UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
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
Xerion EcoSolutions Group Inc.
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(Name of Registrant As Specified In Its Charter)
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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[_] 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
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(1) Amount Previously Paid:
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PRELIMINARY COPY
XERION ECOSOLUTIONS GROUP INC.
Suites A-C 20/F Neich Tower, 128
Gloucester Road, WanChai, Hong Kong
The People's Republic of China
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND REGULATION 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
Dear Shareholder:
A Special Meeting of shareholders of Xerion EcoSolutions Group Inc.
("Xerion") will be held at 159 N. Santa Anita Avenue, Arcadia, CA 91006, at 3:00
p.m. local time, and thereafter as it may be adjourned from time to time, on
January 20, 2006 for the following purposes:
(1) To approve the reincorporation of Xerion from the State of Colorado to
the State of Nevada, including the change of our corporate name to
"SINO-American Development Corporation" and a change in the par value of
preferred stock to $.001 par value per share from no par value;
(2) To approve a one-for-eight (1-for-8) reverse split of the currently
issued and outstanding Common Stock of Xerion;
(3) To elect members to the Board of Directors of Xerion consisting of
five persons: Mr. Fang Zhong, Mr. Luo Yun Fang, Mr. Fang Wei Feng, Mr. Fang Wei
Jun, and Mr. Paul Mai;
(4) To approve the 2006 Stock Option, SAR and Stock Bonus Plan;
(5) To approve the appointment of Murrell, Hall, McIntosh & Co., PLLP as
the registered public accounting firm of Xerion for its fiscal year ended
December 31, 2005; and
(6) To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
This Information Statement is intended to afford shareholders the
opportunity to vote on the above described proposals, and any other matters, if
any, that may be properly brought before the Special Meeting.
On January 10, 2006, the Record Date for shareholders entitled to vote at
the Special Meeting, there were 227,321,840 shares of the Common Stock of Xerion
issued and outstanding. One-third of such outstanding shares of Common Stock is
necessary to provide a quorum at the Special Meeting. Each share is entitled to
one vote. Under the Articles of Incorporation, shareholders do not have the
right to cumulate votes for the election of directors. The affirmative vote of
the holders of a majority of the outstanding shares of Common Stock, present and
voting at the Annual Meeting, is required.
The cost of distributing this Information Statement will be borne by
Xerion which will reimburse brokerage houses, custodians, nominees and
fiduciaries for their expenses in forwarding the material to the beneficial
owners of its Common Stock.
1
General Background and Recent Events
Xerion entered into a Stock Exchange Agreement (the "Agreement") under
which Town House Land Limited ("Town House"), a real estate development company
located in The People's Republic of China (the "PRC"), would be acquired by
Xerion in consideration of the issuance of Common Stock of Xerion representing
98.75% ownership interest in Xerion to the owners of Town House and their
designees. The closing occurred on October 31, 2005, and Town House became a
wholly-owned subsidiary of Xerion.
A copy of the Agreement is attached to the Form 8-K current report of
Xerion dated October 18, 2005 (Exhibit 2.1) and is incorporated herein by
reference as though fully set forth herein. The foregoing summary description of
the Agreement and the transactions contemplated thereby is not intended to be
complete and is qualified in its entirety by the complete text of the Agreement.
Following the closing, the principal executive office of Xerion was
changed and moved to:
Xerion EcoSolutions Group Inc.
Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
On October 31, 2005, Mr. Warren C. Gacsi resigned as a director and an
officer of Xerion. Mr. Zhong Fang was appointed as a director to fill the
resulting vacancy. In addition, all officers of Xerion were replaced by new
officers designated by Town House. Following these actions, the members of the
Board were Mr. Ben Traub, Mr. Robert Skanes and Mr. Zhong Fang.
Effective November 26, 2005, the Board of Directors of Xerion appointed
Mr. Weifeng Fang and Mr. Weijun Fang to serve as directors of Xerion to fill
vacancies resulting from the resignations of Mr. Ben Traub and Mr. Robert Skanes
as directors.
Prior to the reverse merger transaction, Xerion had been a non-operating
corporate shell for several years and had no material assets, revenues or
earnings. Because of the change in the ownership, control, and management of
Xerion and the new active real estate development operations of Xerion, Xerion
believes that it is in the best interests of Xerion to: (a) reincorporate in the
State of Nevada, (b) increase the number of directors on the Board of Directors
of Xerion, (c) effect a 1-for-8 reverse split of the outstanding Common Stock of
Xerion, (iv) approve a stock option, SAR and stock bonus plan for the directors,
officers, employees and consultants of Xerion, and (v) appoint Murrell Hall
McIntosh & Co., PLLP as the independent registered public accounting firm of
Xerion.
Town House Organization
The principal business operations of Town House are real estate
development. Its operations are conducted by and through its subsidiaries:
1. Town House (Wuhan) Land Limited, formerly called Wuhan Pacific Real
Estate Development Company Limited ("Town House-Wuhan")] that is
located in Hong Kong in The People's Republic of China (the "PRC");
2. Town House (Miami) Corporation, a Florida Corporation; and
2
3. Town House Land (USA) Inc., a California corporation.
The corporation organization of Town House is as follows:
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Town House
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Town House (Miami) Town House Town House Land
Corporation (Wuhan) Land (USA) Corporation
Limited
Town House is a limited liability company organized in 2003 in the Hong
Kong Special Administrative Region in the PRC as a holding company.
Town House owns 97% of Town House-Wuhan which was organized in Hubei
Province in the PRC as a limited liability company in 1995. Substantially all of
the assets and operations of Town House in the PRC are conducted through Town
House-Wuhan.
Town House Miami Corporation is a Florida corporation organized on
November 18, 2004.
Town House Land (USA), Inc. is a California corporation organized on March
4, 2004.
Town House (Wuhan) Land Limited
Town House-Wuhan is one of the first privately owned property development
companies in Wuhan City in the PRC and is one of the largest property developers
in Wuhan City, based on a list of top 100 property development enterprises in
Wuhan City in terms of gross floor area ("GFA"), published by the Wuhan
Statistics Bureau and the Development Research Center. It had engaged
principally in the development and sale of high quality commercial and private
residential properties catering to the middle-class residential property market
in Wuhan City and in the City of Yi Chang.
Its portfolio of properties under development are currently all located in
Wuhan City and in the City of Yi Chang, and target different segments within the
mass residential property market, including young white color employees, middle
to senior managers in enterprises, entrepreneurs and families with young
children. These upwardly mobile people represent the emerging middle class and
are a growing source of demand in the mass residential property market.
Town House-Wuhan has equity interests in six property development projects
in Wuhan City, with an approximate GFA of 200,000 square meters and an aggregate
site area of approximately 100,566 square meters. Town House-Wuhan has obtained
land use rights certificates in respect of each of these six property
development projects. Town House-Wuhan has not yet obtained land use rights
certificates in respect of, but has interest in and plans to develop a further
five projects in Wuhan City with an approximate GFA of 252,000 square meters and
an aggregate site area of approximately 70,000 square meters.
3
Town House-Wuhan intends to further solidify its position in Wuhan City,
and also plans to expand focus in the City of Yi Chang. Town House-Wuhan intends
to pursue quality business opportunities in other fast growing cities in the
PRC, if market conditions are appropriate.
Proposal 1. Approval of the reincorporation of Xerion from the State of Colorado
to the State of Nevada.
General
Xerion proposes to change its state of incorporation from the State of
Colorado to the State of Nevada (the "Reincorporation"). For the reasons set
forth below, Xerion believes that its best interest and that of our shareholders
will be best served by the Reincorporation. Such Reincorporation will be
accomplished by merging Xerion with and into its new wholly-owned Nevada
subsidiary, SINO-American Development Corporation ("SADC"). The proposal to
change our state of incorporation gives our shareholders dissenters' rights
under Colorado law. The Reincorporation will not result in a change in our
capitalization included in our current Articles of Incorporation.
Reasons for the Reincorporation
The only reason that Xerion is incorporated in the State of Colorado is
that its predecessor's operations were based and incorporated in the State of
Colorado. The Board of Directors believe that a change in our state of
incorporation from Colorado to Nevada will meet our business needs and that the
Colorado Business Corporations Act ("CBCA") does not offer corporate law
advantages comparable to those provided by the laws of the State of Nevada.
Xerion also wishes to reincorporate to Nevada in order to have more flexibility
in approval of corporate actions by shareholders acting through written consent.
The corporate laws of the State of Nevada are, in the opinion of Xerion, more
flexible and less burdensome in areas like the need to call a shareholders'
meeting to approve any and all corporate actions or certain changes to the
Articles of Incorporation. Reincorporation from Colorado to Nevada also may make
it easier to attract future candidates willing to serve on our Board of
Directors. Potential candidates are generally more familiar with Nevada law,
including provisions relating to director indemnification; from their past
business experience.
LIMITATION OF SHAREHOLDERS' PARTICIPATION IN CONSIDERATION AND APPROVAL OF
FUTURE CORPORATE ACTIONS
BY APPROVING THE MERGER AND REINCORPORATION, YOU WILL CAUSE THE SURVIVING
CORPORATION'S NEVADA ARTICLES OF INCORPORATION AND NEVADA BY-LAWS TO GOVERN
CORPORATE GOVERNANCE. WHILE NO MATERIAL CHANGES TO XERION'S CURRENT ARTICLES OF
INCORPORATION ARE BEING ADOPTED, BY REINCORPORATING TO NEVADA, ONE SHAREHOLDER,
MR. FANG ZHONG, WHO HOLDS OVER 82% OF THE VOTING POWER OF XERION, WILL BE ABLE
TO APPROVE BY WRITTEN CONSENT AND WITHOUT ANY VOTE BY THE OTHER SHAREHOLDERS
ALMOST ANY PROPOSED CORPORATE ACTION, INCLUDING APPROVAL OF AMENDMENTS TO THE
ARTICLES OF INCORPORATION, APPROVAL OF SIGNIFICANT CORPORATE TRANSACTIONS LIKE
MERGERS, RECLASSIFICATIONS OF XERION'S SECURITIES, THE NUMBER OF DIRECTORS ON
XERION'S BOARD OF DIRECTORS, DISSOLUTION OF XERION AND GOING PRIVATE
TRANSACTIONS. WHILE MR. FANG WOULD HAVE SUFFICIENT VOTING POWER UNDER THE CBCA
TO APPROVE ALMOST EVERY PROPOSED CORPORATE ACTION, HE WOULD HAVE TO APPROVE SUCH
ACTIONS AT A SHAREHOLDERS' MEETING AT WHICH THE OTHER SHAREHOLDERS WOULD HAVE
THE OPPORTUNITY TO VOICE THEIR OPINIONS AND CAST THEIR VOTES AS WELL AS RECEIVE
ANSWERS FROM XERION'S SENIOR MANAGEMENT ON ANY PROPOSED CORPORATE ACTION. UNDER
NEVADA LAW, MR. FANG COULD APPROVE MOST PROPOSED CORPORATE ACTIONS WITHOUT A
SHAREHOLDERS' MEETING AND WITHOUT XERION SOLICITING YOUR VOTE AT A SHAREHOLDERS'
MEETING.
4
The Merger Agreement
To effect our Reincorporation in Nevada, we will be merged with and into
SADC, with SADC being the surviving corporation (the "Agreement and Plan of
Merger"). Following the merger, SADC will continue to conduct the business of
Xerion as a Nevada corporation under the name "SINO-American Development
Corporation" and will assume all of our assets and liabilities. The persons
nominated and elected herein to be our Board of Directors and officers will
become the Board of Directors and officers of the surviving corporation for
identical terms of office.
At the effective time of the Reincorporation, each outstanding share of
our Colorado Common and Preferred Stock (hereinafter jointly referred to as the
"Colorado Stock") will automatically be converted into one fully paid and
nonassessable share of Common Stock and Preferred Stock of SADC (hereinafter
jointly referred to as the "SADC Stock"), each having the same rights as existed
prior to the merger. We do not intend to issue new stock certificates to
stockholders of record upon the effective date of the merger and each
certificate representing issued and outstanding shares of our Colorado Stock
immediately prior to the effective date of the merger will evidence ownership of
the shares of SADC Stock after the effective date of the merger. Thus, it will
not be necessary for our shareholders to exchange their existing stock
certificates for certificates of SADC. However, after consummation of the
merger, any stockholder desiring a new form of stock certificate may submit the
existing stock certificate to our transfer agent for cancellation, and obtain a
new Nevada form of certificate.
STOCKHOLDERS NEED NOT EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF THE SURVIVING CORPORATION. HOWEVER, ANY STOCKHOLDERS DESIRING
NEW STOCK CERTIFICATES REPRESENTING COMMON STOCK OF THE SURVIVING CORPORATION
MAY SUBMIT THEIR EXISTING STOCK CERTIFICATES TO SIGNATURE STOCK TRANSFER, INC.,
2591 ONE PRESTON PARK, 2301 OHIO DRIVE, SUITE 100, PLANO, TX 75093, OUR TRANSFER
AGENT, AND OBTAIN NEW CERTIFICATES. THERE WILL BE A CHARGE OF APPROXIMATELY
$35.00 PER CERTIFICATE PAYABLE BY ANY SHAREHOLDER DESIRING A NEW SHARE
CERTIFICATE.
At the effective time of the merger, SADC's Common Stock will be listed
for trading on the NASD Electronic Bulletin Board and the Colorado Common Stock
will cease to be listed on the NASD Electronic Bulletin Board.
Approval of the Reincorporation (which constitutes approval of the
Agreement and Plan of Merger) requires the affirmative vote of the holders of a
majority of all of the votes entitled to be cast by the holders of the Colorado
Stock of Xerion.
Effective Time
If approved by the requisite vote of the holders of shares of the Colorado
Stock, it is anticipated that the merger, and consequently the Reincorporation,
will become effective at the time set forth in each of the Articles of Merger to
be filed with the Secretary of State of Colorado (together with the Agreement
and Plan of Merger) in accordance with Article 7-111-105 of the CBCA and the
Articles of Merger to be filed with the Secretary of State of Nevada in
accordance with the relevant provisions of the Nevada Revised Statutes (the
"NRS"). However, the Agreement and Plan of Merger may be terminated and
abandoned by action of the Board of Directors of Xerion at any time prior to the
effective time of the Reincorporation, whether before or after the approval by
holders of shares of the Colorado Stock, if the Board of Directors of Xerion
determines for any reason, in its sole judgment and discretion, that the
consummation of the Reincorporation would be inadvisable or not in the best
interests of Xerion and its shareholders.
5
Effect of not obtaining the Required Vote for Approval
If the Reincorporation proposal fails to obtain the requisite vote for
approval, the Reincorporation and merger will not be consummated and Xerion will
continue to be incorporated in Colorado. However, Mr. Fang Zhong who owns more
than 82% of the outstanding Common Stock of Xerion has indicated that he intends
to vote FOR all of the proposals being presented at this Special Meeting.
Comparison of the Corporate Laws of Nevada and Colorado
Although it is not practical to compare all of the differences between
Colorado law and our current Articles of Incorporation and Bylaws and Nevada law
and the Articles of Incorporation and Bylaws of the surviving corporation, the
following is a summary of certain differences that we believe may significantly
affect the rights of our stockholders. This summary is not intended to be relied
upon as an exhaustive list of all differences or a complete description of the
differences, and is qualified in its entirety by reference to the Nevada Revised
Statutes ("NRS"), the Colorado Business Corporation Act ("CBCA") and the forms
of the Articles of Incorporation and Bylaws of the surviving corporation. In
addition to the changes described below, certain technical changes have been
made to the Nevada Articles of Incorporation and Nevada Bylaws in comparison to
the Colorado Articles of Incorporation and Colorado Bylaws to reflect
non-material differences between the CBCA and NRS. The summary below is not
intended to be relied upon as an exhaustive list of all differences or a
complete description of the differences, and is qualified in its entirety by
reference to the CBCA, the Colorado Articles of Incorporation, the Colorado
Bylaws, the corporate laws of the State of Nevada and the Nevada Articles of
Incorporation and Bylaws.
