SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
CHINA MOBILITY SOLUTIONS, INC.
---------------------------------------
(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-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
CHINA MOBILITY SOLUTIONS, INC.
#900 - 789 West Pender Street
Vancouver, B.C. Canada V6C 1H2
(604)632-9638
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
__________, 2005
Dear Shareholder:
We cordially invite you to attend China Mobility Solutions, Inc. Annual
Meeting of Shareholders on _______________________, 2005, at The Sheraton Hotel,
360 Union Blvd., Lakewood, Colorado at which meeting you may be present. If you
choose not to attend, you may send your ballot appointing Angela Du, President,
to vote as your ballot directs. The Notice of Meeting and the accompanying Proxy
describe the business of the Annual Meeting of Shareholders.
The enclosed Proxy statement is being furnished to shareholders of record
on _____________________, 2005 of China Mobility Solutions, Inc. ("CHMS.OB"), a
Florida corporation, in connection with the following proposals.
YOU ARE NOT REQUIRED TO SEND US A PROXY BUT YOUR PROXY IS REQUESTED
The holders of a majority of the issued and outstanding shares entitled to
vote have indicated that they intend to vote in favor of these proposals.
1. To elect two directors to hold office until the next annual meeting of
shareholders and qualification of their respective successors.
2. To ratify the appointment of Moen and Company, as Independent
Accountants for the annual period ending December 31, 2004.
3. To increase the Company's authorized shares to 500 million shares of
common stock.
4. To adopt the 2005 Stock Option Plan.
The Board of Directors has fixed the closing of business on
_______________, 2005 as the record date for the determination of shareholders
entitled to notice of and to vote at this meeting or any adjournment thereof.
The stock transfer books will not be closed.
The Company's Annual Report to Stockholders for the year ended December 31,
2004 accompanies this Notice of Annual Meeting and Proxy Statement.
All stockholders, whether or not they expect to attend the Meeting in
person, are requested either to complete, date, sign, and return the enclosed
form of proxy in the accompanying envelope or to record their proxy by other
authorized means. The proxy may be revoked by the person executing the proxy by
filing with the Secretary of the Company an instrument of revocation or duly
executed proxy bearing a later date, or by electing to vote in person at the
meeting.
Sincerely,
------------------------------
Angela Du, President
WE ARE ASKING YOU FOR A PROXY AND YOU ARE REQUESTED TO SEND US A PROXY.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14A PROMULGATED THERETO
CHINA MOBILITY SOLUTIONS, INC.
ANNUAL MEETING OF SHAREHOLDERS
_____________, 2005
This Proxy Statement is being furnished to Shareholders of China Mobility
Solutions, Inc. ("CHMS.OB") in connection with the Annual Meeting of
Shareholders (the "Meeting") to be held on ______________________, 2005 and at
any adjournments thereof (the "Meeting"). The Meeting will be held at The
Sheraton Hotel, 360 Union Blvd., Lakewood, Colorado, at 1:30 P.M. local time.
This Proxy Statement is first being mailed or given to Shareholders on or
about _______________, 2005.
We are a Florida corporation. We are a full-reporting 1934 Act company,
with our common stock quoted on the Over the Counter Bulletin Board (OTCBB)
under the symbol CHMS.OB. Information about us can be found in our December 31,
2004 Annual Report filed on Form 10-KSB. Additional information about us can be
found in our public filings that can be accessed electronically by means of the
SEC's home page on the Internet at http://www.sec.gov, or at other Internet
sites such as http://www.freeedgar.com, as well as by such other means from the
offices of the SEC.
WE ARE ASKING YOU FOR A PROXY
YOU ARE REQUESTED TO SEND US A PROXY
We are soliciting proxies but the holders of more than 50% percent of the
shares entitled to vote have indicated that they intend to vote in favor of
these proposals. In light of the size of the holdings of these shareholders, the
current Board and management of the Company deems the likelihood of a favorable
vote on the proposals sufficient. You may mark and send the proxy attached
hereto to record your vote.
COSTS OF PROXY STATEMENT
We will pay the cost of preparing and sending out this proxy statement. It
will be sent to most shareholders via regular mail. A few will receive it by
personal delivery or facsimile.
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VOTING
SHAREHOLDERS ENTITLED TO VOTE
Holders of record of common stock, at the close of business on the date of
mailing this proxy statement will be entitled to vote at the Annual Meeting. As
of this date, _________________, 2005, 15,826,670 shares of common stock were
issued and outstanding. Each shareholder is entitled to one vote for each share
of common stock held by such shareholder. We have only the single class of
stock, namely our common stock. Each share of Common Stock is entitled to one
(1) vote for as many separate nominees as there are directors to be elected and
for or against all other matters presented. For action to be taken at the Annual
Meeting, a majority of the shares entitled to vote must be represented at the
Annual Meeting in person or by proxy. Shares of stock may not be voted
cumulatively. Abstentions and broker non-votes each will be included in
determining the number of shares present and voting at the Annual Meeting.
Abstentions will be counted in tabulations of the votes cast on proposals,
whereas broker non-votes will not be counted for purposes of determining whether
a proposal has been approved.
QUORUM AND VOTE NECESSARY FOR APPROVALS.
A majority of the shares of common stock outstanding at the record date
must be represented at the Annual Meeting in person or by proxy in order for a
quorum to be present and in order to take action upon all matters to be voted
upon, but if a quorum should not be present, the meeting may be adjourned
without further notice to shareholders, until a quorum is assembled. Each
shareholder will be entitled to cast one vote at the Annual Meeting for each
share of common stock registered in such shareholder's name at the record date.
Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business. Each share
of Common Stock entitles the holder thereof to one vote on all matters to come
before the Annual Meeting. Holders of shares of Common Stock are not entitled to
cumulative voting rights.
The favorable vote of a plurality of the votes of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting is
necessary to elect the nominees for directors of the Company. To take the other
actions at the meeting a majority of the shares outstanding must vote in favor
of the proposals present in person or by Proxy.
A majority of shares issued and outstanding is sufficient to approve the
proposal for a reverse split and name change to be incorporated in Amendments to
the Articles of Incorporation.
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PROXIES
In voting their Common Stock, stockholders may vote in favor of or against
the proposal to approve the proposals on the agenda or may abstain from voting.
Stockholders should specify their choice on the accompanying proxy card. All
properly executed proxy cards delivered pursuant to this solicitation and not
revoked will be voted at the Meeting in accordance with the directions given. If
no specific instruction are given with regard to the matter to be voted upon,
then the shares represented by a signed proxy card will be voted "FOR" the
approval of the Proposals and in the discretion of such proxies to any other
procedural matters which may properly come before the Meeting or any
adjournments thereof. All proxies delivered pursuant to this solicitation are
revocable at any time before they are voted at the option of the persons
executing them by (i) giving written notice to the Secretary of the Company,
(ii) by delivering a later dated proxy card, or (iii) by voting in person at the
Meeting. All written notices of revocation and other communications with respect
to revocations of proxies should be addressed to Angela Du, President, c/o 7609
Ralston Road, Arvada, CO 80002.
IF THEY WISH TO VOTE, HOLDERS OF COMMON STOCK ARE REQUIRED TO COMPLETE,
DATE, AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY
IN THE ACCOMPANYING ENVELOPE.
The person named as proxy is Angela Du, President of the Company.
In addition to the solicitation of proxies by mail, the Company, through
its directors, officers, and employees, may solicit proxies from stockholders
personally or by telephone or other forms of communication. The Company will not
reimburse anyone for out-of-pocket costs and expenses incurred in the
solicitation of proxies. The Company also will request brokerage houses,
nominees, fiduciaries, and other custodians to forward soliciting materials to
beneficial owners, and the Company will reimburse such persons for their
reasonable expenses incurred in doing so. All expenses incurred in connection
with the solicitation of proxies will be borne by the Company.
INTEREST OF PERSONS IN MATTERS TO BE ACTED UPON
No officer or director or principal shareholder has a substantial or
material interest in the favorable action on these proposals.
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PROPOSAL #1
PROPOSED AMENDMENTS TO ARTICLES OF INCORPORATION AND
CHANGES IN CORPORATE CAPITALIZATION
NOMINATION AND ELECTION OF DIRECTORS
The Company's Bylaws currently provide for the number of directors of the
Company to be established by resolution of the Board of Directors and that
number is four. The Board has nominated four (4) persons. At this Annual
Meeting, a Board of four (4) directors will be elected. Except as set forth
below, unless otherwise instructed, the proxy holders will vote the proxies
received by them for Management's nominees named below.
All the nominees are presently directors of the Company. In the event that
any Management nominee shall become available, or if other persons are
nominated, the proxy holders will vote in their discretion for a substitute
nominee. It is not expected that any nominee will be unavailable. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Stockholders or until a successor has been elected and qualified.
The proxies solicited hereby cannot be voted for a number of persons
greater than the number of nominees named below. The Certificate of
Incorporation of the Company does not permit cumulative voting. A plurality of
the votes of the holders of the outstanding shares of Common Stock represented
at a meeting at which a quorum is presented may elect directors.
THE DIRECTORS CANDIDATES NOMINATED BY MANAGEMENT ARE:
Xiao-Qing (Angela) Du
Ernest Cheung
Greg Ye
Michael J.P. Moen
The above individuals are nominees for election as directors for the next
fiscal year. Their biographical information is as follows:
XIAO-QING (ANGELA) DU, President and Director, age 34. She has been
President and Director of our company from 2003 to date. She received a Bachelor
of Science in International Finance in 1992 from East China Normal University.
She received a Master of Science in Finance and Management Science in 1996 from
the University of Saskatchewan Canada. She was Business Manager of China
Machinery & Equipment I/E Corp. (CMEC) from 1992 to 1994. She is now President
of Infornet Investment CORP., the Company's wholly owned subsidiary in Canada
since 1997. She was President of China Mobility from 1997 to 1999. She ran the
operations in China of the DNS and web hosting business.
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ERNEST CHEUNG, Secretary and Director, age 54, has been Secretary of the
company since May 1998. He received a B.A. in Math in 1973 from University of
Waterloo Ontario. He received an MBA in Finance and Marketing from Queen's
University, Ontario in 1975. From 1991 to 1993 he was Vice President of Midland
Walwyn Capital, Inc. of Toronto, Canada, now known as Merrill Lynch Canada. From
1992 until 1995 he served as Vice President and Director of Tele Pacific
International Communications Corp. He has also served as President for Richco
Investors, Inc. since 1995. He has been a director of the Company since 1996. He
is currently a Director of Agro International Holdings, Inc. since 1997, Spur
Ventures, Inc. since 1997, Richco Investors, Inc. since 1995 and Drucker
Industries, Inc. since 1997. In 2000, he became President and a Director of
China NetTV Holdings, Inc. In 2002, he became a Director of The Link Group, Inc.
(Formerly World Envirotech, Inc.).
GREG YE, MBA, age 36, CPA, Director, brings 12 years of management,
consulting and investment experience in a broad range of business and technology
disciplines. He is currently in charge of developing and implementing corporate
strategies as Group Director of Strategic Marketing for Cadence Design Systems
Inc, the world's 9th largest software company, listed on both the NYSE and
NASDAQ. Previously, he worked for Cisco Systems as a market development manager
and PricewaterhouseCoopers, where he spent six years advising high-tech
companies based in the U.S. and Asia. He co-founded a Silicon Valley based
incubator for high-tech companies in China in 1999 and serves as an advisor for
several other U.S. high-tech start-up companies. Mr. Ye received his MBA from
Harvard Business School and his BSEE from Shanghai Jiao Tong University, China.
He is a Certified Public Accountant and a Certified Management Accountant.
MICHAEL J.P. MOEN, age 33, Director, recently a Senior Vice President in
U.S. Institutional Sales for Burlington Capital Markets in New York, has spent
the past several years with some of the most prestigious firms on Wall Street.
His previous positions include US Institutional Sales - Senior Analyst for
Goldman Sachs, a Buyside Trader for CIBC World Markets, and Retail Equity Sales
for Saloman Smith Barney. Previously he was an Accountant with Moen & Company
Chartered Accountants of Vancouver. Mr. Moen earned his Master of Business
Administration in International Finance from the University of Southern Europe
and his Bachelor of Accounting from the University of Minnesota.
Management will devote part time to the operations of the Company, and any
time spent will be devoted to screening and assessing and, if warranted,
negotiating to acquire business opportunities.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" MANAGEMENT'S NOMINEES.
