approved at a price or value equal to or
greater than the price which a prior stockholder has paid, or at a price greater
than the then current market price. Typically, unregistered shares are issued at
less than market price due to their illiquidity and restricted nature as a
result of, among other things, the extended holding period and sales limitations
which such shares are subject to.
The Board feels that this action is necessary in order to have
available authorized shares to raise additional capital, without which capital,
the Company may be unable to continue to operate.
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PROPOSAL #2
Adoption of the 2009 China Wi-Max Communications, Inc.
Stock Option Award and Compensation Plan
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As described in the accompanying NOTICE OF ACTION TO BE TAKEN BY THE
SHAREHOLDERS, the Company proposes to adopt the 2009 China Wi-Max
Communications, Inc. Stock Option Award and Compensation Plan ("Plan") attached
hereto as Exhibit "B."
The Board of Directors believes that the Stock Option Award and
Compensation Plan will enable the Company to compensate management and employees
at a level competitive in the industry.
The Board of Directors of the Company voted unanimously to adopt the
2009 China Wi-Max Communications, Inc. Stock Option Award and Compensation Plan.
The Board of Directors believes that the adoption of the Plan (no grants have
been made under the Plan to date) is critical to attracting, retaining, and
motivating employees and other eligible persons of the Company. The Plan and the
option grants were approved by disinterested members of the Board as well as by
the entire Board.
The following table sets forth information with respect to stock
options to officers and directors of the Company granted pursuant to the Plan
through September 30, 2009.
- --------------------------------- ------------------------- ------------------- -------------------- -------------------
NAME TITLE NUMBER OF OPTIONS EXERCISE PRICE EXPIRATION DATE
GRANTED
- --------------------------------- ------------------------- ------------------- -------------------- -------------------
All current Executive Officers Options 1,400,000 $0.25 June 10, 2014
as a Group
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All current Directors who are Options 0 0 N/A
not Executive Officers as a
Group
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All Employees as a Group (not Options 0 0 N/A
including Executive Officers
and Directors)
- --------------------------------- ------------------------- ------------------- -------------------- -------------------
DESCRIPTION OF THE PLAN
Below is a summary of the principal provisions of the 2009 China Wi-Max
Communications, Inc. Stock Option Award and Compensation Plan ("Plan"). The
summary is not necessarily complete, and reference is made to the full text of
the Plan attached as an Exhibit to this Information Statement. Capitalized terms
used, but not defined herein, have the same meaning as set forth in the Plan.
GENERAL. The Plan provides for the grant of stock options to directors,
officers, employees, consultants, and advisors of the Company. The Plan is
administered by a committee consisting of members of the Board of Directors (the
"Stock Option Committee"), or in its absence, the Board of Directors.
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SHARES SUBJECT TO THE PLAN. The Plan provides for a total of 5,000,000
shares of common stock to be reserved for issuance subject to options. As of the
date of this Information Statement, the Board had approved the grant of no
options to purchase any shares of common stock at an exercise price.
ANTI-DILUTION PROTECTION. Proportionate adjustments will be made to the
number of shares of common stock subject to the Plan in the event of any change
in the capitalization of the Company affecting its common stock (e.g., a stock
split, reverse stock split, stock dividend, combination, recapitalization, or
reclassification). The Board or the Stock Option Committee, subject to Board
approval, may also provide additional anti-dilution protection to a participant
under the terms of such participant's option agreement or otherwise. Shares of
common stock subject to option grants that are canceled, terminated, or
forfeited will again be available for issuance under the Plan.
ADMINISTRATION OF THE PLAN. The Stock Option Committee (or in its
absence, the Board) administers the Plan and has the authority to modify an
existing option, interpret the Plan, adopt rules and procedures relating to the
administration of the Plan, and make such modifications to the Plan as are
necessary to effectuate the intent of the Option Plan as a result of any changes
in the tax, accounting, or securities laws treatment of participants and the
Plan.
STOCK OPTIONS, RESTRICTED STOCK, AND STOCK APPRECIATION RIGHTS. From
time to time, the Stock Option Committee will recommend to the Board individuals
that the Stock Option Committee believes should receive options, the amount of
shares of common stock the Stock Option Committee believes should be subject to
such option, and whether the option should be a qualified or nonqualified
option. The Board will consider, but need not accept, the Stock Option
Committee's grant recommendations.
The Board may grant nonqualified stock option or incentive stock
options to purchase shares of common stock. Any person who is not an employee on
the effective date of the grant of an option to such person may be granted only
a nonstatutory stock option. Moreover, to the extent that options designated as
incentive stock options become exercisable by a participant for the first time
during any calendar year for stock having a fair market value greater than
$100,000, the portions of such options that exceed such amount will be treated
as nonstatutory stock options. The Plan does not provide for stock appreciation
rights.
The Stock Option Committee, subject to approval by the Board, will
determine the number and exercise price of options, and the time or times that
the options become exercisable, provided that an option exercise price may not
be less than the fair market value of the common stock on the date of grant. The
term of an option will also be determined by the Stock Option Committee, subject
to approval by the Board, provided that the term of a stock option may not
exceed ten years from the date of grant.
EXERCISABILITY. Each Stock Option Agreement shall specify the date when
all or any installment of the Option becomes exercisable. In the case of an
Optionee who is not an officer of the Company, a Director or a Consultant, an
Option shall become exercisable at a rate of no more than 25% per year over a
four-year period commencing on January 1 following the Date of Grant and 25%
each year thereafter on January 1. Subject to the preceding sentence, the
exercise provisions of any Stock Option Agreement shall be determined by the
Administrator, in its sole discretion. The option exercise price may be paid in
cash, by check or in such other form of lawful consideration (including
promissory notes or shares of common stock then held by the participant). Each
Option Agreement will specify the vesting and exercisability, in whole or in
part.
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CHANGE OF CONTROL. The Plan provides that in the event of a sale by the
Company of all or substantially all of its assets, a merger of the Company with
another company, the sale or issuance of more than 50% of the total issued and
outstanding voting stock of the Company to another party or parties in a single
transaction or in a series of related transactions, resulting in a change of
control of the Company, or a similar business combination or extraordinary
transaction involving the Company, all outstanding options granted to any
officer, director, or employee of or key consultant to the Company which have
not vested will accelerate to a date at least ten (10) business days prior to
the closing date of such sale or similar business combination or extraordinary
transaction. The exercise of options the vesting of which has accelerated
accordingly will not be effective until the closing date of an above-referenced
extraordinary transaction or business combination. Such vested options will
terminate on the date of the closing of the event causing the vesting of the
options to accelerate. The vesting of the options is conditioned upon the
closing of the transaction that causes the vesting of the options to accelerate.
If said transaction does not close within 30 days from the acceleration date,
then the vesting of the accelerated options will not be effective, and the
options will revert to their original vesting schedule, subject to acceleration
again in accordance with the Plan if another extraordinary transaction or
business combination is proposed and closed.
TERM. The Stock Option Agreement shall specify the term of the Option.
No Option shall be exercised after the expiration of ten years after the date
the Option is granted. Unless otherwise provided in the Stock Option Agreement,
no Option may be exercised (i) three months after the date the Optionee's
Service with the Company, its Parent or its Subsidiaries terminates if such
termination is for any reason other than death, Disability or Cause, (ii) one
year after the date the Optionee's Service with the Company, its Parent or its
subsidiaries terminates if such termination is a result of death or Disability,
and (iii) if the Optionee's Service with the Company, its Parent, or its
Subsidiaries terminates for Cause, all outstanding Options granted to such
Optionee shall expire as of the commencement of business on the date of such
termination. The Administrator may, in its sole discretion, waive the
accelerated expiration provided for in (i) or (ii). Outstanding Options that are
not exercisable at the time of termination of employment for any reason shall
expire at the close of business on the date of such termination.
NO TRANSFERABILITY. Except as provided herein, a Participant may not
assign, sell or transfer Rights, in whole or in part, other than by testament or
by operation of the laws of descent and distribution.
PERMITTED TRANSFER OF NON-QUALIFIED OPTION. The Administrator, in its
sole discretion may permit the transfer of a Non-Qualified Option (but not an
ISO or Stock Purchase Right) as follows: (i) by gift to a member of the
Participant's immediate family, or (ii) by transfer by instrument to a trust
providing that the Option is to be passed to beneficiaries upon death of the
Settlor (either or both (i) or (ii) referred to as a "Permitted Transferee").
For purposes of this Section 8.10.1, "immediate family" shall mean the
Optionee's spouse (including a former spouse subject to terms of a domestic
relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall
include adoptive relationships.
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CONDITIONS OF PERMITTED TRANSFER. A transfer permitted under this
Section 8.10 hereof may be made only upon written notice to and approval thereof
by Administrator. A Permitted Transferee may not further assign, sell or
transfer the transferred Option, in whole or in part, other than by testament or
by operation of the laws of descent and distribution. A Permitted Transferee
shall agree in writing to be bound by the provisions of this Plan, which a copy
of said agreement shall be provided to the Administrator for approval prior to
the transfer.
STOCKHOLDER RATIFICATION. The Plan must be approved by the stockholders
of the Company within twelve months after the date of its adoption by the Board.
Options granted prior to stockholder ratification may become exercisable no
earlier than the date of stockholder ratification of the Plan. Options granted
to executive officers that are designated as performance based under Section
162(m) of the Code must be contingent on stockholder ratification of the
material terms of the Plan to the extent required under Section 162(m) of the
Code.
AMENDMENTS TO THE PLAN. The Board may amend or discontinue the Plan at
any time subject to certain restrictions set forth in the Plan. No amendment or
discontinuance may adversely affect any previously granted option award without
the consent of the recipient.
FEDERAL INCOME TAX CONSEQUENCES. The following general description of
federal income tax consequences is based upon current statutes, regulations and
interpretations and does not purport to be complete. Reference should be made to
the applicable provisions of the Internal Revenue Code of 1986 (the "Code"). In
addition, state, local and foreign income tax consequences may be applicable to
transactions involving options. The following description does not address
specific tax consequences applicable to an individual participant who receives
an option and does not address special rules that may be applicable to directors
and officers.
Under existing federal income tax provisions, a participant who
receives options will not normally realize any income, nor will the Company
normally receive any deduction for federal income tax purposes, upon the grant
of an option.
When a non-qualified stock option granted pursuant to the Plan is
exercised, the employee generally will realize ordinary income (compensation)
measured by the difference between the aggregate purchase price of the common
stock as to which the option is exercised and the aggregate fair market value of
the common stock on the exercise date. The Company generally will be entitled to
a deduction in the year the option is exercised equal to the amount the employee
is required to treat as ordinary income. Any taxable income recognized in
connection with a non-qualified stock option exercised by an optionee who is
also an employee of the Company will be subject to tax withholding by the
Company. The basis for determining gain or loss upon a subsequent disposition of
common stock acquired upon the exercise of a non-qualified stock option will be
the purchase price paid to the Company for the common stock increased by an
amount included in the optionee's taxable income resulting from the exercise of
such option. The holding period for determining whether gain or loss on such
subsequent disposition is short-term or long-term generally begins on the date
on which the optionee acquires the common stock.
An employee generally will not recognize any income upon the exercise
of an incentive stock option, but the exercise may, depending on particular
factors relating to the employee, subject the employee to the alternative
minimum tax. An employee will recognize capital gain or loss in the amount of
the difference between the exercise price and the sale price on the sale or
exchange of stock acquired pursuant to the exercise of an incentive stock
option, provided that the employee does not dispose of such stock within two
years from the date of grant and one year from the date of exercise of the
incentive stock option (the "Required Holding Periods"). An employee disposing
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of such shares before the expiration of the Required Holding Periods will
recognize ordinary income equal to the lesser of (i) the difference between the
option price and the fair market value of the stock on the date of exercise, or
(ii) the total amount of gain realized. The remaining gain or loss is generally
treated as short term or long-term gain or loss depending on how long the shares
are held. The Company will not be entitled to a federal income tax deduction in
connection with the exercise of an incentive stock option, except where the
employee disposes of the shares of common stock received upon exercise before
the expiration of the Required Holding Periods.
PROMISSORY NOTE. To the extent that a Stock Option Agreement or Stock
Purchase Agreement so provides, in the discretion of the Administrator, upon
such terms as the Administrator shall approve, all or a portion of the Exercise
Price or Purchase Price (as the case may be) of shares issued under the Plan may
be paid with a full-recourse promissory note. However, in the event there is a
stated par value of the shares and applicable law requires, the par value of the
shares, if newly issued, shall be paid in cash or cash equivalents. The shares
shall be pledged as security for payment of the principal amount of the
promissory note and interest thereon, and held in the possession of the Company
until said amounts are repaid in full. The interest rate payable under the terms
of the promissory note shall not be less than the minimum rate (if any) required
to avoid the imputation of additional interest under the Code. Subject to the
foregoing, the Administrator (at its sole discretion) shall specify the term,
interest rate, amortization requirements (if any) and other provisions of such
note. Unless the Administrator determines otherwise, shares of Stock having a
Fair Market Value at least equal to the principal amount of the loan shall be
pledged by the holder to the Company as security for payment of the unpaid
balance of the loan and such pledge shall be evidenced by a pledge agreement,
the terms of which shall be determined by the Administrator, in its discretion;
provided, however, that each loan shall comply with all applicable laws,
regulations and rules of the Board of Governors of the Federal Reserve System
and any other governmental agency having jurisdiction.
REPURCHASE RIGHTS. Following a termination of the Participant's
Service, the Company may repurchase the Participant's Rights as provided in this
Section 8.8 (the "Repurchase Right")
REPURCHASE PRICE. Following a termination of the Participant's Service
the Repurchase Right shall be exercisable at a price equal to (i) the Fair
Market Value of vested Stock or, in the case of exercisable options, the Fair
Market Value of the Stock underlying such unexercised options less the Exercise
Price, or (ii) the Purchase Price or Exercise Price, as the case may be, of
unvested Stock; provided, however, the right to repurchase unvested stock as
described in Section 8.8.1(ii) shall lapse at a rate of at least 33.33% per year
over three years from the date the Right is granted.
EXERCISE OF REPURCHASE RIGHT. A Repurchase Right may be exercised only
within 90 days after the termination of the Participant's Service (or in the
case of Stock issued upon exercise of an Option or after the date of termination
or the purchase of Stock under a Stock Purchase Agreement after the date of
termination, within 90 days after the date of the exercise or Stock purchase,
whichever is applicable) for cash or for cancellation of indebtedness incurred
in purchasing the shares.
TERMINATION OF REPURCHASE AND FIRST REFUSAL RIGHTS. Each Stock Option
Agreement and Stock Purchase Agreement shall provide that the Repurchase Rights
and First Refusal Rights shall have no effect with respect to, or shall lapse
and cease to have effect when the issuer's securities become publicly traded or
a determination is made by counsel for the Company that such Repurchase Rights
and First Refusal Rights are not permitted under applicable federal or state
securities laws.
MARKET STAND-OFF. Each Stock Option Agreement and Stock Purchase
Agreement shall provide that, in connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended,
including the Company's initial public offering, the Participant shall agree not
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to sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the repurchase of, or otherwise dispose or transfer for value or otherwise agree
to engage in any of the foregoing transactions with respect to any Stock without
the prior written consent of the Company or its underwriters, for such period of
time from and after the effective date of such registration statement as may be
requested by the Company or such underwriters (the "Market Stand-Off").
STOCK DIVIDENDS, SPLITS, ETC. If there is any change in the number of
outstanding shares of Stock by reason of a stock split, reverse stock split,
stock dividend, recapitalization, combination or reclassification, then (i) the
number of shares of Stock available for Rights, (ii) the number of shares of
Stock covered by outstanding Rights, and (iii) the Exercise Price or Purchase
Price of any Stock Option or Purchase Right, in effect prior to such change,
shall be proportionately adjusted by the Administrator to reflect any increase
or decrease in the number of issued shares of Stock; provided, however, that any
fractional shares resulting from the adjustment shall be eliminated.
The Company and the Majority Shareholders need not comply with any
federal or state regulatory requirements in connection with ratifying the Plan.
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MANAGEMENT INFORMATION
BIOGRAPHICAL INFORMATION ON OFFICERS AND DIRECTORS AND SIGNIFICANT EMPLOYEES
STEVEN T. BERMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER, SECRETARY AND DIRECTOR
Mr. Berman was appointed President, Chief Executive Officer and
Director on March 5, 2009 and Secretary on August 7, 2009. Mr. Berman has a B.A.
from the University of Wisconsin (1984) and a J.D. from the University of
Wisconsin (1987). He served as Assistant General Counsel from 1989-1994 for the
National Rural Utilities Cooperative Finance Corp. He became Senior VP, General
Counsel, and Secretary/Treasurer of National Rural Telecommunications
Cooperative from 1994-2004. In 2005-2006, he was President/CEO of First Capital
Surety & Trust Company. He founded EBC Enterprises, LLC in 2004 as a consulting
company.
FRANK R. VENTURA, CHIEF FINANCIAL OFFICER AND TREASURER
Mr. Ventura was appointed Chief Financial Officer as of April 23, 2009
and Treasurer as of August 7, 2009. Mr. Ventura earned a B.S. in accounting in
1965 from Rockhurst University. In 1972, he completed a program for Management
Development at Harvard Business School. From September 2000 to June 2002, he was
the Chief Financial Officer for St. Andrews Telecommunications, Inc. From May
2003 to September 2004, he was the Chief Financial Officer of Gas-Mart USA, Inc.
Beginning in November 2004 to date, he has been the Chief Financial Officer and
twenty percent owner of Blue Star Communications, Inc.
DR. ALLAN RABINOFF, CHAIRMAN OF THE BOARD
Dr. Rabinoff has over twenty-five years of business experience in China
and the Far East, including developing international companies and teams. Dr.
Rabinoff has been involved as a Board and Senior Executive Team member of
several Chinese ventures. Additionally, he served as the Chief Operations
Officer of In Touch Communications Inc. in Beijing from November 2004 to May
2005. Dr. Rabinoff has accumulated a vast array of contacts in business and
government over the last twenty-five years in Asia and has a firm grasp on the
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requirements necessary to successfully operate in China. In 1975, Dr. Rabinoff
earned a PhD from the University of Maryland. He also holds a Master's and
Bachelor of Science degree from the University of Wisconsin.
