CHINA
CERAMICS CO., LTD.
TABLE
OF CONTENTS
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Proxy
Statement
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1
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Election
of Directors (Proposal No. 1)
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3
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The
Board and Board Committees
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6
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Director
Compensation
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10
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Executive
Officers
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11
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Executive
Compensation Discussion and Analysis
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12
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Securities
Ownership
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14
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Certain
Relationships and Related Transactions
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16
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Report
of the Audit Committee
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17
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Approval
of the 2010 Incentive Plan (Proposal No. 2)
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17
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Ratification
of Independent Auditor (Proposal No. 3)
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23
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Other
Matters
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Shareholder
Proposals
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CHINA
CERAMICS CO., LTD.
c/o
Jinjiang Hengda Ceramics Co., Ltd.
Junbing
Industrial Zone
Anhai,
Jinjiang City
Fujian
Province, PRC
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
This
Proxy Statement is furnished in connection with the solicitation of proxies by
the Board of Directors (the “Board”) of China Ceramics Co., Ltd. (the “Company,”
“China Ceramics,” “we,” “us,” or “our”) for the Annual Meeting of Shareholders
to be held at the Westport Inn, 1595 Post Road East, Westport, CT 06880 on
December 27, 2010, at 7:30 a.m. local time and for any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Any shareholder appointing such a proxy has the
power to revoke it at any time before it is voted. Written notice of such
revocation should be forwarded directly to the secretary of the Company at the
above stated address.
If the
enclosed proxy is properly executed and returned, the shares represented thereby
will be voted in accordance with the directions thereon and otherwise in
accordance with the judgment of the persons designated as proxies. Any proxy
card on which no instruction is specified will be voted in favor of the actions
described in this Proxy Statement and for the election of the nominees set forth
under the caption “Election of Directors.”
Your vote
is important. Accordingly, you are urged to sign and return the accompanying
proxy card whether or not you plan to attend the meeting. If you do attend the
meeting and are a record holder, you may vote by ballot at the meeting and your
proxy will be deemed to be revoked. If you hold your shares in street name and
wish to vote your shares at the meeting, you should contact your broker about
getting a proxy appointing you to vote your shares.
VOTING
SECURITIES
Only
holders of ordinary shares, $.001 par value per share (the “Shares”), of record
at the close of business on November 24, 2010 (the “Record Date”) are entitled
to vote at the meeting. On the Record Date, the Company had issued and
outstanding 16,459,202 Shares entitled to vote. For purposes of voting at the
meeting, each Share is entitled to one vote upon all matters to be acted upon at
the meeting. No less than 50% in nominal value of the outstanding Shares
represented at the meeting in person or by proxy shall constitute a quorum
throughout the meeting. The affirmative vote of a plurality of the votes cast in
person or by proxy at the Annual Meeting and entitled to vote on the election of
directors is required for the election of our directors, and the affirmative
vote of a simple majority of the votes cast in person or by proxy at the Annual
Meeting and entitled to vote is required to approve the 2010 Incentive Plan and
to ratify the appointment of Grant Thornton, independent certified public
accountants, as our independent auditors.
Only
Shares that are voted are taken into account in determining the proportion of
votes cast for the election of directors. Any Shares not voted (whether by
abstention, broker non-vote or otherwise) will therefore only impact the
election of directors to the extent that the failure to vote for any individual
may result in another individual’s receiving a larger proportion of votes cast.
Similarly, any Shares not voted (whether by abstention, broker non-vote or
otherwise) will only impact the percentage of votes cast for or against the
approval of the 2010 Incentive Plan and the ratification of the appointment of
Grant Thornton. Except for determining the presence or absence of a quorum for
the transaction of business, broker non-votes are not counted for any purpose in
determining whether a matter has been approved.
VOTING
If you
are a shareholder of record, you may vote in person at the annual meeting. We
will give you a ballot sheet when you arrive. If you do not wish to vote in
person or you will not be attending the annual meeting, you may vote by proxy.
If you have received a printed copy of these proxy materials by mail, you may
vote by proxy using the enclosed proxy card. To vote by proxy using the enclosed
proxy card (only if you have received a printed copy of these proxy materials by
mail), complete, sign and date your proxy card and return it promptly in the
envelope provided.
If you
intend to vote by proxy, your vote must be received by 5:00p.m. Eastern Time on
December 24, 2010 to ensure that it is counted.
If you
are not a shareholder of record, please follow the directions provided to you by
your bank or broker. If you wish to vote in person at the meeting, please
contact your bank or broker for the procedures necessary to allow you to vote
your shares in person.
ELECTION
OF DIRECTORS
PROPOSAL
NO. 1
The Board
has nominated the current seven directors for re-election as directors to serve
until the next Annual Meeting of Shareholders or until their successors are
elected and become qualified. It is intended that the proxy appointed by the
accompanying proxy card will vote for the election, as directors, of the seven
persons named below, unless the proxy card contains contrary
instructions.
The
Company has no reason to believe that any of the nominees will not be a
candidate or will be unable to serve as director. However, in the event that any
of the nominees should become unable or unwilling to serve as a director, the
persons named in the proxy have advised that they will vote for the election of
such person or persons as shall be designated by the directors, unless the proxy
card contains contrary instructions.
The
following pages set forth the names, ages and director start dates of the seven
nominees for re-election as directors, their respective principal occupations
and brief employment history of the past five years, including the names of
other publicly-held companies of which each serves or has served as a director
during the past five years.
Huang Jia
Dong
, 52, founded Hengda in 1993 and has served as our director since
November 20, 2009 and our Chief Executive Officer since April 4, 2010. Mr. Huang
was Chairman of the Board from November 20, 2009 until April 4, 2010. Mr. Huang
currently serves as Chairman of Hengda. Mr. Huang was previously involved in the
construction material distribution business. Mr. Huang has been appointed as the
vice chairman of Fujian Province Ceramic Industry Association since 2006 and the
executive director of Jinjiang City Chamber of Import and Export Trade since
2007. Mr. Huang has a diploma in corporate management from Xiamen University.
Mr. Huang is a second cousin of Mr. Su Pei Zhi’s wife. We have chosen Mr. Huang
to serve as director because of his extensive experience in the ceramic tiles
industry and his intimate knowledge of our company.
Su Pei
Zhi
, 56,
has
served as our director since November 20, 2009. Mr. Su joined Hengda in 1993 and
served as the sales deputy general manager. He is the head of our sales and
marketing team. Under the leadership of Mr. Su, we have established a nationally
covered sales network including both distribution customers and property
developer customers. Prior to joining Hengda, Mr. Su was in his family ceramic
tile business. Mr. Su Pei Zhi is the father of Mr. Su Wei Feng, our director and
Secretary, and Mr. Su Pei Zhi’s wife is a second cousin of Mr. Huang Jia Dong,
our Chief Executive Officer. We have chosen Mr. Shu Pei Zhi to serve as director
because of his extensive experience in the ceramic tiles industry.
Ding Wei
Dong
, 70, has served as our director since November 20, 2009. From 1997
to 2008, Mr. Ding served as the president of China Building Ceramics &
Sanitaryware Association (CBCSA), the largest industrial association of the
building ceramics and sanitaryware industry in China. Mr. Ding is now the
honorary president of CBCSA. From 1991 to 2000, Mr. Ding served as the executive
vice president of China Building Material Industry Association, a national
organization of the building material industry in China. From 1985 to 1991, Mr.
Ding was the chief of Manufacturing and Management Department of Building
Material Bureau of China where he was responsible for the quality management of
building materials. Mr. Ding graduated from Nanjiing University of Science and
Technology in 1965 with a Bachelor Degree, and he has the professional title of
Senior Engineer of Professor Scale in China. We have chosen Mr. Ding to serve as
director because of his expertise in the Chinese ceramics
industry.
Paul K.
Kelly
, 70,
has
served as our director since August 18, 2009 and our Chairman since April 4,
2010. He was also Chairman of the Board and Chief Executive Officer of our
predecessor, CHAC, from its inception. Since February 1992, Mr. Kelly has been
the President and Chief Executive Officer of Knox & Co., an investment
banking firm specializing in mergers and acquisitions, corporate restructuring
and international financial advisory services for clients in the U.S., Asia, and
throughout the world. In 2004, Mr. Kelly formed the Westgate Group, Inc., a
strategic advisory firm focusing upon identifying and implementing cross-border
business opportunities for clients with an emphasis on Asia and the Pacific
Basin, for which he acts as Chairman, CEO, and is the majority shareholder. Mr.
