<PAGE>
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
U.S.-China Industrial Exchange, 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):
[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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<PAGE>
<PAGE>
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
5. Total fee paid:
----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
----------------------------------------------------------------------------
4. Date Filed:
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-2-
<PAGE>
<PAGE>
May 20, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders to be held at the offices of U.S.-China Industrial Exchange, Inc.,
7201 Wisconsin Avenue, Bethesda, Maryland, on Wednesday, June 17, 1998 at 10:00
A.M., local time. The matters to be acted upon at that meeting are set forth and
described in the Notice of Annual Meeting and Proxy Statement which accompany
this letter. We request that you read these documents carefully.
We hope that you plan to attend the meeting. However, if you
are not able to join us, we urge you to exercise your right as a shareholder and
vote. Please promptly sign, date and return the enclosed proxy card in the
accompanying postage prepaid envelope. You may, of course, attend the Annual
Meeting of Shareholders and vote in person even if you have previously mailed
your proxy card.
Sincerely,
ROBERTA LIPSON
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD AS
SOON AS POSSIBLE.
-3-
<PAGE>
<PAGE>
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
7201 WISCONSIN AVENUE
BETHESDA, MARYLAND 20814
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 17, 1998
To the Shareholders of U.S.-China Industrial Exchange, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of
Shareholders (the "Meeting") of U.S.-China Industrial Exchange, Inc. (the
"Company") will be held at the offices of the Company, 7201 Wisconsin Avenue,
Bethesda, Maryland, on Wednesday, June 17, 1998 at 10:00 A.M., local time, to
consider and act upon the following matters:
1. The election of six directors to serve until the next
annual meeting of shareholders and until their respective successors are elected
and qualified;
2. The ratification and approval of the appointment of Ernst &
Young, LLP as independent certified accountants for the Company for the fiscal
year ending December 31, 1998;
3. The amendment of the Company's 1994 Stock Option Plan to
increase from 228,000 to 500,000 the number of shares of Common Stock for which
options may be granted thereunder and to effect related changes; and
4. The transaction of such other business as may properly come
before the Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the
Meeting is contained in the accompanying Proxy Statement.
The close of business on May 18, 1998 has been fixed as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
ELYSE BETH SILVERBERG
Secretary
Bethesda, Maryland
May 20, 1998
================================================================================
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. EACH SHAREHOLDER
IS URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. AN ENVELOPE ADDRESSED TO THE
COMPANY'S TRANSFER AGENT IS ENCLOSED FOR THAT PURPOSE AND NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES.
================================================================================
<PAGE>
<PAGE>
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
7201 WISCONSIN AVENUE
BETHESDA, MARYLAND 20814
--------------------
PROXY STATEMENT
--------------------
This Proxy Statement is furnished to the holders of Common
Stock, par value $.01 per share ("Common Stock"), and Class B Common Stock, par
value $.01 per share ("Class B Common Stock"), of U.S.-China Industrial
Exchange, Inc. (the "Company") in connection with the solicitation by and on
behalf of its Board of Directors of proxies ("Proxy" or "Proxies") for use at
the 1998 Annual Meeting of Shareholders (the "Meeting") to be held on Wednesday,
June 17, 1998, at 10:00 A.M., local time, at the offices of the Company, 7201
Wisconsin Avenue, Bethesda, Maryland and at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Shareholders. The cost of preparing, assembling and mailing the Notice of
Annual Meeting of Shareholders, this Proxy Statement and Proxies is to be borne
by the Company. The Company also will reimburse brokers who are holders of
record of Common Stock for their expenses in forwarding Proxies and Proxy
soliciting material to the beneficial owners of such shares. In addition to the
use of the mails, Proxies may be solicited without extra compensation by
directors, officers and employees of the Company by telephone, telecopy,
telegraph or personal interview. The approximate mailing date of this Proxy
Statement is May 20, 1998.
Unless otherwise specified, all Proxies, in proper form,
received by the time of the Meeting will be voted for the election of all
nominees named herein to serve as directors and in favor of each of the
proposals set forth in the accompanying Notice of Annual Meeting of Shareholders
and described below.
