UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
Filed by
the Registrant
x
Filed by
a Party other
o
than the
Registrant
Check the
appropriate box:
¨
Preliminary Proxy
Statement
¨
Confidential, for Use
of the Commission Only (as Permitted by Rule 14a-6(e)(2))
x
Definitive Proxy
Statement
¨
Definitive
Additional Materials
¨
Soliciting
Material Pursuant to 240.14a-12
China Medicine
Corporation
(Name of
Registrant as Specified in its Charter)
Payment
of Filing Fee (Check the appropriate box):
|
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
|
|
¨
|
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.:
|
CHINA
MEDICINE CORPORATION
Room
702, Guangri Mansion
No.
9 Siyou Nan Road, Alley 1, 1st Street
Wuyang
Xincheng
Guangzhou,
China 510600
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 19, 2009
To the
Stockholders of China Medicine Corporation:
You are
cordially invited to attend the Annual Meeting of Stockholders of China Medicine
Corporation, a Delaware corporation, to be held at 1325 Avenue of the Americas,
Suite 2800, New York, NY 10019, on Tuesday, May 19, 2008, at 12:00 p.m. local
time, for the following purposes:
|
1.
|
To approve a reincorporation of
our company from Delaware to Nevada through an agreement and plan of
merger;
|
|
2.
|
To elect five members to the
Board of Directors of the Company to serve until their respective
successors are elected and qualified;
and
|
|
3.
|
To transact such other matters as
may properly come before the meeting or any adjournment
thereof.
|
Only
stockholders of record at the close of business on April 28, 2008 (the “Record
Date”) are entitled to notice of, and to vote at, the meeting.
A proxy
statement and proxy are enclosed herewith. If you are unable to attend the
meeting in person you are urged to sign, date and return the enclosed proxy
promptly in the enclosed addressed envelope, which requires no postage if mailed
within the United States. If you attend the meeting in person, you may withdraw
your proxy and vote your shares. Also enclosed herewith is our 2008 Annual
Report.
By Order
of the Board of Directors,
Senshan
Yang
Chief
Executive Officer
Guangzhou,
China
May 5,
2009
PROXY
STATEMENT
CHINA
MEDICINE CORPORATION
Room
702, Guangri Mansion
No.
9, South Wuyang Xin Chengsi
Guangzhou,
China 510600
ANNUAL
MEETING OF STOCKHOLDERS
MAY
19, 2009
INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The Board
of Directors of China Medicine Corporation, a Delaware corporation (the
“Company,” “we” or “us”), is soliciting the enclosed proxy for the annual
meeting of stockholders to be held on May 19, 2009, at 12:00 p.m. local time, at
1325 Avenue of the Americas, Suite 2800, New York, NY 10019, or any continuation
or adjournment thereof. At the meeting, the stockholders will be asked to vote
on one or more proposals, which are listed in the notice of annual meeting of
stockholders and described in more detail below.
This
proxy statement and the enclosed proxy card are intended to be mailed on or
about May 5, 2009, to all stockholders entitled to vote at the meeting. Our 2008
Annual Report on Form 10-K is also being mailed to all stockholders entitled to
vote at the annual meeting. The Annual Report does not constitute a part of the
proxy solicitation material.
At the
meeting, our stockholders will be asked:
|
1.
|
To approve a reincorporation of
our company from Delaware to Nevada through an agreement and plan of
merger;
|
|
2.
|
To elect five members to the
Board of Directors to serve until their respective successors are elected
and qualified; and
|
|
3.
|
To approve such other matters as
may properly come before the meeting or any adjournment
thereof.
|
Important
Notice Regarding the Availability of Proxy Materials
This
proxy statement and our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 will be available on or about May 5, 2009 at:
http://www.chinamedicinecorp.com/investors/SECFilings1.aspx
Important
Information Regarding Delivery of Proxy Material
The U.S.
Securities and Exchange Commission (the “SEC”) has adopted amendments to the
proxy rules that change how companies must provide proxy materials to its
stockholders. These new rules are often referred to as “notice and
access,” under which a company may select either of the following options for
making proxy materials available to its stockholders:
· the
full set delivery option; or
· the
notice only option.
A company
may use a single method for all of its stockholders, or use full set delivery
for some while adopting the notice only option for others.
The
Company must comply with these new rules in connection with the Annual
Meeting.
Full
Set Delivery Option
Under the
full set delivery option, a company delivers all proxy material to its
stockholders by mail as it would have done prior to the change in the
rules. In addition to delivery of proxy materials to stockholders,
the company must post all proxy materials on a publicly-accessible website and
provide information to stockholders about how to access the
website.
In
connection with the Annual Meeting, the Company elected to use the full set
delivery option. Accordingly, you should have received the
Company’s proxy materials by mail. These proxy materials include the
Notice of Annual Meeting of Stockholders, proxy statement, proxy card and 2008
Annual Report to Shareholders. Additionally, the Company has posted
these materials at
http://www.chinamedicinecorp.com/investors/SECFilings1.aspx
Notice
Only Option
Under the
notice only option, a company must post all proxy materials on a
publicly-accessible website. Instead of delivering proxy materials to
its stockholders, the company delivers a “Notice of Internet Availability of
Proxy Material.” The notice includes, among other
matters:
|
·
|
information regarding the date
and time of the annual meeting of stockholders as well as the items to be
considered at the meeting;
|
|
·
|
information regarding the website
where the proxy materials are posted;
and
|
|
·
|
various means by which a
stockholder can request paper or e-mail copies of the proxy
materials.
|
If a
stockholder requests paper copies of the proxy materials, these materials must
be sent to the stockholder within three business days and by first class
mail.
The
Company May Use the Notice Only Option in the Future
Although
the Company elected to use the full set delivery option in connection with the
Annual Meeting, it may choose to use the notice only option in the
future. By reducing the amount of materials that a company needs to
print and mail, the notice only option provides an opportunity for costs savings
as well as conservation of paper products. Many companies that have
used the notice only option have also experienced a lower participation rate
resulting in fewer stockholders voting at the annual meeting. The
Company plans to evaluate the future possible cost savings as well as the
possible impact on stockholder participation as it considers future use of the
notice only option.
Record
Date; Outstanding Shares
Only
stockholders of record at the close of business on April 28, 2009 (the “Record
Date”) are entitled to receive notice of, and vote at, our annual meeting. As of
the Record Date, the classes of stock entitled to vote at the meeting, and the
number of shares of each class outstanding as of the Record Date and entitled to
vote, consisted of:
• 15,226,742
shares of common stock, par value $.0001 per share.
Each
share of our common stock is entitled to one vote on all matters. We do not have
any other voting securities.
Expenses
of Soliciting Proxies
We will
pay the expenses of soliciting proxies to be voted at the annual meeting.
Following the original mailing of the proxies and other proxy materials, we or
our agents may supplement the solicitation of proxies by mail, telephone,
internet, telegraph or in person. Following the original mailing of the proxies
and other proxy materials, we will request that brokers, custodians, nominees
and other record holders of our common stock forward copies of the proxy and
other annual meeting materials to persons for whom they hold shares of common
stock and request authority for the exercise of proxies. In these cases, we will
reimburse such record holders for their reasonable expenses if requested to do
so.
Revocability
of Proxies
If you
attend the meeting, you may vote in person, regardless of whether you have
submitted a proxy. Any person giving a proxy in the form accompanying this proxy
statement may revoke it at any time before it is voted. A proxy may be revoked
by (i) written notice of revocation or submission of a new proxy sent to our
Corporate Secretary at Room 702 Guangri Mansion No. 9, South Wuyang Xin Chengsi,
Guangzhou, China 510600, or (ii) attending the meeting and voting in
person.
Voting
and Votes Required for Approval
Every
stockholder of record is entitled to one vote, for each share held, on each
proposal or item that comes before the meeting. There are no cumulative voting
rights. By submitting your proxy, you authorize Ms. Minhua Liu, or any person
designated as his substitute, to represent you and vote your shares at the
meeting in accordance with your instructions. If the meeting is adjourned, Ms.
Liu or her substitute will be authorized to vote your shares at any adjournment
or postponement of the meeting.
To vote
by mail, please sign, date and complete the enclosed proxy and return it in the
enclosed self-addressed envelope, to Continental Stock Transfer & Trust
Company, 17 Battery Place, New York, New York 10004. If you hold your shares
through a bank, broker or other nominee, it will give you separate instructions
for voting your shares.
In
addition to solicitations by mail, we may solicit proxies in person, by
telephone, facsimile or e-mail. In the event that additional solicitation
material is used, it will be filed with the SEC prior to its use.
Tabulation
of Votes
The votes
received by proxy will be tabulated and certified by our transfer agent,
Continental Stock Transfer & Trust Company. All other votes will be
tabulated by an inspector of election at the meeting.
Voting
by Street Name Holders
If you
are the beneficial owner of shares held in “street name” by a broker, the
broker, as the record holder of the shares, is required to vote those shares in
accordance with your instructions. If you do not give instructions to the
broker, the broker will nevertheless be entitled to vote the shares with respect
to “discretionary” items but will not be permitted to vote the shares with
respect to “non-discretionary” items (in which case, the shares will be treated
as “broker non-votes”).
Quorum;
Abstentions; Broker Non-Votes
The
required quorum for the transaction of business at the annual meeting is a
majority of the outstanding shares of common stock, at the annual meeting, in
person or by proxy. Shares that are voted “FOR,” “AGAINST” or “WITHHELD FROM” a
matter are treated as being present at the meeting for purposes of establishing
a quorum and are also treated as shares represented and voting the votes cast at
the annual meeting with respect to such matter.
While
there is no definitive statutory or case law authority in Delaware as to the
proper treatment of abstentions, we believe that abstentions should be counted
for purposes of determining both: (i) the presence or absence of a quorum for
the transaction of business; and (ii) the total number of votes cast with
respect to a proposal (other than the election of directors). In the absence of
controlling precedent to the contrary, we intend to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against the
proposal.
Under
current Delaware case law, while broker non-votes (i.e. the votes of shares held
of record by brokers as to which the underlying beneficial owners have given no
voting instructions) should be counted for purposes of determining the presence
or absence of a quorum for the transaction of business, broker non-votes should
not be counted for purposes of determining the number of votes cast with respect
to the particular proposal on which the broker has expressly not voted. We
intend to treat broker non-votes in this manner. Thus, a broker non-vote will
make a quorum more readily obtainable, but the broker non-vote will not
otherwise affect the outcome of the voting on a proposal.
PROPOSALS
TO STOCKHOLDERS
PROPOSAL
NO. 1
REINCORPORATION
FROM DELAWARE TO NEVADA
We
propose to change our state of incorporation from Delaware to Nevada, which we
refer to as the “Reincorporation”. The Reincorporation would be effected through
the merger of the Company into a newly formed Nevada corporation that is a
wholly owned subsidiary of the Company, which we refer to as “CMC Nevada,”
pursuant to an Agreement and Plan of Merger, or “merger agreement,” in
substantially the form attached as
Appendix A
to this Proxy
Statement. Upon completion of the merger, CMC Nevada will be the surviving
corporation and will continue to operate our business under the name “China
Medicine Corporation”. In this section, we refer to the Company before the
Reincorporation as “the Company” and after the merger as “CMC Nevada.” In
connection with the Reincorporation:
|
·
|
There will be no change in our
business, management, employees, headquarters, benefit plans, assets,
liabilities or net worth (other than as a result of the costs incident to
the Reincorporation, which we expect to be
immaterial);
|
|
·
|
The directors and officers of the
Company prior to the Reincorporation will hold the same respective
positions with CMC Nevada following the Reincorporation, and there will be
no substantive change in direct or indirect interests of the current
directors or executive officers of the Company;
and
|
|
·
|
Your shares of common stock of
the Company will automatically be converted into an equivalent number of
shares of common stock of CMC Nevada.
YOU WILL NOT
NEED TO EXCHANGE YOUR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES
OF CMC NEVADA.
|
|
·
|
We will be governed by new
articles of incorporation under Nevada law in the form attached as
Appendix
B
.
|
|
·
|
We will adopt new bylaws under
Nevada law in the form attached as
Appendix
C
.
|
Upon
completion of the Reincorporation, the authorized capital stock of CMC Nevada
will consist of 90,000,000 shares of common stock, $0.0001 par value, and
10,000,000 shares of preferred stock, $0.0001 par value, which is identical to
the existing authorized capital stock of the Company. Our common stock is
currently quoted on the Over-the-Counter Bulletin Board. We believe that the
common stock of CMC Nevada will also be quoted on the Over-the-Counter Bulletin
Board immediately after the reincorporation.
Principal
Reasons for the Proposed Reincorporation
Our Board
of Directors has unanimously approved the Reincorporation and believes that the
best interests of the Company and its stockholders will be served by changing
our state of incorporation from Delaware to Nevada. Primarily, the
Reincorporation would eliminate our obligation to pay the annual Delaware
franchise tax which would result in significant savings to us over the long
term. For 2008 and 2007, we were required to pay approximately $72,522.25 and
$53,977.25, respectively, in annual franchise fees to the State of Delaware.
Should we reincorporate in the State of Nevada, our current annual filing fee in
the State of Nevada would be approximately $175. The difference between annual
filing fees in Delaware and Nevada will continue to become greater if the value
of our assets continues to grow.