GEORGE "BUCK" KRIEGER, DIRECTOR
Mr. Krieger was appointed to the Company's Board at its inception in
July 2006. In August of 2004 he was the President of StarTelecom, Inc., a
telecommunications consulting firm, until July 2006. Mr. Krieger has an
extensive financial background which began at Clayton Brokerage Company, which
became the largest brokerage house in the country dedicated to commodities.
During his tenure at Clayton Brokerage he was an Executive V.P. and National
Sales Manager for ten years. Mr. Krieger retired from Clayton after twenty-five
years. He intends to focus his business time primarily on China Wi-Max.
SHARON XIONG, DIRECTOR
Ms. Xiong was appointed on March 9, 2009. Ms. Xiong received her
education in Computer Science from the University of Colorado, Denver and holds
an EMBA from the University of Colorado, Denver, a Ph.D. from the Medical school
at the University of South Dakota, and an M.S and B.S. from Peking University,
China. Sharon Xiong currently leads and manages system verification of High
DensitySIP Trunk Gateway at Avaya Communication Inc. Prior to working for Avaya,
Sharon worked at Lucent Technologies on 10G optical router (Bandwidth Manager)
development and Rhythm Netconnections, Inc., for DSL management software
development. Sharon is the president of XBC Consulting firm which offers
business consulting services to people who intend to expand their business in
China's emerging market. She understands Chinese culture, has a broad Chinese
network, many years hands-on experience in US corporate business operation, and
corporate management skills.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning
compensation paid by the Company to the President and the Company's two most
highly compensated executive officers for the fiscal years ended December 31,
2008, 2007 and 2006 (the "Named Executive Officers"):
11
SUMMARY EXECUTIVES COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
NON-EQUITY NON-QUALIFIED
INCENTIVE DEFERRED
PLAN COMPENSA- ALL
STOCK OPTION COMPEN- TION OTHER
SALARY BONUS AWARDS AWARDS SATION EARNINGS COMPENSATION TOTAL
NAME & POSITION YEAR ($) ($) ($) ($) ($) ($) ($) ($)
- ------------------------------- -------- --------- -------- ----------- --------- ------------ ---------- ---------- ----------
Steven T. Berman, President, 2008 0 0 0 0 0 0 0 0
Chief Executive Officer, 2007 0 0 0 0 0 0 0 0
Secretary and Director (1) 2006 0 0 0 0 0 0 0 0
Frank R. Ventura, Chief 2008 0 0 0 0 0 0 0 0
Financial Officer and 2007 0 0 0 0 0 0 0 0
Treasurer (2) 2006 0 0 0 0 0 0 0 0
Dr. Allan Rabinoff, Chairman 2008 $100,000 0 0 0 0 0 $20,000 $120,000
and Executive Director (3) 2007 0 0 $20,000 0 0 0 $42,000 $ 62,000
2006 0 0 $ 1,500 0 0 0 0 $ 1,500
George E. Harris, Former 2008 $105,000 0 $50,000 $39,900 0 0 0 $194,900
President, CFO and Director 2007 0 0 0 0 0 0 0 0
(4) 2006 0 0 0 0 0 0 0 0
Jenny Wang, Former Chief 2008 0 0 0 0 0 0 $80,600 $80,600
Administrative Officer and 2007 0 0 $13,400 0 0 0 $21,000 $34,400
Director (5) 2006 0 0 $ 100 0 0 0 0 $ 100
- -------------------------------
(1) Mr. Berman was appointed President, Chief Executive Officer and Director on
March 5, 2009 and Secretary on August 7, 2009.
(2) Mr. Ventura was appointed Chief Financial Officer on April 23, 2009 and
Treasurer on August 7, 2009.
(3) During the year ended December 31, 2006, Dr. Rabinoff received 1,500,000
shares of common stock valued at $1,500 for his services. During the year ended
December 31, 2007, Dr. Rabinoff received 1,325,000 shares of common stock valued
at $20,000 as compensation for his services. Mr. Rabinoff received $42,000 for
his services as a director for China Wi-Max. On March 1, 2008, Mr. Rabinoff
entered into an employment agreement with China Wi-Max, prior to that Mr.
Rabinoff did not receive a salary.
(4) In January 2008, Mr. Harris received 200,000 shares of common stock, valued
at $50,000 as a signing bonus in connection with the employment agreement he
executed at that time and 300,000 vested options with an exercise price of $.25,
valued at $39,900. Prior to January 1, 2008, Mr. Harris did not receive a salary
from China Wi-Max. Mr. Harris resigned his position as President on March 5,
2009. On April 16, 2009, Mr. Harris resigned as CFO and a Director.
(5) During the year ended December 31, 2006, Ms. Wang was issued 100,000 shares
of common stock valued at $100 for services. During the year ended December 31,
2007, Ms. Wang received 950,000 shares of common stock valued at $13,400 as
compensation for her services. In addition, Ms. Wang received $21,000 in cash
for her services as a director of the Company. Ms Wang resigned as Chief
Administrative Officer and Director effective March 5, 2009.
12
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
In February 2008, China Wi-Max implemented a Corporation Stock Option
Plan. The Board of Directors set aside 4,000,000 shares of its common stock to
be issued under the Corporation Stock Option Plan. During the years ended
December 31, 2007 and 2006, the Board did not grant or issue any options under
the Corporation Stock Option Plan. During the year ended December 31, 2008, the
Company granted 2,600,000 options, cancelled 400,000 options, leaving 2,200,000
exercisable upon vesting.
The options have a term of five years and an exercise price of $0.25
per share. The options all have vesting rates. At December 31, 2008, 637,500
shares have vested in full. Before any employee options may be delivered or
exercised, the shareholders must ratify the Plan.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
On January 1, 2008, China Wi-Max entered into an employment agreement
with Mr. George Harris to serve as the President and Chief Financial Officer of
China Wi-Max. On March 5, 2009, Mr. Harris resigned as President, with no other
changes to his employment agreement. On April 16, 2009, Mr. Harris resigned as
CFO and director. On January 1, 2008, Mr. Harris was issued an option
exercisable for 500,000 shares under the Corporation Stock Option Plan in
connection with his employment agreement. The option has an exercise price of
$0.25 per share and a term of five years. The option vests at a rate of 200,000
on the grant date, 100,000 on each anniversary of the effective date of the
employment agreement. Vesting is accelerated in connection with a change in
control or termination of the employment agreement. As Mr. Harris has
terminated, his option is fully vested for 500,000 shares.
On March 1, 2008, China Wi-Max entered into an employment agreement
with Dr. Allan Rabinoff to serve as the Executive Director - China Business
Development. Dr. Rabinoff's employment agreement has a term of three years and
provides for Dr. Rabinoff to receive a base salary of $10,000 per month. The
employment agreement provides that the base salary upon the earlier occurrence
of the closing of financing of at least $4 million or December 31, 2008, the
base salary will increase to $15,000 per month. Vesting is accelerated in
connection with a change in control or termination. On March 1, 2008, Dr.
Rabinoff was issued an option exercisable for 600,000 shares under the
Corporation Stock Option Plan in connection with his employment agreement. The
option has an exercise price of $0.25 per share and a term of five years. The
option vests at a rate of 75,000 shares with the completion of acquisitions of
both the fiber assets and spectrum license in each of the remaining 8 targeted
cities of the business plan. Vesting is accelerated in connection with a change
in control or termination of the employment agreement.
On March 1, 2009 China Wi-Max entered into a three year employment
agreement with Mr. Berman to serve as President, Chief Executive Officer and
Director providing for normal executive participation in the employee benefit
plans, expense reimbursements and paid vacations. The Agreement contains normal
duties, responsibilities, termination, non-competition, and compensation
clauses. The base salary is established at $10,000 per month, beginning June 1,
2009. The Agreement also provides a signing bonus of 250,000 shares and options
exercisable for 300,000 shares, vesting over three years at 100,000 shares per
year at $.25.
The Board approved additional incentive arrangement for Steve Berman,
President and CEO, - 500,000 options granted (effective 6/10/09) at present day
fair market value ($0.25) subject to vesting conditioned upon Company-achieving
milestones of raising equity - 50,000 options vested for each $1M received up to
$10M (total potential of 500,000 options vested with 5-yr exercise term). Mr.
Berman's salary to be increased from $10K per month to $15K per month after
13
first to occur of (i) one-year anniversary of start date; or (ii) a $5M traunch
of financing closed.
At a meeting of the Board of Directors on June 10, 2009, the Board
approved the modification of option awards for cities whose rights (fiber and
wireless) are purchased whereby a plan was approved to award shares per prior
arrangement - 50,000 shares to Jenny Wang and 75,000 shares to Allan Rabinoff.
This arrangement is cancelled by the Board and is no longer in effect on a
going-forward basis.
The Board approved new terms to include granting options immediately
(600,000 for Allan Rabinoff and 800,000 for Frank Jia, effective (6/10/09))
subject to vesting tied to the following Company-achieved milestones at present
day fair market value ($0.25) with a five-year exercise term:
Allan Rabinoff (Chairman) - 75,000 options to vest per city
implemented (eight city potential - Shanghai, Chongqing, Shenzhen,
Dalian, Qingdao, Guangzhou, Xi'an, Tianjin);
Frank Jia - 100,000 options to vest per city implemented
(eight city potential - Shanghai, Chongqing, Shenzhen, Dalian, Qingdao,
Guangzhou, Xi'an, Tianjin). Conditions to Frank Jia's options vesting:
contingent upon (i) satisfactory continued performance in current
duties and roles; (ii) each applicable city's fiber and wireless
transaction(s) being directly developed and closed by him (rather than
via a third-party); (iii) all such transactions, on a per city basis,
being purchased at cost, in addition to potential and appropriate
lobbying and transaction fees, acceptable to the Company, in compliance
with all laws and regulations, and with full transparency.
In addition, the Board approved the modification of Chairman Rabinoff's
employment contract to provide for 12 months severance (rather than 3 months),
in the event of termination of employment as provided therein.
In connection with the employment agreements, generally, the Company
terminates the employment agreement at any time with cause. The employee has the
right to terminate the employment agreement at any time with good reason. In the
event, the Company terminates an employment agreement for cause or the employee
terminates his or her employee agreement with good reason, all of such
employee's rights to compensation would cease upon the date of such termination.
If we terminate an employment agreement without cause, then such employee
terminates his employment agreement for cause, or in the event of a change in
control, we are required to pay to such employee all compensation and other
benefits that would have accrued and/or been payable to that employee during the
full term of the employment agreement.
A change of control is considered to have occurred when, as a result of
any type of corporate reorganization, execution of proxies, voting trusts or
similar arrangements, a person or group of persons (other than incumbent
officers, directors and our principal stockholders) acquires sufficient control
to elect more than a majority of our board of directors, acquires 50% or more of
our voting shares, or we adopt a plan of dissolution of liquidation. The
employment agreement also include a non-compete and nondisclosure provisions in
which each employee agrees not to compete with or disclose confidential
information regarding us and our business during the term of the employment
agreement and for a period of one year thereafter.
14
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid
by the Company to those directors who served on the Company's Board of
Directors, during the year ended December 31, 2008. NOTE: THIS TABLE EXCLUDES
ANY COMPENSATION PAID FOR SERVICES AS AN OFFICER.
NAME FEES STOCK OPTION NON-EQUITY NON-QUALIFIED ALL OTHER TOTAL
EARNED AWARDS AWARDS INCENTIVE PLAN DEFERRED COMPENSATION
OR PAID COMPENSATION COMPENSATION
IN CASH EARNINGS
- ------------- ---------- ----------- ----------- ------------------ ------------------- ------------------ -----------
Dr. Allan $20,000 $0 $0 $0 $0 $0 $20,000
Rabinoff (1)
George E. $0 $0 $0 $0 $0 $194,900 $194,900
Harris (2)
George $62,500 $0 $0 $0 $0 $0 $62,500
"Buck"
Krieger (3)
Daniel $35,000 $0 $0 $0 $0 $0 $35,000
Najor (4)
Jenny Wang $80,600 $0 $0 $0 $0 $0 $80,600
(5)
- ------------- ---------- ----------- -----------
(1) During 2008, Mr. Rabinoff received $20,000 for his services as a director
and on March 1, 2008, he entered into an employment agreement with China Wi-Max,
prior to that Mr. Rabinoff did not receive a salary.
(2) In January 2008, Mr. Harris received 200,000 shares of common stock, valued
at $50,000 as a signing bonus in connection with the employment agreement he
executed at that time and 300,000 vested options with an exercise price of $.25,
valued at $39,900. Prior to January 1, 2008, Mr. Harris did not receive a salary
from China Wi-Max. On April 16, 2009, Mr. Harris resigned as a Director
(3) During the year 2008, Mr. Krieger received cash of $60,000 and other
compensation of $2,500 in connection with services he provided in developing the
business plan, seeking out potential new management and Board members, and other
business matters.
(4) In March 2008, Mr. Najor was issued 50,000 shares of common stock valued at
$12,500 and 187,500 vested options with an exercise price of $.25, valued at
$22,500 for his services. Mr. Najor resigned as a Director effective March 1,
2009.
(5) During 2008, Ms. Wang received $80,600 in cash for her services as a
director and officer of the Company. Ms. Wang resigned as Chief Administrative
Officer and Director effective March 5, 2009.
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of February 26, 2008, a Compensation Committee was established. As a
result of two of the three committee members no longer being associated with the
Company, the Compensation Committee was dissolved. Through December 31, 2008 and
through the period ended July 31, 2009, the China Wi-Max Board of Directors in
its entirety acted as the Compensation Committee for China Wi-Max. Dr. Rabinoff
is the Chairman of the Company.
STOCK OPTION AWARD AND COMPENSATION PLAN
China Wi-Max, in February 2008, adopted an incentive stock option plan
pursuant to which the Board of Directors may grant options to key employees,
consultants, and others to purchase up to 4,000,000 shares of the Company's
common stock. On May 15, 2009, our Board of Directors adopted an Incentive Stock
Option Plan pursuant to which the Board of Directors may grant options or shares
to key employees, consultants, and others for up to 5,000,000 shares of the
Company's common stock. The plan will provide for the grant of incentive stock
options with an exercise price of not less than the fair market value on the
date of the grant as determined by the Board of Directors and will expire no
later than the fifth anniversary of the date of grant. As of July 31, 2009,
4,850,000 options with an exercise price of $0.25 had been granted to key
officers, directors, employees and advisors outside of the newly adopted Plan.
Before any employee options may be delivered or exercised, the shareholders must
ratify the Plan.
DIRECTOR COMPENSATION
LIMITATION ON LIABILITY AND INDEMNIFICATION
China Wi-Max is a Nevada corporation. Nevada Revised Statutes (NRS)
provide that a Nevada corporation's Articles of Incorporation may contain a
provision eliminating or limiting the personal liability of a director to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that any such provision may not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its shareholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
acts specified in the NRS (concerning unlawful distributions), or (iv) any
transaction from which a director directly or indirectly derived an improper
personal benefit. China Wi-Max articles of incorporation contain a provision
eliminating the personal liability of directors to China Wi-Max or China Wi-Max
shareholders for monetary damages to the fullest extent provided by the NRS.
The NRS provides that a Nevada corporation must indemnify a person who
was wholly successful, on the merits or otherwise, in defense of any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal (a
"Proceeding"), in which he or she was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection with
the Proceeding, unless such indemnity is limited by the corporation's articles
of incorporation. China Wi-Max articles of incorporation do not contain any such
limitation.
The NRS provides that a Nevada corporation may indemnify a person made
a party to a Proceeding because the person is or was a director against any
obligation incurred with respect to a Proceeding to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan) or reasonable expenses incurred in the Proceeding if the person
conducted himself or herself in good faith and the person reasonably believed,
in the case of conduct in an official capacity with the corporation, that the
person's conduct was in the corporation's best interests and, in all other
cases, his or her conduct was at least not opposed to the corporation's best
interests and, with respect to any criminal proceedings, the person had no
reasonable cause to believe that his or her conduct was unlawful. The Company's
16
articles of incorporation and bylaws allow for such indemnification. A
corporation may not indemnify a director in connection with any Proceeding by or
in the right of the corporation in which the director was adjudged liable to the
corporation or, in connection with any other Proceeding charging that the
director derived an improper personal benefit, whether or not involving actions
in an official capacity, in which Proceeding the director was judged liable on
the basis that he or she derived an improper personal benefit. Any
indemnification permitted in connection with a Proceeding by or in the right of
the corporation is limited to reasonable expenses incurred in connection with
such Proceeding. Under the NRS, unless otherwise provided in the articles of
incorporation, a Nevada corporation may indemnify an officer, employee,
fiduciary, or agent of the corporation to the same extent as a director and may
indemnify such a person who is not a director to a greater extent, if not
inconsistent with public policy and if provided for by its bylaws, general or
specific action of its Board of Directors or shareholders, or contract.
China Wi-Max articles of incorporation provide for indemnification of
directors, officers, employees, fiduciaries and agents of China Wi-Max to the
full extent permitted by Nevada law. China Wi-Max articles of incorporation also
provide that China Wi-Max may purchase and maintain insurance on behalf of any
person who is or was a director or officer of China Wi-Max or who is or was
serving at the request of China Wi-Max as a director, officer or agent of
another enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity or arising out of his or her status
as such, whether or not China Wi-Max would have the power to indemnify him or
her against such liability.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as of July 31, 2009, regarding
the equity compensation plan (including individual compensation arrangements)
under which shares of China Wi-Max's common stock are authorized for issuance.
No class of our securities other than our common stock or options to purchase
our common stock is authorized for issuance under any of our equity compensation
plans.