A copy of the proposed Agreement and Plan of Merger, the Articles of
Incorporation of SADC and the Bylaws of SADC are attached hereto as Exhibits A,
B and C, respectively.
Corporate Name
Under both the NRS and the CBCA, a change in the corporate name requires
an amendment to the articles of incorporation. In such event, the approval of
the shareholders of a corporation is required.
Authorized Stock and Par Value
The authorized shares of Common Stock of Xerion under the Colorado
Articles of Incorporation are 300,000,000 shares, $.001 par value, and there are
50,000,000 shares of authorized Preferred Stock, no par value. Under the Nevada
Articles of corporation, Xerion shall have the authority to issue the same
number of common and preferred shares. The par value of the common stock will
continue to be $.001 per share; however, the par value of the authorized
preferred stock will be changed to $.001 per share from no par value which will
significantly reduce franchise taxes in the State of Nevada. Pursuant to the
terms of the Nevada Articles of Incorporation, the Board of Directors is
authorized to provide for the issue of all of, or any of, the shares of the
preferred stock in one or more series, and to fix the number of shares and to
determine or alter for each such series, such voting powers, full or limited, or
no voting powers, and such designation, preferences, and relative,
participating, optional, or other rights and such qualifications, limitations,
or restrictions thereof, as may be permitted by the NRS.
6
Dividends/Distributions
Under both the NRS and the CBCA, a corporation may make distributions to
stockholders (subject to any restrictions contained in the corporation's
articles of incorporation) as long as, after giving effect to the distribution,
(a) the corporation will be able to pay its debts as they become due in the
usual course of business, and (b) the corporation's total assets will not be
less than the sum of its total liabilities plus (unless the articles of
incorporation permits otherwise) the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
are superior to those receiving the distribution.
Special Meetings of Shareholders
Under Nevada and Colorado law, unless otherwise provided in the articles
of incorporation or bylaws, the President may call by the entire Board of
Directors or by any two directors, or special meetings of the stockholders. In
addition, Colorado law permits the holders of not less than 10% of all votes
entitled to be cast on any issue (unless a greater percentage, not to exceed
50%, is specified in the articles of incorporation) to call a special meeting.
Our current Bylaws provide that a special meeting may be called by the Board,
the President, or the holders of not less than 10% of all votes entitled to be
cast on any issue. After the Reincorporation, our Bylaws will provide that a
special meeting, except as prescribed by statute, may be called at any time by
the majority of the Board, the Chairman, the Chief Executive Officer, or by the
President.
Action by Written Consent
Under Nevada law, unless otherwise provided in a corporation's articles of
incorporation, the shareholders may take action without a meeting if a consent
in writing to such action is signed by the shareholders having a minimum number
of votes that would be necessary to take such action at the meeting. No
limitation of this right is included in the proposed Articles of Incorporation
of SADC.
Under the CBCA, there is no provision to allow Xerion's shareholders to
take any action without a meeting, unless the same is done by unanimous consent.
Quorum for Stockholder Meetings
Under the NRS, unless otherwise provided in a corporation's articles of
incorporation or its bylaws, a majority of shares entitled to vote on a matter
constitutes a quorum at a meeting of stockholders.
The CBCA is similar to the NRS, except that the quorum requirement may be
provided in a corporation's articles of incorporation but not its bylaws. Our
current Bylaws provide that the presence in person or by proxy of stockholders
constituting a majority of the stock of the corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders. The proposed new Bylaws
will contain a similar provision.
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Stockholder Voting Requirements
Under both the NRS and the CBCA, if a quorum is present, directors are
generally elected if they receive more votes favoring their election than
opposing it, unless a greater number of votes is required by the articles of
incorporation or by-laws (in the case of a Nevada corporation) or the articles
of incorporation (in the case of a Colorado corporation). With respect to
matters other than the election of directors, unless a greater number of
affirmative votes is required by the NRS or CBCA or a Colorado corporation's
articles of incorporation (but not its bylaws), if a quorum is present a
proposal generally is approved if the votes cast by stockholders favoring the
action exceed the votes cast by stockholders opposing the action. Under the NRS,
and unless otherwise provided by the NRS or a Nevada corporation' s articles of
incorporation or Bylaws, a proposal is approved by the affirmative vote of a
majority of the shares represented at a meeting and entitled to vote on the
matter. As a result, abstentions under Nevada law have the effect of a vote
against most proposals. Our current Bylaws provide that a proposal generally is
approved if the votes cast by stockholders favoring the action exceed the votes
cast by stockholders opposing the action.
Under both the NRS and the CBCA, in the case of a merger, consolidation or
a sale, lease or exchange of all or substantially all of the assets of a
corporation, the affirmative vote of the holders of a majority of the issued and
outstanding shares entitled to vote is generally required. Accordingly, under
the NRS and the CBCA, abstentions have the same effect as votes against such a
transaction.
Proxies
Under Nevada law, a proxy executed by a stockholder will remain valid for
a period of six months from the date of its creation, unless the proxy provides
for a longer period, which may not exceed 7 years. Under Colorado law, a proxy
is generally effective only for a period of 11 months unless otherwise provided
in the proxy.
Board Recommendations Regarding Merger
Both the NRS and the CBCA generally provide that the stockholders of a
corporation must approve a merger. In order to obtain stockholder approval, the
board of directors of a both a Nevada and Colorado corporation must "recommend"
the plan of merger (unless a conflict of interest exists).
Both the NRS and the CBCA provide that the board of directors may
condition its submission of the proposed merger on any basis.
Merger with Subsidiary
Under both the NRS and CBCA, a parent corporation may merge with its
subsidiary, without stockholder approval, where the parent corporation owns at
least 90% of the outstanding shares of each class of capital stock of its
subsidiary and will be the surviving entity. However, pursuant to the Agreement
and Plan of Merger, the subsidiary will be the surviving entity. In such event,
approval of the shareholders is required under both the NRS and CBCA.
Consideration for Stock
Under the NRS, shares may be issued for consideration consisting of any
tangible or intangible property or benefit to the corporation, including but not
limited to, cash, promissory notes, services performed or to be performed,
contracts for services to be performed or other securities of the corporation.
Under the CBCA, a corporation may issue its capital stock in return for tangible
or intangible property or benefit to the corporation, including cash, promissory
notes, services performed and other securities of the corporation, but not for
services to be performed. However, a promissory note does not constitute
consideration for shares unless the note is negotiable and is secured by
collateral, other than the shares, having a fair market value at least equal to
the principal amount of the note.
8
Board Vacancies
The NRS provides that, unless otherwise provided in a corporation's
articles of incorporation or bylaws, a vacancy or newly created directorship on
the board of directors may be filled by a majority of the remaining directors,
even though less than a quorum. Under the CBCA, a vacancy on the board of
directors may be filled by an affirmative vote of the remaining directors or by
the shareholders, unless the articles of incorporation provides otherwise.
Removal of Directors
The NRS provides that, except with respect to corporations with classified
boards or cumulative voting, a director may be removed by the holders of
two-thirds of the shares entitled to vote at an election of directors, unless
the articles of incorporation provide for a greater percentage to approve the
action. In the event the corporation provides in its articles of incorporation
for the election of directors by cumulative voting, any director or directors
who constitute fewer than all of the incumbent directors may not be removed from
office at any one time, except by the vote of stockholders owning sufficient
shares to prevent each director's election to office at the time of removal. The
Articles of Incorporation of SADC will not contain a provision for cumulative
voting.
The CBCA provides that, except with respect to corporations with directors
elected by a voting group of stockholders or by cumulative voting, stockholders
may remove one or more directors with or without cause unless the corporation's
Articles of Incorporation provides that directors may be removed only for cause.
None of our directors are elected by a voting group and there is no cumulative
voting.
Committees of the Board of Directors
The NRS and the CBCA both provide that the board of directors of a
corporation may delegate many of its duties to one or more committees elected by
a majority of the board. A Nevada corporation may delegate to a committee of the
board of directors all the powers and authority of the board of directors in the
management of the business and affairs of the corporation but no such committee
may approve or adopt or recommend to the stockholders any action or matter for
which the NRS requires shareholder approval or adopt, amend or repeal any bylaw
of the corporation.
The CBCA places more limitations on the types of activities that can be
delegated to committees of the board. Under Colorado law, a committee of the
board of directors may not authorize distributions, approve or propose to
stockholders actions or proposals required to be approved by the stockholders,
fill a vacancy on the board, adopt, amend or repeal the bylaws, approve a plan
of merger not requiring shareholder approval, authorize the issuance of stock,
or authorize the reacquisition of the corporation's own stock.
Dissenters' Rights
Under the NRS, dissenters' rights are afforded to stockholders who follow
prescribed statutory procedures in connection with a merger or consolidation
(subject to restrictions similar to those provided by the CBCA, as described
below), sale of the corporations' assets, or any other action requiring
shareholder approval. Under the NRS, there are no appraisal rights in connection
with a dissenting shareholder. Rather, the matter is submitted to a court
proceeding to establish the fair market value. Unless provided for in the
articles of incorporation, dissenters' rights do not apply to a stockholder of a
Nevada corporation if the stockholder's shares were (a) listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the National Association of Securities Dealers,
Inc., or (b) held of record by more than 2,000 stockholders.
9
Under the CBCA, dissenting stockholders who follow prescribed statutory
procedures are, in certain circumstances, entitled to judicial appraisal rights
in the case of (a) a merger or consolidation, (b) a sale or exchange of all or
substantially all the assets of a corporation, (c) consummation of a sale,
lease, exchange or other disposition of all, or substantially all, of the
property of an entity controlled by the corporation if the stockholder is
entitled to vote upon the consent of the corporation to the disposition. Such
rights are not provided when (a) such stockholders are stockholders of a
corporation surviving a merger or consolidation where no vote of the
stockholders is required for the merger or consolidation, or (b) shares of the
corporation are listed on a national securities exchange, designated as a
national market security by the Nasal Stock Market or held of record by more the
2,000 stockholders.
Amendment to Articles of Incorporation
The NRS and the CBCA generally provide that an amendment to the articles
of incorporation must be approved by the board of directors and by the
stockholders of a corporation. The NRS provides that a vote to amend the
corporation's articles of incorporation requires the approval of a majority of
the outstanding stock entitled to vote. Therefore, under the NRS, an abstention
or a non-vote effectively counts as a vote against an amendment to the articles
of incorporation.
Under the CBCA, an amendment to a Colorado corporation's articles of
incorporation generally requires that the votes cast in favor of the amendment
exceed the votes cast against the amendment unless the CBCA, the corporation's
articles of incorporation or the corporation's board of directors requires a
greater vote.
Amendments to Bylaws
The NRS provides that the stockholders and, if provided in the articles of
incorporation, the board of directors, are entitled to amend the bylaws. The
CBCA provides that the stockholders, as well as the directors, may amend the
bylaws, unless such power is reserved to the stockholders by the articles of
incorporation or by specified action of the stockholders. Neither Xerion's
current Articles of Incorporation nor the surviving corporation's Articles of
Incorporation reserve such power to the stockholders.
Liability of Directors
Except in certain circumstances, the NRS provides that a director is not
individually liable to the corporation or its shareholders or creditors for any
damages as a result of any act of failure to act in his capacity as a director
unless it is proven that (a) his acts or failure to act constituted a breach of
fiduciary duty, and (b) his breach of those duties involve intentional
misconduct, fraud or a knowing violation of law, unless the articles of
incorporation provide otherwise.
Under the CBCA, if so provided in the articles of incorporation, a
director is not personally liable for monetary damages to the corporation or any
other person except that liability is not eliminated or limited for any breach
of the director's duty of loyalty to the corporation or its shareholders, acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, unlawful distributions, or any act which the director,
directly or indirectly, derived an improper personal benefit. Our current
Articles of Incorporation, as amended, includes a provision eliminating director
liability for monetary damages for breaches of a fiduciary duty to the maximum
extent permitted by the CBCA and the proposed Articles of Incorporation will
also include a provision eliminating director liability for monetary damages for
breaches of a fiduciary duty to the maximum extent permitted by the NRS.
10
Indemnification
Under both the CBCA and the NRS, a corporation may generally indemnify its
officers, directors, employees and agents against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement of any proceedings (other
than derivative actions), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in derivative actions, except that indemnification may be made only
for (a) expenses (including attorneys' fees) and certain amounts paid in
settlement, and (b) in the event the person seeking indemnification has been
adjudicated liable, amounts deemed proper, fair and reasonable by the
appropriate court upon application thereto. The CBCA and the NRS each provide
that to the extent that such persons have been successful in defense of any
proceeding, they must be indemnified by the corporation against expenses
actually and reasonably incurred in connection therewith.
The Articles of Incorporation of the surviving corporation provide that
directors, officers, employees and agents will be indemnified to the fullest
extent permitted by the NRS.
Stockholder Inspection of Books and Records
The NRS permits any stockholder holding not less than 15% of all of the
issued and outstanding shares of stock of such corporation, or has been
authorized in writing by the holders of at least 15% of all of the issued and
outstanding shares of stock of such corporation, upon at least 5 days written
demand, the right, during normal business hours, to inspect and copy the
corporation's books of account and all financial records of the corporation, and
to conduct an audit of such records. This right cannot be limited in the
articles of incorporation. Costs of the same are borne by the demanding party.
The aforesaid provision does not apply to any corporation that furnishes to its
stockholders a detailed, annual financial statement or any corporation that has
filed during the preceding 12 months all reports required to be filed pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Under the CBCA, a stockholder is entitled to inspect and copy, during
regular business hours at the corporation's principal office, the articles of
incorporation, bylaws, certain board and stockholders resolutions, all written
communications to stockholders within the prior three years, a list of the names
and business addresses of the corporation's directors and officers, the
corporation's most recent annual report and all financial statements prepared
for the periods ended during the last three years that a shareholder could have
requested the same, only if the stockholder gives at least five business days'
prior written notice to the corporation.
Treasury Stock
A Nevada corporation may reacquire its own issued and outstanding capital
stock, and such capital stock is deemed treasury stock that is issued but not
outstanding. A Colorado corporation may also reacquire its own issued and
outstanding capital stock. Under the CBCA, however, all capital stock reacquired
by a Colorado corporation is automatically returned to the status of authorized
but not issued or outstanding, and is not deemed treasury stock which is issued
but not outstanding, unless a provision in the articles of incorporation so
provide.
11
Possible Disadvantage of a Change in Domicile
Despite the belief of the Board of Directors that the proposed
Reincorporation is in the best interests of both Xerion and our shareholders, it
should be noted that many of the provisions of Nevada law have not yet received
extensive scrutiny and interpretation. However, the Board of Directors believes
that Nevada law will provide Xerion with the comprehensive flexible structure
which it needs to operate effectively.
Tax Consequences of the Merger
The merger and resulting reincorporation of Xerion from Colorado to Nevada
will constitute a tax-free reorganization within the meaning of Section 368
(a)(1)(F) of the Internal Revenue Code of 1986, as amended. Accordingly, for
federal income tax purposes, stockholders upon the conversion of our Common
Stock into the surviving corporation's Common Stock will recognize no gain or
loss. Each stockholder whose shares are converted into the surviving
corporation's Common Stock will have the same basis in the Common Stock of the
surviving corporation as such stockholder had in our Common Stock held
immediately prior to the effective date of the merger. The stockholder's holding
period in the surviving corporation's Common Stock will, for federal income tax
purposes, include the period during which the corresponding shares of Xerion's
Common Stock were held, provided such corresponding shares of Xerion's Common
Stock were held as a capital asset on the effective date of the merger.
We will recognize no gain or loss as a result of the merger and
reincorporation, and the surviving corporation generally will succeed, without
adjustment, to our tax attributes. Changing our state of incorporation will not
affect the amount of the corporate income and other taxes payable.