------------------------
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PROPOSAL #2
INDEPENDENT PUBLIC ACCOUNTANTS
Moen and Company, Independent Registered Public Accounting Firm, of
Vancouver, British Columbia, Canada have been appointed as the Certifying
accountants for the period through fiscal year 2005 and shareholders are asked
to ratify such appointment. Ratification of the appointment of Moen and Company,
as the Company's independent public accountants for the fiscal year ending
December 31, 2005 will require the affirmative vote of a majority of the shares
of Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting. In the event the stockholders do not ratify the appointment of
Moen and Company, for the forthcoming fiscal year, such appointment will be
reconsidered by the Board. Representatives of Moen and Company, are expected to
be present at the Annual Meeting to make statements if they desire to do so, and
such representatives are expected to be available to respond to appropriate
questions.
Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the appointment of Moen and Company, as independent accountants
for the Company's year ending December 31, 2005.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE COMPANY'S INDEPENDENT ACCOUNTANTS.
------------------------
PROPOSAL #3
INCREASE IN AUTHORIZED SHARES
INVOLVING CHANGES IN CORPORATE CAPITAL STRUCTURE
We are asking shareholders to authorize an increase in the number of
authorized shares from 50,000,000 common shares to 500,000,000 common shares.
This requires an amendment to our Articles of Incorporation.
We believe increase in the authorized shares in our Articles of
Incorporation is in the best interest of our corporation because we believe we
have insufficient shares to accomplish growth in the future.
Discussion of Background for Proposed Action
Pursuant to this Proxy Statement, you, as stockholders, are informed that
the action sought is to increase the number of shares of stock that the Company
is authorized to issue to 500 million shares of common stock.
The shares of common stock to be authorized and issued have full voting
rights and have no dividend or interest rates, conversion prices, redemption
prices, maturity dates, or other matters. There are no preemptive rights
regarding the shares of common stock.
8
It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's stockholders pursuant to
the authority and discretion of the Company's management to complete share
issuances without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders with any documentation
concerning the proposed issuance prior to any share issuances. All
determinations (except involving a merger where the number of shares of common
stock of the Company issued will equal more than 20% of the issued and
outstanding shares of common stock of the Company prior to the transaction)
involving share issuances are in the discretion and business judgment of the
Board of Directors in their exercise of fiduciary responsibility, but require a
determination by the Board that the shares are being issued for fair and
adequate consideration.
The rights of the existing holders of common stock will not be affected,
except that the authorization of a large number of additional shares and the
issuance of additional shares for the pending transaction will allow, in the
future, the following types of actions or events to occur without the current
stockholders being able to effectively prevent such actions or events:
1. Dilution may occur due to the issuance of additional shares. The
percentage ownership of the Company by the existing shareholders will
be diluted from 100% to an indeterminate amount upon completion of any
new transactions for stock.
2. Control of the Company by stockholders may change due to new
issuances.
3. The election of the Board of Directors will be dominated by new large
stockholders, effectively blocking current stockholders from electing
directors.
4. Business plans and operations may change.
5. Mergers, acquisitions, or divestitures may occur which are approved by
the holders of the newly issued shares.
In the future event that the Board continues to issue shares for capital,
services, or acquisitions, the present management and stockholders of the
Company most likely will not have control of a majority of the voting shares of
the Company.
It is likely that the Company may acquire other compatible business
opportunities through the issuance of common stock of the Company. Although the
terms of any such transaction cannot be predicted, this could result in
substantial additional dilution in the equity of those who were stockholders of
the Company prior to such issuance. There is no assurance that any future
issuance of shares will be approved at a price or value equal to or greater than
the price which a prior stockholder has paid, or at a price greater than the
then current market price. Typically, unregistered shares are issued at less
than market price due to their illiquidity and restricted nature as a result of,
among other things, the extended holding period and sales limitations which such
shares are subject to.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE INCREASE.
-----------------------
9
PROPOSAL #4
ADOPTION OF THE 2005 STOCK OPTION PLAN
THE COMPANY AND THE PLAN
As described in the accompanying NOTICE OF ANNUAL MEETING OF SHAREHOLDERS,
the Company proposes to adopt the China Mobility Solutions, Inc. 2005 Stock
Option Plan attached hereto as Exhibit "A".
The Board of Directors believes that the Stock Option Plan will enable the
Company to compensate management and employees at a level competitive in the
industry.
The Board of Directors of the Company voted unanimously to adopt the 2005
Stock Option Plan for China Mobility Solutions, Inc. The Board of Directors
believes that the adoption of the Plan critical to attracting, retaining, and
motivating employees and other eligible persons of the Company. The Plan and the
option grants were approved by disinterested members of the Board as well as by
the entire Board.
The following table sets forth information with respect to stock options to
officers and directors of the Company granted pursuant to the Plan through May
6, 2005.
Number of Options Exercise
Name Title Granted(1) Price Expiration Date
---- ----- ---------- ----- ---------------
None.
All current Executive
Officers as a Group
All current Directors who
are not Executive Officers
as a Group)
All Employees as a Group
(not including
Executive Officers and
Directors)
10
PURPOSE. This 2005 China Mobility Solutions, Inc. Stock Option Plan ("the
2005 Plan") is intended to promote the interests of the Corporation by providing
eligible individuals who are responsible for the management, growth and
financial success of the Corporation or who otherwise render valuable services
to the Corporation with the opportunity to acquire a proprietary interest, or
increase their proprietary interest, in the Corporation and thereby encourage
them to remain in the service of the Corporation.
ADMINISTRATION OF THE 2005 PLAN.
(a) The 2005 Plan shall be administered by the Board. The Board, however,
may at any time appoint a committee ("Committee") of two (2) or more Board
members and delegate to such Committee one or more of the administrative powers
allocated to the Board pursuant to the provisions of the 2005 Plan. Members of
the Committee shall serve for such period of time as the Board may determine and
shall be subject to removal by the Board at any time. The Board may also at any
time terminate the functions of the Committee and reassume all powers and
authority previously delegated to the Committee.
(b) The 2005 Plan Administrator (either the Board or the Committee, to the
extent the Committee is at the time responsible for the administration of the
2005 Plan) shall have full power and authority (subject to the provisions of the
2005 Plan) to establish such rules and regulations as it may deem appropriate
for the proper 2005 Plan administration and to make such determinations under,
and issue such interpretations of, the 2005 Plan and any outstanding option
grants or share issuances as it may deem necessary or advisable. Decisions of
the 2005 Plan Administrator shall be final and binding on all parties who have
an interest in the 2005 Plan or any outstanding option or share issuance.
ELIGIBILITY.
(a) The persons eligible to receive option grants pursuant to the 2005 Plan
(each an "Optionee") are limited to the following:
(1) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations, if any) who render
services which contribute to the success and growth of the Corporation (or
any parent or subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of the
Corporation (or any parent or subsidiary corporations);
(2) the non-employee members of the Board or the non-employee members
of the board of directors of any parent or subsidiary corporations; and
(3) those consultants or independent contractors who provide valuable
services to the Corporation (or any parent or subsidiary corporations).
(b) The 2005 Plan Administrator shall have full authority to determine,
with respect to the option grants made under the 2005 Plan, which eligible
individuals are to receive option grants, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.
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STOCK SUBJECT TO THE 2005 PLAN.
(a) The stock issuable under the 2005 Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock, $0.0001 par
value (the "Common Stock"). The maximum number of shares which may be issued
over the term of the 2005 Plan shall not exceed 3.5 million shares of Common
Stock. The total number of shares issuable under the 2005 Plan shall be subject
to adjustment from time to time in accordance with the provisions of Section
4(c).
(b) Shares subject to (i) the portion of one or more outstanding options
which are not exercised or surrendered prior to expiration or termination and
(ii) outstanding options canceled in accordance with the cancellation-regrant
provisions of Section 9 will be available for subsequent option grants or stock
issuances under the 2005 Plan.
(c) In the event any change is made to the Common Stock issuable under the
2005 Plan by reason of any stock dividend, stock split, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without receipt of consideration, then appropriate adjustments shall be
made to (i) the aggregate number and/or class of shares issuable under the 2005
Plan and (ii) the aggregate number and/or class of shares and the option price
per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the 2005 Plan Administrator shall be final, binding and conclusive.
(d) Common Stock issuable under the 2005 Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as may be
determined by the Plan Administrator.
TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the 2005 Plan
shall be authorized by action of the 2005 Plan Administrator and may, at the
discretion of the 2005 Plan Administrator, be either Incentive Options or
Non-Statutory Options. Each granted option shall be evidenced by one or more
instruments in the form approved by the 2005 Plan Administrator; PROVIDED,
HOWEVER, that each such instrument shall comply with and incorporate the terms
and conditions specified below. In addition, each instrument evidencing an
Incentive Option shall be subject to the applicable provisions of Section 7.
(a) OPTION PRICE
(1) The option price per share shall be fixed by the 2005 Plan
Administrator.
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(2) The option price shall become immediately due upon exercise of the
option, and subject to the provisions of Section 11, shall be payable in cash or
check drawn to the Corporation's order. Should the Corporation's outstanding
Common Stock be registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "1934 Act") at the time the option is exercised, then the
option price may also be paid as follows:
(A) in shares of Common Stock held by the optionee for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(B) through a special sale and remittance procedure pursuant to which
the Optionee (i) is to provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds, an amount
sufficient to cover the aggregate option price payable for the purchased
shares plus all applicable Federal and State income and employment taxes
required to be withheld by the Corporation by reason of such purchase and
(ii) concurrently provides written directives to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage firm
in order to effect the sale transaction.
(b) TERM AND EXERCISE OF OPTIONS. Each option granted under the 2005 Plan shall
be exercisable at such time or times, during such period, and for such number of
shares as shall be determined by the 2005 Plan Administrator and set forth in
the stock option agreement evidencing such option. However, no option granted
under the 2005 Plan shall have a term in excess of ten (10) years from the grant
date.
(c) TERMINATION OF SERVICE
(1) The 2005 Plan Administrator shall have complete discretion to limit the
period of time that an option granted under the 2005 Plan may be exercised
should the Optionee cease to remain in Service for any reason (including death
or Permanent Disability). In no event, however, shall any such option be
exercisable after the specified expiration date of the option term. During such
limited period of exercisability, the option may not be exercised for more than
that number of shares (if any) for which such option is exercisable on the date
of the Optionee's cessation of Service. Upon the expiration of such period or
(if earlier) upon the expiration of the option term, the option shall terminate
and cease to be exercisable.
(2) Notwithstanding subsection (1) above, the 2005 Plan Administrator shall
have complete discretion, exercisable either at the time the option is granted
or at the time the Optionee ceases Service, to allow one or more outstanding
options held by the Optionee to be exercised, during the period of
exercisability following the Optionee's cessation of Service, not only with
respect to the number of shares for which the option is exercisable.
(3) Notwithstanding any provision of this 2005 Plan to the contrary, any
options granted under this 2005 Plan shall terminate as of the date the Optionee
ceases to be in the Service of the Corporation if the Optionee was terminated
for "cause" or could have been terminated for "cause." If the Optionee has an
employment or a consulting agreement with the Corporation, the term "cause"
shall have the meaning given that term in the employment or consulting
agreement. If the Optionee does not have an employment or consulting agreement
with the Corporation, or if such employment or consulting agreement does not
define the term "cause," the term "cause" shall mean: (A) misconduct or
dishonesty that materially adversely affects the Corporation, including without
limitation (i) an act materially in
13
conflict with the financial interests of the Corporation, (ii) an act that could
damage the reputation or customer relations of the Corporation, (iii) an act
that could subject the Corporation to liability, (iv) an act constituting sexual
harassment or other violation of the civil rights of co-workers, (v) failure to
obey any lawful instruction of the Board or any officer of the Corporation and
(vi) failure to comply with, or perform any duty required under, the terms of
any confidentiality, inventions or non-competition agreement the Optionee may
have with the Corporation, or (B) acts constituting the unauthorized disclosure
of any of the trade secrets or confidential information of the Corporation,
unfair competition with the Corporation or the inducement of any customer of the
Corporation to breach any contract with the Corporation. The right to exercise
any option shall be suspended automatically during the pendency of any
investigation by the Board, or its designee, and/or any negotiations by the
Board, or its designee, and the Optionee, regarding any actual or alleged act or
omission by the Optionee of the type described in this paragraph.
(d) SHAREHOLDER RIGHTS. An Optionee shall have none of the rights of a
shareholder with respect to any shares covered by the option until such Optionee
shall have exercised the option and paid the option price.
(e) TRANSFERABILITY. Unless otherwise specified in the Agreement relating to an
option, options granted hereunder may be transferable (i) by will or the laws of
descent and distribution, (ii) pursuant to beneficiary designation procedures
approved by the Company, (iii) pursuant to a domestic relations order, (iv) to
one or more family members of the optionee, (v) to a trust or trusts for the
exclusive benefit of the optionee and/or one or more family members of the
optionee, (vi) to a partnership in which the optionee and/or one or more family
members of the optionee are the only partners, (vii) to a limited liability
company in which the optionee and/or one or more family members of the optionee
are the only members, or (viii) to such other persons or entities as may be
specified in the agreement relating to an option or approved in writing by the
Committee prior to such transfer. Except to the extent permitted by the
preceding sentence, each option may be exercised during the optionee's lifetime
only by the optionee or the optionee's legal representative or similar person.