NUMBER OF NUMBER OF
SECURITIES SECURITIES
TO BE ISSUED TO BE
UPON ISSUED UPON
EXERCISE OF EXERCISE OF
VESTED AND UNVESTED NUMBER OF SECURITIES
OUTSTANDING AND REMAINING AVAILABLE FOR
OPTIONS, OUTSTANDING WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
WARRANTS AND OPTIONS, EXERCISE PRICE OF EQUITY COMPENSATION
RIGHTS WARRANTS OUTSTANDING PLANS (EXCLUDING
AND RIGHTS OPTIONS, WARRANTS SECURITIES REFLECTED IN
PLAN CATEGORY AND RIGHTS COLUMN (A) AND (B) *
(A) (B) (C) (D)
- -------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 0 0 0 0
Equity compensation plans not
approved by security holders 1,675,000 3,175,000 $ 0.25 150,000
------------ ------------- ------------------- -------------------------
Total 1,675,000 3,175,000 $ 0.25 150,000
- ---------------------------------
* Prior to increase from 4,000,000 to 5,000,000
17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of China Wi-Max outstanding common stock by:
o each person who is known by China Wi-Max to be the beneficial
owner of five percent (5%) or more of China Wi-Max common
stock;
o China Wi-Max's President, its other executive officers, and
each director as identified in the "Management Information"
section; and
o all of the Company's directors and executive officers as a
group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock and options, warrants
and convertible securities that are currently exercisable or convertible within
sixty days of the date of this document into shares of China Wi-Max common stock
are deemed to be outstanding and to be beneficially owned by the person holding
the options, warrants, or convertible securities for the purpose of computing
the percentage ownership of the person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other person.
The information below is based on the number of shares of China Wi-Max
common stock that China Wi-Max believes was beneficially owned by each person or
entity as of September 30, 2009. The total shares outstanding as of September
30, 2009 was 14,394,004.
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND PERCENT OF
NATURE OF CLASS
BENEFICIAL
OWNER (1)
- ----------------------- -------------------------------------------------------------------- ---------------- --------------
Common shares Steven T. Berman, 750,000(2) 5.21%
President, Chief Executive Officer, Secretary and Director
11649 Port Washington Rd., Ste. #224
Mequon, WI 53092
Common shares Frank R. Ventura, Chief Financial Officer and Treasurer 0(3) 0%
11649 Port Washington Rd., Ste. #224
Mequon, WI 53092
Common shares Dr. Allan Rabinoff, Chairman of the Board and Executive Officer 2,225,000(4) 15.46%
11649 Port Washington Rd., Ste. #224
Mequon, WI 53092
Common shares George "Buck" Krieger, Director 825,000 5.73%
12 Shari Dr.
St. Louis, MO 63122
Common shares Sharon Xiong, Director 25,000 0.17%
11649 Port Washington Rd. Ste. #224
Mequon, WI 53092
18
Common shares Jenny Wang, Former Chief Administrative Officer and Director 1,050,000 7.29%
11649 Port Washington Rd. Ste. #224
Mequon, WI 53092
Common shares Frank Jia 1,000,000(5) 6.95%
7-3-7#, No 102, Youyi Road,
Haidian District
Beijing, China 100085
Common shares Middle River Holding, Inc. 800,000 5.56%
c/o John Varono
1519 Windsor Street
Columbia, MO 65201
Common shares All Directors and Executive Officers as a Group (5 persons) 3,850,000 26.75%
- -----------------------
(1)Assumes the sale of the maximum number of Notes offered and conversion of all
Notes into shares of common stock at $.25 and $.50 per share, which could be
6,540,800 shares. There are no assurances that all the Notes offered will be
sold, as investors may not purchase the notes, or that if sold, all of the Notes
will be converted. To the extent that less than all the Notes are converted,
management's percentage of ownership in the Company will increase
proportionately.
(2)Mr. Berman also holds 800,000 unvested Options.
(3)Mr. Ventura holds 50,000 unvested Options.
(4)Mr. Rabinoff also holds 600,000 unvested Options.
(5)Mr. Jia also holds 800,000 unvested Options
Rule 13d-3 under the Securities Exchange Act of 1934 governs the
determination of beneficial ownership of securities. That rule provides that a
beneficial owner of a security includes any person who directly or indirectly
has or shares voting power and/or investment power with respect to such
security. Rule 13d-3 also provides that a beneficial owner of a security
includes any person who has the right to acquire beneficial ownership of such
security within sixty days, including through the exercise of any option,
warrant or conversion of a security. Any securities not outstanding which are
subject to such options, warrants, or conversion privileges are deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such person. Those securities are not deemed to
be outstanding for the purpose of computing the percentage of the class owned by
any other person. Included in this table are only those derivative securities
with exercise prices that China Wi-Max believes have a reasonable likelihood of
being "in the money" within the next sixty days.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder intends to present at the Company's
2009 Annual Meeting should be received at the Company's principal executive
office no later than __________________, 2009. Any such proposal must comply
with Rule 14c-8 of Regulation 14C of the proxy rules of the Securities and
Exchange Commission. Shareholder proposals should be addressed to the Secretary
of the Company.
19
BOARD RECOMMENDATION OF PROPOSALS
The Board of Directors of the Company voted unanimously to implement
the Proposed Amendments. The Board of Directors believes that the Amendments
will serve the Company's current business. The Company is not expected to
experience any tax consequence as a result of the Amendments.
OTHER MATTERS
The Board of Directors of the Company is not aware that any matter
other than those described in this Information Statement has been presented for
the consent of the shareholders.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER TO STEVEN BERMAN, PRESIDENT OF
THE COMPANY, AT CHINA WI-MAX COMMUNICATIONS, INC., 1905 SHERMAN STREET, SUITE
335, DENVER, COLORADO 80203, TELEPHONE (303) 993-8028. A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K WILL BE PROVIDED WITHOUT CHARGE.
CHINA WI-MAX COMMUNICATIONS, INC.
By: /s/ Steven T. Berman
-----------------------------
Steven Berman, President
20
EXHIBIT "A"
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
Please see attached Exhibit 99.1 Graphic
EXHIBIT "B"
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN
SECTION 1: GENERAL PURPOSE OF PLAN
The name of this plan is the 2009 CHINA WI-MAX COMMUNICATIONS, INC. STOCK OPTION
AWARD AND COMPENSATION PLAN (the "Plan"). The purpose of the Plan is to enable
CHINA WI-MAX COMMUNICATIONS, INC., a Nevada corporation (the "Company"), and any
Parent or any Subsidiary to obtain and retain the services of the types of
Employees, Consultants and Directors who will contribute to the Company's long
range success and to provide incentives which are linked directly to increases
in share value which will inure to the benefit of all stockholders of the
Company.
SECTION 2: DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
"Administrator" shall have the meaning as set forth in Section 3,
hereof.
"Board" means the Board of Directors of the Company.
"Cause" means (i) failure by an Eligible Person to substantially
perform his or her duties and obligations to the Company (other than any such
failure resulting from his or her incapacity due to physical or mental illness);
(ii) engaging in misconduct or a fiduciary breach which is or potentially is
materially injurious to the Company or its stockholders; (iii) commission of a
felony; (iv) the commission of a crime against the Company which is or
potentially is materially injurious to the Company; or (v) as otherwise provided
in the Stock Option Agreement or Stock Purchase Agreement. For purposes of this
Plan, the existence of Cause shall be determined by the Administrator in its
sole discretion.
"Change in Control" shall mean:
The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if more than 50% of
the combined voting power (which voting power shall be calculated by assuming
the conversion of all equity securities convertible (immediately or at some
future time) into shares entitled to vote, but not assuming the exercise of any
warrant or right to subscribe to or purchase those shares) of the continuing or
Surviving Entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned, directly or indirectly, by
persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization; provided, however, that in making
the determination of ownership by the stockholders of the Company, immediately
after the reorganization, equity securities which persons own immediately before
the reorganization as stockholders of another party to the transaction shall be
disregarded; or
The sale, transfer or other disposition of all or substantially all of
the Company's assets.
A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
1
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means a committee of the Board designated by the Board to
administer the Plan.
"Company" means CHINA WI-MAX COMMUNICATIONS, INC., a corporation
organized under the laws of the State of Nevada (or any successor corporation).
"Consultant" means a consultant or advisor who is a natural person or a
legal entity and who provides bona fide services to the Company, a Parent or a
Subsidiary; provided such services are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities.
"Date of Grant" means the date on which the Administrator adopts a
resolution expressly granting a Right to a Participant or, if a different date
is set forth in such resolution as the Date of Grant, then such date as is set
forth in such resolution.
"Director" means a member of the Board.
"Disability" means that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment; provided, however, for purposes of determining the term of an
ISO pursuant to Section 6.6 hereof, the term Disability shall have the meaning
ascribed to it under Code Section 22(e)(3). The determination of whether an
individual has a Disability shall be determined under procedures established by
the Plan Administrator.
"Eligible Person" means an Employee, Consultant or Director of the
Company, any Parent or any Subsidiary.
"Employee" shall mean any individual who is a common-law employee
(including officers) of the Company, a Parent or a Subsidiary.
"Exercise Price" shall have the meaning set forth in Section 6.3
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of a Share,
determined as follows: (i) if the Stock is listed on any established stock
exchange or a national market system, including without limitation, the NASDAQ
National Market, the Fair Market Value of a share of Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in the Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Administrator deems reliable; (ii) if the Stock is quoted on the NASDAQ
System (but not on the NASDAQ National Market) or any similar system whereby the
stock is regularly quoted by a recognized securities dealer but closing sale
prices are not reported, the Fair Market Value of a share of Stock shall be the
mean between the bid and asked prices for the Stock on the last market trading
day prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Administrator deems reliable; or (iii) in the absence
of an established market for the Stock, the Fair Market Value shall be
determined in good faith by the Administrator and such determination shall be
conclusive and binding on all persons.
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"First Refusal Right" shall have the meaning set forth in Section 8.7
hereof.
"ISO" means a Stock Option intended to qualify as an "incentive stock
option" as that term is defined in Section 422(b) of the Code.
"Non-Employee Director" means a member of the Board who is not an
Employee of the Company, a Parent or Subsidiary, who satisfies the requirements
of such term as defined in Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission.
"Non-Qualified Stock Option" means a Stock Option not described in
Section 422(b) of the Code.
"Offeree" means a Participant who is granted a Purchase Right pursuant
to the Plan.
"Optionee" means a Participant who is granted a Stock Option pursuant
to the Plan.
"Outside Director" means a member of the Board who is not an Employee
of the Company, a Parent or Subsidiary, who satisfies the requirements of such
term as defined in Treasury Regulations (26 Code of Federal Regulation Section
1.162-27(e)(3)).
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.
"Participant" means any Eligible Person selected by the Administrator,
pursuant to the Administrator's authority in Section 3, to receive grants of
Rights.
"Plan" means this 2009 CHINA WI-MAX COMMUNICATIONS, INC. STOCK OPTION
AWARD AND COMPENSATION PLAN, as the same may be amended or supplemented from
time to time.
"Purchase Price" shall have the meaning set forth in Section 7.3.
"Purchase Right" means the right to purchase Stock granted pursuant to
Section 7.
"Rights" means Stock Options and Purchase Rights.
"Repurchase Right" shall have the meaning set forth in Section 8.8 of
the Plan.
"Service" shall mean service as an Employee, Director or Consultant.
"Stock" means Common Stock of the Company.
"Stock Option" or "Option" means an option to purchase shares of Stock
granted pursuant to Section 6.
"Stock Option Agreement" shall have the meaning set forth in Section
6.1.
"Stock Purchase Agreement" shall have the meaning set forth in Section
7.1.
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"Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
"Surviving Entity" means the Company if immediately following any
merger, consolidation or similar transaction, the holders of outstanding voting
securities of the Company immediately prior to the merger or consolidation own
equity securities possessing more than 50% of the voting power of the
corporation existing following the merger, consolidation or similar transaction.
In all other cases, the other entity to the transaction and not the Company
shall be the Surviving Entity. In making the determination of ownership by the
stockholders of an entity immediately after the merger, consolidation or similar
transaction, equity securities which the stockholders owned immediately before
the merger, consolidation or similar transaction as stockholders of another
party to the transaction shall be disregarded. Further, outstanding voting
securities of an entity shall be calculated by assuming the conversion of all
equity securities convertible (immediately or at some future time) into shares
entitled to vote.
"Ten Percent Stockholder" means a person who on the Date of Grant owns,
either directly or through attribution as provided in Section 424 of the Code,
Stock constituting more than 10% of the total combined voting power of all
classes of stock of his or her employer corporation or of any Parent or
Subsidiary.
SECTION 3: ADMINISTRATION
3.1 Administrator. The Plan shall be administered by either (i) the
Board, or (ii) a Committee appointed by the Board (the group that administers
the Plan is referred to as the "Administrator").
3.2 Powers in General. The Administrator shall have the power and
authority to grant to Eligible Persons, pursuant to the terms of the Plan, (i)
Stock Options, (ii) Purchase Rights or (iii) any combination of the foregoing.
3.3 Specific Powers. In particular, the Administrator shall have the
authority: (i) to construe and interpret the Plan and apply its provisions; (ii)
to promulgate, amend and rescind rules and regulations relating to the
administration of the Plan; (iii) to authorize any person to execute, on behalf
of the Company, any instrument required to carry out the purposes of the Plan;
(iv) to determine when Rights are to be granted under the Plan; (v) from time to
time to select, subject to the limitations set forth in this Plan, those
Eligible Persons to whom Rights shall be granted; (vi) to determine the number
of shares of Stock to be made subject to each Right; (vii) to determine whether
each Stock Option is to be an ISO or a Non-Qualified Stock Option; (viii) to
prescribe the terms and conditions of each Stock Option and Purchase Right,
including, without limitation, the Purchase Price and medium of payment, vesting
provisions and repurchase provisions, and to specify the provisions of the Stock
Option Agreement or Stock Purchase Agreement relating to such grant or sale;
(ix) to amend any outstanding Rights for the purpose of modifying the time or
manner of vesting, the Purchase Price or Exercise Price, as the case may be,
subject to applicable legal restrictions and to the consent of the other party
to such agreement; (x) to determine the duration and purpose of leaves of
absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan; (xi) to make decisions with
respect to outstanding Stock Options that may become necessary upon a change in
4
corporate control or an event that triggers anti-dilution adjustments; and (xii)
to make any and all other determinations which it determines to be necessary or
advisable for administration of the Plan.
3.4 Decisions Final. All decisions made by the Administrator pursuant
to the provisions of the Plan shall be final and binding on the Company and the
Participants.
3.5 The Committee. The Board may, in its sole and absolute discretion,
from time to time, and at any period of time during which the Company's Stock is
registered pursuant to Section 12 of the Exchange Act, delegate any or all of
its duties and authority with respect to the Plan to the Committee whose members
are to be appointed by and to serve at the pleasure of the Board. From time to
time, the Board may increase or decrease the size of the Committee, add
additional members to, remove members (with or without cause) from, appoint new
members in substitution therefor, and fill vacancies, however caused, in the
Committee. The Committee shall act pursuant to a vote of the majority of its
members or, in the case of a committee comprised of only two members, the
unanimous consent of its members, whether present or not, or by the unanimous
written consent of the majority of its members and minutes shall be kept of all
of its meetings and copies thereof shall be provided to the Board. Subject to
the limitations prescribed by the Plan and the Board, the Committee may
establish and follow such rules and regulations for the conduct of its business
as it may determine to be advisable. During any period of time during which the
Company's Stock is registered pursuant to Section 12 of the Exchange Act, all
members of the Committee shall be Non-Employee Directors and Outside Directors.
3.6 Indemnification. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by applicable law, the Administrator and each of the
Administrator's consultants shall be indemnified by the Company against the
reasonable expenses, including attorney's fees, actually incurred in connection
with any action, suit or proceeding or in connection with any appeal therein, to
which the Administrator or any of its consultants may be party by reason of any
action taken or failure to act under or in connection with the Plan or any
option granted under the Plan, and against all amounts paid by the Administrator
or any of its consultants in settlement thereof (provided that the settlement
has been approved by the Company, which approval shall not be unreasonably
withheld) or paid by the Administrator or any of its consultants in satisfaction
of a judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such Administrator or any of its consultants did not act in good faith and in a
manner which such person reasonably believed to be in the best interests of the
Company, or was grossly negligent, and in the case of a criminal proceeding, had
no reason to believe that the conduct complained of was unlawful; provided,
however, that within 60 days after institution of any such action, suit or
proceeding, such Administrator or any of its consultants shall, in writing,
offer the Company the opportunity at its own expense to handle and defend such
action, suit or proceeding.
SECTION 4: STOCK SUBJECT TO THE PLAN
4.1 Stock Subject to the Plan. Subject to adjustment as provided in
Section 9, Five Million (5,000,000) shares of Common Stock shall be reserved and
available for issuance under the Plan. Stock reserved hereunder may consist, in
whole or in part, of authorized and unissued shares or treasury shares.
5
4.2 Basic Limitation. The number of shares that are subject to Rights
under the Plan shall not exceed the number of shares that then remain available
for issuance under the Plan. The Company, during the term of the Plan, shall at
all times reserve and keep available a sufficient number of shares to satisfy
the requirements of the Plan.
4.3 Additional Shares. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise terminated, the
shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that shares issued
under the Plan are reacquired by the Company pursuant to the terms of any
forfeiture provision, right of repurchase or right of first refusal, such shares
shall again be available for the purposes of the Plan.
SECTION 5: ELIGIBILITY
Eligible Persons who are selected by the Administrator shall be
eligible to be granted Rights hereunder subject to limitations set forth in this
Plan; provided, however, that only Employees shall be eligible to be granted
ISOs hereunder.
SECTION 6: TERMS AND CONDITIONS OF OPTIONS.
6.1 Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Administrator deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
6.2 Number of Shares. Each Stock Option Agreement shall specify the
number of shares of Stock that are subject to the Option and shall provide for
the adjustment of such number in accordance with Section 9, hereof. The Stock
Option Agreement shall also specify whether the Option is an ISO or a
Non-Qualified Stock Option.
6.3 Exercise Price.
6.3.1 In General. Each Stock Option Agreement shall state the
price at which shares subject to the Stock Option may be purchased (the
"Exercise Price"), which shall, with respect to Incentive Stock
Options, be not less than 100% of the Fair Market Value of the Stock on
the Date of Grant. In the case of Non-Qualified Stock Options, the
Exercise Price shall be determined in the sole discretion of the
Administrator.
6.3.2 Payment. The Exercise Price shall be payable in a form
described in Section 8 hereof.
6.4 Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise or with the disposition of
shares acquired by exercising an Option.
