<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to '240.14a-11(c) or '240.14a-12
QIAO XING UNIVERSAL TELEPHONE, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
QIAO XING UNIVERSAL TELEPHONE, INC.
Qiao Xing Building
Wu Shi Industrial Zone
Huizhou City, Guangdong,
People's Republic of China
(011) 86-752-2808-188
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Friday, October 15, 1999
To the Shareholders:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders (the "Meeting)
of Qiao Xing Universal Telephone, Inc. (the "Company") will be held at the
Company's Hong Kong offices, Room 5-9, 27/F., K. Wah Centre, 191 Java Road,
North Point, Hong Kong, on Friday, October 15, 1999, at 11:00 a.m., local time,
for the following purposes:
1. To elect seven directors to hold office for the term specified in the
Proxy Statement or until their successors are elected and qualified;
2. To approve the establishment of the 1999 stock compensation plan for
the benefit of certain officers, directors, employees and advisors of the
Company (the "1999 Stock Compensation Plan Proposal"); and
3. To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on September 8, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment or adjournments thereof.
A Proxy Statement which describes the foregoing proposals and a form of
Proxy accompany this Notice.
By Order of the Board of Directors
Zhi Yang Wu
Secretary
Dated: September 15, 1999
IMPORTANT
Whether or not you expect to attend the Meeting, you are urged to execute
the accompanying proxy and return it promptly in the enclosed reply envelope
which requires no postage. Any shareholder granting a proxy may revoke the same
at any time prior to its exercise. Also, whether or not you grant a proxy, you
may vote in person if you attend the Meeting.
<PAGE>
QIAO XING UNIVERSAL TELEPHONE, INC.
Qiao Xing Building
Wu Shi Industrial Zone
Huizhou City, Guangdong,
People's Republic of China
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held Friday, October 15, 1999
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
Qiao Xing Universal Telephone, Inc. (the "Company") for use at the Annual
Meeting of Shareholders of the Company (the "Meeting") to be held at the
Company's Hong Kong offices, Room 5-9, 27/F., K. Wah Centre, 191 Java Road,
North Point, Hong Kong, on Friday, October 15, 1999, and at any adjournment or
adjournments thereof. In addition to the use of the mails, proxies may be
solicited by personal interview, telephone or telegraph by officers, directors
and other employees of the Company, who will not receive additional compensation
for such services. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward the soliciting material to the beneficial
owners of stock held of record and will reimburse such persons for forwarding
such material at the rates suggested by the New York Stock Exchange. The
Company will bear the cost of this solicitation of proxies. Such costs are
expected to be nominal. Proxy solicitation will commence with the mailing of
this Proxy Statement on or about September 15, 1999.
Execution and return of the enclosed proxy will not affect a shareholder's
right to attend the Meeting and to vote in person. Any shareholder executing a
proxy retains the right to revoke it at any time prior to exercise at the
Meeting. A proxy may be revoked by delivery of written notice of revocation to
the Secretary of the Company, by execution and delivery of a later proxy or by
voting the shares in person at the Meeting. A proxy, when executed and not
revoked, will be voted in accordance with the instructions thereon. In the
absence of specific instructions, proxies will be voted by the person named in
the proxy "FOR" the election as directors of those nominees named in the Proxy
Statement, "FOR" the proposal to approve the establishment of the 1999 Stock
Compensation Plan, and in accordance with his best judgment on all other matters
that may properly come before the Meeting.
The enclosed form of proxy provides a method for shareholders to withhold
authority to vote for any one or more of the nominees for director while
granting authority to vote for the remaining nominees. The names of all
nominees are listed on the proxy. If you wish to grant authority to vote for
all nominees, check the box marked "FOR." If you wish to withhold authority to
vote for all nominees, check the box marked "WITHHOLD." If you wish your shares
to be voted for some nominees and not for one or more of the others, check the
box marked "FOR" and indicate the name(s) of the nominee(s) for whom you are
withholding the authority to vote by writing the name(s) of such nominee(s) on
the proxy in the space provided.
