Proxy Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Xin Net Corp.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)Title of each class of securities to which transaction applies:
Common
-----------------------------------------------------------------
2)Aggregate number of securities to which transaction applies:
21,360,010
-----------------------------------------------------------------
3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
N/A
-----------------------------------------------------------------
4)Proposed maximum aggregate value of transaction:
N/A
-----------------------------------------------------------------
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Xin Net Corp.
#830-789 W. Pender St.
Vancouver, B.C. Canada V6C 1H2
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY ____, 2001
Notice is hereby given that the Annual Meeting of Shareholders of Xin
Net Corp., (hereinafter referred to as "the Company") will be held at
Vancouver, B.C., at 9:00 a.m., local time, for the following purposes:
1. To elect four directors to hold office until the next
annual meeting of shareholders and qualification of
their respective successors.
2. To approve an Employee Stock Award Plan for the
Company.
3. To ratify the designation of Clancy & Co. as
Independent Accountants for the annual period ending
December 31, 2000.
4. To transact such other business as may properly come
before the Annual Meeting or any postponement of or
adjournment thereof.
The Board of Directors has fixed the closing of business on December _____,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at this meeting or any adjournment thereof. The stock
transfer books will not be closed.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1999 accompanies this Notice of Annual Meeting and Proxy Statement.
All stockholders, whether or not they expect to attend the Meeting in
person, are requested to complete, date, sign, and return the enclosed form of
proxy in the accompanying pre-addressed envelope. The proxy may be revoked by
the person executing the proxy by filing with the Secretary of the Company and
instrument of revocation or duly executed proxy bearing a later date, or by
electing to vote in person at the Meeting.
/s/ Marc Hung
----------------------------------
Xin Net Corp.
Marc Hung, President
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PROXY STATEMENT
Xin Net Corp.
#830-789 W. Pender St.
Vancouver, BC Canada V6C 1H2
ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
January ____, 2001
This Proxy Statement is being furnished to the shareholders of Xin Net
Corp., a Florida corporation, in connection with the solicitation by the Board
of Directors of proxies to be used at the Annual Meeting of Shareholders to be
held at 9:00 a.m., local time, January ____, 2001 at #830-789 W. Pender Street,
Vancouver, BC Canada. The Proxy Statement is first being sent or given to
shareholders on or about December ____, 2000.
PROXIES ARE BEING SOLICITED BY THE BOARD OF DIRECTORS.
WE ARE ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED TO SEND US A
PROXY.
VOTING RIGHTS
Stockholders of record of the Company as of the close of business on
December ____, 2000 have the right to receive notice of and to vote at the
Annual Meeting. On November 30, 2000, the Company had issued the outstanding
21,360,010 shares of Common Stock (the "Common Stock"), the only class of voting
securities outstanding. Each share of Common Stock is entitled to one (1) vote
for as many separate nominees as there are directors to be elected and for or
against all other matters presented. For action to be taken at the Annual
Meeting, a majority of the shares entitled to vote must be represented at the
Annual Meeting in person or by proxy. Shares of stock may not be voted
cumulatively. Abstentions and broker non-votes each will be included in
determining the number of shares present and voting at the Annual Meeting.
Abstentions will be counted in tabulations of the votes cast on proposals,
whereas broker non-votes will not be counted for purposes of determining whether
a proposal has been approved.
EXPENSE OF MAILING
The expense of preparing and mailing of this Proxy Statement to
shareholders of the Company is being paid for by the Company. The Company is
also requesting brokers, custodians, nominees and fiduciaries to forward this
Proxy Statement to the beneficial owners of the shares of common stock of the
Company held of record by such persons. The Company will not reimburse such
persons for the cost of forwarding.
PROXIES
In voting their Common Stock, stockholders may vote in favor of or
against the proposal to approve the proposals on the agenda or may abstain from
voting. Stockholders should specify their choice on the accompanying proxy card.