Kelly is also the President, Chief Executive Officer and sole shareholder of PH
II, Inc., a privately held investment company which has investments in the
United States and New Zealand. He has held these positions with PH II since
1988. Mr. Kelly also serves as Chairman and Chief Executive Officer of Knox
Enterprises, Inc., successor to THT Inc., a privately held diversified
manufacturing company. In 1996, Mr. Kelly founded the Carrington Club, a golf
resort and karikari estate and winery in New Zealand for which he is the owner
and Edgewater Developers, a real estate development company in New Zealand. From
1985 to 1990 Mr. Kelly served as President and Chief Executive Officer of Peers
& Co., an international investment banking firm. From 1984 to 1985 Mr. Kelly
was the President and a director of Quadrex Securities Corp. From 1982 to 1984
he was an Executive Vice President and Director of Dean Witter Reynolds, Inc.,
responsible for all investment banking activities for financial institutions.
Mr. Kelly also served as Managing Director and a member of the Management
Committee of Merrill Lynch White Weld Capital Markets Group from 1980 to 1982
where he was responsible for all investment banking activities for financial
institutions on a worldwide basis, and was also senior banker to Merrill Lynch
& Co., the holding company for all Merrill Lynch interests. From 1978 to
1980 Mr. Kelly was Executive Vice President, Director and member of the
Executive Committee of Blyth Eastman Dillon, where he was co-head of the
Corporate Finance Department. He was responsible for all new business activities
for the firm and headed the Financial Institutions Group. Among the other
positions held by Mr. Kelly prior to 1978 include his positions from 1968 to
1975 as Vice President of The First Boston Corporation where he established the
commercial paper department and was responsible for all corporate finance new
business activities and as a partner, member of the management committee and
head of investment banking for Prescott, Ball & Turbin from 1975 to 1978.
Mr. Kelly is a member of the Board of Trustees of the University of
Pennsylvania, a member of the Business School Advisory Board of the University
of Auckland (NZ), and a member of the New Zealand Business Roundtable. In
addition, he is a member of the Director’s Advisory Board of the Yale Cancer
Center. He is a past director of American Life and Health Insurance Company of
New York, The Chicago Sun-Times Corporation, Hydrox Corporation, Ltd. (New
Zealand), MCR Corporation, and Porta Systems Corporation (ASE). He graduated
from the University of Pennsylvania in 1962 and received an MBA in Finance from
the Wharton School in 1964. We have chosen Mr. Kelly to serve as director
because of his experience in the financial industry, and his history with the
Company as a founder of CHAC.
Cheng Yan
Davis
, 68,
has
been our director since November 20, 2009 and was a board member of our
predecessor, CHAC, since its inception. Since September 2010, Ms. Davis has
acted as a special advisor to the President of the Teacher’s College of Columbia
University. From 1993 until September 2010, Ms. Davis served as the Vice Dean of
International Programs and Development at the University of Pennsylvania
Graduate School of Education (GSE International). GSE International was
established by Ms. Davis in 1993, and was the first international programs
office among Ivy League graduate schools of education in the U.S. Since 1993,
Ms. Davis has served as a Special Advisor to the President of the University of
Pennsylvania on internationalization efforts. GSE International has developed
many specialized training programs for groups ranging from government officials
and university presidents to finance executives and corporate CEOs. Among these
programs are training programs for Chief Executive Officers and leading
executives in the Chinese securities and mutual fund industries, created in
conjunction with the Wharton School. Over the past three years, the
Penn-Securities Association of China Program and the Penn-China Mutual Fund CEO
Leadership Program have trained over one hundred Chinese executives in the
latest theories and practices of the U.S. finance sector. Since 1998, Ms. Davis
has worked with Morgan Stanley on the International Conference on Higher
Education Management in Shanghai, the establishment of the China Center, which
focuses on management training for U.S.-China joint ventures, and the China
Pension Program, which works with the state council of China in designing the
architecture and training of a senior workforce in comprehensive pension
management. Ms. Davis has also worked with CIGNA and Lucent Technologies on
various professional education projects since 1997, designing a variety of
training and professional development programs. Ms. Davis also serves as an
advisor on quality workforce standards for the Shanghai Municipal Government and
the Shanghai Foreign Trade Commission. Since 1997, Ms. Davis has been invited to
the Shanghai’s Mayor’s International Advisory Council as a special observer and
to offer suggestions on Shanghai human resource development and workforce
training. Ms. Davis has also been invited to custom design new programs for
China Telecom and China Industrial Commercial Bank. These programs were designed
in preparation of China’s entry into the World Trade Organization. Ms. Davis
initiated former President Jiang Zemin’s visit to the University of Pennsylvania
in 1997. Ms. Davis is a board member of the New York Film Academy, Senior
Advisor to Motorola and Oracle on international government relations, and
Advisor Professor to East China Normal University. In addition, she has served
as the Senior Observer for the Shanghai International Business Leaders Advisory
Council for the past fifteen years. She has received numerous recognitions for
her many contributions, including the first-ever PennGSE Alumni Pioneers Award.
Ms. Davis has a degree in Russian and English from Shichuan Foreign Language
University in China and an Ed D in Education from the Graduate School of
Education at the University of Pennsylvania. We have chosen Ms. Davis to serve
as director because of her history with the Company, as a founder of
CHAC.
Bill
Stulginsky
, 59,
has
been our director since April 1, 2010. Mr. Stulginsky retired as Partner from
PricewaterhouseCoopers LLP in September 2009. He has over thirty six years of
public accounting experience and was a partner at PricewaterhouseCoopers and
predecessor firms for twenty-four years prior to his retirement. His background
includes serving public and private clients in the higher education, healthcare,
electric and gas utilities, pharmaceutical and manufacturing industries. He has
a Bachelor of Science degree in Accounting from LaSalle University. Mr.
Stulginsky is also on the Board of Directors of Fox Chase Cancer Center in
Philadelphia and the Visiting Nurse Association of Greater Philadelphia (Board
Chairman), both of which are nonprofit organizations. We have chosen Mr.
Stulginsky to serve as director because of his financial
sophistication.
Su Wei
Feng
, 29,
has
been our director since April 1, 2010. Mr. Su joined us in March 2007. He
currently acts as our general legal counsel and Secretary. Prior to working with
us, Mr. Su worked as a lawyer at Fujian Minrong Law Firm from 2005 to 2007. He
graduated from the School of Law of Xiamen University in 2004. Mr. Su Wei Feng
is the son of Mr. Su Pei Zhi, a director of the Company. We have chosen Mr. Feng
to serve as director because of his legal background.
The term
of each director is until their resignation or removal.
Pursuant
to a merger and stock purchase agreement dated August 19, 2009, Huang Jia Dong,
Su Pei Zhi, and Ding Wei Dong were initially nominated as members of the Board
by Wong Kung Tok, and Paul K. Kelly and Cheng Yan Davis were initially nominated
as members of the Board by the Company (as defined in the merger and stock
purchase agreement).
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, there have been no events under any bankruptcy act,
criminal proceedings, judgments, injunctions, orders or decrees material to the
evaluation of the ability and integrity of any director, executive officer,
promoter or control person of the Company during the past ten
years.
THE
BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE ABOVE
NOMINEES.
THE
BOARD AND BOARD COMMITTEES
During
the year ended December 31, 2009, the Board met one time and took action by
written consent on three occasions. All of the directors attended 75% or more of
the meetings of the Board. Following the Company’s business combination on
November 20, 2009, the Board formed an audit committee, governance and
nominating committee, and compensation committee in May 2010. Each director is
expected to participate, either in person or via teleconference, in meetings of
our Board and meetings of committees of our Board in which each director is a
member, and to spend the time necessary to properly discharge such director’s
respective duties and responsibilities. We do not have a written policy with
regard to directors’ attendance at annual meetings of shareholders; however, all
directors are encouraged to attend the annual meeting. The Board has determined
that Messrs. Bill Stulginsky, Ding Wei Dong and Paul K. Kelly and Ms. Cheng Yan
Davis are each an independent director as defined in Rule 5605(a)(2) of the
Listing Rules of the NASDAQ Stock Market LLC (the “Listing Rules”).
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Committee Membership
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Audit
Committee
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Governance
and Nominating
Committee
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Compensation
Committee
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Bill Stulginsky
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C
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Ding
Wei Dong
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M
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C
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C
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Paul
K. Kelly
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-
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M
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M
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Cheng
Yan Davis
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Audit
Committee
. We have a separate-designed standing audit
committee which was established in accordance with section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), in May 2010.