Except as permitted by the second preceding sentence, (i) no option granted
hereunder shall be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process and (ii) upon any
attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise
dispose of any option granted hereunder, such option and all rights thereunder
shall immediately become null and void.
INCENTIVE OPTIONS. The terms and conditions specified below shall be
applicable to all Incentive Options granted under the 2005 Plan. Incentive
Options may only be granted to individuals who are Employees. Options which are
specifically designated as Non-Statutory Options when issued under the 2005 Plan
shall NOT be subject to such terms and conditions.
(a) OPTION PRICE. The option price per share of the Common Stock subject to
an Incentive Option shall in no event be less than one hundred percent (100%) of
the Fair Market Value of a share of Common Stock on the grant date; provided, if
the individual to whom the option is granted is at the time a Ten Percent
Shareholder, then the option price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the grant
date.
14
(b) DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this 2005 Plan (or any other option 2005
Plan of the Corporation or any Parent or Subsidiary corporation) may for the
first time become exercisable as Incentive Stock Options under the Federal tax
laws during any one calendar year shall not exceed the sum of one hundred
thousand dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability thereof as Incentive Options
under the Federal tax laws shall be applied on the basis of the order in which
such options are granted.
(c) OPTION TERM FOR TEN PERCENT SHAREHOLDER. No option granted to a Ten
Percent Shareholder shall have a term in excess of five (5) years from the grant
date.
(d) ACCELERATED TERMINATION OF OPTION TERM. The option term shall terminate
prior to the expiration date established by the 2005 Plan Administrator should
any of the following provisions become applicable:
(1) Except as otherwise provided in subparagraph (2) or (3) below,
should an Optionee cease to remain in Service while his/her option is
outstanding, then the period for exercising his/her option shall be reduced
to a three (3) month period commencing with the date of such cessation of
Service, but in no event shall such option be exercisable at any time after
the expiration date. Upon the expiration of such three (3) month period or
(if earlier) upon the expiration date, the option shall terminate and cease
to be outstanding.
(2) Should the Optionee die while his/her option is outstanding,
his/her option shall cease to be exercisable, upon the EARLIER of (a) the
expiration of the twelve (12) month period measured from the date of
Optionee's death or (b) the expiration date of the option. Upon the
expiration of such twelve (12) month period or (if earlier) upon the
expiration date, the option shall terminate and cease to be outstanding.
(3) Should the Optionee become Permanently Disabled and cease by
reason thereof to remain in Service while his/her option is outstanding,
then the Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise
his/her option, but in no event shall this option be exercisable at any
time after the expiration date of the option. Upon the expiration of such
limited period of exercisability or (if earlier) upon the expiration date,
his/her option shall terminate and cease to be outstanding.
(4) During the limited period of exercisability applicable under
subparagraphs (1), (2), or (3) above, the Optionee's option may be
exercised for any or all of the option shares in which the Optionee, at the
time of cessation of Services, is vested in accordance with the
exercise/vesting provisions specified in his/her stock option documents.
(e) TRANSFERABILITY. An Incentive Option shall not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercisable during the Optionee's lifetime only by such Optionee or the
Optionee's legal representative or similar person. Except as modified by the
preceding provisions of this Section 7, all the provisions of the 2005 Plan
shall be applicable to the Incentive Options granted hereunder.
15
CORPORATE TRANSACTION.
(a) In the event of any Corporate Transaction, each option outstanding
under the 2005 Plan shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless assumed by the successor
corporation or parent thereof.
(b) In connection with any such Corporate Transaction, the 2005 Plan
Administrator may, at its sole discretion, (i) accelerate each or any
outstanding option under the 2005 Plan so that each or any such option shall,
immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares, (ii) arrange for each or any outstanding option
to either to be assumed by the successor corporation or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (iii) arrange for the option to be
replaced by a comparable cash incentive program of the successor corporation
based on the option spread (the amount by which the Fair Market Value of the
shares of Common Stock at the time subject to the option exceeds the option
price payable for such shares) or (iv) take none of the actions described in
clauses (i), (ii) or (iii) above and allow the option to terminate as provided
in Section 2(a) above. The determination of comparability under clauses (ii) and
(iii) above shall be made by the 2005 Plan Administrator, and such determination
shall be final and conclusive.
(c) The exercisability as Incentive Stock Options under the Federal tax
laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of subsection 7(b).
(d) If the outstanding options under the 2005 Plan are assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or are
otherwise to continue in effect following such Corporate Transaction, then each
such assumed or continuing option shall, immediately after such Corporate
Transaction, be appropriately adjusted to apply and pertain to the number and
class of securities or other property that would have been issuable to the
option holder, in consummation of the Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction.
(e) The grant of options under this 2005 Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
CANCELLATION AND NEW GRANT OF OPTIONS. The 2005 Plan Administrator shall
have the authority to effect, at any time and from time to time, with the
consent of the affected Optionees, the cancellation of any or all outstanding
options under the 2005 Plan and to grant in substitution therefore new options
under the 2005 Plan covering the same or different numbers of shares of Common
Stock but having, in the case of an Incentive Option, an option price per share
not less than one hundred percent (100%) of such Fair Market Value per share of
Common Stock on the new grant date, or, in the case of a Ten Percent
Shareholder, not less than one hundred and ten percent (110%) of such Fair
Market Value.
16
EXTENSION OF EXERCISE PERIOD. The 2005 Plan Administrator shall have full
power and authority to extend (either at the time when the option is granted or
at any time while the option remains outstanding) the period of time for which
the option is to remain exercisable following the Optionee's cessation of
Service, from the limited period set forth in the option agreement, to such
greater period of time as the 2005 Plan Administrator may deem appropriate under
the circumstances. In no event, however, shall such option be exercisable after
the specified expiration date of the option term.
LOANS.
(a) The 2005 Plan Administrator may assist any Optionee (including an
Optionee who is an officer or director of the Corporation) in the exercise of
one or more options granted to such Optionee under the 2005 Plan, including the
satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by:
(1) authorizing the extension of a loan from the Corporation to such
Optionee, or
(2) permitting the Optionee to pay the option price for the purchased
Common Stock in installments over a period of years.
(b) The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be established by the 2005 Plan
Administrator in its sole discretion. Loans or installment payments may be
granted with or without security or collateral; however, any loan made to a
consultant or other non-employee director must be secured by property other than
the purchased shares of Common Stock. In all events, the maximum credit
available to each may not exceed the SUM of (i) the aggregate option price
payable for the purchased shares less the aggregate par value for such shares
plus (ii) any Federal and State income and employment tax liability incurred by
the Optionee in connection with such exercise.
(c) The 2005 Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions the Board in its discretion deems appropriate.
AMENDMENT OF THE 2005 PLAN AND AWARDS.
(a) The Board shall have complete and exclusive power and authority to
amend or modify the 2005 Plan in any or all respects whatsoever. However, no
such amendment or modification shall adversely affect the rights and obligations
of an Optionee with respect to options at the time outstanding under the 2005
Plan, nor adversely affect the rights of any Participant with respect to Common
Stock issued under the 2005 Plan prior to such action, unless the Optionee
consents to such amendment. In addition, the Board shall not, without the
approval of the Corporation's shareholders, amend the 2005 Plan to (i)
materially increase the maximum number of shares issuable under the 2005 Plan
(except for permissible adjustments under Section 4(c)), (ii) materially
increase the benefits accruing to individuals who participate in the 2005 Plan,
or (iii) materially modify the eligibility requirements for participation in the
2005 Plan.
17
(b) Options to purchase shares of Common Stock may be granted under the
2005 Plan which are in excess of the number of shares then available for
issuance under the 2005 Plan, provided any excess shares actually issued under
the 2005 Plan are held in escrow until there is obtained shareholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the 2005 Plan. If such shareholder approval is not
obtained within twelve (12) months after the date the initial excess issuances
are made, then (i) any unexercised options representing such excess shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund to the Optionees the option price paid for any excess shares issued under
the 2005 Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow.
EFFECTIVE DATE AND TERM OF 2005 PLAN.
(a) The 2005 Plan shall become effective when adopted by the Board and
approved by the Corporation's shareholders. If such shareholder approval is not
obtained within twelve (12) months after the date of the Board's adoption of the
2005 Plan, then all options previously granted under the 2005 Plan shall
terminate, and no further options shall be granted. Subject to such limitation,
the 2005 Plan Administrator may grant options under the 2005 Plan at any time
after the effective date and before the date fixed herein for termination of the
2005 Plan.
(b) The 2005 Plan shall terminate upon the EARLIER of (i) ten years after
the adoption of the 2005 Plan or (ii) the date on which all shares available for
issuance under the 2005 Plan have been issued or canceled pursuant to the
exercise or surrender of options granted under the 2005 Plan. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date under the 2005 Plan shall be affected by the termination of the 2005
Plan, and such securities shall thereafter continue to have force and effect in
accordance with the provisions of the stock option agreements evidencing such
Options.
USE OF PROCEEDS. Any cash proceeds received by the Corporation from the
issuance of shares of Common Stock under the 2005 Plan shall be used for general
corporate purposes.
WITHHOLDING. The Corporation's obligation to deliver shares upon the
exercise or surrender of any options granted under the 2005 Plan shall be
subject to the satisfaction of all applicable Federal, State and local income
and employment tax withholding requirements.
REGULATORY APPROVALS. The implementation of the 2005 Plan, the granting of
any options under the 2005 Plan, and the issuance of Common Stock upon the
exercise or surrender of the option grants made hereunder shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the 2005 Plan, the options
granted under it, and the Common Stock issued pursuant to it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE
COMPANY'S 2005 STOCK OPTION PLAN
------------------------
18
ANNUAL MEETING OF SHAREHOLDERS
At the date of this proxy statement, no other matter will presented for
action at the Annual meeting. Only those matters proposed as discussed will be
voted on at the meeting. Shareholders may propose matters to be presented at
shareholder meetings and also nominate directors. Shareholder proposals must
conform to the standards set out by the Securities Exchange Commission and must
be received at our principal offices on or before, _______________, 2005, in
order to be included in future proxy materials, if any, or presentation at our
next annual meeting of shareholders, anticipated in _____________, 2006.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
As of the call date of the meeting, _________, 2005, the total number of
common shares outstanding and entitled to vote was 15,826,670.
The holders of such shares are entitled to one vote for each share being
held on the record date. There is no cumulative voting on any matter on the
agenda of this meeting. No additional shares will be issued subsequent to call
date and prior to meeting.
REPORT AVAILABLE
A copy of our most current Annual Report on form 10KSB is attached hereto
and later filings may be obtained without charge, by writing Angela Du,
President, #900 - 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company as of
_________________, 2005 are as follows:
Xiao-qing (Angela) Du, President and Director
Ernest Cheung, Secretary/Treasurer and Director
Greg Ye, Director
Michael J.P. Moen, Director
The directors of the Company hold office until the next annual meeting of
the shareholders and until their successors have been duly elected and
qualified. The officers of the Company are elected at the annual meeting of the
Board of Directors and hold office until their successors are chosen and
qualified or until their death, resignation, or removal. The Company presently
has no executive committee.
NAME AGE POSITION WITH THE COMPANY TERM PERIOD OF SERVICE
---- --- ------------------------- ---- -----------------
Angela Du 34 President, CEO, Annual since 1996
and Director
Ernest Cheung 54 Secretary, Treasurer, Annual since 1998
and Director
Greg Ye 36 Director Annual since 2005
Michael J.P. Moen 33 Director Annual since 2005
19
Executive Compensation
------------------------
Remuneration
-------------
The following information is set forth with respect to all remuneration
paid by the Company during the year ended December 31, 2004 to the Company's
five most highly paid executive officers or directors whose total remuneration
exceeded $50,000, and to all directors and officers as a group:
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Cash Compensation Security Grants
----------------------------------------------------------------------------------------------------------
Name and Year Salary Bonus Annual Restricted Securities Long Term LTIP All Other
Principal Compensation Stock Underlying Compensation/ Payments Compensation
Position /Other($) Awards Options/ Options
SARs(#)
(SHARES)
----------------------------------------------------------------------------------------------------------
Xiao-qing Du 2001 32,084 0 0 0 0 0 0 0
President of 2002 4,809 0 0 0 0 0 0 0
Infornet (CDN)
Subsidiary 2003 0 0 0 0 0 0 0 0
2004 0 0 0 0 0 0 0 330,000(2)
-------------------------------------------------------------------------------------------------------------
Ernest Cheung 2001 0 0 24,000 0 0 0 0 0
Secretary(1) 2002 0 0 24,000 0 0 0 0 0
(CDN)
2003 0 0 0 0 0 0 0 0
2004 0 0 0 0 0 0 0 165,000(2)
-------------------------------------------------------------------------------------------------------------
Officers as 2001 32,084 0 24,000 0 0 0 0 0
A Group 2002 4,809 0 24,000 0 0 0 0 0
(CDN) (CDN)
2003 0 0 0 0 0 0 0 0
2004 0 0 0 0 0 0 0 495,000
-------------------------------------------------------------------------------------------------------------
(1) Ernest Cheung received 16,667 options to buy 16,667 shares at $3.90 per
share, plus Richco Investors, Inc. of which Mr. Cheung is an officer and
director, and Mr. Tsakok is an officer and director, received 128,333 units for
services in structuring the private placement. Mr. Tsakok has resigned as an
oficer and Director of the Company.