In
addition, reincorporation in Nevada may help us attract and retain qualified
management by reducing the risk of lawsuits being filed against the Company and
its directors. We believe that, in general, Nevada law provides greater
protection to our directors and the Company than Delaware law. The increasing
frequency of claims and litigation directed towards directors and officers has
greatly expanded the risks facing directors and officers of public companies in
exercising their duties. The amount of time and money required to respond to
these claims and to defend this type of litigation can be substantial. Delaware
law provides that every person becoming a director of a Delaware corporation
consents to the personal jurisdiction of the Delaware courts in connection with
any action concerning the corporation. Accordingly, a director can be personally
sued in Delaware, even though the director has no other contacts with the state.
Nevada law has no similar consent provisions and, accordingly, a plaintiff must
show the minimum contacts generally required for a state to have jurisdiction
over a non-resident director. Also, Nevada law allows a company and its officers
and directors, if personally sued, to petition the court to order a plaintiff to
post a bond to cover their costs of defense. This motion can be based upon lack
of reasonable possibility that the complaint will benefit the Company or a lack
of participation by the individual defendant in the conduct
alleged.
Reincorporation
in Nevada will also limit the personal liability of directors of the Company.
Delaware law permits a corporation to adopt provisions limiting or eliminating
the liability of a director to a company and its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the liability
does not arise from certain proscribed conduct, including breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law. By contrast, Nevada law permits a
broader exclusion of liability of both officers and directors to the Company and
its stockholders, providing for an exclusion of all monetary damages for breach
of fiduciary duty unless they arise from act or omissions which involve
intentional misconduct, fraud or a knowing violation of law. The reincorporation
will result in the elimination of any liability of an officer or director for a
breach of the duty of loyalty unless arising from intentional misconduct, fraud,
or a knowing violation of law.
Operating
the Company as a Nevada corporation will not interfere with, or differ
substantially from, our present corporate activities. As a Nevada corporation,
CMC Nevada will be governed by Nevada corporate law, while the Company is
presently governed by Delaware law. Our Board of Directors believes that Nevada
law constitutes a comprehensive, flexible legal structure under which to
operate. However, because of differences in the laws of these states, your
rights as stockholders will change in several material respects as a result of
the reincorporation. These matters are discussed in greater detail immediately
below.
The
proposed reincorporation is not being proposed to prevent a change in control,
nor is it in response to any present attempt known to our Board of Directors to
acquire control of the Company or obtain representation on our Board of
Directors. Nevertheless, certain effects of the proposed reincorporation may be
considered to have anti-takeover implications simply by virtue of being subject
to Nevada law. For example, in responding to an unsolicited bidder, the Nevada
Revised Statutes authorizes directors to consider not only the interests of
shareholders, but also the interests of employees, suppliers, creditors,
customers, the economy of the state and nation, the interests of the community
and society in general, and the long-term as well as short-term interests of the
corporation and its shareholders, including the possibility that these interests
may be best served by the continued independence of the corporation. For a
discussion of these and other differences between the laws of Delaware and
Nevada, see "Significant Differences Between the Corporation Laws of Delaware
and Nevada," below.
Potential
Disadvantages of Reincorporation
A
potential disadvantage of reincorporating from Delaware to Nevada is that
Delaware for many years has followed a policy of encouraging incorporation in
that state and, in furtherance of that policy, has adopted comprehensive, modern
and flexible corporate laws that Delaware periodically updates and revises to
meet changing business needs. Because of Delaware’s prominence as a state of
incorporation for many large corporations, the Delaware courts have developed
considerable expertise in dealing with corporate issues and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware corporations. Because Nevada case law
concerning the governing and effects of its statutes and regulations is more
limited, the Company and its stockholders may experience less predictability
with respect to legality of corporate affairs and transactions and stockholders’
rights to challenge them.
Principal
Features of the Reincorporation
The
Reincorporation would be effected through the merger of the Company with and
into CMC Nevada, a newly formed Nevada corporation that will be a wholly owned
subsidiary of the Company, pursuant to the merger agreement. Prior to the
merger, CMC Nevada will have no material assets or liabilities and will not have
carried on any business. Upon completion of the merger, CMC Nevada will succeed
to the assets and liabilities of the Company and will continue to operate our
business under the name “China Medicine Corporation”. The merger agreement is
attached to this proxy statement as Appendix A.
Prior
to the merger, CMC Nevada will have one share of common stock issued and
outstanding held by the Company, with only minimal capital. Upon completion of
the merger, each outstanding share of common stock of the Company will be
automatically converted into one share of common stock of CMC Nevada. In
addition, all outstanding warrants and options exercisable for shares of the
Company’s common stock will be automatically converted in to comparable warrants
and options of CMC Nevada. The terms of the merger agreement will provide that
the one outstanding share of outstanding common stock of CMC Nevada held by the
Company will be cancelled upon the effectiveness of the merger, with the result
that the Company’s current stockholders will be the only shareholders of the
surviving corporation.
Subject
to obtaining requisite stockholder approval for the Reincorporation, the merger
will become effective by the filing of articles of merger with the Nevada
Secretary of State and a certificate of merger and the plan of merger with the
Delaware Secretary of State. Upon the effectiveness of the merger, the articles
of incorporation and the bylaws of CMC Nevada, in substantially the forms
attached as Appendices B and C to this Proxy Statement, respectively, will
govern corporate operations and activities of the surviving
corporation.
You
will not have to take any action to exchange your stock certificates as a result
of the merger. The current certificates representing shares of the Company’s
common stock will automatically represent an equal number of shares of CMC
Nevada’s common stock following the Reincorporation. New certificates
representing shares of CMC Nevada common stock will be available for any
stockholder desiring to make an exchange and for all new issuances.
Effective
Time
If
the Reincorporation is approved by the stockholders at the Annual Meeting, it is
anticipated that the Reincorporation will become effective as soon as
practicable thereafter. However, the merger agreement may be terminated and
abandoned, or the consummation of the Reincorporation may be deferred for a
reasonable time, by action of the Company’s Board of Directors at any time prior
to the effective time of the Reincorporation, whether before or after the
approval of this Proposal No. 1, if the Board of Directors determines for
any reason, in its sole judgment and discretion, that the consummation of the
Reincorporation would no longer be in the best interests of the stockholders or
that the deferral thereof is advisable. In addition, the Board of Directors may
amend the merger agreement at any time prior to the merger, provided that an
amendment made subsequent to the adoption by the Company’s stockholders shall
not (i) alter or change the amount or kind of securities to be received in
exchange for the Delaware Common Stock, (ii) alter or change any term of
the articles of incorporation of CMC Nevada, as the surviving corporation to the
merger, or (iii) alter or change any of the terms and conditions of the
merger agreement if such alteration or change would, in the opinion of the Board
of Directors, adversely affect the Company’s stockholders.
Significant
Differences between Delaware and Nevada Law
The
rights of the Company’s stockholders are currently governed by Delaware law and
the Company’s certificate of incorporation and bylaws. The merger agreement
provides that, at the effective time of the merger, the separate corporate
existence of the Company will cease and the former stockholders of the Company
will become stockholders of CMC Nevada. Accordingly, after the effective time of
the merger, your rights as a stockholder will be governed by Nevada law and the
articles of incorporation and bylaws of CMC Nevada. The statutory corporate laws
of the State of Nevada, as governed by the Nevada Revised Statutes, are similar
in many respects to those of Delaware, as governed by the Delaware General
Corporation Law. However, there are certain differences that may affect your
rights as a stockholder, as well as the corporate governance of the corporation,
if the Reincorporation is consummated. The following are summaries of material
differences between the current rights of stockholders of the Company and the
rights of stockholders of CMC Nevada following the merger.
The
following discussion is a summary. It does not give you a complete description
of the differences that may affect you. You should also refer to the Nevada
Revised Statutes, as well as the forms of the articles of incorporation and the
bylaws of CMC Nevada, which are attached as Appendices B and C, respectively, to
this Proxy Statement, and which will come into effect concurrently with the
effectiveness of the Reincorporation merger as provided in the merger agreement.
In this section, we use the term “charter” to describe either the certificate of
incorporation under Delaware law or the articles of incorporation under Nevada
law.
General.
As discuss above under
“Potential Disadvantages of the Reincorporation,” Delaware for many years has
followed a policy of encouraging incorporation in that state and, in furtherance
of that policy, has adopted comprehensive, modern and flexible corporate laws
that Delaware periodically updates and revises to meet changing business needs.
Because of Delaware’s prominence as a state of incorporation for many large
corporations, the Delaware courts have developed considerable expertise in
dealing with corporate issues and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
Delaware corporations. Because Nevada case law concerning the governing and
effects of its statutes and regulations is more limited, the Company and its
stockholders may experience less predictability with respect to legality of
corporate affairs and transactions and stockholders’ rights to challenge
them.
Removal of
Directors
.
Under
Delaware law, directors of a corporation without a classified board may be
removed with or without cause by the holders of a majority of shares then
entitled to vote in an election of directors. Under Nevada law, any one or all
of the directors of a corporation may be removed by the holders of not less than
two-thirds of the voting power of a corporation’s issued and outstanding stock.
Nevada does not distinguish between removal of directors with or without
cause.
Limitation on
Personal Liability of Directors
.
A Delaware corporation is
permitted to adopt provisions in its certificate of incorporation limiting or
eliminating the liability of a director to a company and its shareholders for
monetary damages for breach of fiduciary duty as a director, provided that such
liability does not arise from certain proscribed conduct, including breach of
the duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or liability to the
corporation based on unlawful dividends or distributions or improper personal
benefit.
While
Nevada law has a similar provision permitting the adoption of provisions in the
articles of incorporation limiting personal liability, the Nevada provision
differs in three respects. First, the Nevada provision applies to both directors
and officers. Second, while the Delaware provision excepts from limitation on
liability a breach of the duty of loyalty, the Nevada counterpart does not
contain this exception. Third, Nevada law with respect to the elimination of
liability for directors and officers expressly applies to liabilities owed to
creditors of the corporation. Thus, the Nevada provision expressly permits a
corporation to limit the liability of officers, as well as directors, and
permits limitation of liability arising from a breach of the duty of loyalty and
from obligations to the corporation’s creditors.
Indemnification
of Officers and Directors and Advancement of Expenses
.
Although Delaware and
Nevada law have substantially similar provisions regarding indemnification by a
corporation of its officers, directors, employees and agents, Delaware and
Nevada law differ in their provisions for advancement of expenses incurred by an
officer or director in defending a civil or criminal action, suit or proceeding.
Delaware law provides that expenses incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined that
he is not entitled to be indemnified by the corporation. A Delaware corporation
has the discretion to decide whether or not to advance expenses, unless its
certificate of incorporation or bylaws provide for mandatory advancement. Under
Nevada law, the articles of incorporation, bylaws or an agreement made by the
corporation may provide that the corporation must pay advancements of expenses
in advance of the final disposition of the action, suit or proceedings upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined that he is not entitled to be
indemnified by the corporation.
Action by Written
Consent of Directors
.
Both Delaware and Nevada
law provide that, unless the articles or certificate of incorporation or the
bylaws provide otherwise, any action required or permitted to be taken at a
meeting of the directors or a committee thereof may be taken without a meeting
if ALL members of the board or committee, as the case may be, consent to the
action in writing.
Actions by
Written Consent of Shareholders
.
Both Delaware and Nevada
law provide that, unless the articles or certificate of incorporation provides
otherwise, any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if the holders of outstanding stock
having at least the minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares entitled to vote consent to
the action in writing. Delaware law requires a corporation to give prompt notice
of the taking of corporate action without a meeting by less than unanimous
written consent to those stockholders who did not consent in writing. Nevada law
does not require notice to the stockholders of action taken by less than all of
the stockholders.
Dividends
.
Delaware law is more
restrictive than Nevada law with respect to when dividends may be paid. Under
Delaware law, unless further restricted in the certificate of incorporation, a
corporation may declare and pay dividends out of surplus, or if no surplus
exists out of net profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year (provided that the amount of capital of the
corporation is not less than the aggregate amount of the capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets). In addition, Delaware law provides that a corporation
may redeem or repurchase its shares only if the capital of the corporation is
not impaired and such redemption or repurchase would not impair the capital of
the corporation.
Nevada
law provides that no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or, except as specifically permitted
by the articles of incorporation, the corporation’s total assets would be less
than the sum of its total liabilities plus the amount that would be needed at
the time of a dissolution to satisfy the preferential rights of preferred
shareholders.
Restrictions on
Business Combinations
.
Both Delaware and Nevada
law contain provisions restricting the ability of a corporation to engage in
business combinations with an interested stockholder. Under Delaware law, a
corporation that is listed on a national securities exchange or held of record
by more than 2,000 stockholders, is not permitted to engage in a business
combination with any interested stockholder for a three-year period following
the time the stockholder became an interested stockholder, unless: (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder; (ii) the interested
stockholder acquires 85% or more of the outstanding voting stock of the
corporation in the same transaction that makes it an interested stockholder
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by certain employee stock ownership plans); or
(iii) on or after the date the person becomes an interested stockholder,
the business combination is approved by the corporation’s board of directors and
by the holders of at least two-thirds of the corporation’s outstanding voting
stock at an annual or special meeting, excluding shares owned by the interested
stockholder. Delaware law defines “interested stockholder” generally as a person
who owns 15% or more of the outstanding shares of a corporation’s voting
stock.