A successful challenge by the Internal Revenue Service to the tax-free
status of the Reincorporation would result in a shareholder recognizing gain or
loss with respect to each share of Xerion's Common Stock converted in the
Reincorporation equal to the difference between that shareholder's basis in such
shares and the fair market value, as of the time of the Reincorporation, of the
SADC Common Stock converted in the Reincorporation. In such event, a
shareholder's aggregate basis in the shares of SADC's Common Stock acquired in
the Reincorporation would equal the fair market value of all such shares, and
such shareholder's holding period for such shares would not include the period
during which such shareholder held Xerion Stock.
The foregoing is only a summary of the federal income tax consequences and
is not tax advice.
This Information Statement does not contain any information regarding the
tax consequences, if any, under applicable state, local or foreign laws, and
each stockholder is advised to consult his or her personal attorney or tax
advisor as to the federal, state, local or foreign tax consequences of the
proposed Reincorporation in view of a stockholder's individual circumstances.
Rights of Dissenting Shareholders
Summarized below are the dissenters' rights of the holder of Colorado
Common Stock and the statutory procedures required to be followed in order to
perfect such rights. The following summary is qualified in its entirety by
reference to Article 113 of the CBCA, and each holder of Colorado Common Stock
should consult with their legal counsel regarding the same. Failure to comply
strictly with all conditions for asserting rights as a dissenting shareholder,
including the time limits, will result in loss of such dissenters' rights by the
dissenting shareholder.
12
Pursuant to the CBCA, each record holder of Colorado Common Stock may
assert dissenters' rights as to fewer than all of the shares of Colorado Common
Stock registered in such record holder's name only if the record holder dissents
and does not vote in favor of the Reincorporation proposal with respect to all
shares of Colorado Common Stock beneficially owned by any one person and causes
Xerion to receive written notice which states such dissent and the name, address
and federal taxpayer identification number, if any, of each beneficial holder on
whose behalf the record holder asserts dissenters' rights.
A beneficial holder of Colorado Common Stock may assert dissenters' rights
as to the shares held on such beneficial shareholder's behalf only if the
beneficial holder causes the Company to receive the record holder's written
consent to the dissent not later than the time the beneficial holder asserts
dissenters' rights and the beneficial holder dissents and causes the record
holder to refrain from voting in favor of the Reincorporation proposal with
respect to all shares of Colorado Common Stock owned by the beneficial holder.
If the holder of Colorado Common Stock wishes to dissent, he, she or it
must send to Xerion, before the vote on the Reincorporation merger is taken,
written notice of his, her or its intention to demand payment for his, her or
its shares of Colorado Common Stock if the Reincorporation merger is
effectuated. Neither a vote against the Reincorporation proposal nor any proxy
directing such vote, nor abstention from voting on the Reincorporation proposal
will satisfy the requirement for a written notice to Xerion. All such notices
should be mailed to: Xerion EcoSolutions Group Inc., Suites A-C 20/F Neich
Tower, 128 Gloucester Road, WanChai, Hong Kong, The People's Republic of China;
Attention: Corporate Secretary.
If the Reincorporation is authorized at the Special Meeting, then, within
10 days thereafter, we will provide to the holder of Colorado Common Stock, if
still entitled to demand payment, a written notice containing all information
required by Colorado law. The dissenting holder entitled to demand payment must,
in accordance with the provisions of Article 113 of the CBCA, demand payment and
deposit share certificates representing such dissenting holder's shares of
Colorado Common Stock.
We will pay to the holder of Colorado Common Stock, if eligible, and if
he, she or it has validly exercised his, her or its dissenters' rights under
Article 113 of the CBCA, the amount we estimate is the fair value of the
dissenting holder's shares plus interest at the rate provided in Article 113 of
the CBCA from the effective date of the Reincorporation until the payment date.
We also will provide the information required by Article 113 of the CBCA to the
dissenting owner of Colorado Common Stock entitled to receive payment. If the
holder of shares of Colorado Common Stock has validly exercised dissenters'
rights under Article 113 of the CBCA and believes that (i) the amount offered or
paid is less than the fair value of such holder's shares or that the interest
was incorrectly calculated, (ii) we have failed to make the payment within 60
days of the deadline for receiving payment demand, or (iii) we do not return
deposited certificates when required to do so, the dissenting holder may give
notice to us of such holder's estimate of the fair market value of such holder's
shares and the amount of interest due and demand payment of such estimate, less
any payment previously made by us, or the dissenting holder may reject our offer
and demand payment of the fair value of the shares and interest due. If a
dissenting holder's demand for payment remains unresolved, then we may, within
sixty days of receipt thereof, commence a proceeding and petition the court to
determine the fair value of such dissenting holder's shares and interest due
thereon. If we do not timely make such a request, we must pay the dissenting
holder the amount set forth in such holder's demand for payment.
The Board of Directors recommends a vote FOR the approval of the
reincorporation of Xerion in the State of Nevada.
13
Proposal 2. Reverse Stock Split
Xerion proposes a one-for-eight (1-for-8) reverse split of its currently
issued and outstanding shares of its Common Stock. As a result of the reverse
split, each share of Common Stock outstanding at the effective time of the
reverse split, will, without any action on the part of the holder thereof,
become one-eighth of a share of Common Stock. For purposes of this description,
the Common Stock, as presently constituted, is referred to as the "Old Common
Stock" and the Common Stock resulting from the reverse split is referred to as
the "New Common Stock."
Principal Effects of the Reverse Split. The principal effects of the
reverse split will be as follows:
Based upon the 227,321,840 shares of Old Common Stock presently
outstanding on the Record Date, the reverse split would decrease the number of
outstanding shares of Old Common Stock to approximately 28,415,230 shares.
Xerion will obtain a new CUSIP number for the New Common Stock at the time
of the reverse split. Following the effectiveness of the reverse split, each 8
shares of Old Common Stock, without any action on the part of the holder, will
represent one share of New Common Stock.
Subject to minor differences resulting from the rounding up of fractional
shares, as described below, consummation of the reverse split will not result in
a material change in the relative equity position or voting power of the holders
of Old Common Stock.
Purposes of the Reverse Stock Split. The reverse split was a negotiated
provision in the Exchange Agreement between Xerion and the previous owners of
Town House. The reverse split will decrease the number of shares of Old Common
Stock outstanding and may increase the per share market price for the New Common
Stock. Theoretically, the number of shares outstanding should not, by itself,
affect the marketability of the stock, the type of investor who acquires it, or
Xerion's reputation in the financial community, but in practice this is not
necessarily the case, as many investors look upon a stock trading at or under
$1.00 per share as unduly speculative in nature and, as a matter of policy,
avoid investment in such stocks.
Many leading brokerage firms are reluctant to recommend lower-priced
securities to their clients and a variety of brokerage house policies and
practices currently tend to discourage individual brokers within firms from
dealing in lower-priced stocks. Some of those policies and practices pertain to
the payment of brokers' commissions and to time-consuming procedures that make
the handling of lower priced stocks unattractive to brokers from an economic
standpoint. In addition, the structure of trading commissions also tends to have
an adverse impact upon holders of lower priced stocks because the brokerage
commission on a sale of a lower priced stock generally represents a higher
percentage of the sales price than the commission on a relatively higher priced
issue.
In addition, in the absence of the reverse split, there are not a
sufficient number of authorized but unissued shares of Common Stock to
consummate future stock offerings or acquisitions. The Board of Directors
believes that the Reverse Split is in the best interest of Xerion. The reverse
split would reduce the number of shares of its Common Stock outstanding to
amounts that the Board of Directors believes are more reasonable in light of its
size and market capitalization. Finally, Xerion expects to require additional
capital for its operations and may not be able to raise the necessary capital
unless the price of the Common Stock is higher than the current Common Stock
price levels. However, no assurance can be given that the reverse split will
result in any increase in the Common Stock price or that Xerion will be able to
complete any financing following the reverse split.
14
When the trading price of Xerion's Common Stock is below $5.00 per share,
the Common Stock is considered to be "penny stocks" that are subject to rules
promulgated by the United States Securities and Exchange Commission (the
"Commission") (Rule 15-1 through 15g-9) under the Securities Exchange Act of
1934. These rules impose significant requirements on brokers under these
circumstances, including: (a) delivering to customers the Commission's
standardized risk disclosure document; (b) providing to customers current bid
and offers; (c) disclosing to customers the broker-dealer and sales
representatives compensation; and (d) providing to customers monthly account
statements.
The possibility exists that the reduced number of outstanding shares will
adversely affect the market for the Common Stock by reducing the relative level
of liquidity. In addition, the reverse split may increase the number of
shareholders who own odd lots, or less than 100 shares. Shareholders who own odd
lots typically find it difficult to sell their shares and frequently find odd
lot sales more expensive than round lot sales of 100 shares or more.
After the reverse split, Xerion will have issued and outstanding
approximately 28,415,230 shares of its Common Stock, and Xerion will have the
corporate authority to issue approximately 271,584,770 additional shares of
authorized but unissued Common Stock. These authorized and unissued shares may
be issued without shareholder approval at any time, in the sole discretion of
the Board of Directors. The authorized and unissued shares may be issued for
cash, to acquire property or for any other purpose that is deemed in the best
interests of Xerion. Any decision to issue additional shares will reduce the
percentage of Xerion's shareholders' equity held by the current shareholders and
could dilute Xerion's net tangible book value.
No Exchange of Certificates and Elimination of Fractional Share Interests.
On the effective date of the reverse split, each eight shares of Old Common
Stock will automatically be combined and changed into one share of New Common
Stock. No additional action on the part of Xerion or any shareholder will be
required in order to effect the reverse split. Shareholders will not be
requested to exchange their certificates representing shares of Old Common Stock
held prior to the reverse split for new certificates representing shares of New
Common Stock. However, shareholders will be furnished the necessary materials
and instructions to effect such exchange upon request.
No fractional shares of New Common Stock will be issued to any
shareholder, and all fractional shares will be rounded up to the next whole
number.
Federal Income Tax Consequences of the Reverse Split. The combination of
eight shares of the Old Common Stock into one share of New Common Stock should
be a tax-free transaction under the Internal Revenue Code of 1986, as amended,
and the holding period and tax basis of the Old Common Stock will be transferred
to the New Common Stock received in exchange therefore.
This discussion should not be considered as tax or investment advice, and
the tax consequences of the Reverse Stock Split may not be the same for all
shareholders. Shareholders should consult their own tax advisors to know their
individual Federal, state, local and foreign tax consequences.
The Board of Directors of Xerion recommends a vote FOR the approval of the
Reverse Stock Split.
15
Proposal 3. Nominees for Election of Directors
The following table sets forth certain information regarding each nominee
director of Xerion.
Name Age Current Positions Director Since
---- --- ----------------- --------------
Fang Zhong 41 Chairman, Director, October 31, 2005
Suite A-C, 20/F Neich Chief Executive Officer,
Tower President
128 Gloucester Road and Treasurer
Wanchai, Hong Kong
The People's Republic of
China
Fang Weijun 38 Director November 26, 2005
Suite A-C, 20/F Neich
Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of
China
Fang Weifeng 35 Director November 26, 2005
Suite A-C, 20/F Neich
Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of
China
Yang Jeongho 45 None - - -
300 West Naomi Avenue
Arcadia, CA 91007
Paul H. Mai 58 Chief Financial Officer - - -
2868 S. Concord Avenue
Ontario, CA 91761
Mr. Fang Zhong became the Chairman of the Board, a director, the Chief
Executive Officer and President and is the founder and has been the Chairman of
the Board, Chief Executive Officer and President of Town House, a wholly-owned
subsidiary of Xerion since its organization in 2003. From 1995 to the present,
he has been the Chief Executive Officer and a director of Town House-Wuhan Real
Estate Development Company Limited ("Town House-Wuhan") which is the principal
operating subsidiary of Town House. Mr. Fang Zhong received a Bachelor of
Science degree in industrial and domestic architecture from the Wuhan Institute
of Urban Construction. He also participated in the MBA program at Northern
Jiaotong University. He has received various awards, including "Young
Entrepreneur in Central-south Area" of the PRC, and "One of Ten Excellent Young
Entrepreneurs Leading Private Enterprises in Wuhan". He has also held other
significant positions such as the Standing Director Hubei Physical Culture
Foundation, Deputy to Jiang'an District People's Congress, a Standing Member to
Jiang'an District Political Consultative Conference, and the Vice Chairman of
Jiang'an District Young People Association, etc.
16
Mr. Fang Weijun became a director of Xerion effective November 26, 2005.
He has been employed as the Manager of the Engineering Department of Town
House-Wuhan since 2000. He has been an employee of Town House-Wuhan for over ten
(10) years. He became the General Manager of Operations of Town House-Wuhan in
2003. He attended Zhengzhou College and graduated in 1985.
Mr. Fang Weifeng became a director of Xerion effective November 26, 2005.
He has been employed as the Manager of the Materials Department and Construction
Operations of Town House-Wuhan, responsible for construction material purchases
and distribution, since 1996. He became a director and Vice
President-Construction Operations of Town House-Wuhan in 2003.
Mr. Yang Jeongho is a new director elect of Xerion and has no present
positions with Xerion. From 1993 to the present, Mr. Yang has been the Chief
Executive Officer and President of Microworld Corp., Goldenrock Investment Inc.,
and Neilson Investment & Development Inc. From 1993 to 2003, he was a director
of First Continental Bank and was the director of investment and loan committee.
From 1988 to 2002, Mr. Yang was the Chief Executive Officer and President of
Convenient Business Machines Corp. Mr. Yang graduated from the Tatung Institute
of Technology with a mechanical engineering degree in 1983, and he received a
Master of Science degree in computer engineering from Syracuse University in
1986.
Mr. Mai became the Chief Financial Officer of Xerion on December ____,
2005. From February 2002 to the present, Mr. Mai has been a real estate broker
with ReMax 2000. From 1997 to January 2002, he was a real estate broker with
Coldwell Banker George Realty. Mr. Mai graduated from the Taiwan Naval Academy
in 1971, and received a computer science degree in 1984 from Central State
University in Oklahoma.
Compensation
The following table provides certain summary information concerning the
compensation earned for services rendered in all capacities to Town House and
its subsidiaries for the fiscal years ended December 31, 2004, 2003, and 2002,
by the person serving in the capacity of chief executive officer and the most
highly compensation executive officers of Town House. This information includes
the dollar amount of annual base salaries:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1)(2) LONG TERM
AWARDS COMPENSATION PAYOUTS
------------------------------ ----------------------------
NAME AND OTHER RESTRICTED SECURITIES ALL
PRINCIPAL FISCAL ANNUAL STOCK UNDERLYING LTIP OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARs PAYOUTS COMPENSATION
- ----------------------- ------ ------- ----- ------------ ---------- --------------- ------- ------------
Fang Zhong (1) 2004 $12,480 $ 0 $ 0 - - - - - - - - - - - -
Chairman, Director, 2003 $10,985 $ 0 $ 0 - - - - - - - - - - - -
Chief Executive 2002 $ 6,197 $ 0 $ 0 - - - - - - - - - - - -
Officer, President and
Treasurer
- ----------------------- ------ ------- ----- ------------ ---------- --------------- ------- ------------
Benjamin Traub 2004 $60,000 $ 0 $ 0 - - - - - - - - - - - -
Director and former 2003 $60,000 $ 0 $ 0 - - - 150,000 shares - - - - - -
Chief Executive Officer of common stock
and President 2002 $ 0 $ 0 $ 0 - - - - - - - - - - - -
- ----------------------- ------ ------- ----- ------------ ---------- --------------- ------- ------------
(1) Excludes use of automobiles provided by Town House and certain personal
benefits that are valued at less than levels which would otherwise require
disclosure under the rules of the U.S. Securities and Exchange Commission.
17
Stock Option or Stock Bonus Plan
Xerion has not previously been adopted any stock option or stock bonus
plan and no options have been issued, or are proposed to be issued, to the named
directors and executive officers of Xerion at the present time.
Employment Contracts
Xerion has no employment agreements or consulting agreements with any of
its directors or officers.
Benefit Plans
Xerion does not have any pension plan, profit sharing plan, or similar
plans for the benefit of its officers, directors or employees. However, Xerion
may establish such plans in the future.
Compensation of Directors
Xerion has not adopted any plan or arrangement for compensating directors
for their services.
