SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT
NO.___)
Filed by
the Registrant
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Filed by
a Party other than the Registrant
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Check the
appropriate box:
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Preliminary Proxy
Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material Pursuant to
sec. 240.14a-11(c) or sec.
240.14a-12
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CHINA
ARCHITECTURAL ENGINEERING, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title of each class of securities
to which transaction applies:
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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value
of transaction:
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Fee paid previously with
preliminary materials.
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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CHINA
ARCHITECTURAL ENGINEERING, INC.
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
You are cordially invited to attend the
Annual Meeting of Stockholders (the “Annual Meeting”) of China Architectural
Engineering, Inc., a Delaware corporation (the “Company”, “we”, “us”, or “our”),
to be held at the Company’s executive offices located at 171 Garden Road,
Building A2, 3
rd
Floor,
HongKou District, Shanghai, People’s Republic of China, on December 7, 2010 at
10:00 am local time.
The
Annual Meeting of the Company is being held for the following
purposes:
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1.
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To
elect the following persons to serve as
directors:
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Jun
Tang
Wing
Lun (Alan) Leung
Luo
Ken Yi
Miu
Cheung
Kelly
Wang
Chia
Yong Whatt
Ping
Xu
Shibin
Jo
Chen
Huang
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2.
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To
ratify the appointment of Samuel H. Wong & Co., LLP as the independent
registered public accounting firm of the Company for the year ending
December 31, 2010;
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3.
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To
approve an amendment to the Company’s Certificate of Incorporation (i) to
effect a reverse stock split of our common stock at an exchange ratio of
not less than 1-for-2 and no more than 1-for-4 (the implementation of the
reverse stock split, ratio and timing of which will be subject to the
discretion of the Board of Directors), and (ii) following the reverse
stock split, if and when implemented, to reduce the number of authorized
shares of common stock from 150,000,000 to 100,000,000 (the implementation
of the reduction in authorized shares will be subject to the discretion of
the Board of Directors);
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4.
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To
approve an amendment to the China Architectural Engineering, Inc. 2009
Omnibus Equity Incentive Plan to increase the maximum number of shares of
our common stock that may be issued under the plan from 2,000,000 to
4,000,000 shares (pre-Reverse Stock Split);
and
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5.
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To
transact such other business as may properly come before the meeting or
any adjournments thereof.
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The Board of Directors recommends a
vote “FOR” each of the proposals listed above.
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to Be Held on December 7, 2010. The 2010 Proxy Statement and the Annual Report
to Stockholders for the year ended December 31, 2009 are also available at
http://www.vfnotice.com/chinaarchitectural
.
The Board
of Directors has fixed the close of business on October 26, 2010 as the record
date (the “Record Date”) for determining those stockholders who will be entitled
to vote at the Annual Meeting.
The
following proxy statement and enclosed proxy card is being sent to each
stockholder as of the Record Date. You are cordially invited to attend the
Annual Meeting, but if you do not expect to attend, or if you plan to attend,
but desire the proxy holders to vote your shares, please date and sign your
proxy card and return it in the enclosed postage paid envelope. The giving of
this proxy card will not affect your right to vote in person in the event you
find it convenient to attend. Please return the proxy card promptly to avoid the
expense of additional proxy solicitation.
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FOR
THE BOARD OF DIRECTORS
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Chairman
of the Board of
Directors
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Dated:
October __, 2010
Zhuhai,
China
CHINA
ARCHITECTURAL ENGINEERING, INC.
PROXY
STATEMENT
For
Annual Meeting to be Held
December
7, 2010 at 10:00 a.m. Local Time at
171
Garden Road, Building A2, 3rd Floor,
HongKou
District, Shanghai, People’s Republic of China
This
proxy statement is delivered to you by China Architectural Engineering, Inc.
(“we,” “us,” the “Company,” or “CAE”), a Delaware corporation, in connection
with a Annual Meeting of Stockholders of the Company to be held at the Company’s
executive offices located at 171 Garden Road, Building A2, 3
rd
Floor,
HongKou District, Shanghai, People’s Republic of China, on December 7, 2010 at
10:00 am local time (the “Annual Meeting”). The approximate mailing
date for this proxy statement and the enclosed proxy is November [__],
2010.
Purpose
of the Annual Meeting
The
purpose of the Annual Meeting is to seek stockholder approval of four
proposals:
(1)
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electing
nine directors to the Board of
Directors;
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(2)
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ratifying
the appointment of Samuel H. Wong & Co., LLP as the independent
registered public accounting firm of the Company for the year ending
December 31, 2010;
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(3)
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approving
an amendment to our certificate of incorporation to effect a reverse stock
split of all shares of the Company’s common stock at an exchange ratio of
not less than 1-for-2 and no more than 1-for-4 and to reduce the number of
authorized shares of common stock from 150,000,000 to 100,000,000;
and
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(4)
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approving
an amendment to the China Architectural Engineering, Inc. 2009 Omnibus
Equity Incentive Plan to increase the maximum number of shares of common
stock that may be issued under the plan from 2,000,000 to 4,000,000 shares
(pre-Reverse Stock Split).
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Annual
Report
Our
annual report to stockholders for the year ended December 31, 2009 will be
concurrently provided to each stockholder at the time we send this proxy
statement and the enclosed proxy card and is not to be considered a part of the
proxy soliciting material.
Quorum;
Voting Rights
The
presence, in person or by proxy, of holders of a majority of the outstanding
shares of our common stock entitled to vote at the Annual Meeting is necessary
to constitute a quorum for the Annual Meeting. Abstentions and broker
“non-votes” will be treated as present and entitled to vote for purposes of
determining the presence of a quorum. If a quorum is not present at
the Annual Meeting, we expect that the Annual Meeting will be adjourned to
solicit additional proxies.
Only
stockholders who owned shares of our common stock at the close of business on
October 26, 2010 (the “Record Date”), are entitled to notice of, and to vote at,
the Annual Meeting. As of the Record Date, there were
80,156,874 shares of CAE’s common stock outstanding, and we will need at least
40,078,437 shares present and in person or by proxy at the Annual Meeting for a
quorum to exist.
Voting
Your Proxy
Your vote
is important. Your shares can be voted at the Annual Meeting only if you are
present in person or represented by proxy. Stockholders who hold
shares of our company in “street name” may vote at the Annual Meeting only if
they hold a valid proxy from their broker. Even if you plan to attend the Annual
Meeting, we urge you to vote in advance. If you choose to vote by mail, simply
mark your proxy card, and then date, sign and return it in the postage-paid
envelope provided.
Stockholders
who hold their shares beneficially in street name through a nominee (such as a
bank or broker) may be able to vote by telephone, the Internet or mail. You
should follow the instructions you receive from your nominee to vote those
shares. If you are a stockholder who owns shares through a nominee and attends
the Annual Meeting, you should bring a letter from your nominee identifying you
as the beneficial owner of the shares and acknowledging that you will vote your
shares.
Counting
of Votes
If a
proxy in the accompanying form is duly executed and returned, the shares
represented by the proxy will be voted as directed. If no direction is given,
the shares represented by the proxy will be voted FOR the approval of the
proposals. All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted at the Annual Meeting in accordance
with the directions given. Representatives of our transfer agent will assist us
in the tabulation of the votes.
Effect
of Abstentions and Broker Non-Votes
Abstentions
and broker “non-votes” will be treated as present and entitled to vote for
purposes of determining the presence of a quorum.
An
abstention is the voluntary act of not voting by a stockholder who is present at
a meeting and entitled to vote. Abstentions will have no effect on the election
of the director nominees, but will be counted as votes against the ratification
of the appointment of Samuel H. Wong & Co., LLP, the approval of
reverse stock split and reduction in authorized shares, and the approval of the
amendment to the China Architectural Engineering, Inc. 2009 Omnibus Equity
Incentive Plan to increase the maximum number of shares reserved for
issuance.
A broker
“non-vote” occurs when a broker nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not have
discretionary power for that particular item and has not received instructions
from the beneficial owner. Brokers that hold shares of our common stock in
“street” name for customers that are the beneficial owners of those shares may
not give a proxy to vote those shares on certain routine matters without
specific instructions from those customers. Of the proposals contained herein,
only Proposal 2 is considered a routine matter. Therefore, brokers that do not
receive instructions are entitled to vote on the ratification of the appointment
of our independent registered public accounting firm. Should a broker non-vote
occur, it will have no effect on the outcome of the matter (i.e. it will be
neither a vote “for” nor “against” the proposal), however, it will be treated as
present and entitled to vote for purposes of determining the presence of a
quorum.
Revoking
Your Proxy
Any proxy
given may be revoked at any time prior to its exercise by notifying the
Corporate Secretary of the Company in writing of such revocation, by duly
executing and delivering another proxy bearing a later date, or by attending and
voting in person at the Annual Meeting. The Company’s principal executive office
is located at 105 Baishi Road, Jiuzhou West Avenue, Zhuhai, 519070, People’s
Republic of China.
Appraisal
Rights
Under the
Delaware Code, stockholders entitled to vote will not have any dissenters'
rights of appraisal in connection with any of the matters to be voted on at the
meeting, and we will not independently provide stockholders with any such
right.
Solicitation
of Proxies
The cost
of this solicitation of proxies will be borne by the Company. In
addition, the Company will solicit stockholders by mail, and will request banks
and brokers, and other custodians, nominees and fiduciaries, to solicit their
customers who have stock of CAE registered in the names of such persons and will
reimburse them for their reasonable, out-of-pocket costs. The Company may use
the services of its officers, directors, and others to solicit proxies,
personally or by telephone, without additional compensation.
Delivery
of Proxy Materials to Households
“Householding”
is a program, approved by the Securities and Exchange Commission (the “SEC”),
which allows companies and intermediaries (e.g. brokers) to satisfy the delivery
requirements for proxy statements and annual reports by delivering only one
package of stockholder proxy material to any household at which two or more
stockholders reside. If you and other residents at your mailing address own
shares of our common stock in street name, your broker or bank may have notified
you that your household will receive only one copy of our proxy materials. Once
you have received notice from your broker that they will be “householding”
materials to your address, “householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer wish
to participate in “householding” and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy statement and
wish to receive only one, please notify your broker if your shares are held in a
brokerage account, or call or write us at the following address or phone number:
China Architectural Engineering, Inc., 105 Baishi Road, Jiuzhou West Avenue,
Zhuhai, 519070, People’s Republic of China, by telephone at 86-756-8538908. If
you hold shares of our common stock in your own name as a holder of record,
“householding” will not apply to your shares.
Interest
of Executive Officers and Directors
None of
the Company’s executive officers or directors has any interest in any of the
matters to be acted upon at the Annual Meeting, except, to the extent that the
executive officers and directors are eligible to receive awards under the China
Architectural Engineering, Inc. 2009 Omnibus Equity Incentive Plan, and with
respect to each director, to the extent that a director is named as a nominee
for election to the Board of Directors.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE
DIRECTOR-NOMINEES.
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Pursuant
to the Company’s Bylaws, which give the Board of Directors the authority to
establish, increase or decrease the number of directors, the Board of Directors
increased the size of the board to nine members on September 12,
2010. On August 11, 2010, the Company appointed Jun Tang as a member
and Chairman of the Board of Directors of the Company, effective August 18,
2010. On September 12, 2010, the Company appointed Wing Lun Alan
Leung, Ping Xu, Shibin Jo and Chen Huang as directors of the Company, effective
September 12, 2010.
On August
18, 2010, immediately prior to the effective time of Jun Tang’s appointment, Luo
Ken Yi resigned as the Chairman of the Board of Directors but remains as a
member of the Board. In addition, on August 18, 2010, Tang Nianzhong
resigned as a member of the Board of Directors. Therefore, Tang Nianzhong will
not be standing for re-election.
On
September 12, 2010, Zheng Jin Feng and Zhao Bao Jiang each resigned as a
director of the Company, effective September 12, 2010. Therefore,
Zheng Jin Feng and Zhao Bao Jiang will not be standing for
re-election.
The
nominees for election at the Annual Meeting of Stockholders to the Board of
Directors are:
Jun
Tang,
Wing
Lun (Alan) Leung,
Ping
Xu,
Shibin
Jo,
Chen
Huang,
Kelly
Wang,
Miu
Cheung,
Chia
Yong Whatt, and
Luo
Ken Yi,
all of
whom currently serve on the Board of Directors and advised the Company of their
willingness to serve as a member of the Company’s Board of Directors if elected.
You can find information about the nominees below under the section “Board of
Directors and Executive Officers.”
If
elected, the nominees will serve as directors until the Company’s Annual Meeting
of Stockholders in 2011 or until their successors are elected and
qualified. If a nominee declines to serve or becomes unavailable for
any reason, the proxies may be voted for such substitute nominee as the proxy
holders may designate.
Vote
Required
You may
vote in favor or against any or all of the nominees and you may also withhold
your vote as to any or all of the nominees. The affirmative vote of a plurality
of all of the votes cast at a meeting at which a quorum is present is necessary
for the election of each of the nominees for director, assuming a quorum is
present. If stockholders do not specify the manner in which their shares
represented by a validly executed proxy solicited by the Board of Directors are
to be voted on this proposal, such shares will be voted in favor of all of the
nominees. Abstentions and broker non-votes will not be counted as votes cast and
will have no effect on the result of the vote, although they will count toward
the presence of a quorum.
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY
THE
REAPPOINTMENT OF SAMUEL H. WONG & CO.,
LLP
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The Audit
Committee has recommended the reappointment of Samuel H. Wong & Co., LLP as
the Company’s independent registered public accounting firm for the fiscal year
ending December 31, 2010 Samuel H. Wong & Co., LLP has served as the
Company’s independent accountant since October 17, 2006. The
stockholders are being requested to ratify the reappointment of Samuel H. Wong
& Co., LLP at the Annual Meeting.
Fees
to Independent Registered Public Accounting Firm for Fiscal Years 2009 and
2008
The
following table presents fees, including reimbursements for expenses, for
professional audit services rendered by Samuel H. Wong & Co., LLP for the
audits of the Company’s annual financial statements and interim reviews of the
Company’s quarterly financial statements for the years ended December 31, 2009
and December 31, 2008 and fees billed for other services rendered by Samuel H.
Wong & Co., LLP during those periods.
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Audit
Fees(1)
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$
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165,000
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$
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165,000
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Audit-Related
Fees
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-
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-
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Tax
Fees
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7,740
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-
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All
Other Fees
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-
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-
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Total
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$
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172,740
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$
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165,000
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(1)
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These
are fees for professional services performed by Samuel H. Wong & Co.,
LLP, Certified Public Accountants for the audit of our annual financial
statements, review of our quarterly reports, and review of our
Registration Statements on From
S-1.
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Pre-Approval
Policy
The Audit
Committee on an annual basis reviews audit and non-audit services performed by
the independent registered public accounting firm for such services. The audit
committee pre-approves (i) auditing services (including those performed for
purposes of providing comfort letters and statutory audits) and (ii)
non-auditing services that exceed a de minimis standard established by the
committee, which are rendered to the Company by its outside auditors (including
fees).
Vote
Required
You may
vote in favor or against this proposal and you may also withhold your
vote. The affirmative vote of a majority of all votes cast or
represented by proxy and entitled to vote at the Annual Meeting is required to
ratify the appointment Samuel H. Wong & Co., LLP as the Company’s
independent registered public accounting firm. If stockholders do not specify
the manner in which their shares represented by a validly executed proxy
solicited by the Board of Directors are to be voted on this proposal, such
shares will be voted in favor of the appointment of Samuel H. Wong & Co.,
LLP as our independent registered public accounting firm. For
purposes of the vote on this matter, abstentions will be counted as votes cast
against the proposal, whereas broker non-votes are not applicable as brokers are
entitled to vote on this matter. However, should a broker non-vote
occur, it will not be counted as votes cast and will have no effect on the
result of the vote. Abstentions and broker non-votes will count toward the
presence of a quorum.
PROPOSAL
NO. 3
APPROVAL
OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION – SUBJECT TO THE BOARD’S
DISCRETION, TO EFFECT A REVERSE STOCK SPLIT AND TO REDUCE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO
APPROVE
THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION
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The
Reverse Stock Split Proposal
On
October 21, 2010, our Board of Directors unanimously approved and recommended
that our stockholders approve an amendment to our Certificate of Incorporation
(the “Amendment”), subject to stockholder approval (i) to effect a reverse stock
split of all issued and outstanding shares of our common stock at an exchange
ratio of not less than 1-for-2 and no more than 1-for-4 (the “Reverse Stock
Split”) and (ii) following the reverse stock split, if implemented, to reduce
the number of authorized shares of common stock from 150,000,000 to 100,000,000
at the discretion of the Board of Directors.
The Board
of Directors has unanimously authorized the proposed Amendment to our
Certificate of Incorporation, subject to the Board’s discretion after receipt of
stockholder approval, to effect the Reverse Stock Split and to reduce the number
of authorized shares of common stock. The form of the proposed Amendment
is attached to this proxy statement as
Appendix A
and is
incorporated herein by reference.
If there
exists any circumstances which would make the consummation of the Reverse Stock
Split inadvisable in the judgment of our Board of Directors, the proposal to
amend our Certificate of Incorporation may be terminated by our Board of
Directors either before or after the approval of the Reverse Stock Split by our
stockholders.
Background
and Reasons for the Proposal
The Board
of Director’s primary objective in proposing the Reverse Stock Split is to raise
the per share trading price of our common stock. The Board of Directors believes
that by increasing the market price per share of our common stock, we may regain
and maintain compliance with the NASDAQ listing requirements.
On July
1, 2010, we received notice from The NASDAQ Stock Market that we were not
compliance with the listing standards of NASDAQ due to the trading price of our
common stock falling below the minimum $1.00 bid price for 30 consecutive days,
and that such continued non-compliance would result in delisting of our common
stock from the NASDAQ trading market.
Under the
NASDAQ Listing Rules, if during the 180 calendar days following July 1, 2010,
which ends on December 28, 2010, the closing bid price of the Company’s common
stock is at or above $1.00 per share for a minimum of 10 consecutive business
days, the Company will regain compliance with the minimum bid price
requirement. If the Company does not regain compliance with the
minimum bid price requirement by December 28, 2010, NASDAQ will provide written
notification to the Company that its common stock is subject to
delisting. At such time, the Company may be eligible for an
additional grace period to meet the minimum bid price requirement if the Company
meets the initial listing standards, with the exception of bid price, for The
Nasdaq Capital Market and if the Company submits an application to transfer its
securities to The Nasdaq Capital Market.
The Board
of Directors approved the Reverse Stock Split proposal as a potential means to
increase the per share bid price such that to come into compliance with the
$1.00 minimum bid price requirements of NASDAQ. However, there can be
no assurance that the Reverse Stock Split, if implemented, will have the desired
effect of sufficiently raising the common stock price.
Board
Discretion to Implement the Reverse Stock Split
If the
proposed amendment is approved by our stockholders, it will be implemented, if
at all, only upon a determination by our Board of Directors that a reverse stock
split, at a ratio determined by the Board of Directors within the range of 1:2
to 1:4, is in the best interests of our stockholders. The Board of Directors’
determination as to whether such a split will be implemented and, if so, the
effective time and the ratio of such split, will be based upon several factors,
including existing and expected marketability and liquidity of our common stock,
prevailing market conditions and the likely effect on the market price of our
common stock. If our Board of Directors determines to implement the Reverse
Stock Split, the Board will consider various factors in selecting the ratio,
including the overall market conditions at the time and the recent trading
history of our common stock, including the goal of regaining and maintaining
compliance with the listing standards of NASDAQ requiring that the trading price
of our common stock be at or above $1.00 bid price.
Effects
of the Proposed Reverse Stock Split on Holders of Outstanding Common
Stock
If the
Reverse Stock Split is implemented, each holder of common stock will receive one
share of common stock for every two to four shares of common stock held
immediately prior to effecting the Reverse Stock Split, depending on the ratio
as selected by the Board, and then rounding up to the nearest whole
share. The number of shares of common stock issued and outstanding
will therefore be reduced.
The table
below illustrates the approximate effect of the Reverse Stock Split on the total
number of Common Stock shares at a ratio of 1-for-2, a ratio of 1-for-3 and a
ratio of 1-for-4 based on our capitalization as of the Record Date of October
26, 2010. The approximations below do not take into account rounding
up to the nearest whole share, which will occur. The Board will have
the discretion of effecting the Reverse Stock Split with a non-whole number
ratio, as long as it is between the range of 1-for-2 and 1-for-4.