Nevada
law regulates business combinations more stringently. Nevada law defines an
interested stockholder as a beneficial owner (directly or indirectly) of 10% or
more of the voting power of the outstanding shares of the corporation. In
addition, combinations with an interested stockholder remain prohibited for
three years after the person became an interested stockholder unless
(i) the transaction is approved by the board of directors or the holders of
a majority of the outstanding shares not beneficially owned by the interested
party, or (ii) the interested stockholder satisfies certain fair value
requirements. As in Delaware, a Nevada corporation may opt-out of the statute
with appropriate provisions in its articles of incorporation.
Special Meetings
of the Shareholders
.
Delaware law permits
special meetings of shareholders to be called by the board of directors or by
any other person authorized in the certificate of incorporation or bylaws to
call a special shareholder meeting. Nevada law permits special meetings of
shareholders to be called by the entire board of directors, any two directors,
or the President, unless the articles of incorporation or bylaws provide
otherwise
.
Special Meetings
Pursuant to Petition of Stockholders
.
Delaware law provides that
a director or a stockholder of a corporation may apply to the Court of Chancery
of the State of Delaware if the corporation fails to hold an annual meeting for
the election of directors or there is no written consent to elect directors
instead of an annual meeting for a period of 30 days after the date
designated for the annual meeting or, if there is no date designated, within
13 months after the last annual meeting. Nevada law is more restrictive.
Under Nevada law, stockholders having not less than 15% of the voting interest
may petition the district court to order a meeting for the election of directors
if a corporation fails to call a meeting for that purpose within 18 months
after the last meeting at which directors were elected. The reincorporation may
make it more difficult for our stockholders to require that an annual meeting be
held without the consent of the Board of Directors.
Adjournment of
Shareholder Meetings
.
Under Delaware law, if a
meeting of shareholders is adjourned due to lack of a quorum and the adjournment
is for more than 30 days, or if after the adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting must be given
to each shareholder of record entitled to vote at the meeting. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. Under Nevada law, a corporation is not
required to give any notice of an adjourned meeting or of the business to be
transacted at an adjourned meeting, other than by announcement at the meeting at
which the adjournment is taken, unless the board fixes a new record date for the
adjourned meeting or the meeting date is adjourned to a date more than
60 days later than the date set for the original meeting, in which case a
new record date must be fixed and notice given.
Duration of
Proxies
.
Under
Delaware law, a proxy executed by a shareholder will remain valid for a period
of three years, unless the proxy provides for a longer period. Under Nevada law,
a proxy is effective only for a period of six months, unless it is coupled with
an interest or unless otherwise provided in the proxy, which duration may not
exceed seven years. Nevada law also provides for irrevocable proxies, without
limitation on duration, in limited circumstances.
Shareholder Vote
for Mergers and Other Corporate Reorganizations
.
Delaware law requires
authorization by an absolute majority of outstanding shares entitled to vote, as
well as approval by the board of directors, with respect to the terms of a
merger or a sale of substantially all of the assets of the corporation. A Nevada
corporation may provide in its articles of incorporation that the corporation
may sell, lease or exchange all or substantially all of its assets upon approval
by the board of directors without the requirement of shareholder approval.
Delaware law does not require a shareholder vote of the surviving corporation in
a merger (unless the corporation provides otherwise in its certificate of
incorporation) if: (a) the plan of merger does not amend the existing
certificate of incorporation; (b) each share of stock of the surviving
corporation outstanding immediately before the effective date of the merger is
an identical outstanding share after the merger; and (c) either no shares
of common stock of the surviving corporation and no shares, securities or
obligations convertible into such stock are to be issued or delivered under the
plan of merger, or the authorized unissued shares or shares of common stock of
the surviving corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of common stock of such constituent corporation outstanding immediately
prior to the effective date of the merger. Nevada law does not require a
shareholder vote of the surviving corporation in a merger under substantially
similar circumstances.
Increasing or
Decreasing Authorized Shares
.
Nevada law allows the board
of directors of a corporation, unless restricted by the articles of
incorporation, to increase or decrease the number of authorized shares in the
class or series of the corporation’s shares and correspondingly effect a forward
or reverse split of any such class or series of the corporation’s shares without
a vote of the shareholders, so long as the action taken does not change or alter
any right or preference of the shareholder and does not include any provision or
provisions pursuant to which only money will be paid or script issued to
shareholders who hold 10% or more of the outstanding shares of the affected
class and series, and who would otherwise be entitled to receive fractions of
shares in exchange for the cancellation of all of their outstanding shares.
Delaware law contains no such similar provision.
Significant
Differences between Bylaws of CMC Nevada and the Company
In
addition to the differences between the laws of Delaware and Nevada, under the
bylaws of CMC Nevada, the holders of at least one-third of the outstanding
voting shares shall constitute a quorum at a meeting of stockholders. The
Company’s current bylaws require majority of the outstanding voting shares to
constitute a quorum at a meeting of stockholders.
Certain
Federal Income Tax Consequences of the Reincorporation.
The
Company intends the Reincorporation to be a tax-free reorganization under the
Internal Revenue Code of 1986, as amended. Assuming the Reincorporation
qualifies as a tax-free reorganization, the holders of the Company’s common
stock will not recognize any gain or loss under the Federal tax laws as a result
of the occurrence of the Reincorporation, and neither will the Company or CMC
Nevada. Each stockholder will have the same basis in CMC Nevada’s common stock
received as a result of the Reincorporation as that holder has in the
corresponding common stock of the Company held at the time the Reincorporation
occurs. Each holder’s holding period in CMC Nevada’s common stock received as a
result of the Reincorporation will include the period during which such holder
held the corresponding common stock of the Company at the time the
Reincorporation occurs, provided the latter was held by such holder as a capital
asset at the time of consummation of the Reincorporation.
This
Proxy Statement only discusses U.S. federal income tax consequences and has done
so only for general information. It does not address all of the federal income
tax consequences that may be relevant to particular stockholders based upon
individual circumstances or to stockholders who are subject to special rules,
such as, financial institutions, tax-exempt organizations, insurance companies,
dealers in securities, foreign holders or holders who acquired their shares as
compensation, whether through employee stock options or otherwise. This Proxy
Statement does not address the tax consequences under state, local or foreign
laws.
This
discussion is based on the Internal Revenue Code, laws, regulations, rulings and
decisions in effect as of the date of this Proxy Statement, all of which are
subject to differing interpretations and change, possibly with retroactive
effect. The Company has neither requested nor received a tax opinion from legal
counsel or rulings from the Internal Revenue Service regarding the consequences
of reincorporation. There can be no assurance that future legislation,
regulations, administrative rulings or court decisions would not alter the
consequences discussed above.
You
should consult your own tax advisor to determine the particular tax consequences
to you of the reincorporation, including the applicability and effect of
federal, state, local, foreign and other tax laws.
Regulatory
Approvals
We are
required to obtain the approval of our stockholders under Delaware law to effect
the reincorporation. To obtain this approval, we are required to prepare and
circulate to our stockholders proxy materials meeting the requirements of the
rules and regulations of the SEC. We have prepared this proxy statement in
accordance with those rules and regulations, and it is being circulated in order
to obtain the required stockholder approval. Once we obtain such approval, we
are required to file a certificate of merger with the State of Delaware and
articles of merger with the State of Nevada to effect the reincorporation. Other
than the foregoing, we need not comply with any federal or state regulatory
requirements nor must we obtain any approvals in connection with the merger and
the reincorporation.
Appraisal
Rights
The
reincorporation will be conducted as a merger of the Company into CMC Nevada,
our wholly-owned subsidiary, pursuant to Section 253 of the General Corporation
Law of the State of Delaware. Delaware law does not provide for any right of
appraisal or redemption in connection with mergers of a parent corporation into
its subsidiary. Therefore, our stockholders are not entitled to receive
consideration instead of shares of CMC Nevada.
THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE
THE AGREEMENT AND PLAN OF MERGER UNDER WHICH WE WILL REINCORPORATE FROM DELAWARE
TO NEVADA. PROXIES SOLICITED HEREBY WILL BE VOTED “FOR” THE PROPOSAL UNLESS A
VOTE AGAINST IT OR AN ABSTENTION IS SPECIFICALLY INDICATED.
PROPOSAL
NO. 2
ELECTION
OF DIRECTORS
Our Board
of Directors presently consists of five members. The Board of Directors has
determined to nominate the five individuals currently serving as directors for
re-election as directors. Unless you instruct us otherwise, you will be deemed
to vote your proxies
for
the nominees named below.
In the event that any nominee is unable or declines to serve as a director at
the time of the annual meeting, the proxies will be voted for any nominee who
shall be designated by the current Board of Directors to fill the vacancy. 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 duly elected and
qualified or until his or her earlier resignation, removal from office, death or
incapacity.
Article
II of our By-laws gives power to our Board of Directors to change the number of
directors of the Company by resolution and to fill any vacancies created by an
increase in the number of directors by a vote of the directors without the
necessity of a vote by stockholders on such matter. Our Board of Directors may
exercise that power from time to time between annual meetings of
stockholders.
The
following table sets forth the names and ages of all current directors and all
persons nominated or chosen to become directors along with their current
positions, offices and term:
Name
of Nominee
|
|
Age
|
|
Position
with the Company
|
|
Director
Since
|
Senshan
Yang
|
|
47
|
|
Chief
Executive Officer and Director
|
|
February
2006
|
Minhua
Liu
|
|
41
|
|
Executive
Vice President and Director
|
|
February
2006
|
Robert
Adler
(1)
|
|
74
|
|
Director
|
|
May
2006
|
Dr.
Rachel Gong
(2)
|
|
41
|
|
Director
|
|
May
2006
|
Dr.
Yanfang Chen
(3)
|
|
45
|
|
Director
|
|
May
2006
|
(1)
|
Chairman of the Audit Committee
and Member of the Compensation
Committee
|
(2)
|
Chairman of the Compensation
Committee and Member of the Audit
Committee
|
(3)
|
Member of the Compensation
Committee and of the Audit
Committee
|
The Board
of Directors has determined that our directors Robert Adler, Rachel Gong and
Yanfang Chen are independent (as independence is defined by the rules of the
NASDAQ Stock Market).
The
following information with respect to the principal occupation or employment of
the nominees, the name and principal business of the corporation or other
organization in which such occupation or employment is carried on and other
affiliations and business experience during the past five years has been
furnished to us by the respective nominees:
Senshan Yang.
Mr. Senshan Yang has been our Chief Executive Officer since February 8,
2006 and a Director since February 10, 2006. Since July 2000, he has
been Chairman and General Manager of Guangzhou Konzern Medicine Co., Ltd.
(“Konzern”), our wholly-owned subsidiary incorporated under the law of the
People’s Republic of China (“PRC”). Prior to that, Mr. Yang had served as a
Manager Associate for Guangdong Maoming Petroleum Corporation, a state-owned
company, for nearly 20 years. Mr. Yang obtained his bachelor’s degree from South
China University of Technology in 1981.
Minhua
Liu.
Ms. Minhua Liu has been our Executive Vice President since February
8, 2006 and a Director since February 10, 2006. She has been Vice General
Manager of Konzern since July 2000. Prior to that, she had served as a company
herbalist doctor for China Military Science Qiming Research Center in Beijing,
responsible for all the health care of all staff of the research center. Ms. Liu
obtained her bachelor’s degree from Beijing College of Traditional Chinese
Medicine in 1992.
Robert Adler.
Mr. Robert Adler has been our director, member of the Compensation
Committee and Chairman of the Audit Committee since May 9, 2006. He is a
private investor. Most recently Mr. Adler taught financial English for a
semester in Shanghai University of Finance and Economics. Mr. Adler's prior
experience includes terms as an investment adviser with UBS Financial Services,
a managing director for ING Furman Selz Asset Management, Vice President and
Senior Investment Officer of BHF Securities Corp and DG Bank, New York Branch
and Vice President of Kuhn, Loeb & Co. Mr. Adler obtained a B.A. degree from
Swarthmore College and studied at NYU School of Business Administration. Mr.
Adler is a member of Institute of Chartered Financial Analysts and a member of
the New York Society of Security Analysts.
Dr. Rachel
Gong.
Dr. Gong has been our Director, member of the Audit Committee and
Chairman of the Compensation Committee since May 9, 2006. Dr. Gong has both
operating and investment experiences in the biotechnology industry in China and
the United States. She joined Morningside Ventures in 2004 to focus on
healthcare venture investment and serves on the board of a number of its
portfolio companies. Prior to that, Dr. Gong held positions in biotech
management at QIAGEN, public accounting at PricewaterhouseCoopers, and
investment banking at RBC Capital Markets. Earlier in her career, she was a
researcher at the Chinese Academy of Medical Sciences in Beijing. Dr. Gong
received her Ph.D. in Biochemistry and Molecular Biology from the University Of
South Florida College Of Medicine, her M.B.A. from the Johnson Graduate School
of Management of Cornell University, and her B.S. in Plant Physiology and
Biochemistry from Beijing University.
Dr. Yanfang
Chen.