Certain Relationships and Related Transactions
During the past two years ended December 31, 2004 and 2003, and during the
ten month period ended October 31, 2005, Town House received from time to time
short-term advances for general corporate purposes from Mr. Fang Zhong, a
director and an officer of Town House. Town House had previously established the
practice of making advances for business related costs and expenses to its
executive officers.
A summary of advances to and from the executive officers and directors of
Town House during 2004 and 2003 and during the interim period ended June 30,
2005 (unaudited) are as follows:
Maximum outstanding
balance during the
Beginning at December 31, period ended Security
Name 2004 2003 June 30, 2005 Held
- ------------- ----------- ----------- ------------------- --------
Fang Zhong $(2,022,604) $(2,399,321) $ (1,671,077) None
Hu Min $ 5,970 $ (41,667) $ 5,970 None
Fang Weijun $ (440) $ (48,077) $ (440) None
Fang Wei Feng $ (77,744) $ (125,826) $ (77,744) None
The Board of Directors recommends a vote FOR the nominees for directors
described in this Information Statement.
Proposal 4. Approval of the 2006 Stock Option, SAR and Stock Bonus Plan.
Xerion's Board of Directors has adopted a 2006 Stock Option, SAR and Stock
Bonus Plan (the "Plan") of Xerion. The Plan designates a Stock Plan Committee
appointed by the Board of Directors and authorizes the Stock Plan Committee to
grant or award to eligible participants of Xerion and its subsidiaries and
affiliates, stock options, stock appreciation rights, restricted stock
performance stock awards and bonus stock awards for up to 3,000,000 shares
(post-reverse split) of the New Common Stock of Xerion. The initial members to
be appointed to the Stock Plan Committee are Mr. Fang Zhong, Mr. Yang Jeongho
and Mr. Fang Wei Feng. There are no awards outstanding under the Plan. A
complete copy of the Plan is attached hereto as Exhibit D.
18
The following is a general description of certain features of the Plan:
1. Eligibility. Directors, officers, key employees and consultants of
Xerion, its subsidiaries and its affiliates who are responsible for the
management, growth and profitability of the business of Xerion, its subsidiaries
and its affiliates, are eligible to be granted stock options, stock appreciation
rights, and restricted or deferred stock awards under the Plan.
2. Administration. The Plan is administered by the Stock Option Committee
(the "Committee") of Xerion. The Committee has full power to select, from among
the persons eligible for awards, the individuals to whom awards will be granted,
to make any combination of awards to any participants and to determine the
specific terms of each grant, subject to the provisions of the Plan.
3. Stock Options. The Plan permits the granting of non-transferable stock
options that are intended to qualify as incentive stock options ("ISO's") under
section 422 of the Internal Revenue Code of 1986, and stock options that do not
so qualify ("Non-Qualified Stock Options"). The option exercise price for each
share covered by an option shall be determined by the Committee but shall not be
less than 100% of the fair market value of a share on the date of grant for
ISO's, and not less than 85% of the fair market value of a share on the date of
grant for Non-qualified Stock Options. The term of each option will be fixed by
the Committee, but may not exceed 10 years from the date of the grant in the
case of an ISO or 10 years and two days from the date of the grant in the case
of a Non-Qualified Stock Option. In the case of 10% stockholders, no ISO shall
be exercisable after the expiration of five (5) years from the date the ISO is
granted.
4. Stock Appreciation Rights. Non-transferable stock appreciation rights
("SAR's") may be granted in conjunction with options, entitling the holder upon
exercise to receive an amount in any combination of cash or unrestricted common
stock of Xerion (as determined by the Committee), not greater in value than the
increase since the date of grant in the value of the shares covered by such
right. Each SAR will terminate upon the termination of the related option.
5. Restricted Stock. Restricted shares of the Common Stock may be awarded
by the Committee subject to such conditions and restrictions as they may
determine. The Committee shall also determine whether a recipient of restricted
shares will pay a purchase price per share or will receive such restricted
shares without, any payment in cash or property. No Restricted Stock Award may
provide for restrictions beyond ten (10) years from the date of grant.
6. Performance Stock. Performance shares of Common Stock may be awarded
without any payment for such shares by the Committee if specified performance
goals established by the Committee are satisfied. The designation of an employee
eligible for a specific Performance Stock Award shall be made by the Committee
in writing prior to the beginning of the period for which the performance is
based. The Committee shall establish the maximum number of shares to stock to be
issued to a designated Employee if the performance goal or goals are met. The
Committee reserves the right to make downward adjustments in the maximum amount
of an Award if, in it discretion unforeseen events make such adjustment
appropriate. The Committee must certify in writing that a performance goal has
been attained prior to issuance of any certificate for a Performance Stock Award
to any Employee.
7. Bonus Stock. The Committee may award shares of Common Stock to Eligible
Persons, without any payment for such shares and without any specified
performance goals. The employees eligible for bonus stock awards are senior
officers and consultants of Xerion and such other employees designated by the
Committee.
19
8. Transfer Restrictions. Grants under the Plan are not transferable
except, in the event of death, by will or by the laws of descent and
distribution.
9. Termination of Benefits. In certain circumstances such as death,
disability, and termination without cause, beneficiaries in the Plan may
exercise Options, SAR's and receive the benefits of restricted stock grants
following their termination or their employment or tenure as a director as the
case may be.
10. Change of Control. The Plan provides that (a) in the event of a
"Change of Control" (as defined in the Plan), unless otherwise determined by the
Committee prior to such Change of Control, or (b) to the extent expressly
provided by the Committee at or after the time of grant, in the event of a
"Potential Change of Control" (as defined in the Plan), (i) all stock options
and related SAR's (to the extent outstanding for at least six months) will
become immediately exercisable: (ii) the restrictions and deferral limitations
applicable to outstanding restricted stock awards and deferred stock awards will
lapse and the shares in question will be fully vested: and (iii) the value of
such options and awards, to the extent determined by the Committee, will be
cashed out on the basis of the highest price paid (or offered) during the
preceding 60-day period, as determined by the Committee. The Change of Control
and Potential Change of Control provisions may serve as a disincentive or
impediment to a prospective acquirer of Xerion and, therefore, may adversely
affect the market price of the Common Stock of Xerion.
11. Amendment of the Plan. The Plan may be amended from time to time by
majority vote of the Board of Directors provided as such amendment may affect
outstanding options without the consent of an option holder nor may the plan be
amended to increase the number of shares of Common Stock subject to the Plan
without stockholder approval.
Shareholders should note that certain disadvantages may result from the
adoption of the Plan. Pursuant to the Plan, Xerion is reserving the right to
issue up to 3,000,000 shares of New Common Stock. Such issuances may be in the
form of stock options, stock appreciation rights, restrictive stock awards,
performance stock or bonus stock. Each of these issuances may be made at prices
below the then current market price of Xerion's Common Stock, or at the time of
exercise the exercise price may be below current market prices of Xerion's
Common Stock. Accordingly, the sale of these shares may adversely affect the
market price of our Common Stock. The issuance of shares upon the exercise of
stock options may also result in substantial dilution to the interests of other
stockholders. Additionally, the issuance of shares under the plan will result in
the reduction of shareholder's interest of Xerion with respect to earnings per
share, voting, liquidation and book value per share.
Federal Income Tax Consequences. The following discussion summarizes U.S.
federal tax treatment of options granted under the Plan under federal tax laws
currently in effect. The rules governing the tax treatment of options are quite
technical and the following discussion is necessarily general in nature and does
not purport to be complete. The statutory provisions and interpretations
described below are, of course, subject to change, and their application may
vary in individual circumstances. Optionees are encouraged to seek professional
tax advice when exercising Awards under the Plan.
Non-Qualified Stock Options. If an optionee is granted options under the
Plan that constitute non-qualified stock options, the optionee will not have
taxable income on the grant of the option, nor will Xerion be entitled to any
deduction. Generally, on exercise of non-qualified stock options, an optionee
will recognize ordinary income, and Xerion will be entitled to a deduction, in
an amount equal to the difference between the exercise price and the fair market
value of the common stock on the date of exercise. The holder's basis for the
Common Stock for purposes of determining gain or loss on subsequent disposition
of such shares generally will be the fair market value of the common stock on
the date the optionee exercises the stock option. Any subsequent gain or loss
will be generally taxable as capital gains or losses.
20
Incentive Stock Options. There is no taxable income to an optionee when he
is granted an option under the Plan that constitutes an ISO or when that option
is exercised. However, the amount by which the fair market value of the common
stock at the time of exercise exceeds the exercise price will be an "item of tax
preference" for the optionee. Gain realized by the optionee on the sale of an
ISO is taxable at capital gains rates, and no tax deduction is available to
Xerion, unless the optionee disposes of the common stock within (a) two years
after the date of grant of the ISO or (b) within one year of the date the common
stock was transferred to the optionee. If the shares of common stock are sold or
otherwise disposed of before the end of the one-year and two-year periods
specified above, the difference between the exercise price and the fair market
value of the Common Stock on the date of the option's exercise will be taxed at
ordinary income rates, and Xerion will be entitled to a deduction to the extent
the optionee must recognize ordinary income. An ISO exercised more than three
months after an optionee retires, other than by reason of death or disability,
will be taxed as a non-qualified stock option, and the optionee will have been
deemed to have received income on the exercise taxable at ordinary income rates.
Xerion will be entitled to a tax deduction equal to the ordinary income, if any,
realized by the optionee.
SARs. No taxable income is realized on the receipt of an SAR, but on
exercise of the SAR the fair market value of the common stock (or cash in lieu
of common stock) received must be treated as compensation taxable as ordinary
income to the optionee in the year of the exercise. Xerion will be entitled to a
deduction for compensation paid in the same amount which the optionee realized
as ordinary income.
Stock Awards. The taxation of stock awards will depend in part on the type
of stock award that is granted. However, if an employee has been granted a
restricted stock unit, he will generally not realize taxable income at the time
of grant, and Xerion will not be entitled to a deduction at that time. Instead,
the employee will generally recognize ordinary income at the time a restricted
stock unit becomes vested (that is, when the Committee approves the release of
the restricted stock unit) in an amount equal to the fair market value of the
Common Stock that becomes vested pursuant to such restricted stock unit (plus
the amount of any dividend equivalents awarded with respect to the restricted
stock unit and interest thereon), and Xerion will be entitled to a corresponding
deduction.
The foregoing is only a summary of certain federal income tax consequences
under the Plan. It does not purport to be complete and does not discuss the tax
consequences arising in the context of a participant's death or the income tax
laws of any municipality, state or foreign country in which the participant's
income or gain may be taxable.
The foregoing is only a summary of the Plan and is qualified in its
entirety by reference to its full text, a copy of which is attached hereto as
Exhibit D.
The Board of Directors recommends a vote FOR the approval of the Plan.
Proposal 5. Approval of Appointment of Independent Public Accounting Firm
Murrell, Hall, McIntosh & Co., PLLP
The Board of Directors has appointed Murrell, Hall, McIntosh & Co., PLLP
to audit the consolidated financial statements of Xerion for the year ended
December 31, 2005. A representative of Murrell, Hall, McIntosh & Co., PLLP is
expected to be present at the Special Meeting, will have the opportunity to make
a statement, and will be available to respond to appropriate questions.
21
The Board of Directors recommends a vote FOR the approval and ratification
of the appointment of Murrell, Hall, McIntosh & Co., PLLP as Xerion's
independent auditors for the year ended December 31, 2005.
Security Ownership of Certain Beneficial Owners
The following table sets forth as of November 30, 2005, the number and
percentage of the 227,321,840 shares of the total outstanding Common Stock of
Xerion that were beneficially owned by each person who is currently an officer,
director or director-elect. Except as otherwise indicated, the persons named in
the table have sole voting and dispositive power with respect to all shares
beneficially owned.
Name and Address Common Stock Percent of Class
---------------- ------------ ----------------
Fang Zhong (1)(3) 187,640,540(2) 82.5%(2)
Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Hu Min (1) 6,201,340 2.73%
Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weifeng (3) 6,201,340 2.73%
Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weijun (3) 6,201,340 2.73%
Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Yang Jeongho 2,227,218(4) 1.00%
300 West Naomi Avenue
Arcadia, CA 91007
Paul Mai 0 0%
2868 S. Concord Avenue
Ontario, CA 91761
Officer and directors as 208,517,778 91.8%
a group, including the above six
persons
22
------------------------------------------------
(1) Mr. Fang Zhong and Ms. Hu Min are husband and wife.
(2) Includes 6,201,340 shares of Common Stock of Xerion held in trust
for the minor nephew of Mr. Fang.
(3) Mr. Fang Zhong and, Mr. Fang Weifeng, and Mr. Fang Weijun are
brothers.
(4) Mr. Yang Jeingho______________________________.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Although quotations for Xerion's Common Stock appear on the NASD
Electronic Bulletin Board (OTC-BB), there has been a limited trading market for
its Common Stock. For the past two calendar years to the present, transactions
in the Common Stock can only be described as sporadic. Consequently, Xerion is
of the opinion that any published prices cannot be attributed to a liquid and
active trading market and, therefore, are not indicative of any meaningful
market value.
The following table sets forth for the respective periods indicated the
prices of Xerion's Common Stock on the NASD Electronic Bulletin Board
over-the-counter market (OTC-BB), trading symbol XECO. Such prices are based on
inter-dealer bid prices, without markup, markdown, commissions, or adjustments
and may not represent actual transactions.
High Closing Low Closing
Year Ended December 31, 2003 Bid Price Bid Price
- ---------------------------- ------------ -----------
1st Quarter $ 0.55 $ 0.25
2nd Quarter $ 1.01 $ 0.25
3rd Quarter $ 4.00 $ 0.35
4th Quarter $ 4.50 $ 2.00
Year Ended December 31, 2004
- ----------------------------
1st Quarter $ 2.00 $ 1.75
2nd Quarter $ 1.75 $ 1.58
3rd Quarter $ 1.58 $ 0.60
4th Quarter $ 0.60 $ 0.16
Year Ended December 31, 2005
- ----------------------------
1st Quarter $ 0.18 $ 0.12
2nd Quarter $ 0.15 $ 0.12
3rd Quarter $ 0.20 $ 0.12
4th Quarter $ 0.35 $ 0.15
As of January ___, 2006, the closing bid price for Xerion's Common Stock
was $__________ per share.
Since its inception, no dividends have been paid on Xerion's Common Stock.
Xerion intends to retain any earnings for use in its business activities, so it
is not expected that any dividends on the Common Stock will be declared and paid
in the foreseeable future.
On January 10, 2005, there were __________ holders of record of Xerion's
Common Stock.
23
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and persons who own more than ten percent of a
registered class of our equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of our common stock. Xerion believes all forms required to be filed
under Section 16 of the Exchange Act have been filed timely.
HISTORICAL FINANCIAL INFORMATION
The audited financial statements of Town House for the two years ended
December 31, 2003 and 2004, together with the report of Murrell, Hall, McIntosh
& Co., PLLP, independent auditors, are attached to the Form 8-K current report
of Xerion dated October 18, 2005, which is available at www.Sec.gov.
PRO FORMA INFORMATION
The Pro Forma Financial Information, consistent with Item 310(d) of
Regulation S-B showing the effect on Xerion and Town House of the Town House
acquisition by Xerion, are also attached to the Form 8-K current report of
Xerion dated October 18, 2005, which is available at www.Sec.gov.
AVAILABLE INFORMATION
Xerion is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Commission. The Registration Statement and such reports and
other information may be inspected without charge at the Public Reference Room
maintained by the U.S. Securities and Exchange Commission (the "Commission") at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
material may be obtained from the Public Reference Room of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. Information on
the operation of the Public Reference Room is available by calling the
Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet
site where the Registration Statement and other information filed with the
Commission may be retrieved, and the address of such site is http://www.sec.gov.
Statements made in this Information Statement concerning the contents of any
document referred to herein are not necessarily complete.
By Order of the Board of Directors of
XERION ECOSOLUTIONS GROUP INC.