The audit committee, consisting of Bill Stulginsky, Ding Wei Dong, and Cheng Yan
Davis, oversees the Company’s financial reporting process on behalf of the
Board. The audit committee operates under a written charter, which is available
on our website at
http://www.cceramics.com
. Our
audit committee meets with our independent auditors at the end of each of the
first three fiscal quarters before earnings are publicly released for
such quarter. The committee’s responsibilities include the following
functions:
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retaining
and terminating our independent auditors and pre-approving all auditing
and non-auditing services permitted to be performed by the independent
auditors;
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discussing
the annual audited financial statements with management and the
independent auditors;
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annually
reviewing and reassessing the adequacy of our audit committee
charter;
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such
other matters that are specifically delegated to our audit committee by
the Board from time to time;
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meeting
separately and periodically with management, the internal auditors and the
independent auditors; and
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reporting
regularly to the Board. The Board has determined that Mr. Stulginsky, the
Chair of the Audit Committee, is an “audit committee financial expert” as
defined by the SEC’s rules.
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Governance and
Nominating Committee.
The governance and nominating committee,
established in May 2010, consists of Ding Wei Dong, Paul K. Kelly, and Cheng Yan
Davis, and is responsible for identifying potential candidates to serve on our
board and its committees. The nominating and corporate governance committee
operates under a written charter, which is available on our website at
http://www.cceramics.com
. The
committee’s responsibilities include the following functions:
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overseeing
the process by which individuals may be nominated to the
Board;
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identifying
potential directors and making recommendations as to the size, functions
and composition of the Board and its
committees;
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considering
nominees proposed by our
shareholders;
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establishing
and periodically assessing the criteria for the selection of potential
directors; and
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making
recommendations to the Board on new candidates for board
membership.
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The
governance and nominating committee will consider director candidates
recommended by shareholders. Shareholders who wish to recommend to the
governance and nominating committee a candidate for election to the board should
send their letters to China Ceramics Co., Ltd., Attention: Secretary; c/o
Jinjiang Hengda Ceramics Co., Ltd.; Junbing Industrial Zone; Anhai, Jinjiang
City; Fujian Province, PRC. The corporate secretary will promptly forward all
such letters to the members of the governance and nominating committee.
Shareholders must follow certain procedures to recommend to the governance and
nominating committee candidates for election as directors. In general, in order
to provide sufficient time to enable the governance and nominating committee to
evaluate candidates recommended by shareholders in connection with selecting
candidates for nomination in connection with the Company’s annual meeting of
shareholders, the corporate secretary must receive the shareholder’s
recommendation (i) in the case of an annual meeting, not later than the close of
business on the 60
th
day nor
earlier than the opening of business on the 10th day before the anniversary date
of the immediately preceding annual meeting of Shareholders; provided, however,
that in the event that the annual meeting is called for a date that is not
within 30 days before or after such anniversary date, notice by the shareholder
to be timely must be received not earlier than the opening of business on the
90
th
day before the meeting and not later than the later of (x) the close of business
on the 60
th
day
before the meeting or (y) the close of business on the tenth day following the
date on which public announcement of the date of the annual meeting was first
made by the Company, and (ii) in the case of a special meeting of shareholders
called for the purpose of electing directors, not later than the close of
business on the tenth day following the day on which public announcement of the
date of the special meeting is first made by the Company. Such shareholder’s
notice to the secretary shall set forth (i) as to each person whom the
shareholder proposes to nominate for election or reelection as a director, (a)
the name, age, business address, and residence address of the person, (b) the
principal occupation or employment of the person, (c) the class and number of
shares of capital stock of the Company which are beneficially owned by the
person, and (d) any other information elating to the person that is required to
be disclosed in solicitations for proxies for election of directors pursuant to
the rules and regulations of the Securities and Exchange Commission under
Section 14 of the Exchange Act, and (ii) as to shareholders giving the notice
(a) the name and record address of the shareholder and (b) the class and number
of shares of capital stock of the Company which are beneficially owned by the
shareholder. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the
Company.
In making
nominations, the nominating and corporate governance committee is required to
submit candidates who have personal and professional integrity, who have
demonstrated ability and judgment and who shall be effective, in conjunction
with the other nominees to the board, in collectively serving the long-term
interests of the shareholders. In evaluating nominees, the nominating and
corporate governance committee is required to take into consideration the
following attributes, which are desirable for a member of the board: leadership,
independence, interpersonal skills, financial acumen, business experiences,
industry knowledge, and diversity of viewpoints. Depending upon the current
needs of the Board, certain factors may be weighed more or less heavily. In
considering candidates for the Board, the directors evaluate the entirety of
each candidate’s credentials and do not have any specific minimum qualifications
that must be met. “Diversity,” as such, is not a criterion that the committee
considers. The committee will consider candidates from any reasonable source,
including current Board members, shareholders, professional search firms or
other persons.
As a
condition to the closing of the business combination pursuant to which the
Company acquired Jinjiang Hengda Ceramics Co., Ltd. (“Hengda”) on November 20,
2009, the Company, Hengda, Wong Kung Tok and certain shareholders of the Company
entered into a Voting Agreement to set forth their agreements and understandings
with respect to how Shares held by them will be voted on in connection with, and
following, the business combination. The parties agreed to vote their shares as
necessary to ensure that the size of the Board after the consummation of the
business combination will be five members until April 30, 2012. The parties also
agreed to vote their shares to ensure the election of two members of the Board
designated by the Company, who were initially Paul Kelly and Cheng Davis, and
three members designated by the Seller, of which one designee shall qualify as
an independent director pursuant to the rules of any stock exchange on which the
Company may be listed, who were initially Huang Jia Dong, Su Pei Zhi, and Ding
Wei Dong.
Except as
described in the immediately preceding paragraph, the Company’s nominating
committee did not receive a recommended director nominee from a shareholder that
beneficially owned more than 5% of the Company’s shares for at least one year as
of the date the recommendation was made, or from a group of shareholders that
beneficially owned, in the aggregate, more than 5% of the Company’s
shares.
Compensation
Committee
. The compensation committee, established in May
2010, consists of Ding Wei Dong, Paul K. Kelly, and Cheng Yan Davis and is
responsible for making recommendations to the board concerning salaries and
incentive compensation for our officers and employees and administers our stock
option plans. The compensation committee operates under a written charter, which
is available on our website at
http://www.cceramics.com
. The
committee’s responsibilities include the following functions:
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reviewing
and making recommendations to the board regarding our compensation
policies and forms of compensation provided to our directors and
officers;
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reviewing
and making recommendations to the board regarding bonuses for our officers
and other employees;
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administering
our incentive-compensation plans for our directors and
officers;
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reviewing
and assessing the adequance of the charter
annually;
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administering
our share option plans, if they are established in the future, in
accordance with the terms thereof;
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such
other matters that are specifically delegated to the compensation
committee by the Board from time to
time.
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Board
Leadership Structure and Role in Risk Oversight
Pauk K.
Kelly serves as the non-executive Chairman of the Board, and Huang Jia Dong
serves as the Company’s Chief Executive Officer. The Board has not designated a
lead director. Given the limited number of directors comprising the board, the
independent directors call and plan their executive sessions collaboratively
and, between board meetings, communicate with management and one another
directly. Given the circumstances, the directors believe that formalizing in a
lead director functions in which they all participate might detract from rather
than enhance performance of their responsibilities as directors.
The Board
is responsible for the overall supervision of the Company’s risk oversight
efforts as they relate to the key business risks facing the organization.
Management identifies, assesses, and manages the risks most critical to the
Company’s operations on a day-to-day basis. The Board’s role in risk oversight
of the Company is consistent with the Company’s leadership structure, with
senior management having responsibility for assessing and managing the Company’s
risk exposure, and the Board and its Committees providing oversight as necessary
in connection with those efforts.
Litigation
with Officers and Directors
To the
best of the Company’s knowledge, there have been no material proceedings to
which any director or executive officer is a party adverse to the Company or any
of its subsidiaries or has any material interest averse to the Company or any of
its subsidiaries.
DIRECTOR
COMPENSATION
Starting
April 1, 2010, our Board determined to provide its non-employee members annual
compensation of $40,000 and the chairman of the Audit Committee $45,000. Prior
to April 1, 2010 there was no compensation provided to any of our directors for
service as directors.
EXECUTIVE
OFFICERS
The
following sets forth the names and ages of our current executive officers, their
respective positions and offices, and their respective principal occupations or
brief employment history.
|
Name
|
|
Age
|
|
Office
|
|
Huang
Jia Dong
|
|
52
|
|
Chief
Executive Officer
|
|
Su
Pei Zhi
|
|
56
|
|
Sales
Deputy General Manager
|
|
Hen
Man Edmund
|
|
37
|
|
Chief
Financial Officer
|
|
Su
Wei Feng
|
|
29
|
|
Corporate
Secretary
|
Please
refer to the section entitled “Election of Directors” for details regarding
Huang Jia Dong, Su Pei Zhi, and Su Wei Feng.
Hen Man
Edmund
has served as our Chief Financial Officer since November 20, 2009.