A Proxy may be revoked by a shareholder at any time before its
exercise by filing with Elyse Beth Silverberg, the Secretary of the Company, at
the address set forth above, an instrument of revocation or a duly executed
proxy bearing a later date, or by attendance at the Meeting and electing to vote
in person. Attendance at the Meeting will not, in and of itself, constitute
revocation of a Proxy.
The close of business on May 18, 1998 has been fixed by the
Board of Directors as the record date (the "Record Date") for the determination
of shareholders entitled to notice of, and to vote at, the Meeting and any
adjournment thereof. As of the Record Date, there were 4,772,500 shares of
Common Stock and 2,000,000 shares of Class B Common Stock outstanding. The
shares of Class B Common Stock are convertible at any time into shares of Common
Stock on a one-for-one basis. Each holder of Common Stock is entitled to one
vote for each share held by such holder and each holder of Class B Common Stock
is entitled to six votes for each share held by such holder. Shares of Common
Stock and Class B Common Stock vote as one class.
A majority of the shares entitled to vote, represented in
person or by proxy, is required to constitute a quorum for the transaction of
business. Proxies submitted which contain abstentions or broker nonvotes will be
deemed present at the Meeting for determining the presence of a quorum.
-2-
<PAGE>
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, shareholders will elect six directors to serve
until the next annual meeting of shareholders and until their respective
successors are elected and qualified. Unless otherwise directed, the persons
named in the Proxy intend to cast all Proxies received for the election of Mmes.
Roberta Lipson and Elyse Beth Silverberg and Messrs. Lawrence Pemble, Robert C.
Goodwin, Jr., A. Kenneth Nilsson and Julius Y. Oestreicher (collectively, the
"nominees") to serve as directors upon their nomination at the Meeting. All
nominees currently serve on the Board of Directors and their terms expire at the
Meeting. Each nominee has advised the Company of his or her willingness to serve
as a director of the Company. In case any nominee should become unavailable for
election to the Board of Directors for any reason, the persons named in the
Proxies have discretionary authority to vote the Proxies for one or more
alternative nominees who will be designated by the Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their
present positions with the Company are as follows:
Name Positions with the Company
- ---- --------------------------
Roberta Lipson(1) Chairperson of the Board of Directors,
Chief Executive Officer and President
Elyse Beth Silverberg(1) Executive Vice President, Secretary and
Director
Lawrence Pemble Executive Vice President Finance and Business
Development and Director
Robert C. Goodwin, Jr. Executive Vice President Operations, Treasurer,
Assistant Secretary, General Counsel and Director
A. Kenneth Nilsson(2) Director
Julius Y. Oestreicher(2) Director
- ---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
-3-
<PAGE>
<PAGE>
All directors of the Company hold office until the next annual
meeting of the shareholders and until their successors have been elected and
qualified. The officers of the Company are elected by the Board of Directors at
the first meeting after each annual meeting of the Company's shareholders and
hold office until their death, until they resign or until they have been removed
from office.
INFORMATION ABOUT NOMINEES
Set forth below is certain information with respect to each
director and nominee:
ROBERTA LIPSON, 42, co-founded the Company in 1981. Ms. Lipson
has served as the Chairperson of the Board of Directors, Chief Executive Officer
and President since that time. From 1979 until founding the Company in 1981, Ms.
Lipson was employed in China by Sobin Chemical, Inc., a worldwide trading
company, as Marketing Manager, coordinating marketing and sales of various
equipment in China. Ms. Lipson was employed by Schering-Plough Corp. in the area
of product marketing until 1979. Ms. Lipson received a B.A. degree in East Asian
Studies from Brandeis University and an M.B.A. from Columbia University Graduate
School of Business. Ms. Lipson's husband is the cousin of Ms. Silverberg.
ELYSE BETH SILVERBERG, 41, co-founded the Company in 1981. Ms.