By
---------------------------
Hu Min, Secretary
24
Exhibit A
to
Information Statement
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of December ____, 2005, is entered into between Xerion EcoSolutions
Group Inc., a Colorado corporation (the "Company"), and SINO-American
Development Corporation, a Nevada corporation and a wholly owned subsidiary of
the Company ("SADC"). The Company and SADC may hereinafter also be referred to
individually as a "party" and collectively as the "parties."
RECITALS
WHEREAS, the respective board of directors of each of the Company and SADC deems
it advisable, upon the terms and subject to the conditions herein stated, that
the Company be merged with and into SADC, and that SADC be the surviving
corporation (the Reincorporation Merger"); and
WHEREAS, the Company has submitted this Agreement for approval to the holders of
shares of Common Stock of the Company ("Colorado Common Stock").
NOW, THEREFORE, in consideration of the premises and of the agreements of the
Parties hereto contained herein, the parties agree as follows:
ARTICLE I
THE REINCORPORATION MERGER; EFFECTIVE TIME
Section 1.1. The Reincorporation Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.2), the Company shall be merged with and into SADC whereupon the
separate existence of the Company shall cease. SADC shall be the surviving
corporation (sometimes hereinafter referred to as the "Surviving Corporation")
in the Reincorporation Merger and shall continue to be governed by the laws of
the State of Nevada. The Reincorporation Merger shall have the effects specified
in the Revised Statutes of the State of Nevada, as amended (the "NRS") and in
the Colorado Business Corporation Act, as amended (the "CBCA") and the Surviving
Corporation shall succeed, without other transfer, to all of the assets and
property (whether real, personal, intellectual or mixed), rights, privileges,
franchises, immunities and powers of the Company, and shall assume and be
subject to all of the duties, liabilities, obligations and restrictions of every
kind and description of the Company, including, without limitation, all
outstanding indebtedness of the Company.
Section 1.2. Effective Time. Provided that the condition set forth in Section
5.1 has been fulfilled or waived in accordance with this Agreement and that this
Agreement has not been terminated or abandoned pursuant to Section 6.1, on the
date of the closing of the Reincorporation Merger, the Company and SADC shall
cause Articles of Merger to be executed and filed with the Secretary of State of
Colorado (the "Colorado Articles of Merger") and Articles of Merger to be
executed and filed with the Secretary of State of Nevada (the "Nevada Articles
of Merger"). The Reincorporation Merger shall become effective upon the date and
time specified in the Colorado Articles of Merger and the Nevada Articles of
Merger (the "Effective Time").
25
ARTICLE II
CHARTER AND BYLAWS OF THE SURVIVING CORPORATION
Section 2.1. The Articles of Incorporation. The Articles of Incorporation of
SADC in effect at the Effective Time shall be the Articles of Incorporation of
the Surviving Corporation, until amended in accordance with the provisions
provided therein or applicable law.
Section 2.2. The Bylaws. The bylaws of SADC in effect at the Effective Time
shall be the bylaws of the Surviving Corporation, until amended in accordance
with the provisions provided therein or applicable law.
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Section 3.1. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation,
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal.
Section 3.2. Directors. The directors of the board of directors of the Company
at the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal.
ARTICLE IV
EFFECT OF MERGER ON CAPITAL STOCK
Section 4.1. Effect of Merger on Capital Stock. At the Effective Time, as a
result of the Reincorporation Merger and without any action on the part of the
Company, SADC or the shareholders of the Company:
(a) Each share of Colorado Common Stock, other than shares ("Dissenting
Shares") that are owned by shareholders ("Dissenting Shareholders") exercising
dissenters' rights pursuant to Article 113 of the CBCA, issued and outstanding
immediately prior to the Effective Time shall be converted (without the
surrender of stock or any other action) into one fully paid and non-assessable
share of Common Stock, par value $0.001, of SADC (thr "Nevada Common Stock" as
adjusted for the one-for-eight reverse stock split), with the same rights,
powers and privileges as the shares so converted and all shares of Colorado
Common Stock shall be cancelled and retired and shall cease to exist.
(b) Each option, warrant, purchase right, unit or other security of the
Company issued and outstanding immediately prior to the Effective Time shall be
converted into and shall be an identical security of SADC.
Section 4.2. Certificates. At and after the Effective Time, all of the
outstanding Certificates which immediately prior thereto represented shares of
Colorado Common Stock (other than Dissenting Shares) or options, warrants,
purchase rights, units or other securities of the Company shall be deemed for
all purposes to evidence ownership of and to represent the shares of the
respective Nevada Common Stock, or options, warrants, purchase rights, units or
other securities of SADC, as the case may be, into which the shares of Colorado
Common Stock or options, warrants, purchase rights, units or other securities of
the Company represented by such Certificates have been converted as herein
provided and shall be so registered on the books and records of the Surviving
Corporation or its transfer agent. The registered owner of any such outstanding
Certificates shall, until such Certificates shall have been surrendered for
transfer or otherwise accounted for to the Surviving Corporation or its transfer
agent, have and be entitled to exercise any voting and other rights with respect
to, and to receive any dividends and other distributions upon, the shares of
Nevada Common Stock or options, warrants, purchase rights, units or other
securities of SADC, as the case may be, evidenced by such outstanding
Certificates, as above provided.
26
Section 4.3 Dissenters' Rights. No Dissenting Shareholder shall be entitled to
shares of Nevada Common Stock under this Article IV unless and until the holder
thereof shall have failed to perfect or shall have effectively withdrawn or lost
such holder's right to dissent from the Reincorporation Merger under the CBCA,
and any Dissenting Shareholder shall be entitled to receive only the payment
provided by Article 113 of the CBCA with respect to Dissenting Shares owned by
such Dissenting Shareholder. If any person or entity who otherwise would be
deemed a Dissenting Shareholder shall have failed to properly perfect or shall
have effectively withdrawn or lost the right to dissent with respect to any
shares which would be Dissenting Shares but for that failure to perfect or
withdrawal or loss of the right to dissent, such Dissenting Shares shall
thereupon be treated as though such Dissenting Shares had been converted into
shares of Nevada Common Stock pursuant to Section 4.1 hereof.
ARTICLE V
CONDITION PRECEDENT
Section 5.1. Condition to Each Party's Obligation to Effect the Reincorporation
Merger. The respective obligation of each party hereto to effect the
Reincorporation Merger is subject to receipt prior to the Effective Time of the
requisite approval of this Agreement and the transactions contemplated hereby by
a majority of the holders of Colorado Common Stock pursuant to the CBCA and the
Articles of Incorporation, as amended, of the Company.
ARTICLE VI
TERMINATION
Section 6.1. Termination. This Agreement may be terminated, and the
Reincorporation Merger may be abandoned, at any time prior to the Effective
Time, whether before or after approval of this Agreement by the shareholders of
the Company, if the board of directors of the Company determines for any reason,
in its sole judgment and discretion, that the consummation of the
Reincorporation Merger would be inadvisable or not in the best interests of the
Company and its shareholders. In the event of the termination and abandonment of
this Agreement, this Agreement shall become null and void and have no effect,
without any liability on the part of either the Company or SADC, or any of their
respective shareholders, directors or officers.
ARTICLE VII
MISCELLANEOUS AND GENERAL
Section 7.1. Modification or Amendment. Subject to the provisions of applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement; provided, however, that an amendment made subsequent to
the approval of this Agreement by the holders of Colorado Common Stock shall not
(i) alter or change the amount or kind of shares and/or rights to be received in
exchange for or on conversion of all or any of the shares or any class or series
thereof of such corporation, (ii) alter or change any provision of the Articles
of incorporation of the Surviving Corporation to be effected by the
Reincorporation Merger, or (iii) alter or change any of the terms or conditions
of this Agreement if such alteration or change would adversely affect the
holders of any class or series of capital stock of any of the parties hereto.
27
Section 7.2. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
Section 7.3. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEVADA WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
Section 7.4. Entire Agreement. This Agreement constitutes the entire agreement
and supercedes all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof.
Section 7.5. No Third Party Beneficiaries. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 7.6. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is determined by any court or other authority of competent
jurisdiction to be invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision, and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 7.7. Headings. The headings therein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first written
above.
Xerion EcoSolutions Group Inc.
a Colorado corporation
By:
------------------------
Name: Fang Zhong
Title: Chief Executive Officer, President and
Treasurer
SINO-American Development Corporation
a Nevada corporation
By:
------------------------
Name: Fang Zhong
Title: Chief Executive Officer, President and
Treasurer
28
Exhibit B
to
Information Statement
Exhibit B
to
Information Statement
ARTICLES OF INCORPORATION
OF
SINO-AMERICAN DEVELOPMENT CORPORATION
The undersigned natural person, being more than eighteen years of age,
hereby establishes a corporation pursuant to the statutes of the State of Nevada
and adopts the following Articles of Incorporation.
FIRST: The name of the corporation is SINO-American Development
Corporation.
SECOND: The corporation shall have perpetual existence.
THIRD:
A. The purpose or purposes for which the corporation is organized shall
be:
1. To engage in any lawful business and to exercise all powers
authorized under Chapter 78 of the Nevada Revised Statutes as
now exists and may hereafter be amended.
2. To purchase and develop real estate, and purchase either the
assets or capital stock of other businesses, including
corporations and partnerships
B. The corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations
organized under the laws of the State of Nevada and may do
everything necessary, suitable or proper in the accomplishment of
any of its corporate purposes.
FOURTH:
A. The aggregate number of shares that the corporation shall have the
authority to issue is 150,000,000 shares of common stock, $.001 par
value, and 50,000,000 shares of preferred stock, $.001par value.
B. Each shareholder of record shall have one vote for each share of
stock standing in his name on the books of the corporation and
entitled to vote, except that in the election of directors he shall
have the right to vote such number of shares for as many persons as
there are directors to be elected. Cumulative voting shall not be
allowed in the election of directors or for any other purpose.
29
C. At all meetings of shareholders, one-third of the shares entitled to
vote at such meeting, represented in person or by proxy, shall
constitute a quorum and at any meeting at which a quorum is present
the affirmative vote of a greater proportion or number is required
by the laws of Nevada, in which case, including an amendment to
these Articles of Incorporation, an affirmative vote by a majority
of shares represented at such meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote
of the shares entitled to vote at such meeting shall be the act of
the shareholders.
D. No shareholder of the corporation shall have any pre-emptive right
or similar right to acquire or subscribe for any additional unissued
or treasury shares of stock, or other securities of any class or
rights, warrants or options to purchase stock or scrip or securities
of any kind convertible into stock or carrying stock purchase
warrants or privileges.
E. The corporation shall have the right to impose restrictions on the
sale and transfer of its shares of stock.
FIFTH: The corporation shall have the right to indemnify any person to the
fullest extent allowed by the laws of the State of Nevada, except as limited by
the by-laws of the corporation from time to time in effect.
SIXTH: The business and affairs of the corporation shall be managed by the
Board of Directors and the number of members, which shall be fixed by the
by-laws, shall not be less than three (3) person, provided however, that so long
as the corporation has less than three (3) shareholders, the Board of Directors
shall consist of the same number of persons as the corporation has stockholders.
No director need be a resident of the State of Nevada or a shareholder of the
corporation. The names and addresses of persons who shall serve as the directors
until the first annual meeting of shareholders or until their successors be
elected and qualified are:
Name Address
Fang Zhong Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weijun Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weifeng Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Yang Jeongho 300 West Naomi Avenue
Arcadia, CA 91007
Paul Mai 2868 S. Concord Avenue
Ontario, CA 91761
30
SEVENTH: The meeting of the shareholders and of the directors of this
corporation may be held at such places within or without the State of Nevada as
may be designated from time to time by the Board of Directors or by the by-laws,
and all business transacted at such meeting and the proceedings thereat shall
have the same binding force and effect as if such meeting was held at the
registered office of the corporation in the State of Nevada.
EIGHTH: The registered office of the corporation is in the County of
Clark, State of Nevada and is located at The Corporation Trust Company of
Nevada, 6100 Neil Road, Suite 500, Reno, Nevada 89511. The name of its resident
agent is The Corporation Trust Company of Nevada.
NINTH: The address of the principal place of business of the corporation
is Suite A-C. 20/F Neich Tower, 128 Gloucester Road, Wanchai, Hong Kong, The
People's Republic of China, and at such other places as the corporation may
elect to conduct its business in the State of Nevada or in such other states,
territories and foreign countries as the Board of Directors may deem advisable.
TENTH: The name of the incorporator of the corporation is Stephen A.
Zrenda, Jr. and his address is 5700 N.W. 132nd Street, Oklahoma City, Oklahoma
73142-4430.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of December
2005, hereby declaring and certifying that the facts stated herein above are
true.
/s/ Stephen A. Zrenda, Jr.
--------------------------
Exhibit B
to
Information Statement
ARTICLES OF INCORPORATION
OF
SINO-AMERICAN DEVELOPMENT CORPORATION
The undersigned natural person, being more than eighteen years of age,
hereby establishes a corporation pursuant to the statutes of the State of Nevada
and adopts the following Articles of Incorporation.
FIRST: The name of the corporation is SINO-American Development
Corporation.
31
SECOND: The corporation shall have perpetual existence.
THIRD:
A. The purpose or purposes for which the corporation is organized shall
be:
1. To engage in any lawful business and to exercise all powers
authorized under Chapter 78 of the Nevada Revised Statutes as
now exists and may hereafter be amended.
2. To purchase and develop real estate, and purchase either the
assets or capital stock of other businesses, including
corporations and partnerships
B. The corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations
organized under the laws of the State of Nevada and may do
everything necessary, suitable or proper in the accomplishment of
any of its corporate purposes.
FOURTH:
A. The aggregate number of shares that the corporation shall have the
authority to issue is 150,000,000 shares of common stock, $.001 par
value, and 50,000,000 shares of preferred stock, $.001 par value.
B. Each shareholder of record shall have one vote for each share of
stock standing in his name on the books of the corporation and
entitled to vote, except that in the election of directors he shall
have the right to vote such number of shares for as many persons as
there are directors to be elected. Cumulative voting shall not be
allowed in the election of directors or for any other purpose.
C. At all meetings of shareholders, one-third of the shares entitled to
vote at such meeting, represented in person or by proxy, shall
constitute a quorum and at any meeting at which a quorum is present
the affirmative vote of a greater proportion or number is required
by the laws of Nevada, in which case, including an amendment to
these Articles of Incorporation, an affirmative vote by a majority
of shares represented at such meeting and entitled to vote on the
subject matter shall be the act of the shareholders, unless the vote
of the shares entitled to vote at such meeting shall be the act of
the shareholders.
D. No shareholder of the corporation shall have any pre-emptive right
or similar right to acquire or subscribe for any additional unissued
or treasury shares of stock, or other securities of any class or
rights, warrants or options to purchase stock or scrip or securities
of any kind convertible into stock or carrying stock purchase
warrants or privileges.
E. The corporation shall have the right to impose restrictions on the
sale and transfer of its shares of stock.
32
FIFTH: The corporation shall have the right to indemnify any person to the
fullest extent allowed by the laws of the State of Nevada, except as limited by
the by-laws of the corporation from time to time in effect.
SIXTH: The business and affairs of the corporation shall be managed by the
Board of Directors and the number of members, which shall be fixed by the
by-laws, shall not be less than three (3) person, provided however, that so long
as the corporation has less than three (3) shareholders, the Board of Directors
shall consist of the same number of persons as the corporation has stockholders.
No director need be a resident of the State of Nevada or a shareholder of the
corporation. The names and addresses of persons who shall serve as the directors
until the first annual meeting of shareholders or until their successors be
elected and qualified are:
Name Address
---- -------
Fang Zhong Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weijun Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Fang Weifeng Suite A-C, 20/F Neich Tower
128 Gloucester Road
Wanchai, Hong Kong
The People's Republic of China
Yang Jeongho 300 West Naomi Avenue
Arcadia, CA 91007
Paul Mai 2868 S. Concord Avenue
Ontario, CA 91761
SEVENTH: The meeting of the shareholders and of the directors of this
corporation may be held at such places within or without the State of Nevada as
may be designated from time to time by the Board of Directors or by the by-laws,
and all business transacted at such meeting and the proceedings thereat shall
have the same binding force and effect as if such meeting was held at the
registered office of the corporation in the State of Nevada.