Reverse Stock Split Ratio
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Approximate Number
of Shares Outstanding
After the Reverse
Stock Split
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Shares
Authorized
and
Unreserved
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Total Shares
Authorized to be
Issued
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Pre-Split
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80,156,874
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69,843,126
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150,000,000
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If
1-for-2 stock split enacted
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40,078,437
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59,921,563
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100,000,000
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If
1-for-3 stock split enacted
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26,718,958
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73,281,042
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100,000,000
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If
1-for-4 stock split enacted
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20,039,219
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79,960,781
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100,000,000
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We will
not pay cash to any stockholder in respect of any fractional interest in a share
resulting from the Reverse Stock Split. A reverse stock split may
leave certain stockholders with one or more "odd lots," which are stock holdings
in amounts of fewer than 100 shares of common stock. These odd lots may be
more difficult to sell than shares of common stock in even multiples of 100.
Stockholders selling odd lots created by the Reverse Stock Split may incur
increased brokerage commissions in selling such shares.
Except
for
de minimis
adjustments that may result from the treatment of fractional shares as described
above, the Reverse Stock Split will not have any dilutive effect on our
stockholders since each stockholder would hold the same percentage of our common
stock outstanding immediately following the Reverse Stock Split as such
stockholder held immediately prior to the Reverse Stock Split. The relative
voting and other rights that accompany the shares of common stock would not be
affected by the Reverse Stock Split.
Although
the Reverse Stock Split will not have any dilutive effect on our stockholders,
the proportion of shares owned by our stockholders relative to the number of
shares authorized for issuance will decrease because the Amendment will reduce
the number of authorized of shares of common stock only to
100,000,000.
Effects
of the Proposed Reverse Stock Split on Options, Restricted Stock Awards,
Warrants, and Convertible or Exchangeable Securities
Based
upon the Reverse Stock Split ratio, proportionate adjustments will be required
to be made to the per share exercise price and the number of shares issuable
upon the exercise or conversion of all outstanding options, warrants,
convertible or exchangeable securities entitling the holders to purchase,
exchange for, or convert into, shares of Common Stock. This would result in
approximately the same aggregate price being required to be paid under such
options, warrants, convertible or exchangeable securities upon exercise, and
approximately the same value of shares of Common Stock being delivered upon such
exercise, exchange or conversion, immediately following the Reverse Stock Split
as was the case immediately preceding the Reverse Stock Split. The number of
shares deliverable upon settlement or vesting of restricted stock awards and
units will be similarly adjusted. The number of shares reserved for issuance
under these securities will be reduced proportionately based upon the Reverse
Stock Split ratio determined by the Board of Directors.
Effects
of the Proposed Reverse Stock Split on China Architectural Engineering, Inc.
2009 Omnibus Equity Incentive Plan
The
Reverse Stock Split, if and when implemented, will affect outstanding stock
awards and options to purchase our common stock that were granted under the
China Architectural Engineering, Inc. 2009 Omnibus Equity Incentive Plan (the
“Plan”). The Plan, as amended, includes provisions for appropriate
adjustments to the number of shares of common stock covered by the Plan and to
stock options and other grants of stock-based awards under the Plan, as well as
the per share exercise price. If stockholders approve the
Reverse Stock Split and the Board of Directors implements the Reverse Stock
Split, an outstanding stock option to purchase a certain number of shares of
common stock would thereafter evidence the right to purchase that number divided
by a lesser number of common stock consistent with the reverse stock split
ratio, and the exercise price per share would be a corresponding multiple of the
previous exercise price.
In
addition, the number of shares reserved for issuance under the Plan, currently
at 2,000,000 shares, will be affected by the Reverse Stock Split in that the
number of shares reserved, as may be amended, will be reduced by the ratio of
the Reverse Stock Split, as selected by the Board. In addition, if
the stockholders approve an amendment to the China Architectural Engineering,
Inc. 2009 Omnibus Equity Incentive Plan to increase the maximum number of shares
of our common stock that may be issued under the plan from 2,000,000 to
4,000,000 shares, the Board will effect the increase prior to the Reverse Stock
Split such that the 4,000,000 shares would be reduced by the Reverse Stock
Split, if and when implemented.
Potential
Effects of the Amendment on the Ratio of our Authorized Shares and Outstanding
Shares
If and
when the Board of Directors elects to effect the Reverse Stock Split, the
authorized number of shares of our common stock will be reduced from 150,000,000
to 100,000,000. Accordingly, there will be a reduction in the number of
authorized shares of our common stock at a proportionately higher level than
would be available if the number of authorized shares was reduced by the Reverse
Stock Split ratio. As a result, the proportion of shares owned by our
stockholders relative to the number of shares authorized for issuance will
decrease, and the additional authorized shares of common stock will be available
for issuance at such times and for such purposes as the Board of Directors may
deem advisable without further action by our stockholders, except as required by
applicable laws and regulations. Because our common stock is traded on The
NASDAQ Stock Market, stockholder approval must be obtained, under applicable
NASDAQ rules, prior to the issuance of shares for certain purposes, unless an
exemption is available from such approval. Such an exemption would be available
if the Board authorized the filing of an application with NASDAQ to waive the
shareholder vote requirement if it believed the delay associated with securing
such vote would seriously jeopardize our financial viability and NASDAQ granted
us such an exemption.
The
additional shares of our common stock to be authorized will be a part of the
existing class of common stock and, if and when issued, would have the same
rights and privileges as the shares of our common stock presently issued and
outstanding.
Potential
Anti-Takeover Effects of Proposed Reverse Stock Split
The
additional shares of common stock that would become available for issuance as a
result of the Reverse Stock Split could be used by our management to oppose a
hostile takeover attempt or delay or prevent changes of control or changes in or
removal of management, including transactions that are favored by a majority of
the stockholders or in which the stockholders might otherwise receive a premium
for their shares over then-current market prices or benefit in some other
manner. Although the Reverse Stock Split would be prompted by business and
financial considerations, stockholders nevertheless should be aware that the
Reverse Stock Split could facilitate future efforts by our management to deter
or prevent a change in control of our company. The Board has no plans to use any
of the additional shares of common stock that would become available should the
Reverse Stock Split occur, if any, for any such purposes.
In
addition to the anti-takeover implications from the increased number of shares
that would become available for issuance as a result of the Reverse Stock Split,
as discussed above, we are also affected by Delaware anti-takeover laws and
anti-takeover provisions in our charter documents. Other than as
discussed in this information statement, there are no provisions of our
articles, bylaws, employment agreements or credit agreements have material
anti-takeover consequences.
Delaware Law Anti-Takeover
Law
We are
subject to Section 203 of the Delaware General Corporation Law. This provision
generally prohibits a Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the date the stockholder became an interested stockholder,
unless:
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prior
to such date, the Board of Directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
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upon
consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by persons who are directors and
also officers and by employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer;
or
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on
or subsequent to such date, the business combination is approved by the
Board of Directors and authorized at an annual meeting or special meeting
of stockholders and not by written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder.
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Section
203 defines a business combination to include:
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any
merger or consolidation involving the corporation and the interested
stockholder;
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any
sale, transfer, pledge or other disposition of 10% or more of the assets
of the corporation involving the interested
stockholder;
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subject
to certain exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
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any
transaction involving the corporation that has the effect of increasing
the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder;
or
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the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
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In
general, Section 203 defines an “interested stockholder” as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a
corporation, or an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of a corporation at any time
within three years prior to the time of determination of interested stockholder
status; and any entity or person affiliated with or controlling or controlled by
such entity or person.
Anti-Takeover
Charter Provisions
Our
Certificate of Incorporation and Bylaws contain provisions that could have the
effect of discouraging potential acquisition proposals or tender offers or
delaying or preventing a change in control of our company, including changes a
stockholder might consider favorable. In particular, our Certificate of
Incorporation and Bylaws, as applicable, among other things, will:
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provide
our Board of Directors with the ability to alter our Bylaws without
stockholder approval;
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provide
for an advance notice procedure with regard to the nomination of
candidates for election as directors and with regard to business to be
brought before a meeting of stockholders;
and
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provide
that vacancies on our Board of Directors may be filled by a majority of
directors in office, although less than a
quorum.
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Such
provisions may have the effect of discouraging a third-party from acquiring our
company, even if doing so would be beneficial to its stockholders. These
provisions are intended to enhance the likelihood of continuity and stability in
the composition of our Board of Directors and in the policies formulated by
them, and to discourage some types of transactions that may involve an actual or
threatened change in control of our company. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal and to
discourage some tactics that may be used in proxy fights. We believe that the
benefits of increased protection of our potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us
outweigh the disadvantages of discouraging such proposals because, among other
things, negotiation of such proposals could result in an improvement of their
terms.
However,
these provisions could have the effect of discouraging others from making tender
offers for our shares that could result from actual or rumored takeover
attempts. These provisions also may have the effect of preventing changes in our
management.
Risks
Associated with the Reverse Stock Split
There
can be no assurance that the total market capitalization of our common stock
(the aggregate value of all CAE common stock at the then market price) after the
implementation of the Reverse Stock Split will be equal to or greater
than the total market capitalization before the Reverse Stock Split or that the
per share market price of our common stock following the Reverse Stock Split
will increase in proportion to the reduction in the number of shares of our
common stock outstanding before the Reverse Stock Split.
There can
be no assurance that the market price per share of our common stock after the
Reverse Stock Split will remain unchanged or increase in proportion to the
reduction in the number of old shares of our common stock outstanding before the
Reverse Stock Split. For example, based on the closing price of our common stock
on October 21, 2010 of $0.78 per share, if the Board were to implement the
Reverse Stock Split and utilize a ratio of 1-for-3, we cannot assure you that
the post-split market price of our common stock would be $2.34 (that is,
$0.78 × 3) per share or greater. In many cases, the market price
of a company’s shares declines after a reverse stock split.
Accordingly,
the total market capitalization of our common stock after the Reverse Stock
Split, when and if implemented, may be lower than the total market
capitalization before the Reverse Stock Split. Moreover, in the future, the
market price of our common stock following the Reverse Stock Split may not
exceed or remain higher than the market price prior to the Reverse Stock
Split.
The
Reverse Stock Split may not increase our stock price over the long-term, which
may prevent us from maintaining our listing with NASDAQ.
While we
expect that the Reverse Stock Split will enable our shares to qualify for
listing with NASDAQ and that we will be able to continue to meet on-going
quantitative and qualitative listing requirements, we cannot be sure that this
will be the case. Negative financial results, adverse clinical trials
developments, or market conditions could adversely affect the market price of
our common stock and jeopardize our ability to meet or maintain applicable
NASDAQ listing requirements. Furthermore, in addition to its enumerated listing
and maintenance standards, NASDAQ has broad discretionary authority over the
initial and continued listing of securities, which it could exercise with
respect to our shares.
A
decline in the market price of our common stock after the Reverse Stock Split is
implemented may result in a greater percentage decline than would occur in the
absence of the Reverse Stock Split, and the liquidity of our common stock could
be adversely affected following the Reverse Stock Split.
If the
Reverse Stock Split is effected and the market price of our common stock
declines, the percentage decline may be greater than would occur in the absence
of the Reverse Stock Split. The market price of our common stock will, however,
also be based on our performance and other factors, which are unrelated to the
number of shares of common stock outstanding. Furthermore, the liquidity of our
common stock could be adversely affected by the reduced number of shares that
would be outstanding after the Reverse Stock Split.
United
States Federal Income Tax Consequences
The
following discussion is a summary of certain federal income tax consequences of
the Reverse Stock Split to us and stockholders of our common
stock. This discussion is based on laws, regulations, rulings and
decisions in effect on the date hereof, all of which are subject to change
(possibly with retroactive effect) and to differing
interpretations. This discussion only applies to stockholders that
are U.S. persons as defined in the Internal Revenue Code of 1986, as amended,
and does not describe all of the tax consequences that may be relevant to a
stockholder in light of his particular circumstances or to stockholders subject
to special rules (such as dealers in securities, financial institutions,
insurance companies, tax-exempt organizations, foreign individuals and entities,
and persons who acquired their common stock as compensation). In
addition, this summary is limited to stockholders that hold their common stock
as capital assets. This discussion also does not address any tax consequences
arising under the laws of any state, local or foreign jurisdiction or
alternative minimum tax consequences. The tax treatment of each stockholder may
vary depending upon the particular facts and circumstances of such
stockholder.
We have
not sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the Reverse
Stock Split. We believe, however, that because the Reverse Stock Split is not
part of a plan to periodically increase or decrease any stockholder’s
proportionate interest in the assets or earnings and profits of our company, the
Reverse Stock Split should have the federal income tax effects described
below:
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The
exchange of pre-split shares for post-split shares should not result in
recognition of gain or loss for federal income tax
purposes.
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The
stockholder’s aggregate tax basis in the post-split shares would equal
that stockholder’s aggregate tax basis in the pre-split
shares.
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The
stockholder’s holding period for the post-split shares will include such
stockholder’s holding period for the pre-split
shares.
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Provided
that a stockholder held the pre-split shares as a capital asset, the
post-split shares received in exchange therefore would also be held as a
capital asset.
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Our
Company should not recognize gain or loss as a result of the Reverse Stock
Split.
You should consult your own
tax adviser concerning the particular U.S. federal tax consequences of the
Reverse Stock Split, as well as any consequences arising under the laws of any
other taxing authority, such as any state, local or foreign income tax
consequences to which you may be subject.
To ensure
compliance with Treasury Department Circular 230, each holder of common stock is
hereby notified that: (a) any discussion of U.S. federal tax issues in this
proxy statement is not intended or written to be used, and cannot be used, by
such holder for the purpose of avoiding penalties that may be imposed on such
holder under the Code; (b) any such discussion has been included by Generex in
furtherance of the Reverse Stock Split on the terms described herein; and (c)
each such holder should seek advice based on its particular circumstances from
an independent tax advisor.
Fractional
Shares
We will
not issue fractional shares in connection with the Reverse Stock Split. In order
to avoid the expense and inconvenience of issuing and transferring fractional
shares of common stock to stockholders who would otherwise be entitled to
receive fractional shares of common stock following the Reverse Split, any
fractional shares which result from the Reverse Stock Split will be rounded up
to the next whole share.
Stock
Certificates
As of the
effective date of the Reverse Stock Split, each certificate representing shares
of our common stock before the Reverse Stock Split would be deemed, for all
corporate purposes, to evidence ownership of the reduced number of shares of our
common stock resulting from the Reverse Stock Split. All shares, underlying
options and warrants and other securities would also be automatically adjusted
on the effective date of the Reverse Stock Split, if any such securities are
outstanding on the effective date.
If you
hold your shares of common stock in a brokerage account or in "street name," you
would not be required to take any further action. If you hold stock
certificates, you would not have to exchange your existing stock certificates
for new stock certificates reflecting the Reverse Stock Split. However, any
stockholder desiring a new form of stock certificate may submit the existing
stock certificate to our transfer agent for cancellation, and obtain a new form
of certificate. The transfer agent may impose a reasonable fee for a voluntary
exchange of certificates. Stockholders should not destroy any stock
certificate.
Contact
information for our transfer agent is as follows:
Computershare
Trust Company, N.A.
350
Indiana Street, Suite 800
Golden,
CO 80401
Telephone:
(303) 262-0600
Facsimile:
(303) 262-0700
Vote
Required
Approval
of the amendment to our certificate of incorporation will require the
affirmative vote of at least a majority in voting interest of the stockholders
present in person or by proxy and voting at the Annual Meeting, assuming the
presence of a quorum. For purposes of the vote on this matter,
abstentions and broker non-votes will be counted as votes cast against the
proposal, although each type of vote will count toward the presence of a
quorum. If the stockholders do not approve Proposal No. 3, the
certificate of amendment to our certificate of incorporation will not be filed
and we will not effectuate the Reverse Stock Split.
PROPOSAL
NO. 4
APPROVAL
OF AMENDMENT TO CHINA ARCHITECTURAL ENGINEERING, INC. 2009 OMNIBUS
INCENTIVE PLAN – INCREASE IN AUTHORIZED SHARES FOR
ISSUANCE
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO
APPROVE
THE AMENDMENT TO THE CHINA ARCHITECTURAL ENGINEERING, INC. 2009 OMNIBUS
INCENTIVE PLAN
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The
Company currently maintains the China Architectural Engineering, Inc. 2009
Omnibus Incentive Plan, as amended (the “Plan”) in order to provide an
incentive to attract and retain eligible personnel performing services for the
Company and to motivate such persons to contribute to the growth and
profitability of the Company.
The Plan
currently has a total of 2,000,000 shares reserved for issuance under the Plan
and all 2,000,000 shares reserved for such issuance has either been issued or
options have been issued for exercise for issuance for such reserved shares,
such that there are no shares currently available for issuance under the
Plan. Therefore, in order to continue to have available a reasonable
number of shares to provide such incentives, it is in the best interests of the
Company and its stockholders to amend and restate the Plan to increase the
maximum number of shares of the Company’s common stock that may be issued under
the Plan from 2,000,000 to 4,000,000 shares (pre-Reverse Stock Split) (the
“Amended Plan”).
The
Amended Plan shall become effective if approved by our stockholders at the
Annual Meeting.
See
“Executive Compensation,” below, for additional regarding the Plan.
The form
of the proposed Amendment No. 2 to the Plan is attached to this proxy statement
as
Appendix B
and is incorporated herein by reference.
Vote
Required
Approval
of the Amended Plan will require the affirmative vote of at least a majority in
voting interest of the stockholders present in person or by proxy and voting at
the Annual Meeting, assuming the presence of a quorum. For purposes
of the vote on this matter, abstentions will be counted as votes cast against
the proposal, whereas broker non-votes will not be counted as votes cast and
will have no effect on the result of the vote, although each type of vote will
count toward the presence of a quorum. If the stockholders do not
approve the Amended Plan, it will not be implemented.
BOARD
OF DIRECTORS AND EXECUTIVE OFFICERS
Information
Concerning Director Nominees
Our
executive officers, our current directors, and our director nominees who have
been nominated for election as directors at the Annual Meeting, the positions
held by them and their ages as of the date of this proxy statement are as
follows:
Name
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Age
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Position
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Jun
Tang
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48
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Chairman
of the Board and director nominee
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Wing
Lun (Alan) Leung
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42
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Chief
Executive Officer, Director and director nominee
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Luo
Ken Yi
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53
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President,
Director and director nominee
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Qin
(Andy) Lu
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34
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Acting
Chief Financial Officer and Corporate Secretary
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Charles
John Anderson
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56
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President,
U.S. Operations and Chief Operating Officer
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Miu
Cheung
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40
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Director
and director nominee
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Kelly
Wang
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39
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Director
and director nominee
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Chia
Yong Whatt
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43
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Director
and director nominee
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Shibin
Jo
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46
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Director
and director nominee
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Chen
Huang
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37
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Director
and director nominee
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Ping
Xu
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39
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Director
and director nominee
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Jun Tang
has been the Chairman of the Board since August 2010. He currently
serves as the President and Chief Executive Officer of New Huadu Group in
Fujian, China. From 2004 to 2008, Mr. Tang served as President of Shanghai SNDA
(Nasdaq: SNDA), an interactive entertainment media company in China. Prior to
that, he served as President of Microsoft China Co., Ltd from 2002 to 2004. From
1997 to 2002, he served as General Manager of Microsoft Global Technical
Engineering Center, and from 1994 to 1997 he served as Senior Project Manager
for Microsoft US. Mr. Tang received a doctorate degree in Electrical Engineering
from University of Pacific Western in April 1995, a master's degree in
Electronics from Nagoya University in March 1988, and a bachelor's degree in
Physics from Beijing University of Posts and Telecommunications in July 1984. We
believe that Mr. Tang’s experience and leadership in the software and online
gaming industry qualifies him to serve on our board.
Wing Lun (Alan)
Leung
has been the Chief Executive Officer of the Company since September
2010. He is the co-founder and Chief Executive Officer of Shanghai
ConnGame Network Co. Ltd. From February 2010 to the present, Mr.
Leung served on the Board of Directors of Game First International Corporation,
an online game distributor in Taiwan. From November 2008 to the
present, Mr. Leung served as the managing director of IAHGames HK Limited, an
online game distributor in Southeast Asia. From February 2008 to
October 2008, Mr. Leung was the Chief Executive Officer of Shanghai Holdfast
Online Information Technology Co., Ltd, a subsidiary of Shanda Interactive Co.