Silverberg has served as the Company's Executive Vice President and Secretary
and as a Director since that time. Prior to founding the Company, from 1980 to
1981 Ms. Silverberg worked with Ms. Lipson at Sobin Chemical, Inc. and was an
intern in China with the National Council for U.S.-China Trade from 1979 to
1980. Ms. Silverberg received a B.A. degree in Chinese Studies and History from
the State University of New York at Albany.
LAWRENCE PEMBLE, 41, joined the Company in 1984 and has served
as Executive Vice President Finance and Business Development since January 1996.
From 1986 until 1996, Mr. Pemble served as Vice President of Marketing. From
1986 through April 1992 and September 1993 to the present, Mr. Pemble has also
served as a Director of the Company. Prior to joining the Company, Mr. Pemble
was employed by China Books and Periodicals, Inc. as Manager, East Coast Center.
Mr. Pemble received a B.A. degree in Chinese Studies and Linguistics from the
State University of New York at Albany.
ROBERT C. GOODWIN, JR., 57, has served as Executive Vice
President Operations since January 1996, as Assistant Secretary since June 1995
and as General Counsel, Treasurer and a Director of the Company since October
1992. In addition to his other duties, from October 1992 until January 1996, Mr.
Goodwin served as Vice President of Operations for the Company. Prior to joining
the Company, Mr. Goodwin was engaged in the private practice of law from 1979 to
1992, with a specialty in international law, in Washington, D.C. and had served
as the Company's outside counsel since 1984. Prior to such employment, Mr.
Goodwin served for two years as the Assistant General Counsel for International
Trade and Emergency Preparedness for the United States Department of Energy and
for three years as the Deputy Assistant General Counsel for the Federal Energy
Administration. From 1969 until 1974, Mr. Goodwin served as an attorney-advisor
for the U.S. Department of Commerce. Mr. Goodwin received a B.A. degree from
Fordham University and a J.D. from Georgetown University Law Center.
-4-
<PAGE>
<PAGE>
A. KENNETH NILSSON, 65, has served as a Director of the
Company since January 1996. Since 1989, Mr. Nilsson has served as Chairman of
Eureka Group, Inc., a consulting firm he founded in 1972. Prior to 1989, Mr.
Nilsson served as Vice Chairman of Cooper Companies, Inc., President of Cooper
Laboratories, Inc., and President of Cooper Lasersonics, Inc. He previously
served as an executive of Max Factor & Co., Ltd. and of Pfizer International,
Inc. Mr. Nilsson received a B.A. degree in Telecommunications from the
University of Southern California and an M.A. in Political Science from the
University of California.
JULIUS Y. OESTREICHER, 68, has served as a Director of the
Company since January 1996. Mr. Oestreicher has been a partner with the law firm
of Oestreicher & Ennis, LLP and its predecessor firms for thirty years, engaged
primarily in estate, tax and business law. Mr. Oestreicher received a B.S.
degree in Business Administration from City College of New York and a J.D. from
Fordham University School of Law.
COMMITTEES
The Board of Directors held two meetings and took action by
unanimous written consent three times during 1997. Each director attended all
meetings of the Board of Directors that occurred during 1997.
The Company has no executive or nominating committee of the
Board of Directors, but has a Compensation Committee and an Audit Committee.
The function of the Compensation Committee is to make relevant
compensation decisions of the Company and to attend to such other matters
relating to compensation as may be prescribed by the Board of Directors. The
Compensation Committee did not meet formally during 1997; however, its members
met informally from time to time.
The function of the Audit Committee is to make recommendations
concerning the selection each year of independent auditors of the Company, to
review the effectiveness of the Company's internal accounting methods and
procedures and to determine through discussions with the independent auditors
whether any instructions or limitations have been placed upon them in connection
with the scope of their audit or its implementation. The Audit Committee held
two meetings during 1997.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid a retainer
at the rate of $1,000 per annum for service on the Board of Directors and an
additional $500 for each meeting of the Board of Directors attended. The Company
also reimburses each director for reasonable expenses in attending meetings of
the Board of Directors. Directors who are also employees of the Company are not
separately compensated for their services as directors.