(2) Options at $.30 per share expiring August 1, 2007.
There have been no Option/SAR grants or exercises in the last fiscal year
reportable under Reg. S-B, 402(c) or (d).
20
(b) Directors' Compensation
Directors who are also officers of China Mobility Solutions, Inc. receive
no cash compensation for services as a director. However, the directors will be
reimbursed for out-of-pocket expenses incurred in connection with attendance at
board and committee meetings. The Company has granted options to directors under
its Stock Incentive Plan subsequently adopted.
SUMMARY COMPENSATION TABLE OF DIRECTORS
(To December 31, 2004)
Cash Compensation Security Grants
-------------------------------------------------------------------------------------------------------------
Name and Year Annual Meeting Consulting Number Securities LTIP All Other
Principal retainer Fees ($) Fees/Other of Underlying Payments Compensation
Position Fees ($) Fees($) Shares (#) Options/SARs(#)
(SHARES)
------------------------------------------------------------------------------------------------------------
Xiao-qing Du, 2001 0 0 0 0 0 0 0
Director 2002 0 0 0 0 0 0 0
2003 0 0 0 0 0 0 0
(*)2004 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------------------------------
Ernest Cheung, 2001 0 0 0 0 0 0 0
Director 2002 0 0 0 0 0 0 0
2003 0 0 0 0 0 0 0
(*)2004 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------
Greg Ye, 2004 0 0 0 0 0 0 0
Director
-------------------------------------------------------------------------------------------------------------
Michael J.P. 2004 0 0 0 0 0 0 0
Moen, Director
------------------------------------------------------------------------------------------------------------
Maurice Tsakok 2001 0 0 24,000 CDN 0 0 0 0
Director(1) 2002 0 0 24,000 CDN 0 0 0 0
(Resigned 2003 0 0 0 0 0 0 0
2004) 2004 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------
Directors as a 2001 0 0 84,000 CDN 0 0 0 0
group 2002 0 0 54,000 CDN 0 0 0 0
2003 0 0 0 0 0 0 0
2004 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------
(1) On July 15, 2004, Maurice Tsakok resigned as the director of the Company.
* See Executive Compensation Table.
There have been no Option/SAR grants or exercises in the last fiscal year
reportable under Reg. S-B, 402(c) or (d).
21
Termination of Employment and Change of Control Arrangements:
None.
Stock purchase options: (Note all of these options are subject to the 1 for
3 reverse split effectuated in 2004. This would reduce the options by a factor
of 3 and increase the exercise price by a factor of 3.)
On November 12, 1999 the Company granted options to purchase shares at
$1.30 per share to entities/persons who contributed to the Company in 1999,
which are unexpired, as follows:
(a) 262,000 options to Gemsco Management Ltd., beneficially Maurice
Tsakok, for designing and implementing the Company's corporate
website, advising on technological matters, researching the technology
sector and for services as a director;
(b) 262,000 options to Farmind Link Corp. for their role as advisor on
strategic issues, technology market trends, and financial and capital
market issues;
(c) 262,000 options to Sinhoy Management Ltd., beneficially Marc Hung, for
their contributions to the general management of our company, investor
relations, technological matters and for services as a director;
(d) 212,000 options to Lancaster Pacific Investment, Ltd. for their
contributions in the areas of regulatory matters, Chinese market
conditions and strategies aimed at penetrating that market;
(e) 50,000 options to Ernest Cheung for services rendered as secretary and
director;
(f) 20,000 options to Yonderiche International Consultants Ltd. for
services rendered in matters regarding Chinese government policies and
regulations; and
LONG TERM COMPENSATION
----------------------
Options
Restricted & SARs
Stock LTIP LTIP Other
Awards Payouts Payouts Compensation
------ ------- ------- ------------
Angela Du None None None None
Ernest Cheung None None None None
Option/SAR Granted During the Last Fiscal Year
----------------------------------------------
No Options were granted during the last fiscal year.
22
Long Term Incentive Plans/Awards in Last Fiscal Year
----------------------------------------------------
None
(1) None of the current directors of the Company will devote their full
time to the management of the Company.
Stock Purchase Plans; Profit Sharing and Thrift Plans
-----------------------------------------------------
Presently the Company has no stock purchase plans, profit-sharing or thrift
plans.
Options, Warrants or Rights
----------------------------
Summary of Outstanding Options as of January 17, 2005
Award
Issued To Date Amount/Price Term Effective Date Comments
--------- ---- ------------ ---- -------------- ---------
None
TOTAL
Compensation Committee Interlocks
---------------------------------
The Securities and Exchange Commission requires disclosure where an
executive officer of a company served or serves as a director or on the
compensation committee of an entity other than the Company and an executive
officer of such other entity served or serves as a director or on the
compensation committee of the Company. The Company does not have any such
interlocks. Decisions as to executive compensation are made by the Compensation
Committee.
Audit Committee
---------------
The Company does not have an Audit Committee.
23
Code of Ethics
--------------
The Company has not adopted a Code of Ethics for the Board and the salaried
employees.
Committees and Procedures
(1) The registrant has no standing audit, nominating and compensation
committees of the Board of Directors, or committees performing similar
functions. The Board acts itself in lieu of committees due to its
small size.
(2) The view of the board of directors is that it is appropriate for the
registrant not to have such a committee because all directors
participate in the consideration of director nominees and the board is
so small.
(3) Each of the members of the Board which acts as nominating committee is
not independent, pursuant to the definition of independence of a
national securities exchange registered pursuant to section 6(a) of
the Act (15 U.S.C. 78f(a).
(4) The nominating committee has no policy with regard to the
consideration of any director candidates recommended by security
holders, but the committee will consider director candidates
recommended by security holders.
(5) The basis for the view of the board of directors that it is
appropriate for the registrant not to have such a policy is that there
is no need to adopt a policy for a small company.
(6) The nominating committee will consider candidates recommended by
security holders, and by security holders in submitting such
recommendations; should provide a completed Directors Questionnaire to
the Company.
(7) There are no specific, minimum qualifications that the nominating
committee believes must be met by a nominee recommended by security
holders except to find anyone willing to serve with clean background.
There are no differences in the manner in which the nominating
committee evaluates nominees for director based on whether the nominee
is recommended by a security holder, or found by the board.
(8) The nominating committee's process for identifying and evaluation
nominees for director, including nominees recommended by security
holders, is to find anyone willing to serve with clean background.
There are no differences in the manner in which the nominating
committee evaluates nominees for director based on whether the nominee
is recommended by a security holder, or found by the board.
24
(9) With regard to each nominee approved by the nominating committee for
inclusion on the registrant's proxy card (other than nominees who are
executive officers or who are directors standing for re-election),
state which one or more of the following categories of persons or
entities recommended that nominee: Legal Counsel to Company.
PRINCIPAL HOLDERS OF VOTING SECURITIES
(a) Beneficial owners of five percent (5%) or greater, of Company common
stock: The following sets forth information with respect to ownership by holders
of more than five percent (5%) of its common stock known by the Company based
upon 15,826,670 shares outstanding at December 31, 2004, and in the event of
exercise of all options for our stock.
Title of Name and Address Amount of Percent of If
Class of Beneficial Owner Beneficial Interest Class options
exercised*
---------------------------------------------------------------------------------------------------------------
Common Xiao-qing Du
Stock Ste. 900-789 West Pender St. 1,250,000 7.9% 7.6%
Vancouver, BC V6C 1H2 (2)(9)
Common Richco Investors, Inc. 1,137,999 7.2% 6.9%
Stock Ste. 830-789 West Pender St. (1)(3)(4)(7)
Vancouver, BC V6C 1H2
Common Ernest Cheung 1,446,333 9.1% 8.8%
Stock Ste. 830-789 West Pender St. (1)(3)(6)(7)(9)
Vancouver, BC V6C 1H2
Common Maurice Tsakok 1,225,333 7.7% 7.4%
Stock Ste. 830-789 West Pender St. (1)(3)(5)
Vancouver, BC V6C 1H2
Common QuickNet Partners 2,040,000 12.9% 12.4%
Stock #1859 New Century Office Tower
Beijing China
Common Zeth Zhang 1,333,333 8.4% 8.1%
Stock 14-F Hutchison House
10 Harcourt Road, Hong Kong
Common Grace Ding 1,333,333 8.4% 8.1%
Stock 14-143 Dahongmen Street
Fengtai District, Beijing, China
Common Jerry Wang 1,400,000 8.8% 8.5%
Stock 17-2-101 New Zhongxili
East District, Beijing, China
Common Susan Wen 1,528,000 9.7% 9.3%
Stock 502-16 No. 3 Street
Zhongguancun, Haidian District
Beijing, China
Includes options exercisable within 30 days.
25
(b) The following sets forth information with respect to the Company common
stock beneficially owned by each Officer and Director, and by all Directors and
Officers as a group, at December 31, 2004, and in the event of exercise of all
options for our stock held by such listed holders and their affiliates or
beneficial owners.
Title of Name and Address Amount of Percent of All
Class of Beneficial Owner Beneficial Interest Class warrants
exercised**
---------------------------------------------------------------------------------------------------------------
Common Xiao-qing Du (Director) 1,250,000 7.9% 7.6%
Stock Ste. 900-789 West Pender St. (2)(8)
Vancouver, B.C. V6C 1H2
Common Ernest Cheung 1,446,333 9.1% 7.3%
Stock (Secretary & Director) (1)(3)(4)(5)(6)(8)
(Including Richco Investors)
Common Maurice Tsakok 1,225,333 7.7% 6.2%
Stock (Including Richco Investors) (1)(3)(4)(5)(6)(8)
Total for officers and directors as a group 2,696,333 16.4 13.3
(1) Richco Investors, Inc., owns 1,137,999 shares after the reverse split.
Messrs. Cheung and Tsakok are officers, directors and beneficial
owners of Richco Investors Inc. For purposes of this table, the shares
owned by Richco are deemed owned by Mr.Cheung and Mr. Tsakok,
beneficially and individually. Mr. Cheung received 165,000 options in
2004.
(2) As an officer Ms. Du received 330,000 options in 2004.
(3) Ernest Cheung has 16,667 options (after the reverse split) to purchase
shares at $3.90 and 165,000 options at $.30.
(4) Maurice Tsakok has 87,333 options after the reverse split to purchase
shares at $3.90.
(5) Ernest Cheung is President of Development Fund II of Nova Scotia, Inc.
which owns 63,333 common shares after the reverse split.
(6) Includes all shares of Richco Investors, Inc., Ernest Cheung, Maurice
Tsakok, and Development Fund II of Nova Scotia since there is common
control.
26
(7) Assumes exercise of all warrants and options within 60 days pursuant
to Rule 13(d)3(d)(i).
(8) QuickNet Partners owns 2,040,000 common shares after the reverse split
for the acquisition.
(9) XiaoQing Du owns 330,000 post reverse split options at the exercise
price of $0.30; Ernest Cheung owns 165,000 post reverse split options
at the exercise price of $0.30.
*If all warrants for units are exercised.
**If all warrants and options for shares are exercised.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Under Section 16 of the Securities Exchange Act 1934, the Company's
directors and executive officers and persons holding more than 10% of its common
stock are required to report their initial ownership of common stock and
subsequent changes to that ownership to the Securities and Exchange Commission
by specified due dates. To the Company's knowledge all of these filing
requirements were satisfied.
The Company's Annual Report on Form 10-KSB for the year ended December 31,
2004 (the "Form 10-KSB") is being furnished simultaneously herewith. The Form
10-KSB is not considered a part of this Proxy Statement.
OTHER AND GENERAL INFORMATION.
Our Annual Report on Form 10-KSB, for the year ended December 31, 2004,
including audited financial statements as of that date, is available from us on
request. Further information is available by request or can be accessed on the
Internet. We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities Exchange Commission (the "SEC"). Reports, proxy
statements and other information filed by China Mobility Solutions, Inc. can be
accessed electronically by means of the SEC's home page on the Internet at
http://www.sec.gov or at other Internet sites such as http://www.freeedgar.com
or http://www.pinksheets.com.