Ltd. From July 2007 to January 2008, Mr. Leung was the Chief
Operating Officer of China Youth Foundation Group and was the Chief Operating
Officer of CITIC Pacific Communication (Guangzhou) Co. Ltd, a subsidiary of
CITIC Pacific Limited from October 2005 to June 2007. Mr. Leung
has 22 years of experience in implementing IT projects and other consulting
services. Additionally, he has over ten years of experience in the
PRC online gaming industry. Mr. Leung received a bachelor’s degree in
Computer Science from the University of London in 1990, a master’s degree in
Business Administration from City University London in 1994 and a master’s
degree in Electronic Commerce from the University of Hong Kong in
2002.
Luo Ken Yi
has been the President and Director of the Company since October
2006. He was previously the Company’s Chief Executive Officer and
Chairman of the Board from July 2008 until August 2010 and Chief Operating
Officer from October 2006 to June 2008. Mr. Luo has served as the
Chief Executive Officer and Chairman of the Board of Zhuhai King Glass
Engineering Co., Ltd. since 1992. Mr. Luo also served as the Chief
Operating Officer of Zhuhai King Glass Engineering Co., Ltd. from 1992 to June
2008. He served as Project Manager and Production Manager at P.X.
Engineering, Inc. in the U.S from 1989 to 1991. Mr. Luo founded Kangbao
Electronics Co., Ltd. in Shunde, Guangdong, China, where he served as Chief
Engineer, Technical Manager, Vice Manager General and Deputy President from 1986
to 1989. Mr. Luo founded KGE Group, Limited in 1992 and served as Chief Managing
Director. Later, he studied steel supported glass curtain wall design in the
U.S. and Europe 1992 to 1994. He was appointed Vice President of the
Architectural Glass and Metal Structure Institute of Qinghua University in 1999.
In 2000 he was appointed by the Chinese Ministry of Construction to head the
committee on creating national standards for the glass curtain wall industry.
Mr. Luo and the Company own over 76 patents related to building envelope systems
technology. He was honored as one of the “Ten Great Leaders in Technology” and
has published numerous books and articles. Luo Ken Yi studied Medicine at the
Guangzhou University of Chinese Medicine, graduating in 1983, and Mechanical
Engineering at Bunker Hill Community College, graduating in 1988. Mr. Luo
received an MBA from Australia Murdoch University in 1998.
Qin (Andy)
Lu
has been
Acting Chief Financial Officer and Corporate Secretary of the Company since
September 2010. He served as the Chief Operating Officer of Gaotime
Corporate, a financial information services and IT solution company, from
January 2010 to August 2010. Prior to that, Mr. Lu was a General
Manager at Hong Yang Education Ltd., a professional training and consulting
company from March 2008 to December 2009. From November 2002 to
February 2008, Mr. Lu served as the Senior Business Director & Division
Deputy General Manager at Shanghai Wicresoft Co., Ltd. in Shanghai. Mr. Lu
received a bachelor’s degree in Electronic Engineering from Fudan University in
1999 and a master’s degree in Business Administration from BI Norwegian School
of Management in 2006.
Charles John
Anderson
has served as President of CAE Building Systems, Inc., a
wholly-owned subsidiary of the Company, since February 2008 and as Chief
Operating Officer of the Company since June 2008. He has worked in the building
envelope industry for more than 33 years. His career began in 1974 and he has
experience in sales, estimating, engineering, manufacturing, testing, quality
control, installation, project management, contract administration and executive
management. Prior to joining the Company, Mr. Anderson worked as a senior
consultant for Israel Berger & Associates, LLC, specializing in building
envelope evaluation. From 1996 to 2004, Mr. Anderson worked for Glassalum
International Corporation, a custom curtain wall manufacturing and installation
company, where he was responsible for coordinating engineering, manufacturing
and project management activities. While at Glassalum International Corporation,
Mr. Anderson served in various positions, including President and Chief
Operating Officer. In 1987, Mr. Anderson founded Building Research, Inc., which
provided consulting, testing and inspection services from inception to 1992. Mr.
Anderson also worked for other companies in the curtain wall and related
industries, including Midwest Curtain walls, Inc., Ampat Group, Inc.,
Construction Research Laboratory, Inc., and Miami Testing Laboratory,
Inc.
Miu Cheung
has served as a director of the Company since June 10, 2008. Since May 1999, Mr.
Cheung has been with CITC Capital Holdings, Ltd., (“CITIC”) currently serving as
its Managing Director and Head of the Structured Finance Group. Prior to joining
CITIC, he had worked with Commonwealth Bank of Australia, Société Générale Asia
Ltd and Bank of China (Hong Kong). He received an MBA from the Australian
Graduate School of Management in 1997 and a Bachelor’s of Business
Administration (Finance) from the Chinese University of Hong Kong in 1992. Mr.
Cheung is also a director of CITIC Capital Finance Ltd. and CITIC Allco
Investments Management Limited.
Kelly
Wang
has
served as a director of the Company since July 2007. Since March 2007, Ms. Wang
has served as the manager in Financial Reporting for Starbucks Corporation.
Prior to joining Starbucks, Ms. Wang served as the manager of technical
accounting and SEC reporting of Flow International Corporation from August 2005
to March 2007. From May 2001 to August 2005, Ms. Wang was an assurance manager
at Ernst & Young LLP. Ms. Wang received a B.S. in International Finance from
the Shanghai University of Finance and Economics in 1992 and an MBA from the
University of Hawaii at Manoa in 1997 and is a certified public accountant in
California and Washington. We believe that Ms. Wang’s accounting and
professional experience with large companies exhibit her qualifications to sit
on our Board, including expertise and background with respect to accounting
matters and her understanding of U.S. GAAP and financial
statements.
Chia Yong Whatt
has served as a director of the Company since June 2009. From April
2002 to March 2008, Mr. Chia served as a director and member of senior
management of Messrs. Chong Chia & Lim LLC, which is a law corporation.
Mr. Chia serves as a member of the Board and Audit Committee member of Sim
Siang Choon Limited since August 2008, and served as a member of the Board and
Audit Committee of FM Holdings Limited from September 2008 to January 2010.
Since November 2009, Mr. Chia has also served as corporate counsel for
Jaya Holdings Ltd., a company listed in Singapore. Mr. Chia received
his Bachelor of Law from the National University of Singapore in 1990.We believe
that Mr. Whatt is qualified to serve as a member of our Board of Directors due
to his knowledge of the law and experience acting as a director of publicly
traded companies. We believe that Mr. Chia’s legal and corporate
expertise well qualifies Mr. Chia to serve on our board.
Shibin Jo
has served as a director of the Company since September 2010. Mr. Jo
founded JCD Co. Ltd. and has held the positions of President and CEO since
1993. Prior to that, Mr. Jo served as a board member for the Chinese
Chamber of Commerce in Japan and was employed by the Construction Technology
Institute in Japan. Mr. Jo received a bachelor’s degree in
Engineering from Qinghua University in 1984 and a Doctorate’s degree in Urban
and Transportation Planning from Nagoya University in 1991. We
believe that Mr. Jo’s experience in the business field and construction industry
qualifies Mr. Jo to serve on our board.
Chen Huang
has served as a director of the Company since September 2010. Since
May 2010, he has been a partner at Shanghai Legalplus Law Firm. From
September 2005 to May 2010, Mr. Huang was a partner at Shanghai Zhongyi Huaxia
Law Firm. Mr. Huang previously taught at Shanghai University Law
School and has been certified by the Shanghai Foreign Investment Commission and
Shanghai Service Center for Human Recourses Development as a financial
investment consultant. Mr. Huang received a bachelor’s degree in Law from East
China University of Political Science and Law in 2003. We believe
that Mr. Huang’s knowledge and experience in the legal and investment industries
qualifies him for service on our board.
Ping Xu
has served as a director of the Company since September 2010. Since
August 2005, Ms. Xu has been with Ant Capital Partners Co., Ltd. and currently
serves as a director and general partner of Vangoo Investment Partners, a
subsidiary of Ant Capital Partners Co., Ltd. Prior to that, Ms. Xu founded
multiple companies in China. Ms. Xu received a bachelor’s degree in Economics
from Keio University in 1999. We believe that Ms. Xu’s
entrepreneurial approach and experience in the investment community qualifies
Ms. Xu to serve on our board.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Code
of Business Conduct and Ethics
Our Board
of Directors has adopted a code of ethics, which applies to all our directors,
officers and employees. Our code of ethics is intended to comply with the
requirements of Item 406 of Regulation S-K. Our code of ethics is posted on our
Internet website at www.caebuilding.com. We will provide our code of ethics in
print without charge to any stockholder who makes a written request to: Chief
Financial Officer, China Architectural Engineering, Inc., 105 Baishi Road,
Jiuzhou West Avenue, Zhuhai 519070, People’s Republic of China. Any waivers of
the application and any amendments to our code of ethics must be made by our
Board of Directors. Any waivers of, and any amendments to, our code of ethics
will be disclosed promptly on our Internet website.
Director
Independence
Subject
to certain exceptions, under the listing standards of the NASDAQ Stock Market
LLC (“NASDAQ”), a listed company’s Board of Directors must consist of a majority
of independent directors. Currently, our Board of Directors has determined
that each of the non-management directors, Chen Huang, Ping Xu, Chen Huang,
Kelly Wang and Chia Yong Whatt, is an “independent” director as defined by the
listing standards of NASDAQ currently in effect and approved by the U.S.
Securities and Exchange Commission (“SEC”) and all applicable rules and
regulations of the SEC. All members of the Audit, Compensation and
Nominating and Corporate Governance Committees satisfy the “independence”
standards applicable to members of each such committee. The Board of Directors
made this affirmative determination regarding these directors’ independence
based on discussions with the directors and on its review of the directors’
responses to a standard questionnaire regarding employment and compensation
history; affiliations, family and other relationships; and transactions with the
Company. The Board of Directors considered relationships and transactions
between each director or any member of his immediate family and the Company and
its subsidiaries and affiliates. The purpose of the board of director’s review
with respect to each director was to determine whether any such relationships or
transactions were inconsistent with a determination that the director is
independent under the NASDAQ rules.
Family
Relationships
There are
no family relationships among the individuals comprising our Board of Directors
and executive officers.
Legal
Proceedings
None of
the nominees nor any director or executive officer has been involved in the
certain legal proceedings listed in Item 103 and/or Item 401 of Regulation
S-K.
Attendance
of Directors at Board Meetings and Annual Meeting of Stockholders
During
the year ended December 31, 2009, the Board of Directors met five
times. Each of the current directors who was on the Board of
Directors during 2009 attended the meeting held by the Board of Directors held
during 2009.
The
Company does not have a policy requiring its directors to attend the Annual
Meeting of Stockholders.
Board
Committees
Audit
Committee
. We established our audit committee in July 2007.
The audit committee consists of Ping Xu, Chen Huang, and Kelly Wang, each of
whom is an independent director. Kelly Wang is an “audit committee financial
expert” as defined under Item 407(d) of Regulation S-K. The purpose of the audit
committee is to represent and assist our Board of Directors in its general
oversight of our accounting and financial reporting processes, audits of the
financial statements and internal control and audit functions. The audit
committee’s responsibilities include:
|
·
|
The
appointment, replacement, compensation, and oversight of work of the
independent auditor, including resolution of disagreements between
management and the independent auditor regarding financial reporting, for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services.
|
|
·
|
Reviewing
and discussing with management and the independent auditor various topics
and events that may have significant financial impact on our company or
that are the subject of discussions between management and the independent
auditors.
|
The
audit committee charter is posted in the corporate governance section of the
investor relations page of the Company’s Web site located at
www.caebuilding.com
.
Compensation
Committee.
We established our Compensation Committee June
2009. The Compensation Committee consists of Chia Yong Whatt and Shibin Jo, each
of whom is an independent director. Chia Yong Whatt is the Chairman of the
Compensation Committee. The Compensation Committee is responsible for the
design, review, recommendation and approval of compensation arrangements for our
directors, executive officers and key employees, and for the administration of
our equity incentive plans, including the approval of grants under such plans to
our employees, consultants and directors. The Compensation Committee also
reviews and determines compensation of our executive officers, including our
Chief Executive Officer. The board of directors has adopted a written charter
for the Compensation Committee. A copy of the Compensation Committee Charter is
posted on our corporate website at: www.caebuilding.com.
Nominating and
Corporate Governance Committee.
The Nominating and Corporate
Governance Committee consists of Shibin Jo and Ping Xu, each of whom is an
independent director. Shibin Jo is the Chairman of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance Committee assists
in the selection of director nominees, approves director nominations to be
presented for stockholder approval at our annual general meeting and fills any
vacancies on our board of directors, considers any nominations of director
candidates validly made by stockholders, and reviews and considers developments
in corporate governance practices. The board of directors has adopted a written
charter for the Nominating and Corporate Governance Committee. A copy
of the Nominating and Corporate Governance Committee Charter is posted on our
corporate website at: www.caebuilding.com.
Board
Leadership Structure
The
Company does not have a policy regarding whether the Chairman and Chief
Executive Officer roles should be combined or separated. Rather, the Board
retains flexibility to choose its Chairman in any way that it deems best for the
Company at any given time. The Company does not currently have a combined
Chairman and CEO position. Jun Tang serves as our Chairman of the
Board and Wing Lun (Alan) Leung serves or Chief Executive
Officer. The Board periodically reviews the appropriateness and
effectiveness of its leadership structure given various factors.
A number
of factors support the current leadership structure. The Board believes that Jun
Tang’s in-depth knowledge of the Company’s online gaming industry and of the
businesses and operations of ConnGame best equips him to lead Board meetings and
focus the Board discussions on the most critical issues.
The
Board’s Role in Risk Oversight
Our
Company faces a variety of risks, including investment risk, liquidity risk, and
operational risk. It is management’s responsibility to manage the
day-to-day risks that we face and bring to the Board of Directors’ attention the
most material risks to the Company. The Board of Directors has
oversight responsibility of the processes established by management to report
and monitor systems for material risks applicable to the Company, with the
oversight of certain risk areas delegated to board committees. The
Board’s oversight role is supported by management reporting processes that are
designed to provide the Board visibility into the identification, assessment,
and management of critical risks.
The
Director Nomination Process
Our Board
of Directors considers nominees from all sources, including stockholders.
Stockholder nominees are evaluated by the same criteria used to evaluate
potential nominees from other sources. We are a “Controlled Company” pursuant to
NASDAQ Marketplace rules and are not required to maintain a board that consists
of a majority of independent directors. Minimally, nominees should have a
reputation for integrity, honesty and adherence to high ethical standards. They
should have demonstrated business experience and the ability to exercise sound
judgment in matters related to the current and long-term objectives of the
Company, and should be willing and able to contribute positively to the
decision-making process of the Company. In addition, they should not have, nor
appear to have, a conflict of interest that would impair the nominee’s ability
to represent the interests of the Company or to fulfill the responsibilities of
a director. The value of diversity on the Board should be considered and the
particular or unique needs of the Company shall be taken into account at the
time a nominee is being considered. Additionally, the Board of Directors
considers the respective qualifications needed for directors serving on various
committees of the board, and serving as chairs of such committees, should be
taken into consideration. In recruiting and evaluating nominees, the Board of
Directors considers the appropriate mix of skills and experience and background
needed for members of the board and for members of each of the board’s
committees, so that the board and each committee has the necessary resources to
perform its respective functions effectively. The Board of Directors also
believes that a prospective nominee should be willing to limit the number of
other corporate boards on which he or she serves so that the proposed director
is able to devote adequate time to his or her duties to the Company, including
preparing for and attending board and committee meetings. In addition, the
re-nomination of existing directors is not viewed as automatic, but based on
continuing qualification under the criteria set forth above. In addition, the
Board of Directors will consider the existing director’s performance on the
board and on any committee on which such director serves, which will include
attendance at board and committee meetings.
Director Nominees by
Stockholders
. The Board of Directors will consider nominees recommended
in good faith by our stockholders as long as these nominees for the appointment
to the Board of Directors meet the requirements set forth above. Possible
candidates who have been suggested by stockholders are evaluated by the Board of
Directors in the same manner as are other possible candidates.
Executive
Sessions
Non-management
directors meet in executive sessions without our management. Non-management
directors are those directors who are not also our executive officers and
include directors, if any, who are not independent by virtue of the existence of
a material relationship with our company. Executive sessions are led by our
Audit Committee Chairman. An executive session is typically held in conjunction
with each regularly scheduled Audit Committee meeting and other sessions may be
called by the Audit Committee Chairman in his own discretion or at the request
of the Board of Directors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Prior to
August 2009, we were considered a “controlled company” pursuant to Rule
4350(c)(5) of the NASDAQ Marketplace Rules, as one of our stockholders, KGE
Group Limited, owned more than 50% of our voting power. As a result, we
were exempt from certain corporate governance requirements as a listed company
on the NASDAQ Stock Market LLC, including the requirement that our executive
compensation be determined by a majority of our independent directors. We
formed our compensation committee in June 2009. Prior to the formation of
our compensation committee, our Chief Executive Officer and Chairman of the
Board, Luo Ken Yi, determined the compensation for our executive officers that
was earned and paid in fiscal 2009, 2008 and 2007 and our Board of Directors, as
a whole, approved the compensation.
The
compensation committee formed by our Board of Directors in June 2009 is
comprised of non-employee directors. The compensation committee will
perform, at least annually, a strategic review of the compensation program for
our executive officers to determine whether it provides adequate incentives and
motivation to our executive officers and whether it adequately compensates our
executive officers relative to comparable officers in other companies with which
we compete for executives. Those companies may or may not be public
companies or companies located in the PRC or even, in all cases, companies in a
similar business.
In 2010,
our compensation committee will determine compensation levels for our executive
officers. Compensation for our current executive officers is determined
with the goal of attracting and retaining high quality executive officers and
encouraging them to work as effectively as possible on our behalf. Key areas of
corporate performance taken into account in setting compensation policies and
decisions are growth of sales, cost control, profitability, and innovation. The
key factors may vary depending on which area of business on which a particular
executive officer’s work is focused. Compensation is designed to reward
executive officers for successfully meeting their individual functional
objectives and for their contributions to our overall development. For these
reasons, the elements of compensation of our executive officers are salary and
bonus. Salary is paid to cover an appropriate level of living expenses for the
executive officers and the bonus is paid to reward the executive officer for
individual and company achievement. Accordingly, the amount of salary received
by our executive officers has traditionally been lower than the amount of the
bonus.
With
respect to the amount of a bonus, the compensation committee evaluates our
company’s achievements for the fiscal year based on performance factors and
results of operations such as revenues generated, cost of revenues, net income,
and whether we obtain significant contracts. The compensation committee also
conducts a monthly and annual evaluation of the achievement level of an
executive based on individual performance measurements, such as contribution to
the achievement of the company’s goals and individual performance metrics based
on their positions and responsibilities. Bonuses are paid at the end of each
fiscal year.
We
believe that long-term performance is aided by the use of stock-based awards,
which we believe create an ownership culture among our named executive officers
that fosters beneficial, long-term performance by our company. On June 12,
2009, our stockholders approved the China Architectural Engineering, Inc. 2009
Omnibus Incentive Plan (the “Plan”), which was previously adopted by our Board
of Directors on April 30, 2009. The Plan, as amended by our Board of
Directors on June 19, 2009, has a total of 2,000,000 shares of common stock
available for grant under the Plan. We believe an equity incentive plan
provides our employees, including our named executive officers, as well as our
directors and consultants, with incentives to help align their interests with
the interests of stockholders. The Compensation Committee believes that the use
of stock-based awards promotes our overall executive compensation objectives and
expects that stock options will become a significant source of compensation for
our executives.
We do not
have a general equity grant policy with respect to the size and terms of option
grants, but our Compensation Committee will evaluate our achievements for the
fiscal year based on performance factors and results of operations such as
revenues generated, cost of revenues, and net income. We do not currently have
established quantitative targets.
On
January 18, 2010, we approved the issuance of a total of 1.9 million shares of
restricted stock (the “Restricted Stock Grants”) to certain of our officers,
directors, and key employees under the China Architectural Engineering, Inc.