-5-
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the ownership
of shares of the Company's Common Stock and Class B Common Stock as of April 15,
1998 with respect to (i) holders known to the Company to beneficially own more
than five percent of the outstanding Common Stock or the Class B Common Stock,
(ii) each director and nominee for director, (iii) each executive officer of the
Company named in the Summary Compensation Table under the caption "Executive
Compensation" below and (iv) all directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Ownership (2)(3) Percent of:
----------------------------------- -------------------------
Name and Address of Common Class B Common Class B
Beneficial Shareholder (1) Stock Common Stock (4)(5) Stock Common Stock
- -------------------------- ------ ------------------- ----- ------------
<S> <C> <C> <C> <C>
Roberta Lipson 488,000(6) 1,040,000(7) 9.3% 52.0%
Elyse Beth Silverberg 359,000(8) 680,000 7.0% 34.0%
Lawrence Pemble 100,300(9) 200,000 2.1% 10.0%
Robert C. Goodwin, Jr. 82,333(10) 0 1.7% 0%
Julius Y. Oestreicher 74,000(11) 0 1.5% 0%
235 Mamaroneck Avenue
White Plains, New York
A. Kenneth Nilsson 10,000 0 * 0%
P.O. Box 2510
Monterey, California
All Executive Officers and 1,113,633(12) 1,920,000 19.1% 96.0%
Directors as a Group (6 persons)
</TABLE>
- ----------------------
* Less than 1%.
(1) Unless otherwise indicated, the business address of each person named in
the table is c/o U.S.-China Industrial Exchange, Inc., 7201 Wisconsin
Avenue, Bethesda, Maryland 20814.
(2) Except as otherwise indicated, each of the parties listed has sole voting
and investment power with respect to all shares indicated below.
(3) Beneficial ownership is calculated in accordance with Regulation S-B as
promulgated by the Securities and Exchange Commission.
(4) Mmes. Lipson and Silverberg and Mr. Pemble have placed 240,000, 153,000 and
51,000 shares, respectively, of Class B Common Stock in escrow and may
vote, but not dispose of, any of such shares during the term of the escrow
agreement. See "Escrow Shares" below.
(5) The Class B Common Stock is entitled to six votes per share, whereas the
Common Stock is entitled to one vote per share.
(6) Includes 486,000 shares that may be purchased pursuant to Class A Warrants
and Class B Warrants.
(7) Includes 40,000 shares held by the Ariel Benjamin Lee Trust, of which Ms.
Lipson is a Trustee.
(8) Includes 324,000 shares that may be purchased pursuant to Class A Warrants
and Class B Warrants.
(9) Includes 96,000 shares that may be purchased pursuant to Class A Warrants
and Class B Warrants.
-6-
<PAGE>
<PAGE>
(10) Includes 32,250 shares that may be purchased pursuant to Class A Warrants
and Class B Warrants and 39,333 shares that may be purchased pursuant to
stock options that are exercisable currently or within 60 days.
(11) Does not include 80,000 shares of Common Stock beneficially owned by Mr.
Oestreicher's wife, which includes 60,000 shares that may be purchased
pursuant to Class A Warrants and Class B Warrants, as to which Mr.
Oestreicher disclaims beneficial ownership. Includes 64,000 shares issuable
upon the exercise of 16,000 Unit Purchase Options, as defined herein. Each
such option represents the right to purchase one unit, each of which
consists of one share of Common Stock, one Class A Warrant and one Class B
Warrant. Also includes 10,000 shares that may be purchased pursuant to
currently exercisable stock options.
(12) Includes an aggregate of 1,051,583 shares that may be purchased pursuant to
Unit Purchase Options, Class A Warrants, Class B Warrants and currently
exercisable stock options.
ESCROW SHARES
Of the 2,000,000 shares of Class B Common Stock outstanding on
the date hereof, 450,000 shares (the "Escrow Shares") are held in escrow and
will not be assignable or transferable (but may be voted) until such time, if
ever, as the Escrow Shares are released from escrow in accordance with terms of
the escrow agreement. Each current holder of Class B Common Stock of the Company
contributed pro rata to the number of Escrow Shares in accordance with their
percentage ownership of Class B Common Stock. All Escrow Shares remaining in
escrow on March 31, 1999 will be forfeited and then canceled and contributed to
the Company's capital. The arrangement relating to the Escrow Shares was
required by the underwriter as a condition to the Company's initial public
offering.