Mr. Hen joined Hengda in 2008 as the Chief Financial Officer. Mr. Hen is
responsible for the corporate finance function and oversees maters relating to
compliance and reporting obligation of the company. Prior to joining Hengda, Mr.
Hen was a Financial Controller of a switchgear manufacturer in Sichuan PRC and
was responsible for the corporate finance function of the company. Prior to
that, Mr. Hen was the accountant of Dickson Concepts (International) Ltd., a
public listed company in Hong Kong and oversaw the accounting and financial
administration of the company. He also worked at a variety of international
accountancy firms, including Deloitte Touche Tohmatsu, in assurance and advisory
services during the period from 1995 to 2001. Mr. Hen graduated from the
University of East Anglia, United Kingdom, with a Bachelor Degree in Science in
1995. He is an associate of the Institute of Chartered Accountants in England
and Wales and an associate of the Hong Kong Institute of Certified Public
Accountants.
EXECUTIVE
COMPENSATION
Since we
did not have an operating business prior to the business combination on November
20, 2009, our officers did not receive any compensation for their services; and,
since we had no other employees, we did not have any compensation policies,
procedures, objectives or programs in place.
The following table presents
compensation information for Hengda prior to the business combination, and for
the Company and Hengda following the business combination.
|
Name and Principal Position
|
|
Year
|
|
Salary
(4)
RMB
|
|
|
Bonus
(4)
RMB
|
|
|
Total
(4)
RMB
|
|
|
Huang Jia
Dong, Chief Executive Officer
|
|
Six
month ended
June
30, 2010
|
|
|
60,000
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
|
2009
|
|
|
120,000
|
|
|
|
—
|
|
|
|
120,000
|
|
|
|
|
2008
|
|
|
121,084
|
|
|
|
—
|
|
|
|
121,084
|
|
|
|
|
2007
|
|
|
121,051
|
|
|
|
—
|
|
|
|
121,051
|
|
|
Su
Pei Zhi(1), Sales Deputy General Manager
|
|
Six
month ended
June
30, 2010
|
|
|
72,000
|
|
|
|
—
|
|
|
|
72,000
|
|
|
|
|
2009
|
|
|
96,430
|
|
|
|
—
|
|
|
|
96,430
|
|
|
|
|
2008
|
|
|
96,778
|
|
|
|
—
|
|
|
|
96,778
|
|
|
|
|
2007
|
|
|
77,319
|
|
|
|
—
|
|
|
|
77,319
|
|
|
Li
Shun Qing(2), Former Chief Executive Officer
|
|
Six
month ended
June 30,
2010
|
|
|
24,000
|
|
|
|
—
|
|
|
|
24,000
|
|
|
|
|
2009
|
|
|
93,499
|
|
|
|
—
|
|
|
|
93,499
|
|
|
|
|
2008
|
|
|
97,440
|
|
|
|
—
|
|
|
|
97,440
|
|
|
|
|
2007
|
|
|
93,079
|
|
|
|
—
|
|
|
|
93,079
|
|
|
Hen
Man Edmund(3), Chief Financial Officer
|
|
Six
month ended
June
30, 2010
|
|
|
180,000
|
|
|
|
—
|
|
|
|
180,000
|
|
|
|
|
2009
|
|
|
96,000
|
|
|
|
1,364,000
|
|
|
|
1,460,000
|
|
|
|
|
2008
|
|
|
40,000
|
|
|
|
—
|
|
|
|
40,000
|
|
|
Su
Wei Feng, Corporate Secretary
|
|
Six
Month ended
June
30, 2010
|
|
|
42,000
|
|
|
|
—
|
|
|
|
42,000
|
|
|
|
|
2009
|
|
|
84,060
|
|
|
|
—
|
|
|
|
84,060
|
|
|
|
(1)
|
Mr.
Su Pei Zhi was on leave during early 2007 due to personal health
reasons.
|
|
|
(2)
|
As
of April 4, 2010, Mr. Li ceased to be our Chief Executive Officer. Mr. Li
now manages Hengdali. Mr. Li received 3 months of compensation as our
Chief Executive Officer in 2010.
|
|
|
(3)
|
Mr.
Hen Man Edmund joined Hengda in August of 2008 and received 5 months of
compensation in 2008. Mr. Hen Man Edmund received a bonus of RMB 1,364,000
in 2009 relating to services rendered in
2009.
|
|
|
(4)
|
The
amounts shown in this table include the amount each executive officer
received from Hengda prior to the consummation of the business
combination.
|
Employment
Agreements
Upon
consummation of the acquisition of Success Winner, we entered into employment
agreements with certain of our executive officers. The following discussion
summarizes the material terms of employment agreements entered into between us
and our executive officers:
|
|
·
|
We
entered into employment agreements with the following officers: Huang Jia
Dong, Chief Executive Officer, Su Pei Zhi, Vice General Manager of Sales,
Hen Man Edmund, Chief Financial Officer, and Su Wei Feng, Corporate
Secretary.
|
|
|
·
|
The
term of the employment agreements is three years (February 1, 2009 to
January 31, 2012 for Su Pei Zhi, Huang Jia Dong and Su Wei Feng and August
1, 2008 to July 31, 2011 for Hen Man
Edmund).
|
|
|
·
|
Huang
Jia Dong will receive compensation of RMB 10,000 per month; Su Pei Zhi
will receive compensation of RMB 12,000 per month from January 1, 2010;
Hen Man Edmund will receive compensation of RMB 30,000 per month from
January 1, 2010; and Su Wei Feng will receive compensation of RMB 7,000
per month.
|
|
|
·
|
We
may dismiss any of the above officers if any of the following events
occurs with respect to the officer: (1) failure to show up for work, (2)
failure to provide required documents, (3) falsification of documents,
criminal record, etc., (4) serious violation of internal or other
governmental rules and of regulations, (5) serious failure to perform
duties and responsibilities, (6) activities that violate regulations,
resulting in loss of more than RMB 4,000, (7) operation of his own
business during the term of his employment, (8) criminal prosecution and
labor punishment, (9) request by the officer to resign, (10) causing us to
sign or change any contract through fraud, coercion and other fraudulent
means, or (11) other situations stipulated by law and
statutes.
|
|
|
·
|
Each
officer is subject to the non-compete provisions of the agreement for a
period of three years following termination of the employment agreement
and non-solicitation provisions of the agreement for a period of two years
following termination of the employment
agreement.
|
Other
Employees
Compensation
for our senior executives will be comprised of four elements: a base salary, an
annual performance bonus, equity and benefits.
In
developing salary ranges, potential bonus payouts, equity awards and benefit
plans, it is anticipated our compensation committee takes into account: 1)
competitive compensation among comparable companies and for similar positions in
the market, 2) relevant ways to incentivize and reward senior management for
improving shareholder value while building a successful company, 3) individual
performance, 4) how best to retain key executives, 5) the overall performance of
us and our various key component entities, 6) our ability to pay and 7) other
factors deemed to be relevant at the time.
Specific
compensation plans for our key executives will be negotiated and established by
our compensation committee. This will include, but may not be limited
to, the four executive officers who currently have employment contracts (which
may be modified, if necessary, to reflect any additions to or changes in
compensation).
Retirement
Benefits
As of
December 31, 2009, the Company’s subsidiaries in the PRC participate in the
government-mandated employee welfare and retirement benefit contribution and
provided pension, retirement or similar benefits to its employees. The PRC
regulations require the Company’s PRC subsidiaries to pay the local labor
administration bureau a monthly contribution at a stated contribution rate based
on the monthly basic compensation of qualified employees. The local labor
administration bureau, which manages various investment funds, pays employee
retirement, medical and other fringe benefits. The Company’s subsidiaries have
no commitments beyond the monthly contribution.
SECURITIES
OWNERSHIP
The
following table sets forth, as of the close of business on November 24, 2010,
certain information regarding beneficial ownership of our shares by each person
who is known by us to beneficially own more than 5% of our shares. The table
also identifies the share ownership of each of our directors, each of our named
executive officers, and all directors and officers as a group. Except as
otherwise indicated, the shareholders listed in the table have sole voting and
investment powers with respect to the shares indicated. Our major shareholders
do not have different voting rights than any other holder of our
shares.