27
You can read and copy any materials that we file with the SEC at the SEC'S
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. A copy
of any public filing is also available, at no charge, from the Company.
CHINA MOBILITY SOLUTIONS, INC.
Dated: _________, 2005
By the order of the Board of Directors
/s/
-----------------------
28
BALLOT
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CHINA MOBILITY SOLUTIONS, INC.
#900 - 789 West Pender Street
Vancouver, B.C. Canada V6C 1H2
(604)632-9638
PROXY FOR ANNUAL MEETING OF
STOCKHOLDERS, ________________, 2005
The undersigned hereby appoints Angela Du proxy, with full power of
substitution, for and in the name or names of the undersigned, to vote all
shares of Common Stock of China Mobility Solutions, Inc. held of record by the
undersigned at the Annual Meeting of Stockholders to be held on _________, 2005,
at 1:30 p.m., at The Sheraton Hotel, 360 Union Blvd., Lakewood, Colorado, and at
any adjournment thereof, upon the matters described in the accompanying Notice
of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged,
and upon any other business that may properly come before, and matters incident
to the conduct of, the meeting or any adjournment thereof. Said person is
directed to vote on the matters described in the Notice of Annual Meeting and
Proxy Statement as follows, and otherwise in their discretion upon such other
business as may properly come before, and matters incident to the conduct of,
the meeting and any adjournment thereof.
1. To elect a Board of four (4) directors to hold office until the next annual
meeting of stockholders or until their respective successors have been
elected and qualified:
Nominees: Xiao-Qing (Angela) Du, Ernest Cheung, Greg Ye, Michael J.P. Moen
[_] FOR: nominees listed above (except as marked to the contrary
below).
[_] WITHHOLD authority to vote for nominee(s) specified below.
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), write
the applicable name(s) in the space provided below.
--------------------------------------------------------------------------------
2. To ratify the appointment of Moen and Company as independent accountants
for the period ending December 31, 2005:
[_] FOR [_] AGAINST [_] ABSTAIN
3. To increase the Company's authorized shares to 500 million shares of common
stock.
[_] FOR [_] AGAINST [_] ABSTAIN
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU MAY SIGN AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL
BE VOTED "FOR" THE STATED PROPOSALS.
----------------------------------------
Signature of Stockholder
----------------------------------------
Signature if held jointly
Dated: __________________________, 2005
IMPORTANT: If shares are jointly owned, both owners should sign. If signing as
attorney, executor, administrator, trustee, guardian or other person signing in
a representative capacity, please give your full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
EXHIBIT "A"
2005 STOCK OPTION PLAN
CHINA MOBILITY SOLUTIONS, INC.
2005 STOCK OPTION PLAN
1. PURPOSE
This 2005 China Mobility Solutions, Inc. Stock Option Plan ("the 2005
Plan") is intended to promote the interests of the Corporation by providing
eligible individuals who are responsible for the management, growth and
financial success of the Corporation or who otherwise render valuable services
to the Corporation with the opportunity to acquire a proprietary interest, or
increase their proprietary interest, in the Corporation and thereby encourage
them to remain in the service of the Corporation. Capitalized terms used herein
shall have the meanings ascribed to such terms in Paragraph 5.
2. ADMINISTRATION OF THE 2005 PLAN
(a) The 2005 Plan shall be administered by the Board. The Board, however, may at
any time appoint a committee ("Committee") of two (2) or more Board members and
delegate to such Committee one or more of the administrative powers allocated to
the Board pursuant to the provisions of the 2005 Plan. Members of the Committee
shall serve for such period of time as the Board may determine and shall be
subject to removal by the Board at any time. The Board may also at any time
terminate the functions of the Committee and reassume all powers and authority
previously delegated to the Committee.
(b) The 2005 Plan Administrator (either the Board or the Committee, to the
extent the Committee is at the time responsible for the administration of the
2005 Plan) shall have full power and authority (subject to the provisions of the
2005 Plan) to establish such rules and regulations as it may deem appropriate
for the proper 2005 Plan administration and to make such determinations under,
and issue such interpretations of, the 2005 Plan and any outstanding option
grants or share issuances as it may deem necessary or advisable. Decisions of
the 2005 Plan Administrator shall be final and binding on all parties who have
an interest in the 2005 Plan or any outstanding option or share issuance.
3. ELIGIBILITY
(a) The persons eligible to receive option grants pursuant to the 2005 Plan
(each an "Optionee") are limited to the following:
(1) key employees (including officers and directors) of the
Corporation (or its parent or subsidiary corporations, if any) who render
services which contribute to the success and growth of the Corporation (or
any parent or subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of the
Corporation (or any parent or subsidiary corporations);
(2) the non-employee members of the Board or the non-employee members
of the board of directors of any parent or subsidiary corporations; and
(3) those consultants or independent contractors who provide valuable
services to the Corporation (or any parent or subsidiary corporations).
(b) The 2005 Plan Administrator shall have full authority to determine,
with respect to the option grants made under the 2005 Plan, which eligible
individuals are to receive option grants, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding.
- 1 -
4. STOCK SUBJECT TO THE 2005 PLAN
(a) The stock issuable under the 2005 Plan shall be shares of the
Corporation's authorized but unissued or reacquired Common Stock, $0.0001 par
value (the "Common Stock"). The maximum number of shares which may be issued
over the term of the 2005 Plan shall not exceed 3.5 million shares of Common
Stock. The total number of shares issuable under the 2005 Plan shall be subject
to adjustment from time to time in accordance with the provisions of Section
4(c).
(b) Shares subject to (i) the portion of one or more outstanding options
which are not exercised or surrendered prior to expiration or termination and
(ii) outstanding options canceled in accordance with the cancellation-regrant
provisions of Section 9 will be available for subsequent option grants or stock
issuances under the 2005 Plan.
(c) In the event any change is made to the Common Stock issuable under the
2005 Plan by reason of any stock dividend, stock split, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without receipt of consideration, then appropriate adjustments shall be
made to (i) the aggregate number and/or class of shares issuable under the 2005
Plan and (ii) the aggregate number and/or class of shares and the option price
per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the 2005 Plan Administrator shall be final, binding and conclusive.
(d) Common Stock issuable under the 2005 Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as may be
determined by the Plan Administrator.
5. DEFINITIONS
The following definitions shall apply to the respective capitalized terms
used herein:
BOARD means the Board of Directors of China Mobility Solutions, Inc.
CODE means the Internal Revenue Code of 1986, as amended.
CORPORATION means China Mobility Solutions, Inc. and its successors.
CORPORATE TRANSACTION means one or more of the following transactions:
(a) a merger or consolidation in which the Corporation is not the surviving
entity, except for a transaction the principal purpose of which is to change the
state of the Corporation's incorporation,
(b) the sale, transfer or other disposition of all or substantially all of
the assets of the Corporation, or (c) any reverse merger in which the
Corporation is the surviving entity but in which fifty percent (50%) or more of
the Corporation's outstanding voting stock is transferred to holders different
from those who held the stock immediately prior to such merger.
EMPLOYEE means an individual who is in the employ of the Corporation or one
or more Parent or Subsidiary corporations (if any). An optionee shall be
considered to be an Employee for so long as such individual remains in the
employ of the Corporation or one or more Parent or Subsidiary corporations,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance.
EXERCISE DATE shall be the date on which written notice of the exercise of
an outstanding option under the 2005 Plan is delivered to the Corporation. Such
notice shall be in the form of a stock purchase agreement.
FAIR MARKET VALUE of a share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(a) If the Common Stock is at the time listed or admitted to trading on any
stock exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the stock exchange
determined by the 2005 Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market Value shall be the
closing selling price on the exchange on the last preceding date for which such
quotation exists.
- 2 -
(b) If the Common Stock is not at the time listed or admitted to trading on
any stock exchange but is traded in the over-the-counter market, the Fair Market
Value shall be the mean between the highest bid and the lowest asked prices (or,
if such information is available, the closing selling price) per share of Common
Stock on the date in question in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers through its NASDAQ
National Market System or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the date in
question, then the mean between the highest bid and lowest asked prices (or
closing selling price) on the last preceding date for which such quotations
exist shall be determinative of Fair Market Value.
(c) If the Common Stock is at the time neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market, or if
the 2005 Plan Administrator determines that the valuation provisions of
subparagraphs (a) and (b) above will not result in a true and accurate valuation
of the Common Stock, then the Fair Market Value shall be determined by the 2005
Plan Administrator after taking into account such factors as the 2005 Plan
Administrator shall deem appropriate under the circumstances.
INCENTIVE OPTION means an Incentive Stock Option which satisfies the
requirements of Section 422 of the Code.
NON-STATUTORY OPTION means an option not intended to meet the statutory
requirements prescribed under the Code for an Incentive Option.
PARENT corporation means any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
PERMANENT DISABILITY means the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
2005 PLAN means this 2005 China Mobility Solutions, Inc. Stock Option Plan.
PLAN ADMINISTRATOR means the Board or the Committee, to the extent the
Committee is responsible for plan administration in accordance with Section 2.
SERVICE means the performance of services for the Corporation or one or
more Parent or Subsidiary corporations by an individual in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, unless a different meaning is specified in the option
agreement evidencing the option grant or the purchase agreement evidencing the
purchased option shares. An Optionee shall be deemed to remain in Service for so
long as such individual renders services to the Corporation or any Parent or
Subsidiary corporation on a periodic basis in the capacity of an Employee, a
non-employee member the board of directors or an independent consultant or
advisor.
SUBSIDIARY corporation means each corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each such corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
TEN PERCENT SHAREHOLDER means the owner of stock (as determined under
Section 424(d) of the Code) possessing ten percent or more of the total combined
voting power of all classes of stock of the Corporation or any Parent or
Subsidiary corporation.
- 3 -
6. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the 2005 Plan shall be authorized by action of
the 2005 Plan Administrator and may, at the discretion of the 2005 Plan
Administrator, be either Incentive Options or Non-Statutory Options. Each
granted option shall be evidenced by one or more instruments in the form
approved by the 2005 Plan Administrator; PROVIDED, HOWEVER, that each such
instrument shall comply with and incorporate the terms and conditions specified
below. In addition, each instrument evidencing an Incentive Option shall be
subject to the applicable provisions of Section 7.
(a) OPTION PRICE
(1) The option price per share shall be fixed by the 2005 Plan
Administrator.
(2) The option price shall become immediately due upon exercise of the
option, and subject to the provisions of Section 11, shall be payable in
cash or check drawn to the Corporation's order. Should the Corporation's
outstanding Common Stock be registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") at the time
the option is exercised, then the option price may also be paid as follows:
(A) in shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or (B) through a special sale and
remittance procedure pursuant to which the Optionee (i) is to provide
irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds, an amount sufficient to cover
the aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to
be withheld by the Corporation by reason of such purchase and (ii)
concurrently provides written directives to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage
firm in order to effect the sale transaction.
(b) TERM AND EXERCISE OF OPTIONS
Each option granted under the 2005 Plan shall be exercisable at
such time or times, during such period, and for such number of shares
as shall be determined by the 2005 Plan Administrator and set forth in
the stock option agreement evidencing such option. However, no option
granted under the 2005 Plan shall have a term in excess of ten (10)
years from the grant date.
(c) TERMINATION OF SERVICE
(1) The 2005 Plan Administrator shall have complete discretion to
limit the period of time that an option granted under the 2005 Plan
may be exercised should the Optionee cease to remain in Service for
any reason (including death or Permanent Disability). In no event,
however, shall any such option be exercisable after the specified
expiration date of the option term. During such limited period of
exercisability, the option may not be exercised for more than that
number of shares (if any) for which such option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of
such period or (if earlier) upon the expiration of the option term,
the option shall terminate and cease to be exercisable.
(2) Notwithstanding subsection (1) above, the 2005 Plan
Administrator shall have complete discretion, exercisable either at
the time the option is granted or at the time the Optionee ceases
Service, to allow one or more outstanding options held by the Optionee
to be exercised, during the period of exercisability following the
Optionee's cessation of Service, not only with respect to the number
of shares for which the option is exercisable.
(3) Notwithstanding any provision of this 2005 Plan to the
contrary, any options granted under this 2005 Plan shall terminate as
of the date the Optionee ceases to be in the Service of the
Corporation if the Optionee was terminated for "cause" or could have
been terminated for "cause." If the Optionee has an employment or a
consulting agreement with the Corporation, the term "cause" shall have
the meaning given that term in the employment or consulting agreement.