<PAGE>
PURPOSE OF MEETING
As stated in the Notice of Annual Meeting of Shareholders accompanying this
Proxy Statement, the business to be conducted and the matters to be considered
and acted upon at the Meeting are as follows:
1. To elect seven directors to hold office for the term specified herein
or until their successors are elected and qualified;
2. To approve the establishment of the 1999 stock compensation plan for
the benefit of certain officers, directors, employees and advisors of the
Company (the "1999 Stock Compensation Plan Proposal"); and
3. To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
VOTING AT MEETING
The voting securities of the Company consist solely of common stock, $.001
par value per share (the "Common Stock").
The record date for shareholders entitled to notice of and to vote at the
Meeting is the close of business on September 8, 1999, at which time the Company
had outstanding and entitled to vote at the Meeting 9,600,000 shares of Common
Stock. Shareholders are entitled to one vote, in person or by proxy, for each
share of Common Stock held in their name on the record date. Shareholders
representing a majority of the Common Stock outstanding and entitled to vote
must be present or represented by proxy to constitute a quorum.
The election of directors and approval of the 1999 Stock Compensation Plan
Proposal each will require the affirmative vote of the holders of a majority of
the Common Stock present or represented by proxy at the Meeting and entitled to
vote thereon. Cumulative voting for directors is not authorized and proxies
cannot be voted for more than seven nominees.
STOCK OWNERSHIP
The following table sets forth the number of shares of Common Stock owned
beneficially as of June 30, 1999 by each person known by the Company to have
owned beneficially more than ten percent of such shares then outstanding, by
each current officer and director of the Company and by all of the Company's
current officers and directors as a group. This information gives effect to
securities deemed outstanding pursuant to Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended. As far as is known to management of the
Company, no person owned beneficially more than ten percent of the outstanding
shares of Common Stock as of June 30, 1999 except as set forth below.
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<TABLE>
<CAPTION>
Name of Beneficial Holder Number Percent
- ------------------------- ------ -------
Shares Beneficially Owned
-------------------------
<S> <C> <C>
Wu Holdings Limited........................................................ 6,819,000(1) 71.0
Rui Lin Wu................................................................. 6,819,000(1) 71.0
Zhi Yang Wu................................................................ 0 0
Shuen Ji Yeh............................................................... 0 0
Zhong Ai Li................................................................ 0 0
Jie Shi.................................................................... 0 0
Zi Shu Huang............................................................... 0 0
Liu Rong Yang.............................................................. 0 0
Guo Liang Zhang............................................................ 0 0
All directors and executive officers as a group (8 persons)................ 6,819,000 71.0
</TABLE>
_____________
(1) Wu Holdings Limited is a British Virgin Islands corporation which is 71.16%
owned by the Qiao Xing Trust and the remaining 28.84% is owned by Sino
Communications Ltd., a wholly owned subsidiary of a nonaffiliated
corporation listed on The Stock Exchange of Hong Kong Limited. The Qiao
Xing Trust is a Cook Islands trust which was formed for the primary benefit
of Zhi Jian Wu Li, the youngest son of Rui Lin Wu, Chairman of the Company.
The 6,819,000 shares of Common Stock owned of record and beneficially by Wu
Holdings Limited may be deemed to also be beneficially owned by Rui Lin Wu
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) since he may be deemed to have and/or share the power to
direct the voting and disposition of such shares.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating details. The Board meets regularly
throughout the year, including the annual organization meeting following the
Annual Meeting of Shareholders, to review significant developments affecting the
Company and to act upon matters requiring Board approval. It also holds special
meetings as required from time to time when important matters arise requiring
Board action between scheduled meetings. During the last fiscal year, the Board
met five times.
The Board of Directors has established an Audit Committee to devote
attention to specific subjects and to assist it in the discharge of its
responsibilities. The functions of the Audit Committee, its current members,
and the number of meetings held during fiscal year 1998 are described below.
The Audit Committee consists of Rui Lin Wu, Zi Shu Huang and Liu Rong Yang.
The functions of the Audit Committee are to recommend annually to the Board of
Directors the appointment of the independent public accountants of the Company,
discuss and review the scope and the fees of the prospective annual audit and
review the results thereof with the independent public accountants, review and
approve non-audit services of the independent public accountants, review
compliance with existing accounting and financial policies of the Company,
review the adequacy of the financial organization of the Company and review
management's procedures and policies relative to the adequacy of the
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Company's internal accounting controls and compliance with federal and state
laws relating to financial reporting. The Audit Committee met twice during the
fiscal year ended December 31, 1998.