EIGHTH: The registered office of the corporation is in the County of
Clark, State of Nevada and is located at The Corporation Trust Company of
Nevada, 6100 Neil Road, Suite 500, Reno, Nevada 89511. The name of its resident
agent is The Corporation Trust Company of Nevada.
33
NINTH: The address of the principal place of business of the corporation
is Suite A-C. 20/F Neich Tower, 128 Gloucester Road, Wanchai, Hong Kong, The
People's Republic of China, and at such other places as the corporation may
elect to conduct its business in the State of Nevada or in such other states,
territories and foreign countries as the Board of Directors may deem advisable.
TENTH: The name of the incorporator of the corporation is Stephen A.
Zrenda, Jr. and his address is 5700 N.W. 132nd Street, Oklahoma City, Oklahoma
73142-4430.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of December
2005, hereby declaring and certifying that the facts stated herein above are
true.
/s/ Stephen A. Zrenda, Jr.
--------------------------
Stephen A. Zrenda, Jr.
34
Exhibit C
to
Information Statement
INDEX TO THE BYLAWS OF
SINO-AMERICAN DEVELOPMENT CORPORATION
ARTICLE 1 - OFFICES............................................1
SECTION 1.1 PRINCIPAL OFFICE.....................1
SECTION 1.2 REGISTERED OFFICE....................1
ARTICLE 2 - SHAREHOLDERS.......................................1
SECTION 2.1 ANNUAL MEETING.......................1
SECTION 2.2 SPECIAL MEETINGS.....................1
SECTION 2.3 PLACE OF MEETINGS....................2
SECTION 2.4 NOTICE OF MEETING....................2
SECTION 2.5 MEETING OF ALL SHAREHOLDERS..........2
SECTION 2.6 CLOSING OF TRANSFER BOOKS OR
FIXING OF RECORD DATE........................2
SECTION 2.7 VOTING RECORD........................3
SECTION 2.8 QUORUM...............................3
SECTION 2.9 MANNER OF ACTING.....................3
SECTION 2.10 PROXIES.............................3
SECTION 2.11 VOTING OF SHARES....................3
SECTION 2.12 VOTING OF SHARES BY CERTAIN
SHAREHOLDERS.................................4
SECTION 2.13 INFORMAL ACTION BY SHAREHOLDERS.....4
SECTION 2.14 VOTING BY BALLOT....................4
SECTION 2.15 CUMULATIVE VOTING...................5
ARTICLE 3 - BOARD OF DIRECTORS.................................5
SECTION 3.1 GENERAL POWERS.......................5
SECTION 3.2 PERFORMANCE OF DUTIES................5
SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS....5
SECTION 3.4 REGULAR MEETINGS.....................6
SECTION 3.5 SPECIAL MEETINGS.....................6
SECTION 3.6 NOTICE...............................6
SECTION 3.7 QUORUM...............................6
SECTION 3.8 MANNER OF ACTING.....................6
SECTION 3.9 INFORMAL ACTION BY DIRECTORS.........7
SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS...7
SECTION 3.11 VACANCIES...........................7
SECTION 3.12 RESIGNATION.........................7
SECTION 3.13 REMOVAL.............................7
SECTION 3.14 COMMITTEES..........................7
SECTION 3.15 COMPENSATION........................8
SECTION 3.16 PRESUMPTION OF ASSENT...............8
35
ARTICLE 4 - OFFICERS...........................................8
SECTION 4.1 NUMBER...............................8
SECTION 4.2 ELECTION AND TERM OF OFFICE..........8
SECTION 4.3 REMOVAL..............................8
SECTION 4.4 VACANCIES............................8
SECTION 4.5 PRESIDENT............................9
SECTION 4.6 VICE PRESIDENT.......................9
SECTION 4.7 SECRETARY............................9
SECTION 4.8 TREASURER............................10
SECTION 4.9 ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS...................................10
SECTION 4.10 BONDS...............................10
SECTION 4.11 SALARIES............................10
ARTICLE 5 - CONTRACTS, LOANS, CHECKS AND DEPOSITS..............10
SECTION 5.1 CONTRACTS............................10
SECTION 5.2 LOANS................................10
SECTION 5.3 CHECKS, DRAFTS, ETC..................11
SECTION 5.4 DEPOSITS.............................11
ARTICLE 6 - SHARES, CERTIFICATES FOR SHARES
AND TRANSFER OF SHARES.......................11
SECTION 6.1 REGULATION...........................11
SECTION 6.2 CERTIFICATES FOR SHARES..............11
SECTION 6.3 CANCELLATION OF CERTIFICATES.........12
SECTION 6.4 LOST, STOLEN OR DESTROYED
CERTIFICATES.................................12
SECTION 6.5 TRANSFER OF SHARES...................12
ARTICLE 7 - FISCAL YEAR........................................12
ARTICLE 8 - DIVIDENDS..........................................12
ARTICLE 9 - CORPORATE SEAL.....................................13
ARTICLE 10 - WAIVER OF NOTICE..................................13
ARTICLE 11 - AMENDMENTS........................................13
ARTICLE 12 - EXECUTIVE COMMITTEE...............................13
SECTION 12.1 APPOINTMENT.........................13
SECTION 12.2 AUTHORITY...........................13
SECTION 12.3 TENURE AND QUALIFICATIONS...........13
SECTION 12.4 MEETINGS............................14
SECTION 12.5 QUORUM..............................14
SECTION 12.6 INFORMAL ACTION BY EXECUTIVE
COMMITTEE....................................14
SECTION 12.7 VACANCIES...........................14
SECTION 12.8 RESIGNATIONS AND REMOVAL............14
SECTION 12.9 PROCEDURE...........................14
36
ARTICLE 13 - INDEMNIFICATION...................................15
SECTION 13.1 INDEMNIFICATION.....................15
SECTION 13.2 RIGHT TO INDEMNIFICATION............15
SECTION 13.3 GROUPS AUTHORIZED TO MAKE
INDEMNIFICATION DETERMINATION................16
SECTION 13.4 PAYMENT AND ADVANCE OF EXPENSES.....16
37
BYLAWS
OF
SINO-AMERICAN DEVELOPMENT CORPORATION
ARTICLE 1 - OFFICES
SECTION 1.1 PRINCIPAL OFFICE
The initial principal office of the Corporation in the state of Nevada
shall be located in Las Vegas. The Corporation may have such other offices,
either within or outside of the State of Nevada as the board of directors may
designate, or as the business of the Corporation may require from time to time.
SECTION 1.2 REGISTERED OFFICE
The registered office of the Corporation, required by Chapter 78 of the
Nevada Revised Statutes to be maintained in the State of Nevada, may be, but
need not be, identical with the principal office in the state of Nevada, and the
address of the registered office may be changed from time to time by the board
of directors.
ARTICLE 2 - SHAREHOLDERS
SECTION 2.1 ANNUAL MEETING
The annual meeting of the shareholders shall be held on the first Tuesday
in the month of May of each year, commencing with the year 2006, at the hour of
10:00 a.m., or at such other time on such other day as shall be fixed by the
board of directors for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the state of Nevada, such meeting
shall be held on the next succeeding business day. If the election of directors
shall not be held on the day designated herein for any annual meeting of the
shareholders, or at any adjournment thereof, the board of directors shall cause
the election to be held at a special meeting of the shareholders as soon
thereafter as may be convenient.
SECTION 2.2 SPECIAL MEETINGS
Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the board
of directors, and shall be called by the president at the request of the holders
of not less than one-tenth of all outstanding shares of the Corporation entitled
to vote at the meeting.
SECTION 2.3 PLACE OF MEETINGS
The board of directors may designate any place, either within or outside
of the State of Nevada, as the place of meeting for any annual meeting or for
any special meeting called by the board of directors. If no designation is made,
or if a special meeting be otherwise called, the place of meeting shall be the
principal office of the Corporation in the state of Nevada.
38
SECTION 2.4 NOTICE OF MEETING
Written notice stating the place, day and hour of the meeting of
shareholders and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall, unless otherwise prescribed by statute, be
delivered not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the president,
or the secretary, or the officer or other persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid.
SECTION 2.5 MEETING OF ALL SHAREHOLDERS
Except as provided by law, if a majority of the shareholders meet at any
time and place, either within or outside of the State of Nevada, and consent to
the holding of a meeting at such time and place, such meeting shall be valid
without call or notice, and at such meeting any corporate action may be taken.
SECTION 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other purpose, the board of directors of the Corporation
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, sixty days. If the share transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
days immediately preceding such meeting. In lieu of closing the share transfer
books, the board of directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty days and, in case of a meeting of shareholders, not less than ten
days prior t o the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this Section, such determination shall apply to any adjournment thereof.
SECTION 2.7 VOTING RECORD
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, at least ten days before such meeting of
shareholders, a complete record of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each. The record,
for a period of ten days prior to such meeting, shall be kept on file at the
principal office of the Corporation, whether within or outside of the State of
Nevada, and shall be subject to inspection by any shareholder for any purpose
germane to the meeting at any time during usual business hours. Such record
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
39
The original stock transfer books shall be the prima facie evidence as to
who are the shareholders entitled to examine the record or transfer books or to
vote at any meeting of shareholders.
SECTION 2.8 QUORUM
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, except as otherwise provided by Chapter 78 of the Nevada Revised
Statutes and the Articles of Incorporation. In the absence of a quorum at any
such meeting, a majority of the shares so represented may adjourn the meeting
from time to time for a period not to exceed sixty days without further notice.
At such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
during such meeting of that number of shareholders whose absence would cause
there to be less than a quorum.
SECTION 2.9 MANNER OF ACTING
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless the vote of a greater proportion or number
or voting by classes is otherwise required by statute or by the Articles of
Incorporation or these bylaws.
SECTION 2.10 PROXIES
At all meetings of shareholders a shareholder may vote in person or by
proxy executed in writing by the shareholder or by a duly authorized
attorney-in-fact. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
six months from the date of its execution, unless otherwise provided in the
proxy.
SECTION 2.11 VOTING OF SHARES
Unless otherwise provided by these bylaws or the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to vote at a meeting of shareholders, and each
fractional share shall be entitled to a corresponding fractional vote on each
such matter.
SECTION 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS
Shares standing in the name of another Corporation may be voted by such
officer, agent or proxy as the bylaws of such Corporation may prescribe, or, in
the absence of such provision, as the board of directors of such other
Corporation may determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by an administrator, executor, court appointed
guardian or conservator, either in person or by proxy without a transfer of such
shares into the name of such administrator, executor, court appointed guardian
or conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him or her without a transfer of such shares into his or her name.
40
Shares standing in the name of a receiver may be voted by such receiver
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into the trustee name if authority so to
do be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither shares of its own stock belonging to this Corporation, nor shares
of its own stock held by it in a fiduciary capacity, nor shares of its own stock
held by another Corporation if the majority of shares entitled to vote for the
election of directors of such Corporation is held by this Corporation may be
voted, directly or indirectly, at any meeting and shall not be counted in
determining the total number of outstanding shares at any given time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited with
a bank or trust company with irrevocable instruction and authority to pay the
redemption price to the holders of the shares upon surrender of certificates
therefore.
SECTION 2.13 INFORMAL ACTION BY SHAREHOLDERS
Except as provided by law, any action required or permitted to be taken at
a meeting of the shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by a majority of the
shareholders entitled to vote with respect to the subject matter thereof.
SECTION 2.14 VOTING BY BALLOT
Voting on any question or in any election may be by voice vote unless the
presiding officer shall order or any shareholder shall demand that voting be by
ballot.
SECTION 2.15 CUMULATIVE VOTING
Cumulative voting shall not be permitted in the election of officers or
directors, or in any other matter.
ARTICLE 3 - BOARD OF DIRECTORS
SECTION 3.1 GENERAL POWERS
The business and affairs of the Corporation shall be managed by its board
of directors.
SECTION 3.2 PERFORMANCE OF DUTIES
A director of the Corporation shall perform his or her duties as a
director, including his or her duties as a member of any committee of the board
upon which he or she may serve, in good faith, in a manner he or she reasonably
believes to be in the best interests of the Corporation, and with such care as
an ordinarily prudent person in a like position would use under similar
circumstances. In performing his or her duties, a director shall be entitled to
rely on information, opinions, reports, or statements, including financial
statements and other financial data, in each case prepared or presented by
persons and groups listed in paragraphs A, B, and C of this Section 3.2; but he
or she shall not be considered to be acting in good faith if he or she has
knowledge concerning the matter in question that would cause such reliance to be
unwarranted. A person who so performs his or her duties shall not have any
liability by reason of being or having been a director of the Corporation. Those
persons and groups on whose information, opinions, reports, and statements a
director is entitled to rely upon are:
41
A. One or more officers or employees of the Corporation whom the director
reasonably believes to be reliable and competent in the matter presented;
B. Counsel, public accountants, or other persons as to matters which the
director reasonably believes to be within such persons' professional or expert
competence; or
C. A committee of the board upon which he or she does not serve, duly
designated in accordance with the provision of the Articles of Incorporation or
the bylaws, as to matters within its designated authority, which committee the
director reasonably believes to merit confidence.
SECTION 3.3 NUMBER, TENURE AND QUALIFICATIONS
The number of directors of the Corporation shall be fixed from time to
time by resolution of the board of directors, but in no instance shall there be
less than one director or that number otherwise required by law. Each director
shall hold office until the next annual meeting of shareholders or until his or
her successor shall have been elected and qualified. Directors need not be
residents of the state of Nevada nor shareholders of the Corporation.
There shall be a chairman of the board, who has been elected from among
the directors. He or she shall preside at all meetings of the stockholders and
of the board of directors. He or she shall have such other powers and duties as
may be prescribed by the board of directors.
SECTION 3.4 REGULAR MEETINGS
A regular meeting of the board of directors shall be held without other
notice than this bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The board of directors may provide, by resolution, the
time and place, either within or without the state of Nevada, for the holding of
additional regular meetings without other notice than such resolution.
SECTION 3.5 SPECIAL MEETINGS
Special meetings of the board of directors may be called by or at the
request of the president or any two directors. The person or persons authorized
to call special meetings of the board of directors may fix any place, either
within or without the state of Nevada, as the place for holding any special
meeting of the board of directors called by them.
SECTION 3.6 NOTICE
Written notice of any special meeting of directors shall be given as
follows:
By mail to each director at his or her business address at least three
days prior to the meeting; or
By personal delivery or telegram at least twenty-four hours prior to the
meeting to the business address of each director, or in the event such notice is
given on a Saturday, Sunday or holiday, to the residence address of each
director. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice of
any meeting. The attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
Transacted at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of such
meeting.
42
SECTION 3.7 QUORUM
A majority of the number of directors fixed by or pursuant to Section 3.2
of this Article 3 shall constitute a quorum for the transaction of business at
any meeting of the board of directors, but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 3.8 MANNER OF ACTING
Except as otherwise required by law or by the Articles of Incorporation,
the act of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the board of directors.
SECTION 3.9 INFORMAL ACTION BY DIRECTORS
Any action required or permitted to be taken by the board of directors or
by a committee thereof at a meeting may be taken without a meeting if a consent
in writing, setting forth the action so taken, shall be signed by all of the
directors or all of the committee members entitled to vote with respect to the
subject matter thereof.
SECTION 3.10 PARTICIPATION BY ELECTRONIC MEANS
Any members of the board of directors or any committee designated by such
board may participate in a meeting of the board of directors or committee by
means of telephone conference or similar communications equipment by which all
persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
SECTION 3.11 VACANCIES
Any vacancy occurring in the board of directors may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his or her predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
may be filled by election by the board of directors for a term of office
continuing only until the next election of directors by the shareholders.
SECTION 3.12 RESIGNATION
Any director of the Corporation may resign at any time by giving written
notice to the president or the secretary of the Corporation. The resignation of
any director shall take effect upon receipt of notice thereof or at such later
time as shall be specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. When one or more directors shall resign from the board, effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective.