If the Optionee does not have an employment or consulting agreement
with the Corporation, or if such employment or consulting agreement
does not define the term "cause," the term "cause" shall mean: (A)
misconduct or dishonesty that materially adversely affects the
Corporation, including without limitation (i) an act materially in
- 4 -
conflict with the financial interests of the Corporation, (ii) an act
that could damage the reputation or customer relations of the
Corporation, (iii) an act that could subject the Corporation to
liability, (iv) an act constituting sexual harassment or other
violation of the civil rights of co-workers, (v) failure to obey any
lawful instruction of the Board or any officer of the Corporation and
(vi) failure to comply with, or perform any duty required under, the
terms of any confidentiality, inventions or non-competition agreement
the Optionee may have with the Corporation, or (B) acts constituting
the unauthorized disclosure of any of the trade secrets or
confidential information of the Corporation, unfair competition with
the Corporation or the inducement of any customer of the Corporation
to breach any contract with the Corporation. The right to exercise any
option shall be suspended automatically during the pendency of any
investigation by the Board, or its designee, and/or any negotiations
by the Board, or its designee, and the Optionee, regarding any actual
or alleged act or omission by the Optionee of the type described in
this paragraph.
(d) SHAREHOLDER RIGHTS. An Optionee shall have none of the rights
of a shareholder with respect to any shares covered by the option
until such Optionee shall have exercised the option and paid the
option price.
(e) TRANSFERABILITY. Unless otherwise specified in the Agreement
relating to an option, options granted hereunder may be transferable
(i) by will or the laws of descent and distribution, (ii) pursuant to
beneficiary designation procedures approved by the Company, (iii)
pursuant to a domestic relations order, (iv) to one or more family
members of the optionee, (v) to a trust or trusts for the exclusive
benefit of the optionee and/or one or more family members of the
optionee, (vi) to a partnership in which the optionee and/or one or
more family members of the optionee are the only partners, (vii) to a
limited liability company in which the optionee and/or one or more
family members of the optionee are the only members, or (viii) to such
other persons or entities as may be specified in the agreement
relating to an option or approved in writing by the Committee prior to
such transfer. Except to the extent permitted by the preceding
sentence, each option may be exercised during the optionee's lifetime
only by the optionee or the optionee's legal representative or similar
person. Except as permitted by the second preceding sentence, (i) no
option granted hereunder shall be sold, transferred, assigned,
pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment
or similar process and (ii) upon any attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of any
option granted hereunder, such option and all rights thereunder shall
immediately become null and void.
7. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the 2005 Plan. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as Non-Statutory Options when issued under the 2005 Plan shall NOT be
subject to such terms and conditions.
(a) OPTION PRICE. The option price per share of the Common Stock subject to
an Incentive Option shall in no event be less than one hundred percent (100%) of
the Fair Market Value of a share of Common Stock on the grant date; provided, if
the individual to whom the option is granted is at the time a Ten Percent
Shareholder, then the option price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the grant
date.
(b) DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this 2005 Plan (or any other option 2005
Plan of the Corporation or any Parent or Subsidiary corporation) may for the
first time become exercisable as Incentive Stock Options under the Federal tax
laws during any one calendar year shall not exceed the sum of one hundred
thousand dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability thereof as Incentive Options
under the Federal tax laws shall be applied on the basis of the order in which
such options are granted.
(c) OPTION TERM FOR TEN PERCENT SHAREHOLDER. No option granted to a Ten
Percent Shareholder shall have a term in excess of five (5) years from the grant
date.
- 5 -
(d) ACCELERATED TERMINATION OF OPTION TERM. The option term shall terminate
prior to the expiration date established by the 2005 Plan Administrator should
any of the following provisions become applicable:
(1) Except as otherwise provided in subparagraph (2) or (3) below,
should an Optionee cease to remain in Service while his/her option is
outstanding, then the period for exercising his/her option shall be reduced
to a three (3) month period commencing with the date of such cessation of
Service, but in no event shall such option be exercisable at any time after
the expiration date. Upon the expiration of such three (3) month period or
(if earlier) upon the expiration date, the option shall terminate and cease
to be outstanding.
(2) Should the Optionee die while his/her option is outstanding,
his/her option shall cease to be exercisable, upon the EARLIER of (a) the
expiration of the twelve (12) month period measured from the date of
Optionee's death or (b) the expiration date of the option. Upon the
expiration of such twelve (12) month period or (if earlier) upon the
expiration date, the option shall terminate and cease to be outstanding.
(3) Should the Optionee become Permanently Disabled and cease by
reason thereof to remain in Service while his/her option is outstanding,
then the Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise
his/her option, but in no event shall this option be exercisable at any
time after the expiration date of the option. Upon the expiration of such
limited period of exercisability or (if earlier) upon the expiration date,
his/her option shall terminate and cease to be outstanding.
(4) During the limited period of exercisability applicable under
subparagraphs (1), (2), or (3) above, the Optionee's option may be
exercised for any or all of the option shares in which the Optionee, at the
time of cessation of Services, is vested in accordance with the
exercise/vesting provisions specified in his/her stock option documents.
(e) TRANSFERABILITY. An Incentive Option shall not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercisable during the Optionee's lifetime only by such Optionee or the
Optionee's legal representative or similar person. Except as modified by the
preceding provisions of this Section 7, all the provisions of the 2005 Plan
shall be applicable to the Incentive Options granted hereunder.
8. CORPORATE TRANSACTION
(a) In the event of any Corporate Transaction, each option outstanding
under the 2005 Plan shall terminate upon the consummation of such Corporate
Transaction and cease to be exercisable, unless assumed by the successor
corporation or parent thereof.
(b) In connection with any such Corporate Transaction, the 2005 Plan
Administrator may, at its sole discretion, (i) accelerate each or any
outstanding option under the 2005 Plan so that each or any such option shall,
immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all
or any portion of such shares, (ii) arrange for each or any outstanding option
to either to be assumed by the successor corporation or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, (iii) arrange for the option to be
replaced by a comparable cash incentive program of the successor corporation
based on the option spread (the amount by which the Fair Market Value of the
shares of Common Stock at the time subject to the option exceeds the option
price payable for such shares) or (iv) take none of the actions described in
clauses (i), (ii) or (iii) above and allow the option to terminate as provided
in Section 2(a) above. The determination of comparability under clauses (ii) and
(iii) above shall be made by the 2005 Plan Administrator, and such determination
shall be final and conclusive.
(c) The exercisability as Incentive Stock Options under the Federal tax
laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of subsection 7(b).
(d) If the outstanding options under the 2005 Plan are assumed by the
successor corporation (or parent thereof) in
- 6 -
the Corporate Transaction or are otherwise to continue in effect following such
Corporate Transaction, then each such assumed or continuing option shall,
immediately after such Corporate Transaction, be appropriately adjusted to apply
and pertain to the number and class of securities or other property that would
have been issuable to the option holder, in consummation of the Corporate
Transaction, had the option been exercised immediately prior to such Corporate
Transaction.
(e) The grant of options under this 2005 Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
9. CANCELLATION AND NEW GRANT OF OPTIONS
The 2005 Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under the 2005 Plan and to grant
in substitution therefore new options under the 2005 Plan covering the same or
different numbers of shares of Common Stock but having, in the case of an
Incentive Option, an option price per share not less than one hundred percent
(100%) of such Fair Market Value per share of Common Stock on the new grant
date, or, in the case of a Ten Percent Shareholder, not less than one hundred
and ten percent (110%) of such Fair Market Value.
10. EXTENSION OF EXERCISE PERIOD
The 2005 Plan Administrator shall have full power and authority to extend
(either at the time when the option is granted or at any time while the option
remains outstanding) the period of time for which the option is to remain
exercisable following the Optionee's cessation of Service, from the limited
period set forth in the option agreement, to such greater period of time as the
2005 Plan Administrator may deem appropriate under the circumstances. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.
11. LOANS
(a) The 2005 Plan Administrator may assist any Optionee (including an
Optionee who is an officer or director of the Corporation) in the exercise of
one or more options granted to such Optionee under the 2005 Plan, including the
satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by:
(1) authorizing the extension of a loan from the Corporation to such
Optionee, or
(2) permitting the Optionee to pay the option price for the purchased
Common Stock in installments over a period of years.
(b) The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be established by the 2005 Plan
Administrator in its sole discretion. Loans or installment payments may be
granted with or without security or collateral; however, any loan made to a
consultant or other non-employee director must be secured by property other than
the purchased shares of Common Stock. In all events, the maximum credit
available to each may not exceed the SUM of (i) the aggregate option price
payable for the purchased shares less the aggregate par value for such shares
plus (ii) any Federal and State income and employment tax liability incurred by
the Optionee in connection with such exercise.
(c) The 2005 Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under the financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions the Board in its discretion deems appropriate.
12. AMENDMENT OF THE 2005 PLAN AND AWARDS
(a) The Board shall have complete and exclusive power and authority to
amend or modify the 2005 Plan in any or all respects whatsoever. However, no
such amendment or modification shall adversely affect the rights and obligations
of an Optionee with respect to options at the time outstanding under the 2005
Plan, nor adversely affect the rights of any Participant with respect to Common
Stock issued under the 2005 Plan prior to such action, unless the Optionee
- 7 -
consents to such amendment. In addition, the Board shall not, without the
approval of the Corporation's shareholders, amend the 2005 Plan to (i)
materially increase the maximum number of shares issuable under the 2005 Plan
(except for permissible adjustments under Section 4(c)), (ii) materially
increase the benefits accruing to individuals who participate in the 2005 Plan,
or (iii) materially modify the eligibility requirements for participation in the
2005 Plan.
(b) Options to purchase shares of Common Stock may be granted under the
2005 Plan which are in excess of the number of shares then available for
issuance under the 2005 Plan, provided any excess shares actually issued under
the 2005 Plan are held in escrow until there is obtained shareholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the 2005 Plan. If such shareholder approval is not
obtained within twelve (12) months after the date the initial excess issuances
are made, then (i) any unexercised options representing such excess shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund to the Optionees the option price paid for any excess shares issued under
the 2005 Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow.
13. EFFECTIVE DATE AND TERM OF 2005 PLAN
(a) The 2005 Plan shall become effective when adopted by the Board and
approved by the Corporation's shareholders. If such shareholder approval is not
obtained within twelve (12) months after the date of the Board's adoption of the
2005 Plan, then all options previously granted under the 2005 Plan shall
terminate, and no further options shall be granted. Subject to such limitation,
the 2005 Plan Administrator may grant options under the 2005 Plan at any time
after the effective date and before the date fixed herein for termination of the
2005 Plan.
(b) The 2005 Plan shall terminate upon the EARLIER of (i) ten years after
the adoption of the 2005 Plan or (ii) the date on which all shares available for
issuance under the 2005 Plan have been issued or canceled pursuant to the
exercise or surrender of options granted under the 2005 Plan. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date under the 2005 Plan shall be affected by the termination of the 2005
Plan, and such securities shall thereafter continue to have force and effect in
accordance with the provisions of the stock option agreements evidencing such
Options.
14. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance of shares
of Common Stock under the 2005 Plan shall be used for general corporate
purposes.
15. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under the 2005 Plan shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements.
16. REGULATORY APPROVALS
The implementation of the 2005 Plan, the granting of any options under the
2005 Plan, and the issuance of Common Stock upon the exercise or surrender of
the option grants made hereunder shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the 2005 Plan, the options granted under it, and the
Common Stock issued pursuant to it.
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CHINA MOBILITY SOLUTIONS, INC.
2005 STOCK OPTION PLAN
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") made to
purchase shares of China Mobility Solutions, Inc. (the "Company") common stock
(the "Common Stock"):
OPTIONEE: _______________________________
GRANT DATE: _____________________________
VESTING COMMENCEMENT DATE: ________________________
TYPE OF STOCK: Common Stock
OPTION PRICE: $ ________ per share
NUMBER OF OPTION SHARES: ____________________________
EXPIRATION DATE: ______________________________________
TYPE OF OPTION: Incentive / Non-Statutory
EXERCISE SCHEDULE: _____________________________________
Optionee understands and agrees that the Option is granted subject to and in
accordance with the express terms and conditions of the 2005 China Mobility
Solutions, Inc. Stock Option Plan (the "2005 Plan"). Optionee further agrees to
be bound by the terms and conditions of the Option as set forth in the Stock
Option Agreement attached hereto as Exhibit A.
Optionee understands that the terms and conditions applicable to any Option
Shares purchased thereunder are as set forth in the Stock Purchase Agreement
attached hereto as Exhibit B.
Optionee hereby acknowledges receipt of a copy of the 2005 Plan in the form
attached to this Notice of Grant.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement or in the 2005 Plan
shall confer upon the Optionee any right to continue in the Service of the
Company for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company or the Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason whatsoever, with or without cause.
CHINA MOBILITY SOLUTIONS, INC.
Date: _____________________________
By: _______________________________
its ________________________________
OPTIONEE __________________________
Date: _____________________________
Address: __________________________
- 9 -
EXHIBIT A
CHINA MOBILITY SOLUTIONS, INC.