6.5 Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option becomes exercisable. In the case of an
Optionee who is not an officer of the Company, a Director or a Consultant, an
Option shall become exercisable at a rate of no more than 25% per year over a
6
four-year period commencing on January 1 following the Date of Grant and 25%
each year thereafter on January 1. Subject to the preceding sentence, the
exercise provisions of any Stock Option Agreement shall be determined by the
Administrator, in its sole discretion.
6.6 Term. The Stock Option Agreement shall specify the term of the
Option. No Option shall be exercised after the expiration of ten years after the
date the Option is granted. Unless otherwise provided in the Stock Option
Agreement, no Option may be exercised (i) three months after the date the
Optionee's Service with the Company, its Parent or its Subsidiaries terminates
if such termination is for any reason other than death, Disability or Cause,
(ii) one year after the date the Optionee's Service with the Company, its Parent
or its subsidiaries terminates if such termination is a result of death or
Disability, and (iii) if the Optionee's Service with the Company, its Parent, or
its Subsidiaries terminates for Cause, all outstanding Options granted to such
Optionee shall expire as of the commencement of business on the date of such
termination. The Administrator may, in its sole discretion, waive the
accelerated expiration provided for in (i) or (ii). Outstanding Options that are
not exercisable at the time of termination of employment for any reason shall
expire at the close of business on the date of such termination.
6.7 Leaves of Absence. For purposes of Section 6.6 above, to the extent
required by applicable law, Service shall be deemed to continue while the
Optionee is on a bona fide leave of absence. To the extent applicable law does
not require such a leave to be deemed to continue while the Optionee is on a
bona fide leave of absence, such leave shall be deemed to continue if, and only
if, expressly provided in writing by the Administrator or a duly authorized
officer of the Company, Parent, or Subsidiary for whom Optionee provides his or
her services.
6.8 Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Administrator may modify, extend or assume
outstanding Options (whether granted by the Company or another issuer) or may
accept the cancellation of outstanding Options (whether granted by the Company
or another issuer) in return for the grant of new Options for the same or a
different number of shares and at the same or a different Exercise Price.
Without limiting the foregoing, the Administrator may amend a previously granted
Option to fully accelerate the exercise schedule of such Option and provide that
upon the exercise of such Option, the Optionee shall receive shares of
Restricted Stock that are subject to repurchase by the Company at the Exercise
Price paid for the Option in accordance with Section 8.8.1 with such Company's
right to repurchase at such price lapsing at the same rate as the exercise
provisions set forth in Optionee's Stock Option Agreement. The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, impair the Optionee's rights or increase the Optionee's obligations
under such Option. However, a termination of the Option in which the Optionee
receives a cash payment equal to the difference between the Fair Market Value
and the Exercise Price for all shares subject to exercise under any outstanding
Option shall not be deemed to impair any rights of the Optionee or increase the
Optionee's obligations under such Option.
SECTION 7: TERMS AND CONDITIONS OF AWARDS OR SALES
7.1 Stock Purchase Agreement. Each award or sale of shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
7
7.2 Duration of Offers. Unless otherwise provided in the Stock Purchase
Agreement, any right to acquire shares under the Plan (other than an Option)
shall automatically expire if not exercised by the Purchaser within 15 days
after the grant of such right was communicated to the Purchaser by the Company.
7.3 Purchase Price.
7.3.1 In General. Each Stock Purchase Agreement shall state
the price at which the Stock subject to such Stock Purchase Agreement
may be purchased (the "Purchase Price"), which, with respect to Stock
Purchase Rights, shall be determined in the sole discretion of the
Administrator.
7.3.2 Payment of Purchase Price. The Purchase Price shall be
payable in a form described in Section 8.
7.4 Withholding Taxes. As a condition to the purchase of shares, the
Purchaser shall make such arrangements as the Board may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such purchase.
SECTION 8: PAYMENT; RESTRICTIONS
8.1 General Rule. The entire Purchase Price or Exercise Price of shares
issued under the Plan shall be payable in full by, as applicable, cash or
certified check for an amount equal to the aggregate Purchase Price or Exercise
Price for the number of shares being purchased, or in the discretion of the
Administrator, upon such terms as the Administrator shall approve, (i) in the
case of an Option and provided the Company's stock is publicly traded, by a copy
of instructions to a broker directing such broker to sell the Stock for which
such Option is exercised, and to remit to the Company the aggregate Exercise
Price of such Options (a "cashless exercise"), (ii) in the case of an Option or
a sale of Stock, by paying all or a portion of the Exercise Price or Purchase
Price for the number of shares being purchased by tendering Stock owned by the
Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery equal to the aggregate Purchase Price of the Stock with
respect to which such Option or portion thereof is thereby exercised or Stock
acquired (a "stock-for-stock exercise") or (iii) by a stock-for-stock exercise
by means of attestation whereby the Optionee identifies for delivery specific
shares of Stock already owned by Optionee and receives a number of shares of
Stock equal to the difference between the Option shares thereby exercised and
the identified attestation shares of Stock (an "attestation exercise").
8.2 Withholding Payment. The Purchase Price or Exercise Price shall
include payment of the amount of all federal, state, local or other income,
excise or employment taxes subject to withholding (if any) by the Company or any
parent or subsidiary corporation as a result of the exercise of a Stock Option.
The Optionee may pay all or a portion of the tax withholding by cash or check
payable to the Company, or, at the discretion of the Administrator, upon such
terms as the Administrator shall approve, by (i) cashless exercise or
attestation exercise; (ii) stock-for-stock exercise; (iii) in the case of an
Option, by paying all or a portion of the tax withholding for the number of
shares being purchased by withholding shares from any transfer or payment to the
Optionee ("Stock withholding"); or (iv) a combination of one or more of the
foregoing payment methods. Any shares issued pursuant to the exercise of an
Option and transferred by the Optionee to the Company for the purpose of
satisfying any withholding obligation shall not again be available for purposes
8
of the Plan. The Fair Market Value of the number of shares subject to Stock
withholding shall not exceed an amount equal to the applicable minimum required
tax withholding rates.
8.3 Services Rendered. At the discretion of the Administrator, shares
may be awarded under the Plan in consideration of services rendered to the
Company, a Parent or a Subsidiary prior to the award.
8.4 Promissory Note. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, in the discretion of the Administrator,
upon such terms as the Administrator shall approve, all or a portion of the
Exercise Price or Purchase Price (as the case may be) of shares issued under the
Plan may be paid with a full-recourse promissory note. However, in the event
there is a stated par value of the shares and applicable law requires, the par
value of the shares, if newly issued, shall be paid in cash or cash equivalents.
The shares shall be pledged as security for payment of the principal amount of
the promissory note and interest thereon, and held in the possession of the
Company until said amounts are repaid in full. The interest rate payable under
the terms of the promissory note shall not be less than the minimum rate (if
any) required to avoid the imputation of additional interest under the Code.
Subject to the foregoing, the Administrator (at its sole discretion) shall
specify the term, interest rate, amortization requirements (if any) and other
provisions of such note. Unless the Administrator determines otherwise, shares
of Stock having a Fair Market Value at least equal to the principal amount of
the loan shall be pledged by the holder to the Company as security for payment
of the unpaid balance of the loan and such pledge shall be evidenced by a pledge
agreement, the terms of which shall be determined by the Administrator, in its
discretion; provided, however, that each loan shall comply with all applicable
laws, regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction.
8.5 Exercise/Pledge. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so allows and if Stock is publicly traded, in the
discretion of the Administrator, upon such terms as the Administrator shall
approve, payment may be made all or in part by the delivery (on a form
prescribed by the Administrator) of an irrevocable direction to pledge shares to
a securities broker or lender approved by the Company, as security for a loan,
and to deliver all or part of the loan proceeds to the Company in payment of all
or part of the Exercise Price and any withholding taxes.
8.6 Written Notice. The purchaser shall deliver a written notice to the
Administrator requesting that the Company direct the transfer agent to issue to
the purchaser (or to his designee) a certificate for the number of shares of
Common Stock being exercised or purchased or, in the case of a cashless exercise
or share withholding exercise, for any shares that were not sold in the cashless
exercise or withheld.
8.7 First Refusal Right. Each Stock Option Agreement and Stock Purchase
Agreement may provide that the Company shall have the right of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed sale,
hypothecation or other disposition of the Stock purchased by the Optionee or
Offeree pursuant to a Stock Option Agreement or Stock Purchase Agreement; and in
the event the holder of such Stock desires to accept a bona fide third-party
offer for any or all of such Stock, the Stock shall first be offered to the
Company upon the same terms and conditions as are set forth in the bona fide
offer.
8.8 Repurchase Rights. Following a termination of the Participant's
Service, the Company may repurchase the Participant's Rights as provided in this
Section 8.8 (the "Repurchase Right").
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8.8.1 Repurchase Price. Following a termination of the
Participant's Service the Repurchase Right shall be exercisable at a
price equal to (i) the Fair Market Value of vested Stock or, in the
case of exercisable options, the Fair Market Value of the Stock
underlying such unexercised options less the Exercise Price, or (ii)
the Purchase Price or Exercise Price, as the case may be, of unvested
Stock; provided, however, the right to repurchase unvested stock as
described in Section 8.8.1(ii) shall lapse at a rate of at least 33.33%
per year over three years from the date the Right is granted.
8.8.2 Exercise of Repurchase Right. A Repurchase Right may be
exercised only within 90 days after the termination of the
Participant's Service (or in the case of Stock issued upon exercise of
an Option or after the date of termination or the purchase of Stock
under a Stock Purchase Agreement after the date of termination, within
90 days after the date of the exercise or Stock purchase, whichever is
applicable) for cash or for cancellation of indebtedness incurred in
purchasing the shares.
8.9 Termination of Repurchase and First Refusal Rights. Each Stock
Option Agreement and Stock Purchase Agreement shall provide that the Repurchase
Rights and First Refusal Rights shall have no effect with respect to, or shall
lapse and cease to have effect when the issuer's securities become publicly
traded or a determination is made by counsel for the Company that such
Repurchase Rights and First Refusal Rights are not permitted under applicable
federal or state securities laws.
8.10 No Transferability. Except as provided herein, a Participant may
not assign, sell or transfer Rights, in whole or in part, other than by
testament or by operation of the laws of descent and distribution.
8.10.1 Permitted Transfer of Non-Qualified Option. The
Administrator, in its sole discretion may permit the transfer of a
Non-Qualified Option (but not an ISO or Stock Purchase Right) as
follows: (i) by gift to a member of the Participant's immediate family,
or (ii) by transfer by instrument to a trust providing that the Option
is to be passed to beneficiaries upon death of the Settlor (either or
both (i) or (ii) referred to as a "Permitted Transferee"). For purposes
of this Section 8.10.1, "immediate family" shall mean the Optionee's
spouse (including a former spouse subject to terms of a domestic
relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and
shall include adoptive relationships.
8.10.2 Conditions of Permitted Transfer. A transfer permitted
under this Section 8.10 hereof may be made only upon written notice to
and approval thereof by Administrator. A Permitted Transferee may not
further assign, sell or transfer the transferred Option, in whole or in
part, other than by testament or by operation of the laws of descent
and distribution. A Permitted Transferee shall agree in writing to be
bound by the provisions of this Plan, which a copy of said agreement
shall be provided to the Administrator for approval prior to the
transfer.
SECTION 9: ADJUSTMENTS; MARKET STAND-OFF
9.1 Effect of Certain Changes.
9.1.1 Stock Dividends, Splits, Etc. If there is any change in
the number of outstanding shares of Stock by reason of a stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification, then (i) the number of shares of Stock available for
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Rights, (ii) the number of shares of Stock covered by outstanding
Rights, and (iii) the Exercise Price or Purchase Price of any Stock
Option or Purchase Right, in effect prior to such change, shall be
proportionately adjusted by the Administrator to reflect any increase
or decrease in the number of issued shares of Stock; provided, however,
that any fractional shares resulting from the adjustment shall be
eliminated.
9.1.2 Liquidation, Dissolution, Merger or Consolidation. In
the event of a dissolution or liquidation of the Company, or any
corporate separation or division, including, but not limited to, a
split-up, a split-off or a spin-off, or a sale of substantially all of
the assets of the Company; a merger or consolidation in which the
Company is not the Surviving Entity; or a reverse merger in which the
Company is the Surviving Entity, but the shares of Company stock
outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash
or otherwise, then, the Company, to the extent permitted by applicable
law, but otherwise in its sole discretion may provide for: (i) the
continuation of outstanding Rights by the Company (if the Company is
the Surviving Entity); (ii) the assumption of the Plan and such
outstanding Rights by the Surviving Entity or its parent; (iii) the
substitution by the Surviving Entity or its parent of Rights with
substantially the same terms for such outstanding Rights; or (iv) the
cancellation of such outstanding Rights without payment of any
consideration, provided that if such Rights would be canceled in
accordance with the foregoing, the Participant shall have the right,
exercisable during the later of the ten-day period ending on the fifth
day prior to such merger or consolidation or ten days after the
Administrator provides the Rights holder a notice of cancellation, to
exercise such Rights in whole or in part without regard to any
installment exercise provisions in the Rights agreement.
9.1.3 Par Value Changes. In the event of a change in the Stock
of the Company as presently constituted which is limited to a change of
all of its authorized shares with par value, into the same number of
shares without par value, or a change in the par value, the shares
resulting from any such change shall be "Stock" within the meaning of
the Plan.
9.2 Decision of Administrator Final. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive; provided, however, that each ISO granted pursuant
to the Plan shall not be adjusted in a manner that causes such Stock Option to
fail to continue to qualify as an ISO without the prior consent of the Optionee
thereof.
9.3 No Other Rights. Except as hereinbefore expressly provided in this
Section 9, no Participant shall have any rights by reason of any subdivision or
consolidation of shares of Company stock or the payment of any dividend or any
other increase or decrease in the number of shares of Company stock of any class
or by reason of any of the events described in Section 9.1, above, or any other
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class; and, except as provided in this Section 9,
none of the foregoing events shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock subject to
Rights. The grant of a Right pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets.
9.4 Market Stand-Off. Each Stock Option Agreement and Stock Purchase
Agreement shall provide that, in connection with any underwritten public
11
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended,
including the Company's initial public offering, the Participant shall agree not
to sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the repurchase of, or otherwise dispose or transfer for value or otherwise agree
to engage in any of the foregoing transactions with respect to any Stock without
the prior written consent of the Company or its underwriters, for such period of
time from and after the effective date of such registration statement as may be
requested by the Company or such underwriters (the "Market Stand-Off").
SECTION 10: AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan at any time and for
any reason. At the time of such amendment, the Board shall determine, upon
advice from counsel, whether such amendment will be contingent on stockholder
approval.
SECTION 11: GENERAL PROVISIONS
11.1 General Restrictions.
11.1.1 No View to Distribute. The Administrator may require
each person acquiring shares of Stock pursuant to the Plan to represent
to and agree with the Company in writing that such person is acquiring
the shares without a view towards distribution thereof. The
certificates for such shares may include any legend that the
Administrator deems appropriate to reflect any restrictions on
transfer.
11.1.2 Legends. All certificates for shares of Stock delivered
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Administrator may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed and
any applicable federal or state securities laws, and the Administrator
may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
11.1.3 No Rights as Stockholder. Except as specifically
provided in this Plan, a Participant or a transferee of a Right shall
have no rights as a stockholder with respect to any shares covered by
the Rights until the date of the issuance of a Stock certificate to him
or her for such shares, and no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions of other rights for which the record date is
prior to the date such Stock certificate is issued, except as provided
in Section 9.1, hereof.
11.2 Other Compensation Arrangements. Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.
11.3 Disqualifying Dispositions. Any Participant who shall make a
"disposition" (as defined in Section 424 of the Code) of all or any portion of
an ISO within two years from the date of grant of such ISO or within one year
after the issuance of the shares of Stock acquired upon exercise of such ISO
shall be required to immediately advise the Company in writing as to the
occurrence of the sale and the price realized upon the sale of such shares of
Stock.
12
11.4 Regulatory Matters. Each Stock Option Agreement and Stock Purchase
Agreement shall provide that no shares shall be purchased or sold thereunder
unless and until (i) any then applicable requirements of state or federal laws
and regulatory agencies shall have been fully complied with to the satisfaction
of the Company and its counsel and (ii) if required to do so by the Company, the
Optionee or Offeree shall have executed and delivered to the Company a letter of
investment intent in such form and containing such provisions as the Board or
Committee may require.
11.5 Recapitalizations. Each Stock Option Agreement and Stock Purchase
Agreement shall contain provisions required to reflect the provisions of Section
9.
11.6 Delivery. Upon exercise of a Right granted under this Plan, the
Company shall issue Stock or pay any amounts due within a reasonable period of
time thereafter. Subject to any statutory obligations the Company may otherwise
have, for purposes of this Plan, thirty days shall be considered a reasonable
period of time.
11.7 Other Provisions. The Stock Option Agreements and Stock Purchase
Agreements authorized under the Plan may contain such other provisions not
inconsistent with this Plan, including, without limitation, restrictions upon
the exercise of the Rights, as the Administrator may deem advisable.
SECTION 12: INFORMATION TO PARTICIPANTS
To the extent necessary to comply with Nevada law, the Company each
year shall furnish to Participants its balance sheet and income statement unless
such Participants are limited to key Employees whose duties with the Company
assure them access to equivalent information.
SECTION 13: STOCKHOLDERS AGREEMENT
As a condition to the transfer of Stock pursuant to a Right granted
under this Plan, the Administrator, in its sole and absolute discretion, may
require the Participant to execute and become a party to any agreement by and
among the Company and any of its stockholders which exists on or after the Date
of Grant (the "Stockholders Agreement"). If the Participant becomes a party to a
Stockholders Agreement, in addition to the terms of this Plan and the Stock
Option Agreement or Stock Purchase Agreement (whichever is applicable) pursuant
to which the Stock is transferred, the terms and conditions of the Stockholders
Agreement shall govern Participant's rights in and to the Stock; and if there is
any conflict between the provisions of the Stockholders Agreement and this Plan
or any conflict between the provisions of the Stockholders Agreement and the
Stock Option Agreement or Stock Purchase Agreement (whichever is applicable)
pursuant to which the Stock is transferred, the provisions of the Stockholders
Agreement shall be controlling. Notwithstanding anything to the contrary in this
Section 13, if the Stockholders Agreement contains any provisions which would
violate the Nevada Corporations Code if applied to the Participant, the terms of
this Plan and the Stock Option Agreement or Stock Purchase Agreement (whichever
is applicable) pursuant to which the Stock is transferred shall govern the
Participant's rights with respect to such provisions.