The Company does not have a nominating committee. The functions
customarily attributable to a nominating committee are performed by the Board of
Directors as a whole.
No director attended fewer than 75 percent of the aggregate of the total
number of meetings of the Board of Directors and the total number of meetings
held by all committees of the Board on which he served.
Each non-employee director is compensated separately for service on the
Board and is reimbursed for expenses to attend Board meetings.
ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected. Each director will be
elected for a one-year term or until his successor is elected and qualified.
Shares represented by properly executed proxies will be voted, in the
absence of contrary indication therein or revocation thereof by the shareholder
granting such proxy, in favor of the election of the persons named below as
directors, to hold office for the term stated in the preceding paragraph. The
person named as proxy in the enclosed proxy has been designated by management
and intends to vote for the election to the Board of Directors of the persons
named below, each of whom is now a director of the Company. If the contingency
should occur that any such nominee is unable to serve as a director, it is
intended that the shares represented by the proxies will be voted, in the
absence of contrary indication, for any substitute nominee that management may
designate. Management knows of no reason why any nominee would be unable to
serve. The information presented herein with respect to the nominees was
obtained in part from the respective persons, and in part from the records of
the Company.
Nominees for Election as Directors
Name Age Position
- ---- --- --------
Rui Lin Wu 47 Chairman and Chief Executive Officer
Zhi Yang Wu 26 Vice Chairman and Secretary
Shuen Ji Yeh 58 Executive Director
Zhong Ai Li 28 Executive Director
Jie Shi 31 Chief Financial Officer
Zi Shu Huang 45 Non-Executive Director
Liu Rong Yang 26 Non-Executive Director
Guo Liang Zhang 57 Non-Executive Director
None of the directors and officers was selected pursuant to any agreement
or understanding with any other person. There is no family relationship between
any director or executive officer and any other director or executive officer,
except Rui Lin Wu and his son Zhi Yang Wu.
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Mr. Rui Lin Wu, aged 47, is the Chairman and Chief Executive Officer of the
Company. He is the founder of the Company and has over 11 years of experience in
the telecommunication industry. He is responsible for the Company's overall
strategic planning, policy making and finance. Prior to his career in the
telecommunications industry, he was a general manager of a fashion and garment
factory from 1980 to 1986. Currently, Mr. Wu is a member of the China National
Association of Industry and Commerce, senior analyst of the China National
Condition and Development Research Center, and a member of the Poverty Fund of
China.
Mr. Zhi Yang Wu, aged 26, is the Vice Chairman of the Company and the elder
son of Mr. Rui Lin Wu. Mr. Wu also serves as the Secretary of the Company. Mr.
Wu received a Diploma in Business Management from Huizhou University of the PRC.
He joined the Company in 1992 and is responsible for the Company's overall
strategic planning, policy making and the overseas market development.
Mr. Shuen Ji Yeh, aged 58, joined the Company and has served as a director
of the Company since July 1998. He is responsible for the overall corporate
strategy of the Company. Mr. Yeh has more than 19 years' experience in finance
and corporate development. He is presently the chairman of Guo Ye Holdings and
Guo Ye Enterprise Limited, whose principal activities are investment consultancy
in electronic communications and properties in the PRC, and PRC investment
consulting, respectively. He is also the chairman of Beijing Jin Peng Electronic
Amusement Machine Company Limited in which Guo Ye Holdings holds a 50% interest.
Mr. Yeh was a managing director of China International Trust & Investment
Corporation Hong Kong (Holdings) Limited.
Mr. Zhong Ai Li, aged 28, is Deputy General Manager of Qiao Xing
Telecommunication Industry Co., Ltd. ("QXTI") and has served as a director of
the Company since September 1997. From August 1992 to July 1994, he served as
deputy manager of QXTI's marketing department. From August 1994 to February
1997, Mr. Li served as manager of Shenzhen Baoan Chang He Electronic Co., Ltd.