Shares
which an individual or group has a right to acquire within 60 days pursuant to
the exercise or conversion of options, warrants or other similar convertible or
derivative securities are deemed to be outstanding for the purpose of computing
the percentage ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any other
person shown in the table.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting and investment power. Except
as otherwise indicated below, each beneficial owner holds voting and investment
power directly. The percentage of ownership is based on 16,459,202 shares issued
and outstanding as of the close of business on November 24, 2010.
|
Name
(1)
|
|
Number of Shares
Beneficially Owned
|
|
|
Percentage of
Ownership
|
|
|
Paul K. Kelly
(2)
|
|
|
663,692
|
|
|
|
4.03
|
%
|
|
Cheng
Yan Davis
(3)
|
|
|
69,750
|
|
|
|
*
|
|
|
Huang
Jia Dong
(4)
|
|
|
0
|
|
|
|
—
|
|
|
Su
Pei Zhi
|
|
|
0
|
|
|
|
—
|
|
|
Ding
Wei Dong
|
|
|
0
|
|
|
|
—
|
|
|
Bill
Stulginsky
(5)
|
|
|
0
|
|
|
|
—
|
|
|
Su
Wei Feng
|
|
|
0
|
|
|
|
—
|
|
|
Hen
Man Edmund
|
|
|
0
|
|
|
|
—
|
|
|
All
directors and executive officers as a group (8
individuals)
|
|
|
733,442
|
|
|
|
4.46
|
%
|
|
James
D. Dunning, Jr.
|
|
|
663,693
|
|
|
|
4.03
|
%
|
|
Wong
Kung Tok
(4)
|
|
|
5,377,354
|
(6)
|
|
|
32.67
|
%
|
|
Surmount
Investments Group Limited
|
|
|
1,074,020
|
(7)
|
|
|
6.53
|
%
|
|
Dorset
Management Corporation
(8)
|
|
|
1,350,000
|
(9)
|
|
|
8.20
|
%
|
* Less
than 1%
|
|
(1)
|
Unless
otherwise indicated, the business address of each of the individuals is
c/o Jinjiang Hengda Ceramics Co., Ltd.; Junbing Industrial Zone; Anhai,
Jinjiang City; Fujian Province,
PRC.
|
|
|
(2)
|
Paul
K. Kelly’s business address is c/o Knox & Co.; 33 Riverside Avenue;
Westport, CT 06880.
|
|
|
(3)
|
Cheng
Yan Davis’s business address is Teachers College, Columbia University, 525
West 420th Street, New York, NY
10027.
|
|
|
(4)
|
Mr.
Huang and Mr. Wong are
brother-in-laws.
|
|
|
(5)
|
Bill
Stulginsky’s business address is 209 Wisteria Lane; Media, PA
19063.
|
|
|
(6)
|
Mr.
Wong is entitled to receive 6,971,636 of our Shares if certain conditions
contained in the merger and stock purchase agreement dated August 19, 2009
are met. Such securities are not beneficially owned because Mr. Wong does
not have voting or dispositive power over such shares and it is not yet
known if he will be entitled to receive any such shares. Pursuant to the
terms of the agreement, the 6,971,636 shares held in escrow may be issued
to Mr. Wong if the following events
occur:
|
|
Event
|
|
Number of
Shares
|
|
|
From
escrow at the close of 2010 audit, if certain earnings thresholds are
met
|
|
|
1,794,800
|
|
|
From
escrow at the close of 2011 audit, if certain earnings thresholds are
met
|
|
|
2,176,836
|
|
|
From
escrow if the closing price of the Company’s shares is at or above $20.00
per share for twenty trading days in a thirty trading day period prior to
April 30, 2012
|
|
|
2,000,000
|
|
|
From
escrow if the closing price of the Company’s shares is at or above $25.00
per share for twenty trading days in a thirty trading day period prior to
April 30, 2012
|
|
|
1,000,000
|
|
|
|
(7)
|
Includes
(i) 537,010 shares held by Surmount Investments Group Limited, (ii)
268,505 shares held by Top Plenty International Limited, and (iii) 268,505
shares held by Park Rise Holdings
Limited.
|
|
|
(8)
|
The
controlling person of Dorset Management Corporation is David M. Knott.
Dorset Management Corporation’s address is 485 Underhill Boulevard, Suite
205, Syosset, New York 11791.
|
|
|
(9)
|
Based
in part on a Schedule 13G/A filed with the Securities and Exchange
Commission on October 14, 2010. Includes (i) 157,700 shares held by Knott
Partners, LP, (ii) 109,500 shares held by Knott Partners Offshore Master
Fund, LP, (iii) 8,700 shares held by CommonFund Hedged Equity Co., (iv)
54,600 shares held by Shoshone Partners, LP, (v) 4,700 shares held by
Knott Partners Offshore (SRI) Fund Ltd., and (vi) 14,800 shares held by
Mulsanne Partners, LP.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Party Transactions of CHAC
China
Holdings Acquisition Corp., the Company’s corporate predecessor, paid Stuart
Management Co., an affiliate of Paul K. Kelly, a total of $10,000 per month for
administrative services and secretarial support for a period commencing on the
date of the closing of the Company’s initial public offering and ending on the
consummation of the business combination. This arrangement was agreed to by
Stuart Management Co. for our benefit and is not intended to provide Stuart
Management Co. compensation in lieu of a management fee. We believe that such
fees were at least as favorable as we could have obtained from an unaffiliated
third party.
Related
Party Transactions of China Ceramics and Operating
predecessor
Mr. Huang
Jia Dong, the founder and Chairman of Hengda and the Chief Executive Officer and
one of our directors, and Mr. Wong Kung Tok, a holder of approximately 41% of
our shares, provide working capital loans to us from time to time during the
normal course of our business. These loans amounted to RMB 1,439,000, RMB
3,118,000, RMB 3,380,000, and RMB 3,032,000 in 2007, 2008, 2009 and the six
months ended June 30, 2010, respectively. These loans are interest free,
unsecured and repayable on demand. They remain outstanding as of June 30, 2010.
Mr. Huang and Mr. Wong are brothers-in-law.
In 2007,
we paid RMB 3,364,000 for the purchase of property, plant and equipment on
behalf of Jinjiang City Anhai Junbing Hengda Construction Material Factory
(“Anhai Hengda”), at the time a holder of greater than 10% of Hengda’s common
stock (it ceased to be a related party on April 23, 2008). The loan was interest
free and was fully repaid in August 2009.
During
the normal course of our business, we rent warehouse and stockyard space from
Anhai Hengda. Hengda paid Anhai Hengda an aggregate of RMB 1,566,000 and RMB
522,000 in connection with such rental in 2007 and in the period from January 1,
2008 to April 23, 2008 (the date on which it ceased to be a related party),
respectively. We believe this rental arrangement with Anhai Hengda was at least
as favorable as we could have obtained from an unaffiliated third
party.
Pursuant
to an administrative services agreement dated as of December 1, 2009 between the
Company and Stuart Management Co., an affiliate of Paul K. Kelly, Chairman of
the Board, the Company will pay $7,000 a month plus out-of-pocket expenses to
Stuart Management Co. for administrative services beginning on December 1, 2009
for a term of one year, and the agreement shall automatically renew for
successive one-year terms unless either party notifies the other of its intent
not to renew.
As of
December 31, 2009, we have the exclusive right to use 11 design patents through
our chief executive officer, Huang Jia Dong. Huang Jia Dong has licensed to us,
for no consideration, the exclusive right to use PRC design patents owned by him
during the terms of each of the patents.
PROPOSAL
2
APPROVAL
OF THE 2010 INCENTIVE COMPENSATION PLAN
The
Company is seeking approval of the shareholders to adopt the China Ceramics Co.,
Ltd. 2010 Incentive Compensation Plan (the “2010 Incentive Plan”). The purpose
of the 2010 Incentive Plan is to assist the Company and its subsidiaries in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors, and independent contractors by enabling
such persons to acquire or increase a proprietary interest in the Company in
order to strengthen the mutuality of interests between such persons and the
Company’s shareholders, and providing such persons with annual and long-term
performance incentives to expand their maximum efforts in the creation of
shareholder value. If the 2010 Incentive Plan is approved, awards
under the 2010 Incentive Plan will be limited in the aggregate to 1,200,000
Shares. The 2010 Incentive Plan shall terminate at such time as no Shares remain
available for issuance under the 2010 Incentive Plan and the Company has no
further obligations with respect to outstanding awards under the 2010 Incentive
Plan.
General
Description of the 2010 Incentive Plan
The
following is a summary of the material provisions of the 2010 Incentive Plan and
is qualified in its entirety by reference to the complete text of the 2010
Incentive Plan, a copy of which is attached to this Proxy Statement as
Annex A
.
