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:
2. Aggregate number of securities to which
transaction applies:
<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:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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<PAGE>
[Letterhead of U.S.-China Industrial Exchange, Inc.]
June 17, 1999
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 Tuesday, July 13, 1999 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.
<PAGE>
U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
7201 WISCONSIN AVENUE
BETHESDA, MARYLAND 20814
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 13, 1999
To the Shareholders of U.S.-China Industrial Exchange, Inc.:
NOTICE IS HEREBY GIVEN that the 1999 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 Tuesday, July 13, 1999 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, 1999; and
3. 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 June 16, 1999 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
June 17, 1999
- --------------------------------------------------------------------------------
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>
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 1999 Annual Meeting of Shareholders (the "Meeting") to be held on Tuesday,
July 13, 1999, 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 June 17, 1999.
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 the proposal 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 June 16, 1999 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 596,583 shares of Common
Stock and 193,750 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.
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<PAGE>
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.
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>
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, 44, 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, 42, 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, 42, 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., 58, 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>
A. KENNETH NILSSON, 66, 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, 69, 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 one meeting and took action by
unanimous written consent two times during 1998. Each director attended all
meetings of the Board of Directors that occurred during 1998.
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 1998; 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
one meeting during 1998.
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.
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<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 June 15,
1999 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, (iii) the Company's Chief Executive Officer and each other
executive officer whose annual cash compensation for 1998 exceeded $100,000 and
(iv) all directors and executive officers of the Company as a group. The
following calculation takes into account the Company's one-for-eight reverse
stock split of its Common Stock, Class B Common Stock, Class A Warrants, Class B
Warrants and Units, effective February 26, 1999.
<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 61,000(6) 100,000(7) 9.3% 51.6%
Elyse Beth Silverberg 44,875(8) 65,125 7.0% 33.6%
Lawrence Pemble 12,538(9) 18,625 2.1% 9.6%
Robert C. Goodwin, Jr. 11,543(10) 0 1.9% 0%
Julius Y. Oestreicher 9,250(11) 0 1.5% 0%
235 Mamaroneck Avenue
White Plains, New York
A. Kenneth Nilsson 1,250 0 * 0%
P.O. Box 2510
Monterey, California
D.H. Blair & Co., Inc. 127,488(12) 0 18.5% 0%
Kenton E. Wood
44 Wall Street
New York, New York
All Executive Officers and 140,456(13) 183,750 19.3% 94.8%
Directors as a Group (6 persons)
- ----------------------
* Less than 1%.
</TABLE>
(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.
-6-
<PAGE>
(4) The Class B Common Stock is entitled to six votes per share, whereas
the Common Stock is entitled to one vote per share.
(5) On March 31, 1999, a total of 56,250 shares of Class B Common Stock,
which had been held in escrow since the initial public offering of the
Company in August 1994, were canceled and contributed to the Company's
capital by Roberta Lipson, Elyse Beth Silverberg and Lawrence Pemble in
the amounts of 30,000, 19,875 and 6,375 shares, respectively. Each such
person is an executive officer and director of the Company. As of June
15, 1999, there were 193,750 shares of Class B Common Stock
outstanding.
(6) Includes 60,750 shares that may be purchased pursuant to Class A
Warrants and Class B Warrants.
(7) Includes 5,000 shares held by the Ariel Benjamin Lee Trust, of which
Ms. Lipson is a Trustee.
(8) Includes 40,500 shares that may be purchased pursuant to Class A
Warrants and Class B Warrants.
(9) Includes 12,000 shares that may be purchased pursuant to Class A
Warrants and Class B Warrants.
(10) Includes 4,032 shares that may be purchased pursuant to Class A
Warrants and Class B Warrants and 6,167 shares that may be purchased
pursuant to stock options that are exercisable currently or within 60
days.
(11) Does not include 10,000 shares of Common Stock beneficially owned by
Mr. Oestreicher's wife, which includes 7,500 shares that may be
purchased pursuant to Class A Warrants and Class B Warrants, as to
which Mr. Oestreicher disclaims beneficial ownership. Includes 8,000
shares issuable upon the exercise of 2,000 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 1,250 shares that may be
purchased pursuant to currently exercisable stock options.
(12) The amount and nature of beneficial ownership of these shares by D.H.
Blair & Co., Inc. and Kenton E. Wood is based solely on the Schedule
13G filings, as submitted to the Company, of each of D.H. Blair & Co.,
Inc. and Kenton E. Wood. According to those filings, D.H. Blair & Co.,
Inc. may be deemed to beneficially own as of June 15, 1999 (as adjusted
for the Company's one-for-eight reverse stock split effective February
26, 1999): (i) 18,000 shares underlying a Unit Purchase Option to
purchase 9,000 Units; and (ii) 35,562 shares of Common Stock, 20,419
shares that may be purchased pursuant to Class A Warrants and 52,507
shares that may be purchased pursuant to Class B Warrants. According to
those filings, Kenton E. Wood may be deemed to beneficially own an
additional 1,000 shares of Common Stock underlying a Unit Purchase
Option to purchase 250 Units owned directly by him. The Company has no
independent knowledge of the accuracy or completeness of the
information set forth in such Schedule 13G filings, but has no reason
to believe that such information is not complete or accurate.