All properly executed proxy cards delivered pursuant to this solicitation and
not revoked will be voted at the Meeting in accordance with the directions
given. If no specific instruction are given with regard to the matter to be
voted upon, then the shares represented by a signed proxy card will be voted
"FOR" the approval of the proposals and in the discretion of such proxies to any
other procedural matters which may properly come before the Meeting or any
adjournments thereof. All proxies delivered pursuant to this solicitation are
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revocable at any time before they are voted at the option of the persons
executing them by (i) giving written notice to the Secretary of the Company,
(ii) by delivering a later dated proxy card, or (iii) by voting in person at the
Meeting. All written notices of revocation and other communications with respect
to revocations of proxies should be addressed to Ernest Cheung, Secretary, Xin
Net Corp., #830-789 W. Pender St., Vancouver BC Canada V6C 1H2.
HOLDERS OF COMMON STOCK ARE REQUIRED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY IN THE
ACCOMPANYING PRE-ADDRESSED ENVELOPE.
The person named as proxy is Marc Hung, a director of the Company.
In addition to the solicitation of proxies by mail, the Company, through
its directors, officers, and employees, may solicit proxies from stockholders
personally or by telephone or other forms of communication. The Company will not
reimburse anyone for reasonable out-of-pocket costs and expenses incurred in the
solicitation of proxies. The Company also will request brokerage houses,
nominees, fiduciaries, and other custodians to forward soliciting materials to
beneficial owners, and the Company will reimburse such persons for their
reasonable expenses incurred in doing so. All expenses incurred in connection
with the solicitation of proxies will be borne by the Company.
INTEREST OF PERSONS IN MATTERS TO BE ACTED UPON
None. No director or shareholder owning 10% or more of the outstanding
shares has indicated her or his intent to oppose any action to be taken at the
meeting. No officer or director or shareholder has any interest in any matter to
be voted upon, except that all officers and directors may be deemed
beneficiaries under the Employee Stock Award Plan proposed for adoption.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
As of the call date of the meeting, December ____, 2000, the total number
of common shares outstanding and entitled to vote was 21,360,010.
The holders of such shares are entitled to one vote for each share held
on the record date. There is no cumulative voting on any matter on the agenda of
this meeting. No additional shares will be issued subsequent to call date and
prior to meeting.
RECORD DATE
Stock transfer records will remain open. December ____,2000 shall be
the record date for determining shareholders entitled to vote and receive notice
of the meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of November 30, 2000,
with respect to the shares of common stock of the Company owned by (i) owners of
more than 5% of the outstanding shares of common stock, (ii) each director of
the Company, and (iii) all directors and officers of the Company as a group.
Unless otherwise indicated, all shares are held by the person named and are
subject to sole voting and investment are by such person.
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Interest Class
----- ---------------- ------------------- -----
Common Xiao-qing Du
#2754 Adanac St. 2,760,000 12.9%
Vancouver, BC V5K 2M9
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Common Richco Investors, Inc. 2,962,500 13.9%
789 W. Pender St., #830
Vancouver, BC Canada V6C 1H2
Common Ernest Cheung (1) 2,962,500 13.9%
Secretary and Director
789 W. Pender St., #830
Vancouver, BC Canada V6C 1H2
Common Maurice Tsakok (1) 2,962,500 13.9%
789 W. Pender St., #830
Vancouver, BC Canada V6C 1H2
Common Marc Hung 118,000 .5%
789 W. Pender St., #830
Vancouver, BC Canada V6C 1H2
Officers and Directors as a Group 5,840,500 27.3%
(1) Through Richco Investors, Inc. of which Ernest Cheung and Maurice Tsakok are
officers, directors, and shareholders.
VOTING REQUIRED FOR APPROVAL
I. A majority of the shares of common stock outstanding at the record
date must be represented at the Annual Meeting in person or by proxy in order
for a quorum to be present, but if a quorum should not be present, the meeting
may be adjourned without further notice to shareholders, until a quorum is
assembled. Each shareholder will be entitled to cast one vote at the Annual
Meeting for each share of common stock registered in such shareholder's name at
the record date.
II. Abstensions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Each share of Common Stock entitles the holder thereof to one vote on all
matters to come before the Annual Meeting. Holders of shares of Common Stock are
not entitled to cumulative voting rights.