A shareholder's rights to his or her shares in escrow are not
affected by any change in his or her status as an employee, officer or director
of, or his or her relationship with, the Company, and, in the event of such
shareholder's death, the terms of the escrow agreement will be binding on such
shareholder's executor, administrator, estate and legatees.
All Escrow Shares will be released from escrow if and only if:
(a) the Minimum Pretax Income (as defined below) is at least $3,750,000 for the
fiscal year ending December 31, 1997, or (b) the Minimum Pretax Income is at
least $5,000,000 for the fiscal year ending December 31, 1998, or (c) the
closing Bid Price of the Common Stock averages in excess of $14.60 per share
(subject to adjustment in the event of any stock split, dividend or
distribution, reverse stock split or other similar event) for 20 consecutive
trading days at any time prior to August 18, 1997. Conditions (a) and (c) above
are no longer applicable.
"Minimum Pretax Income" means for any fiscal year the
Company's income before provision for income taxes and exclusive of any
extraordinary earnings and exclusive of any charges to income resulting from the
release of any Escrow Shares, all as reflected on the Company's audited
financial statements. For purposes of calculating Minimum Pretax Income, if
additional shares of Common Stock are issued, then the foregoing Minimum Pretax
Income levels for any year are subject to proportional increase. Accordingly,
the Minimum Pretax Income levels set forth above are subject to proportional
increase to reflect the issuance of shares of Common Stock, including shares of
Common Stock issuable upon exercise of Warrants, in connection with the second
public offering by the Company that was completed in November 1996. Since the
principal market for the Common Stock presently is the NASDAQ National Market
the term "Bid Price" presently means the closing sales price of the Common Stock
as reported on that market.
-7-
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the
annual and long term compensation during the Company's last three fiscal years
of the Company's Chief Executive Officer and other most highly compensated
executive officers whose salary and bonus for 1997 exceeds $100,000 for services
rendered in all capacities to the Company and its subsidiaries:
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------------------- ------------
Other
Name and Annual Shares Under-
Principal Position Year Salary Bonus Compensation lying Options
- ------------------ ---- ------ ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
Roberta Lipson, 1997 $167,670 --- $26,421(1) ---
Chairperson of 1996 $154,913 $43,000 $18,620(1) ---
the Board, Chief 1995 $135,000 --- --- ---
Executive Officer
and President
Elyse Beth Silverberg, 1997 $161,460 --- $29,834(2) ---
Executive Vice 1996 $149,175 $43,000 $22,936(2) ---
President and 1995 $130,000 --- $23,600(2) ---
Secretary
Lawrence Pemble, 1997 $161,221 --- --- ---
Executive Vice 1996 $144,278 $43,000 --- ---
President Finance 1995 $123,733 --- --- ---
and Business
Development
Robert C. Goodwin, Jr. 1997 $141,875 $31,203 --- 20,000
Executive Vice 1996 $126,602 $73,003 --- 10,000
President Operations, 1995 $110,000 --- --- ---
Treasurer, Assistant
Secretary and General
Counsel
</TABLE>
- -------------------------
(1) Includes tuition expense for Ms. Lipson's sons in China in the amounts of
$23,971 for 1997 and $18,620 for 1996.
(2) Includes yearly rental expense in the amount of $9,400 for Ms. Silverberg's
housing in China and tuition expense in the amounts of $20,434 for 1997,
$13,536 for 1996 and $14,200 for 1995 for Ms. Silverberg's son in China.