2009 Omnibus Incentive Plan (the “Plan”), which was previously approved by our
stockholders at the 2009 Annual Meeting of Stockholders. As approved, the
Restricted Stock Grants were subject to and contingent upon the Company’s filing
of a registration statement on Form S-8 with the Securities and Exchange
Commission, which occurred on January 21, 2010. Included in the Restricted
Stock Grants were issuances to the executive officers and members of the Board
of Directors, as set forth below.
Name
|
|
Position
|
|
No. of Shares of Restricted
Stock
|
|
Luo
Ken Yi
|
|
Chief
Executive Officer and Chairman of the Board
|
|
|
160,000
|
|
Charles
John Anderson
|
|
President,
U.S. Operations and Chief Operating Officer
|
|
|
200,000
|
|
Tang
Nianzhong
|
|
Vice
President, China Operations and Director
|
|
|
152,000
|
|
Ye
Ning
|
|
Vice
President
|
|
|
150,000
|
|
Li
Guoxing
|
|
General
Manager of Design
|
|
|
151,000
|
|
Wang
Zairong
|
|
Chief
Technology Officer
|
|
|
10,000
|
|
Feng
Shu
|
|
Research
and Development Supervisor
|
|
|
9,000
|
|
Zheng
Jinfeng
|
|
Director
|
|
|
30,000
|
|
Zhao
Bao Jiang
|
|
Director
|
|
|
30,000
|
|
Kelly
Wang
|
|
Director
|
|
|
30,000
|
|
Miu
Cheung
|
|
Director
|
|
|
15,000
|
|
Chia
Yong Whatt
|
|
Director
|
|
|
6,000
|
|
As
granted, the Restricted Stock Grants were set to vest such that ¼ would vest on
March 31, 2010, ¼ would vest on June 30, 2010, ¼ would vest on September 30,
2010, and the remaining ¼ would vest on December 31, 2010, except for the
Restricted Stock Grant that was made to Charles John Anderson, which will vest
100% upon the date of grant. The vesting of the grants were subject to the
terms and conditions of the Restricted Stock Agreement entered into by and
between the recipients and us. In the first quarter of 2010, we opted to
accelerate vesting of the restricted stock awards so that they became fully
vested immediately. Since becoming a public company in the United States
in 2007, we had not regularly made equity compensation grants and began to make
sure grants in 2010, and the grant of the awards was to reward our officers,
directors, and employees for their contributions to our company’s establishment
as a public company and encourage continued support of our company. We
intend to use equity compensation in the future as a means to compensate our
officers, directors, and employees.
We
believe that the salaries, bonuses and equity compensation paid to our executive
officers during 2009, 2008, and 2007 are indicative of the objectives of our
compensation program and reflect the fair value of the services provided to our
company, as measured by the local market in China, Hong Kong, the United States
and those other areas where our executive officers may work. We determine market
rate by conducting a comparison with the local geographic area averages and
industry averages these countries. Raises for executive officers may be
based on the increased amount of responsibilities to be assumed by each of the
executive officers as we expand our operations and continue as a publicly
reporting company.
Executive
compensation for 2010 will follow the same evaluation methods as were used for
2009. We may adjust our bonus evaluations upwards, but, in such case, we do not
intend to increase it by more than five percent.
Summary
Compensation Table
The
following table sets forth information concerning the compensation for the three
fiscal years ended December 31, 2009, 2008, and 2007 of the principal executive
officer, principal financial officer, in addition to, as applicable, our three
most highly compensated officers whose annual compensation exceeded $100,000,
and up to two additional individuals for whom disclosure would have been
required but for the fact that the individual was not serving as our executive
officer at the end of the last fiscal year (collectively, the “Named Executive
Officers”).
Name and Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Options
Awards
($)(1)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wing
Lun (Alan) Leung (2)
|
|
2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luo
Ken Yi (3)
|
|
2009
|
|
|
187,887
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
187,887
|
|
President
|
|
2008
|
|
|
114,957
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114,957
|
|
|
|
2007
|
|
|
57,423
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qin
(Andy) Lu (4)
|
|
2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Acting
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gene
Michael Bennett (5)
|
|
2009
|
|
|
37,636
|
|
|
|
-
|
|
|
|
24,878
|
|
|
|
-
|
|
|
|
62,514
|
|
Former
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Li
Chengcheng (5)
|
|
2009
|
|
|
90,057
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,057
|
|
Former
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert
Jan Grisel (5)
|
|
2009
|
|
|
79,375
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
79,375
|
|
Former
Chief Financial Officer
|
|
2008
|
|
|
69,270
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,280
|
|
|
|
76,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
John Anderson (6)
|
|
2009
|
|
|
265,943
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,000
|
(6)
|
|
|
277,943
|
|
President
of CAE Building Systems, Inc.
|
|
2008
|
|
|
209,000
|
|
|
|
27,000
|
(7)
|
|
|
-
|
|
|
|
12,000
|
(6)
|
|
|
248,000
|
|
and
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ye
Ning
|
|
2009
|
|
|
138,866
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138,866
|
|
Vice
President
|
|
2008
|
|
|
100,032
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,032
|
|
|
|
2007
|
|
|
49,220
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tang
Nianzhong
|
|
2009
|
|
|
138,866
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138,866
|
|
Vice
President
|
|
2008
|
|
|
100,032
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,032
|
|
|
|
2007
|
|
|
49,220
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,220
|
|
|
(1)
|
The
amounts disclosed reflect the value of awards for grants of non-qualified
stock options. These non-qualified stock options are performance-based
compensation for purposes of Section 162(m) of the Internal Revenue Code
and reflect the full grant date fair values in accordance with FASB ASC
Topic 718.
|
|
(2)
|
Mr.
Wing Lun (Alan) Leung has served as the Chief Executive Officer of the
Company since September 2010.
|
|
(3)
|
Mr.
Luo Ken Yi has served as the Chief Executive Officer and Chairman of the
Board of the Directors from October 2006 to August
2010.
|
|
(4)
|
Mr.
Qin (Andy) Lu has served as the Acting Chief Financial Officer of the
Company since September 2010.
|
|
(5)
|
Mr.
Bennett has served as the Acting Chief Financial Officer of the Company
from November 2009 to September 2010. Mr. Bennett served as the
Company’s Vice President of Finance from September 2009 to November 2009.
Li Chengcheng served as our Chief Financial Officer from March 2009
to November 2009. Albert Jan Grisel served as our Chief Financial
Officer from October 2008 through March 2009. Mr. Grisel received an
aggregate transportation allowance of $Nil and $6,730 in 2009 and 2008,
respectively. In addition, we paid for club membership fees equal to $Nil
and $550 for the benefit of Mr. Grisel in 2009 and 2008, respectively. The
foregoing amounts are included in “All Other
Compensation.”
|
|
(6)
|
Mr.
Anderson became president of CAE Building Systems, Inc, a wholly-owned
subsidiary of the Company, in February 2008 and Chief Operating Officer of
the Company in June 2008. He received an aggregate automobile allowance of
$12,000 and $12,000 in 2009 and 2008, respectively. The foregoing amounts
are included in “All Other
Compensation.”
|
|
(7)
|
Represents
sales commission earned.
|
Grants
of Plan-Based Awards in 2009
The
following table summarizes our awards made to our named executive officers in
2009.
|
|
Grant
Date(1)
|
|
Number of
Shares of
Common
Stock
Underlying
Options
|
|
|
Exercise of
Base Price of
the Options
Award ($/Sh)
|
|
|
Grant date of
Fair Value of
Stock and
Options
Awarded ($)
|
|
Gene
Michael Bennett
|
|
October
5, 2009(1)
|
|
|
100,000
|
|
|
|
1.56
|
|
|
|
24,878
|
|
|
(1)
|
The
options were granted pursuant to an Employment Agreement entered into with
Mr. Bennett, our former Chief Financial
Officer.
|
Outstanding
Equity Awards at 2009 Fiscal Year End
The
following table presents the outstanding equity awards held by each of the Named
Executive Officers as of the fiscal year ended December 31, 2009.
|
|
Option Awards
|
Name
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
|
Number of
securities
underlying
unexercised options
(#) unexercisable
|
|
|
Equity incentive
plan awards:
Number of securities
underlying
unexercised
unearned options (#)
|
|
|
Option
exercise
price ($)
|
|
|
Option
expiration date
|
Gene
Michael Bennett
|
|
|
20,000
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
1.56
|
|
|
10/5/2012
|
(1)
|
Mr.
Bennett received options to purchase 100,000 shares of common stock on
October 5, 2009. The options vest at the rate of 10,000 per month
beginning on November 27,
2010.
|
Option
Exercises and Stock Vested in Fiscal 2009
There
were no option exercises or stock vested in 2009.
Pension
Benefits
There
were no pension benefit plans in effect in 2009.
Nonqualified
Defined Contribution and Other Nonqualified Deferred Compensation
Plans
There was
no nonqualified defined contribution or other nonqualified deferred compensation
plans in effect in 2009.
Employment
Agreements
We have
entered into PRC standard employment agreements with many of employees,
including the following persons and terms:
|
·
|
Luo
Ken Yi is paid $61,466 annually pursuant to a three-year agreement that
expires on December 31, 2012;
|
|
·
|
Tang
Nianzhong is paid $61,466 annually pursuant to an agreement with no expiry
term;
|
|
·
|
Ye
Ning is paid $61,466 annually pursuant to an agreement with no expiry
term;
|
|
·
|
Li
Guoxing is paid $52,685 annually pursuant to an agreement with no expiry
term;
|
|
·
|
Wang
Zairong is paid $14,049 annually pursuant to an agreement with no expiry
term; and
|
|
·
|
Feng
Shu is paid $13,347 annually pursuant to an agreement with no expiry
term.
|
Pursuant
to each of the foregoing person’s employment agreement with us, we also agreed
to pay for we may terminate the agreement if, among other things, the executive
neglects his or her duties, violates our rules and regulations, is convicted of
a criminal, or undergoes bankruptcy. In addition, none of the agreements provide
for severance upon termination.
Wing
Lun (Alan) Leung
In
connection with Mr. Leung’s appointment as Chief Executive Officer of the
Company, we entered into an employment agreement with Mr. Leung. The
employment agreement has an effective date of September 1,
2010. According to the employment agreement, Mr. Leung will receive
an annual base salary of US$150,000. Mr. Leung will also be entitled
to reimbursement of reasonable business expenses and two weeks of paid vacation
annually. The employment agreement expires on August 31, 2013, and is
subject to early termination by us and/or Mr. Leung with the required amount of
notice as set forth the employment agreement. In addition, Mr. Leung
will be subject to non-competition and client and employee non-solicitation
clauses during his employment with us and for certain periods of time after the
termination of employment.
Gene
Michael Bennett
On
October 5, 2009, we entered into an employment agreement (the “Bennett
Agreement”) with our former Acting Chief Financial Officer, Gene Michael
Bennett. The Bennett Agreement has an effective date of September 28,
2009. According to the Bennett Agreement, Mr. Bennett received an annual
base salary of US$180,000. Mr. Bennett was also entitled to reimbursement
of reasonable business expenses, two weeks of paid vacation annually, a housing
allowance equal to 10,000 RMB (which is equal to approximately US$1,470) per
month, and payment of certain dues to professional associations and societies,
as approved by the Company. Pursuant to the Bennett Agreement, Mr.
Bennett also received a sign-on bonus of stock options exercisable into 100,000
shares of common stock (the “Initial Options”), which vested at the rate of
10,000 of the underlying shares per month, with the first vesting of 10,000
shares occurring on November 27, 2009. Mr. Bennett entered into a Stock
Option Agreement on October 5, 2009 for the Initial Options, pursuant to which
the options are exercisable at $1.56 per share and have a term of five
years.
Effective
September 12, 2010, Mr. Bennett terminated the Bennett Agreement and ceased to
serve as our Chief Financial Officer. Since Mr. Bennett terminated
the Bennett Agreement as a result of a change of control of the Company, as
defined in the Bennett Agreement, he will be entitled to two months of Severance
Payments, conditioned upon the execution of a release and waiver agreement.
All of Bennett’s Initial Options vested and shall be exercisable for a
period of 90 days following his termination. During the term of the
Bennett Agreement and for 24 months thereafter, Mr. Bennett agreed not to
solicit clients or employees from us and not to compete against us in the Asia
Pacific.
Charles
John Anderson
We
entered into an employment agreement with Charles John Anderson on March 12,
2008. Mr. Anderson’s employment agreement has a term of five years and it will
automatically renew for successive one-year periods thereafter unless either
party provides 180-day prior written notice or unless terminated earlier in
accordance with agreement. During the term of the Anderson Agreement, either
party may terminate the agreement with 120-day prior written notice. According
to the Anderson Agreement, Mr. Anderson will receive an annual base salary of
$190,000, in addition to a commission that will be based on all cash received by
the Company on all sales of our goods or services made pursuant to contracts
originated primarily as the result of the efforts of Mr. Anderson during the
term of the agreement (“Employee Sales”). Mr. Anderson will receive a cash
payment equal to one-half percent (0.50%) of Employee Sales up to $20 million
per annum. Mr. Anderson’s commission rate is adjusted to one-quarter percent
(0.25 %) for Employee Sales in excess of $20 million per annum. Mr. Anderson
will receive his commission payments in three installments, as follows: (i) the
first payment will be 50% of the total commissions for a contract and will be
paid once we receive the first payment from the customer, provided that,
however, the first payment on each contract cannot exceed a total of US$100,000;
(ii) the second payment will be 80% of total commissions, on a cumulative basis,
of a such contract, including any amounts paid in the first payment, and will be
paid once we receive payment of at least 50% of the total payments due under the
contract; and (iii) the third and final payment will be for the remaining 20% of
the total commissions for the contract and will be paid once we receive the last
payment from the customer.
Mr.
Anderson will also receive each year a number of shares of our common stock that
is equal to (i) twice the amount of Mr. Anderson’s total commissions on US sales
for the year divided by (ii) the closing trading price of our common stock on
December 31 on such year; provide that, however, the US sales for purposes of
this calculation will be capped at $50 million. All shares received by Mr.
Anderson will be subject to a twelve-month lock up restriction. Mr. Anderson
will be eligible to receive an annual bonus at the sole discretion of the Chief
Executive Officer and Board of Directors.
Albert
Jan Grisel
On
January 12, 2009, we entered into an employment agreement with our Chief
Financial Officer, Albert Jan Grisel, effective as of October 16, 2008.
According to the agreement, Mr. Grisel, as the Chief Financial Officer of the
Company, would receive an initial annual base salary of HKD$1,852,500, which is
approximately US$239,000. The annual base salary would be reviewed every two
years after the effective date of the agreement. In addition, Mr. Grisel would
receive a cash bonus of US$37,500 for the year ended December 31, 2008 and
US$150,000 for the year ending December 31, 2009, payable within three months
after the relevant financial year. Mr. Grisel would also receive a one-time
payment of US$75,000 and a certain number of shares of the Company’s common
stock to be determined by the Company’s Compensation Committee or Board of
Directors. Mr. Grisel would also receive 50,000 shares of the Company’s common
stock and 50,000 options to purchase shares of the Company’s common stock on the
12th, 24th and 36th month of his continued service with the Company. The options
shall have a six-year term and an exercise price equal to the closing price of
the Company’s common stock on the NASDAQ stock market on the date of the grant
of the options. The share and option grants would be subject to anti-dilution
protection such that the number of shares that Mr. Grisel would receive would be
adjusted if additional shares of common stock are issued and outstanding as of
the date of grant. He would also receive medical and disability insurance from
the Company. Mr. Grisel will also receive a transportation allowance of
HK$15,000 payable monthly.
During
the term of the agreement and for six months thereafter, Mr. Grisel agreed not
to solicit clients or employees from the Company and not to compete against the
Company in Hong Kong. Either party may terminate the agreement for any reason
upon providing three months’ written notice to the other party or by the Company
by payment in lieu of notice. The Company may terminate the agreement
immediately without notice or payment in lieu of notice in accordance with
Section 9 of the Employment Ordinance of Hong Kong. The Company may terminate
the agreement upon seven days’ written notice in the event Mr. Grisel for a
limited number of permitted reasons, such as criminal convictions. If the
Company terminates the agreement other than in accordance with Section 9 of the
Employment Ordinance of Hong Kong or for one of the Permitted Reasons, Mr.
Grisel is entitled to six months’ salary, including a pro rata portion of the
share and option grants and cash bonus, in addition to any payment in lieu of
notice. Mr. Grisel resigned as CFO of our company on March 31, 2009 to become
the Vice President of KGE Group Ltd., the single largest shareholder of our
Company.
Li
Chengcheng
On March
30, 2009, we entered into an employment agreement with Mr. Li as our Chief
Financial Officer. The agreement had a probationary period of three months,
during which either party could terminate the agreement with no notice during
the first month and seven days’ notice thereafter. After Mr. Li’s successful
completion of the probationary period, either party could terminate the
agreement with two months’ notice. In the event of negligence, misconduct, and
other similar actions or events, we could terminate Mr. Li’s employment without
notice. According to the agreement, Mr. Li received an initial annual base
salary of $120,000, to be reviewed for adjustment after two years. Upon
successful completion of the probationary period, Mr. Li was entitled to a
$30,000 bonus. In addition, during the first two years of service under the
agreement, Mr. Li was entitled to a cash bonus of 6% of a bonus pool, which is
defined in the agreement as 0.3% of our total revenue plus 5% of the after-tax
profit, as shown in our consolidated accounts. Any such cash bonus was
conditional on Mr. Li being employed by us at the end of the relevant year. Any
bonus was to be paid within three months after the audit report was available
for financial years 2009 and 2010. Furthermore, after completing the first year
of employment under the agreement, Mr. Li was entitled to receive 50,000 shares
of our common stock; provided that, however, Mr. Li was still employed by us at
the end of the year. Mr. Li agreed not to compete with us, have business
dealings with, or solicit or interfere with the relationship of, our clients or
prospective clients during his employment or within six months after termination
of his employment, except where we wrongfully terminate Mr. Li’s employment.
Effective November 6, 2009, we terminated Mr. Li’s employment agreement and Mr.
Li ceased to serve as our Chief Financial Officer. We terminated the agreement
with payment in lieu of two months’ notice pursuant to the
agreement.
2009
Omnibus Incentive Plan
On June
12, 2009, our stockholders approved the China Architectural Engineering, Inc.
2009 Omnibus Incentive Plan (the “2009 Plan”). Our Board of Directors approved
the 2009 Plan subject to the stockholders’ approval on April 30, 2009. The
2009 Plan, as originally approved by the Board and stockholders, the 2009 Plan
reserved a total of 5.0 million shares authorized for issuance under the 2009
Plan. On June 17, 2009, the Board amended the plan to reduced the number
of shares authorized for issuance under the 2009 Plan to a total of 2.0 million
shares. Pursuant to the terms of the 2009 Plan and NASDAQ rules, no
stockholder approval of the amendment to the 2009 Plan was
required.
The Board
may at any time amend or terminate the 2009 Plan, provided that no such action
may be taken that adversely affects any rights or obligations with respect to
any awards theretofore made under the 2009 Plan without the consent of the
recipient. No awards may be made under the 2009 Plan after the tenth
anniversary of its effective date. Certain provisions of the Incentive
Plan relating to performance-based awards under Section 162(m) of the Code will
expire on the fifth anniversary of the effective date. Awards under the
Incentive Plan may include incentive stock options, nonqualified stock options,
stock appreciation rights (“SARs”), restricted shares of common stock,
restricted stock units, performance share or unit awards, other stock-based
awards and cash-based incentive awards.
The 2009
Plan is administered by the Company’s Board of Directors. The Board has
the authority to determine, within the limits of the express provisions of the
2009 Plan, the individuals to whom awards will be granted, the nature, amount
and terms of such awards and the objectives and conditions for earning such
awards. The Board generally has discretion to delegate its authority under
the 2009 Plan to a committee of the Board or a subcommittee, or to such other
party or parties, including officers of the Company, as the Board deems
appropriate. The Board may grant awards to any employee, director,
consultant or other person providing services to the Company or its affiliates.
The maximum awards that can be granted under the 2009 Plan to a single
participant in any calendar year is 1,500,000 shares of common stock (whether
through grants of Options or Stock Appreciation Rights or other awards of common
stock or rights with respect thereto) or $1 million in the form of cash-based
incentive awards.