Dr. Chen has been our Director, member of the Audit Committee and
member of the Compensation Committee since May 9, 2006. He is currently an
assistant professor, of Department of Pharmacology & Toxicology, Wright
State University Boonshoft School of Medicine. During the past five years, he
has been research associate, senior research associate and research assistant
professor at the Department of Pharmacology & Toxicology, Wright State
University Boonshoft School of Medicine. He obtained a Ph.D degree from Medical
Science Center, Peking University in China in 1995 and worked for Guangdong
Provincial People's Hospital from 1995 to 1999. Dr. Chen is a professional
member of American Heart Association and American Stroke Association, and a
member of American Society for Pharmacology and Experimental Therapeutics. He
has numerous publications in his field of research.
Directors
are elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors and the five nominees who receive the most votes of our common stock
will be elected. In the election of directors, votes may be cast in favor of or
withheld with respect to each nominee.
Family
Relationships
There are
no family relationships among our nominees for directors and
officers.
THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION AS A
DIRECTOR OF EACH OF THE NOMINEES SET FORTH ABOVE. PROXIES SOLICITED HEREBY WILL
BE VOTED “FOR” EACH DIRECTOR NAMED ABOVE UNLESS A VOTE AGAINST A NOMINEE OR AN
ABSTENTION IS SPECIFICALLY INDICATED.
MANAGEMENT
The
following table sets forth the names and ages of all current China Medicine
officers along with their current positions. Officers are appointed to serve
until the meeting of the Board of Directors following the next annual meeting of
stockholders and until their successors have been duly elected and
qualified.
Name
|
|
Age
|
|
Position
|
Senshan
Yang
|
|
47
|
|
Chief
Executive Officer and Director
|
Minhua
Liu
|
|
41
|
|
Executive
Vice President and Director
|
Huizhen
Yu
|
|
36
|
|
Chief
Financial
Officer
|
Senshan
Yang
’s biographical information is set forth under “Election of
Directors”
Minhua
Liu
’s biographical information is set forth under “Election of
Directors”
Huizhen
Yu
. Ms. Huizhen Yu has been our Chief Financial Officer since February
10, 2006. She has been Chief Financial Officer of Konzern since October 2002.
Ms. Yu was an accountant for Shenzhen Liuge Bicycle Equipment Co., Ltd from 2000
until 2002, and an accountant for Guangzhou JoinWin Consultancy Ltd. from 1997
to 2000. She obtained her bachelor’s degree from Jinan University in Guangzhou
and Middle Level Accountant Certificate in China in 2002.
Legal
Proceedings
None of
our directors, nominee directors, or executive officers, nor any affiliate of
any such individual, is a party adverse to the Company in any material
proceeding.
BOARD
OF DIRECTORS MEETINGS AND COMMITTEES
The Board
of Directors acted three times by unanimous written consent during the fiscal
year ended December 31, 2008. The Board of Directors has standing Audit and
Compensation Committees.
Audit
Committee and Audit Committee Report
The Board
of Directors created the audit committee in May 2006. The Audit Committee is to
oversee the Company's accounting and financial reporting processes, as well as
its financial statement audits. The committee recommends to the Board of
Directors the selection of the Company’s outside auditors and reviews their
procedures for ensuring their independence with respect to the services
performed for the Company.
The Audit
Committee is comprised of three directors: Dr. Rachel Gong, Dr. Yanfang Chen and
Mr. Robert Adler. Mr. Adler is the Chairman of the Audit Committee. In the
opinion of the Board of Directors, Dr. Gong, Dr. Chen and Mr. Adler are
independent of management and free of any relationship that would interfere with
their exercise of independent judgment as members of this committee and they are
independent as defined by the rules of the NASDAQ Stock Market. The Board of
Directors has adopted a written charter for the Audit Committee. The Audit
Committee met three times during the fiscal year ended December 31,
2008.
AUDIT
COMMITTEE REPORT
The Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board of Directors. The Committee is comprised of three Directors and operates
under a written charter adopted by the Board of Directors. All of the audit
committee members are independent as defined by the rules of the NASDAQ Stock
Market, and as that term is defined in Section 10A of the Securities Act of
1934, as amended. Management has the primary responsibility for the financial
statements and the reporting process, including the Company’s systems of
internal control. In fulfilling its responsibilities, the Committee reviewed the
audited financial statements in the Annual Report with management, including
discussing with management, in March 2009, the quality and acceptability of the
Company’s financial reporting and controls.
The
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting standards, their judgments as to the quality
and acceptability of the Company’s financial reporting and such other matters as
are required to be discussed with the Committee under generally accepted
auditing standards, including the matters required to be discussed by SAS 61
(Communication with Audit Committees). In addition, the Committee has discussed
with the independent auditors the auditors’ independence from management and the
Company, including the matters in the auditors’ written disclosures required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant's communications with the audit committee
concerning independence. Furthermore, the Audit Committee has considered whether
the provision of non-audit services by the independent auditors for the fiscal
year ended December 31, 2008 is compatible with maintaining their
independence.
In
reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements for
the fiscal year ended December 31, 2008 be included in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, for filing with
the SEC.
Management
is responsible for the Company’s financial reporting process, including its
systems of internal control, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting principles. The
Company’s independent auditors are responsible for auditing those financial
statements. Our responsibility is to monitor and review these processes. It is
not the Committee’s duty or responsibility to conduct auditing or accounting
reviews or procedures. The Committee has relied, without independent
verification, on management’s representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States of America and on the
independent auditors’ report on the Company’s financial statements.
The
Committee’s oversight does not provide it with an independent basis to determine
that management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Committee’s considerations and discussions with
management and the independent auditors do not assure that the Company’s
financial statements are presented in accordance with generally accepted
accounting principles, that the audit of the Company’s financial statements has
been carried out in accordance with generally accepted auditing standards or
that the Company’s independent accountants are in fact
“independent.”
The Audit
Committee is pleased to submit this report to the stockholders with regard to
the above matters.
/s/
Robert Adler
/s/
Rachel Gong
/s/
Yanfang Chen
Financial
Expert
The
Company believes that Robert Adler qualifies as a “financial expert” as defined
in Rule 407(d)(5)(ii) of Regulation S-K.
Independent
Public Accountant
The Board
of Directors has selected Moore Stephens Wurth Frazer and Torbet, LLP (“Moore
Stephens”), our current principal accountant, to serve as our principal
accountant for the year ending December 31, 2009. Representatives of Moore
Stephens are not expected to be present at our annual meeting or to be available
to respond to questions at the meeting. They will have the opportunity to make a
statement if they desire to do so.
Audit
Fees
The
aggregate fees billed for professional services rendered by Moore Stephens, for
the audit of our annual financial statements and review of the financial
statements included in our Form 10-Q or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for fiscal years 2008 and 2007 were $160,000 and $90,000,
respectively.
Audit-Related
Fees
There
were no audit related fees billed by Moore Stephens for fiscal years 2008 and
2007.
Tax
Fees
The
aggregate fees billed by Moore Stephens for professional services rendered for
tax compliance, tax advice and tax planning were $8,000 for fiscal year 2008 and
$0 for fiscal year 2007.
All
Other Fees
There
were no other fees billed by Moore Stephens for fiscal years 2008 and 2007 other
than the fees described above.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
and Corporate Governance
Our
Compensation Committee (which is referred to herein as the “Committee” or as the
“Compensation Committee”) oversees and administers our executive compensation
programs. The Committee’s complete roles and responsibilities are set forth in
the written charter adopted by the Board of Directors. The Compensation
Committee has three members, Dr. Yanfang Chen, Mr. Robert Adler and Dr.
Rachel Gong, each of whom was appointed to the Committee in May 2006. Each of
Mr. Adler, Drs. Chen and Gong qualifies as an independent director under the
rules of the NASDAQ Stock Market.
During
the fiscal year ended December 31, 2008, the Committee met one time. As part of
her duties as the Committee Chair, Rachel Gong reports on Committee actions and
recommendations to the Board of Directors.
Executive
Compensation Philosophy and Objectives
Our
compensation program for the individuals named in the Summary Compensation Table
below (the “named executive officers”) is designed and implemented based on our
pay-for-performance compensation philosophy. Our compensation committee’s
current intent is to perform an annual strategic review of our executive
officers’ compensation to determine whether it provides adequate incentives and
motivation and whether it adequately compensates our executive officers relative
to comparable officers in other companies with which we compete for executives.
We strive to adhere to this philosophy by significantly differentiating the pay
and rewards of our executive officers based on their demonstrated performance
and potential to contribute to the long-term success of the Company. Competing
for talent in the rapidly changing and increasingly competitive medical
distribution and intellectual property industries in China is both challenging
and critical to our success. The quality of the Company’s talent is a key driver
of long-term stockholder value. Establishing and maintaining executives’
long-term commitment to us is critical to the development of our product
pipeline, as development of new products often takes three years or more, and
time to market is critical to our business success.
We have
established a total rewards framework that supports our compensation philosophy
through the following objectives:
|
•
|
to afford our executives a
competitive total rewards opportunity relative to organizations with which
we compete for executive
talent,
|
|
•
|
to allow us to attract and retain
superior, experienced people who can perform and succeed in our
fast-paced, dynamic and challenging
environment,
|
|
•
|
to support our meritocracy by
ensuring that our top performers receive rewards that are substantially
greater than those received by average performers at the same position
level, and
|
|
•
|
to deliver pay in a cost
efficient manner that aligns employees’ rewards with stockholders’
long-term interests.
|
What
is our compensation program designed to reward?
The
compensation program is designed to reward superior financial, strategic and
operational performance that is achieved in a manner consistent with the
Company’s values. Results and how the results are attained are both critically
important. Our executive officers are assessed on the basis of demonstrated
results relative to pre-established goals, ability to address market changes in
a timely and efficient manner, as well as demonstrated competencies and
behavioral attributes.
Compensation
Program Elements and Pay Level Determination
What
factors are considered in determining the amounts of compensation?
The
Committee has put in place a review process for the determination of base
salaries, annual incentive targets and payments, and long-term incentive targets
and awards for all executive officers.
As part
of this review process, the CEO presents to the Committee individual assessments
of each executive officer’s performance over the prior year, as well as
recommended compensation actions for each executive officer. The performance
assessments for executive officers include performance relative to established
goals, overall leadership effectiveness, impact across the organization and
performance and impact relative to other executive officers.
Formal
goal setting is critical to ensuring that our compensation program rewards each
executive based on his or her success relative to the specific objectives for
his or her role. All the Company’s senior managers are subject to annual goal
setting, as well as annual performance reviews. The key metrics we use to
measure performance differ by individual, but can be grouped into the following
categories:
|
•
|
Financial — we evaluate
measures of Company financial performance, including revenue growth, gross
margins, operating margins and other measures such as expense
management.
|
|
•
|
Strategic — we monitor
the success of our executive team in furthering the strategic success of
the Company, including developments with the Company’s strategic business
partners.
|
|
•
|
Operational — we
include operational measures in our determination of success, including
our progress in obtaining new distribution rights and new development of
medical formulas, and customer growth and
retention.
|
The
Committee considers the totality of the information presented (including
external competitiveness, the performance review, Company performance, progress
towards strategic objectives and internal equity) and applies its knowledge and
discretion to determine the compensation for each executive
officer.
What
is each element of compensation and why is it paid?
The
Company’s executive compensation includes three basic elements (discussed in
detail below), each of which serves an important role in supporting China
Medicine’s pay-for-performance philosophy and in realizing our compensation
program objectives:
Element
|
|
Role
and Purpose
|
Base
Salary
|
|
Provide
a stable source of income that facilitates the attraction and recognition
of the acquired skills and contributions of executives in the day-to-day
management of our business.
|
|
|
|
Long-term
Incentives
|
|
Align
executive interests with those of stockholders.
|
|
|
|
|
|
Promote
long-term retention and stock ownership, and hold executives accountable
for enhancing stockholder value.
|
|
|
|
|
|
Enable
the delivery of competitive compensation opportunities in a manner that
balances cost efficiency with perceived value.
|
|
|
|
Benefits
& Perquisites
|
|
Provide
programs that promote health, wellness and financial
security.
|
|
|
|
|
|
Provide
executive benefits and perquisites at or below market competitive
levels.
|
While the
general mix of the elements is considered in the design of our total
compensation program, the Committee does not target a specific mix of pay in
either its program design or in its compensation determinations. By design, our
executive officers have more variability than non-executives in their
compensation, to more closely tie their compensation to the Company’s overall
performance.
Base
Salary
We pay
our executive officers base salaries to provide a baseline level of compensation
that is both competitive with the external market and commensurate with each
employee’s past performance, experience, responsibilities and skills. The
Company generally targets base salaries around the median of our external market
peers. In making its base salary determinations, the Committee takes into
account the internal and external factors described above. Our CEO’s total
compensation decreased from approximately $100,000 in 2007 to $50,214 in
2008.
Long-term
Incentives
A
long-term incentive (“LTI”) plan has been designed for managers to foster a
culture of ownership, align compensation with stockholder interests and promote
long-term retention and affiliation with the organization. The Committee has
determined the types of awards to be used for delivering long-term incentives.
In doing so, the Committee considered the ability of each type of award to
achieve key compensation objectives (such as employee retention, motivation and
attraction), the needs of the business, competitive market practices, dilution
and expense constraints, as well as tax and accounting
implications.
In
January, 2006, we adopted the 2006 Long-Term Incentive Plan covering 1,575,000
shares of common stock. The plan provides for the grant of incentive and
non-qualified options, stock grants, stock appreciation rights and other
equity-based incentives to employees, including officers, and
consultants.