-8-
<PAGE>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERMS
UNDERLYING EMPLOYEES EXERCISE OR EXPIRATION ----------------------
NAME OPTIONS GRANTED IN FISCAL 1997 BASE PRICE DATE 5%($) 10%($)
- ---- --------------- --------------- -------------- --------------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 20,000(1) 24.2% $4.25/share January 9, 2007 $53,456 $135,468
</TABLE>
- ---------------
(1) The options are exercisable as to one-third of the total number of shares
on each of January 9, 1997, 1998 and 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END MONEY OPTIONS AT FISCAL YEAR END
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE(1)
- ---- --------------- ------------ --------------------------- --------------------------
<S> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 0 $0 29,333/16,667 $0/$0
</TABLE>
- ---------------
(1) Based on the closing bid price per share of $1.75 on the last day of fiscal
1997.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement, as
amended to date, with each of Mmes. Lipson and Silverberg and Messrs. Pemble and
Goodwin providing for base salaries to be subject to annual review and
adjustment as determined by the Company and which currently are $150,903,
$145,314, $139,725 and $122,958, respectively. Each such executive officer also
receives additional benefits, including those generally provided to other
executive officers of the Company. In addition, each of Mmes. Lipson and
Silverberg receives reimbursement of expenses relating to residing in China.
Each employment agreement also contains non-competition provisions that preclude
each executive from competing with the Company for a period of two years from
the date of his or her termination of employment unless his or her employment is
terminated by the Company without cause, as such term is defined in the
employment agreements. Each employment agreement has been automatically extended
for the one-year period ending April 30, 1999, and is subject to successive
annual renewal.
The Company has obtained individual term life insurance
policies covering each of Mmes. Lipson and Silverberg in the amount of
$2,000,000 per person. The Company is the sole beneficiary under these policies.
-9-
<PAGE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and executive officers, and persons
who own more than 10% of the Company's Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and persons who are the beneficial owners of more than ten
percent of the Company's Common Stock are required by SEC regulations to furnish
the Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company during the one-year period ended December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
-10-
<PAGE>
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION
OF
INDEPENDENT CERTIFIED ACCOUNTANTS
The Board of Directors believes it is appropriate to submit
for approval by its shareholders its selection of Ernst & Young, LLP as the
Company's independent certified public accountants for the fiscal year ending
December 31, 1998.
Representatives of Ernst & Young, LLP are expected to be
present at the Annual Meeting of Shareholders with the opportunity to make a
statement and to be available to respond to questions regarding these and any
other appropriate matters.
-11-
<PAGE>
<PAGE>
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN
The Company's 1994 Stock Option Plan, as amended (the "Stock
Option Plan") was adopted by the Company's Board of Directors on April 27, 1994
and amended by the Board of Directors on July 29, 1994 and January 9, 1997. On
September 26, 1997, the Company's Board of Directors approved an amendment to
the Stock Option Plan and directed that the amendment be submitted to the
Company's shareholders for approval at the Meeting. The amendment provides for
an increase of 272,000, from 228,000 to 500,000, in the number of shares of
Common Stock for which options may be granted under the Stock Option Plan. The
Board of Directors adopted the amendment upon evaluating the Company's existing
compensation programs, the Company's long-range goals and expansion plans and
the Company's continuing need to attract, motivate and retain qualified key
employees, officers and directors.
Subject to shareholder approval of the amendment to the Stock
Option Plan, set forth below is the number of shares of Common Stock underlying
options currently determined to be granted under the Stock Option Plan to each
of the persons indicated:
NEW PLAN BENEFITS
1994 Stock Option Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value Number of Options
- ----------------- ------------ -----------------
<S> <C> <C>
Roberta Lipson (CEO) $ 0 0
Elyse Beth Silverberg (Executive VP) $ 0 0
Lawrence Pemble (Exec. VP Finance) $ 0 0
Robert C. Goodwin, Jr. (Exec. VP Operations) $ 0 0
Executive Group $ 0 0
Non-Executive Director Group $ 0 0
Non-Executive Officer Employee Group $ 76,500 17,000
</TABLE>
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<PAGE>
<PAGE>
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes cast at the
Meeting (Proposal 1). The affirmative vote of a majority of the votes cast in
favor of or against such action at the Meeting by the holders of shares entitled
to vote on such matter will be required to ratify the appointment of Ernst &
Young, LLP as independent certified accountants of the Company for the fiscal
year ending December 31, 1998 (Proposal 2) and to approve the amendment to the
Stock Option Plan to increase from 228,000 to 500,000 the number of shares of
Common Stock for which options may be granted thereunder and to effect related
changes (Proposal 3). Abstentions and broker non-votes with respect to any
matter are not considered as votes cast with respect to that matter.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY RECOMMENDED A VOTE IN
FAVOR OF EACH NOMINEE NAMED IN THE PROXY AND FOR PROPOSALS 2 AND 3.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 1999
Annual Meeting of Shareholders must be received by the Company not later than
January 20, 1999 for inclusion in the Company's proxy statement and form of
proxy for that meeting.