The 2009
Plan replaces the China Architectural Engineering, Inc. 2007 Equity Incentive
Plan (“2007 EIP”), which has been frozen and under which no further grants or
awards will be made. The Board did not grant any awards pursuant to the
2007 EIP and there are no options, shares, or other securities outstanding under
the 2007 EIP.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table provides information as of December 31, 2009 regarding
compensation plans (including individual compensation arrangements) under which
our equity securities are authorized for issuance.
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options,
Warrants and Rights
|
|
|
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights
|
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in Column
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
100,000
|
(2)
|
|
$
|
$1.56
|
|
|
|
2,000,000
|
(1)
|
Equity
compensation plans not approved by security holders
|
|
|
50,000
|
|
|
$
|
3.50
|
|
|
|
—
|
|
Total
|
|
|
150,000
|
|
|
$
|
2.21
|
|
|
|
2,000,000
|
|
(1)
|
Represents
shares available for grant under our China Architectural Engineering, Inc.
2009 Omnibus Incentive Plan.
|
Director
Compensation
The
following table shows information regarding the compensation earned during the
fiscal year ended December 31, 2009 by our Board of Directors.
Name
|
|
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
($)
|
|
|
Total ($)
|
|
Zheng
Jinfeng (3)
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Zhao
Bao Jiang (3)
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Kelly
Wang
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
Miu
Cheung
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chia
Yong Whatt (1)
|
|
|
10,849
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,849
|
|
Ye
Ning (2)
|
|
|
11,945
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,945
|
|
(1)
|
Chia
Yong Whatt was appointed as a director on June 17,
2009.
|
(2)
|
Ye
Ning resigned as a director on August 6,
2009.
|
(3)
|
Zheng
Jinfeng and Zhao Bao Jiang resigned as directors on September 12,
2010.
|
We have a
policy to pay our non-employee directors $20,000 per year as cash consideration
for serving on the Board of Directors. We further agree to reimburse all
reasonable travel and other expenses incurred for attendance at a board or
committee meeting, and we agree to pay the fees and documented reimbursements
within a reasonable time and in accordance with our current payment practices.
Directors are also eligible to participate in our equity incentive
plans.
On
January 18, 2010, we approved the issuance of the following stock grants to our
directors, as set forth below.
Name
|
|
No. of Shares of Restricted Stock
|
|
Zheng
Jinfeng
|
|
|
30,000
|
|
Zhao
Bao Jiang
|
|
|
30,000
|
|
Kelly
Wang
|
|
|
30,000
|
|
Miu
Cheung
|
|
|
15,000
|
|
Chia
Yong Whatt
|
|
|
6,000
|
|
As
granted, the Restricted Stock Grants were set to vest such that ¼ would vest on
March 31, 2010, ¼ would vest on June 30, 2010, ¼ would vest on September 30,
2010, and the remaining ¼ would vest on December 31, 2010. The vesting of
the grants was subject to the terms and conditions of the Restricted Stock
Agreement entered into by and between the recipients and us. In the first
quarter of 2010, we opted to accelerate vesting of the restricted stock awards
so that they became fully vested immediately.
The Board
appointed Ping Xu, Shibin Jo, and Chen Huang to the Board of Directors on
September 12, 2010.
Indemnification
of Directors and Executive Officers and Limitations of Liability
We are
incorporated in the State of Delaware and are governed by Delaware law. Under
Section 145 of the General Corporation Law of the State of Delaware, we can
indemnify our directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). Our certificate of incorporation provides that, pursuant
to Delaware law, our directors shall not be liable for monetary damages for
breach of the directors’ fiduciary duty of care to us and our stockholders. This
provision in the certificate of incorporation does not eliminate the duty of
care, and in appropriate circumstances equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director’s duty of loyalty to us or our stockholders for acts or omissions
not in good faith or involving intentional misconduct or knowing violations of
the law, for actions leading to improper personal benefit to the director, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision also does not affect a director’s
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
Our
bylaws provide for the indemnification of our directors to the fullest extent
permitted by the Delaware General Corporation Law. Our bylaws further provide
that our Board of Directors has discretion to indemnify our officers and other
employees. We are required to advance, prior to the final disposition of any
proceeding, promptly on request, all expenses incurred by any director or
executive officer in connection with that proceeding on receipt of an
undertaking by or on behalf of that director or executive officer to repay those
amounts if it should be determined ultimately that he or she is not entitled to
be indemnified under the bylaws or otherwise. We are not, however, required to
advance any expenses in connection with any proceeding if a determination is
reasonably and promptly made by our Board of Directors by a majority vote of a
quorum of disinterested Board members that (i) the party seeking an advance
acted in bad faith or deliberately breached his or her duty to us or our
stockholders and (ii) as a result of such actions by the party seeking an
advance, it is more likely than not that it will ultimately be determined that
such party is not entitled to indemnification pursuant to the applicable
sections of our bylaws.
We have
been advised that in the opinion of the Securities and Exchange Commission,
insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In the
event a claim for indemnification against such liabilities (other than our
payment of expenses incurred or paid by our director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
We may
enter into indemnification agreements with each of our directors and officers
that are, in some cases, broader than the specific indemnification provisions
permitted by Delaware law, and that may provide additional procedural
protection. To date, we have not entered into any indemnification agreements
with our directors or officers, but may choose to do so in the future. Such
indemnification agreements may require us, among other things, to:
|
·
|
indemnify
officers and directors against certain liabilities that may arise because
of their status as officers or
directors;
|
|
·
|
advance
expenses, as incurred, to officers and directors in connection with a
legal proceeding, subject to limited exceptions;
or
|
|
·
|
obtain
directors’ and officers’ insurance.
|
At
present, there is no pending litigation or proceeding involving any of our
directors, officers or employees in which indemnification is sought, nor are we
aware of any threatened litigation that may result in claims for
indemnification.
COMPENSATION
COMMITTEE REPORT
The
members of the Compensation Committee of the Board of Directors, as set forth
below, have reviewed and discussed with management the Compensation Discussion
and Analysis, or CD&A, contained in this Proxy Statement on Schedule 14A
required by Item 402(b) of Regulation S−K. Based on this review and discussion,
the members of the Compensation Committee have recommended to the Board of
Directors that the CD&A be included in the Company’s Annual Report on Form
10-K and this Proxy Statement on Schedule 14A.
Respectfully
submitted,
|
|
Compensation
Committee
|
|
Chia
Yong Whatt
|
Shibin
Jo
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the securities. In computing the
number of shares beneficially owned by a person and the percentage of ownership
of that person, shares of common stock subject to options and warrants held by
that person that are currently exercisable or become exercisable within 60 days
of the Record Date are deemed outstanding even if they have not actually been
exercised. Those shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.
The
following table sets forth certain information with respect to beneficial
ownership of the Company’s common stock as of the Record Date, based on
80,156,874 issued and outstanding shares of common stock, by:
|
•
|
Each
person known to be the beneficial owner of 5% or more of the Company’s
outstanding common stock;
|
|
•
|
Each
named executive officer;
|
|
•
|
All
of the executive officers and directors as a
group.
|
The
number of shares of our common stock outstanding as of Record Date, excludes (i)
423,700 shares of our common stock issuable upon exercise of outstanding
warrants, (ii) 6,414,912 shares of our common stock issuable upon the conversion
of issued and outstanding bonds, subject to adjustment, and (iii) 100,000 shares
that are issuable upon the exercise of outstanding options. Unless
otherwise indicated, the persons and entities named in the table have sole
voting and sole investment power with respect to the shares set forth opposite
the stockholder’s name, subject to community property laws, where applicable.
Unless otherwise indicated, the address of each stockholder listed in the table
is c/o China Architectural Engineering, Inc., 105 Baishi Road, Jiuzhou West
Avenue, Zhuhai, 519070, People’s Republic of China.
Name and Address
of Beneficial Owner
|
|
Title
|
|
Shares of Common Stock
Beneficially Owned
|
|
|
Percent of Class
Beneficially
Owned
|
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
Jun
Tang
|
|
Chairman
of the Board
|
|
|
25,000,000
|
(1)
|
|
|
31.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Wing
Lun (Alan) Leung
|
|
Chief
Executive Officer
|
|
|
25,000,000
|
(1)
|
|
|
31.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Luo
Ken Yi
|
|
President
and Director
|
|
|
17,603,854
|
(2)
|
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Qin
(Andy) Lu
|
|
Acting
Chief Financial Officer and Corporate Secretary
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles
John Anderson
|
|
President,
U.S. Operations and Chief Operating Officer
|
|
|
180,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Kelly
Wang
|
|
Director
|
|
|
30,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Miu
Cheung
|
|
Director
|
|
|
15,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Chia
Yong Whatt
|
|
Director
|
|
|
6,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Chen
Huang
|
|
Director
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Shibin
Jo
|
|
Director
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Ping
Xu
|
|
Director
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (total of 11 persons)
|
|
|
|
|
42,834,854
|
|
|
|
53.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
5%
Owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Jet Investments Limited
|
|
|
|
|
25,000,000
|
(1)
|
|
|
31.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
KGE
Group Limited
|
|
|
|
|
17,603,854
|
(2)
|
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
ABN
AMRO Bank, N.V.
|
|
|
|
|
4,558,908
|
(3)
|
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Li
Qin Fu
|
|
|
|
|
5,000,000
|
(4)
|
|
|
6.2
|
%
|
|
(1)
|
Includes
25,000,000 shares of common stock in our company held by First Jet
Investment Limited, a company organized under the laws of the British
Virgin Islands. Gaotime Corporation Limited owns 100% of the
issued and outstanding shares of First Jet Investment
Limited. Jun Tang and Wing Lun (Alan) Leung own approximately
72% and 11% respectively, of Gaotime Corporation Limited’s issued and
outstanding capital stock. As a result, Jun Tang and Wing Lun (Alan) Leung
may be deemed to be a beneficial owner of the shares held by First Jet
Investment Limited. Each of the foregoing persons disclaims beneficial
ownership of the shares held by First Jet Investment Limited except to the
extent of his pecuniary interest.
|
|
(2)
|
Includes
17,603,854 shares of common stock in our company held by KGE Group
Limited, a Hong Kong corporation, of which Luo Ken Yi, Ye Ning and Tang
Nianzhong are directors and may be deemed to have voting and investment
control over the shares owned by KGE Group Limited. In addition, Luo Ken
Yi, Ye Ning and Tang Nianzhong own approximately 70%, 10% and 10%
respectively, of KGE Group Limited’s issued and outstanding shares. In
addition, KGE Holding Limited owns approximately 5% of the issued and
outstanding shares of KGE Group Limited, of which is owned by Luo Ken Yi
and his brother. As a result, Luo Ken Yi, Ye Ning and Tang Nianzhong may
be deemed to be a beneficial owner of the shares held by KGE Group
Limited. Each of the foregoing persons disclaims beneficial ownership of
the shares held by KGE Group Limited except to the extent of his pecuniary
interest.
|
|
(3)
|
Includes
(i) 1,181,102 shares of common stock may be acquired upon conversion of
the Company’s 12% Convertible Bonds Due 2011, which are
currently convertible at a conversion price of $6.35 per share, subject to
adjustment upon certain events, and (ii) 112,500 shares of common stock
that may be acquired upon exercise of the warrants issued in connection
with the 2008 Bonds. Also includes 3,265,306 shares of common stock may be
acquired upon conversion of the $8 million of the Company’s Variable Rate
Convertible Bonds due in 2012 based on a conversion price of $2.45 per
share. The address of the stockholder is 250 Bishopsgate, London
EC2M 4AA, United Kingdom.
|
|
(4)
|
Consists
of 5,000,000 shares that Resort Property International Limited purchased
from KGE Group, Ltd. in a private transaction that closed on August 6,
2009. The shares were purchased by Nine Dragon (Hong Kong) Co. Ltd.,
an entity controlled by Li Qin Fu, who also has voting and investment
control over the securities owned by Resort Property International
Limited. The address of the stockholder is Room 2601, No 3 Lane, 288
Huaihai West Road, Shanghai PR China,
200031.
|
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
requires our directors and executive officers to file reports of holdings and
transactions in our stock with the SEC. Based on a review of written
representations from our executive officers and directors, we believe that
during the fiscal year ended December 31, 2009, our directors, officers and
owners of more than 10% of our common stock complied with all applicable filing
requirements.
REPORT
OF THE AUDIT COMMITTEE
The Audit
Committee consists of three non-employee directors who are independent under the
standards adopted by the Board of Directors and applicable Nasdaq Stock Market
Rules and SEC standards. The Audit Committee represents and assists the Board of
Directors in fulfilling its responsibility for oversight and evaluation of the
quality and integrity of CAE’s financial statements, CAE’s compliance with legal
and regulatory requirements, the qualifications and independence of CAE’s
registered public accounting firm, Samuel H. Wong & Co., LLP, and the
performance of CAE’s internal controls and of Samuel H. Wong & Co.,
LLP.
The Audit
Committee has reviewed and discussed with CAE s management, internal finance
staff, internal auditors and Samuel H. Wong & Co., LLP, with and without
management present, CAE’s audited financial statements for the fiscal year ended
December 31, 2009 and management’s assessment of the effectiveness of CAE’s
internal controls over financial reporting. The Audit Committee has also
discussed with Samuel H. Wong & Co., LLP the results of the independent
auditors’ examinations and the judgments of Samuel H. Wong & Co., LLP
concerning the quality, as well as the acceptability, of CAE’s accounting
principles and such other matters that CAE is required to discuss with the
independent auditors under applicable rules, regulations or generally accepted
auditing standards (including Statement on Auditing Standards No. 61). In
addition, the Audit Committee has received from Samuel H. Wong & Co., LLP
the written disclosures required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent auditors’
communications with the Audit Committee concerning independence and has
discussed with Samuel H. Wong & Co., LLP their independence from CAE and
management, including a consideration of the compatibility of non-audit services
with their independence, the scope of the audit and the fees paid to Samuel H.
Wong & Co., LLP during the year.
Based on
our review and the discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2008 for filing with the SEC.
Respectfully
submitted,
|
|
Kelly
Wang
|
Chen
Huang
|
Ping
Xu
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
CITIC
Capital Finance Limited
On April
15, 2008, we completed a financing transaction with ABN AMRO Bank N.V., London
Branch (“ABN AMRO”), CITIC Allco Investments Limited (together with ABN AMRO,
the “Subscribers,” and each a “Subscriber”), and CITIC Capital Finance Limited
issuing (i) $20,000,000 12% Convertible Bonds due in 2011 and (ii) 300,000
warrants to purchase an aggregate of 300,000 shares of our common stock, subject
to certain adjustments as set forth in the warrant instrument, that expire in
2013. The transaction was completed in accordance with a subscription agreement
entered into by us, the Subscribers, and CITIC Capital Finance Limited, dated
April 2, 2008 (the “Subscription Agreement”). Pursuant to the terms of the
Subscription Agreement, we were required as a condition to the closing to
appoint a director designated by CITIC Capital Finance Limited to our Board of
Directors. The closing condition was waived by the parties to the financing
transaction and we agreed to appoint such a director within three months from
closing. On June 10, 2008, our Board of Directors appointed Miu Cheung to serve
as a director of the Company pursuant to the Subscription
Agreement. Mr. Cheung continues to serve on the Board of Directors of
our Company.
Loans
to and from Insiders
We have
taken interest-free loans from our major stockholder, KGE Group Limited.
On June 17, 2009, we entered into an interest-free loan agreement with KGE
Group Ltd. pursuant to which we may borrow up to $2.8 million from KGE Group
Ltd. Pursuant to the terms of the agreement, the loan will be
interest-free and fee-free and not become due earlier than two years from the
date of the loan. The loan was approved by the Board of Directors of the
Company. We have taken additional loans from KGE Group Ltd. The
amount due to KGE Group at December 31, 2009, 2008 and 2007 was $10,080,345,
$924,687 and $1,334,856, respectively. All of the loans are interest-free,
fee-free and have no fixed repayment schedule.
The loan
and the advances are related party transactions because KGE Group Ltd. is a Hong
Kong company that is the majority stockholder of the Company. In
addition, Luo Ken Yi, Ye Ning and Tang Nianzhong own approximately 70%, 10% and
10% respectively, of KGE Group Limited’s issued and outstanding shares and each
of the foregoing are directors of KGE Group Ltd. Luo Ken Yi is the
Company’s Chief Executive Officer and Chairman of the Board, Ye Ning is a Vice
President of the Company, and Tang Nianzhong is the Company’s Vice President of
China Operations and a Director. In addition, KGE Holding Limited owns
approximately 5% of the issued and outstanding shares of KGE Group Limited, of
which is owned by Luo Ken Yi and his brother.
The
transactions with related parties during the periods were carried out in the
ordinary course of business and on normal commercial terms.
Guangdong
Canbo Electrical Co., Ltd.
During
the year ended December 31, 2009, the Company purchased construction materials
amounting to $22.9 million from Guangdong Canbo Electrical Co., Ltd. (Canbo) via
its parent company, Kangbao Electrical Company Limited (Kangbao), a subsidiary
of the Company’s major stockholder, KGE Group Limited. Canbo is a preferred
supplier of the Company as it is able to procure materials at favorable price
levels due to its purchased quantities. More important, application of certain
of the Company’s patented technology is preferably routed through Canbo to
prevent undesired distribution of this technology. The Company at times provides
purchases advance payment to Kangbao in order to obtain a more favorable
pricing. As of December 31, 2009, the Company’s purchases advance to Canbo was
$5.9 million for the purpose of future supplies of materials. The Company has
also obtained trade facilities for purchases through Canbo.
Acquisition
of ConnGame from FirstJet
On August
18, 2010, pursuant to a stock purchase agreement that was entered into on August
11, 2010 by and among us, First Jet Investments Limited, New Crown Technology
Limited, which is First Jet’s wholly-owned subsidiary, and Mr. Jun Tang, the
principal of First Jet and New Crown, we completed our acquisition of 60% of the
issued and outstanding shares of New Crown, which is the holder of 100% of the
equity interests of Shanghai ConnGame Network Ltd. (“ConnGame”). In
exchange for the 60% equity interest of New Crown, we issued 25,000,000 shares
of our common stock, $0.001 par value per share, to First
Jet. ConnGame is a developer and publisher of MMORPG (Massively
Multiplayer Online Role Playing Game). As a result of the
transaction, First Jet became the Company’s largest shareholder. In
accordance with the stock purchase agreement, we appointed Mr. Jun Tang as
Chairman of our Board of Directors. Subsequent to the transaction,
100% of the ownership of FirstJet was transferred to Gaotime Corporation
Limited, of which Mr. Jun Tang is the 72% owner. Our CEO, Wing Lun
(Alan) Leung owns approximately 11% of Gaotime Corporation Limited.
Policy
for Approval of Related Party Transactions
Our
policy is to have our Audit Committee review and pre-approve any related party
transactions and other matters pertaining to the integrity of management,
including potential conflicts of interest, or adherence to standards of business
conduct as required by our policies.
NOMINATIONS
AND STOCKHOLDER PROPOSALS FOR 2010 ANNUAL MEETING
Proposals
to be Included in Proxy Statement
Stockholders
are hereby notified that if they wish a proposal to be included in our proxy
statement and form of proxy relating to the 2011 annual meeting of stockholders,
they must deliver a written copy of their proposal no later than July [__],
2011. If the date of next year’s annual meeting is changed by more than 30 days
from the date of this year’s meeting, then the deadline is a reasonable time
before we begin to print and mail proxy materials. Proposals must comply with
the proxy rules relating to stockholder proposals, in particular Rule 14a-8
under the Securities Exchange Act of 1934, in order to be included in our proxy
materials.
PERFORMANCE
GRAPH
The
following graph compares the cumulative total stockholder return data for the
Company’s common stock since September 28, 2007, the date of the Company’s
initial listing on a national securities exchange, to the cumulative return over
such period of The Nasdaq Stock Market Composite Index and the Russell 2000
Index. The Company does not use a published industry or line-of-business basis,
and does not believe it could reasonably identify a different peer group. The
graph assumes that $100 was invested on the date on which the Company completed
in connection with it initial listing in September 2007 and in each of the
comparative indices on the same date. The graph further assumes that such amount
was initially invested in the Common Stock of the Company at the price to which
such stock was first offered to the public by the Company on the date of its
public offering of $3.50 per share. The stock price performance on the following
graph is not necessarily indicative of future stock price
performance.