III. The favorable vote of a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting is
necessary to elect the nominees for directors of the Company and to approve the
Employee Stock Award Plan.
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
EXECUTIVE COMPENSATION
(a) Cash Compensation.
Compensation paid by the Company for all services provided up to December
31, 1999 and to September 30, 2000 to (1) each of our executive officers and (2)
to all officers as a group.
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SUMMARY COMPENSATION TABLE OF EXECUTIVES
Cash Compensation Security Grants
------------------------------------------------------------------------------
Name and Year Salary Bonus Consulting Number Securities Long Term
Principal Fees/Other of Underling Compensation/
Position Fees ($) Shares Options/ Option
SARs(#)
------------------------------------------------------------------------------
Xiao-qing Du 1997 20,000 0 0 0 0 0
President of 1998 20,000 0 0 0 0 0
Infornet 1999 27,474 0 16,000 0 0 0
Subsidiary(3) 2000 22,500 0 0 0 0 0
(CDN)
------------------------------------------------------------------------------
Marc Hung 1998 0 0 0 0 0
President(3) 1999 0 0 17,500 0 0 $4,500 (2)
2000 0 0 23,500 (CDN) 0 0 0
------------------------------------------------------------------------------
Ernest Cheung, 1998 0 0 0 0 0 (1)
Secretary (3) 1999 0 0 8,000 0 0 $385,000
2000 0 0 18,000 (CDN) 0 0 0
------------------------------------------------------------------------------
Officers as a 1998 20,000 0 0 0 0
Group(3) 1999 27,474 0 41,500 0 0 $389,500
(CDN) (CDN)
2000 22,500 0 41,500 0 0 0
Effective on April 6, 1999, Marc Hung was appointed as President of the
Company and Angela X. Du resigned as the President of the Company. She is the
President of Infornet Investment Corp., the wholly owned operating subsidiary in
Canada.
(1)Richco Investors, Inc. of which Mr. Cheung is an officer and director,
and Mr. Tsakok is an officer and director, received 385,000 units for its
services in structuring the private placement.
(2) Compensation in the form of options at a below market price.
(3) For nine months to September 30, 2000
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SUMMARY COMPENSATION TABLE OF DIRECTORS
(To December 31, 1999)
Cash Compensation Security Grants
-----------------------------------------------------------------------------
Name and Year Annual Meeting Consulting Number Securities
Principal retainer Fees ($) Fees/Other of Underlying
Position Fees ($) Fees($) Shares Options/SARs(#)
(#)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Xiao-qing Du, 1998 0 0 0 0 0
Director 1999 0 0 0 0 0
2000 0 0 0 0 0
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Jing Liang, 1998 0 0 0 0 0
Director 1999 0 0 0 0 0
(resigned in
1999)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Marc Hung 1999 0 0 0 0 $4,500 (2)
Director 2000 0 0 0 0 0
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Ernest Cheung, 1998 0 0 0 0 0
Director 1999 0 0 0 0 $385,000(1)
2000 0 0 0 0 0
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Maurice Tsakok 1999 0 0 14,000 CDN 0 $385,000(1)
2000 0 0 18,000 CDN 0 0
------------------------------------------------------------------------------
Directors as a 1999 0 0 14,000 CDN 0 $389,500
Group 2000 0 0 18,000 cdn 0 0
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(1) See note (1) under Compensation Table of Executives
(2) See note (2) under Compensation Table of Executives
No director, except for those who are also officers of the Company as
listed above, received any compensation in 1998.
Effective on May 1, 1998, Jing Liang resigned from his position as
Secretary of the Company. Ernest Cheung was appointed Secretary of the Company
as of the same date.
Effective March 10, 1999 Jing Liang resigned as director of the Company.
Effective on April 6, 1999, Mr. Marc Hung and Mr. Maurice Tsakok were
elected as directors of the board.
(e) Termination of Employment and Change of Control Arrangements. None.