13
SECTION 14: EFFECTIVE DATE OF PLAN
The effective date of this Plan is ______________, 2009. The adoption
of the Plan is subject to approval by the Company's stockholders, which approval
must be obtained within 12 months from the date the Plan is adopted by the
Board. In the event that the stockholders fail to approve the Plan within 12
months after its adoption by the Board, any grants of Options or sales or awards
of shares that have already occurred shall be rescinded, and no additional
grants, sales or awards shall be made thereafter under the Plan.
SECTION 15: TERM OF PLAN
The Plan shall terminate automatically on ________, 2019, but no later
than the tenth (10th) anniversary of the effective date. No Right shall be
granted pursuant to the Plan after such date, but Rights theretofore granted may
extend beyond that date. The Plan may be terminated on any earlier date pursuant
to Section 10 hereof.
SECTION 16: EXECUTION
To record the adoption of the Plan by the Board, the Company has caused
its authorized officer to execute the same as of ______________, 2009.
CHINA WI-MAX COMMUNICATIONS, INC.
By: _______________________________
Steven T. Berman, President
14
STOCK OPTION AGREEMENT
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN
Notice Of Stock Option Grant
You have been granted the following option to purchase Common Stock of CHINA
WI-MAX COMMUNICATIONS, INC. (the "Company"):
Name of Optionee:
Total Number of Shares Granted:
Type of Option:
Exercise Price Per Share:
Date of Grant:
Vesting Commencement Date:
Vesting Schedule:
Expiration Date:
By your signature and the signature of the Company's authorized representative
below, you and the Company agree that this option is granted under and governed
by the terms and conditions of the 2009 CHINA WI-MAX STOCK OPTION AWARD AND
COMPENSATION PLAN and the STOCK OPTION AGREEMENT, both of which are attached
hereto and are incorporated herein by reference. Optionee hereby represents that
both the option and any shares acquired upon exercise of the option have been or
will be acquired for investment for his own account and not with a view to or
for sale in connection with any distribution or resale of the security.
Optionee: CHINA WI-MAX COMMUNICATIONS, INC.
- ---------------------------------------- ---------------------------------------
By: By:
- ---------------------------------------- ---------------------------------------
Name: Steven T. Berman
President
- ---------------------------------------- ---------------------------------------
ANNEX I
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN
STOCK OPTION AGREEMENT
SECTION 1: GRANT OF OPTION
1.1 Option. On the terms and conditions set forth in the notice of
stock option grant to which this agreement (the "Agreement") is attached (the
"Notice of Stock Option Grant") and this agreement, the Company grants to the
individual named in the Notice of Stock Option Grant (the "Optionee") the option
to purchase at the exercise price specified in the Notice of Stock Option Grant
(the "Exercise Price") the number of Shares set forth in the Notice of Stock
Option Grant. This option is intended to be either an ISO or a Non-Qualified
Stock Option, as provided in the Notice of Stock Option Grant.
1.2 Stock Plan and Defined Terms. This option is granted pursuant to
and subject to the terms of the 2009 CHINA WI-MAX COMMUNICATIONS, INC. STOCK
OPTION AWARD AND COMPENSATION PLAN, as in effect on the date specified in the
Notice of Stock Option Grant (which date shall be the later of (i) the date on
which the Board resolved to grant this option, or (ii) the first day of the
Optionee's Service) and as amended from time to time (the "Plan"), a copy of
which is attached hereto and which the Optionee acknowledges having received.
Capitalized terms not otherwise defined in this Agreement have the definitions
ascribed to them in the Plan.
SECTION 2: RIGHT TO EXERCISE
2.1 Exercisability. Subject to Sections 2.2 and 2.3 below and the other
conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7. In addition, all of the remaining
unexercised options shall become vested and fully exercisable if (i) a Change in
Control occurs before the Optionee's Service terminates, and (ii) the option is
not assumed or an equivalent option is not substituted by the successor entity
that employs the Optionee immediately after the Change in Control or by its
parent or subsidiary.
2.2 Limitation. If this option is designated as an ISO in the Notice of
Stock Option Grant, then to the extent (and only to the extent) the Optionee's
right to exercise this option causes this option (in whole or in part) to not be
treated as an ISO by reason of the $100,000 annual limitation under Section
422(d) of the Code, such options shall be treated as Non-Qualified Stock
Options, but shall be exercisable by their terms. The determination of options
1
to be treated as Non-Qualified Stock Options shall be made by taking options
into account in the order in which they are granted. If the terms of this option
cause the $100,000 annual limitation under Section 422(d) of the Code to be
exceeded, a pro rata portion of each exercise shall be treated as the exercise
of a Non-Qualified Stock Option.
2.3 Stockholder Approval. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's stockholders.
SECTION 3: NO TRANSFER OR ASSIGNMENT OF OPTION
Except as provided herein, an Optionee may not assign, sell or transfer
the option, in whole or in part, other than by testament or by operation of the
laws of descent and distribution. The Administrator, in its sole discretion may
permit the transfer of a Non-Qualified Option (but not an ISO) as follows: (i)
by gift to a member of the Participant's immediate family, or (ii) by transfer
by instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the Settlor (either or both (i) or (ii) referred to
as a "Permitted Transferee"). For purposes of this Section 3, "immediate family"
shall mean the Optionee's spouse (including a former spouse subject to terms of
a domestic relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall
include adoptive relationships. A transfer permitted under this Section 3 hereof
may be made only upon written notice to and approval thereof by Administrator. A
Permitted Transferee may not further assign, sell or transfer the transferred
option, in whole or in part, other than by testament or by operation of the laws
of descent and distribution. A Permitted Transferee shall agree in writing to be
bound by the provisions of this Plan, which agreement shall be submitted to and
approved by the Administrator before the transfer.
SECTION 4: EXERCISE PROCEDURES
4.1 Notice of Exercise. The Optionee or the Optionee's representative
may exercise this option by delivering a written notice in the form of Exhibit A
attached hereto ("Notice of Exercise") to the Company in the manner specified
pursuant to Section 14.4 hereof. Such Notice of Exercise shall specify the
election to exercise this option, the number of Shares for which it is being
exercised and the form of payment, which must comply with Section 5. The Notice
of Exercise shall be signed by the person who is entitled to exercise this
option. In the event that this option is to be exercised by the Optionee's
representative, the notice shall be accompanied by proof (satisfactory to the
Company) of the representative's right to exercise this option.
4.2 Issuance of Shares. After receiving a proper Notice of Exercise,
the Company shall cause to be issued a certificate or certificates for the
Shares as to which this option has been exercised, registered in the name of the
person exercising this option (or in the names of such person and his or her
spouse as community property or as joint tenants with right of survivorship).
The Company shall cause such certificate or certificates to be deposited in
escrow or delivered to or upon the order of the person exercising this option.
4.3 Withholding Taxes. In the event that the Company determines that it
is required to withhold any tax as a result of the exercise of this option, the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
2
this option, and shall provide to the Company his/her/its social security number
or employment identification number.
SECTION 5: PAYMENT FOR STOCK
5.1 General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in full by cash or cashier's check for an amount equal to
the aggregate Exercise Price for the number of shares being purchased.
Alternatively, in the sole discretion of the Plan Administrator and upon such
terms as the Plan Administrator shall approve, the Exercise Price may be paid
by:
5.1.1 Cashless Exercise. Provided the Company's Common Stock
is publicly traded, a copy of instructions to a broker directing such
broker to sell the Shares for which this option is exercised, and to
remit to the Company the aggregate Exercise Price of such option
("Cashless Exercise");
5.1.2 Stock-For-Stock Exercise. Paying all or a portion of the
Exercise Price for the number of Shares being purchased by tendering
Shares owned by the Optionee, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the
Exercise Price multiplied by the number of Shares with respect to which
this option is being exercised (the "Purchase Price") or the aggregate
Purchase Price of the shares with respect to which this option or
portion hereof is exercised ("Stock-for-Stock Exercise"); or
5.1.3 Attestation Exercise. By a stock for stock exercise by
means of attestation whereby the Optionee identifies for delivery
specific Shares already owned by Optionee and receives a number of
Shares equal to the difference between the Option Shares thereby
exercised and the identified attestation Shares ("Attestation
Exercise").
5.2 Withholding Payment. The Exercise Price shall include payment of
the amount of all federal, state, local or other income, excise or employment
taxes subject to withholding (if any) by the Company or any parent or subsidiary
corporation as a result of the exercise of a Stock Option. The Optionee may pay
all or a portion of the tax withholding by cash or check payable to the Company,
or, at the discretion of the Administrator, upon such terms as the Administrator
shall approve, by (i) Cashless Exercise or Attestation Exercise; (ii)
Stock-for-Stock Exercise; (iii) in the case of an Option, by paying all or a
portion of the tax withholding for the number of shares being purchased by
withholding shares from any transfer or payment to the Optionee ("Stock
withholding"); or (iv) a combination of one or more of the foregoing payment
methods. Any shares issued pursuant to the exercise of an Option and transferred
by the Optionee to the Company for the purpose of satisfying any withholding
obligation shall not again be available for purposes of the Plan. The fair
market value of the number of shares subject to Stock withholding shall not
exceed an amount equal to the applicable minimum required tax withholding rates.
5.3 Promissory Note. The Plan Administrator, in its sole discretion,
upon such terms as the Plan Administrator shall approve, may permit all or a
portion of the Exercise Price of Shares issued under the Plan to be paid with a
full-recourse promissory note. However, in the event there is a stated par value
of the shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The Shares shall be pledged
as security for payment of the principal amount of the promissory note and
interest thereon, and shall be held in the possession of the Company until the
promissory note is repaid in full. Subject to the foregoing, the Plan
Administrator (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.
3
5.4 Exercise/Pledge. In the discretion of the Plan Administrator, upon
such terms as the Plan Administrator shall approve, payment may be made all or
in part by the delivery (on a form prescribed by the Plan Administrator) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.
SECTION 6: TERM AND EXPIRATION
6.1 Basic Term. This option shall expire and shall not be exercisable
after the expiration of the earliest of (i) the Expiration Date specified in the
Notice of Stock Option Grant, (ii) three months after the date the Optionee's
Service with the Company and its Subsidiaries terminates if such termination is
for any reason other than death, Disability or Cause, (iii) one year after the
date the Optionee's Service with the Company and its Subsidiaries terminates if
such termination is a result of death or Disability, and (iv) if the Optionee's
Service with the Company and its Subsidiaries terminates for Cause, all
outstanding Options granted to such Optionee shall expire as of the commencement
of business on the date of such termination. Outstanding Options that are not
exercisable at the time of termination of employment for any reason shall expire
at the close of business on the date of such termination. The Plan Administrator
shall have the sole discretion to determine when this option is to expire. For
any purpose under this Agreement, Service shall be deemed to continue while the
Optionee is on a bona fide leave of absence, if such leave to the extent
required by applicable law. To the extent applicable law does not require such a
leave to be deemed to continue while the Optionee is on a bona fide leave of
absence, such leave shall be deemed to continue if, and only if, expressly
provided in writing by the Administrator or a duly authorized officer of the
Company, Parent or Subsidiary for whom Optionee provides his or her services.
6.2 Exercise After Death. All or part of this option may be exercised
at any time before its expiration under Section 6.1 above by the executors or
administrators of the Optionee's estate or by any person who has acquired this
option directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's death. When the Optionee dies, this option shall expire
immediately with respect to the number of Shares for which this option is not
yet exercisable and with respect to any Share that is subject to the Right of
Repurchase (as such term is defined in below) (the "Restricted Stock").
6.3 Notice Concerning ISO Treatment. If this option is designated as an
ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax
treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability, or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
4
SECTION 7: RIGHT OF REPURCHASE
7.1 Option Repurchase Right. Following a termination of the Optionee's
Service, the Company shall have the option to repurchase the Optionee's vested
and exercisable options at a price equal to the Fair Market Value of the Stock
underlying such options, less the Exercise Price (the "Option Repurchase
Right").
7.2 Stock Repurchase Right. Unless they have become vested in
accordance with the Notice of Stock Option Grant and Section 7.4 below, the
stock acquired under this Agreement initially shall be Restricted Stock and
shall be subject to a right (but not an obligation) of repurchase by the
Company, which shall be exercisable at a price equal to the Exercise Price paid
for the Restricted Stock (the "Stock Repurchase Right"). Vested stock acquired
under this Agreement shall be subject to a right (but not an obligation) of
repurchase by the Company, which shall be exercisable at a price equal to the
Fair Market Value of the vested Stock.
7.3 Condition Precedent to Exercise. The Option Repurchase Right and
Stock Repurchase Rights (collectively, the "Right of Repurchase") shall be
exercisable over Restricted Stock only during the 90-day period next following
the later of:
7.3.1 The date when the Optionee's Service terminates for any
reason, with or without Cause, including (without limitation) death or
disability; or
7.3.2 The date when this option was exercised by the Optionee,
the executors or administrators of the Optionee's estate, or any person
who has acquired this option directly from the Optionee by bequest,
inheritance or beneficiary designation.
7.4 Lapse of Right of Repurchase. The Right of Repurchase shall lapse
with respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant. In addition, the Right
of Repurchase shall lapse and all of the remaining Restricted Stock shall become
vested if (i) a Change in Control occurs before the Optionee's Service
terminates, and (ii) the Right of Repurchase is not assigned to the entity that
employs the Optionee immediately after the Change in Control or to its parent or
subsidiary. The Right of Repurchase shall lapse with respect to (i) Shares that
are registered under a then currently effective registration statement under
applicable federal securities laws and the issuer is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or becomes an investment
company registered or required to be registered under the Investment Company Act
of 1940, or (ii) Shares for which a determination is made by counsel for the
Company that such Exercise Price restrictions are not required in the
circumstances under applicable federal or state securities laws.
7.5 Exercise of Right of Repurchase. The Company shall exercise the
Right of Repurchase by written notice delivered to the Optionee prior to the
expiration of the 90-day period specified in Section 7.3 above. The notice shall
set forth the date on which the repurchase is to be effected, which must occur
within 31 days of the notice. The certificate(s) representing the Restricted
Stock to be repurchased shall, prior to the close of business on the date
specified for the repurchase, be delivered to the Company properly endorsed for
transfer. The Company shall, concurrently with the receipt of such
certificate(s), pay to the Optionee the Purchase Price determined according to
this Section 7. Payment shall be made in cash or cash equivalents or by
canceling indebtedness to the Company incurred by the Optionee in the purchase
of the Restricted Stock. The Right of Repurchase shall terminate with respect to
any Restricted Stock for which it has not been timely exercised pursuant to this
Section 7.5.
5
7.6 Rights of Repurchase Adjustments. If there is any change in the
number of outstanding shares of Stock by reason of a stock split, reverse stock
split, stock dividend, an extraordinary dividend payable in a form other than
stock, recapitalization, combination or reclassification, or a similar
transaction affecting the Company's outstanding securities without receipt of
consideration, then (i) any new, substituted or additional securities or other
property (including money paid other than as an ordinary cash dividend)
distributed with respect to any Restricted Stock (or into which such Restricted
Stock thereby become convertible) shall immediately be subject to the Right of
Repurchase; and (ii) appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Stock and to the price per share to be paid upon the exercise of the
Right of Repurchase; provided, however, that the aggregate Purchase Price
payable for the Restricted Stock shall remain the same.
7.7 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Stock to be repurchased in
accordance with this Section 7, then after such time the person from whom such
Restricted Stock is to be repurchased shall no longer have any rights as a
holder of such Restricted Stock (other than the right to receive payment of such
consideration in accordance with this Agreement). Such Restricted Stock shall be
deemed to have been repurchased in accordance with the applicable provisions
hereof, whether or not the certificate(s) therefore have been delivered as
required by this Agreement.
7.8 Escrow. Upon issuance, the certificates for Restricted Stock shall
be deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Section 7.6 above shall immediately be delivered to
the Company to be held in escrow, but only to the extent the Shares are at the
time Restricted Stock. All regular cash dividends on Restricted Stock (or other
securities at the time held in escrow) shall be paid directly to the Optionee
and shall not be held in escrow. Restricted Stock, together with any other
assets or securities held in escrow hereunder, shall be (i) surrendered to the
Company for repurchase and cancellation upon the Company's exercise of its Right
of Repurchase or Right of First Refusal or (ii) released to the Optionee upon
the Optionee's request to the extent the Shares are no longer Restricted Stock
(but not more frequently than once every six months). In any event, all Shares
which have vested (and any other vested assets and securities attributable
thereto) shall be released within 60 days after the earlier of (i) the
Optionee's cessation of Service or (ii) the lapse of the Right of First Refusal.
SECTION 8: RIGHT OF FIRST REFUSAL
8.1 Right of First Refusal. In the event that the Company's stock is
not readily tradable on an established securities market and the Optionee
proposes to sell, pledge or otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in such Shares, to any person,
entity or organization (the "Transferee") the Company shall have the Right of
First Refusal with respect to all (and not less than all) of such Shares (the
"Right of First Refusal"). If the Optionee desires to transfer Shares acquired
under this Agreement, the Optionee shall give a written transfer notice
("Transfer Notice") to the Company describing fully the proposed transfer,
including the number of Shares proposed to be transferred, the proposed transfer
price, the name and address of the proposed Transferee and proof satisfactory to
the Company that the proposed sale or transfer will not violate any applicable
federal or state securities laws. The Transfer Notice shall be signed both by
the Optionee and by the proposed Transferee and must constitute a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase all, and not less than all, of the Shares on the terms of
6
the proposal described in the Transfer Notice by delivery of a notice of
exercise of the Right of First Refusal within 30 days after the date when the
Transfer Notice was received by the Company. The Company's rights under this
Section 8.1 shall be freely assignable, in whole or in part.
8.2 Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 8 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 8. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 8.
8.3 Termination of Right of First Refusal. Any other provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Optionee desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Optionee shall have no
obligation to comply with the procedures prescribed by this Section 8.