COMPARISON
OF CUMULATIVE TOTAL RETURN
AMONG
CHINA ARCHITECTURAL ENGINEERING, INC.,
THE
NASDAQ STOCK MARKET (U.S.) INDEX
AND THE
RUSSELL 2000 INDEX
|
|
9/28/2007
|
|
|
12/31/2007
|
|
|
3/31/2008
|
|
|
6/30/2008
|
|
|
9/30/2008
|
|
|
12/31/2008
|
|
|
3/31/2009
|
|
|
6/30/2009
|
|
|
9/30/2009
|
|
|
12/31/2009
|
|
China
Architectural Engineering, Inc.
|
|
$
|
100
|
|
|
$
|
247.14
|
|
|
$
|
155.71
|
|
|
$
|
279.14
|
|
|
$
|
202.57
|
|
|
$
|
70.29
|
|
|
$
|
28.00
|
|
|
$
|
55.71
|
|
|
$
|
47.71
|
|
|
$
|
30.00
|
|
Nasdaq
Stock Market (U.S.)
|
|
$
|
100
|
|
|
$
|
98.18
|
|
|
$
|
84.36
|
|
|
$
|
84.88
|
|
|
$
|
77.43
|
|
|
$
|
58.38
|
|
|
$
|
56.58
|
|
|
$
|
67.93
|
|
|
$
|
78.56
|
|
|
$
|
84.00
|
|
Russell
2000 Index
|
|
$
|
100
|
|
|
$
|
95.11
|
|
|
$
|
85.41
|
|
|
$
|
85.62
|
|
|
$
|
84.37
|
|
|
$
|
62.01
|
|
|
$
|
52.49
|
|
|
$
|
63.11
|
|
|
$
|
75.02
|
|
|
$
|
77.64
|
|
Proposals
to be submitted for the Annual Meeting
A
stockholder may wish to have a proposal presented at the 2011 annual meeting,
but not to have such proposal included in the Company’s proxy statement and form
of proxy relating to that meeting. If notice of any such proposal is
not received by the Company at its principal executive offices on or before
October [_], 2011 (45 calendar days prior to the anniversary of the mailing date
of this proxy statement), then such proposal shall be deemed “untimely” for
purposes of Securities and Exchange Commission Rule
14a-4(c). Therefore, the persons named in the enclosed proxy card
will be allowed to use their discretionary voting authority to vote on the
stockholder proposal when and if the proposal is raised at the 2011 Annual
Meeting of Stockholders.
If the
date of our 2011 annual meeting has been changed by more than 30 days from the
date of our 2010 annual meeting, stockholders’ written notices must be received
by us a reasonable time before we begin to print and mail proxy materials for
our 2011 annual meeting.
Mailing
Instructions
In either
case, proposals should be delivered to China Architectural Engineering, Inc.,
105 Baishi Road, Jiuzhou West Avenue, Zhuhai, 519070, People’s Republic of
China, Attention: Corporate Secretary. To avoid controversy and establish timely
receipt by the Company, it is suggested that stockholders send their proposals
by certified mail, return receipt requested.
STOCKHOLDER
COMMUNICATION WITH THE BOARD OF DIRECTORS
Stockholders
who wish to contact any of our directors either individually or as a group may
do so by writing them c/o Corporate Secretary, China Architectural Engineering,
Inc., 105 Baishi Road, Jiuzhou West Avenue, Zhuhai, 519070, People’s Republic of
China, by telephone at 0086-756-8538908 specifying whether the communication is
directed to the entire board or to a particular director. Stockholder letters
are screened by Company personnel to filter out improper or irrelevant topics,
such as solicitations, and to confirm that that such communications relate to
matters that are within the scope of responsibilities of the board or a
Committee.
OTHER
BUSINESS
The Board
of Directors does not know of any other matter to be acted upon at the Annual
Meeting. However, if any other matter shall properly come before the Annual
Meeting, the proxyholders named in the proxy accompanying this Proxy Statement
will have authority to vote all proxies in accordance with their
discretion.
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
Chairman
of the Board of Directors
|
Dated:
October [__], 2010
Zhuhai,
China
Appendix
A
–
|
Form
of Certificate of Amendment to Certificate of Incorporation of China
Architectural Engineering, Inc.
|
Appendix
B
–
|
Form
of Amendment No. 2 to China Architectural Engineering, Inc.
2009 Omnibus Incentive Plan (with full Plan, as
amended)
|
APPENDIX
A
CERTIFICATE
OF AMENDMENT
TO
CERTIFICATE
OF INCORPORATION
OF
CHINA
ARCHITECTURAL ENGINEERING, INC.
a
Delaware corporation
CHINA ARCHITECTURAL ENIGNEERING, INC.,
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the “
Corporation
”),
DOES
HEREBY CERTIFY:
FIRST: Article 4 of the Corporation’s
Certificate of Incorporation is amended by deleting the existing Article 4 in
its entirety and substituting therefore a new Article 4 to read in its entirety
as follows:
Section 1. Number
of Authorized Shares. The total number of shares of stock which the
Corporation shall have the authority to issue shall be One Hundred Ten Million
(110,000,000) shares. The Corporation shall be authorized to issue
two classes of shares of stock, designated, “Common Stock” and “Preferred
Stock.” The Corporation shall be authorized to issue One Hundred
Million (100,000,000) shares of Common Stock, each share to have a par value of
$.001 per share, and Ten Million (10,000,000) shares of Preferred Stock, each
share to have a par value of $.001 per share.
Section 2. Common
Stock. The Board of Directors of the Corporation may authorize the
issuance of shares of Common Stock from time to time. The Corporation
may reissue shares of Common Stock that are redeemed, purchased, or otherwise
acquired by the Corporation unless otherwise provided by law.
Upon the
filing and effectiveness (the “
Effective Time
”) of
this Certificate of Amendment with the Delaware Secretary of State, every
[____(__)] outstanding shares of Common Stock shall without further action by
this Corporation or the holder thereof be combined into and automatically become
one (1) share of Common Stock (the “
Reverse Stock
Split
”). The number of authorized shares of Common Stock of
the Corporation and the par value of the Common Stock shall remain as set forth
in this Certificate of Incorporation, as amended. No fractional share
shall be issued in connection with the foregoing combination; all shares of
Common Stock that are held by a stockholder will be aggregated for purposes of
such combination and each stockholder shall be entitled to receive the number of
whole shares resulting from the combination of the shares so aggregated. Any
fractions resulting from the Reverse Stock Split computation shall be rounded up
to the next whole share.
Section 3. Preferred
Stock. The Board of Directors of the Corporation may by resolution
authorize the issuance of shares of Preferred Stock from time to time in one or
more series. The Corporation may reissue shares of Preferred Stock
that are redeemed, purchased, or otherwise acquired by the Corporation unless
otherwise provided by law. The Board of Directors is hereby
authorized to fix or alter the designations, powers and preferences, and
relative, participating, optional or other rights, if any, and qualifications,
limitations or restrictions thereof, including, without limitation, dividend
rights (and whether dividends are cumulative), conversion rights, if any, voting
rights (including the number of votes, if any, per share, as well as the number
of members, if any, of the Board of Directors or the percentage of members, if
any, of the Board of Directors each class or series of Preferred Stock may be
entitled to elect), rights and terms of redemption (including sinking fund
provisions, if any), redemption price and liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, and to increase or decrease the number
of shares of any such series subsequent to the issuance of shares of such
series, but not below the number of shares of’ such series then
outstanding.
Section 4. Dividends
and Distributions. Subject to the preferences applicable to Preferred
Stock outstanding at any time, the holders of shares of Common Stock shall be
entitled to receive such dividends, payable in cash or otherwise, as may be
declared thereon by the Board of Directors from time to time out of assets or
funds of the Corporation legally available therefore.
Section 5. Voting
Rights. Each share of Common Stock shall entitle the holder thereof
to one vote on all matters submitted to a vote of the stockholders of the
Corporation.
SECOND: The
amendment set forth has been duly approved by the Board of Directors of the
Corporation and by the Stockholders entitled to vote thereon.
THIRD: That
said amendment was duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN
WITNESS WHEREOF, I, the undersigned, being the Chief Executive Officer of the
Corporation, for the purpose of amending the Certificate of Incorporation of the
Corporation pursuant to Section 242 of the Delaware General Corporation Law, do
make and file this Certificate of Amendment, hereby declaring and certifying
that the facts herein stated are true and accordingly have hereunto set my hand,
as of this __
TH
day of
____________, 2010.
By
:
|
|
|
Name:
Wing Lun Alan Leung
|
|
Title:
Chief Executive Officer
|
|
ANNUAL
MEETING OF STOCKHOLDERS OF
CHINA
ARCHITECTURAL ENGINEERING, INC.
December
7, 2010
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
¨
Please detach along perforated line
and mail in the envelope provided.
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THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN PROPOSAL NO. 1 AND “FOR”
EACH OF PROPOSAL NOS. 2, 3, AND 4. PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE.
¨
1.
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Election
of Directors
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FOR
ALL THE
NOMINEES
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WITHHOLD
AUTHORITY
FOR
ALL
NOMINEES
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FOR
ALL EXCEPT
(See
instructions below)
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Jun
Tang
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Wing
Lun (Alan) Leung
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Ping
Xu
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Shibin
Jo
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Chen
Huang
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Kelly
Wang
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Miu
Cheung
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Chia
Yong Whatt
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Luo
Ken Yi
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT” and strike a line through the nominee’s name in the list
below
NOMINEE:
Jun
Tang Wing Lun (Alan) Leung Ping
Xu Shibin Jo Chen
Huang Kelly Wang Miu
Cheung Chia Yong Whatt Luo Ken Yi
2.
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Ratify
the selection of Samuel H. Wong & Co., LLP. as the Company’s
independent registered public accounting firm for the year ending
December 31, 2010.
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FOR
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AGAINST
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ABSTAIN
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3.
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Approve
an amendment to the Company’s certificate of incorporation (i) to effect a
reverse stock split of our common stock at an exchange ratio of not less
than 1-for-2 and no more than 1-for-4 (the implementation of the reverse
stock split, ratio and timing of which will be subject to the discretion
of the Board of Directors), and (ii) following the reverse stock split, if
implemented, to reduce the number of authorized shares of common stock
from 150,000,000 to 100,000,000 (the implementation of the decrease in
authorized shares will be subject to the discretion of the Board of
Directors).
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FOR
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AGAINST
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ABSTAIN
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4.
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Approve
an amendment to the China Architectural Engineering, Inc. 2009 Omnibus
Equity Incentive Plan to increase the maximum number of shares of our
common stock that may be issued under the plan from 2,000,000 to 4,000,000
shares (pre-Reverse Stock Split).
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FOR
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AGAINST
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ABSTAIN
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Each of
the persons named as proxies herein are authorized, in such person’s
discretion, to vote upon such other matters as may properly come before the
Annual Meeting, or any adjournments thereof.
To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Please
check here if you plan to attend the meeting.
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Signature
of
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Date:
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Signature
of
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Date:
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Stockholder:
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Stockholder:
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Note:
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Please
sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
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CHINA ARCHITECTURAL ENGINEERING,
INC.
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PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
DECEMBER 7, 2010
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned stockholder(s) of China Architectural Engineering, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement dated October [__], 2010, and hereby
appoints Jun Tang, our Chairman of the Board, and Wing Lun (Alan) Leung, our
Chief Executive Officer, or either of them acting singly in the absence of the
other, with full power of substitution, as attorneys-in-fact and proxies for,
and in the name and place of, the undersigned, and hereby authorizes each of
them to represent and to vote all of the shares which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of China Architectural
Engineering, Inc to be held on December 7, 2010, at 10:00 am Local Time in
Shanghai, China, and at any adjournments thereof, upon the matters as set forth
in the Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of
which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED
AND RETURNED IN A TIMELY MANNER, WILL BE VOTED AT THE ANNUAL MEETING AND AT ANY
ADJOURNMENTS THEREOF IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR
APPROVAL OF THE PROPOSAL AS DESCRIBED IN THE PROXY, AND IN ACCORDANCE WITH THE
JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED
ENVELOPE.
(continued,
and to be signed and dated, on reverse side)
APPENDIX
B
[FORM
OF]
AMENDMENT
NO. 2
TO
CHINA
ARCHITECTURAL ENGINEERING, INC.
2009
OMNIBUS INCENTIVE PLAN
The
following constitutes Amendment No. 2 to the 2009 Omnibus Incentive Plan (the
“Plan”) of China Architectural Engineering, Inc. (the
“Company”). This amendment increases the total number of authorized
shares of Common Stock reserved and available for issuance under the Plan from
2,000,000 shares by 2,000,000 shares so that the Plan authorizes a total of
4,000,000 shares.
Pursuant
to the resolutions of the board of directors dated October 21, 2010, subject to
approval from the stockholders of the Company, Article IV Section 4.01 of the
Plan shall be deleted in its entirety and replaced with the
following:
“4.01
Number of Shares Issuable. The total number of shares initially
authorized to be issued under the Plan shall be 4,000,000 shares of Common
Stock. The foregoing share limit shall be subject to adjustment in
accordance with Section 11.07. The shares to be offered under the
Plan shall be authorized and unissued Common Stock, or issued Common Stock that
shall have been reacquired by the Company.”
IN
WITNESS WHEREOF, pursuant to the due authorization and adoption of this
amendment to the Plan by the board of directors and stockholders on the day and
year set forth below, the Company has caused this amendment to the Plan to be
duly executed by its duly authorized officer.
Dated: December
__, 2010
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CHINA
ARCHITECTURAL ENGINEERING, INC.,
a
Delaware corporation
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By:
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Name:
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Title:
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CHINA
ARCHITECTURAL ENGINEERING, INC.
2009
OMNIBUS INCENTIVE PLAN
ARTICLE
I
PURPOSE
AND ADOPTION OF THE PLAN
1.01. Purpose. The
purpose of the China Architectural Engineering, Inc. 2009 Omnibus Incentive Plan
(as amended from time to time, the "Plan") is to assist in attracting and
retaining highly competent employees, directors and consultants to act as an
incentive in motivating selected employees, directors and consultants of the
Company
and its
Subsidiaries to achieve long-term corporate objectives and to enable stock-based
and cash-based incentive awards to qualify as performance-based compensation for
purposes of the tax deduction limitations under Section 162(m) of the
Code.
1.02. Adoption
and Term. The Plan has been approved by the Board to be effective as
of April 30,
2009,
and approved by the stockholders of the Company on June 12, 2009. The
Plan shall remain in effect until the tenth anniversary of the Effective Date,
or until terminated by action of the Board, whichever occurs
sooner.
ARTICLE
II
DEFINITIONS
For the
purpose of this Plan, capitalized terms shall have the following
meanings:
2.01. Affiliate
means an entity in which, directly or indirectly through one or more
intermediaries, the Company has at least a fifty percent (50%) ownership
interest or, where permissible under Section 409A of the Code, at least a twenty
percent (20%) ownership interest;
provided
,
however
, for
purposes of any grant of an Incentive Stock Option, “Affiliate” means a
corporation which, for purposes of Section 424 of the Code, is a parent or
subsidiary of the Company, directly or indirectly.
2.02. Award
means any one or a combination of Non-Qualified Stock Options or Incentive Stock
Options described in Article VI, Stock Appreciation Rights described in Article
VI, Restricted Shares and Restricted Stock Units described in Article VII,
Performance Awards described in Article VIII, other stock-based Awards described
in Article IX, short-term cash incentive Awards described in Article X or any
other Award made under the terms of the Plan.
2.03. Award
Agreement means a written agreement between the Company and a Participant or a
written acknowledgment from the Company to a Participant specifically setting
forth the terms and conditions of an Award granted under the Plan.
2.04. Award
Period means, with respect to an Award, the period of time, if any, set forth in
the Award Agreement during which specified target performance goals must be
achieved or other conditions set forth in the Award Agreement must be
satisfied.
2.05. Beneficiary
means an individual, trust or estate who or which, by a written designation of
the Participant filed with the Company, or if no such written designation is
filed, by operation of law, succeeds to the rights and obligations of the
Participant under the Plan and the Award Agreement upon the Participant's
death.
2.06. Board
means the Board of Directors of the Company.
2.07. Change
in Control means, and shall be deemed to have occurred upon the occurrence of,
any one of the following events:
(a)
The acquisition in one or more transactions, other than
from the Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the Company, an
Affiliate or any employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of a number of Company
Voting Securities in excess of 25% of the Company Voting Securities unless such
acquisition has been approved by the Board;
(b)
Any election has occurred of persons to the Board that
causes two-thirds of the Board to consist of persons other than (i) persons who
were members of the Board on the effective date of the Plan and (ii) persons who
were nominated for elections as members of the Board at a time when two-thirds
of the Board consisted of persons who were members of the Board on the effective
date of the Plan, provided, however, that any person nominated for election by a
Board at least two-thirds of whom constituted persons described in clauses (i)
and/or (ii) or by persons who were themselves nominated by such Board shall, for
this purpose, be deemed to have been nominated by a Board composed of persons
described in clause (i);
(c)
The consummation (
i.e.
closing) of a
reorganization, merger or consolidation involving the Company, unless, following
such reorganization, merger or consolidation, all or substantially all of the
individuals and entities who were the respective beneficial owners of the
Outstanding Common Stock and Company Voting Securities immediately prior to such
reorganization, merger or consolidation, following such reorganization, merger
or consolidation beneficially own, directly or indirectly, more than 75% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, as the case may be;
(d)
The consummation (
i.e.
closing) of a sale or
other disposition of all or substantially all the assets of the Company, unless,
following such sale or disposition, all or substantially all of the individuals
and entities who were the respective beneficial owners of the Outstanding Common
Stock and Company Voting Securities immediately prior to such sale or
disposition, following such sale or disposition beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors or trustees,
as the case may be, of the entity purchasing such assets in substantially the
same proportion as their ownership of the Outstanding Common Stock and Company
Voting Securities immediately prior to such sale or disposition, as the case may
be; or
(e)
a complete liquidation or dissolution of the
Company.
2.08. Code
means the Internal Revenue Code of 1986, as amended. References to a section of
the Code shall include that section and any comparable section or sections of
any future legislation that amends, supplements or supersedes said
section.
2.09. Committee
means the Compensation Committee of the Board. In the event the
Company does not have a Committee, the Board as a whole shall act as the
Committee with respect to the administration of the Plan.
2.10. Common
Stock means the common stock of the Company, par value $0.001 per
share.
2.11. Company
means China Architectural Engineering, Inc., a Delaware corporation, and its
successors.
2.12. Company
Voting Securities means the combined voting power of all outstanding voting
securities of the Company entitled to vote generally in the election of
directors to the Board.
2.13. Date
of Grant means the date designated by the Committee as the date as of which it
grants an Award, which shall not be earlier than the date on which the Committee
approves the granting of such Award.
2.14. Dividend
Equivalent Account means a bookkeeping account in accordance with under Section
11.17 and related to an Award that is credited with the amount of any cash
dividends or stock distributions that would be payable with respect to the
shares of Common Stock subject to such Awards had such shares been outstanding
shares of Common Stock.
2.15
Exchange Act means the Securities Exchange Act of 1934, as amended.
2.16. Exercise
Price means, with respect to a Stock Appreciation Right, the amount established
by the Committee in the Award Agreement which is to be subtracted from the Fair
Market Value on the date of exercise in order to determine the amount of the
payment to be made to the Participant, as further described in Section
6.02(b).
2.17. Fair
Market Value means, as of any applicable date: (i) if the Common
Stock is listed on a national securities exchange or is authorized for quotation
on the Nasdaq National Market System (“NMS”), the closing sales price of the
Common Stock on the exchange or NMS, as the case may be, on that date, or, if no
sale of the Common Stock occurred on that date, on the next preceding date on
which there was a reported sale; or (ii) if none of the above apply, the closing
bid price as reported by the Nasdaq SmallCap Market on that date, or if no price
was reported for that date, on the next preceding date for which a price was
reported; or (iii) if none of the above apply, the last reported bid price
published in the “pink sheets” or displayed on the National Association of
Securities Dealers, Inc. (“NASD”), Electronic Bulletin Board, as the case may
be; or (iv) if none of the above apply, the fair market value of the Common
Stock as determined under procedures established by the Committee.
2.18. Incentive
Stock Option means a stock option within the meaning of Section 422 of the
Code.
2.19. Merger
means any merger, reorganization, consolidation, exchange, transfer of assets or
other transaction having similar effect involving the Company.