(f) Stock purchase options:
On February 26, 1999, stock options for a total of 480,000 shares at $.40
per share were granted to officers and employees (or persons who became
officers) that had contributed to the success of the company in the past: Marc
Hung (150,000 shares) and Xin Wei (330,000 shares) (Note: Mr. Wei is not an
officer of the Company, but an employee of Infornet Investment Corp.) All share
options were exercised as of April 6, 1999.
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On November 12, 1999 the Company granted 2,136,000 options to purchase
shares at $1.30 per share to entities/persons who contributed to the successful
results achieved by the Company in 1999, as follows:
a. 262,000 options to Gemsco Management Ltd. (owned beneficially by
director Maurice Tsakok) for designing and implementing the Company's corporate
website, advising on technological matters, researching the technology sector
and for services as a director.
b. 262,000 options to Farmind Link Corp. for their role as advisor on
strategic issues, technology market trends, and financial and capital market
issues.
c. 262,000 options to Sinhoy Management Ltd. (owned beneficially by officer
and director Marc Hung) for their contributions to the general management of the
Company, investor relations, technological matters and for services as a
director.
d. 212,000 options to Lancaster Pacific Investment, Ltd. for their
contributions in the areas of regulatory matters, Chinese market conditions and
strategies aimed at penetrating the market.
e. 50,000 options to Ernest Cheung for services rendered as secretary and
director of the Company.
f. 20,000 options to Yonderiche International Consultants Ltd. for services
rendered in matters regarding Chinese government policies and regulations.
g. 1,068,000 options to Weststar Holdings Limited (owned beneficially by
Xiao-qing Du, a director and president of Infornet Investment Corp., and Xin
Wei, a director and secretary of Infornet Investment Corp. and president of XIN
HAI) and employees of Xin Hai Technology Development Ltd., as a group, for the
successful continued development of the business in China and achieving
excellent operational results during the year. The breakdown of the 1,068,000
options is to be determined at a later date.
The average closing price for the five trading days ended on November 12,
1999 was $1.28 per share. The closing price on November 12, 1999 was $1.187 per
share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 26, 1999, Marc Hung, who was neither an officer nor director
but since has become President and Director, was granted and exercised (in
March, 1999) an option to purchase 150,000 shares of common stock at $.40 per
share. The option to purchase shares was granted to him for services rendered
since July 1998 as advisor to the Company in matters relating to management,
technology and strategies.
On February 26, 1999, Kun Wei, a shareholder, was granted and exercised (in
March) an option to purchase 330,000 shares of common stock at $.40 per share.
The option to purchase shares was granted to him for contributing to the success
of the joint venture, in particular with regards to technology development and
implementation. Kun Wei is Vice President of Xin Hai Technology Development,
Ltd. and the brother of Xin Wei.
On February 26, 1999, Xin Wei, a shareholder, who is President of Xin Hai
Technology Development, Ltd., the Company's joint venture Partner, was granted
and exercised (in March 1999) an option to purchase 330,000 shares of common at
$.40 per share. The option to purchase shares was granted to him for
contributing to the success of the joint venture, in particular with regards to
general management of Xin Hai Technology Development Ltd., business development
and governmental relations.
In May 1999, Marc Hung, President and Director of the Company, purchased
80,000 units of the private placement at the $1.00 offering price. Richco
Investors, Inc., a public company of which both Messrs. Ernest Cheung and
Maurice Tsakok are directors, officers and shareholders, purchased 700,000 units
in the private placement at $1.00 per unit in May 1999.
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On September 17, 1999 385,000 units were issued to Richco Investors, Inc.
as a consulting fee for services rendered in structuring the unit placement.
The units consisted of one share and a warrant to purchase an additional
unit at $2.00 per unit, such additional unit consisting of one share and a
warrant to purchase an additional share at $5.00 per share.
On November 12, 1999 the Company granted 2,136,000 options to purchase
shares at $1.30 per share to entities/persons who contributed to the successful
results achieved by the Company in 1999, as described above under Item (f)
"Stock Purchase Options."
The Company has made loans to the Placer joint venture during the year
1999. These loans bear 0% interest and are payable on demand. At December 31,
1999 the cumulative amount of the loans was $1,558,689.