From February 1997 to September 1997, he served as manager of QXTI's marketing
department. Mr. Li has served as Deputy General Manager of QXTI since September
1997.
Mr. Jie Shi, aged 31, has served as the Chief Financial Officer and
Controller of Finance of the Company since September 1997. He also serves as
Deputy General Manager of QXTI since September 1997. From July 1994 to September
1997, Mr. Shi served as department head of the finance department of QXTI. From
July 1993 to July 1994, he served as deputy section chief of the finance
department of Guizhou Province Bijie Region Power Supply Bureau. From September
1992 to July 1993, Mr. Shi served as section chief of the finance department of
Guizhou Province Bijie City Seasoning Factory.
Mr. Zi Shu Huang, aged 45, serves as a non-executive director of the
Company. He has served as the general manager of Huizhou City Xiaojinkou
Economic Development Company since September 1997. This company specializes in
the manufacturing of electronic parts and business trading.
Ms. Liu Rong Yang, aged 26, serves as a non-executive director of the
Company. Ms. Yang has worked for Huizhou Lian Zhuang Wire and Cable Limited as
deputy managing director since January 1998. From 1996 to 1998, she served as
the deputy managing director for Huizhou Zhong Qiao Electronics Limited.
Mr. Guo Liang Zhang, aged 57, is assistant to the chairman of QXTI and
served as a director of the Company from September 1997 to July 1998 and has
served as a non-executive director of the Company since August 1999. From March
1992 to May 1994, Mr. Zhang served as vice general manager
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of Jilin Jixing Telecommunication Industry Co., Ltd., a company which is
principally engaged in the manufacturing and sales of telecommunications
terminals and equipment. Mr. Zhang received a Bachelor of Arts Degree in Chinese
from Jilin Province Huadian Normal College.
Compensation of Directors and Executive Officers
The aggregate compensation paid by the Company to all directors and
executive officers of the Company as a group with respect to its fiscal year
ended December 31, 1998 on an accrual basis, for services in all capacities, was
RMB 2,776,000 (US$335,000). During the fiscal year ended December 31, 1998, the
Company contributed an aggregate amount of RMB 49,000 (US$6,000) toward the
pension plans of the directors and executive officers.
Executive Service Contract
The Company has not entered into an employment agreement with Mr. Rui Lin
Wu. Currently, Mr. Wu serves as President of the Company at an annual salary of
RMB 1,267,000 (US$153,000). Mr. Wu's remuneration package includes benefits with
respect to a motor car.
THE BOARD OF DIRECTORS RECOMMENDS TO THE SHAREHOLDERS THAT THEY VOTE "FOR"
---
THE ELECTION OF SUCH NOMINEES.
CERTAIN TRANSACTIONS
The following table is provided to facilitate the investors' understanding
of the relationships between the Company and each of the following related
parties and their transactions with the Company during the fiscal year ended
December 31, 1998.
<TABLE>
<CAPTION>
Name of related parties Existing relationship with the Company
<S> <C>
Mr. Zhi Jian Wu Li The major shareholder
Mr. Rui Lin Wu Director and father of Mr. Zhi Jian Wu Li
Mr. Zhi Yang Wu Director and brother of Mr. Zhi Jian Wu Li
Ms. Mei Lian Li Director and wife of Mr. Zhi Yang Wu
Mr. Zhi Zhong Wu Brother of Mr. Zhi Jian Wu Li
Ms. Qing Li Wife of Mr. Rui Lin Wu
Wu Holdings Limited ("WHL") Intermediate holding company
Qiao Xing Group Limited Common directors
Qiao Xing Properties Limited ("QXPL") Common directors
Qiao Xing International Company ("QXIC") Common director
Qiao Xing Commercial Limited ("QXCL") Common director
Rui Xing Electronic Development Company
Limited ("RXED") Common director
Ben Xing Telecommunication Component
Limited ("BXTC") Common director
Qiao Xing Investment Limited Common director
</TABLE>
Since the beginning of 1996, QXTI subleased a portion of factory building
to Qiao Xing Properties Limited ("QXPL"), Qiao Xing International Company
("QXIC"), Rui Xing Electronic
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<PAGE>
Development Company Limited ("RXED") and Ben Xing Telecommunication Component
Limited ("BXTC"). The balance due from these related parties represented
rental charges, electrical charges and water fees that were paid to the Wu Shi
Industrial Administrative Bureau by QXTI on behalf of the above four related
parties, respectively. In 1997, QXIC and BXTC moved out from QXTI's factory
building, and QXPL and RXED stayed there. At the end of 1997, QXPL and RXED
settled all these withholding charges.