2.20. Non-Qualified
Stock Option means a stock option which is not an Incentive Stock
Option.
2.21
Non-Vested Share means shares of the Company Common Stock issued to a
Participant in respect of the non-vested portion of an Option in the event of
the early exercise of such Participant’s Options pursuant to such Participant’s
Award Agreement, as permitted in Section 6.06 below.
2.22. Options
means all Non-Qualified Stock Options and Incentive Stock Options granted at any
time under the Plan.
2.23. Outstanding
Common Stock means, at any time, the issued and outstanding shares of Common
Stock.
2.24. Participant
means a person designated to receive an Award under the Plan in accordance with
Section 5.01.
2.25. Performance
Awards means Awards granted in accordance with Article VIII.
2.26. Performance
Goals means net sales, project cost controls, return on stockholders' equity,
customer satisfaction or retention, return on investment or working capital,
operating income, economic value added (the amount, if any, by which net
operating income after tax exceeds a reference cost of capital), EBITDA (as net
income (loss) before net interest expense, provision (benefit) for income taxes,
and depreciation and amortization), expense targets, net income, earnings per
share, share price, reductions in inventory, inventory turns, on-time delivery
performance, operating efficiency, productivity ratios, market share or change
in market share, any one of which may be measured with respect to the Company or
any one or more of its Subsidiaries and divisions and either in absolute terms
or as compared to another company or companies, and quantifiable, objective
measures of individual performance relevant to the particular individual's job
responsibilities.
2.27. Plan
has the meaning given to such term in Section 1.01.
2.28. Purchase
Price, with respect to Options, shall have the meaning set forth in Section
6.01(b).
2.29. Restricted
Shares means Common Stock subject to restrictions imposed in connection with
Awards granted under Article VII.
2.30. Restricted
Stock Unit
means
a unit representing the right to receive Common Stock or the value thereof in
the future subject to restrictions imposed in connection with Awards granted
under Article VII.
2.31. Rule
16b-3 means Rule 16b-3 promulgated by the Securities and Exchange Commission
under Section 16 of the Exchange Act, as the same may be amended from time to
time, and any successor rule.
2.32. Stock
Appreciation Rights means awards granted in accordance with Article
VI.
2.33
Termination of Service means the voluntary or involuntary termination of a
Participant’s service as an employee, director or consultant with the Company or
an Affiliate for any reason, including death, disability, retirement or as the
result of the divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government
service shall constitute Termination of Service, or whether and when a
Termination of Service shall occur as a result of disability, shall be
determined in each case by the Committee in its sole discretion.
ARTICLE
III
ADMINISTRATION
3.01. Committee.
(a)
Duties and Authority. The Plan shall be
administered by the Committee and the Committee shall have exclusive and final
authority in each determination, interpretation or other action affecting the
Plan and its Participants. The Committee shall have the sole
discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, and to make all factual determinations with
respect to and take such steps in connection with the Plan and Awards granted
hereunder as it may deem necessary or advisable. The Committee shall
not, however, have or exercise any discretion that would disqualify amounts
payable under Article X as performance-based compensation for purposes of
Section 162(m) of the Code. The Committee may delegate such of its
powers and authority under the Plan as it deems appropriate to a subcommittee of
the Committee or designated officers or employees of the Company. In
addition, the full Board may exercise any of the powers and authority of the
Committee under the Plan. In the event of such delegation of authority or
exercise of authority by the Board, references in the Plan to the Committee
shall be deemed to refer, as appropriate, to the delegate of the Committee or
the Board. Actions taken by the Committee or any subcommittee
thereof, and any delegation by the Committee to designated officers or
employees, under this Section 3.01 shall comply with Section 16(b) of the
Exchange Act, the performance-based provisions of Section 162(m) of the Code,
and the regulations promulgated under each of such statutory provisions, or the
respective successors to such statutory provisions or regulations, as in effect
from time to time, to the extent applicable.
(b)
Indemnification. Each
person who is or shall have been a member of the Board or the Committee, or an
officer or employee of the Company to whom authority was delegated in accordance
with the Plan shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such individual in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf; provided, however, that the foregoing
indemnification shall not apply to any loss, cost, liability, or expense that is
a result of his or her own willful misconduct. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, conferred in a separate agreement with the Company, as
a matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
ARTICLE
IV
SHARES
4.01. Number
of Shares Issuable. The total number of shares initially authorized
to be issued under the Plan shall be Five Million (5,000,000) shares
of Common
Stock. The foregoing share limit shall be subject to adjustment in
accordance with Section 11.07. The shares to be offered under the
Plan shall be authorized and unissued Common Stock, or issued Common Stock that
shall have been reacquired by the Company.
4.02. Shares
Subject to Terminated Awards. Common Stock covered by any unexercised
portions of terminated or forfeited Options (including canceled Options) granted
under Article VI, Restricted Stock or Restricted Stock Units forfeited as
provided in Article VII, other stock-based Awards terminated or forfeited as
provided under the Plan, and Common Stock subject to any Awards that are
otherwise surrendered by the Participant may again be subject to new Awards
under the Plan. Shares of Common Stock surrendered to or withheld by
the Company in payment or satisfaction of the Purchase Price of an Option or tax
withholding obligation with respect to an Award shall be available for the grant
of new Awards under the Plan. In the event of the exercise of Stock
Appreciation Rights, whether or not granted in tandem with Options, only the
number of shares of Common Stock actually issued in payment of such Stock
Appreciation Rights shall be charged against the number of shares of Common
Stock available for the grant of Awards hereunder.
ARTICLE
V
PARTICIPATION
5.01. Eligible
Participants. Participants in the Plan shall be such employees,
directors and consultants of the Company and its Subsidiaries as the Committee,
in its sole discretion, may designate from time to time. The
Committee's designation of a Participant in any year shall not require the
Committee to designate such person to receive Awards or grants in any other
year. The designation of a Participant to receive Awards or grants
under one portion of the Plan does not require the Committee to include such
Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. Subject
to adjustment in accordance with Section 11.07, in any calendar year, no
Participant shall be granted Awards in respect of more than 1.5 million shares
of Common Stock (whether through grants of Options or Stock Appreciation Rights
or other Awards of Common Stock or rights with respect thereto) or cash-based
Awards for more than $1 million.
ARTICLE
VI
STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS
6.01. Option
Awards.
(a)
Grant of Options. The Committee may
grant, to such Participants as the Committee may select, Options entitling the
Participant to purchase shares of Common Stock from the Company in such number,
at such price, and on such terms and subject to such conditions, not
inconsistent with the terms of this Plan, as may be established by the
Committee. The terms of any Option granted under this Plan shall be
set forth in an Award Agreement.
(b)
Purchase Price of
Options. Subject to the requirements applicable to Incentive Stock
Options under Section 6.01(d), the Purchase Price of each share of Common Stock
which may be purchased upon exercise of any Option granted under the Plan shall
be determined by the Committee; provided, however, that in no event shall the
Purchase Price be less than the Fair Market Value on the Date of
Grant.
(c)
Designation of Options. The Committee
shall designate, at the time of the grant of each Option, the Option as an
Incentive Stock Option or a Non-Qualified Stock Option;
provided,
however,
that an Option may be designated as an Incentive
Stock Option only if the applicable Participant is an employee of the Company on
the Date of Grant.
(d)
Special Incentive
Stock Option Rules. No Participant may be granted Incentive Stock Options under
the Incentive Plan (or any other plans of the Company) that would result in
Incentive Stock Options to purchase shares of Common Stock with an aggregate
Fair Market Value (measured on the Date of Grant) of more than $100,000 first
becoming exercisable by the Participant in any one calendar year.
Notwithstanding any other provision of the Incentive Plan to the contrary, the
Exercise Price of each Incentive Stock Option shall be equal to or greater than
the Fair Market Value of the Common Stock subject to the Incentive Stock Option
as of the Date of Grant of the Incentive Stock Option;
provided
,
however
, that no Incentive
Stock Option shall be granted to any person who, at the time the Option is
granted, owns stock (including stock owned by application of the constructive
ownership rules in Section 424(d) of the Code) possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
unless at the time the Incentive Stock Option is granted the price of the Option
is at least one hundred ten percent (110%) of the Fair Market Value of the
Common Stock subject to the Incentive Stock Option and the Incentive Stock
Option by its terms is not exercisable for more than five years from the Date of
Grant.
(e)
Rights As a Stockholder. A Participant or a
transferee of an Option pursuant to Section 11.04 shall have no rights as a
stockholder with respect to Common Stock covered by an Option until the
Participant or transferee shall have become the holder of record of any such
shares, and no adjustment shall be made for dividends in cash or other property
or distributions or other rights with respect to any such Common Stock for which
the record date is prior to the date on which the Participant or a transferee of
the Option shall have become the holder of record of any such shares covered by
the Option; provided, however, that Participants are entitled to share
adjustments to reflect capital changes under Section 11.07.
6.02. Stock
Appreciation Rights.
(a)
Stock Appreciation Right Awards. The Committee is
authorized to grant to any Participant one or more Stock Appreciation
Rights. Such Stock Appreciation Rights may be granted either
independent of or in tandem with Options granted to the same Participant. Stock
Appreciation Rights granted in tandem with Options may be granted simultaneously
with, or, in the case of Non-Qualified Stock Options, subsequent to, the grant
to such Participant of the related Option; provided however, that: (i) any
Option covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any Stock Appreciation Right with respect to the same
share, (ii) any Stock Appreciation Right covering any share of Common Stock
shall expire and not be exercisable upon the exercise of any related Option with
respect to the same share, and (iii) an Option and Stock Appreciation Right
covering the same share of Common Stock may not be exercised
simultaneously. Upon exercise of a Stock Appreciation Right with
respect to a share of Common Stock, the Participant shall be entitled to receive
an amount equal to the excess, if any, of (A) the Fair Market Value of a share
of Common Stock on the date of exercise over (B) the Exercise Price of such
Stock Appreciation Right established in the Award Agreement, which amount shall
be payable as provided in Section 6.02(c).
(b)
Exercise Price. The Exercise Price established
under any Stock Appreciation Right granted under this Plan shall be determined
by the Committee, but in the case of Stock Appreciation Rights granted in tandem
with Options shall not be less than the Purchase Price of the related Option;
provided, however, that in no event shall the Exercise Price be less than the
Fair Market Value on the Date of Grant. Upon exercise of Stock
Appreciation Rights granted in tandem with options, the number of shares subject
to exercise under any related Option shall automatically be reduced by the
number of shares of Common Stock represented by the Option or portion thereof
which are surrendered as a result of the exercise of such Stock Appreciation
Rights.
(c)
Payment of Incremental Value. Any
payment which may become due from the Company by reason of a Participant's
exercise of a Stock Appreciation Right may be paid to the Participant as
determined by the Committee (i) all in cash, (ii) all in Common Stock, or (iii)
in any combination of cash and Common Stock. In the event that all or
a portion of the payment is made in Common Stock, the number of shares of Common
Stock delivered in satisfaction of such payment shall be determined by dividing
the amount of such payment or portion thereof by the Fair Market Value on the
Exercise Date. No fractional share of Common Stock shall be issued to
make any payment in respect of Stock Appreciation Rights; if any fractional
share would be issuable, the combination of cash and Common Stock payable to the
Participant shall be adjusted as directed by the Committee to avoid the issuance
of any fractional share.
6.03. Terms
of Stock Options and Stock Appreciation Rights.
(a)
Conditions on Exercise. An Award Agreement with
respect to Options or Stock Appreciation Rights may contain such waiting
periods, exercise dates and restrictions on exercise (including, but not limited
to, periodic installments) as may be determined by the Committee at the time of
grant. In the event the Committee grants an Option or Stock
Appreciation Right that would be subject to Section 409A of the Code, the
Committee may include such additional terms, conditions and restrictions on the
exercise of such Option or Stock Appreciation Right as the Committee deems
necessary or advisable in order to comply with the requirements of Section 409A
of the Code.
(b)
Duration of Options and Stock Appreciation
Rights. Options and Stock Appreciation Rights shall terminate upon
the first to occur of the following events:
(i) Expiration of the
Option or Stock Appreciation Right as provided in the Award Agreement;
or
(ii) Termination of the Award in
the event of a Participant's disability, Retirement, death or other Termination
of Service as provided in the Award Agreement; or
(iii) In
the case of an Incentive Stock Option, ten years from the Date of Grant (five
years in certain cases, as described in Section 6.01(d)); or
(iv) Solely
in the case of a Stock Appreciation Right granted in tandem with an Option, upon
the expiration of the related Option.
(c)
Acceleration or Extension of Exercise Time. The
Committee, in its sole discretion, shall have the right (but shall not be
obligated), exercisable on or at any time after the Date of Grant, to permit the
exercise of an Option or Stock Appreciation Right (i) prior to the time such
Option or Stock Appreciation Right would become exercisable under the terms of
the Award Agreement, (ii) after the termination of the Option or Stock
Appreciation Right under the terms of the Award Agreement, or (iii) after the
expiration of the Option or Stock Appreciation Right.
6.04. Exercise
Procedures. Each Option and Stock Appreciation Right granted under
the Plan shall be exercised under such procedures and by such methods as the
Board may establish or approve from time to time. The Purchase Price
of shares purchased upon exercise of an Option granted under the Plan shall be
paid in full in cash by the Participant pursuant to the Award Agreement;
provided, however, that the Committee may (but shall not be required to) permit
payment to be made (a) by delivery to the Company of shares of Common Stock held
by the Participant, (b) by a “net exercise” method under which the Company
reduces the number of shares of Common Stock issued upon exercise by the largest
whole number of shares with a Fair Market Value that does not exceed the
aggregate Exercise Price, or (c) such other consideration as the Committee deems
appropriate and in compliance with applicable law (including payment under an
arrangement constituting a brokerage transaction as permitted under the
provisions of Regulation T applicable to cashless exercises promulgated by the
Federal Reserve Board, unless prohibited by Section 402 of the Sarbanes-Oxley
Act of 2002). In the event that any Common Stock shall be transferred
to the Company to satisfy all or any part of the Purchase Price, the part of the
Purchase Price deemed to have been satisfied by such transfer of Common Stock
shall be equal to the product derived by multiplying the Fair Market Value as of
the date of exercise times the number of shares of Common Stock transferred to
the Company. The Participant may not transfer to the Company in
satisfaction of the Purchase Price any fractional share of Common
Stock. Any part of the Purchase Price paid in cash upon the exercise
of any Option shall be added to the general funds of the Company and may be used
for any proper corporate purpose. Unless the Committee shall
otherwise determine, any Common Stock transferred to the Company as payment of
all or part of the Purchase Price upon the exercise of any Option shall be held
as treasury shares.
6.05. Change
in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, no accelerated
vesting of any Options or Stock Appreciation Rights outstanding on the date of
such Change in Control shall occur.
6.06
Early Exercise. An Option may, but need not, include a provision by
which the Participant may elect to exercise the Option in whole or in part prior
to the date the Option is fully vested. The provision may be included
in the Award Agreement at the time of grant of the Option or may be added to the
Award Agreement by amendment at a later time. In the event of an
early exercise of an Option, any shares of Common Stock received shall be
subject to a special repurchase right in favor of the Company with terms
established by the Board. The Board shall determine the time and/or
the event that causes the repurchase right to terminate and fully vest the
Common Stock in the Participant. Alternatively, in the sole
discretion of the Board, one or more Participants may be granted stock purchase
rights allowing them to purchase shares of Common Stock outright, subject to
conditions and restrictions as the Board may determine.
ARTICLE
VII
RESTRICTED
SHARES AND RESTRICTED STOCK UNITS
7.01. Award
of Restricted Stock and Restricted Stock Units.
The
Committee may grant to any Participant an Award of Restricted Shares consisting
of a specified number of shares of Common Stock issued to the Participant
subject to such terms, conditions and forfeiture and transfer restrictions,
whether based on performance standards, periods of service, retention by the
Participant of ownership of specified shares of Common Stock or other criteria,
as the Committee shall establish. The Committee may also grant
Restricted Stock Units representing the right to receive shares of Common Stock
in the future subject to such terms, conditions and restrictions, whether based
on performance standards, periods of service, retention by the Participant of
ownership of specified shares of Common Stock or other criteria, as the
Committee shall establish. With respect to performance-based Awards
of Restricted Shares or Restricted Stock Units intended to qualify as
"performance-based" compensation for purposes of Section 162(m) of the Code,
performance targets will consist of specified levels of one or more of the
Performance Goals. The terms of any Restricted Share and Restricted
Stock Unit Awards granted under this Plan shall be set forth in an Award
Agreement which shall contain provisions determined by the Committee and not
inconsistent with this Plan.
7.02 Restricted
Shares.
(a)
Issuance of Restricted Shares. As soon as
practicable after the Date of Grant of a Restricted Share Award by the
Committee, the Company shall cause to be transferred on the books of the
Company, or its agent, Common Stock, registered on behalf of the Participant,
evidencing the Restricted Shares covered by the Award, but subject to forfeiture
to the Company as of the Date of Grant if an Award Agreement with respect to the
Restricted Shares covered by the Award is not duly executed by the Participant
and timely returned to the Company. All Common Stock covered by
Awards under this Article VII shall be subject to the restrictions, terms and
conditions contained in the Plan and the Award Agreement entered into by the
Participant. Until the lapse or release of all restrictions
applicable to an Award of Restricted Shares, the share certificates representing
such Restricted Shares may be held in custody by the Company, its designee, or,
if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with
respect to an Award as described in Section 7.02(d), one or more share
certificates, registered in the name of the Participant, for an appropriate
number of shares as provided in Section 7.02(d), free of any restrictions set
forth in the Plan and the Award Agreement shall be delivered to the
Participant.
(b)
Stockholder Rights. Beginning on the Date of
Grant of the Restricted Share Award and subject to execution of the Award
Agreement as provided in Section 7.02(a), the Participant shall become a
stockholder of the Company with respect to all shares subject to the Award
Agreement and shall have all of the rights of a stockholder, including, but not
limited to, the right to vote such shares and the right to receive dividends;
provided, however, that any Common Stock distributed as a dividend or otherwise
with respect to any Restricted Shares as to which the restrictions have not yet
lapsed, shall be subject to the same restrictions as such Restricted Shares and
held or restricted as provided in Section 7.02(a).
(c)
Restriction on
Transferability. None of the Restricted Shares may be assigned or
transferred (other than by will or the laws of descent and distribution, or to
an inter vivos trust with respect to which the Participant is treated as the
owner under Sections 671 through 677 of the Code, except to the extent that
Section 16 of the Exchange Act limits a Participant's right to make such
transfers), pledged or sold prior to lapse of the restrictions applicable
thereto.
(d)
Delivery of Shares Upon Vesting. Upon expiration or
earlier termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of Section
7.04, the restrictions applicable to the Restricted Shares shall
lapse. As promptly as administratively feasible thereafter, subject
to the requirements of Section 11.05, the Company shall deliver to the
Participant or, in case of the Participant's death, to the Participant's
Beneficiary, one or more share certificates for the appropriate number of shares
of Common Stock, free of all such restrictions, except for any restrictions that
may be imposed by law.
(e)
Forfeiture of Restricted Shares. Subject to
Sections 7.02(f) and 7.04, all Restricted Shares shall be forfeited and returned
to the Company and all rights of the Participant with respect to such Restricted
Shares shall terminate unless the Participant continues in the service of the
Company or an Affiliate as an employee until the expiration of the forfeiture
period for such Restricted Shares and satisfies any and all other conditions set
forth in the Award Agreement. The Committee shall determine the
forfeiture period (which may, but need not, lapse in installments) and any other
terms and conditions applicable with respect to any Restricted Share
Award.
(f)
Waiver of Forfeiture
Period. Notwithstanding anything contained in this Article VII to the
contrary, the Committee may, in its sole discretion, waive the forfeiture period
and any other conditions set forth in any Award Agreement under appropriate
circumstances (including the death, disability or Retirement of the Participant
or a material change in circumstances arising after the date of an Award) and
subject to such terms and conditions (including forfeiture of a proportionate
number of the Restricted Shares) as the Committee shall deem
appropriate.
7.03. Restricted
Stock Units.