Administration
. The 2010
Incentive Plan is administered by a committee (the “Committee”) designated by
the Board, which shall consist of at least two directors, each of whom is (i) a
“non-employee director” within the meaning of Rule 16b-3 promulgated under the
Exchange Act and (ii) an “outside director” within the meaning of Section 162(m)
of the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto (the
“Code”); provided, however, that except as otherwise expressly provided in the
2010 Incentive Plan or in order to comply with Code Section 162(m), or Rule
13b-3 under the Exchange Act, the Board may exercise any power or authority
granted to the Committee under the 2010 Incentive Plan. Among other things, the
Committee has complete discretion, subject to the express limits of the 2010
Incentive Plan, to determine the officers, directors, employees and independent
contractors to be granted an award, the type of award to be granted, the number
of Shares subject to each award, the terms and conditions of each award, the
exercise price of each award which is a stock option (“
Option
”) and the base
price of each award which is a stock appreciation right (“SAR”), the term of
each award, the vesting schedule for an award, whether to accelerate award
vesting, the value of the Shares underlying an award, and the required
withholdings, if any. The Committee is also authorized to construe the award
agreements, and may prescribe rules relating to the 2010 Incentive Plan.
Notwithstanding the foregoing, neither the Committee nor the Board has any
authority to grant or modify an award under the 2010 Incentive Plan with terms
or conditions that would cause the award to be considered nonqualified “deferred
compensation” subject to Code Section 409A. The last reported sales price on the
Nasdaq Stock Market of the Shares on November 26, 2010 was $7.67.
Grant of Awards; Shares Available
for Awards
. The 2010 Incentive Plan provides for the grant of Options
(both incentive stock options and non-incentive stock options), SARs (including
limited SARs), restricted stock, deferred stock, stock granted as a bonus or in
lieu of another award, dividend equivalents, bonus stock, awards in lieu of
obligations, and performance or annual incentive awards (each an “award”) to
executive officers, directors and employees, and independent contractors of the
Company or any of its subsidiaries (each a “participant”) (however, solely
employees of the Company or its subsidiaries are eligible for awards which are
incentive stock options). The Company has reserved a total of 1,200,000 Shares
for issuance as or under awards to be made under the 2010 Incentive
Plan. If any award lapses, expires, is cancelled, or terminates
unexercised or ceases to be exercisable for any reason, the number of Shares
subject thereto is again available for grant under the 2010 Incentive Plan. The
number of Shares for which awards which are Options, SARs, performance awards or
annual incentive awards may be granted to a participant under the 2010 Incentive
Plan in any fiscal year is limited to 350,000.
Future
new hires, directors and additional consultants would be eligible to participate
in the 2010 Incentive Plan as well. The number of awards to be granted to
officers, directors, employees and consultants cannot be determined at this time
as the grant of awards is dependent upon various factors such as hiring
requirements and job performance.
Options
. The exercise price
per Share purchasable under an Option shall be determined by the Committee or
the Board, provided that such per Share exercise price shall not be less than
100% of the fair market value of a Share on the date of grant of the Option and
shall not, in any event, be less than the par value of a Share on the date of
grant of such option. The Committee or the Board shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part, the time or times at which Options shall cease to be or become
exercisable following termination of employment or upon other conditions, the
methods by which such exercise price may be paid or deemed to be paid, the form
of such payment, and the methods by or forms in which Shares will be delivered
or deemed to be delivered to participants who exercise Options.
Options
which are incentive stock options (“ISOs”) granted under the 2010 Incentive Plan
shall comply in all respects with Code Section 422. In the case of ISOs, if an
employee owns or is deemed to own (by reason of the attribution rules applicable
under Code Section 424(d)) more than 10% of the combined voting power of all
classes of stock of the Company or parent or subsidiary of the Company and an
ISO is granted to such employee, the per Share exercise price under such ISO (to
the extent required by the Code at the time of grant) shall be no less than 110%
of the fair market value of a Share on the date such ISO is granted. The term of
an ISO may not exceed 10 years (5 years in the case of an ISO granted to a ten
percent shareholder). ISOs may solely be granted to employees. In addition, the
aggregate fair market value of the Shares subject to an ISO (determined at the
time of grant) which are exercisable for the first time by an employee during
any calendar year may not exceed $100,000.
Stock Appreciation Rights
. A
SAR provides on the participant to whom it is granted the right to receive, upon
its exercise, the excess of (A) the fair market value of the number of Shares
subject to the SAR on the date of exercise (or, in the case of a “Limited SAR”
that may be exercised only in the event of a change in control, the fair market
value determined by reference to the change in control price, as defined in the
2010 Incentive Plan), over (B) the product of the number of Shares subject to
the SAR multiplied by the grant price under the SAR, as determined by the
Committee or the Board. The grant price of a SAR shall not be less than the fair
market value of a Share on the date of grant.
Restricted Stock Awards
. A
restricted stock award is a grant or sale of Shares to the participant, subject
to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee or the Board may impose, which
restrictions may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee or
the Board may determine at the date of grant or purchase or thereafter. Except
to the extent restricted under the terms of the 2010 Incentive Plan and any
agreement relating to the restricted stock award, a participant who is granted
or has purchased restricted stock shall have all of the rights of a shareholder,
including the right to vote the restricted stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other requirement
imposed by the Committee or the Board). During the restricted period applicable
to the restricted stock, subject to certain exceptions, the restricted stock may
not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the participant.
Deferred Stock
. A deferred
stock award is a right to receive Shares, cash, or a combination thereof at the
end of a specified deferral period, subject to certain terms and conditions, and
in compliance with Code Section 409A. Payment under an award of deferred stock
shall occur upon expiration of the deferral period specified for such deferred
stock award by the Committee or the Board (or, if permitted by the Committee or
the Board, as elected by the participant). In addition, deferred stock awards
shall be subject to such restrictions (which may include a risk of forfeiture)
as the Committee or the Board may impose, if any, which restrictions may lapse
at the expiration of the deferral period or at earlier specified times
(including based on achievement of performance goals and/or future service
requirements), separately or in combination, in installments or otherwise, as
the Committee or the Board may determine. Payments under deferred stock awards
may be by delivery of Shares, cash equal to the fair market value of the
specified number of Shares covered by the deferred stock award, or a combination
thereof, as determined by the Committee or the Board at the date of grant or
thereafter. Prior to the end of the specified deferral period for a deferred
stock award, the award carries no voting or dividend or other rights associated
with share ownership.
Bonus Shares and Awards in Lieu of
Obligations
.
The
Committee and the Board are each authorized to grant Shares as a bonus, or to
grant Shares or other awards in lieu of Company obligations to pay cash or
deliver other property under the 2010 Incentive Plan or under other plans or
compensatory arrangements, provided that, in the case of participants subject to
Section 16 of the Exchange Act, the amount of such grants remains within the
discretion of the Committee to the extent necessary to ensure that acquisitions
of Shares or other awards are exempt from liability under Section 16(b) of the
Exchange Act. These bonus shares or awards granted under the 2010 Incentive Plan
shall be subject to such other terms as shall be determined by the Committee or
the Board.
Dividend Equivalents
. The
Committee and the Board are each authorized to grant dividend equivalents to a
participant, entitling the participant to receive cash, Shares, other awards, or
other property equal in value to dividends paid with respect to a specified
number of Shares, or other periodic payments. Dividend equivalents may be
awarded on a free-standing basis or in connection with another award. The
Committee or the Board may provide that dividend equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Shares, awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee or the
Board may specify.
Other Stock-Based Awards
. The
Committee and the Board are each authorized, subject to limitations under
applicable law, to grant to participants such other awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Shares, as deemed by the Committee or the
Board to be consistent with the purposes of the 2010 Incentive Plan, including,
without limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Shares, purchase rights for Shares, awards with
value and payment contingent upon performance of the Company or any other
factors designated by the Committee or the Board, and awards valued by reference
to the book value of Shares or the value of securities of or the performance of
specified subsidiaries or business units of the Company.
Performance and Annual Incentive
Awards
. Subject to certain limitations contained in the 2010 Incentive
Plan, the right of a participant to exercise or receive a grant or settlement of
any award, and the timing thereof, may be subject to such performance conditions
as may be specified by the Committee or the Board. If and to the extent the
Committee determines that a performance or annual incentive award to be granted
to an eligible person who is designated by the Committee as likely to be a
Covered Employee within the meaning of Code Section 162(m) should quality as
“performance-based compensation” for purposes of Code Section 162(m), additional
conditions apply to the grant, exercise or settlement of such performance or
annual incentive award as set forth in the 2010 Incentive Plan.
Change in Control Provisions.