QXTI borrowed RMB4,500,000 from RXED in 1997. The balance of this loan was
RMB959,000 as of December 31, 1998. The loan bears interest of 26% per annum and
was used for working capital purposes. This related party borrowing is unsecured
and without pre-determined repayment terms.
Regarding purchases from related parties, (i) QXTI purchases plastic covers
and molding from QXPL with an on going basis since October 1995. QXPL has common
directors (i.e., Rui Lin Wu and Zhi Yang Wu) with QXUT. QXPL is equipped with
the latest computer software and automatic machineries to provide on time and
quality services to QXTI. Since QXPL is located next to the Company, it provides
an additional convenience for QXTI to closely monitor the progress of their
work. The purchase price is determined on the open bid basis (i.e., only when
the price offered by QXPL is not higher than third-party's quotation, QXPL's
product can be accepted by QXTI); (ii) QXIC purchases the Integrated Circuit
("IC") from overseas suppliers for QXTI since 1997. QXIC has a common director
(i.e., Zhi Yang Wu) with QXUT. QXIC specializes in overseas sourcing of IC and
electronic components and provides a direct access channel to the world
electronics market for the Company with minimal searching cost incurred. If the
quality of the IC produced by local manufacturers can meet QXTI's requirement,
QXTI will purchase the IC from local suppliers and stop requiring QXIC to
purchase for them. The purchase price is also determined on the open bid basis;
(iii) QXCL started a pilot run on telephone research and assembling, and the
caller ID displayed telephones newly developed by QXCL were well accepted by the
market. However, QXCL did not have complete assembling line capability nor its
own distribution network. QXCL has a common director (i.e., Zhi Yang Wu) with
QXUT. Since the wholesale price of QXCL's products is very close to the
manufacturing cost of the similar products of QXTI, QXTI purchased all of the
semi-finished products from QXCL and successfully promoted them to the market
with average gross profit margin of approximately 30%. In 1999, since QXTI was
able to produce such telephones by itself, it stopped purchasing telephones from
QXCL, and QXCL also terminated its pilot run of telephone assembling in the
beginning of 1999; (iv) QXTI purchases printed circuit boards ("PCB") from
RXED with an on-going basis since October 1995. RXED has a common director
(i.e., Rui Lin Wu) with QXUT and it provides flexibility on supplying different
type of PCB when QXTI demands. The purchase price is also determined on the open
bid basis; and (v) QXTI purchases the custom-made components such as electronic
locks and mini speakers from BXTC with an on going basis since January 1995.
BXTC has a common director (i.e., Rui Lin Wu) with QXUT. The purchase price is
also determined on the open bid basis.
Regarding amounts due from/to affiliates, the amount due from Rui Lin Wu,
Zhi Yang Wu, Zhi Jian Wu Li and Mei Lian Li represented the balance of cash
advanced, the amount due from Qiao Xing Group Limited and Qiao Xing Investment
Limited represented amount borrowed from QXTI by these companies for working
capital uses, and the amount due from Wu Holdings Limited ("WHL") mainly
represented amount borrowed from QXTI for settlement of WHL's audit fees. The
balances due from the related parties were unsecured, non-interest bearing and
repayable on demand. The amount due to Zhi Yang Wu represented the unpaid
compensations owed to him. The amount due to Qing Li and RXED represented amount
borrowed from these related parties for working capital uses. The amount due to
RXED was unsecured, bore interest at 26% per annum and was without pre-
determined repayment terms. The other balances due to the related parties were
unsecured, non-interest bearing and without pre-determined repayment terms.
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As of December 31, 1998, QXTI had provided corporate guarantee to an
unrelated party who is a friend of Mr. Rui Lin Wu for bank borrowings of
approximately HK$1,200,000 (equivalent to approximately RMB1,282,000 and US
$155,000).