(a)
Settlement of Restricted Stock
Units. Payments shall be made to Participants with respect to their
Restricted Stock Units as soon as practicable after the Committee has determined
that the terms and conditions applicable to such Award have been satisfied or at
a later date if distribution has been deferred. Payments to
Participants with respect to Restricted Stock Units shall be made in the form of
Common Stock, or cash or a combination of both, as the Committee may
determine. The amount of any cash to be paid in lieu of Common Stock
shall be determined on the basis of the Fair Market Value of the Common Stock on
the date any such payment is processed. As to shares of Common Stock
which constitute all or any part of such payment, the Committee may impose such
restrictions concerning their transferability and/or their forfeiture as may be
provided in the applicable Award Agreement or as the Committee may otherwise
determine, provided such determination is made on or before the date
certificates for such shares are first delivered to the applicable
Participant.
(b)
Shareholder Rights. Until the lapse or
release of all restrictions applicable to an Award of Restricted Stock Units, no
shares of Common Stock shall be issued in respect of such Awards and no
Participant shall have any rights as a shareholder of the Company with respect
to the shares of Common Stock covered by such Award of Restricted Stock
Units.
(c)
Waiver of Forfeiture
Period. Notwithstanding anything contained in this Section 7.03 to
the contrary, the Committee may, in its sole discretion, waive the forfeiture
period and any other conditions set forth in any Award Agreement under
appropriate circumstances (including the death, disability or retirement of the
Participant or a material change in circumstances arising after the date of an
Award) and subject to such terms and conditions (including forfeiture of a
proportionate number of shares issuable upon settlement of the Restricted Stock
Units constituting an Award) as the Committee shall deem
appropriate.
(d)
Deferral of Payment. If approved by the
Committee and set forth in the applicable Award Agreement, a Participant may
elect to defer the amount payable with respect to the Participant’s Restricted
Stock Units in accordance with such terms as may be established by the
Committee, subject to the requirements of Section 409A of the Code.
7.04 Change
in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, no acceleration of the termination of any of the
restrictions applicable to Restricted Shares and Restricted Stock Unit Awards
shall occur in the event of a Change in Control.
ARTICLE
VIII
PERFORMANCE
AWARDS
8.01. Performance
Awards.
(a)
Award Periods and Calculations of Potential
Incentive Amounts. The Committee may grant Performance Awards to
Participants. A Performance Award shall consist of the right to
receive a payment (measured by the Fair Market Value of a specified number of
shares of Common Stock, increases in such Fair Market Value during the Award
Period and/or a fixed cash amount) contingent upon the extent to which certain
predetermined performance targets have been met during an Award
Period. The Award Period shall be two or more fiscal or calendar
years as determined by the Committee. The Committee, in its
discretion and under such terms as it deems appropriate, may permit newly
eligible Participants, such as those who are promoted or newly hired, to receive
Performance Awards after an Award Period has commenced.
(b)
Performance Targets. Subject to Section
11.18, the performance targets applicable to a Performance Award may include
such goals related to the performance of the Company or, where relevant, any one
or more of its Subsidiaries or divisions and/or the performance of a Participant
as may be established by the Committee in its discretion. In the case
of Performance Awards to "covered employees" (as defined in Section 162(m) of
the Code), the targets will be limited to specified levels of one or more of the
Performance Goals. The performance targets established by the
Committee may vary for different Award Periods and need not be the same for each
Participant receiving a Performance Award in an Award Period.
(c)
Earning Performance Awards. The
Committee, at or as soon as practicable after the Date of Grant, shall prescribe
a formula to determine the percentage of the Performance Award to be earned
based upon the degree of attainment of the applicable performance
targets.
(d)
Payment of Earned Performance Awards. Subject
to the requirements of Section 11.05, payments of earned Performance Awards
shall be made in cash or Common Stock, or a combination of cash and Common
Stock, in the discretion of the Committee. The Committee, in its sole
discretion, may define, and set forth in the applicable Award Agreement, such
terms and conditions with respect to the payment of earned Performance Awards as
it may deem desirable.
8.02. Termination
of Service. In the event of a Participant’s Termination of Service
during an Award Period, the Participant’s Performance Awards shall be forfeited
except as may otherwise be provided in the applicable Award
Agreement.
8.03. Change
in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, no accelerated
vesting of any Performance Awards outstanding on the date of such Change in
Control shall occur.
ARTICLE
IX
OTHER
STOCK-BASED AWARDS
9.01. Grant
of Other Stock-Based Awards. Other stock-based awards, consisting of
stock purchase rights (with or without loans to Participants by the Company
containing such terms as the Committee shall determine), Awards of Common Stock,
or Awards valued in whole or in part by reference to, or otherwise based on,
Common Stock, may be granted either alone or in addition to or in conjunction
with other Awards under the Plan. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the persons to
whom and the time or times at which such Awards shall be made, the number of
shares of Common Stock to be granted pursuant to such Awards, and all other
conditions of the Awards. Any such Award shall be confirmed by an
Award Agreement executed by the Committee and the Participant, which Award
Agreement shall contain such provisions as the Committee determines to be
necessary or appropriate to carry out the intent of this Plan with respect to
such Award.
9.02. Terms
of Other Stock-Based Awards. In addition to the terms and conditions
specified in the Award Agreement, Awards made pursuant to this Article IX shall
be subject to the following:
(a) Any
Common Stock subject to Awards made under this Article IX may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses; and
(b) If
specified by the Committee in the Award Agreement, the recipient of an Award
under this Article IX shall be entitled to receive, currently or on a deferred
basis, interest or dividends or dividend equivalents with respect to the Common
Stock or other securities covered by the Award; and
(c) The
Award Agreement with respect to any Award shall contain provisions dealing with
the disposition of such Award in the event of a Termination of Service prior to
the exercise, payment or other settlement of such Award, whether such
termination occurs because of Retirement, disability, death or other reason,
with such provisions to take account of the specific nature and purpose of the
Award.
ARTICLE
X
SHORT-TERM
CASH INCENTIVE AWARDS
10.01. Eligibility. Executive
officers of the Company who are from time to time determined by the Committee to
be "covered employees" for purposes of Section 162(m) of the Code will be
eligible to receive short-term cash incentive awards under this Article
X.
10.02. Awards.
(a) Performance
Targets. The Committee shall establish objective performance targets
based on specified levels of one or more of the Performance
Goals. Such performance targets shall be established by the Committee
on a timely basis to ensure that the targets are considered "preestablished" for
purposes of Section 162(m) of the Code.
(b) Amounts
of Awards. In conjunction with the establishment of performance
targets for a fiscal year or such other short-term performance period
established by the Committee, the Committee shall adopt an objective formula (on
the basis of percentages of Participants' salaries, shares in a bonus pool or
otherwise) for computing the respective amounts payable under the Plan to
Participants if and to the extent that the performance targets are
attained. Such formula shall comply with the requirements applicable
to performance-based compensation plans under Section 162(m) of the Code and, to
the extent based on percentages of a bonus pool, such percentages shall not
exceed 100% in the aggregate.
(c) Payment
of Awards. Awards will be payable to Participants in cash each year
upon prior written certification by the Committee of attainment of the specified
performance targets for the preceding fiscal year or other applicable
performance period.
(d) Negative
Discretion. Notwithstanding the attainment by the Company of the
specified performance targets, the Committee shall have the discretion, which
need not be exercised uniformly among the Participants, to reduce or eliminate
the award that would be otherwise paid.
(e) Guidelines. The
Committee may adopt from time to time written policies for its implementation of
this Article X. Such guidelines shall reflect the intention of the
Company that all payments hereunder qualify as performance-based compensation
under Section 162(m) of the Code.
(f)
Non-Exclusive Arrangement. The adoption and operation of this
Article X shall not preclude the Board or the Committee from approving other
short-term incentive compensation arrangements for the benefit of individuals
who are Participants hereunder as the Board or Committee, as the case may be,
deems appropriate and in the best of the Company.
ARTICLE
XI
TERMS
APPLICABLE GENERALLY TO AWARDS
GRANTED
UNDER THE PLAN
11.01. Plan
Provisions Control Award Terms. Except as provided in Section 11.16,
the terms of the Plan shall govern all Awards granted under the Plan, and in no
event shall the Committee have the power to grant any Award under the Plan which
is contrary to any of the provisions of the Plan. In the event any
provision of any Award granted under the Plan shall conflict with any term in
the Plan as constituted on the Date of Grant of such Award, the term in the Plan
as constituted on the Date of Grant of such Award shall
control. Except as provided in Section 11.03 and Section 11.07, the
terms of any Award granted under the Plan may not be changed after the Date of
Grant of such Award so as to materially decrease the value of the Award without
the express written approval of the holder.
11.02. Award
Agreement. No person shall have any rights under any Award granted
under the Plan unless and until the Company and the Participant to whom such
Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
11.03. Modification
of Award After Grant. No Award granted under the Plan to a
Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and (b)
shall be approved by the Committee.
11.04. Limitation
on Transfer. Except as provided in Section 7.01(c) in the case of
Restricted Shares, a Participant's rights and interest under the Plan may not be
assigned or transferred other than by will or the laws of descent and
distribution, and during the lifetime of a Participant, only the Participant
personally (or the Participant's personal representative) may exercise rights
under the Plan. The Participant's Beneficiary may exercise the
Participant's rights to the extent they are exercisable under the Plan following
the death of the Participant. Notwithstanding the foregoing, to the extent
permitted under Section 16(b) of the Exchange Act with respect to Participants
subject to such Section, the Committee may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Participant or to trusts or partnerships for such family members,
and the Committee may also amend outstanding Non-Qualified Stock Options to
provide for such transferability.
11.05. Taxes. The
Company shall be entitled, if the Committee deems it necessary or desirable, to
withhold (or secure payment from the Participant in lieu of withholding) the
amount of any withholding or other tax required by law to be withheld or paid by
the Company with respect to any amount payable and/or shares issuable under such
Participant's Award, or with respect to any income recognized upon a
disqualifying disposition of shares received pursuant to the exercise of an
Incentive Stock Option, and the Company may defer payment or issuance of the
cash or shares upon exercise or vesting of an Award unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be
payable by the Participant at such time as the Committee determines in
accordance with the following rules:
(a) The
Participant shall have the right to elect to meet his or her withholding
requirement (i) by having withheld from such Award at the appropriate time that
number of shares of Common Stock, rounded down to the nearest whole share, whose
Fair Market Value is equal to the amount of withholding taxes due, (ii) by
direct payment to the Company in cash of the amount of any taxes required to be
withheld with respect to such Award or (iii) by a combination of shares and
cash.
(b) In
the case of Participants who are subject to Section 16 of the Exchange Act, the
Committee may impose such limitations and restrictions as it deems necessary or
appropriate with respect to the delivery or withholding of shares of Common
Stock to meet tax withholding obligations.
11.06. Surrender
of Awards; Authorization of Repricing. Any Award granted under the
Plan may be surrendered to the Company for cancellation on such terms as the
Committee and the holder approve. Without requiring shareholder
approval, the Committee may substitute a new Award under this Plan in connection
with the surrender by the Participant of an equity compensation award previously
granted under this Plan or any other plan sponsored by the Company, including
the substitution or grant of (i) an Option or Stock Appreciation Right with a
lower exercise price than the Option or Stock Appreciation Right being
surrendered, (ii) a different type of Award upon the surrender or cancellation
of an Option or Stock Appreciation Right with an exercise price above the Fair
Market Value of the underlying Common Stock on the date of such substitution or
grant, or (iii) any other Award constituting a repricing of an Option or Stock
Appreciation Right.
11.07. Adjustments
to Reflect Capital Changes.
(a) Recapitalization. In
the event of any corporate event or transaction (including, but not limited to,
a change in the Common Stock or the capitalization of the Company) such as a
merger, consolidation, reorganization, recapitalization, separation, partial or
complete liquidation, stock dividend, stock split, reverse stock split, split
up, spin-off, or other distribution of stock or property of the Company, a
combination or exchange of Common Stock, dividend in kind, or other like change
in capital structure, number of outstanding shares of Common Stock, distribution
(other than normal cash dividends) to shareholders of the Company, or any
similar corporate event or transaction, the Committee, in order to prevent
dilution or enlargement of Participants’ rights under this Plan, shall make
equitable and appropriate adjustments and substitutions, as applicable, to or of
the number and kind of shares subject to outstanding Awards, the Purchase Price
or Exercise Price for such shares, the number and kind of shares available for
future issuance under the Plan and the maximum number of shares in respect of
which Awards can be made to any Participant in any calendar year, and other
determinations applicable to outstanding Awards. The Committee shall
have the power and sole discretion to determine the amount of the adjustment to
be made in each case.
(b) Merger. In
the event that the Company is a party to a Merger, outstanding Awards shall be
subject to the agreement of merger or reorganization. Such agreement
may provide, without limitation, for the continuation of outstanding Awards by
the Company (if the Company is a surviving corporation), for their assumption by
the surviving corporation or its parent or subsidiary, for the substitution by
the surviving corporation or its parent or subsidiary of its own awards for such
Awards, for accelerated vesting and accelerated expiration, or for settlement in
cash or cash equivalents.
(c) Options
to Purchase Shares or Stock of Acquired Companies. After any Merger
in which the Company or an Affiliate shall be a surviving corporation, the
Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the Merger whose shares or stock subject to the old options
may no longer be issued following the Merger. The foregoing
adjustments and manner of application of the foregoing provisions shall be
determined by the Committee in its sole discretion. Any such
adjustments may provide for the elimination of any fractional shares which might
otherwise become subject to any Options.
11.08. No
Right to Continued Service. No person shall have any claim of right
to be granted an Award under this Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be retained
in the service of the Company or any of its Subsidiaries.
11.09. Awards
Not Includable for Benefit Purposes. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.
11.10. Governing
Law. All determinations made and actions taken pursuant to the Plan
shall be governed by the laws of Delaware
and construed in
accordance therewith.
11.11. No
Strict Construction. No rule of strict construction shall be implied
against the Company, the Committee, or any other person in the interpretation of
any of the terms of the Plan, any Award granted under the Plan or any rule or
procedure established by the Committee.
11.12. Compliance
with Rule 16b-3. It is intended that, unless the Committee determines
otherwise, Awards under the Plan be eligible for exemption under Rule
16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.
11.13. Captions. The
captions (i.e., all Section headings) used in the Plan are for convenience only,
do not constitute a part of the Plan, and shall not be deemed to limit,
characterize or affect in any way any provisions of the Plan, and all provisions
of the Plan shall be construed as if no captions have been used in the
Plan.
11.14. Severability. Whenever
possible, each provision in the Plan and every Award at any time granted under
the Plan shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan or any Award at any time
granted under the Plan shall be held to be prohibited by or invalid under
applicable law, then (a) such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest extent
permitted by law and (b) all other provisions of the Plan and every other Award
at any time granted under the Plan shall remain in full force and
effect.
11.15. Amendment
and Termination.
(a) Amendment. The
Board shall have complete power and authority to amend the Plan at any time;
provided, however, that the Board shall not, without the requisite affirmative
approval of stockholders of the Company, make any amendment which requires
stockholder approval under the Code or under any other applicable law or rule of
any stock exchange which lists Common Stock or Company Voting
Securities. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore have been granted
under the Plan, adversely affect the right of such individual under such
Award.
(b) Termination. The
Board shall have the right and the power to terminate the Plan at any time. No
Award shall be granted under the Plan after the termination of the Plan, but the
termination of the Plan shall not have any other effect and any Award
outstanding at the time of the termination of the Plan may be exercised after
termination of the Plan at any time prior to the expiration date of such Award
to the same extent such Award would have been exercisable had the Plan not
terminated.
11.16. Foreign
Qualified Awards. Awards under the Plan may be granted to such
employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time to
time. The Committee may adopt such supplements to the Plan as may be necessary
or appropriate to comply with the applicable laws of such foreign jurisdictions
and to afford Participants favorable treatment under such laws; provided,
however, that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.
11.17. Dividend
Equivalents. For any Award granted under the Plan, the Committee
shall have the discretion, upon the Date of Grant or thereafter, to establish a
Dividend Equivalent Account with respect to the Award, and the applicable Award
Agreement or an amendment thereto shall confirm such
establishment. If a Dividend Equivalent Account is established, the
following terms shall apply:
(a) Terms
and Conditions. Dividend Equivalent Accounts shall be subject to such
terms and conditions as the Committee shall determine and as shall be set forth
in the applicable Award Agreement. Such terms and conditions may
include, without limitation, for the Participant’s Account to be credited as of
the record date of each cash dividend on the Common Stock with an amount equal
to the cash dividends which would be paid with respect to the number of shares
of Common Stock then covered by the related Award if such shares of Common Stock
had been owned of record by the Participant on such record date.
(b) Unfunded
Obligation. Dividend Equivalent Accounts shall be established and
maintained only on the books and records of the Company and no assets or funds
of the Company shall be set aside, placed in trust, removed from the claims of
the Company's general creditors, or otherwise made available until such amounts
are actually payable as provided hereunder.
11.18
Adjustment of Performance Goals and
Targets. Notwithstanding any provision of the Plan to the contrary,
the Committee shall have the authority to adjust any Performance Goal,
performance target or other performance-based criteria established with respect
to any Award under the Plan if circumstances occur (including, but not limited
to, unusual or nonrecurring events, changes in tax laws or accounting principles
or practices or changed business or economic conditions) that cause any such
Performance Goal, performance target or performance-based criteria to be
inappropriate in the judgment of the Committee; provided, that with respect to
any Award that is intended to qualify for the "performance-based compensation"
exception under Section 162(m) of the Code and the regulations thereunder, any
adjustment by the Committee shall be consistent with the requirements of Section
162(m) and the regulations thereunder.
11.19 Legality
of Issuance. Notwithstanding any provision of this Plan or any
applicable Award Agreement to the contrary, the Committee shall have the sole
discretion to impose such conditions, restrictions and limitations (including
suspending exercises of Options or Stock Appreciation Rights and the tolling of
any applicable exercise period during such suspension) on the issuance of Common
Stock with respect to any Award unless and until the Committee determines that
such issuance complies with (i) any applicable registration requirements under
the Securities Act of 1933 or the Committee has determined that an exemption
therefrom is available, (ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed, (iii) any applicable Company
policy or administrative rules, and (iv) any other applicable provision of
state, federal or foreign law, including foreign securities laws where
applicable.
11.20 Restrictions
on Transfer. Regardless of whether the offering and sale of Common
Stock under the Plan have been registered under the Securities Act of 1933 or
have been registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge, or other transfer of such
Common Stock (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and its counsel, such
restrictions are necessary or desirable to achieve compliance with the
provisions of the Securities Act of 1933, the securities laws of any state, the
United States or any other applicable foreign law.
11.21 Further
Assurances. As a condition to receipt of any Award under the Plan, a
Participant shall agree, upon demand of the Company, to do all acts and execute,
deliver and perform all additional documents, instruments and agreements which
may be reasonably required by the Company, to implement the provisions and
purposes of the Plan.
AMENDMENT
NO. 1
TO
CHINA
ARCHITECTURAL ENGINEERING, INC.
2009
OMNIBUS INCENTIVE PLAN
The
following constitutes Amendment No. 1 to the 2009 Omnibus Incentive Plan (the
“Plan”) of China Architectural Engineering, Inc. (the
“Company”). This amendment decreases the total number of initially
authorized shares of Common Stock reserved and available for issuance under the
Plan from 5,000,000 shares by 3,000,000 shares so that the Plan authorizes a
total of 2,000,000 shares.
Pursuant
to the resolutions of the board of directors dated June 17, 2009, Article IV
Section 4.01 of the Plan shall be deleted in its entirety and replaced with the
following:
“4.01
Number of Shares Issuable. The total number of shares initially
authorized to be issued under the Plan shall be 2,000,000 shares of Common
Stock. The foregoing share limit shall be subject to adjustment in
accordance with Section 11.07. The shares to be offered under the
Plan shall be authorized and unissued Common Stock, or issued Common Stock that
shall have been reacquired by the Company.”
[SIGNATURE
PAGE TO FOLLOW]
IN
WITNESS WHEREOF, pursuant to the due authorization and adoption of this
amendment to the Plan by the board of directors and stockholders on the day and
year set forth below, the Company has caused this amendment to the Plan to be
duly executed by its duly authorized officer.
Dated: June
17, 2009
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CHINA
ARCHITECTURAL ENGINEERING, INC.,
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a
Delaware corporation
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By:
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/s/
Luo Ken Yi
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Name:
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Luo
Ken Yi
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Title:
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Chief
Executive Officer and
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Chairman
of the Board of Directors
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|
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