43
SECTION 3.13 REMOVALS
Any director or directors of the Corporation may be removed at any time,
with or without cause, in the manner provided in Chapter 78 of the Nevada
Revised Statutes.
SECTION 3.14 COMMITTEES
By resolution adopted by a majority of the board of directors, the
directors may designate two or more directors to constitute a committee, any of
which shall have such authority in the management of the Corporation as the
board of directors shall designate and as shall be prescribed by Chapter 78 of
the Nevada Revised Statutes.
SECTION 3.15 COMPENSATION
By resolution of the board of directors and irrespective of any personal
interest of any of the members, each director may be paid his or her expenses,
if any, of attendance at each meeting of the board of directors, and may be paid
a stated salary as director or a fixed sum for attendance at each meeting of the
board of directors or both. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 3.16 PRESUMPTION OF ASSENT
A director of the Corporation who is present at a meeting of the board of
directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his or her dissent shall be entered in
the minutes of the meeting or unless he or she shall file his or her written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in favor
of such action.
ARTICLE 4 - OFFICERS
SECTION 4.1 NUMBER
The officers of the Corporation shall be a president, a secretary and a
treasurer, each of whom shall be elected by the board of directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the board of directors. Any two or more offices may be held by the
same person.
SECTION 4.2 ELECTION AND TERM OF OFFICE
The officers of the Corporation to be elected by the board of directors
shall be elected annually by the board of directors at the first meeting of the
board of directors held after the annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as practicable. Each officer shall hold office until his
or her successor shall have been duly elected and shall have qualified or until
his or her death or until he or she shall resign or shall have been removed in
the manner hereinafter provided.
44
SECTION 4.3 REMOVAL
Any officer or agent may be removed by the board of directors whenever in
its judgment the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
SECTION 4.4 VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the board of directors for the
unexpired portion of the term.
SECTION 4.5 PRESIDENT
The president shall be the chief executive officer of the Corporation and,
subject to the control of the board of directors, shall in general supervise and
control all of the business and affairs of the Corporation. He or she shall,
when present, and in the absence of a chairman of the board, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the secretary or any other proper officer of the Corporation thereunto
authorized by the board of directors, certificates for shares of the Corporation
and deeds, mortgages, bonds, contracts, or other instruments which the board of
directors has authorized to be executed, excepted in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these bylaws to some other officer or agent of the Corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
SECTION 4.6 VICE PRESIDENT
If elected or appointed by the board of directors, the vice president (or
in the event there be more than one vice president, the vice presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall, in the absence of the
president or in the event of his or her death, inability or refusal to act,
perform all duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. Any vice
president may sign, with the treasurer or an assistant treasurer or the
secretary or an assistant secretary, certificates for shares of the Corporation;
and shall perform such other duties as from time to time may be assigned to him
or her by the president or by the board of directors.
SECTION 4.7 SECRETARY
The secretary shall: (a) keep the minutes of the proceedings of the
shareholders and of the board of directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the Corporation and see that the seal of
the Corporation is affixed to all documents the execution of which on behalf of
the Corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) sign with the chairman or vice chairman of
the board of directors, or the president, or a vice president, certificates for
shares of the Corporation, the issuance of which shall have been authorized by
resolution of the board of directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him or her by the president or by the board of directors.
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SECTION 4.8 TREASURER
The treasurer shall: (a) have charge and custody of and be responsible for
all funds and securities of the Corporation; (b) receive and give receipts for
moneys due and payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of Article 5 of these bylaws; and (c) in general perform all of the
duties incident to the office of treasurer and such other duties as from time to
time may be assigned to him or her by the president or by the board of
directors.
SECTION 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS
The assistant secretaries, when authorized by the board of directors, may
sign with the chairman or vice chairman of the board of directors or the
president or a vice president certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the board of
directors. The assistant secretaries and assistant treasurers, in general, shall
perform such duties as shall be assigned to them by the secretary or the
treasurer, respectively, or by the president or the board of directors.
SECTION 4.10 BONDS
If the board of directors by resolution shall so require, any officer or
agent of the Corporation shall give bond to the Corporation in such amount and
with such surety as the board of directors may deem sufficient, conditioned upon
the faithful performance of their respective duties and offices.
SECTION 4.11 SALARIES
The salaries of the officers shall be fixed from time to time by the board
of directors and no officer shall be prevented from receiving such salary by
reason of the fact that he or she is also a director of the Corporation.
ARTICLE 5 - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 5.1 CONTRACTS
The board of directors may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the Corporation, and such authority may be general or confined
to specific instances.
SECTION 5.2 LOANS
No loans shall be contracted on behalf of the Corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the board of directors. Such authority may be general or confined to specific
instances.
SECTION 5.3 CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation shall be
signed by such officer or officers, agent or agents of the Corporation and in
such manner as shall from time to time be determined by resolution of the board
of directors.
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SECTION 5.4 DEPOSITS
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the board of directors may select.
ARTICLE 6 - SHARES, CERTIFICATES FOR SHARES
AND TRANSFER OF SHARES
SECTION 6.1 REGULATION
The board of directors may make such rules and regulations as it may deem
appropriate concerning the issuance, transfer and registration of certificates
for shares of the Corporation, including the appointment of transfer agents and
registrars.
SECTION 6.2 CERTIFICATES FOR SHARES
Certificates representing shares of the Corporation shall be respectively
numbered serially for each class of shares, or series thereof, as they are
issued, shall be impressed with the corporate seal or a facsimile thereof, and
shall be signed by the chairman or vice-chairman of the board of directors or by
the president or a vice president and by the treasurer or an assistant treasurer
or by the secretary or an assistant secretary; provided that such signatures may
be facsimile if the certificate is counter-signed by a transfer agent, or
registered by a registrar other than the Corporation itself or its employee.
Each certificate shall state the name of the Corporation, the fact that the
Corporation is organized or incorporated under the laws of the state of Nevada,
the name of the person to whom issued, the date of issue, the class (or series
of any class), the number of shares represented thereby and the par value of the
shares represented thereby or a statement that such shares are without par
value. A statement of the designations, preferences, qualifications,
limitations, restrictions and special or relative rights of the shares of each
class shall be set forth in full or summarized on the face or back of the
certificates which the Corporation shall issue, or in lieu thereof, the
certificate may set forth that such a statement or summary will be furnished to
any shareholder upon request without charge. Each certificate shall be otherwise
in such form as may be prescribed by the board of directors and as shall conform
to the rules of any stock exchange on which the shares may be listed.
The Corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a fractional
interest in a share of stock. The Corporation may, but shall not be obligated
to, issue scrip in lieu of any fractional shares, such scrip to have terms and
conditions specified by the board of directors.
SECTION 6.3 CANCELLATION OF CERTIFICATES
All certificates surrendered to the Corporation for transfer shall be
canceled and no new certificates shall be issued in lieu thereof until the
former certificate for a like number of shares shall have been surrendered and
canceled, except as herein provided with respect to lost, stolen or destroyed
certificates.
SECTION 6.4 LOST, STOLEN OR DESTROYED CERTIFICATES
Any shareholder claiming that his or her certificate for shares is lost,
stolen or destroyed may make an affidavit or affirmation of that fact and lodge
the same with the secretary of the Corporation, accompanied by a signed
application for a new certificate. Thereupon, and upon the giving of a
satisfactory bond of indemnity to the Corporation not exceeding an amount double
the value of the shares as represented by such certificate (the necessity for
such bond and the amount required to be determined by the president and
treasurer of the Corporation), a new certificate may be issued of the same tenor
and representing the same number, class and series of shares as were represented
by the certificate alleged to be lost, stolen or destroyed.
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SECTION 6.5 TRANSFER OF SHARES
Subject to the terms of any shareholder agreement relating to the transfer
of shares or other transfer restrictions contained in the Articles of
Incorporation or authorized therein, shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his or her duly authorized attorney, upon the surrender and cancellation of a
certificate or certificates for a like number of shares. Upon presentation and
surrender of a certificate for shares properly endorsed and payment of all taxes
therefor, the transferee shall be entitled to a new certificate or certificates
in lieu thereof. As against the Corporation, a transfer of shares can be made
only on the books of the Corporation and in the manner hereinabove provided, and
the Corporation shall be entitled to treat the holder of record of any share as
the owner thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly provided by
the statutes of the state of Nevada.
ARTICLE 7 - FISCAL YEAR
The fiscal year of the Corporation shall end on the last day of December
in each calendar year. The fiscal year of the Corporation may be changed by the
affirmative vote of a majority of the board of directors.
ARTICLE 8 - DIVIDENDS
The board of directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE 9 - CORPORATE SEAL
The board of directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the state of incorporation and the words "CORPORATE SEAL."
ARTICLE 10 - WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of these
bylaws or under the provisions of the Articles of Incorporation or under the
provisions of the Chapter 78 of the Nevada Revised Statutes, or otherwise, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the event or other circumstance requiring such
notice, shall be deemed equivalent to the giving of such notice.
ARTICLE 11 - AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by a majority of the directors present at any meeting of the board of
directors of the Corporation at which a quorum is present.
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ARTICLE 12 - EXECUTIVE COMMITTEE
SECTION 12.1 APPOINTMENT
The board of directors by resolution adopted by a majority of the full
board, may designate two or more of its members to constitute an executive
committee. The designation of such committee and the delegation thereto of
authority shall not operate to relieve the board of directors, or any member
thereof, of any responsibility imposed by law.
SECTION 12.2 AUTHORITY
The executive committee, when the board of directors is not in session,
shall have and may exercise all of the authority of the board of directors
except to the extent, if any, that such authority shall be limited by the
resolution appointing the executive committee and except also that the executive
committee shall not have the authority of the board of directors in reference to
amending the Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
Corporation otherwise than in the usual and regular course of its business,
Recommending to the shareholders a voluntary dissolution of the Corporation or a
revocation thereof, or amending the bylaws of the Corporation.
SECTION 12.3 TENURE AND QUALIFICATIONS
Each member of the executive committee shall hold office until the next
regular annual meeting of the board of directors following his or her
designation and until his or her successor is designated as a member of the
executive committee and is elected and qualified.
SECTION 12.4 MEETINGS
Regular meetings of the executive committee may be held without notice at
such time and places as the executive committee may fix from time to time by
resolution. Special meetings of the executive committee may be called by any
member thereof upon not less than one day's notice stating the place, date and
hour of the meeting, which notice may be written or oral, and if mailed, shall
be deemed to be delivered when deposited in the United States mail addressed to
the member of the executive committee at his or her business address. Any member
of the executive committee may waive notice of any meeting and no notice of any
meeting need be given to any member thereof who attends in person. The notice of
a meeting of the executive committee need not state the business proposed to be
transacted at the meeting.
SECTION 12.5 QUORUM
A majority of the members of the executive committee shall constitute a
quorum for the transaction of business at any meeting thereof, and action of the
executive committee must be authorized by the affirmative vote of a majority of
the members present at a meeting at which a quorum is present.
SECTION 12.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE
Any action required or permitted to be taken by the executive committee at
a meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
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SECTION 12.7 VACANCIES
Any vacancy in the executive committee may be filled by a resolution
adopted by a majority of the full board of directors.
SECTION 12.8 RESIGNATIONS AND REMOVAL
Any member of the executive committee may be removed at any time with or
without cause by resolution adopted by a majority of the full board of
directors. Any member of the executive committee may resign from the executive
committee at any time by giving written notice to the president or secretary of
the Corporation, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 12.9 PROCEDURE
The executive committee shall elect a presiding officer from its members
and may fix its own rules of procedure which shall not be inconsistent with
these bylaws. It shall keep regular minutes of its proceedings and report the
same to the board of directors for its information at the meeting thereof held
next after the proceedings shall have been taken.
ARTICLE 13 - INDEMNIFICATION
SECTION 13.1 INDEMNIFICATION
The Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, or investigative,
except an action by or in the right of the Corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct as unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe his conduct was unlawful.
The Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interest of the Corporation. Indemnification may not be made for any
claim, issue or matter as to which such person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the Corporation or for amounts paid in settlement to the Corporation, unless
and only to the extent that the court in which the action or suit was brought or
other competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
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SECTION 13.2 RIGHT TO INDEMNIFICATION
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 13.1 and 13.2 of this
Article 13, or in defense of any claim, issue or matter therein, the Corporation
shall indemnify him against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
SECTION 13.3 GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION
Any indemnification under Sections 13.1 or 13.2 of this Article 13, unless
ordered by a court or advanced pursuant to Section 13.2, may be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (a) by the stockholders; (b) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the action, suit or proceeding; (c) if a majority vote
of a quorum consisting of directors who were not parties to the action, suite or
proceeding so orders, by independent legal counsel in a written opinion; or (d)
if a quorum consisting of directors who were not parties to the action, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.
SECTION 13.4 PAYMENT AND ADVANCE OF EXPENSES
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the Corporation as they are
incurred and in advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
Corporation. The provisions of this Section do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
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Exhibit D
to
Information Statement
2006 Stock Option, SAR and Stock Bonus Plan
ARTICLE 1
General Provisions
1.1 Purpose. The purpose of the 2006 Stock Option, SAR and Stock Bonus Plan (the
"Plan") shall be to retain and compensate its directors, officers, employees and
independent consultants (the "Participants") of SINO-American Development
Corporation (the "Company") and its subsidiaries, if any, by way of granting (i)
non-qualified stock options ("Stock Options"), (ii) non-qualified stock options
with stock appreciation rights attached ("Stock Option SAR's"), and (iii) stock
bonuses. In addition, no consultant shall be a Participant in this Plan in
consideration for consulting or other services related to capital raising
activities for The Company or related to any stock promotion activities for the
Company. For the purpose of this Plan, Stock Option SAR's are sometimes
collectively herein called "SAR's;" and Stock Options. The Stock Options to be
granted are intended to be "non-qualified stock options" as described in
Sections 83 and 421 of the Code. Furthermore, under the Plan, the terms "parent"
and "subsidiary" shall have the same meaning as set forth in Subsections (e) and
(f) of Section 425 of the Code unless the context herein clearly indicates to
the contrary.
1.2 General. The terms and provisions of this Article I shall be applicable to
Stock Options and SAR's unless the context herein clearly indicates to the
contrary.
1.3 Administration of the Plan. The Plan shall be administered by the Stock Plan
Committee (the "Committee") appointed by the Board of Directors (the "Board") of
the Company and consisting of at least one member from the Board. The members of
the Committee shall serve at the pleasure of the Board. The Committee shall have
the power where consistent with the general purpose and intent of the Plan to
(i) modify the requirements of the Plan to conform with the law or to meet
special circumstances not anticipated or covered in the Plan, (ii) suspend or
discontinue the Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions of
the Plan including the form of any "stock option agreements" ("Stock Option
Agreements"). Unless otherwise provided in the Plan, the Committee shall have
the authority to interpret and construe the Plan, and determine all questions
arising under the Plan and any agreement made pursuant to the Plan. Any
interpretation, decision or determination made by the Committee shall be final,
binding and conclusive. A majority of the Committee shall constitute a quorum,
and an act of the majority of the members present at any meeting at which a
quorum is present shall be the act of the Committee. Mr. Fang Zhong, Mr. Yang
Jeongho, Mr. Fang Weifeng have been appointed as the initial members of the
Committee.
1.4 Shares Subject to the Plan. Shares of stock ("Stock") covered by Stock
Options, SAR's, and stock bonuses shall consist of 3,000,000 shares (following
the planned 1-for-8 reverse split of the Common Stock of The Company) of the
Common Stock, $.001 par value, of The Company. Either authorized and unissued
shares or treasury shares may be delivered pursuant to the Plan. If any Option
for shares of Stock, granted to a Participant lapses, or is otherwise
terminated, the Committee may grant Stock Options, SAR's and stock bonuses for
such shares of Stock to other Participants. However, neither Stock Options nor
SAR's shall be granted again for shares of Stock which have been subject to
SAR's which are surrendered in exchange for cash or shares of Stock issued
pursuant to the exercise of SAR's as provided in Article II hereof.