Tax-deductibility
of Compensation
Section
162(m) of the Internal Revenue Code of 1986, as amended, limits to $1 million
the amount a company may deduct for compensation paid to its CEO or any of its
other four named executive officers. This limitation does not, however, apply to
compensation meeting the definition of “qualifying performance-based”
compensation.
Management
works with the Committee to assess alternatives to preserve the deductibility
under Section 162(m) of compensation payments to the extent reasonably
practicable, consistent with our compensation policies and as determined to be
in the best interests of the Company and its stockholders. For the fiscal year
ended December 31, 2008, the Company believes that the Compensation payments
will meet the requirements of Section 162(m) of the Internal Revenue Code of
1986, as amended.
Summary
Compensation Table
The
following table shows the compensation paid to or earned by the named executive
officers during the fiscal year ended December 31, 2007.
Name and
Principal
Position
|
|
Year
|
|
Salary
(cash
or non-
cash)
($)
|
|
Bonus
(cash
or non-
cash)
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
(1)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
Senshan
Yang,
CEO
|
|
|
2008
2007
|
|
50,214
100,000
|
|
|
—
—
|
|
—
—
|
|
|
—
—
|
|
—
—
|
|
|
—
—
|
|
—
—
|
|
|
50,214
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meiyi Xia,
former Vice
President
(2)
|
|
|
2008
2007
|
|
0
58,500
|
|
|
—
—
|
|
—
—
|
|
|
0
63,045
|
|
—
—
|
|
|
—
—
|
|
—
—
|
|
|
0
121,545
|
|
(1)
|
The amounts in this column
represent the compensation cost of stock options awarded by the
Compensation Committee granted in 2006, except that these amounts do not
include any estimate of forfeitures. The grant date fair value of option
awards granted were determined in accordance with Statement of Financial
Accounting Standards No. 123R (SFAS123(R)) and are recognized as
compensation cost over the requisite service period. The amount recognized
for these awards was calculated using the Black Scholes option-pricing
model.
|
(2)
|
Meiyi Xia resigned from the
Company effective September
2007.
|
Employment
Agreements
None of
our executive officers has an employment agreement. In the absence of an
employment agreement, the relevant PRC Labor Laws would apply and provide for
employment-related benefits and terms to the executive officers, including but
not limited to: the term of employment, the provision of labor-related
insurance, termination for cause, termination on 30 days’ notice and termination
without notice and benefits.
Director
Compensation
Senshan
Yang and Minhua Liu, employee members of the Board of Directors, received no
extra compensation for their service on the Board of Directors.
The
following table reflects the compensation of directors for the Company’s fiscal
year ended December 31, 2008:
Name of Director
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Change in
Pension value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
Robert
Adler*
|
|
|
12,000
|
|
—
|
|
|
6,259
|
(1)
|
—
|
|
|
—
|
|
—
|
|
|
18,259
|
|
Rachel
Gong*
|
|
|
12,000
|
|
—
|
|
|
6,259
|
(1)
|
—
|
|
|
—
|
|
—
|
|
|
18,259
|
|
Yanfang
Chen*
|
|
|
12,000
|
|
—
|
|
|
6,259
|
(1)
|
—
|
|
|
—
|
|
—
|
|
|
18,259
|
|
|
(1)
|
The amounts in this column
represent the compensation cost of stock options awarded by the
Compensation Committee granted in 2008, except that these amounts do not
include any estimate of forfeitures. The grant date fair value of option
awards granted were determined in accordance with Statement of Financial
Accounting Standards No. 123R (SFAS123(R)) and are recognized as
compensation cost over the requisite service period. The amount recognized
for these awards was calculated using the Black-Scholes option-pricing
model.
|
|
(2)
|
As of December 31, 2008, each of
the three directors held options to purchase 40,000 shares of our common
stock, including options to purchase 30,000 shares at an exercise price of
$1.25 per share, 5,000 shares at an exercise price of $3.00 per share and
5,000 shares at an exercise price of $2.01 per
share.
|
In
accordance with the 2006 Long Term Incentive Plan, independent directors are not
eligible for discretionary options. However, each newly elected independent
director receives, at the time of his or her election, a five-year option to
purchase 30,000 shares of common stock at the market price on the date of his or
her election. In addition, the plan provides for the annual grant of an option
to purchase 5,000 shares of common stock on April 1st of each year, commencing
April 1, 2007 to each independent director.
Also,
each independent director shall receive an annual retainer of $12,000. There is
no other specific compensatory arrangement for committee services, services as
chairman of the board or a committee and meeting attendance. All the directors
have the same compensation terms.
Compensation
Committee Interlocks and Insider Participation
None of
the Compensation Committee members is, or was ever, an officer or employee of
the Company or any of its subsidiaries, nor did any of the Compensation
Committee members have any relationship requiring disclosure by the Company
under any subsection of Item 404 of Regulation S-K promulgated by the SEC.
During the last fiscal year, none of the executive officers of the Company
served on the Board of Directors or on the compensation committee of any other
entity, any of whose executive officers served on the Board.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee, comprised of independent directors reviewed and
discussed the Compensation Discussion and Analysis set forth above with the
Company’s management. Based on such review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Company’s proxy statement.
/s/
Rachel Gong
/s/
Yanfang Chen
/s/
Robert Adler
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The
following table sets forth as of the date of this report, certain information
with respect to the beneficial ownership of our voting securities by (i) each
person or group owning more than 5% of the Company’s securities, (ii) each
director, (iii) each executive officer and (iv) all executive officers and
directors as a group. The information presented in the table is based on
15,226,742 shares of common stock outstanding as of April 28, 2009, the record
date for our annual meeting.
|
|
|
|
Amount and
|
|
|
|
|
Name and
|
|
|
|
Nature of
|
|
|
|
|
Address of
|
|
Title of
|
|
Beneficial
|
|
|
Percent of
|
|
Beneficial Owner
|
|
Class
|
|
Ownership
(1)
|
|
|
Class
(1)
|
|
Barron
Partners L.P.
|
|
Common
Stock
|
|
|
2,401,316
|
(2)
|
|
|
13.6
|
%
|
730
Fifth Avenue, 9th Floor
|
|
|
|
|
|
|
|
|
|
|
New
York, New York 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Wilshire Securities Management, Inc.
|
|
Common
Stock
|
|
|
2,065,617
|
(3)
|
|
|
13.6
|
%
|
1224
East Green Street, Suite 200
|
|
|
|
|
|
|
|
|
|
|
Pasadena,
California 91106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ventures International
|
|
Common
Stock
|
|
|
1,100,000
|
(4)
|
|
|
7.2
|
%
|
One
Capitol Place, P.O. Box 1787 GT
|
|
|
|
|
|
|
|
|
|
|
Grand
Cayman, Cayman Islands
|
|
|
|
|
|
|
|
|
|
|
British
West Indies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senshan
Yang
|
|
Common
Stock
|
|
|
3,265,000
|
|
|
|
21.5
|
%
|
Director
and CEO
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si
|
|
|
|
|
|
|
|
|
|
|
Guangzhou
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minhua
Liu
|
|
Common
Stock
|
|
|
2,662,000
|
(7)
|
|
|
17.4
|
%
|
Director
and Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si
|
|
|
|
|
|
|
|
|
|
|
Guangzhou
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junhua
Liu
|
|
Common
Stock
|
|
|
653,000
|
|
|
|
4.3
|
%
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si
|
|
|
|
|
|
|
|
|
|
|
Guangzhou
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huizhen
Yu
|
|
Common
Stock
|
|
|
50,000
|
(5)
|
|
|
0.3
|
%
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si
|
|
|
|
|
|
|
|
|
|
|
Guangzhou
|
|
|
|
|
|
|
|
|
|
|
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Adler
|
|
Common
Stock
|
|
|
40,000
|
(6)
|
|
|
0.3
|
%
|
Director
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si,
|
|
|
|
|
|
|
|
|
|
|
Guangzhou,
China
|
|
|
|
|
|
|
|
|
|
|
Rachel
Gong
|
|
Common
Stock
|
|
|
40,000
|
(6)
|
|
|
0.3
|
%
|
Director
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si,
|
|
|
|
|
|
|
|
|
|
|
Guangzhou,
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yanfang
Chen
|
|
Common
Stock
|
|
|
40,000
|
(6)
|
|
|
0.3
|
%
|
Director
|
|
|
|
|
|
|
|
|
|
|
Room
702 Guangri Mansion No. 9
|
|
|
|
|
|
|
|
|
|
|
South
Wuyang Xincheng Si,
|
|
|
|
|
|
|
|
|
|
|
Guangzhou,
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Directors and Officers of the Company
|
|
Common
Stock
|
|
|
6,700,000
|
|
|
|
44.0
|
%
|
as
a group
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In determining beneficial
ownership of our common stock as of a given date, the number of shares
shown includes shares of common stock which may be acquired on exercise of
warrants or options within 60 days of that date. In determining the
percent of common stock owned by a person or entity on March 25, 2009, (a)
the numerator is the number of shares of common stock beneficially owned
by such beneficial owner (including shares that he has the right to
acquire within 60 days of March 25, 2009), and (b) the denominator is the
sum of (i) the 15,226,742 shares outstanding on March 25, 2009 and (ii)
the number of shares of common stock which such beneficial owner has the
right to acquire within 60 days of March 25, 2009 upon exercise of
warrants or options. Except as otherwise indicated each person has the
sole power to vote and dispose of all shares of common stock listed
opposite his name.
|
|
(2)
|
This number includes 2,401,316
shares of common stock issuable upon exercise of our Series B warrants.
However, the Series B warrants may not be exercised if such conversion or
exercise would result in Barron Partners owning more than 4.9% of our
outstanding common stock. This limitation may not be
waived.
|
|
(3)
|
As disclosed by the beneficial
owner on Schedule 13G/A filed on February 13,
2009.
|
|
(4)
|
As disclosed by the beneficial
owner on Schedule 13G filed on October 17, 2007. Susquehanna Advisors
Group, Inc. is the investment manager to Capital Ventures International
and as such may exercise voting and dispositive power over these shares.
The address of Susquehanna Advisors Group, Inc. is 401 City Avenue, Suite
220, Bala Cynwyd, PA 19004.
|
|
(5)
|
Options to purchase our common
stock with an exercise price of $1.25 per
share.
|
|
(6)
|
Options to purchase our common
stock including options to purchase 30,000 shares at an exercise price of
$1.25 per share, 5,000 shares at an exercise price of $3.00 per share and
5,000 shares at an exercise price of $2.01 per
share.
|
|
(7)
|
Includes 50,000 shares of common
stock issuable upon exercise of options at an exercise price of $1.25 per
share. The options had been issued to Jinkui Xie on February 8, 2006 and
were transferred to Ms. Liu on April 22,
2009.
|
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On
February 8, 2006, we purchased 928,000 shares of common stock from Capital
Markets, LLC for $200,000. The purchase price was funded from the sale of the
Series A Convertible Preferred Stock and Investor Warrants in the February 2006
private placement. At the time of the purchase, Capital Markets owned
approximately 97.3% of our outstanding common stock.
Contemporaneously
with the February 2006 private placement, we issued an aggregate of 750,000
shares for services, including 150,000 shares to Meiyi Xia and 37,500 shares to
Lin Li. In connection with the February 2006 private placement, we paid a
consulting fee of $100,000 to AiDi Financial Investment LLC. Ms. Xia was Chief
Executive Officer of AiDi Financial Investment, LLC.
As of
December 31, 2008, there were no cash advances outstanding to shareholders of
the company.
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of common stock and other of
our equity securities. These insiders are required by SEC regulations to furnish
us with copies of all Section 16(a) forms they file, including Forms 3, 4 and
5.
To our
knowledge, during the calendar year ended December 31, 2008:
|
·
|
Dr. Rachel Gong, our director,
failed to file on a timely basis one Form 4 reporting grant of certain
stock options on August 6, 2008. The required filing was made on November
21, 2008;
|
|
·
|
as of the date of this report
First Wilshire Securities Management, Inc. failed to file Form 3 reporting
beneficial ownership of more than 10% of a registered class of our equity
securities which ownership was acquired some time during the year of 2008
according to Schedule 13G/A filed by First Wilshire Securities Management,
Inc. on February 13, 2009.
|
STOCKHOLDER
COMMUNICATIONS
We
encourage stockholder communications to the Board of Directors and/or individual
Directors. Stockholders who wish to communicate with the Board of Directors or
an individual Director should send their communications to the care of Minhua
Liu, Corporate Secretary, China Medicine Corporation, Room 702 Guangri Mansion
No. 9, South Wuyang Xin Chengsi, Guangzhou, China 510600. Communications
regarding financial or accounting policies should be sent to the attention of
the Chairman of the Audit Committee.
STOCKHOLDER
PROPOSALS
A
stockholder of record may present a proposal for action at the 2010 Annual
Meeting of Stockholders provided that we receive such proposal in writing at our
executive offices at Room Room 702 Guangri Mansion No. 9, South Wuyang Xin
Chengsi, Guangzhou, China 510600, no later than December 31, 2009. We anticipate
that the 2010 Annual Meeting will be held in May 2010. The proponent may submit
a maximum of one (1) proposal of not more than five hundred (500) words for
inclusion in our proxy materials for a meeting of security holders. At the 2010
Annual Meeting, management proxies will have discretionary authority, under Rule
14a-4 of the Securities Exchange Act of 1934, to vote on stockholder proposals
that are not submitted for inclusion in our proxy statement unless received by
us before March 1, 2010.