Committees and Meetings
The Board held numerous meetings during the fiscal year ended December
31, 1999. The Board has standing Audit and Compensation Committees. The Audit
Committee conducted its business during the regular meetings of the Board of
Directors during the last fiscal year and in addition, conferred from time to
time as necessary. The Compensation Committee, in addition to meetings as part
of the regular meetings of the Board, also conferred from time to time as
necessary. The Board has no standing nominating committee. All directors
attended more than 75% of the Board meetings and the meetings of the Board
committees on which such directors served.
The Audit Committee of the Board presently consists of Mr. Cheung and
Mr. Hung. The Audit Committee has the responsibility to review the scope of the
annual audit, recommend to the Board the appointment of the independent
auditors, and meet with the independent auditors for review and analysis of the
Company's systems, the adequacy of controls and the sufficiency of financial
reporting and accounting compliance.
Messrs. Cheung and Hung currently serve on the Compensation Committee.
The Compensation Committee will administers the Company's Employee Stock Award
Plan (the "Plan") and determines the compensation to be paid to each of the
Company's executive officers, employees, and Directors.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Securities and Exchange Commission requires disclosure where an
executive officer of a company served or serves as a director or on the
compensation committee of an entity other than the Company and an executive
officer of such other entity served or serves as a director or on the
compensation committee of the Company. The Company does not have any such
interlocks. Decisions as to executive compensation are made by the Compensation
Committee. Messrs. Cheung and Hung are members of the Compensation Committee.
Indemnification of Directors and Officers
As permitted by the Florida Business Corporation Act, the Company's
Certificate of Incorporation includes a provision that eliminates the personal
liability of its directors for monetary damages for breach or alleged breach of
their duty of care. In addition, as permitted by the Florida Business
Corporation Act, the Bylaws of the Company provide generally that the Company
shall indemnify its directors and officers to the fullest extent permitted by
Florida law, including those circumstances in which indemnification would
otherwise be discretionary.
The Company has entered into indemnification agreements with each of
its directors and executive officers that provide the maximum indemnity allowed
to directors and executive officers by the Florida Business Corporation Act and
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the Bylaws, as well as certain additional procedural protections. In addition,
the indemnification agreements provide generally that the Company will advance
expenses incurred by directors and executive officers in any action or
proceeding as to which they may be indemnified.
The indemnification provision in the Bylaws, and the indemnification
agreements entered into between the Company and its directors and executive
officers, may be sufficiently broad to permit indemnification of the officers
and directors for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act").
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the year ended December
31, 1999 (the "Form 10-KSB") is being furnished simultaneously herewith. The
Form 10-KSB is not considered a part of this Proxy Statement.
The Company will also furnish to any stockholder of the Company a copy
of any exhibit to the Form 10-KSB as listed thereon, upon request and upon
payment of the Company's reasonable expenses of furnishing such exhibit.
Requests should be directed to Ernest Cheung, Secretary, at #830, 789 W. Pender
St., Vancouver, BC Canada V6C 1H2.
BOARD OF DIRECTORS AND OFFICERS
The persons listed below are Officers and the members of the Board of
Directors. All are nominees for Director for the following term.
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
The directors and executive officers of the Company as of December 7, 2000
are as follows:
Period of
Service As
An Officer Or
Name Age Position(s) Director
----------------------- -------- ------------------------ -------------------
Marc Hung 55 President & Director Annual
Ernest Cheung 50 Secretary & Director Annual
Xiao-qing (Angela) Du 29 Director Annual
Maurice Tsakok 48 Director Annual
The directors of the Company hold office until the next annual meeting
of the shareholders and until their successors have been duly elected and
qualified. The officers of the Company are elected at the annual meeting of the
Board of Directors and hold office until their successors are chosen and
qualified or until their death, resignation, or removal.