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1.5 Participation in the Plan. The Committee shall determine from time to time
those Participants who are to be granted Stock Options, SAR's and stock bonuses
and the number of shares of Stock covered thereby.
1.6 Determination of Fair Market Value. As used in the Plan, "fair market value"
shall mean on any particular day (i) if the Stock is listed or admitted for
trading on any national securities exchange or the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotation System, the
last sale price, or if no sale occurred, the mean between the closing high bid
and low asked quotations, for such day of the Stock on the principal securities
exchange on which shares of Stock are listed, (ii) if Stock is not traded on any
national securities exchange but is quoted on the National Association of
Securities Dealers, Inc., Automated Quotation System, the NASD electronic
bulletin board, or any similar system of automated dissemination of quotations
or securities prices in common use, the mean between the closing high bid and
low asked quotations for such day of the Stock on such system, (iii) if neither
clause (i) nor (ii) is applicable, the mean between the high bid and low asked
quotations for the Stock as reported by the National Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for shares of the Stock on at least five (5) of the ten (10)
preceding days, (iv) in lieu of the above, if actual transactions in the shares
of Stock are reported on a consolidated transaction reporting system, the last
sale price of the shares of Stock on such system or, (v) if none of the
conditions set forth above is met, the fair market value of shares of Stock as
determined by the Board. Provided, for purposes of determining "fair market
value" of the Common Stock of The Company, such value shall be determined
without regard to any restriction other than a restriction which will never
lapse.
1.7 Adjustments Upon Changes in Capitalization. The aggregate number of shares
of Stock under Stock Options granted under the Plan, the Option Price and the
total number of shares of Stock which may be purchased by a Participant on
exercise of a Stock Option shall be approximately adjusted by the Committee to
reflect any recapitalization, stock split, merger, consolidation,
reorganization, combination, liquidation, stock dividend or similar transaction
involving The Company except that a dissolution or liquidation of the Company or
a merger or consolidation in which the Company is not the surviving or the
resulting corporation, shall cause the Plan and any Stock Option, or SAR granted
thereunder, to terminate upon the effective date of such dissolution,
liquidation, merger or consolidation. Provided, that for the purposes of this
Section 1.7, if any merger, consolidation or combination occurs in which the
Company is not the surviving corporation and is the result of a mere change in
the identity, form or place of organization of the Company accomplished in
accordance with Section 368(a)(1)(F) of the Code, then, such event will not
cause a termination. Appropriate adjustment may also be made by the Committee in
the terms of a SAR to reflect any of the foregoing changes.
1.8 Amendment and Termination of the Plan. The Plan shall terminate at midnight,
January 31, 2009, but prior thereto may be altered, changed, modified, amended
or terminated by written amendment approved by the Board. Provided, that no
action of the Board may, without the approval of the Board of Directors,
increase the aggregate number of shares of Stock which may be purchased under
Stock Options, SAR's or stock bonuses granted under the Plan; or withdraw the
administration of the Plan from the Committee. Except as provided in this
Article I, no amendment, modification or termination of the Plan shall in any
manner adversely affect any Stock Option or SAR theretofore granted under the
Plan without the consent of the affected Participant.
1.9 Effective Date. The Plan shall be effective January ___, 2006.
53
1.10 Securities Law Requirements. The Company shall have no liability to issue
any Stock hereunder unless the issuance of such shares would comply with any
applicable federal or state securities laws or any other applicable law or
regulations thereunder.
1.11 Separate Certificates. Separate certificates representing the Common Stock
of the Company to be delivered to a Participant upon the exercise of any Stock
Option, or SAR will be issued to such Participant.
1.12 Payment for Stock; Receipt of Stock or Cash in Lieu of Payment.
(a) Payment for Stock. Payment for shares of Stock acquired under this Plan
shall be made in full and in cash or check made payable to the Company or may be
made by the transfer of common stock owned by the Participant to the Company at
fair value. Provided, payment for shares of Stock purchased under this Plan may
also be made in Common Stock of the Company or a combination of cash and Common
Stock of the Company in the event that the purchase of shares is pursuant to the
exercise of rights under an SAR attached to the Option and which is exercisable
on the date of exercise of the Option. In the event that Common Stock of the
Company is utilized in consideration for the purchase of Stock upon the exercise
of a Stock Option, then, such Common Stock shall be valued at the "fair market
value" as defined in Section 1.6 of the Plan.
(b) Receipt of Stock or Cash in Lieu of Payment. Furthermore, a Participant may
exercise an Option without payment of the Option Price in the event that the
exercise is pursuant to rights under an SAR attached to the Option and which is
exercisable on the date of exercise of the Option. In the event an Option with
an SAR attached is exercised without payment of the Option Price, the
Participant shall be entitled to receive either (i) a cash payment from the
Company equal to the excess of the total fair market value of the shares of
Stock on such date as determined with respect to which the Option is being
exercised over the total cash Option Price of such shares of Stock as set forth
in the Option or (ii) that number of whole shares of Stock as is determined by
dividing (A) an amount equal to the fair market value per share of Stock on the
date of exercise into (B) an amount equal to the excess of the total fair market
value of the shares of Stock on such date with respect to which the Option is
being exercised over the total cash Option Price of such shares of Stock as set
forth in the Option, and fractional shares will be rounded to the next lowest
number and the Participant will receive cash in lieu thereof.
1.13 Incurrence of Disability. A Participant shall be deemed to have terminated
consulting and incurred a disability ("Disability") if such Participant suffers
a physical or mental condition which, in the judgment of the Committee, totally
and permanently prevents a Participant from engaging in any substantial gainful
consulting with the Company or a subsidiary.
1.14 Grants of Options and Stock Option Agreement. Each Stock Option and/or SAR
granted under this Plan shall be evidenced by the minutes of a meeting of the
Committee or by the written consent of the Committee and by a written Stock
Option Agreement effective on the date of grant and executed by the Company and
the Participant. Each Option granted hereunder shall contain such terms,
restrictions and conditions as the Committee may determine, which terms,
restrictions and conditions may or may not be the same in each case.
1.15 Use of Proceeds. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.
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1.16 Non-Transferability of Options. Except as otherwise herein provided, any
Option or SAR granted shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Participant, only by him or her. More particularly (but without
limiting the generality of the foregoing), the Option and/or SAR may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option and/or SAR contrary to
the provisions hereof shall be null and void and without effect.
1.17 Additional Documents on Death of Participant. No transfer of an Option
and/or SAR by the Participant by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice and an unauthenticated copy of the will and/or
such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.
1.18 Changes in Relationships. So long as the Participant shall continue to be
an officer, director, employee or a consultant of the Company or any one of its
subsidiaries, any Option granted to him or her shall not be affected by any
change of duties or position. Nothing in the Plan or in any Stock Option
Agreement which relates to the Plan shall confer upon any Participant any right
to continue as an officer, director, employee or a consultant of the Company or
of any of its subsidiaries, or interfere in any way with the right of the
Company or any of its subsidiaries to terminate the consulting arrangement at
any time.
1.19 Shareholder Rights. No Participant shall have a right as a shareholder with
respect to any shares of Stock subject to an Option prior to the purchase of
such shares of Stock by exercise of the Option.
1.20 Right to Exercise Upon Company Ceasing to Exist. Where dissolution or
liquidation of the Company or any merger consolidation or combination in which
the Company is not the surviving corporation occurs, the Participant shall have
the right immediately prior to such dissolution, liquidation, merger,
consolidation or combination, as the case may be, to exercise, in whole or in
part, his or her then remaining Options whether or not then exercisable, but
limited to that number of shares that can be acquired without causing the
Participant to have an "excess parachute payment" as determined under Section
280G of the Code determined by taking into account all of Participant's
"parachute payments" determined under Section 280G of the Code. Provided, the
foregoing notwithstanding, after the Participant has been afforded the
opportunity to exercise his or her then remaining Options as provided in this
Section 1.21, and to the extent such Options are not timely exercised as
provided in this Section 1.21, then, the terms and provisions of this Plan and
any Stock Option Agreement will thereafter continue in effect, and the
Participant will be entitled to exercise any such remaining and unexercised
Options in accordance with the terms and provisions of this Plan and such Stock
Option Agreement as such Options thereafter become exercisable. Provided
further, that for the purposes of this Section 1.21, if any merger,
consolidation or combination occurs in which the Company is not the surviving
corporation and is the result of a mere change in the identity, form, or place
of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event shall not cause an acceleration of
the exercisebility of any such Options granted hereunder.
1.21 Assumption of Outstanding Options and SAR's. To the extent permitted by the
then applicable provisions of the Code, any successor to the Company succeeding
to, or assigned the business of, the Company as the result of or in connection
with a corporate merger, consolidation, combination, reorganization or
liquidation transaction shall assume Options and SAR's outstanding under the
Plan or issue new Options and/or SAR's in place of outstanding Options and/or
SAR's under the Plan, as determined in its sole discretion.
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ARTICLE II
Terms of Stock Options and Exercise
2.1 General Terms.
(a) Grant and Terms for Stock Options. Stock Options shall be granted by the
Committee on the following terms and conditions: No Stock Option shall be
exercisable within thirty days from the date of grant (except as specifically
provided in Subsection 2.l(c) hereof, with regard to the death or Disability of
a Participant), nor more than three years after the date of grant. Subject to
such limitation, the Committee shall have the discretion to fix the period (the
"Option Period") during which any Stock Option may be exercised. Stock Options
granted shall not be transferable except by will or by the laws of descent and
distribution, Stock Options shall be exercisable only by the Participant while
actively retained as a consultant by the Company or a subsidiary, except that
(i) any such Stock Option granted and which is otherwise exercisable, may be
exercised by the personal representative of a deceased Participant within 12
months after the death of such Participant (but not beyond the Option Period of
such Stock Option), (ii) if a Participant terminates his position as a
consultant with the Company or a subsidiary on account of Retirement, such
Participant may exercise any Stock Option which is otherwise exercisable at any
time within three months of such date of termination and (iii) if a Participant
terminates his position as a consultant with the Company or a subsidiary on
account of incurring a Disability, such Participant may exercise any Stock
Option which is otherwise exercisable at any time within 12 months of such date
of termination. If a Participant should die during the applicable three-month or
12-month period following the date of such Participant's termination on account
of Disability, the rights of the personal representative of such deceased
Participant as such relate to any Stock Options granted to such deceased
Participant shall be governed in accordance with Subsection 2.1(a)(i) of this
Article II.
(b) Option Price. The option price ("Option Price") for shares of Stock subject
to a Stock Option shall be determined by the Committee, but in no event shall
the Option Price of Stock Options be less than 85% of the "fair market value" of
the Stock on the date of grant.
(c) Acceleration of Otherwise Unexerciseble Stock Option on Death, Disability or
Other Special Circumstances. The Committee, in its sole discretion, may permit
(i) a Participant who terminates his position as a consultant due to a
Disability, (ii) the personal representative of a deceased Participant, or (iii)
any other Participant who terminates his position as a consultant upon the
occurrence of special circumstances (as determined by the Committee) to exercise
and purchase (within three months of such date of termination of consulting
arrangement, or 12 months in the case of a deceased or disabled Participant; all
or any part of the shares subject to Stock Option on the date of the
Participant's Disability, death, or as the Committee otherwise so determines,
notwithstanding that all installments, if any, with respect to such Stock
Option, had not accrued on such date. Provided, such discretionary authority of
the Committee shall not be exercised with respect to any Stock Option (or
portion thereof) if the applicable six-month waiting period for exercise had not
expired except in the event of the death or disability of the Participant when
the personal representative of the deceased Participant or the disabled
Participant may, with the consent of the Committee, exercise such Stock Option
notwithstanding the fact that the applicable six-month waiting period had not
yet expired.
(d) Number of Stock Options Granted. Participants may be granted more than one
Stock Option. In making any such determination, the Committee shall obtain the
advice and recommendation of the officers of the Company or a subsidiary which
have supervisory authority over such Participants. The granting of a Stock
Option under the Plan shall not affect any outstanding Stock Option previously
granted to a Participant under the Plan.
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(e) Notice of Exercise Stock Option. Upon exercise of a stock option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's principal executive
office. No Stock shall be issued to any Participant until the Company receives
full payment for the Stock purchased, if applicable, and any required state and
federal withholding taxes.
ARTICLE III
SAR's
3.1 General Terms.
(a) Grant and Terms of SAR's. The Committee may grant SAR's to Participants in
connection with Stock Options granted under the Plan. SAR's shall not be
exercisable (i) earlier than six months from the date of grant except as
specifically provided in Subsection 3.l (b) hereof in the case of the death or
Disability of a Participant, and (ii) shall terminate at such time as the
Committee determines and shall be exercised only upon surrender of the related
Stock Option and only to the extent that the related Stock Option (or the
portion thereof as to which the SAR is exercisable) is exercised. SAR's may be
exercised only by the Participant while actively engaged as a consultant by the
Company or a subsidiary except that (i) any SAR's previously granted to a
Participant which are otherwise exercisable may be exercised, with the approval
of the Committee, by the personal representative of a deceased Participant, even
if such death should occur within six months of the date of grant (but not
beyond the expiration date of such SAR), and (ii) if a Participant terminates
his position as a consultant with the Company or a subsidiary, as the case may
be, on account of incurring a Disability, such Participant may exercise any
SAR's which are otherwise exercisable, with the approval of the Committee,
anytime within 12 months of termination by Disability. If a Participant should
die during the applicable three-month period following the applicable 12 month
period following the date of termination on account of Disability, the rights of
the personal representative of such deceased Participant as such relate to any
SAR's granted to such deceased Participant shall be governed in accordance with
(i) of the second sentence of this Subsection 3.l (a) of this Article III. The
applicable SAR shall (i) terminate upon the termination of the underlying Stock
Option, as the case may be, (ii) only be transferable at the same time and under
the same conditions as the underlying Stock Option is transferable, (iii) only
be exercised when the underlying Stock Option is exercised, and (iv) may be
exercised only if there is a positive spread between the Option Price, as
applicable and the "fair market value" of the Stock for which the SAR is
exercised.
(b) Acceleration of Otherwise Unexerciseble SAR's upon Death, Disability or
Other Special Circumstances. The Committee, in its sole discretion, may permit
(i) a Participant who terminates his position as a consultant with the Company
or a subsidiary due to a Disability, (ii) the personal representative of such
deceased Participant, or (iii) any other Participant who terminates employment
as a consultant with the Company or a subsidiary upon the occurrence of special
circumstances (as determined by the Committee) to exercise (within 12 months in
the case of a disabled or deceased Participant) all or any part of any such
SAR's previously granted to such Participant as of the date of such
Participant's Disability, death, or as the Committee otherwise so determines,
notwithstanding that all installments, if any with respect to such SAR's, had
not accrued on such date. Provided, such discretionary authority of the
Committee may not be exercised with respect to any SAR (or portion thereof if
the applicable six-month waiting period for exercise had not expired as of such
date, except (i) in the event of the Disability of the Participant or (ii) the
death of the Participant, when such disabled Participant or the personal
representative of such deceased Participant may, with the consent of the
Committee, exercise such SAR's notwithstanding the fact that the applicable
six-month waiting period had not yet expired.
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(c) Form of Payment of SAR's. The Participant may request the method and
combination of payment upon the exercise of a SAR; however, the Committee has
the final authority to determine whether the value of the SAR shall be paid in
cash or shares of Stock or both. Upon exercise of a SAR, the holder is entitled
to receive the excess amount of the "fair market value" of the Stock (as of the
date of exercise) for which the SAR is exercised over the Option Price, as
applicable, under the related Stock Option, as the case may be. All applicable
federal and state withholding taxes will be paid by the Participant to the
Company upon the exercise of a SAR since the excess amount described above will
be required to be included within taxable income in accordance with Sections 61
and 83 of the Code.
SINO-American Development Corporation
By: /s/ Fang Zhong
---------------
Fang Zhong, Chief Executive Officer and President
Date Plan adopted and approved by the Board of Directors:
January ____, 2006
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