8.4 Permitted Transfers. This Section 8 shall not apply to a transfer
(i) by gift to a member of the Participant's immediate family or (ii) by
transfer by instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the Settlor. For purposes of this Section 8.4,
"immediate family" shall mean the Optionee's spouse (including a former spouse
subject to terms of a domestic relations order); child, stepchild, grandchild,
child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and
sibling-in-law, and shall include adoptive relationships.
8.5 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
this Section 8, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to receive payment of such consideration in accordance with this
Agreement). Such Shares shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefore have been delivered as required by this Agreement.
SECTION 9: OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any time
following Optionee's acquisition of Shares hereunder, stockholders of the
Company owning 51% or more of the shares of the Company (on a fully diluted
basis) (the "Control Sellers") enter into an agreement (including any agreement
in principal) to transfer all of their shares to any person or group of persons
who are not affiliated with the Control Sellers, such Control Sellers may
require each stockholder who is not a Control Seller (a "Non-Control Seller") to
sell all of their shares to such person or group of persons at a price and on
terms and conditions the same as those on which such Control Sellers have agreed
to sell their shares, other than terms and conditions relating to the
performance or non-performance of services. For the purposes of the preceding
sentence, an affiliate of a Control Seller is a person who controls, which is
controlled by, or which is under common control with, the Control Seller.
7
SECTION 10: STOCKHOLDERS AGREEMENT
As a condition to the transfer of Stock pursuant to this Stock Option
Agreement, the Administrator, in its sole and absolute discretion, may require
the Participant to execute and become a party to any agreement by and among the
Company and any of its stockholders which exists on or after the Date of Grant
(the "Stockholders Agreement"). If the Participant becomes a party to a
Stockholders Agreement, in addition to the terms of the Plan and this Stock
Option Agreement, the terms and conditions of Stockholders Agreement shall
govern Participant's rights in and to the Stock; and if there is any conflict
between the provisions of the Stockholders Agreement and the Plan or any
conflict between the provisions of the Stockholders Agreement and this Stock
Option Agreement, the provisions of the Stockholders Agreement shall be
controlling. Notwithstanding anything to the contrary in this Section 10, if the
Stockholders Agreement contains any provisions which would violate Nevada
corporate law if applied to the Participant, the terms of the Plan and this
Stock Option Agreement shall govern the Participant's rights with respect to
such provisions.
SECTION 11: LEGALITY OF INITIAL ISSUANCE
No Shares shall be issued upon the exercise of this option unless and
until the Company has determined that:
11.1 It and the Optionee have taken any actions required to register
the Shares, provided the Stock is publicly traded, under the Securities Act of
1933, as amended (the "Securities Act"), or to perfect an exemption from the
registration requirements thereof;
11.2 Any applicable listing requirement of any stock exchange on which
Stock is listed has been satisfied; and
11.3 Any other applicable provision of state or federal law has been
satisfied.
SECTION 12: NO REGISTRATION RIGHTS
The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.
SECTION 13: RESTRICTIONS ON TRANSFER
13.1 Securities Law Restrictions. Regardless of whether the offering
and sale of Shares under the Plan have been registered under the Securities Act
or have been registered or qualified under the securities laws of any state, the
Company, at its discretion, may impose restrictions upon the sale, pledge or
other transfer of such Shares (including the placement of appropriate legends on
stock certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
13.2 Market Stand-Off. In the event of an underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Act, including the Company's initial public offering
(a "Public Offering"), the Optionee shall not transfer for value any shares of
Stock without the prior written consent of the Company or its underwriters, for
such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters (the "Market
8
Stand-Off"). The Market Stand-off shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In the event of the declaration of a stock
dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to
any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period.
13.3 Investment Intent at Grant. The Optionee represents and agrees
that the Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.
13.4 Investment Intent at Exercise. In the event that the sale of
Shares under the Plan is not registered under the Securities Act but an
exemption is available which requires an investment representation or other
representation, the Optionee shall represent and agree at the time of exercise
that the Shares being acquired upon exercising this option are being acquired
for investment, and not with a view to the sale or distribution thereof, and
shall make such other representations as are deemed necessary or appropriate by
the Company and its counsel.
13.5 Legends. All certificates evidencing Shares purchased under this
Agreement in an unregistered transaction shall bear the following legend (and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
13.6 Removal of Legends. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement no longer is required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
13.7 Administration. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Section 13 shall be
conclusive and binding on the Optionee and all other persons.
SECTION 14: MISCELLANEOUS PROVISIONS
14.1 Rights as a Stockholder. Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Exercise Price pursuant to Section 4 and Section 5 hereof.
14.2 Adjustments. If there is any change in the number of outstanding
9
shares of Stock by reason of a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, then (i) the number of shares
subject to this option and (ii) the Exercise Price of this option, in effect
prior to such change, shall be proportionately adjusted to reflect any increase
or decrease in the number of issued shares of Stock; provided, however, that any
fractional shares resulting from the adjustment shall be eliminated.
14.3 No Retention Rights. Nothing in this option or in the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without
Cause.
14.4 Notice. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed the Optionee at the
address set forth in the records of the Company. Notice shall be addressed to
the Company at:
CHINA WI-MAX COMMUNICATIONS, INC.
1905 SHERMAN STREET, SUITE 335
DENVER, COLORADO 80203
14.5 Entire Agreement. The Notice of Stock Option Grant, this Agreement
and the Plan constitute the entire contract between the parties hereto with
regard to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) that relate to the subject matter hereof.
14.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA WITHOUT REGARD TO ITS CHOICE
OF LAWS PROVISIONS, AS NEVADA LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND
PERFORMED IN SUCH STATE.
14.7 Attorneys' Fees. In the event that any action, suit or proceeding
is instituted upon any breach of this Agreement, the prevailing party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses, including attorneys' fees incurred in each and every such
action, suit or proceeding (including any and all appeals or petitions
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal services actually performed in connection with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to "reasonable attorneys'
fees" as defined in any statute or rule of court.
10
EXHIBIT A
TO
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN:
STOCK OPTION AGREEMENT
ANNEX I
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
CHINA WI-MAX COMMUNICATIONS, INC.
1905 SHERMAN STREET, SUITE 335
DENVER, COLORADO 80203
The undersigned, the holder of the enclosed Stock Option Agreement, hereby
irrevocably elects to exercise the purchase rights represented by the Option and
to purchase thereunder __________* shares of Common Stock of CHINA WI-MAX
COMMUNICATIONS, INC. (the "Company"), and herewith encloses payment of $_______
and/or _________ shares of the Company's common stock in full payment of the
purchase price of such shares being purchased.
Dated:
- ------------------------------
NOTICE: YOUR STOCK MAY BE SUBJECT TO RESTRICTIONS AND FORFEITABLE UNDER THE
NOTICE OF STOCK OPTION GRANT AND STOCK OPTION AGREEMENT
(Signature must conform in all respects to name of holder as specified on the
face of the Option)
- --------------------------------------------------------------
- --------------------------------------------------------------
(Please Print Name)
- --------------------------------------------------------------
- --------------------------------------------------------------
(Address)
* Insert here the number of shares called for on the face of the Option, or, in
the case of a partial exercise, the number of shares being exercised, in either
case without making any adjustment for additional Common Stock of the Company,
other securities or property that, pursuant to the adjustment provisions of the
Option, may be deliverable upon exercise.
FORM OF RESOLUTIONS FOR OPTION GRANTS
RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
CHINA WI-MAX COMMUNICATIONS, INC.
As of ___________, 2009
The undersigned directors, constituting the entire board of directors (the
"Board") of CHINA WI-MAX COMMUNICATIONS, INC., a Nevada corporation (the
"Company"), hereby take the following actions, adopt the following resolutions,
and transact the following business, by written consent without a meeting, as of
the date above written, pursuant to the applicable corporate laws of the State
of Nevada and the Company's Bylaws.
WHEREAS, the Company previously adopted the 2009 CHINA WI-MAX COMMUNICATIONS,
INC. STOCK OPTION AWARD AND COMPENSATION PLAN (the "Plan"), and has delegated
the responsibility to administer the Plan to the Board;
WHEREAS, Five Million (5,000,000) shares of Common Stock of the Company were
originally reserved for issuance under the Plan;
WHEREAS, as of the date hereof, _____________ shares remain available for
issuance under the Plan; and
WHEREAS, the Board has determined that it is in the best interests of this
Company and its stockholders to provide, under the Plan, equity incentives to
those employees, directors and/or consultants of the Company identified below.
NOW, THEREFORE, BE IT RESOLVED, that the persons listed on the Exhibit A, which
is attached hereto and incorporated herein by reference, which exhibit was
reviewed by the Board and shall be included with this Consent, are hereby
granted, as of the date hereof, an option (the "Option") to purchase the number
of shares with the vesting schedule and exercise price as set forth in Exhibit
A;
RESOLVED FURTHER, that each of the Options shall be either a Non-Qualified Stock
Option or an ISO (as such terms are defined in the Plan) as specified in Exhibit
A;
RESOLVED FURTHER, that the Options shall be evidenced by stock option agreements
and be subject to the restrictions (including transfer and/or repurchase
rights), if any, set forth in such stock option agreements;
RESOLVED FURTHER, that the Options shall be granted pursuant to the exemptions
provided under Section 701 of the Securities Act Rules and Nevada Securities
Laws;
RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the
number of shares adequate to cover the shares underlying the Options granted
herein; and
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and
they hereby are, authorized, directed and empowered for and on behalf of the
Company to do or cause to be done all such acts and things and to sign, deliver
and/or file all such documents and notices as any of such officers may deem
necessary or advisable in order to carry out and perform the foregoing
resolutions and the intention thereof.
The Secretary of the Corporation is directed to file the original executed copy
of this Consent with the minutes of proceedings of the Board.
IN WITNESS WHEREOF, each of the undersigned has executed this consent as of the
date first written above.
DIRECTORS:
- ----------------------------------------------- --------------------------------
Steven T. Berman Dr. Allan Rabinoff
- ----------------------------------------------- --------------------------------
George B. Krieger Sharon Xiong
EXHIBIT A
TO
FORM OF RESOLUTIONS FOR OPTION GRANTS
Stock Option Grant Information
- -------------- ------------- -------------- ------------------ -----------------
Name No. Shares ISO or NQSO Exercise Price* Vesting Schedule
- -------------- ------------- -------------- ------------------ -----------------
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* In the case of an ISO, the per share exercise price must be at least 100% of
the Fair Market Value (as such term is defined in the Plan) of the underlying
share as of the date of grant. In the case of a NQSO, the per share exercise
price must be at least 85% of the Fair Market Value of the underlying share as
of the date of grant.
STOCK PURCHASE AGREEMENT
STOCK PURCHASE CERTIFICATE
THIS IS TO CERTIFY that CHINA WI-MAX COMMUNICATIONS, INC., a Nevada corporation
(the "Company"), has offered you (the "Purchaser") the right to purchase Common
Stock (the "Stock" or "Shares") of the Company under its 2009 CHINA WI-MAX
COMMUNICATIONS, INC. STOCK OPTION AWARD AND COMPENSATION PLAN (the "Plan"), as
follows:
- ----------------------------------------- --------------------------------------
Name of Purchaser:
- ----------------------------------------- --------------------------------------
Address of Purchaser:
- ----------------------------------------- --------------------------------------
- ----------------------------------------- --------------------------------------
Number of Shares:
- ----------------------------------------- --------------------------------------
Purchase Price: $
- ----------------------------------------- --------------------------------------
Offer Grant Date:
- ----------------------------------------- --------------------------------------
Offer Expiration Date: 15 days after the Offer Grant Date
- ----------------------------------------- --------------------------------------
Vesting Commencement Date:
- ----------------------------------------- --------------------------------------
Vesting Schedule:
- ----------------------------------------- --------------------------------------
By your signature and the signature of the Company's representative below, you
and the Company agree to be bound by all of the terms and conditions of the
Stock Purchase Agreement, which is attached hereto as Annex I and the Plan (both
incorporated herein by this reference as if set forth in full in this document).
By executing this Agreement, Purchaser hereby irrevocably elects to exercise the
purchase rights granted pursuant to the Stock Purchase Agreement and to purchase
________ shares of Stock of CHINA WI-MAX COMMUNICATIONS, INC., and herewith
encloses payment of $ ____________ in payment of the purchase price of the
shares being purchased.
PURCHASER: CHINA WI-MAX COMMUNICATIONS, INC.
By:_________________________________ By:______________________
Steven T. Berman
Print Name:_________________________ Its: President
ANNEX I
TO
STOCK PURCHASE AGREEMENT
THE STOCK GRANTED PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
2009 CHINA WI-MAX COMMUNICATIONS, INC.
STOCK OPTION AWARD AND COMPENSATION PLAN:
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into on the
execution date of the Stock Purchase Certificate to which it is attached (the
"Certificate"), by and between CHINA WI-MAX COMMUNICATIONS, INC., a Nevada
corporation (the "Company"), and the Director, Employee or Consultant
("Purchaser") named in the Certificate.
Pursuant to the 2009 CHINA WI-MAX STOCK OPTION AWARD AND COMPENSATION PLAN (the
"Plan"), the Administrator of the Plan has authorized the grant to Purchaser of
the right to purchase shares of the Company's Common Stock, upon the terms and
subject to the conditions set forth in this Agreement and in the Plan.
Capitalized terms not otherwise defied herein shall have the meanings ascribed
to them in the Plan.
SECTION 1: THE OFFER.
1.1 Offer of the Stock. The Company hereby offers to sell to purchaser
the number of shares of stock set forth in the certificate at the price and
subject to the restrictions set forth in this Agreement (the shares of stock
which you purchase under this agreement are referred to as the "Stock" or
"Shares").
1.2 Purchase Price. The Purchase Price for the Stock is set forth in
the Certificate.
1.3 Payment For The Stock. Purchaser may pay for the stock by
delivering to the company the purchase price in the form of either (i) cash or
cashier's check or (ii) your promissory note, in the form of the Promissory Note
attached to this agreement as Exhibit A. If Purchaser pays for the stock by
delivery of the Promissory Note, Purchaser must also deliver to the company at
the same time one executed copy of both the Security Agreement attached as
Exhibit B and the Stock Assignment attached as Exhibit C.
1.4 Expiration of Offer. This offer expires at 5:00 o'clock p.m. on the
date set forth in the certificate.
2
SECTION 2: ACCEPTANCE OF THE OFFER.
There is no obligation to exercise the rights granted to you under this
Agreement, in whole or in part. Purchaser may purchase fewer shares than the
number offered to Purchaser in this Agreement. If Purchaser decides to accept
the offer and purchase any shares offered, Purchaser must do the following:
2.1 Complete Documents. Complete, sign and date one copy of the
Certificate, and, if Purchaser is paying by delivery of a promissory note, one
copy each of the attached Promissory Note, Security Agreement and Stock
Assignment;
2.2 Spousal Consent. If Purchaser is married, Purchaser must have his
or her spouse sign and date one copy of the attached Spousal Consent; and
2.3 Deliver to Company. Deliver to the Company on or before the time
the offer expires, the signed copy of this Agreement, the Spousal Consent, and
payment for the Stock, in cash, by cashier's check or by the Promissory Note. If
Purchaser is paying for the stock by the Promissory Note, Purchaser must also
deliver to the Company the executed original Promissory Note, Security Agreement
and Stock Assignment.
Purchaser should retain a copy of all of the signed documents for his or her
files, and if Purchaser does so, Purchaser should mark the retained copy of the
Promissory Note "COPY." THE SIGNED PROMISSORY NOTE IS A NEGOTIABLE INSTRUMENT
AND IS ENFORCEABLE AGAINST PURCHASER BY ANY HOLDER OF THE PROMISSORY NOTE, AND
ANY ADDITIONAL SIGNED COPIES WHICH ARE NOT MARKED "COPY" MAY ALSO BE NEGOTIABLE
INSTRUMENTS WHICH ARE ENFORCEABLE AGAINST PURCHASER BY THEIR HOLDER.
SECTION 3: RESTRICTIONS ON THE STOCK.
3.1 Restrictions on Transfer of Shares. Purchaser shall not sell, make
any short sale of, loan, hypothecate, pledge, grant any option for the
repurchase of, or otherwise dispose or transfer for value (each a "Transfer") or
otherwise agree to engage in any of the foregoing transactions with respect to
any shares of Stock. The Company shall not be required to register any such
Transfer and the Company may instruct its transfer agent not to register any
such Transfer, unless and until all of the following events shall have occurred:
3.1.1 The Company has declined to exercise the right of first refusal
provided for in Section 5 hereof;
3.1.2 The Shares are Transferred pursuant to and in conformity
with: (i) (x) an effective registration statement filed with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Act") or (y) an exemption from
registration under the Act; and (ii) the securities laws of any state
of the United States; and
3.1.3 Purchaser has, prior to the Transfer of such Shares, and
if requested by the Company, provided all relevant information to the
Company's counsel so that upon the Company's request, the Company's
counsel is able to deliver, and actually prepares and delivers to the
Company a written opinion that the proposed Transfer is: (i) (x)
pursuant to a registration statement which has been filed with the
3
Commission and is then effective or (y) exempt from registration under
the Act as then in effect, and the Rules and Regulations of the
Commission thereunder; and (ii) is either qualified or registered under
any applicable state securities laws, or exempt from such qualification
or registration. The Company shall bear all reasonable costs of
preparing such opinion.
3.2 Additional Restrictions on Transfer of Non-Vested Shares. Purchaser
agrees, for himself or herself and for his or her heirs, successors and assigns,
that Purchaser shall have no right or power under any circumstance to Transfer
any interest in shares of the Stock which are "Non-Vested Shares," as determined
by the schedule set forth in the Certificate, except to the Company. As used in
this Agreement, "Vested Shares" means all shares of the Stock which Purchaser
has the right to Transfer at a specified point in time and "Non-Vested Shares"
means all shares of the Stock which Purchaser does not have the right to
Transfer at a specified point in time. The Certificate sets forth the vesting
schedule.