OTHER MATTERS
Management does not intend to bring before the Meeting for
action any matters other than those specifically referred to above and is not
aware of any other matters which are proposed to be presented by others. If any
other matters or motions should properly come before the Meeting, the persons
named in the Proxy intend to vote thereon in accordance with their judgment on
such matters or motions, including any matters or motions dealing with the
conduct of the Meeting.
PROXIES
All shareholders are urged to fill in their choices with
respect to the matters to be voted on, sign and promptly return the enclosed
form of Proxy.
By Order of the Board of Directors,
ELYSE BETH SILVERBERG
Secretary
May 20, 1998
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<PAGE>
APPENDIX 1
PROXY CARD
PROXY PROXY
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock or Class B Common Stock, as the case may
be, of U.S.-CHINA INDUSTRIAL EXCHANGE, INC., revoking all proxies heretofore
given, hereby constitute and appoint Roberta Lipson and Elyse Beth Silverberg
and each of them, Proxies, with full power of substitution, for the undersigned
and in the name, place and stead of the undersigned, to vote all of the
undersigned's shares of said stock, according to the number of votes and with
all the powers the undersigned would possess if personally present, at the 1998
Annual Meeting of Shareholders of U.S.-CHINA INDUSTRIAL EXCHANGE, INC., to be
held at the offices of the Company, 7201 Wisconsin Avenue, Bethesda, Maryland,
on Wednesday, June 17, 1998 at 10:00 A.M., local time, and at any adjournments
or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy
Statement relating to the meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the specifications
made on the reverse side of this Proxy and in the discretion of the Proxies on
any other matter that may come before the meeting. Where no choice is specified,
this Proxy will be voted FOR all listed nominees to serve as directors and FOR
each of the proposals set forth on the reverse side.
(Please mark, date and sign this proxy on the reverse side)
<PAGE>
<PAGE>
A [X] Please mark your
votes as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND
FOR PROPOSALS 2 AND 3
FOR all nominees WITHHOLD
listed to right authority to vote
1. Election of (except as marked for all
six Directors to the contrary) listed nominees
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee, circle
that nominee's name in the list provided.)
NOMINEES: Roberta Lipson, Elyse Beth Silverberg, Lawrence Pemble, Robert C.
Goodwin, Jr., A. Kenneth Nilsson and Julius Y. Oestreicher
2. Proposal to ratify the Board of Director's selection of Ernst & Young, LLP
as the Company's independent certified accountants for the year ending
December 31, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to amend the Company's 1994 Stock Option Plan to increase from
228,000 to 500,000 the number of shares for which options may be granted
thereunder and to effect related changes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting.
The shares represented by this proxy will be voted in the manner directed. In
the absence of any direction, the shares will be voted FOR each nominee named
in Proposal No. 1 and FOR Proposals 2 and 3 and in accordance with their
discretion on such other matters as may properly come before the meeting.
DATED _________________________________________________________________, 1998
_____________________________________________________________________________
_____________________________________________________________________________
Signature(s)
(Signature(s) should conform to names as registered. For jointly owned shares,
each owner should sign. When signing as attorney, executor, administrator,
trustee, guardian or officer of a corporation, please give full title.)
PLEASE MARK AND SIGN ABOVE AND RETURN PROMPTLY