The Company believes that the terms of the agreements and transactions
referenced above which involve the Company's officers, directors, principal
shareholders or affiliates were fair, reasonable and consistent with terms that
the Company could have obtained from unaffiliated third parties.
ADDITIONAL MATTER TO BE VOTED UPON BY SHAREHOLDERS
THE 1999 STOCK COMPENSATION PLAN PROPOSAL
Effective June 16, 1999, the Board of Directors adopted and approved the
1999 Stock Compensation Plan (the "1999 Plan"). The purpose of the 1999 Plan is
to encourage ownership of the Common Stock of the Company by certain officers,
directors, employees and advisors of the Company or any subsidiary of the
Company in order to provide additional incentive for such persons to promote the
success and the business of the Company or its subsidiaries and to encourage
them to remain in the employ of the Company or its subsidiaries by providing
such persons an opportunity to benefit from any appreciation of the Common Stock
of the Company through the issuance of stock options to such persons in
accordance with the terms of the 1999 Plan. The Board of Directors believes
that the best interests of the Company and its subsidiaries, if any, would be
served by increasing their ability to secure and retain highly qualified and
experienced officers, directors, employees and advisors through affording them
an opportunity to acquire a stake in the future of the Company or its subsidiary
by acquiring an equity position in the Company. It is the desire of the Board
of Directors to assure by appropriate means the maximum efforts and fullest
measure of continued loyal association with the Company or its subsidiaries on
the part of their respective officers, directors, employees and advisors. It is
intended that options granted pursuant to the 1999 Plan shall constitute either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the United States Internal Revenue Code of 1986, as amended (the "Code"), or
options which do not constitute Incentive Options ("Nonqualified Options") at
the time of issuance of such options.
THE BOARD OF DIRECTORS RECOMMENDS TO THE SHAREHOLDERS THAT THEY VOTE "FOR"
---
THE ESTABLISHMENT AND ADOPTION OF THE 1999 STOCK COMPENSATION PLAN.
The 1999 Plan provides that incentive stock options and non-qualified stock
options would be granted to certain officers, directors, employees and advisors
of the Company or its subsidiaries, if any, selected by the Compensation
Committee. A total of 2,000,000 shares of Common Stock would be authorized and
reserved for issuance under the 1999 Plan, subject to adjustment to reflect
changes in the Company's capitalization in the case of a stock split, stock
dividend or similar event. The 1999 Plan would be administered by the
Compensation Committee which would have the sole authority to interpret the 1999
Plan and to make all determinations necessary or advisable for administering the
1999 Plan, including but not limited to (i) who shall be granted options under
the 1999 Plan, (ii) the term of each option, (iii) the number of shares covered
by such option, (iv) whether the option shall constitute an
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incentive option or a nonqualified option, (v) the exercise price for the
purchase of the shares of the Common Stock covered by the option, provided that
the exercise price for any incentive option must be at least equal to the fair
market value of the shares covered thereby as of the date of grant of such
option, (vi) the period during which the option may be exercised, (vii) whether
the right to purchase the number of shares covered by the option shall be fully
vested on issuance of the option so that such shares may be purchased in full at
one time or whether the right to purchase such shares shall become vested over a
period of time so that such shares may only be purchased in installments, and
(viii) the time or times at which the options shall be granted. Except in the
case of disability or death, no option shall be exercisable after an optionee
who is an employee of the Company ceases to be employed by the Company;
provided, however, that the Compensation Committee has the right to extend the
exercise period following the date of termination of such optionee's employment.
If an optionee's employment is terminated by reason of death or disability, the
Compensation Committee may extend the option term following the date of
termination of the optionee's employment. Upon the exercise of the option, the
exercise price thereof must be paid in full either in cash, shares of stock of
the Company or a combination thereof.
As of this date, the Company has not granted any options under the 1999
Plan.
If and to the extent that any option to purchase reserved shares shall not
be exercised by an optionee for any reason or if such option to purchase shall
terminate as provided by the 1999 Plan, such shares which have not been so
purchased thereunder shall again become available for the purposes of the 1999
Plan unless the 1999 Plan shall have been terminated.