The principal occupations of each director and officer of the Company
for at least the past five years are as follows:
MANAGEMENT EXPERIENCE
Marc Hung, B.A.Sc.(E.E.), M.A. Sc. (E.E.) University of Montreal (1969 &
1971), President and Director, age 55, has been President of the Company since
April 6, 1999. From May 1992 to April 1997, Marc Hung was director, Power System
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Technology, a division of Institut de Recherche en Electricite du Quebec (IREQ),
Hydro-Quebec's Research Institute. His main tasks consisted of general
management, networking, promotion of the division's technological products and
services and negotiations with potential partners for spinning off promising
innovations. The field of responsibility included, amongst others, software
products and services, software engineering and telecommunications technology.
From May 1997 to June 1998, he was loaned by Hydro-Quebec to the Canadian Centre
for Magnetic Fusion (CCFM), a fundamental research entity formed by
Hydro-Quebec, the Institut National de Recherche Scientifique (INRS) and (up to
March 1997) Atomic Energy of Canada Ltd. Besides general management, his main
mandate was to develop and propose a plan for the commercialization of the
Centre's innovative products and services. From 1999 to date, he has been
President and principal of Sinhoy Management, Ltd. From July 1998 to March 1999,
Mr. Hung was on sabbatical for personal reasons, but acted as a consultant to
Xin Net.
Maurice Tsakok, Director, age 48, was employed, from 1994 to 1996, by Sagit
Mutual Funds, a mutual fund company who as a Vice-President was responsible for
computer operations and research on global technology companies. From 1997 to
present, he acted as a consultant on the high-tech industry and provides
technical analysis on high-tech companies. He holds a Mechanical Engineering
degree (1974 University of Minnesota) as well as an MBA specializing in
Management Information Systems (MIS) (1976 Hofstra University). From 1997 to
date he has been a principal director in Gemsco Management, Ltd.
Xiao-qing (Angela) Du, President of subsidiary Infornet Investment Corp.
and Director, age 29, was President and Director of the company from 1996 to
April 1999. She received a Bachelor of Science in International Finance in 1992
from East China Normal University. She received a Master of Science in Finance
and Management Science in 1996 from the University of Saskatchewan, Canada. She
has been Business Manager of China Machinery & Equipment I/E Corp. (CMEC) from
1992 to 1994. She is now President of Infornet Investment Corp., the wholly
owned subsidiary in Canada and remains a director of the company.
Ernest Cheung, Secretary and Director, age 50, received an MBA in Finance
and Marketing from Queen's University, in Kingston, Ontario in 1975 and obtained
a Bachelors Degree in Math in 1973 from University of Waterloo, Ontario. From
1984 to 1991, he was Vice President and Director, Capital Group Securities, Ltd.
in Toronto, Canada. From 1991 to 1993, he was Vice President of Midland Walwyn
Capital, Inc. of Toronto, Canada. From 1993, to 1994, he was Vice Chairman of
Tele Pacific International Communications Corp. of Vancouver, BC. From 1994 -
1996, he was Vice President of Finance of BIT Integration Technology, Inc. of
Toronto, Canada. From May 1995 to present, he has served as President of Richco
Investors, Inc. of Vancouver, BC.
From 1992 - 1995, he served as a Director of Tele Pacific International
Communications Corp. (VSE). He has also served as a Director of Richco
Investors, Inc. (CDN) since 1995. From 1995 - 1996, he was a Director of BIT
Integration Technology, Inc. (ASE). Since 1997, he has served and is still
serving as Director of the following companies: Argo International Holdings,
Inc. (VSE); Spur Ventures, Inc. (VSE); Drucker Industries, Inc. (NASD Bulletin
Board); Xin Net Corp. (NASD Bulletin Board); Speechlink Communications Corp.
(NASD); Global-Pacific Minerals, Inc. (TSE); and Pacific E-Link Corp. (VSE);
NetNation Communications, Inc. (Nasdaq small cap.).
He has held a Canadian Securities license but is currently inactive. He
has been a Director of Registrant since 1997.