3.3 Company's Repurchase Right.
3.3.1 Scope of Repurchase Right. Unless they have become
vested, the Shares acquired under this Agreement initially shall be
"Restricted Stock" and shall be subject to a right (but not an
obligation) of repurchase by the Company (the "Repurchase Right"). The
Purchaser shall not transfer, assign, encumber or otherwise dispose of
any Restricted Stock, except as provided in the following sentence. The
Purchaser may transfer Restricted Stock:
3.3.1.1 By testament or intestate succession or by
transfer by instrument to a trust providing that the
Restricted Stock is to be passed to one or more beneficiaries
upon death of the Settlor; or
3.3.1.2 To the Purchaser's "immediate family," as
that term is defined in the Plan (together, "Transferee").
Provided, however, in either case the Transferee must
agree in writing on a form prescribed by the Company to be
bound by all provisions of this Agreement. If the Purchaser
transfers any Restricted Stock, then this Section 3 will apply
to the Transferee to the same extent as to the Purchaser.
3.3.2 Exercise Period. The Repurchase Right shall be
exercisable only during the 90-day period following the later of the
date when the Purchaser's service as an Employee, outside Director or
Consultant ("Service") terminates for any reason, with or without
cause, including (without limitation) death or disability.
3.3.3 Non Applicability and Lapse of Repurchase Right. The
Repurchase Right shall lapse with respect to the Shares in accordance
with the vesting schedule set forth in the Certificate. In addition,
the Repurchase Right shall lapse and all of such Stock shall become
vested if (i) a Change in Control occurs before the Purchaser's Service
terminates and (ii) the options are not assumed by, or Repurchase Right
is not assigned to, the entity that employs the Participant immediately
after the Change in Control or to its parent or subsidiary.
The Repurchase Right shall not exist with respect to shares of
Stock that have been registered under a then currently effective
registration statement under applicable federal securities laws and the
issuer is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act or becomes an investment company registered or
4
required to be registered under the Investment Company Act of 1940, or
(ii) a determination is made by counsel for the Company that such
Exercise Price restrictions are not required in the circumstances under
applicable federal or state securities laws.
3.3.4 Repurchase Price. Following a termination of the
Participant's Service, which does not result from the Company's
termination of Service for Cause, the Repurchase Right shall be
exercisable at a price equal to (i) the Fair Market Value of vested
Stock and (ii) the Purchase Price of unvested Stock. Following the
termination of the Participant's Service for Cause, the Repurchase
Right shall be exercisable as to both vested and unvested Shares at a
price equal to the Purchase Price as set forth in the Certificate.
3.3.5 Rights of Repurchase Adjustments. If there is any change
in the number of outstanding shares of Stock by reason of a stock
split, reverse stock split, stock dividend, an extraordinary dividend
payable in a form other than stock, recapitalization, combination or
reclassification, or a similar transaction affecting the Company's
outstanding securities without receipt of consideration, then (i) any
new, substituted or additional securities or other property (including
money paid other than as an ordinary cash dividend) distributed with
respect to any Restricted Stock (or into which such Restricted Stock
thereby become convertible) shall immediately be subject to the Right
of Repurchase; and (ii) appropriate adjustments to reflect the
distribution of such securities or property shall be made to the number
and/or class of the Restricted Stock and to the price per share to be
paid upon the exercise of the Right of Repurchase; provided, however,
that the aggregate Purchase Price payable for the Restricted Stock
shall remain the same.
3.3.6 Escrow. Upon issuance, the certificates for Restricted
Stock shall be deposited in escrow with the Company to be held in
accordance with the provisions of this Agreement. Any new, substituted
or additional securities or other property described in Section 3.3.5
above shall immediately be delivered to the Company to be held in
escrow, but only to the extent the Shares are at the time Restricted
Stock. All regular cash dividends on Restricted Stock (or other
securities at the time held in escrow) shall be paid directly to the
Purchaser and shall not be held in escrow. Restricted Stock, together
with any other assets or securities held in escrow hereunder, shall be
(i) surrendered to the Company for repurchase and cancellation upon the
Company's exercise of its Right of Repurchase or Right of First Refusal
or (ii) released to the Purchaser upon the Purchaser's request to the
extent the Shares are no longer Restricted Stock (but not more
frequently than once every six months). In any event, all Shares which
have vested (and any other vested assets and securities attributable
thereto) shall be released within 60 days after the earlier of (i) the
Purchaser's cessation of Service or (ii) the lapse of the Right of
First Refusal.
3.4 Retention of Non-Vested Shares. Purchaser shall immediately deliver
to the Company each certificate representing Non-Vested Shares issued to
Purchaser hereunder, or deemed to be issued to Purchaser hereunder, together
with the collateral instruments of transfer executed in blank, to be held by the
Company until such time as all shares represented by that certificate are Vested
Shares and any indebtedness with respect to those shares has been paid in full;
provided, however, that if the Company holds a certificate representing Vested
Shares and Non-Vested Shares, and any indebtedness with respect to the Vested
Shares has been paid in full, upon Purchaser's request the Company will cause a
5
certificate representing the Vested Shares to be delivered to Purchaser, but the
Company will retain any certificate representing the Non-Vested Shares.
3.5 Non-Complying Transfers. Every attempted Transfer of any shares of
the Stock in violation of this Section 3 shall be null and void ab initio, and
of no force or effect.
SECTION 4: LEGENDS ON STOCK CERTIFICATES.
Purchaser agrees that the Company may place on each certificate representing
Shares the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND THE REGISTERED HOLDER OF
THIS CERTIFICATE, WHICH AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THE ISSUER
HAS A RIGHT TO REPURCHASE THE SECURITIES EVIDENCED BY THIS CERTIFICATE. A COPY
OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER."
SECTION 5: RIGHT OF FIRST REFUSAL.
5.1 Right of First Refusal. In the event that the Stock is not readily
tradable on an established securities market and the Purchaser proposes to sell,
pledge or otherwise transfer to a third party any Shares acquired under this
Agreement, or any interest in such Shares, to any person, entity or organization
(the "Transferee") the Company shall have the Right of First Refusal with
respect to all (and not less than all) of such Shares (the "Right of First
Refusal"). If the Purchaser desires to transfer Shares acquired under this
Agreement, the Purchaser shall give a written transfer notice ("Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the proposed transfer price, the
name and address of the proposed Transferee and proof satisfactory to the
Company that the proposed sale or transfer will not violate any applicable
federal or state securities laws. The Transfer Notice shall be signed both by
the Purchaser and by the proposed Transferee and must constitute a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase all, and not less than all, of the Shares on the terms of
the proposal described in the Transfer Notice by delivery of a notice of
exercise of the Right of First Refusal within 30 days after the date when the
Transfer Notice was received by the Company. The Company's rights under this
Section 5 shall be freely assignable, in whole or in part.
5.2 Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 5 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 5. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 5.
5.3 Termination of Right of First Refusal. Any other provision of this
Section 5 notwithstanding, in the event that the Stock is readily tradable on an
6
established securities market when the Purchaser desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Purchaser shall have no
obligation to comply with the procedures prescribed by this Section 5.
5.4 Permitted Transfers. This Section 5 shall not apply to a transfer
(i) by gift to a member of the Participant's immediate family or (ii) by
transfer by instrument to a trust providing that the Shares is to be passed to
beneficiaries upon death of the Settlor. For purposes of this Section 5.4,
"immediate family" shall mean the Purchaser's spouse (including a former spouse
subject to terms of a domestic relations order); child, stepchild, grandchild,
child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and
sibling-in-law, and shall include adoptive relationships.
5.5 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
this Section 5, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to receive payment of such consideration in accordance with this
Agreement). Such Shares shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefor have been delivered as required by this Agreement.
SECTION 6: OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any time following
Purchaser's acquisition of Shares hereunder, stockholders of the Company owning
51% or more of the shares of the Company (on a fully diluted basis) (the
"Control Sellers") enter into an agreement (including any agreement in
principal) to transfer all of their shares to any person or group of persons who
are not affiliated with the Control Sellers, such Control Sellers may require
each stockholder who is not a Control Seller (a "Non-Control Seller") to sell
all of their shares to such person or group of persons at a price and on terms
and conditions the same as those on which such Control Sellers have agreed to
sell their shares, other than terms and conditions relating to the performance
or non-performance of services. For the purposes of the preceding sentence, an
affiliate of a Control Seller is a person who controls, which is controlled by,
or which is under common control with, the Control Seller.
SECTION 7: STOCKHOLDERS AGREEMENT.
As a condition to the transfer of Stock pursuant to this Stock Purchase
Agreement, the Administrator, in its sole and absolute discretion, may require
the Participant to execute and become a party to any agreement by and among the
Company and any of its stockholders which exists on or after the Date of Grant
(the "Stockholders Agreement"). If the Participant becomes a party to a
Stockholders Agreement, in addition to the terms of the Plan and this Stock
Purchase Agreement, the terms and conditions of Stockholders Agreement shall
govern Participant's rights in and to the Stock; and if there is any conflict
between the provisions of the Stockholders Agreement and the Plan or any
conflict between the provisions of the Stockholders Agreement and this Stock
Purchase Agreement, the provisions of the Stockholders Agreement shall be
controlling. Notwithstanding anything to the contrary in this Section 7, if the
Stockholders Agreement contains any provisions which would violate Nevada law if
applied to the Participant, the terms of the Plan and this Stock Purchase
Agreement shall govern the Participant's rights with respect to such provisions.
7
SECTION 8: WAIVER OF RIGHTS TO PURCHASE STOCK.
By signing this Agreement, Purchaser acknowledges and agrees that neither the
Company nor any other person or entity is under any obligation to sell or
transfer to Purchaser any option or equity security of the Company, other than
the shares of Stock subject to this Agreement and any other right or option to
purchase Stock which was previously granted in writing to Purchaser by the Board
(or a committee thereof). By signing this Agreement, except as provided in the
immediately preceding sentence, Purchaser specifically waives all rights he or
she may have had prior to the date of this Agreement to receive any option or
equity security of the Company.
SECTION 9: INVESTMENT INTENT.
Purchaser represents and agrees that if he or she purchases the Stock in whole
or in part and if at the time of such purchase the Stock has not been registered
under the Act, that he or she will acquire the Stock upon such purchase for the
purpose of investment and not with a view to the distribution of such Stock and
upon each purchase, he or she will furnish to the Company a written statement to
such effect.
SECTION 10: GENERAL PROVISIONS.
10.1 Further Assurances. Purchaser shall promptly take all actions and
execute all documents requested by the Company which the Company deems to be
reasonably necessary to effectuate the terms and intent of this Agreement. Any
sale or transfer of the Stock to Purchaser by the Company shall be made free of
any and all claims, encumbrances, liens and restrictions of every kind, other
than those imposed by this Agreement.
10.2 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be given to the parties
hereto as follows:
10.2.1 If to the Company, to:
CHINA WI-MAX COMMUNICATIONS, INC.
1905 SHERMAN STREET, SUITE 335
DENVER, COLORADO 80203
10.2.2 If to Purchaser, to the address set forth in the
records of the Company.
10.2.3 Any such notice request, demand or other communication
shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by first-class certified mail,
return receipt requested, postage pre-paid, addressed as aforesaid, or
(ii) if given by any other means, when delivered at the address
specified in this Section 10.2.
10.3 Transfer of Rights under this Agreement. The Company may at any
time transfer and assign its rights and delegate its obligations under this
Agreement to any other person, Company, firm or entity, including its officers,
Directors and stockholders, with or without consideration.
10.4 Purchase Rights Non Transferable. Purchaser may not sell,
transfer, assign or otherwise dispose of any rights hereunder except by
testament or the laws of descent and distribution and the rights hereunder may
8
be exercised during the lifetime of Purchaser only by the Purchaser or by his or
her guardian or legal representative.
10.5 Market Stand-Off. In the event of an underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Act, including the Company's initial public offering
(a "Public Offering"), Purchaser shall not transfer for value any shares of
Stock without the prior written consent of the Company or its underwriters, for
such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters (the "Market
Stand-Off"). The Market Stand-Off shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In the event of the declaration of a stock
dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to
any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period.
10.6 Adjustment. If there is any change in the number of outstanding
shares of Stock by reason of a stock split, reverse stock split, stock dividend,
an extraordinary dividend payable in a form other than stock, recapitalization,
combination or reclassification, or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, then (i) any
new, substituted or additional securities or other property (including money
paid other than as an ordinary cash dividend) distributed with respect to any
Restricted Stock (or into which such Restricted Stock thereby become
convertible) shall immediately be subject to the Repurchase Right; and (ii)
appropriate adjustments to reflect the distribution of such securities or
property shall be made to the number and/or class of the Restricted Stock and to
the price per share to be paid upon the exercise of the Repurchase Right;
provided, however, that the aggregate purchase price payable for the Restricted
Stock shall remain the same.
10.7 Successors and Assigns. Except to the extent this Agreement is
specifically limited by the terms and provisions of this Agreement, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successor, assigns, heirs and personal representatives.
10.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA, WITHOUT REGARD TO ITS
CHOICE OF LAW PROVISIONS, AS NEVADA LAWS ARE APPLIED TO CONTRACTS ENTERED INTO
AND PERFORMED IN SUCH STATE.
10.9 Severability. Should any paragraph or any part of a paragraph
within this Stock Purchase Agreement be rendered void, invalid or unenforceable
by any court of law for any reason, such invalidity or unenforceability shall
not void or render invalid or unenforceable any other paragraph or part of a
paragraph in this Stock Purchase Agreement.
10.10 Attorneys' Fees. In the event that any action, suit or proceeding
is instituted upon any breach of this Agreement, the prevailing party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses, including attorneys' fees incurred in each and every such
action, suit or proceeding (including any and all appeals or petitions
9
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal services actually performed in connection with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to "reasonable attorneys'
fees" as defined in any statute or rule of court.
10.11 The Plan. This Agreement is made pursuant to the Plan, and it is
intended, and shall be interpreted in a manner, to comply herewith. Any
provision of this Agreement inconsistent with the Plan shall be superseded and
governed by the Plan.
10.12 Miscellaneous. Title and captions contained in this Agreement are
inserted for convenience and reference only and do not constitute a part of this
Agreement for any purpose.
10
SPOUSAL CONSENT
The undersigned spouse of __________________________ does hereby consent to the
execution of the foregoing Agreement by _____________________, and the
performance by him (or her) of his (or her) obligations thereunder.
Dated:
- -------------------------------- -----------------------------------------
Signature
11
EXHIBIT A
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
PROMISSORY NOTE
$ Date:
- ------------------------------------------- ------------------------------------
FOR VALUE RECEIVED, the undersigned promises to pay to CHINA WI-MAX
COMMUNICATIONS, INC., a Nevada corporation, 1905 SHERMAN STREET, SUITE 335,
DENVER, COLORADO 80203 (the "Company"), the principal sum of $_______________
with interest from the date hereof on the unpaid principal balance at the rate
of _______% per annum, compounded annually. Accrued but unpaid interest under
this Note shall be due and payable annually on the date immediately preceding
the anniversary of this Note, at the rate of ____% per annum, and the unpaid
principal balance and any remaining accrued but unpaid interest shall be due and
payable on _______________, _____.
All sums paid hereunder shall be paid in lawful money of the United States of
America at the principal executive offices of the Company or at such other place
as the holder of this Note shall have designated to the undersigned in writing.
The principal amount of this Note may be paid in whole or in part (in either
case with any interest accrued through the date of payment) at any time or from
time to time, prior to maturity, without penalty or charge for prepayment. All
sums paid hereunder shall be applied first to any unpaid interest and then to
the principal amount then outstanding.
If service of the undersigned with the Company is terminated for any reason,
with or without cause, the holder of this Note shall be entitled at its option
to demand payment of the full principal amount of this Note then unpaid,
together with all interest accrued thereon to the date of payment, by delivery
to the undersigned of written demand. Not later than 30 days after delivery of
such demand the undersigned shall pay the principal amount together with all
accrued interest.
The undersigned shall pay to the holder of this Note reasonable attorneys' fees
and all costs and other expenses (including, without limitation, fees, costs and
expenses of litigation) incurred by the holder in enforcing this Note. This Note
is secured by a Security Agreement of even date herewith between the Company and
the undersigned. The holder of this Note is entitled to the benefits of the
Security Agreement and may enforce the agreements of the undersigned contained
therein and exercise the remedies provided for thereby or otherwise available
with respect to this Note.
Borrower:
Print name and Address:
EXHIBIT B
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered into as
of the ___ day of ______________, 2009, between CHINA WI-MAX COMMUNICATIONS,
INC., a Nevada corporation ("Lender") and ___________________ ("Debtor").
WHEREAS, Debtor has concurrently herewith purchased from Lender _____ shares of
Lender's Stock (the "Stock") pursuant to that certain Stock Purchase Agreement,
dated ________________, ____, between Lender and Debtor (the "Purchase
Agreement") and has made payment therefor by delivery of Debtor's promissory
note of even date herewith (the "Note"); and
WHEREAS, Debtor and Lender desire to have Debtor grant to Lender a security
interest in the collateral described below as security for Debtor's performance
of the terms and conditions of the Purchase Agreement, the Note and this
Security Agreement.
NOW, THEREFORE, on the basis of the above facts and in consideration of the
mutual covenants and agreements set forth below, Lender and Debtor agree as
follows:
SECTION 1: GRANT OF SECURITY INTEREST.
As security for Debtor's full and faithful performance of each and all of its
obligations and liabilities under the Note, and any and all modifications,
extensions or renewals thereof, the Purchase Agreement and this Security
Agreement, Debtor hereby grants and assigns to Lender a continuing security
interest in and to the Stock, and all stock dividends, cash dividends,
liquidating dividends, new securities and all other property, moneys and rights
to which Debtor may become entitled on account thereof (the "Collateral").
SECTION 2: PERFECTION OF SECURITY INTEREST.
To perfect Lender's security interest in and lien on the Collateral, Debtor
shall, upon the execution of this Agreement, immediately deliver to Lender,
together with collateral instruments of transfer executed in blank, all
certificates representing the Stock to be held by Lender until released pursuant
to Section 6 hereof.
SECTION 3: DEFAULT.
At the sole and exclusive option of Lender, upon an Event of Default (as defined
in Section 3.2 below) Lender may exercise any or all of the rights and remedies
of a secured party under the Nevada Uniform Commercial Code, as amended from
time to time. All rights and remedies of Lender shall be cumulative and may be
exercised successively or concurrently and without impairment of Lender's
interest in the Collateral.