GENERAL
Unless
contrary instructions are indicated on the proxy, all shares of common stock
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted FOR Proposal No. 1 and FOR Proposal
No. 2.
OTHER
BUSINESS
The Board
of Directors knows of no business other than that set forth above to be
transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
common stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of common stock will be voted in accordance with the specification so
made.
IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN AND
RETURN THE FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO MATTER HOW LARGE
OR SMALL YOUR HOLDINGS MAY BE.
By Order
of the Board of Directors,
/s/
Senshan Yang
Senshan
Yang,
Chief
Executive Officer
Guangzhou,
China
May 5,
2009
China
Medicine Corporation
VOTE
BY INTERNET
QUICK
*** EASY *** IMMEDIATE
As a
stockholder of China Medicine Corporation, you have the option of voting your
shares electronically through the Internet, eliminating the need to return the
proxy card. Your electronic vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed, dated and returned the proxy
card. Votes submitted electronically over the Internet must be received by 7:00
p.m., Eastern Time, on May 18, 2009.
|
|
|
Vote Your Proxy on the Internet:
Go to
www.continentalstock.com
Have your proxy card available when
you access the above website. Follow
the prompts to vote your shares.
|
OR
|
Vote Your Proxy by mail:
Mark, sign, and date your proxy card,
then detach it, and return it in the
postage-paid envelope provided.
|
|
PLEASE
DO NOT RETURN THE PROXY CARD IF YOU ARE
VOTING
ELECTRONICALLY
|
|
|
|
|
|
▼
FOLD AND DETACH HERE AND
READ THE REVERSE SIDE
▼
|
|
|
|
|
|
PROXY
|
Please mark
your votes
like this
|
x
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
FOR all
Nominees listed
to the left
|
WITHHOLD AUTHORITY
to vote (except as marked to
the contrary for all nominees
listed to the left)
|
1. Approve reincorporation of the
Company from Delaware to Nevada
through an agreement and plan of merger
|
¨
|
¨
|
¨
|
2. Election of Directors
NOMINEES: (1) Senshan Yang
(2)
Minhua Liu
(3) Robert Adler
(4) Rachel Gong
(5) Yanfang Chen
|
¨
|
¨
|
|
|
|
|
(Instruction:
To withhold authority to vote for any individual nominee, strike a line
through that nominee’s name in the list above)
|
|
|
|
|
|
|
|
|
|
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS INDICATED. IF NO CONTRARY
INDICATION IS MADE, THE PROXY WILL BE VOTED IN FAVOR OF REINCORPORATION OF
THE COMPANY FROM DELAWARE TO NEVADA AND IN FAVOR OF ELECTING THE FIVE
NOMINEES TO THE BOARD OF DIRECTORS AND IN ACCORDANCE WITH THE JUDGMENT OF
THE PERSON NAMED AS PROXY HEREIN, ON ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
|
|
|
|
|
|
|
|
|
|
COMPANY
ID:
PROXY
NUMBER:
ACCOUNT
NUMBER:
|
Signature
|
Signature
|
Date
|
, 2009.
|
Note:
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee, guardian, or corporate officer, please give title as such.
Important
Notice Regarding the Availability of Proxy Materials
The
Company’s proxy statement and its Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 are available to you to review at:
http://www.chinamedicinecorp.com/investors/SECFilings1.aspx
▼
FOLD AND DETACH HERE AND READ THE
REVERSE SIDE
▼
PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
China
Medicine Corporation
The
undersigned appoints Ms. Minhua Liu as proxy, with the power to appoint her
substitute, and authorizes her to represent and to vote, as designated on the
reverse hereof, all of the shares of common stock of China Medicine Corporation
held of record by the undersigned at the close of business on April 28, 2009 at
the Annual Meeting of Stockholders of China Medicine Corporation to be held on
May 19, 2009 or at any adjournment thereof.
(Continued,
and to be marked, dated and signed, on the other side)
Appendix
A
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (the “
Plan
”) is adopted as
of May [__], 2009, by and between China Medicine Corporation, a Delaware
corporation (“
CMC
Delaware
”), and China Medicine Corporation, a Nevada corporation and a
wholly-owned subsidiary of CMC Delaware (“
CMC
Nevada
”).
WHEREAS
, CMC Delaware is a
corporation duly organized and existing under the laws of the State of
Delaware;
WHEREAS
, CMC Nevada is a
corporation duly organized and existing under the laws of the State of
Nevada;
WHEREAS
, on the date hereof,
CMC Delaware has authority to issue One Hundred Million (100,000,000) shares of
capital stock consisting of Ninety Million (90,000,000) shares of common
stock, $.0001 par value per share, of which 15,226,742 shares are issued and
outstanding (“
CMC
Delaware Common Stock
”), and Ten Million (10,000,000) shares of preferred
stock, $.0001 par value per share, of which no shares are outstanding (“
CMC Delaware Preferred
Stock
”);
WHEREAS
, on the date hereof,
CMC Nevada has authority to issue One Hundred Million (100,000,000) shares of
capital stock consisting of Ninety Million (90,000,000) shares of common
stock, $.0001 par value per share (“
CMC Nevada Common
Stock
”), and Ten Million (10,000,000) shares of preferred stock, $.0001
par value per share (“
CMC Nevada Preferred
Stock
”);
WHEREAS
, on the date hereof,
one (1) share of Nevada Common Stock is issued and outstanding and is owned
by CMC Delaware and no shares of Nevada Preferred Stock are
outstanding.
WHEREAS
, the respective boards
of directors of CMC Nevada and CMC Delaware have determined that, for the
purpose of effecting the reincorporation of CMC Delaware in the State of Nevada,
it is advisable and in the best interests of such corporations and their
respective shareholders that CMC Delaware merge with and into CMC Nevada upon
the terms and conditions herein provided; and
WHEREAS
, the respective boards
of directors of CMC Nevada and CMC Delaware have approved the Plan and recommend
that it be submitted to the respective shareholders of CMC Nevada and CMC
Delaware entitled to vote thereon.
NOW, THEREFORE
, in
consideration of the mutual agreements and covenants set forth herein, CMC
Delaware and CMC Nevada hereby agree to merge as follows:
1.
Merger
. Subject to
the terms and conditions hereinafter set forth, CMC Delaware shall be merged
with and into CMC Nevada, with CMC Nevada to be the surviving corporation in the
merger (the “
Merger
”). The
Merger shall be effective on the later of the date and time (the “
Effective Time
”) that
a properly executed certificate of merger consistent with the terms of this Plan
and Section 253 of the Delaware General Corporation Law (the “
DGCL
”) is filed with
the Secretary of State of Delaware and articles of merger are filed with the
Secretary of the State of Nevada as required by Section 92A.200 of the
Nevada Revised Statutes (the “
NRS
”).
2.
Principal Office of CMC
Nevada
. The address of the principal office of CMC Nevada is
Room 702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600.
3.
Corporate
Documents
. The Articles of Incorporation of CMC Nevada, as in
effect immediately prior to the Effective Time, shall continue to be the
Articles of Incorporation of CMC Nevada as the surviving corporation except that
the name of the surviving corporation will be changed to QKL Stores
Inc. The Bylaws of CMC Nevada, as in effect immediately prior to the
Effective Time, shall continue to be the Bylaws of CMC Nevada as the surviving
corporation without change or amendment until further amended in accordance with
the provisions thereof and applicable law.
4.
Directors and
Officers
. The directors and officers of CMC Delaware at
the Effective Time shall be and become directors and officers, holding the same
titles and positions, of CMC Nevada at the Effective Time, and after the
Effective Time shall serve in accordance with the Bylaws of CMC
Nevada.
5.
Succession
. At the
Effective Time, CMC Nevada shall succeed to CMC Delaware in the manner of and as
more fully set forth in Section 259 of the DGCL and in Section 92A.250
of the NRS.
6.
Further Assurances
.
From time to time, as and when required by CMC Nevada or by its successors and
assigns, there shall be executed and delivered on behalf of CMC Delaware such
deeds and other instruments, and there shall be taken or caused to be taken by
it such further and other action, as shall be appropriate or necessary in order
to vest or perfect in or to confer of record or otherwise in CMC Nevada the
title to and possession of all the interests, assets, rights, privileges,
immunities, powers, franchises and authority of CMC Delaware, and otherwise to
carry out the purposes and intent of this Plan, and the officers and directors
of CMC Nevada are fully authorized in the name and on behalf of CMC Delaware or
otherwise to take any and all such actions and to execute and deliver any and
all such deeds and other instruments.
7.
CMC Delaware Common Stock
and CMC Delaware Preferred Stock
. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, each share of
CMC Delaware Common Stock outstanding immediately prior thereto shall be changed
and converted automatically into one fully paid and nonassessable share of CMC
Nevada Common Stock and each share of CMC Delaware Preferred Stock outstanding
immediately prior thereto shall be changed and converted automatically into one
fully paid and nonassessable share of CMC Nevada Preferred
Stock.
8.
Stock
Certificates
. At and after the Effective Time, all of the
outstanding certificates which prior to that time represented shares of CMC
Delaware Common Stock and CMC Delaware Preferred Stock shall be deemed for all
purposes to evidence ownership of and to represent shares of CMC Nevada Common
Stock and CMC Nevada Preferred Stock into which the shares of the CMC Delaware
represented by such certificates have been converted as herein
provided.
9.
Options;
Warrants
. Each option, warrant or other right to
purchase shares of CMC Delaware Common Stock, which are outstanding at the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become an option, warrant or right
to purchase the same number of shares of CMC Nevada Common Stock at an exercise
or purchase price per share equal to the exercise or purchase price applicable
to the option, warrant or other right to purchase CMC Delaware Common
Stock.
10.
Common Stock of CMC
Nevada
. At the Effective Time, the previously
outstanding one (1) share of CMC Nevada Common Stock registered in the name
of CMC Delaware shall, by reason of the Merger, be reacquired by CMC Nevada,
shall be retired and shall resume the status of authorized and unissued shares
of CMC Nevada Common Stock, and no shares of CMC Nevada Common Stock or other
securities of CMC Nevada shall be issued in respect thereof.
11.
Amendment
. The
boards of directors of CMC Delaware and CMC Nevada may amend this Plan at any
time prior to the Merger, provided that an amendment made subsequent to the
adoption of the Plan by the sole shareholder of CMC Nevada or the stockholders
of CMC Delaware shall not (i) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for the CMC
Delaware Common Stock or CMC Delaware Preferred Stock, (ii) alter or change
any term of the articles of incorporation of CMC Nevada, as the surviving
corporation to the Merger, or (iii) alter or change any of the terms and
conditions of the Plan if such alteration or change would adversely affect the
holders of CMC Delaware Common Stock or CMC Delaware Preferred
Stock.
12.
Abandonment
. At
any time before the Effective Time, this Plan may be terminated and the Merger
contemplated hereby may be abandoned by the Board of Directors of either CMC
Delaware or CMC Nevada or both, notwithstanding approval of this Plan by the
sole shareholder of CMC Nevada or the stockholders of CMC Nevada, or
both.
13.
Rights and Duties of CMC
Nevada
. At the Effective Time and for all purposes the separate existence
of CMC Delaware shall cease and shall be merged with and into CMC Nevada which,
as the surviving corporation, shall thereupon and thereafter possess all the
rights, privileges, immunities, licenses and franchises (whether of a public or
private nature) of CMC Delaware; and all property (real, personal and mixed),
all debts due on whatever account, all choses in action, and all and every other
interest of or belonging to or due to CMC Delaware shall continue and be taken
and deemed to be transferred to and vested in CMC Nevada without further act or
deed; and the title to any real estate, or any interest therein, vested in CMC
Delaware shall not revert or be in any way impaired by reason of such Merger;
and CMC Nevada shall thenceforth be responsible and liable for all the
liabilities and obligations of CMC Delaware; and, to the extent permitted by
law, any claim existing, or action or proceeding pending, by or against CMC
Delaware may be prosecuted as if the Merger had not taken place, or CMC Nevada
may be substituted in the place of such corporation. Neither the rights of
creditors nor any liens upon the property of CMC Delaware shall be impaired by
the Merger. If at any time CMC Nevada shall consider or be advised that any
further assignment or assurances in law or any other actions are necessary or
desirable to vest the title of any property or rights of CMC Delaware
in CMC Nevada according to the terms hereof, the officers and directors of CMC
Nevada are empowered to execute and make all such proper assignments and
assurances and do any and all other things necessary or proper to vest title to
such property or other rights in CMC Nevada, and otherwise to carry out the
purposes of this Plan.
14.
Consent to Service of
Process
. CMC Nevada hereby agrees that it may be served with process in
the State of Delaware in any proceeding for enforcement of any obligation of CMC
Delaware, as well as for enforcement of any obligation of CMC Nevada arising
from the Merger. CMC Nevada hereby irrevocably appoints the
Secretary of State of the State of Delaware and the successors of such officer
its attorney in the State of Delaware upon whom may be served any notice,
process or pleading in any action or proceeding against it to enforce against
CMC Nevada any obligation of CMC Delaware. In the event of such service upon the
Secretary of State of the State of Delaware or the successors of such officer,
such service shall be mailed to the principal office of CMC Nevada at Room 702,
Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600.