Proposal #1
NOMINATION AND ELECTION OF DIRECTORS
The Company's Bylaws currently provide for the number of directors of
the Company to be established by resolution of the Board of Directors and that
number is four. The Board has nominated four (4) persons. At this Annual
Meeting, a Board of four (4) directors will be elected. Except as set forth
below, unless otherwise instructed, the proxy holders will vote the proxies
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received by them for Management's nominees named below. All the nominees are
presently directors of the Company. In the event that any Management nominee
shall become unavailable, or if other persons are nominated, the proxy holders
will vote in their discretion for a substitute nominee. It is not expected that
any nominee will be unavailable. The term of office of each person elected as a
director will continue until the next Annual Meeting of Stockholders or until a
successor has been elected and qualified.
The proxies solicited hereby cannot be voted for a number of persons
greater than the number of nominees named below. The Certificate of
Incorporation of the Company does not permit cumulative voting. A plurality of
the votes of the holders of the outstanding shares of Common Stock represented
at a meeting at which a quorum is presented may elect directors.
The business experience of each director nominee is discussed on pages
9 and 10 of this Proxy Statement.
THE DIRECTORS NOMINATED BY MANAGEMENT ARE:
Marc Hung
Ernest Cheung
Xiao-qing (Angela) Du
Maurice Tsakok
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" MANAGEMENT'S NOMINEES.
Proposal #2
EMPLOYEE STOCK AWARD PLAN
On October 3, 2000 the Board unanimously approved an Employee Stock
Award Plan, subject to stockholder approval, for 15% of shares outstanding, all
of which shares will be available for grant to directors and selected employees,
advisors and consultants of the Company. The Board believes that the Plan is
necessary for the Company to compete effectively in its market by attracting and
retaining key talent with stock options.
The following summary does not purport to be a complete statement of
the Plan's terms and is subject to and qualified in its entirety by reference to
Exhibit A.
Under the Plan, only employees, directors, and consultants of the Company
or any subsidiary (including, without limitation, independent contractors who
are not members of the Board) are eligible to receive grants of Options by the
Compensation Committee. The Plan is administered by the Compensation Committee
of the Board, which selects the employees to whom options will be granted,
determines the number of shares to be made subject to each grant, and prescribes
other terms and conditions, including the type of consideration to be paid to
the Company for the grant of each option and vesting schedules in connection
with each grant.
Set forth below is an explanation of the Plan and a summary of its
principal terms. The text of the Plan is set forth in Exhibit A to this Proxy
Statement.
Shares Subject to the Employee Stock Award Plan
The maximum number of option grants is set at 15% of shares outstanding.
The authorized shares issuable in connection with the Plan are subject to
adjustment in the event of stock dividends, mergers or other reorganizations and
other situations.
If any option granted under the Plan expires or is canceled or otherwise
terminated, the shares allocable to the unexercised portion of such option shall
again be available for additional option grants.
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Participants
All directors, employees, advisors, and consultants of the Company are
eligible to receive options under the Plan either by automatic grant for the
Board made pursuant to the Plan or if selected by the Compensation Committee.
Terms of Stock Options
The exercise price of NSOs under the Plan shall not be less than 100% of the
fair market value of a share of the Company's Common Stock on the date of grant.
The exercise price of all NSOs granted to a nonemployee director shall be equal
to 100% of the fair market value of a share of the Company's Common Stock on the
date of grant.
The exercise price of ISOs granted to the Company's employees shall not
be less than 100% of the fair market value of a share of the Company's Common
Stock on the date of grant.
The term of any Option granted under the Plan shall not exceed ten (10)
years from the date of grant.
The Compensation Committee shall have sole discretion in determining the
award amounts.
The Compensation Committee: (1) administers the Plan, and except for
automatic grants for the Board made pursuant to the Plan (2) determines the
number of shares and options to be granted under the Plan, and the timing,
vesting, and other terms of such grants, including, without limitation, the
purchase price for each award or sale of shares and the exercise price of each
option.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of the
Plan is intended to be a summary of applicable federal law. State and local tax
consequences may differ. Because the federal income tax rules governing options
and related payments are complex and subject to frequent change, optionees are
advised to consult their tax advisors prior to exercise of options or
dispositions of stock acquired pursuant to option exercise.
ISOs and NSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Internal
Revenue Code. NSOs need not comply with such requirements.