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Arthur Andersen & Co., Hong Kong will attend the
Meeting and will have the opportunity to make a statement if he or she so
desires. This representative will be available to respond to appropriate
shareholder questions at that time.
PROPOSALS OF SHAREHOLDERS FOR PRESENTATION
AT NEXT ANNUAL MEETING OF SHAREHOLDERS
Any shareholder of record of the Company who desires to submit a proper
proposal for inclusion in the proxy materials relating to the next Annual
Meeting of Shareholders must do so in writing and it must be received at the
Company's principal executive offices by December 30, 1999. The proponent must
be a record or beneficial owner entitled to vote at the next Annual Meeting on
his proposal and must continue to own such security entitling him to vote
through the date on which the meeting is held.
ANNUAL REPORT
The Annual Report to Shareholders concerning the operations of the Company
during the fiscal year ended December 31, 1998, including audited financial
statements for the year then ended, has been distributed to all record holders
as of the record date. The Annual Report is not incorporated in the Proxy
Statement and is not to be considered a part of the soliciting material.
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OTHER BUSINESS
Management of the Company is not aware of any other matters which are to be
presented at the Meeting, nor has it been advised that other persons will
present any such matters. However, if other matters properly come before the
Meeting, the individual named in the accompanying proxy shall vote on such
matters in accordance with his best judgment.
AVAILABILITY OF ANNUAL REPORT ON FORM 20-F
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, TO
EACH SHAREHOLDER OF RECORD OR TO EACH SHAREHOLDER WHO OWNED COMMON STOCK OF THE
COMPANY LISTED IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE CLOSE OF
BUSINESS ON SEPTEMBER 8, 1999. ANY REQUEST BY A SHAREHOLDER FOR THE COMPANY'S
ANNUAL REPORT ON FORM 20-F SHOULD BE SENT TO THE COMPANY'S SECRETARY, QIAO XING
UNIVERSAL TELEPHONE, INC., QIAO XING BUILDING, WU SHI INDUSTRIAL ZONE, HUIZHOU
CITY, GUANGDONG, PEOPLE'S REPUBLIC OF CHINA.
The above notice and Proxy Statement are sent by order of the Board of
Directors.
ZHI YANG WU
Secretary
September 15, 1999
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
QIAO XING UNIVERSAL TELEPHONE, INC.
TO BE HELD OCTOBER 15, 1999
The undersigned hereby appoints Rui Lin Wu as the lawful agent and Proxy of
the undersigned (with all powers the undersigned would possess if personally
present, including full power of substitution), and hereby authorizes him to
represent and to vote, as designated below, all the shares of Common Stock of
Qiao Xing Universal Telephone, Inc. held of record by the undersigned as of the
close of business on September 8, 1999, at the Annual Meeting of Shareholders
to be held on Friday, October 15, 1999, or any adjournment or postponement
thereof.
1.ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed below AUTHORITY to
(except as marked vote for all
to the contrary nominees listed
below) below
R.L. Wu, Z.Y. Wu, S.J. Yeh, Z.A. Li, Z.S. Huang, L.R. Yang, G.L. Zhang
(INSTRUCTION: To withhold authority to vote for any nominees, write the
nominees' names on the space provided below.)
------------------------------------------------------
2. To approve the establishment of the 1999 stock compensation plan for the
benefit of certain officers, directors, employees and advisors of the
Company (the "1999 Stock Compensation Plan Proposal").
[_] FOR [_] AGAINST [_] ABSTAIN
3. In his discretion, the Proxy is authorized to vote upon any matters which
may properly come before the Meeting, or any adjournment or postponement
thereof.
It is understood that when properly executed, this proxy will be voted in
the manner directed herein by the undersigned shareholder. WHERE NO CHOICE
IS SPECIFIED BY THE SHAREHOLDER, THE PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS PROPOSED IN ITEM (1) AND IN FAVOR OF ITEM (2).
<PAGE>
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and confirms all that said proxy or his substitutes may do by
virtue hereof.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: _________________ , 1999
_______________________________
Signature
_______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
[_] PLEASE CHECK THIS BOX IF YOU INTEND TO BE PRESENT AT THE MEETING.