[Signature
Page Follows]
IN WITNESS WHEREOF
, this
Agreement and Plan of Merger, having first been duly approved by resolution of
the Boards of Directors of CMC Delaware and CMC Nevada, has been executed on
behalf of each of said two corporations by their respective duly authorized
officers.
CHINA
MEDICINE CORPORATION
a
Delaware corporation
|
|
By:
|
|
|
Senshan
Yang, Chief Executive Officer
|
|
|
CHINA
MEDICINE CORPORATION
a
Nevada corporation
|
|
|
By:
|
|
|
Senshan
Yang, Chief Executive
Officer
|
[Signature
Page to Agreement and Plan of Merger]
Appendix
B
ARTICLES
OF INCORPORATION
OF
CHINA
MEDICINE CORPORATION
(Pursuant
to NRS 78)
ARTICLE
I
The name
of the corporation (which is hereinafter referred to as the "Corporation") is
China Medicine Corporation.
ARTICLE
II
The
address of the registered office of the Corporation in the State of Nevada is
202 South Minnesota Street, Carson City, Nevada 89703. The name of the
registered agent of the Corporation is United Corporate Services,
Inc.
ARTICLE
III
The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the provisions of Chapter 78 of the Nevada
Revised Statutes.
ARTICLE
IV
SECTION
1.
Common
Stock
. The aggregate number of shares of Common Stock which the
Corporation shall have authority to issue is 90,000,000 at a par value of $.0001
per share. All stock, when issued shall be fully paid and non-assessable,
shall be of the same class and have the same rights and
preferences.
Each
share of Common Stock shall be entitled to one vote at a stockholder’s meeting,
either in person or by proxy. Cumulative voting in elections of Directors
and all other matters brought before stockholder meetings, whether they be
annual or special, shall not be permitted.
The
holders of the capital stock of the Corporation shall not be personally liable
for the payment of the Corporation's debts; and the private property of the
holders of the capital stock of the Corporation shall not be subject to the
payment of debts of the Corporation to any extent whatsoever.
Stockholders
of the Corporation shall not have any preemptive rights to subscribe for
additional issues of stock of the Corporation except as may be agreed upon from
time to time by the Corporation and any such stockholder.
SECTION
2.
Preferred
Stock
. The aggregate number of shares of Preferred Stock which the
Corporation shall have authority to issue is 10,000,000 shares, par value
$.0001, which may be issued in series, with such designations,
preferences, stated values, rights, qualifications or limitations as determined
solely by the Board of Directors of the Corporation. The Board of Directors
is hereby vested with authority to fix such designations, preferences and
relative participating, optional or other special rights or qualifications,
limitations, or restrictions for each series, including, but not by way of
limitation, the power to fix the redemption and liquidation preferences, the
rate of dividends payable and the time for and the priority of payment
thereof and to determine whether such dividends shall be cumulative or not
and to provide for and fix the terms of conversion of such Preferred Stock or
any series thereof into Common Stock of the Corporation and fix the voting
power, if any, of shares of Preferred Stock or any series
thereof.
ARTICLE
V
SECTION
1.
Number. Election
and Terms of Directors
. The members of the governing board of the
Corporation shall be called Directors of the Corporation. The number of the
Directors of the Corporation shall be fixed from time to time by or pursuant to
the By-Laws of the Corporation, and shall initially be five. The name and
address of the first Board of Directors is as follows:
Name
|
|
Address
|
|
|
|
Senshan Yang
|
|
Room
702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600
|
Minhua Liu
|
|
Room
702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600
|
Robert Adler
|
|
Room
702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600
|
Rachel Gong
|
|
Room
702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600
|
Yanfang Chen
|
|
Room
702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou, China
510600
|
SECTION
2.
Newly Created
Directorships and Vacancies
. Newly created directorships resulting from
any increase in the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled only by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the Board
of Directors, or by the sole remaining Director. No decrease in the number of
Directors constituting the Board of Directors shall shorten the term of any
incumbent Director.
ARTICLE
VI
Any
action required or permitted to be taken by the stockholders of the Corporation
may be effected by any consent in writing by such holders, signed by holders of
not less than that number of shares of Common Stock required to approve such
action.
ARTICLE
VII
Subject
to any express provision of the laws of the State of Nevada or these Articles of
Incorporation, the Board of Directors shall have the power to make, alter, amend
and repeal the By-Laws of the Corporation (except so far as By-Laws of the
Corporation adopted by the stockholders shall otherwise provide). Any By-Laws
made by the Directors under the powers conferred hereby may be altered, amended
or repealed by the Directors or by the stockholders.
ARTICLE
VII
Election
of Directors need not be by ballot unless the By-laws of the Corporation shall
so provide.
ARTICLE
VIII
SECTION
1.
Elimination of
Certain Liability of Directors
. A Director of the Corporation shall
not be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, or (ii) for the payment of distributions to
stockholders in violation of Section 78.300 of the Nevada Revised
Statutes.
SECTION
2.
Indemnification and
Insurance
.
a)
Action, etc., Other Than by
or in the Right of the Corporation
. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any Agent (as hereinafter defined) against
costs, charges and Expenses (as hereinafter defined), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the Agent in
connection with such action, suit or proceeding, and any appeal there from, if
the Agent acted in good faith and in a manner the Agent reasonably believed to
be in or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful. The termination of any action, suit or proceeding—whether
by judgment, order, settlement conviction, or upon a plea of
nolo contendere
or
its equivalent—shall not, of itself, create a presumption that the Agent did not
act in good faith and in a manner which the Agent reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, that the Agent had reasonable cause to
believe that the Agent's conduct was unlawful.
(b)
Action, etc., by or in the
Right of the Corporation
. The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed judicial action or suit brought by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was an Agent, against costs, charges and Expenses actually and
reasonably incurred by the Agent in connection with the defense or settlement of
such action or suit and any appeal therefrom if the Agent acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for gross negligence or willful misconduct in the
performance of the Agent's duty to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and Expenses which such court shall deem
proper.
(c)
Determination of Right of
Indemnification
. Any indemnification under Paragraphs (a) and (b) of this
Section (unless ordered by a court) shall be paid by the Corporation unless a
determination is reasonably and promptly made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable, if a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders, that such
person acted in bad faith and in a manner that such person did not believe to be
in or not opposed to the best interests of the Corporation, or, with respect to
any criminal proceeding, that such person believed or had reasonable cause to
believe that his conduct was unlawful.
(d)
Indemnification Against
Expenses of Successful Party
. Notwithstanding the other provisions of
this Section, to the extent that an Agent has been successful on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, the settlement of an action without admission of liability, or the
defense of any claim, issue or matter therein, or on appeal from any such
proceeding, action, claim or matter, such Agent shall be indemnified against all
costs, charges and Expenses incurred in connection therewith.
(e)
Advances of Expenses
.
Except as limited by Paragraph (f) of this Section, costs, charges, and Expenses
incurred by an Agent in any action, suit, proceeding or investigation or any
appeal therefrom shall be paid by the Corporation in advance of the final
disposition of such matter if the Agent shall undertake to repay such amount in
the event that it is ultimately determined as provided herein that such person
is not entitled to indemnification. Notwithstanding the foregoing, no advance
shall be made by the Corporation if a determination is reasonably and promptly
made by the Board of Directors by a majority vote of a quorum of disinterested
Directors, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested Directors so directs) by independent legal counsel in a
written opinion, that, based upon the facts known to the Board of Directors or
counsel at the time such determination is made, the Agent acted in bad faith and
in a manner that such person did not believe to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal proceeding, that
such person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the Board of
Directors or independent legal counsel reasonably determines that the Agent
deliberately breached such persons’ duty to the Corporation or its
stockholders.
(f)
Right of Agent to
Indemnification upon Application: Procedure upon
Application
. Any indemnification under Paragraphs
(a), (b) and (d) or advance under Paragraph (e) of this Section, shall be made
promptly, and in any event within 60 days, upon the written request of the
Agent, unless with respect to applications under Paragraphs (a), (b) or (e), a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum of disinterested Directors that such Agent acted in a
manner set forth in such Paragraphs as to justify the Corporation's not
indemnifying or making an advance to the Agent. In the event no quorum of
disinterested Directors is obtainable, the Board of Directors shall promptly
direct that independent legal counsel shall decide whether the Agent acted in
the manner set forth in such Paragraphs as to justify the Corporation's not
indemnifying or making an advance to the Agent. The right to indemnification or
advances as granted by this Section shall be enforceable by the Agent in any
court of competent jurisdiction if the Board of Directors or independent legal
counsel denies the claim in whole or in part or if no disposition of such claim
is made within 60 days. The Agent's costs, charges, and expenses incurred in
connection with successfully establishing such persons’ right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
(g)
Other Rights and
Remedies
. The indemnification provided by this Section shall not be
deemed exclusive of, and shall not affect, any other rights to which an Agent
seeking indemnification may be entitled under any law, By-law, or charter
provision, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office, and shall continue as to a person
who has ceased to be an Agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. All rights to indemnification
under this Section shall be deemed to be contract between the Corporation and
the Agent who serves in such capacity at any time while these Articles and other
relevant provisions of the general corporation law and other applicable law, if
any, are in effect. Any repeal or modification thereof shall not affect any
rights or obligations then existing.
(h)
Insurance
. The
Corporation may purchase and maintain insurance on behalf of any person who is
or was an Agent against any liability asserted against such person and incurred
by him or her in any such capacity, or arising out of such persons' status as
such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Section. The
Corporation may create a trust fund, grant a security interest or use other
means (including, without limitation, a letter of credit) to ensure the payment
of such sums as may become necessary to effect indemnification as provided
herein.
(i)
Other Enterprises. Fines and
Serving at Corporation's Request
. For purposes of this Section,
references to "other enterprise" in Paragraph (a) shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to any employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service by Agent as Director,
officer, employee, agent or fiduciary of the Corporation which imposes duties
on, or involves services by, such Agent with respect to any employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Section.
(j)
Savings Clause
. If
this Section or any portion thereof shall be invalidated on any ground by any
court of competent jurisdiction, then the Corporation shall nevertheless
indemnify each Agent as to costs, charges and Expenses, judgments, fines and
amounts paid in settlement with respect to any action, suit, proceeding or
investigation, and any appeal there from, whether civil, criminal or
administrative, and whether internal or external, including a grand jury
proceeding and an action or suit brought by or in the right of the Corporation,
to the full extent permitted by any applicable portion of this Section that
shall not have been invalidated, and to the fullest extent permitted by
applicable law.
(k)
Common Directors -
Transactions between Corporations
. No contract or other transaction
between this corporation and any one or more of its directors or any other
corporation, firm, association, or entity in which one or more of its directors
or officers are financially interested, shall be either void or void-able
because of such relationship or interest, or because such director or directors
are present at the meeting of the Board of Directors, or a committee thereof,
which authorizes, approves, or ratifies such contract or transaction, or because
his or their votes are counted for such purpose if: (a) the fact of such
relationship or interest is disclosed or known to the Board of Directors or
committee which authorizes, approves, or ratifies the contract or transaction by
vote or consent sufficient for the purpose without counting the votes or
consents of such interested director; or (b) the fact of such relationship or
interest is disclosed or known to the stockholders entitled to vote and they
authorize, approve, or ratify such contract or transaction by vote or written
consent, or (c) the contract or transaction is fair and reasonable to the
corporation.
Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or committee there of which authorizes,
approves or ratifies such contract or transaction.
(l)
Definitions
. For the
purposes of this Article:
(1)
"Agent" means any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding or
investigation, whether civil, criminal or administrative, and whether external
or internal to the Corporation (other than a judicial action or suit brought by
or in the right of the Corporation) by reason of the fact that he or she is or
was or has agreed to be a Director, officer, employee, agent or fiduciary of the
Corporation, or that, being or having been such a Director, officer, employee,
agent or fiduciary, he or she is or was serving at the request of the
Corporation as a Director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust or other enterprise.
(2)
"Expenses" shall include all reasonable attorneys' fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in a
proceeding.
ARTICLE
IX
The
Corporation reserves the right at any time and from time to time to amend,
alter, change or repeal any provision contained in these Articles of
Incorporation, and other provisions authorized by the laws of the State of
Nevada at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, Directors or any other persons
whomsoever by and pursuant to these Articles of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE
X
The
Corporation shall exist in perpetuity, from and after the date of filing of its
original Articles of Incorporation with the Secretary of State of the State of
Nevada unless dissolved according to law.
ARTICLE
XI
The
provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada Revised
Statutes shall be inapplicable to the Corporation.
ARTICLE
XII
The
provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised
Statutes shall be inapplicable to the Corporation.
ARTICLE
XIII
The name
and address of the incorporator of the Corporation is:
Senshan
Yang, Room 702, Guangri Mansion, No. 9, South Wuyang Xin Chengsi, Guangzhou,
China 510600
IN
WITNESS WHEREOF, the undersigned incorporator has executed these Articles of
Incorporation of China Medicine Corporation on ________, 2009.
|
|
Senshan
Yang, Incorporator
|
Appendix
C
BY-LAWS
OF
CHINA
MEDICINE CORPORATION
(a
Nevada corporation)
ARTICLE
I
STOCKHOLDERS
Section
1.
Certificates
Representing Stock
.
(a)
Certificates representing
stock in the corporation shall be signed by, or in the name of, the corporation
by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.