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. The Board has adopted the 2005 Stock Option Plan (the "2005 Plan") for the
purpose of attracting and retaining the services of selected key employees
(including officers and directors), non-employee members of the Board and
consultants and other independent contractors who contribute to the financial
success of the Corporation.
B. Optionee is an individual who is to render valuable services to the
Corporation, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the 2005 Plan in connection with the Corporation's
grant of a stock option to Optionee.
C. Capitalized terms used in this Agreement shall, unless the context clearly
indicates otherwise, have the meaning assigned to such terms in Paragraph 20 of
this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set forth in
this Agreement, the Corporation hereby grants to Optionee, as of the Grant Date,
a stock option to purchase up to that number of Option Shares as is specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the Option term at the Option Price per share specified in the Grant
Notice.
2. OPTION TERM. This Option shall expire at the close of business on the
Expiration Date specified in the Grant Notice, unless sooner terminated in
accordance with Paragraphs 5, 6, or 17 hereof; provided, in no event shall this
Option have a maximum term in excess of ten (10) years measured from the Grant
Date.
3. OPTION NONTRANSFERABLE; EXCEPTION. Unless otherwise specified in the
Agreement relating to an option, options granted hereunder may be transferable
(i) by will or the laws of descent and distribution, (ii) pursuant to
beneficiary designation procedures approved by the Company, (iii) pursuant to a
domestic relations order, (iv) to one or more family members of the optionee,
(v) to a trust or trusts for the exclusive benefit of the optionee and/or one or
more family members of the optionee, (vi) to a partnership in which the optionee
and/or one or more family members of the optionee are the only partners, (vii)
to a limited liability company in which the optionee and/or one or more family
members of the optionee are the only members, or (viii) to such other persons or
entities as may be specified in the agreement relating to an option or approved
in writing by the Committee prior to such transfer. Except to the extent
permitted by the preceding sentence, each option may be exercised during the
optionee's lifetime only by the optionee or the optionee's legal representative
or similar person. Except as permitted by the second preceding sentence, (i) no
option granted hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process and (ii)
upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option granted hereunder, such option and all rights
thereunder shall immediately become null and void. Additional transferability
restrictions apply to Incentive Stock Options in accordance with Paragraph 18(a)
hereof.
4. DATES OF EXERCISE. This Option may not be exercised in whole or in part at
any time prior to the time the 2005 Plan is approved by the Corporation's
shareholders in accordance with Paragraph 17. Provided such shareholder approval
is obtained, this Option shall thereupon become exercisable for the Option
Shares in one or more installments as is specified in the Grant Notice. As the
Option becomes exercisable in one or more installments, the installments shall
accumulate and the Option shall remain exercisable for such installments until
the Expiration Date or the sooner termination of the Option term under Paragraph
5 or Paragraph 6 of this Agreement.
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5. ACCELERATED TERMINATION OF OPTION TERM. The option term specified in
Paragraph 2 shall terminate (and this Option shall cease to be exercisable)
prior to the Expiration Date should any of the following provisions become
applicable:
(a) Except as otherwise provided in subparagraph (b) or (c) below, should
Optionee cease to remain in Service while this Option is outstanding, then the
period for exercising this Option shall be reduced to a three (3) month period
commencing with the date of such cessation of Service, but in no event shall
this Option be exercisable at any time after the Expiration Date. Upon the
expiration of such three (3) month period or (if earlier) upon the Expiration
Date, this Option shall terminate and cease to be outstanding.
(b) Should Optionee die while this Option is outstanding, then the personal
representative of the Optionee's estate or the person or persons to whom the
Option is transferred pursuant to the Optionee's will or in accordance with the
law of descent and distribution shall have the right to exercise this Option.
Such right shall lapse, and this Option shall cease to be exercisable, upon the
EARLIER of (i) the expiration of the twelve (12) month period measured from the
date of Optionee's death or (ii) the Expiration Date. Upon the expiration of
such twelve (12) month period or (if earlier) upon the Expiration Date, this
Option shall terminate and cease to be outstanding.
(c) Should Optionee become Permanently Disabled and cease by reason thereof to
remain in Service while this Option is outstanding, then the Optionee shall have
a period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this Option, but in no event shall this Option
be exercisable at any time after the Expiration Date. Upon the expiration of
such limited period of exercisability or (if earlier) upon the Expiration Date,
this Option shall terminate and cease to be outstanding.
(d) During the limited period of exercisability applicable under subparagraphs
(a), (b) or (c) above, this Option may be exercised for any or all of the Option
Shares in which the Optionee, at the time of cessation of Service, is vested in
accordance with the exercise/vesting provisions specified in the Grant Notice or
the special acceleration provisions of Paragraph 6 of this Agreement.
(e) Notwithstanding any provisions of this paragraph 5 or any other provision of
this Agreement or the 2005 Plan to the contrary, any options granted under the
2005 Plan shall terminate as of the date Optionee ceases to be in the Service of
the Corporation if Optionee was terminated for "cause" or could have been
terminated for "cause." If Optionee has an employment or consulting agreement
with the Corporation, the term "cause" shall have the meaning given that term in
the employment or consulting agreement. If Optionee does not have an employment
or consulting agreement with the Corporation, or if such employment or
consulting agreement does not define the term "cause," the term "cause" shall
mean: (1) misconduct or dishonesty that materially adversely affects the
Corporation, including without limitation (i) an act materially in conflict with
the financial interests of the Corporation, (ii) an act that could damage the
reputation or customer relations of the Corporation, (iii) an act that could
subject the Corporation to liability, (iv) an act constituting sexual harassment
or other violation of the civil rights of co-workers, (v) failure to obey any
lawful instruction of the Board or any officer of the Corporation and (vi)
failure to comply with, or perform any duty required under, the terms of any
confidentiality, inventions, or noncompetition agreement Optionee may have with
the Corporation, or (2) acts constituting the unauthorized disclosure of any
trade secrets or confidential information of the Corporation, unfair competition
with the corporation or the inducement of any customer of the Corporation to
breach any contract during the pendency of any investigation by the Board, or
its designee, and/or any negotiations by the Board, or its designee, and
Optionee, regarding any actual or alleged act or omission by Optionee of the
type described in this paragraph.
6. CORPORATE TRANSACTION.
(a) This Option shall terminate upon the consummation of any Corporate
Transaction, unless expressly assumed by the successor corporation or parent
thereof.
(b) In connection with any such Corporate Transaction, the 2005 Plan
Administrator may, at its sole discretion, (i) accelerate this Option so that
this Option shall, immediately prior to the specified effective date for such
Corporate Transaction, become fully exercisable with respect to all of the
Option Shares and may be exercised for all or any
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portion of such shares, (ii) arrange for this Option either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (iii) arrange for this Option to be replaced by a comparable
cash incentive program of the successor corporation based on the option spread
(the amount by which the Fair Market Value of the shares of Common Stock at the
time subject to the Option exceeds the Option Price payable for such shares) or
(iv) take none of the actions described in clauses (i), (ii) or (iii) above and
allow this Option to terminate as provided in Paragraph 6(a) above. The
determination of comparability under clauses (ii) and (iii) above shall be made
by the 2005 Plan Administrator, and its determination shall be final and
conclusive.
(c) The exercisability of this Option as an Incentive Stock Option under the
Federal tax laws (if designated as such in the Grant Notice) shall, in
connection with any such Corporate Transaction, be subject to the applicable
dollar limitation of Paragraph 18.
(d) This Agreement shall not in any way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise make changes in its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES
(a) In the event any change is made to the Corporation's outstanding Common
Stock by reason of any stock split, stock dividend, combination of shares,
exchange or conversion of shares, or other change affecting the outstanding
Common Stock as a class without receipt of consideration, then appropriate
adjustments shall be made to (i) the total number of Option Shares subject to
this Option and (ii) the Option Price payable per share in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
(b) If this Option is to be assumed or is otherwise to remain outstanding after
the Corporate Transaction, then this Option shall be appropriately adjusted to
apply and pertain to the number and class of securities that would have been
issuable to the Optionee in the consummation of such Corporation Transaction had
the option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Option Price payable per
share, provided the aggregate Option Price payable hereunder shall remain the
same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this Option shall not have any of
the rights of a shareholder with respect to the Option Shares until such
individual shall have exercised the option and paid the Option Price.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this Option with respect to all or any part of the
Option Shares for which this Option is at the time exercisable, Optionee (or in
the case of exercise after Optionee's death, the Optionee's executor,
administrator heir or legatee, as the case may be) or Transferee (in the case of
certain Incentive Options) must take the following actions:
(1) Execute and deliver to the Secretary of the Corporation the Purchase
Agreement.
(2) Pay the aggregate Option Price for the purchased shares either by full
payment in cash or check, or any other form approved by the 2005 Plan
Administrator at the time of exercise in accordance with the provisions of
Paragraph 14.
(3) Furnish to the Corporation appropriate documentation that the person or
persons exercising the Option (if other than Optionee) have the right to
exercise this Option.
(b) Should the Corporation's outstanding Common Stock be registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), at the time the Option is exercised, then the Option Price may also be
paid as follows:
(1) in shares of the Common Stock held by the Optionee for the requisite
period necessary to avoid a charge to the
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Corporation's earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or (2) through a special sale and remittance
procedure pursuant to which the Optionee (i) is to provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds, an
amount sufficient to cover the aggregate Option Price payable for the purchased
shares plus all applicable Federal and state income and employment taxes
required to be withheld by the Corporation by reason of such purchase and (ii)
concurrently provides written directives to the Corporation to deliver the
certificates for the purchased shares directly to such broker-dealer in order to
effect the sale transaction.
(c) Except to the extent the special sale and remittance procedure is utilized
to exercise this Option, payment of the Option Price must accompany the delivery
of the Purchase Agreement. As soon after such payment is practical, the
Corporation shall mail or deliver to Optionee (or to the other person or persons
exercising this Option) a certificate or certificates representing the shares so
purchased and paid for, with the appropriate legend affixed thereto.
(d) In no event may this Option be exercised for any fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this Option and the issuance of Option Shares upon such
exercise shall be subject to compliance by the Corporation and the Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Corporation's Common
Stock may be listed at the time of such exercise and issuance.
(b) In connection with the exercise of this Option, Optionee shall execute and
deliver to the Corporation such representations in writing as may be requested
by the Corporation in order for it to comply with the applicable requirements of
Federal and state securities laws.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraphs 3, 6 and 18(a) the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Corporation.
12. LIABILITY OF CORPORATION.
(a) If the Option Shares covered by this Agreement exceed, as of the Grant Date,
the number of shares of Common Stock that may be issued under the 2005 Plan
without shareholder approval, then this Option shall be void with respect to
such excess shares, unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the 2005 Plan is
obtained in accordance with the applicable provisions of the 2005 Plan.
(b) The inability of the Corporation to obtain approval from any regulatory body
having authority the Corporation deems necessary to the lawful issuance and sale
of any Common Stock pursuant to this Option shall relieve the Corporation of any
liability with respect to the non-issuance of the Common Stock as to which such
approval shall not have been obtained. The Corporation, however, shall use its
best efforts to obtain all such approvals.
13. NOTICES. Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the
Corporation in care of the Corporate Secretary at its principal corporate
offices. Any notices required to be given or delivered to the Optionee shall be
in writing and addressed to Optionee at the address indicated below Optionee's
signature line on the Grant Notice. All notices shall be deemed to have been
given or delivered upon personal delivery or upon deposit in the U.S. Mail,
postage prepaid and properly addressed to the party to be notified.
14. LOANS. The 2005 Plan Administrator may, in its absolute discretion and
without any obligation to do so, assist the Optionee in the exercise of this
Option by (i) authorizing the extension of a loan to the Optionee from the
Corporation or (ii) permitting the Optionee to pay the option price for the
purchased Common Stock in installments over a period of years. The terms of any
such loan or installment method of payment (including the interest rate, the
requirement for collateral and the terms of repayment) shall be established by
the 2005 Plan Administrator in its sole discretion.
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15. CONSTRUCTION. This Agreement and the Option evidenced hereby are made and
granted pursuant to the 2005 Plan and are in all respects limited by and subject
to the express terms and provisions of the 2005 Plan. All decisions of the 2005
Plan Administrator with respect to any question or issue arising under the 2005
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this Option.
16. GOVERNING LAW. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.
17. SHAREHOLDER APPROVAL. The grant of this Option is subject to approval of the
2005 Plan by the Corporation's shareholders within twelve (12) months after the
adoption of the 2005 Plan by the Board. NOTWITHSTANDING ANY PROVISION OF THIS
AGREEMENT TO THE CONTRARY, THIS OPTION MAY NOT BE EXERCISED IN WHOLE OR IN PART
UNTIL SUCH SHAREHOLDER APPROVAL IS OBTAINED. In the event that such shareholder
approval is not obtained, then this Option shall terminate in its entirety and
the Optionee shall have no further rights to acquire any Option Shares
hereunder.
18. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In the event this
Option is designated an Incentive Stock Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(a) An Incentive Option shall not be transferable otherwise than by will or the
laws of descent and distribution and may be exercisable during the Optionee's
lifetime only by such Optionee or the Optionee's legal representative or similar
person.
(b) This Option shall cease to qualify for favorable tax treatment as an
Incentive Stock Option under the Federal tax laws if (and to the extent) this
Option is exercised for one or more Option Shares: (i) more than three (3)
months after the date the Optionee ceases to be an Employee for any reason other
than death or Permanent Disability or (ii) more than one (1) year after the date
the Optionee ceases to be an Employee by reason of Permanent Disability.
(c) In the event this Option is designated as immediately exercisable in the
Grant Notice, then except in the event of a Corporate Transaction, this Option
shall not become exercisable in the calendar year in which granted if (and to
the extent) the aggregate Fair Market Value (determined at the Grant Date) of
the Common Stock for which this Option would otherwise first become exercisable
in such calendar year would, when added to the aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more other post-1986 Incentive Stock Options granted to the
Optionee prior to the Grant Date (whether under the 2005 Plan or any other
option 2005 Plan of the Corporation or any Parent or Subsidiary corporations)
first become exercisable during the same calendar year, exceed one hundred
thousand dollars ($100,000) in the aggregate. To the extent the exercisability
of this Option is deferred by reason of the foregoing limitation, the deferred
portion will first become exercisable in the first calendar year or years
thereafter in which the one hundred thousand dollar ($100,000) limitation of
this Paragraph 18(b) would not be contravened.
(d) In the event this Option is designated as an installment option in the Grant
Notice, no installment under this Option (whether annual or monthly) shall
qualify for favorable tax treatment as an Incentive Stock Option under the
Federal tax laws if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder will, when added to the aggregate Fair
Market Value (determined as of the respective date or dates of grant) of the
Common Stock for which this Option or one or more other post-1986 Incentive
Stock Options granted to the Optionee prior to the Grant Date (whether under the
2005 Plan or any other option 2005 Plan of the Corporation or any Parent or
Subsidiary corporations) first become exercisable during the same calendar year,
exceed one hundred thousand dollars ($100,000) in the aggregate.
(e) Should the exercisability of this Option be accelerated upon a Corporate
Transaction, then this Option shall qualify for favorable tax treatment as an
Incentive Stock Option under the Federal tax laws only to the extent the
aggregate Fair Market Value (determined at the Grant Date) of the Common Stock
for which this Option first becomes exercisable in the calendar year in which
the Corporate Transaction occurs does not, when added to the
- 14 -
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which this Option or one or more other post-1986
Incentive Stock Options granted to the Optionee prior to the Grant Date (whether
under the 2005 Plan or any other option 2005 Plan of the Corporation or any
Parent or Subsidiary corporations) first become exercisable during the same
calendar year, exceed one hundred thousand (100,000) in the aggregate.
(f) To the extent this Option should fail to qualify as an Incentive Stock
Option under the Federal tax laws, the Optionee will recognize compensation
income in connection with the acquisition of one or more Option Shares
hereunder, and the Optionee must make appropriate arrangements for the
satisfaction of all Federal, state or local income tax withholding requirements
and Federal Social Security employee tax requirements applicable to such
compensation income.
19. ADDITIONAL TERMS APPLICABLE TO A NON-STATUTORY STOCK OPTION. In the event
this Option is designated a non-statutory stock option in the Grant Notice,
Optionee hereby agrees to make appropriate arrangements with the Corporation for
the satisfaction of all Federal, state or local tax withholding requirements and
Federal Social Security employee tax requirements applicable to the exercise of
this Option.
20. DEFINITIONS. The following definitions shall apply to the respective
capitalized terms used herein:
(a) BOARD means the Board of Directors of China Mobility Solutions, Inc.
(b) CODE means the Internal Revenue Code of 1986, as amended.
(c) COMMON STOCK means the Common Stock of China Mobility Solutions, Inc.
(d) CORPORATION means China Mobility Solutions, Inc., a Delaware corporation,
and any of its successors.
(e) CORPORATE TRANSACTION means one or more of the following transactions: (1) a
merger or consolidation in which the Corporation is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
of the Corporation's incorporation; (2) the sale, transfer, or other disposition
of all or substantially all of the assets of the Corporation; or (3) any reverse
merger in which the Corporation is the surviving entity but in which fifty
percent (50%) or more of the Corporation's outstanding voting stock is
transferred to holders different from those who held stock immediately prior to
such merger.
(f) EMPLOYEE means an individual who is in the employ of the Corporation or any
Parent or Subsidiary corporation. An Optionee shall be considered to be an
Employee for so long as such individual remains in the employ of the Corporation
or any Parent or Subsidiary corporation, subject to the control and direction of
the employer entity as to both the work to be performed and the manner and
method of performance.
(g) EXERCISE DATE shall be the date on which the executed Purchase Agreement for
one or more Option Shares is delivered to the Corporation in accordance with
Paragraph 9 of this Agreement.
(h) FAIR MARKET VALUE of a share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(1) If the Common Stock is not at the time listed or admitted to trading on any
stock exchange but is traded in the over-the-counter market, the Fair Market
Value shall be the mean between the highest bid and the lowest asked prices (or
if such information is available, the closing selling price) per share of Common
Stock on the date in question in the over-the-counter market, as such prices are
reported by the National Association of Securities Dealers through its NASDAQ
National Market System or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the date in
question, then the mean between the highest bid and the lowest asked prices (or
closing selling price) on the last preceding date for which such quotations
exist shall be determinative of Fair Market Value.
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(2) If the Common Stock is at the time listed or admitted to trading on any
stock exchange then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the stock exchange determined
by the 2005 Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such exchange on the
date in question, then the Fair Market Value shall be the closing selling price
on the exchange on the last preceding date for which such quotation exists. (3)
If the Common Stock is at the time neither listed nor admitted to trading on any
stock exchange nor traded in the over-the-counter market, or if the 2005 Plan
Administrator otherwise determines that the valuation provisions of
subparagraphs (a) and (b) above will not result in a true and accurate valuation
of the Common Stock, then the Fair Market Value shall be determined by the 2005
Plan Administrator after taking into account such factors as the 2005 Plan
Administrator shall deem appropriate under the circumstances.
(i) GRANT DATE means the date specified in the Grant Notice as the date on which
the Option was granted to the Optionee under the 2005 Plan.
(j) INCENTIVE STOCK OPTION means an option intended to meet the statutory
requirements of Section 422 of the Code.
(k) NON-STATUTORY STOCK OPTION means an option not intended to meet the
statutory requirements prescribed under the Code for an Incentive Option.
(l) OPTION SHARES means the total number of shares of Common Stock indicated in
the Grant Notice as purchasable under this Option.
(m) OPTIONEE means the individual identified in the Grant Notice as the person
to whom this Option has been granted under the 2005 Plan.
(n) OPTION PRICE means the exercise price per share to be paid by the Optionee
for the exercise of this Option. The Option Price is indicated in the Grant
Notice.
(o) PARENT corporation means any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each such
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(p) PERMANENTLY DISABLED or Permanent Disability means the inability of an
individual to engage in any substantial gainful activity by reason of any
medically-determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
(q) 2005 PLAN means the 2005 China Mobility Solutions, Inc. Stock Option Plan
attached to the Grant Notice.
(r) 2005 PLAN ADMINISTRATOR means either the Board or a committee of two or more
Board members, to the extent such committee may at the time be responsible for
plan administration.
(s) PURCHASE AGREEMENT means the stock purchase agreement, in substantially the
form of Exhibit B to the Grant Notice, which is to be executed in connection
with the exercise of this Option for one or more Option Shares.
(t) SERVICE means the performance of services for the Corporation or any Parent
or Subsidiary corporation by an individual in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or
advisor. Accordingly, the Optionee shall be deemed to remain in Service for so
long as such individual renders services to the Corporation or any Parent or
Subsidiary corporation on a periodic basis in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or
advisor.
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(u) SUBSIDIARY corporation means each corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each such corporation (other than the last corporation) in the unbroken chain
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
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EXHIBIT B
CHINA MOBILITY SOLUTIONS, INC.
STOCK PURCHASE AGREEMENT
Agreement made as of this day of __________________ , 20__, between China
Mobility Solutions, Inc., a Delaware corporation (the "Corporation"), and
_________________________ , the holder of a stock option ("Optionee") under the
2005 China Mobility Solutions, Inc. Stock Option Plan (the "2005 Plan"). All
capitalized terms in this Agreement shall have the meaning assigned to them in
this Agreement or in the 2005 Plan, unless otherwise indicated.
A. EXERCISE OF OPTION
1. EXERCISE. Optionee hereby purchases shares of Common Stock (the "Purchased
Shares") pursuant to that certain option (the "Option") granted Optionee on
____________ , 20__ (the "Grant Date") to purchase ______________ shares of
Common Stock under the 2005 Plan at the exercise price of $ _____________ per
share (the "Exercise Price").
2. PAYMENT. Concurrently with the delivery of this Agreement to the Corporate
Secretary, Optionee shall pay the Exercise Price for the Purchased Shares in
accordance with the provisions of the Option Agreement and shall deliver
whatever additional documents may be required by the Option Agreement as a
condition for exercise.
B. SECURITIES LAW COMPLIANCE
1. EXEMPTION FROM REGISTRATION. The Purchased Shares have not been registered
under the 1933 Act and are accordingly being issued to Optionee in reliance upon
the exemption from such registration provided by Rule 701 of the SEC for stock
issuances under compensatory benefit plans such as the 2005 Plan. Optionee
hereby acknowledges receipt of a copy of the 2005 Plan attached to the Grant
Notice.
2. RESTRICTED SECURITIES.
Optionee hereby confirms that Optionee has been informed that the Purchased
Shares are restricted securities under the 1933 Act and may not be resold or
transferred unless the Purchased Shares are first registered under the Federal
securities laws or unless an exemption from such registration is available.
Accordingly, Optionee hereby acknowledges that Optionee is prepared to hold the
Purchased Shares for an indefinite period and that Optionee is aware that Rule
144 of the SEC issued under the 1933 Act is not presently available to exempt
the resale of the Purchased Shares from the registration requirements of the
1933 Act.
3. DISPOSITION OF SHARES. Optionee hereby agrees that Optionee shall make no
disposition of the Purchased Shares unless and until there is compliance with
all of the following requirements:
(a) Optionee shall have provided the Corporation with a written summary of the
terms and conditions of the proposed disposition.
(b) Optionee shall have complied with all requirements of this Agreement
applicable to the disposition of the Purchased Shares.
c) Optionee shall have provided the Corporation with written assurances, in
form and substance satisfactory to the Corporation, that (i) the proposed
disposition does not require registration of the Purchased Shares under the 1933
Act or (ii) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or of any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.
(d) Optionee shall have provided the Corporation with written assurances, in
form and substance satisfactory to the Corporation that the proposed disposition
will not result in the contravention of any transfer restrictions applicable to
the Purchased Shares.
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The Corporation shall not be required (i) to transfer on its books any Purchased
Shares which have been sold or transferred in violation of the provisions of
this Agreement or (ii) to treat as the owner of the Purchased Shares, or
otherwise to accord voting, dividend or liquidation rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
4. RESTRICTIVE LEGENDS. In order to reflect the restrictions imposed by this
Agreement upon the disposition of the Purchased Shares, the stock certificates
for the Purchased Shares shall be endorsed with the following restrictive
legend:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933. The shares may not be sold or offered for sale
in the absence of (i) an effective registration statement for the shares
under such Act, or (ii) satisfactory assurances to the Corporation that
registration under such Act is not required with respect to such sale or
offer."
C. MISCELLANEOUS PROVISIONS.
1. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever additional
action and execute whatever additional documents the Corporation may deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Optionee or the Purchased Shares
pursuant to the express provisions of this Agreement.
2. AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the entire contract
between the parties hereto with regard to the subject matter hereof. This
Agreement is made pursuant to the provisions of the 2005 Plan and shall in all
respects be construed in conformity with the express terms and provisions of the
2005 Plan.
3. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without resort to that
State's conflict-of-laws rules. The parties hereto hereby irrevocably submit to
the jurisdiction of any state or federal court sitting in Delaware, in any
action or proceeding brought to enforce or otherwise arising out of or relating
to this Agreement, and hereby waive any objection to venue in any such court and
any claim that such forum is an inconvenient forum.
4. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to the
benefit of, and be binding upon the Corporation and its successors and assignees
and Optionee and Optionee's legal representatives, heirs, legatees,
distributees, assignees, and transferees by operation of law, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms and conditions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first indicated above.
CHINA MOBILITY SOLUTIONS, INC.: OPTIONEE:
By: Address:
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Title:
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