(13) Includes an aggregate of 132,699 shares that may be purchased pursuant
to Unit Purchase Options, Class A Warrants, Class B Warrants and
currently exercisable stock options.
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<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 1998 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, 1998 $152,300 --- $43,235(1) ---
Chairperson of 1997 $167,670 --- $26,421(1) ---
the Board, Chief 1996 $154,913 $43,000 $18,620(1) ---
Executive Officer
and President
Elyse Beth Silverberg, 1998 $146,659 --- $31,443(2) ---
Executive Vice 1997 $161,460 --- $29,834(2) ---
President and 1996 $149,175 $43,000 $22,936(2) ---
Secretary
Lawrence Pemble, 1998 $142,369 --- --- ---
Executive Vice 1997 $161,221 --- --- ---
President Finance 1996 $144,278 $43,000 --- ---
and Business
Development
Robert C. Goodwin, Jr. 1998 $125,129 --- --- 1,250
Executive Vice 1997 $141,875 $31,203 --- 2,500
President Operations, 1996 $126,602 $73,003 --- 1,250
Treasurer, Assistant
Secretary and
General Counsel
</TABLE>
- -------------------------
(1) Includes tuition expense for Ms. Lipson's sons in China in the amounts
of $40,785 for 1998, $23,971 for 1997 and $18,620 for 1996.
(2) Includes yearly rental expense in the amount of $9,600 in 1998 and
$9,400 in 1997 and 1996 for Ms. Silverberg's housing in China and
tuition expense in the amounts of $21,800 for 1998, $20,434 for 1997
and $13,536 for 1996 for Ms. Silverberg's son in China.
-8-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERMS
UNDERLYING EMPLOYEES EXERCISE OR EXPIRATION ----------------------
NAME OPTIONS GRANTED IN FISCAL 1998 BASE PRICE DATE 5%($) 10%($)
- ---- --------------- --------------- -------------- --------------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 1,250(1) 12.7% $16.00/share June 17, 2008 $0 $31,875
- ---------------
</TABLE>
(1) The options have an exercise price of $16.00 per share. The options
shall be exercisable on the fifth anniversary of the date of grant
(June 17, 1998); provided that such options shall be earlier
exercisable on the first date that the fair market value of the Common
Stock equals or exceeds $40.00 per share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END MONEY OPTIONS AT FISCAL YEAR END
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE(1)
- ---- --------------- ------------ --------------------------- --------------------------------
<S> <C> <C> <C> <C>
Robert C. Goodwin, Jr. 0 $0 4,917/2,083 $0/$0
- ---------------
</TABLE>
(1) Based on the closing bid price per share of $2.75 on the last day of fiscal
1998.
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, effective June 1, 1999, have
been set at $167,670, $161,460, $155,250 and $152,040, 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 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, 2000, 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>
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, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with, except that Elyse Beth Silverberg
and Julius Oestreicher each inadvertently did not timely file one report
concerning Common Stock purchases and Robert C. Goodwin, Jr. inadvertently did
not timely file one report concerning a stock option grant.
-10-
<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, 1999.
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.
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<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, 1999 (Proposal 2). 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 PROPOSAL 2.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
Shareholders wishing to present proposals at the 2000 Annual
Meeting of Shareholders and wishing to have their proposals presented in the
proxy statement and form of proxy distributed by the Board of Directors in
connection with the 2000 Annual Meeting of Shareholders must submit their
proposals to the Company in writing on or before February 17, 2000.
If the Company does not receive notice by May 3, 2000 from a
shareholder who intends to present at the next annual meeting a proposal that is
not discussed in the Company's proxy statement, the persons named in the proxy
accompanying the Company's proxy statement for that annual meeting will have the
discretionary authority to vote on such proposal at such 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
June 17, 1999
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<PAGE>
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
1999 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 Tuesday, July 13, 1999 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 the proposal set forth on the reverse side.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ALL LISTED NOMINEES AND
FOR PROPOSAL 2
1. Election of FOR all nominees listed (except WITHHOLD AUTHORITY to
six Directors as marked to the contrary) vote for all listed nominees
below
Nominees: Roberta Lipson, Elyse Beth Silverberg, Lawrence Pemble, Robert C.
Goodwin, Jr., A. Kenneth Nilsson and Julius Y. Oestreicher
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE
THAT NOMINEE'S NAME IN THE LIST PROVIDED ABOVE.)
2. Proposal to ratify the Board of Directors' selection of Ernst &
Young, LLP as the Company's independent certified accountants
for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 1 and FOR Proposal 2 and in accordance with the
discretion of the Proxies on such other matters as may properly come before the
meeting.
Dated: _____________, 1999
---------------------------
---------------------------
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