(b)
Whenever the corporation
shall be authorized to issue more than one class of stock or more than one
series of any class of stock, and whenever the corporation shall issue any
shares of its stock as partly paid stock, the certificates representing shares
of any such class or series or of any such partly paid stock shall set forth
thereon the statements prescribed by the Nevada Revised Statutes. Any
restrictions on the transfer or registration of transfer of any shares of stock
of any class or series shall be noted conspicuously on the certificate
representing such shares.
(c)
The corporation may
issue a new certificate of stock or uncertificated shares in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require the owner of the lost, stolen
or destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate or uncertificated
shares.
Section
2.
Uncertificated
Shares
. Subject to any conditions imposed by the Nevada Revised Statutes,
the Board of Directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of the stock of the
corporation shall be uncertificated shares. Within a reasonable time after the
issuance or transfer of any uncertificated shares, the corporation shall send to
the registered owner thereof any written notice prescribed by the Nevada Revised
Statutes.
Section
3.
Fractional
Share Interests
. The corporation may, but shall not be required to, issue
fractions of a share. If the Corporation does not issue fractions of a share, it
shall (1) arrange for the disposition of fractional interests by those entitled
thereto, (2) pay in cash the fair value of fractions of a share as of the time
when those entitled to receive such fractions are determined, or (3) issue scrip
or warrants in registered form (either represented by a certificate or
uncertificated) or bearer form (represented by a certificate) which shall
entitle the holder to receive a full share upon the surrender of such scrip or
warrants aggregating a full share. A certificate for a fractional share or an
uncertificated fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
Corporation in the event of liquidation. The Board of Directors may cause scrip
or warrants to be issued subject to the conditions that they shall become void
if not exchanged for certificates representing the full shares or uncertificated
full shares before a specified date, or subject to the conditions that the
shares for which scrip or warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other conditions which the Board of Directors may
impose.
Section
4.
Stock
Transfers
. Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfers of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by his
attorney thereunto authorized by power of attorney duly executed and filed with
the Secretary of the corporation or with a transfer agent or a registrar, if
any, and, in the case of shares represented by certificates, on surrender of the
certificate or certificates for such shares of stock properly endorsed and the
payment of all taxes due thereon.
Section
5.
Record
Date For Stockholders
. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the Nevada Revised Statutes, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Nevada, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meeting of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the Nevada Revised Statutes, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
Section
6.
Meaning
of Certain Terms
. As used herein in respect of the right to notice of a
meeting of stockholders or a waiver thereof or to participate or vote thereat or
to consent or dissent in writing in lieu of meeting, as the case may be, the
term "share" or "shares" or "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the articles of incorporation confers such rights
where there are two or more classes or series of shares of stock or upon which
or upon whom the Nevada Revised Statutes confers such rights notwithstanding
that the articles of incorporation may provide for more than one class or series
of shares of stock, one or more of which are limited or denied such rights
thereunder; provided, however, that no such right shall vest in the event of an
increase or a decrease in the authorized number of shares of stock of any class
or series which is otherwise denied voting rights under the provisions of the
articles of incorporation, except as any provision of law may otherwise
require.
Section
7.
Stockholder
Meetings
.
(a)
Time
.
The annual meeting shall be held on the date and at the time fixed, from time to
time, by the directors, provided that the first annual meeting shall be held on
a date within thirteen months after the organization of the corporation, and
each successive annual meeting shall be held on a date within thirteen months
after the date of the preceding annual meeting. A special meeting shall be held
on the date and at the time fixed by the directors.
(b)
Place
.
Annual meetings and special meetings shall be held at such place, within or
without the State of Nevada, as the directors may, from time to time, fix.
Whenever the directors shall fail to fix such place, the meeting shall be held
at the registered office of the corporation in the State of Nevada.
(c)
Call
.
Annual meetings and special meetings may be called by the directors or by any
officer instructed by the directors to call the meeting.
(d)
Notice or
Waiver of Notice
. Written notice of all meetings shall be given, stating
the place, date, hour of the meeting and stating the place within the city or
other municipality or community at which the list of stockholders of the
corporation may be examined. The notice of an annual meeting shall state that
the meeting is called for the election of directors and for the transaction of
other business which may properly come before the meeting, and shall (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special meeting
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the Nevada
Revised Statutes. Except as otherwise provided by the Nevada Revised Statutes, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such other address
which he may have furnished by request in writing to the Secretary of the
corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States Mail. If a meeting is adjourned to
another time, not more than thirty days hence, and/or place is made at the
meeting, it shall not be necessary to give notice of the adjourned meeting
unless the directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, not the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
(e)
Stockholder
List
. The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city or other municipality or community where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
(f)
Conduct
of Meeting
. Meetings of the stockholders shall be presided over by one of
the following officers in the order of seniority and if present and acting-the
Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the
President, a Vice-President, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the Chairman of the meeting shall appoint a secretary of
the meeting.
(g)
Proxy
Representation
. Every stockholder may authorize another person or persons
to act for him by proxy in all matters in which a stockholder is entitled to
participate, whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting. Every proxy
must be signed by the stockholder or by his attorney-in-fact. No proxy shall be
voted or acted upon after three years from its date unless such proxy provides
for a longer period. A duly executed proxy shall be irrevocable if it states
that is irrevocable and, if, and only as long as it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation
generally.
(h)
Inspectors
.
The directors, in advance of any meeting, may, but need not, appoint one or more
inspectors of election to act at the meeting or any adjournment thereof. If any
inspector or inspectors are not appointed, the person presiding at the meeting
may, but need not appoint one or more inspectors. In case any person who may be
appointed as an inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspectors at such meeting with strict impartiality and according to
the best of his ability. The inspectors, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate all votes, ballots, or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the meeting, the inspector
or inspectors, if any, shall make a report in writing of any challenge,
question, or matter determined by him or them and execute a certificate of any
fact found by him or them. Except as otherwise required by subsection (e) of
Section 231 of the Nevada Revised Statutes, the provisions of that Section shall
not apply to the corporation.
(i)
Quorum
.
The holders of at least one third of the outstanding voting shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. Once a quorum is established at any meeting of the stockholders,
the voluntary withdrawal of any stockholder from the meeting shall not affect
the authority of the remaining stockholders to conduct any business which
properly comes before the meeting. In the absence of a quorum, the chairman of
the meeting or stockholders present at the meeting may adjourn the meeting from
day to day or time to time without further notice other than announcement at
such meeting of such date, time and place of the adjourned meeting. At an
adjourned meeting of the stockholders at which a quorum is present, any business
may be transacted which might have been transacted at the meeting as originally
noticed.
(j)
Voting
.
Each share of stock shall entitle the holder thereof to one vote. At each
meeting of the stockholders, each stockholder entitled to vote thereat may vote
in person or by proxy duly appointed by an instrument in writing subscribed by
such stockholder. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Any other action shall be authorized by a
majority of the votes cast except where the Nevada Revised Statutes prescribes a
different percentage of votes and/or a different exercise of voting power, and
except as may be otherwise prescribed by the provisions of the articles of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
Section
8.
Stockholder
Action Without Meetings
. Any action required by the Nevada Revised
Statutes to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Action taken
pursuant to this paragraph shall be subject to the provisions of Section 78.320
of the Nevada Revised Statutes.
ARTICLE
II
DIRECTORS
Section
1.
Functions
and Definition
. The business and affairs of the corporation shall be
managed by or under the direction of the Board of Directors of the corporation.
The Board of Directors shall have the authority to fix the compensation of the
members thereof. The use of the phrase "whole board" herein refers to the total
number of directors which the corporation would have if there were no
vacancies.
Section
2.
Qualifications
and Number
. A director need not be a stockholder, a citizen of the United
States, or a resident of the State of Nevada. The initial Board of Directors
shall consist of five (5) person. Thereafter, the number of directors may be
increased or decreased from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be five
(5).
Section
3.
Election
and Term
. The first Board of Directors, unless the members thereof shall
have been named in the articles of incorporation, shall be elected by the
incorporator or incorporators and shall hold office until first annual meeting
of stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Any director may resign at any time upon
written notice to the corporation. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the next
annual meeting resignation or removal. Except as the Nevada Revised Statutes may
otherwise require, in the interim between annual meetings of stockholders or of
special meetings of stockholders called for the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director.
Section
4.
Meetings
.
(a)
Time
.
Meetings shall be held at such time as the Board shall fix, except that the
first meeting of a newly elected Board shall be held as soon after its election
as the directors may conveniently assemble.
(b)
Place
.
Meetings shall be held at such place within or without the State of Nevada as
shall be fixed by the Board.
(c)
Call
.
No call shall be required for regular meetings for which the time and place have
been fixed. Special meetings may be called by or at the direction of the
Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of the
President, or of a majority of the directors in office.
(d)
Notice or
Actual or Constructive Waiver
. No notice shall be required for regular
meetings for which the time and place have been fixed. Written, oral, or any
other mode of notice of the time and place shall be given for special meetings
in sufficient time for the convenient assembly of the directors thereat. Notice
need not be given to any director or to any member of a committee of directors
who submits a written waiver of notice signed by him before or after the time
stated therein. Attendance of any such person at a meeting shall constitute a
waiver of notice of such meeting, except when he attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
waiver of notice.
(e)
Quorum
and Action
. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided, that such
majority shall constitute at least one-third of the whole Board. A majority of
the directors present, whether or not a quorum is present, may adjourn a meeting
to another time and place. Except as herein otherwise provided, and except as
otherwise provided by the Nevada Revised Statutes, the vote of the majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the Nevada Revised Statutes and
these Bylaws which govern a meeting of the directors held to fill vacancies and
newly created directorships in the Board or action of disinterested
directors.
Any
member or members of the Board of Directors or of any committee designated by
the Board, may participate in a meeting of the Board, or any such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
(f)
Chairman
of the Meeting
. The Chairman of the Board, if any and if present and
acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the
Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
Section
5.
Removal
of Directors
. Except as may otherwise be provided by the Nevada Revised
Statutes, any director or the entire Board of Directors may be removed, with or
without cause, by the holders of two-thirds of the shares then entitled to vote
at an election of directors.
Section
6.
Committees
.
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any such committee or committees, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation with the exception of any authority the delegation of which is
prohibited by the Nevada Revised Statutes, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Section
7.
Written
Action
. Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
Section
8.
Board of
Advisors.
The Board of Directors,
in its discretion, may establish a Board of Advisors, consisting of individuals
who may or may not be stockholders or directors of the Corporation. The purpose
of the Board of Advisors would be to advise the officers and directors of the
Corporation with respect to such matters as such officers and directors shall
choose, and any other matters which the members of such Board of Advisors deem
appropriate in furtherance of the best interest of the Corporation. The Board of
Advisors shall meet on such basis as the members thereof may determine. The
Board of Directors may eliminate the Board of Advisors at any time. No member of
the Board of Advisors, nor the Board of Advisors itself, shall have any
authority of the Board of Directors or any decision-making power and shall be
merely advisory in nature. Unless the Board of Directors determines another
method of appointment, the President shall recommend possible members of the
Board of Advisors to the Board of Directors, who shall approve such appointments
or reject them.
ARTICLE
III
OFFICERS
The
officers of the corporation shall consist of a President, a Secretary, a
Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, a Vice-Chairman of the Board, an Executive
Vice- President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
title as the resolution of the Board of Directors choosing them shall designate.
Except as may otherwise be provided in the resolution of the Board of Directors
choosing him, no officer other than the Chairman or Vice-Chairman of the Board,
if any, need be a director. Any number of offices may be held by the same
person, as the directors may determine.
Unless
otherwise provided in the resolution choosing him, each officer shall be chosen
for a term which shall continue until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor shall
have been chosen and qualified.
All
officers of the corporation shall have such authority and perform such duties in
the management and operation of the corporation as shall be prescribed in the
resolutions of the Board of Directors designating and choosing such officers and
prescribing their authority and duties, and shall have such additional authority
and duties as are incident to their office except to the extent that such
resolutions may be inconsistent therewith. The Secretary or an Assistant
Secretary of the corporation shall record all of the proceedings of all meetings
and actions in writing of stockholders, directors, and committees of directors,
and shall exercise such additional authority and perform such additional duties
as the Board shall assign to him. Any officer may be removed, with or without
cause, by the Board of Directors. Any vacancy in any office may be filled by the
Board of Directors.
ARTICLE
IV
CORPORATE
SEAL
The
corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE
V
FISCAL
YEAR
The
fiscal year of the corporation shall be fixed, and shall be subject to change,
by the Board of Directors.
ARTICLE
VI
AMENDMENT
These
Bylaws may be adopted, amended or repealed at any time by the unanimous written
consent of the Board of Directors.
CERTIFICATE
OF SECRETARY
I, the
undersigned, do hereby certify:
1. That
I am the duly elected and acting secretary of China Medicine Corporation, a
Nevada corporation; and
2. That
the foregoing Bylaws, comprising seven (7) pages, constitute the Bylaws of said
corporation as duly adopted and approved by the board of directors of said
corporation by a Unanimous Written Consent dated as of _________,
2009.
IN
WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of said
corporation this ___ day of _______, 2009.
China Medicine (CE) (USOTC:CHME)
Gráfico Histórico do Ativo
De Ago 2024 até Set 2024
China Medicine (CE) (USOTC:CHME)
Gráfico Histórico do Ativo
De Set 2023 até Set 2024