In the event of a change in control (as defined in the 2010 Incentive Plan), (i)
any award subject to vesting and exercisability requirements that was not
previously vested and exercisable shall become fully vested and exercisable as
of the occurrence of the change in control, subject to certain restrictions;
(ii) Limited SARs (and other SARs if so provided by their terms) shall become
exercisable for amounts, in cash, determined by reference to the change in
control price; (iii) the restrictions, deferral of settlement, and forfeiture
conditions applicable to any other award shall lapse and such awards shall be
deemed fully vested as of the occurrence of the change in control, except to the
extent of any waiver by the participant and subject to certain restrictions;
(iv) with respect to any outstanding award subject to achievement of performance
goals and conditions under the 2010 Incentive Plan, such performance goals and
other conditions will be deemed to be met if and to the extent so provided by
the Committee in the award agreement relating to such award; (v) the Board may
in its sole and absolute discretion, provide on a case by case basis that
Options shall terminate, provided however, that a participant holding a
terminating Option shall have the right, immediately prior to the occurrence of
such change in control and during such period as the Board in its sole
discretion shall determine and designate, to exercise that Option, to the extent
exercisable, in whole or in part; and (vi) the Board may in its sole and
absolute discretion, provide on a case by case basis that any award entitled to
be settled in Shares shall instead be entitled to be settled, during such period
as the Board in its sole discretion shall determine and designate, by means of a
cash payment equal to the fair market value of such award immediately prior to
the occurrence of such change in control, as determined in good faith by the
Board.
Amendment and Termination.
The Board may amend, alter, suspend, discontinue or terminate the 2010
Incentive Plan, or the Committee’s authority to grant awards under the 2010
Incentive Plan, without the consent of shareholders or participants, except that
any amendment or alteration to the 2010 Incentive Plan shall be subject to the
approval of the Company’s shareholders not later than the annual meeting next
following such Board action if such shareholder approval is required by any
federal or state law or regulation (including, without limitation, Rule 16b-3 or
Code Section 162(m)) or the rules of any stock exchange or automated quotation
system on which the Shares may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to the 2010
Incentive Plan to shareholders for approval; provided that, without the consent
of an affected participant, no such Board action may materially and adversely
affect the rights of such participant under any previously granted and
outstanding award. The Committee or the Board may waive any conditions or rights
under, or amend, alter, suspend, discontinue or terminate any award theretofore
granted and any award agreement relating thereto, except as otherwise provided
in the 2010 Incentive Plan; provided that, without the consent of an affected
participant, no such Committee or the Board action may materially and adversely
affect the rights of such participant under such award.
Certain
U.S. Federal Income Tax Consequences of the 2010 Incentive Plan
The
following is a general summary of the U.S. federal income tax consequences under
current tax law to the Company, were it subject to U.S. federal income taxation,
and to participants under the 2010 Incentive Plan who are individual citizens or
residents of the United States for U.S. federal income tax purposes (“U.S.
participants”) of Options, which include ISOs and Options that are not ISOs,
SARs, restricted stock, deferred stock, performance shares, performance units,
restricted stock units, dividend equivalent rights and bonus stock. It does not
purport to cover all of the special rules that may apply, including special
rules relating to limitations on the ability of the Company, were it subject to
U.S. federal income taxation, to deduct certain compensation, special rules
relating to deferred compensation, golden parachutes, participants subject to
Section 16(b) of the Exchange Act and the exercise of a stock Option with
previously-acquired shares. This summary assumes that U.S. participants will
hold their shares as capital assets within the meaning of Section 1221 of the
Code. This summary does not address the application of the passive foreign
investment company rules of the Code to U.S. participants, which are discussed
generally in the Company’s most recent Form 20-F as filed with the Securities
and Exchange Commission. In addition, this summary does not address the foreign,
state or local income or other tax consequences, or any U.S. federal non-income
tax consequences, inherent in the acquisition, ownership, vesting, exercise,
termination or disposition of an award under the 2010 Incentive Plan or shares
issued pursuant thereto. Participants are urged to consult their own tax
advisors concerning the tax consequences to them of an award under the 2010
Incentive Plan or shares issued pursuant thereto.
A U.S.
participant generally does not recognize taxable income upon the grant of an
option. Upon the exercise of an Option that is not an ISO, the participant
generally recognizes ordinary income in an amount equal to the excess, if any,
of the fair market value of the shares acquired on the date of exercise over the
exercise price therefor, and the Company would be entitled to a deduction for
such amount at that time. If the U.S. participant later disposes of the shares
acquired under an Option that is not an ISO, the U.S. participant generally
recognizes a long-term or short-term gain or loss, depending upon the period for
which the shares were held thereby. A long-term capital gain generally is
subject to more favorable tax treatment than ordinary income or a short-term
capital gain. The deductibility of capital losses is subject to certain
limitations. Upon the exercise of an ISO, a U.S. participant generally does not
recognize taxable income. If the U.S. participant disposes of the shares
acquired pursuant to the exercise of an ISO more than two years after the date
of grant and more than one year after the transfer of the shares to the
participant, the U.S. participant generally recognizes a long-term capital gain
or loss, and the Company would not be entitled to a deduction. However, if the
U.S. participant disposes of such shares prior to the end of the required
holding period, all or a portion of the gain is treated as ordinary income, and
the Company, were it subject to U.S. federal income taxation, generally would be
entitled to deduct such amount.
In
addition to the U.S. federal income tax consequences described above, the U.S.
participant may be subject to the alternative minimum tax (“AMT”), which is
payable to the extent it exceeds the participant’s regular income tax. For this
purpose, upon the exercise of an ISO, the excess of the fair market value of the
shares for which the ISO is exercised over the exercise price thereunder for
such shares is a preference item for purposes of the AMT. In addition, the U.S.
participant’s basis in such shares is increased by such excess for purposes of
computing the gain or loss on the disposition of the shares for AMT purposes. If
a U.S. participant is required to pay any AMT, the amount of such tax which is
attributable to deferral preferences (including any ISO adjustment) generally
may be allowed as a credit against the participant’s regular income tax
liability (and, in certain cases, may be refunded to the participant) in
subsequent years. To the extent the credit is not used, it may be carried
forward.
A U.S.
participant who receives a bonus of restricted stock or who purchases shares of
restricted stock, which shares, in either case, are subject to a substantial
risk of forfeiture and certain transfer restrictions, generally does not
recognize income on the receipt of the award or the purchased restricted shares
and generally recognizes ordinary compensation income at the time the
restrictions lapse in an amount equal to the excess, if any, of the fair market
value of the shares at such time over any amount paid by the U.S. participant
for the shares. Alternatively, the U.S. participant may elect to be taxed upon
receipt of the restricted stock based on the value of the shares at the time of
receipt. The Company generally would be entitled to deduct such amount at the
same time as ordinary compensation income is required to be included by the U.S.
participant and in the same amount. Dividends received with respect to
restricted stock generally are treated as compensation, unless the U.S.
participant elects to be taxed on the receipt (rather than the vesting) of the
restricted stock.
A U.S.
participant generally does not recognize income upon the grant of an SAR. The
U.S. participant recognizes ordinary compensation income upon the exercise of
the SAR equal to the increase in the value of the underlying shares, and the
Company generally would be entitled to a deduction for such
amount.
A U.S.
participant generally does not recognize income on the receipt of a deferred
stock award or a bonus stock award and generally recognizes income when the
shares are received. At such time, the U.S. participant recognizes ordinary
compensation income equal to the excess, if any, of the fair market value of the
shares over any amount paid for the shares, and the Company generally would be
entitled to deduct such amount at such time.
A U.S.
participant generally does not recognize income on the receipt of a performance
award, annual incentive award or dividend equivalent right award until a payment
is received under the award. At such time, the U.S. participant
recognizes ordinary compensation income equal to the amount of any cash payments
and the fair market value of any shares received, and the Company generally
would be entitled to deduct such amount at such time.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE 2010 INCENTIVE
PLAN.
RATIFICATION
OF INDEPENDENT AUDITORS
PROPOSAL
NO. 3
The Audit
Committee has appointed Grant Thornton as the independent auditors of the
Company to audit the financial statements of the Company for the fiscal year
ending December 31, 2010, and the Board is asking shareholders to ratify that
appointment.
A
representative of Grant Thornton is expected to be present either in person or
via teleconference at the Annual Meeting, with the opportunity to make a
statement, if he or she desires to do so, and is expected to be available to
respond to appropriate questions.
The Audit
Committee is not required to take any action as a result of the outcome of the
vote on this proposal. In the event shareholders fail to ratify the appointment,
the Audit Committee will reconsider this appointment. Even if the appointment is
ratified, the Audit Committee, in its discretion, may direct the appointment of
a different independent accounting firm at any time during the year if the Audit
Committee determines that such a change would be in the best interest of the
Company and the shareholders.
THE
BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE RATIFICATION OF THE APPOINTMENT
OF GRANT THORNTON AS CHINA CERAMICS’ INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2010.