As used herein, an Event of Default ("Event of Default") shall mean any of the
following:
The failure of Debtor to perform any of its obligations under the Purchase
Agreement, the Note or this Security Agreement; or
The occurrence of one or more of the following: (i) Debtor becoming the subject
of any case or action or order for relief under the Bankruptcy Reform Act of
1978; (ii) the filing by Debtor of a petition or answer to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or
liquidation law or statute, or the filing of any answer admitting the material
allegations of a petition filed against Debtor in any proceeding under any such
law or the taking of any action by Debtor for the purpose of effecting the
foregoing; the appointment of a trustee, receiver or custodian of Debtor or any
of Debtor's material assets or properties; (iii) Debtor making an assignment for
the benefit of creditors; or (iv) the occurrence of any other act by Debtor or
Debtor's creditors which Lender reasonably determines may jeopardize Debtor's
ability to pay the Note or perform Debtor's obligations under the Purchase
Agreement or this Security Agreement.
SECTION 4: WARRANTIES AND REPRESENTATIONS OF DEBTOR.
Debtor hereby represents and warrants that the Collateral is free and clear of
any security interest, lien, restriction or encumbrance and that he has the full
right and power to transfer the Collateral to Lender free and clear thereof and
to enter into and carry out the Purchase Agreement, the Note and this Security
Agreement.
SECTION 5: POWER OF ATTORNEY.
Debtor hereby appoints Lender's Secretary as his true and lawful
attorney-in-fact to transfer the Collateral or cause it to be transferred on
Lender's books whenever Lender determines in its sole and absolute discretion
that such transfer is necessary or advisable to protect its rights or interests
under this Security Agreement.
SECTION 6: RELEASE OF THE COLLATERAL.
Within five days following receipt by Lender of the unpaid principal amount of
the Note from Debtor, Lender shall release from its security interest hereunder
and deliver or cause to be delivered to Debtor the Stock.
SECTION 7: WAIVERS.
No waiver by Lender of any breach or default by Debtor under the Purchase
Agreement, the Note or this Security Agreement shall be deemed a waiver of any
breach or default thereafter occurring, and the taking of any action by Lender
shall not be deemed an election of that action in exclusion of any other action.
The rights, privileges, remedies and options granted to Lender under this
Security Agreement or under any applicable law shall be deemed cumulative and
may be exercised successively or concurrently.
2
SECTION 8: GENERAL PROVISIONS.
8.1 Notices. All notices, requests, demands or other communications
under this Security Agreement shall be in writing and shall be given to parties
hereto as follows: If to the Company, to:
CHINA WI-MAX COMMUNICATIONS, INC.
1905 SHERMAN STREET, SUITE 335
DENVER, COLORADO 80203
If to Debtor, to the address set forth in the records of the Company, or such
other address as may be furnished by either such party in writing to the other
party hereto.
Any such notice, request, demand or other communication shall be effective (i)
if given by mail, 72 hours after such communication is deposited in the mail by
first-class certified mail, return receipt requested, postage prepaid, addressed
as aforesaid, or (ii) if given by any other means, when delivered at the address
specified in this Paragraph 8.
8.2 Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns, heirs and personal representatives.
8.3 Severability. Should any paragraph or any part of a paragraph
within this Security Agreement be rendered void, invalid or unenforceable by any
court of law for any reason, such invalidity or unenforceability shall not void
or render invalid or unenforceable any other paragraph or part of a paragraph in
this Security Agreement.
8.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA WITHOUT REGARD TO ITS CHOICE
OF LAW PROVISIONS, AS NEVADA LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND
PERFORMED IN SUCH STATE.
8.5 Attorneys' Fees. In the event that any action, suit or proceeding
is instituted upon any breach of this Security Agreement, the prevailing party
shall be paid by the other party thereto an amount equal to all of the
prevailing party's costs and expenses, including attorneys' fees incurred in
each and every such action, suit or proceeding (including any and all appeals or
petitions therefrom). As used in this Agreement, "Attorneys' Fees" shall mean
the full and actual cost of any legal services actually performed in connection
with the matter involved calculated on the basis of the usual fee charged by the
attorney performing such services and shall not be limited to "reasonable
attorneys' fees" as defined in any statute or rule of court.
8.6 Entire Agreement. The making, execution and delivery of this
Security Agreement by the parties hereto have been induced by no
representations, statements, warranties or agreements other than those herein
expressed. This Security Agreement, the Purchase Agreement and the Note embody
the entire understanding of the parties and there are no further or other
agreements or understandings, written or oral, in effect between the parties
relating to the subject matter hereof, unless expressly referred to by reference
herein.
8.7 Miscellaneous. Titles and captions contained in this Security
Agreement are inserted for convenience of reference only and do not constitute
part of this Security Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Security
Agreement as of the date first above written.
DEBTOR: LENDER:
CHINA WI-MAX COMMUNICATIONS, INC.
- ------------------------------------------ ------------------------------------
By:
- ------------------------------------------ ------------------------------------
(Sign) Steven T. Berman
- ------------------------------------------ ------------------------------------
Its: President
- ------------------------------------------ ------------------------------------
(Please print name and address)
3
EXHIBIT C
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
STOCK ASSIGNMENT
SEPARATE FROM CERTIFICATE
For Value Received, _________________________________ ("Holder") hereby sells,
assigns and transfers unto ____________________________________ (________)
shares (the "Shares") of the Stock of CHINA WI-MAX COMMUNICATIONS, INC., a
Nevada corporation (the "Company"), held of record by Holder and represented by
Certificate No. ______, and hereby irrevocably constitutes and appoints as
Holder's attorney to transfer the Shares on the books of the Company, with full
power of substitution in the premises.
The signature to this assignment must correspond with the name written upon the
face of the Certificate in every particular without any alteration or addition
or any other change.
Dated
- ------------------------------
- -------------------------------------------------------------------------------
(Signature of Holder)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address)
SIGNATURE GUARANTEED BY:
(Holder's signature must be guaranteed by a bank, a trust company or a brokerage
firm):
- ----------------------------------------------------
- ----------------------------------------------------
LETTER REGARDING
FEDERAL AND NEVADA TAX CONSEQUENCES
CHINA WI-MAX COMMUNICATIONS, INC.
1905 SHERMAN STREET, SUITE 335
DENVER, COLORADO 80203
[Purchaser]
Dear :
- ------------------------------
This letter is to notify you of certain federal and Nevada income tax
consequences to you as a result of your purchase of shares (the "Shares") of
Common Stock of CHINA WI-MAX COMMUNICATIONS, INC. (the "Company") pursuant to
the Stock Purchase Agreement dated __________, 2009 between you and the Company.
The conclusion of this letter is that, if the purchase price for the Shares
equals their fair market value on the date you sign the Stock Purchase
Agreement, you should send copies of the attached form (the "Section 83 Form")
relating to Section 83 ("Section 83") of the Internal Revenue Code of 1986 (the
"Internal Revenue Code"), to the Internal Revenue Service and the Company, not
later than 30 days after the date of the Stock Purchase Agreement. If the
purchase price for the Shares is less than their fair market value on the date
you sign the Stock Purchase Agreement, you should consider carefully whether or
not you should file the Section 83 Form within 30 days after you sign the Stock
Purchase Agreement.
Federal Income Tax Consequences
Certain federal income tax consequences to you in connection with your purchase
of the Shares are determined in accordance with Section 83.
Section 83(a). Under Section 83(a), a person to whom property is transferred in
connection with the performance of services ("Section 83 property") must
recognize ordinary income in the year the property is transferred in an amount
equal to the fair market value of the Section 83 property at the time it is
transferred less the amount, if any, paid for the Section 83 property, unless
the Section 83 property is not transferable and is subject to a substantial risk
of forfeiture (collectively, a "Restriction on Transfer"). If there is a
Restriction on Transfer, then the person acquiring Section 83 property will not
recognize income until the Restriction on Transfer lapses (unless a Section
83(b) election is made - see below), at which time the person must recognize as
ordinary income the fair market value of the Section 83 property at that time
less the amount, if any, paid for the Section 83 property.
Your purchase of the Shares probably constitutes a transfer of Section 83
property. Further, the Stock Purchase Agreement provides that, if you cease to
be employed by the Company for any reason, the Company must repurchase from you
and you must sell to the Company all Non-Vested Shares (as defined in the Stock
Purchase Agreement) for an amount which may be less than their fair market
value. Under Regulations promulgated under Section 83, these provisions probably
constitute a Restriction on Transfer over your Non-Vested Shares. Thus, under
Section 83(a), you would not be required to recognize any income as a result of
your purchase of the Shares until they vest; when they vest, you would be
required under Section 83(a) to recognize as ordinary income the excess, if any,
of the fair market value of the Shares (as of the day they vest) over the price
you paid for those Shares under the Stock Purchase Agreement. If the price of
the Company's Common Stock is greater when the Shares vest than when you
purchased them, you could have a substantial tax liability in connection with
your purchase of the Shares when they vest.
Section 83(b) Election. Section 83(b) provides an alternative method for taxing
Section 83 property. Under Section 83(b), a person may elect to recognize
ordinary income in the year Section 83 property is transferred to him or her,
rather then waiting until it vests. Thus, if you make a Section 83(b) election,
you will be required to recognize as ordinary income in the year you purchase
the Shares the difference, if any, between the fair market value of the Shares
on the date you sign the Stock Purchase Agreement and the purchase price you pay
for the Shares. For example, if you make the Section 83(b) election and you paid
a purchase price for the Shares equal to their fair market value, you will not
pay any taxes in the year of the purchase in connection with your purchase of
the Shares. On the other hand, if you make the Section 83(b) election and the
purchase price of the Shares is less than their fair market value on the date
you sign the Stock Purchase Agreement, you will be required to pay taxes on the
difference between those amounts in the year of the purchase. In either case,
however, if you make the Section 83(b) election, you will not be required to
recognize any income when the Shares vest.
To make the Section 83(b) election, you must file the Section 83 Form with both
the Company and the Internal Revenue Service office where you file federal
income tax returns. You must file the Section 83(b) Form within 30 days after
you sign the Stock Purchase Agreement. In addition, you must attach a copy of
the Section 83(b) Form to your income tax return that covers the year in which
you filed the Form.
Sale of Section 83 Property. If a person sells Section 83 property after the
Restriction on Transfer lapses (or after making a Section 83(b) election), he or
she will recognize taxable gain or loss equal to the difference between the
amount realized upon the sale of the Section 83 property and the person's
"adjusted basis" for the Section 83 property. The person's adjusted basis for
the Section 83 property will be (i) the amount paid for the Section 83 property
plus (ii) any amount which the person has included in gross income pursuant to
the Section 83(b) election. Thus, upon sale, you will recognize taxable gain or
loss equal to the difference between the sale price of the Shares and your
adjusted basis for the Shares.
In general, the gain or loss you recognize will be capital gain or loss if the
following "Capital Gain Requirements" are met: (i) the Section 83 property is a
capital asset and (ii) the Section 83 property is held for more than 12 months
from either the date the Restrictions on Transfer lapse or, if a Section 83(b)
election is made, the date the Section 83 property is acquired. Thus, as the
Shares are probably a capital asset in your hands, you will recognize capital
gain or loss upon their sale if you hold them for more than 12 months from
either the date they vest or, if you make the Section 83(b) election, from the
date you sign the Stock Purchase Agreement.
Forfeiture of Section 83 Property. If a person's interest in Section 83 property
is forfeited, the person will recognize gain or loss equal to the difference
between the amount realized upon forfeiture and the amount paid for the Section
83 property. In your case, if your employment with the Company is terminated
before all of the Shares have vested, the Company is obligated to repurchase
from you, and you are obligated to sell to the Company, any Non-Vested Shares at
the price you paid for them. As there would be no difference between the amount
realized upon forfeiture and the amount paid for the Shares, you would not be
required to recognize any gain or loss at that time. However, upon forfeiture,
you would not be able to recoup any taxes you pay pursuant to a Section 83(b)
election.
Nevada Income Tax Consequences.
The Nevada income tax consequences to you in connection with your purchase of
the Shares are identical to the federal income tax consequences. To make the
Section 83(b) election in Nevada, you must file the Section 83(b) Form with the
Internal Revenue Service, as described above; there are no extra filing
requirements for making the Section 83(b) election in Nevada.
If you have any questions concerning the tax consequences described in this
letter, please feel free to call me.
Sincerely,
CHINA WI-MAX COMMUNICATIONS, INC.
By: __________________________________________________
Steven T. Berman
Its: President
ELECTION TO INCLUDE IN GROSS INCOME IN
YEAR OF TRANSFER PURSUANT TO SECTION 83(b)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to the provisions of Section
83(b) of the Internal Revenue Code of 1986, as amended, and the regulations of
the Commissioner of Internal Revenue promulgated thereunder, with respect to the
Section 83 property described below, and supplies the following information in
connection with that election:
The name, address, taxable year and taxpayer identification number of the
undersigned are:
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Name:
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Address:
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Taxable Year ________ Taxpayer I.D. No.________
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The description of the Section 83 property with respect to which the undersigned
is making the election is as follows:
_______________ (_____) shares (the "Subject Shares") of the Common Stock of
CHINA WI-MAX COMMUNICATIONS, INC., a Nevada corporation (the "Company").
The date upon which the Subject Shares were transferred to, and acquired by, the
undersigned was ____________, ________.
The Subject Shares are subject to restrictions under a ___________ vesting
period. If the undersigned's employment terminates, the Company is obligated to
purchase and the undersigned is obligated to sell to the Company all Subject
Shares that are not vested for a purchase price, which in certain circumstances
may be less than the fair market value of the Subject Shares.
The fair market value of the Subject Shares at the time of the transfer to, and
acquisition by, the undersigned (determined without regard to any restrictions
other than restrictions which by their terms will never lapse) was $_____ per
share.
The amount paid by the undersigned for the Subject Shares was $____ per share.
The undersigned has furnished a copy of this election to the Company.
[Signature Page Follows]
Dated:
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(Signature)
Make 4 copies
(1) IRS (to be filed at the IRS where you ordinarily file your returns)
within 30 days of the purchase
(1) IRS (to be filed with your income tax return)
(1) CHINA WI-MAX COMMUNICATIONS, INC.
(1) Copy for purchaser
FORM OF RESOLUTIONS FOR PURCHASE RIGHTS GRANTS
RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
CHINA WI-MAX COMMUNICATIONS, INC.
As of __________________, 2009
The undersigned directors, constituting the entire board of directors (the
"Board") of CHINA WI-MAX COMMUNICATIONS, INC., a Nevada corporation (the
"Company"), hereby take the following actions, adopt the following resolutions,
and transact the following business, by written consent without a meeting, as of
the date above written, pursuant to the applicable corporate laws of the State
of Nevada and the Company's Bylaws.
WHEREAS, The Company Previously Adopted the 2009 CHINA WI-MAX COMMUNICATIONS,
INC. STOCK OPTION AWARD AND COMPENSATION PLAN (The "Plan"), and has delegated
the responsibility to administer the Plan to the Board;
WHEREAS, Five Million (5,000,000) shares of Common Stock of the Company were
originally reserved for issuance under the Plan;
WHEREAS, as of the date hereof, _____________ shares remain available for
issuance under the Plan; and
WHEREAS, the Board has determined that it is in the best interests of this
company and its stockholders to provide, under the plan, equity incentives to
those employees of the company identified below.
NOW, THEREFORE, BE IT RESOLVED, that the persons listed on the Exhibit A, which
exhibit was reviewed by the Board and shall be included with this Consent, are
hereby granted, as of the date hereof, the current right to purchase (the
"Purchase Right") the number of shares at the per share purchase price as set
forth in Exhibit A at any time on or prior to the date which is 15 days from the
date this grant is first communicated to each recipient;
RESOLVED FURTHER, that this Company be, and it hereby is, authorized to accept a
promissory note from each purchaser as consideration for the stock so purchased,
in such form (including security for the obligation thereunder) heretofore
approved by the Board;
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and
they hereby are, authorized, directed and empowered for and on behalf of this
Company to prepare or cause to be prepared a stock purchase agreement,
promissory note and/or security agreement (the "Purchase Agreements") to
represent the rights granted at this meeting substantially in the form, and
containing the terms and provisions, heretofore approved by the Board, and
containing such other terms and provisions as such officers shall, upon advice
of counsel, determine to be necessary or appropriate, their execution of such
Purchase Agreements to conclusively evidence such determination;
RESOLVED FURTHER, that the Purchase Rights shall be evidenced by stock purchase
agreements and be subject to the restrictions (including transfer and/or
repurchase rights), if any, set forth in such stock purchase agreements;
RESOLVED FURTHER, that the Purchase Rights shall be granted pursuant to the
exemptions provided under Section 701 of the Securities Act Rules and Nevada
Corporate Securities Laws;
RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the
number of shares adequate to cover the shares underlying the Purchase Rights
granted herein;
RESOLVED FURTHER, that upon receipt of executed Purchase Agreements from the
person or persons granted rights hereunder, the officers of this Company, and
each of them, be, and they hereby are, authorized, directed and empowered for
and on behalf of this Company to issue the stock so purchased, and to do or
cause to be done all such further acts and things and to sign, deliver and/or
file all such documents and notices as any of such officers may deem necessary
or advisable in order to carry out and perform the foregoing resolutions and the
intention thereof; and
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and
they hereby are, authorized, directed and empowered for and on behalf of the
Company to do or cause to be done all such acts and things and to sign, deliver
and/or file all such documents and notices as any of such officers may deem
necessary or advisable in order to carry out and perform the foregoing
resolutions and the intention thereof.
The Secretary of the Corporation is directed to file the original executed copy
of this Consent with the minutes of proceedings of the Board.
IN WITNESS WHEREOF, each of the undersigned has executed this consent as of the
date first written above.
DIRECTORS:
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Steven T. Berman Dr. Allan Rabinoff
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George B. Krieger Sharon Xiong
EXHIBIT A
Purchase Rights Grant Information
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Name No. Shares Purchase Price*
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* The per share purchase price must be at least 85% of the Fair Market Value (as
such term is defined in the Plan) of the underlying share as of the date of
grant.