An employee is not taxed on the grant or exercise of an ISO. The
difference between the exercise price and the fair market value on the exercise
date of the shares acquired under an ISO will, however, be a preference item for
purposes of the alternative minimum tax. If an optionee holds the shares
acquired upon exercise of an ISO for at least two (2) years following grant and
at least one (1) year following exercise, the optionee's gain, if any, upon a
subsequent disposition of such shares is long-term capital gain. If such shares
are held longer than 18 months, the long-term capital gains rate is generally
20%. The measure of the gain is the difference between the proceeds received on
disposition and the optionee's basis in the shares (which generally equals the
exercise price). If an optionee disposes of stock acquired pursuant to exercise
of an ISO before satisfying the one (1)- and two (2)-year holding periods
described above, the optionee may recognize both ordinary income and capital
gain in the year of disposition. The amount of the ordinary income will be
limited to the difference between the fair market value of the stock on the
exercise date and the option exercise price. Any remaining gain on the
disposition will be capital gain and will be long-term capital gain if the stock
had been held for at least one (1) year following the date of exercise. The
Company is not entitled to an income tax deduction on the grant or exercise of
an ISO if there is no disposition of the shares prior to the satisfaction of the
holding period requirements described above. If the holding periods are not
satisfied, the Company will be entitled to a deduction in the year the optionee
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disposes of the shares, in an amount equal to the ordinary income recognized by
the optionee.
An employee is not taxed on the grant of an NSO. On exercise, however,
the optionee recognizes ordinary income equal to the difference between the
option price and the fair market value of the shares on the date of exercise.
The Company is entitled to an income tax deduction in the year of exercise in
the amount recognized by the optionee as ordinary income. Any gain on subsequent
disposition of the shares is long-term capital gain if the shares are held for
at least one (1) year following exercise. The Company does not receive a
deduction for this gain.
New Plan Benefits
The Compensation Committee has full discretion to determine the number
and amount of options to be granted to employees under the Plan. Therefore, the
benefits and amounts that will be received by each of the officers named in the
Summary Compensation Table above, the executive officers as a group, the
directors who are not executive officers as a group, and all other employees
under the Plan are not presently determinable.
The number of options to be received by each nonemployee director
pursuant to the terms of the Plan, subject to stockholder approval, are
determined by the Compensation Committee.
Required Approval
For action to be taken at the Annual Meeting, a quorum must be present.
To be considered approved, the amendment and restatement of the Plan must
receive the affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting.
Unless marked to the contrary, proxies received will be voted "FOR" the
approval of the company's Employee Stock Award Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE COMPANY'S EMPLOYEE
STOCK AWARD PLAN.
Proposal #3
INDEPENDENT PUBLIC ACCOUNTANTS
Clancy and Co., PLLC, Independent Public Accountants, of Phoenix,
Arizona, have been engaged as the Certifying accountants for the period through
fiscal year 2000 and shareholders are asked to ratify such engagement.
Ratification of the appointment of Clancy and Co, PLLC, as the Company's
independent public accountants for the fiscal year ending December 31, 2000 will
require the affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy and entitled to vote at the Annual Meeting. In
the event the stockholders do not ratify the appointment of Clancy and Co.,
PLLC, for the forthcoming fiscal year, such appointment will be reconsidered by
the Board.
Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the designation of Clancy and Co., PLLC, as independent
accountants for the Company's fiscal year ending December 31, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATIONOF THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matter appropriate for
shareholder action consistent with regulations of the Securities and Exchange
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Commission. Should a shareholder intend to present a proposal at next year's
annual meeting, it must be received by the secretary of the Company at #830-789
W. Pender St., Vancouver, BC Canada V6C 1H2, not later than 30 days prior to
fiscal year end, in order to be included in the Company's proxy statement and
form of proxy relating to that meeting. It is anticipated that the next annual
meeting will be held in June, 2001.
Other Matters. Management knows of no business that will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting. If, however, other matters are properly brought before the
Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: December ____, 2000
By Order of the Board of Directors
/s/ Marc Hung
By: ----------------------------------
Marc Hung, President
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