Principal
Accountant Fees and Services
The
following table represents the approximate aggregate fees for services rendered
by Grant Thornton for fiscal years ended December 31, 2009 and
2008:
|
|
|
December
31
|
|
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$
|
265,000
|
|
|
$
|
180,000
|
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
|
|
|
|
Tax
Fees
|
|
|
-
|
|
|
|
|
|
|
All
Other Fees
|
|
|
-
|
|
|
|
|
|
|
Total
Fees
|
|
$
|
265,000
|
|
|
$
|
180,000
|
|
Audit
Fees
Grant
Thornton’s audit fees for 2009 and 2008 consist of the audit of our financial
statements for the years ended December 31, 2009, 2008, 2007, and
2006.
Audit-Related
Fees
Other
than the fees described under the caption “Audit Fees” above, Grant Thornton did
not bill any fees for services rendered to us during fiscal year 2009 and 2008
for assurance and related services in connection with the audit or review of our
financial statements.
Tax
Fees
There were no tax fees billed by Grant
Thornton for the fiscal years ended December 31, 2009 and 2008.
All
Other Fees
There
were no fees billed by Grant Thornton for other professional services rendered
during fiscal years ended December 31, 2009 and 2008.
Pre-Approval
of Services
We do not
rely on pre-approval policies and procedures.
GENERAL
Management
does not know of any matters other than those stated in this Proxy Statement
that are to be presented for action at the meeting. If any other
matters should properly come before the meeting, it is intended that proxies in
the accompanying form will be voted on any such other matters in accordance with
the judgment of the persons voting such proxies. Discretionary
authority to vote on such matters is conferred by such proxies upon the persons
voting them.
The
Company will bear the cost of preparing, printing, assembling and mailing the
proxy card, Proxy Statement and other material which may be sent to shareholders
in connection with this solicitation. It is contemplated that brokerage houses
will forward the proxy materials to beneficial owners at our
request. In addition to the solicitation of proxies by use of the
mails, officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone or telegraph. We may reimburse brokers or
other persons holding shares in their names or the names of their nominees for
the expenses of forwarding soliciting material to their principals and obtaining
their proxies.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
Shareholders
wishing to communicate with the Board or any individual director may write to
the Board or the individual director to the Board; China Ceramics Co., Ltd.; c/o
Jinjiang Hengda Ceramics Co., Ltd.; Junbing Industrial Zone; Anhai, Jinjiang
City; Fujian Province, PRC. Any such communication must state the number of
Shares beneficially owned by the shareholder making the communication. All such
communications will be forwarded to the full Board or to any individual director
or directors to whom the communication is directed unless the communication is
clearly of a marketing nature or is unduly hostile, threatening, illegal, or
similarly inappropriate, in which case the Company has the authority to discard
the communication or take appropriate legal action regarding the
communication.
WHERE
YOU CAN FIND MORE INFORMATION
The
Company files annual and current reports and other documents with the SEC under
the Exchange Act. The Company’s SEC filings made electronically through the
SEC’s EDGAR system are available to the public at the SEC’s website at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at the SEC’s public reference room located at 100 F Street, NE, Room 1580,
Washington, DC 20549. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference room.
|
November
30, 2010
|
By
Order of the Board of Directors,
|
|
|
|
|
|
/s/ Huang Jia Dong
|
|
|
Huang
Jia Dong
|
|
|
Chief
Executive Officer
|
ANNEX A
CHINA
CERAMICS CO., LTD.
2010
INCENTIVE COMPENSATION PLAN
CHINA
CERAMICS CO., LTD.
2010
INCENTIVE COMPENSATION PLAN
|
|
|
Page
|
|
1.
|
|
Purpose
|
|
1
|
|
|
|
|
|
2.
|
|
Definitions
|
|
1
|
|
|
|
|
|
3.
|
|
Administration
|
|
4
|
|
|
|
|
|
|
|
|
(a)
|
|
Authority
of the Committee
|
|
4
|
|
|
|
(b)
|
|
Manner
of Exercise of Committee Authority
|
|
4
|
|
|
|
(c)
|
|
Limitation
of Liability
|
|
4
|
|
|
|
|
|
4.
|
|
Stock
Subject to Plan
|
|
4
|
|
|
|
|
|
|
|
|
(a)
|
|
Limitation
on Overall Number of Shares Subject to Awards
|
|
4
|
|
|
|
(b)
|
|
Application
of Limitations
|
|
5
|
|
|
|
|
|
5.
|
|
Eligibility;
Per-Person Award Limitations
|
|
5
|
|
|
|
|
|
6.
|
|
Specific
Terms of Awards
|
|
5
|
|
|
|
|
|
|
|
|
(a)
|
|
General
|
|
5
|
|
|
|
(b)
|
|
Options
|
|
5
|
|
|
|
(c)
|
|
Stock
Appreciation Rights
|
|
6
|
|
|
|
(d)
|
|
Restricted
Stock
|
|
7
|
|
|
|
(e)
|
|
Deferred
Stock
|
|
8
|
|
|
|
(f)
|
|
Bonus
Stock and Awards in Lieu of Obligations
|
|
8
|
|
|
|
(g)
|
|
Dividend
Equivalents
|
|
9
|
|
|
|
(h)
|
|
Other
Stock-Based Awards
|
|
9
|
|
|
|
|
|
7.
|
|
Certain
Provisions Applicable to Awards
|
|
9
|
|
|
|
|
|
|
|
|
(a)
|
|
Term
of Awards
|
|
9
|
|
|
|
(b)
|
|
Form
and Timing of Payment Under Awards; Deferrals
|
|
9
|
|
|
|
(c)
|
|
Exemptions
from Section 16(b) Liability
|
|
9
|
|
|
|
|
|
8.
|
|
Performance
and Annual Incentive Awards
|
|
10
|
|
|
|
|
|
|
|
|
(a)
|
|
Performance
Conditions
|
|
10
|
|
|
|
(b)
|
|
Performance
Awards Granted to Designated Covered Employees
|
|
10
|
|
|
|
(c)
|
|
Annual
Incentive Awards Granted to Designated Covered Employees
|
|
11
|
|
|
|
(d)
|
|
Written
Determinations
|
|
12
|
|
|
|
(e)
|
|
Status
of Section 8(b) and Section 8(c) Awards Under Code Section
162(m)
|
|
12
|
|
|
|
|
|
9.
|
|
Change
in Control
|
|
12
|
|
|
|
|
|
|
|
|
(a)
|
|
Effect
of Change in Control
|
|
12
|
|
|
|
(b)
|
|
Definition
of Change in Control
|
|
13
|
|
|
|
(c)
|
|
Definition
of Change in Control Price
|
|
14
|
|
|
|
|
|
10.
|
|
General
Provisions
|
|
14
|
|
|
|
|
|
|
|
|
(a)
|
|
Compliance
With Legal and Other Requirements
|
|
14
|
|
|
|
(b)
|
|
Limits
on Transferability; Beneficiaries
|
|
14
|
|
|
|
(c)
|
|
Adjustments
|
|
15
|
|
|
|
(d)
|
|
Taxes
|
|
15
|
|
|
|
(e)
|
|
Changes
to the Plan and Awards
|
|
16
|
|
|
|
(f)
|
|
Limitation
on Rights Conferred Under Plan
|
|
16
|
|
|
|
(g)
|
|
Unfunded
Status of Awards; Creation of Trusts
|
|
16
|
|
|
|
(h)
|
|
Nonexclusivity
of the Plan
|
|
16
|
|
|
|
(i)
|
|
Payments
in the Event of Forfeitures; Fractional Shares
|
|
16
|
|
|
|
(j)
|
|
Governing
Law
|
|
17
|
|
|
|
(k)
|
|
Plan
Effective Date and Shareholder Approval; Termination of
Plan
|
|
17
|
|
|
|
(l)
|
|
Code
Section 409A
|
|
17
|
CHINA
CERAMICS CO., LTD.
2010
INCENTIVE COMPENSATION PLAN
1.
Purpose
. The
purpose of this 2010 Incentive Compensation Plan (the “
Plan
”) is to assist CHINA
CERAMICS CO., LTD. (the “
Company
”) and its subsidiaries
in attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, Directors and independent contractors by enabling
such persons to acquire or increase a proprietary interest in the Company in
order to strengthen the mutuality of interests between such persons and the
Company’s shareholders, and providing such persons with annual and long term
performance incentives to expend their maximum efforts in the creation of
shareholder value. The Plan is also intended to qualify certain compensation
awarded under the Plan for tax deductibility under Section 162(m) of the
Code (as hereafter defined) to the extent deemed appropriate by the Committee
(or any successor committee) of the Board of Directors of the
Company.
2.
Definitions
. For
purposes of the Plan, the following terms shall be defined as set forth below,
in addition to such terms defined in Section 1 hereof.
“Annual
Incentive Award” means a conditional right granted to a Participant under
Section 8(c) hereof to receive a cash payment, Stock or other Award, unless
otherwise determined by the Committee, after the end of a specified fiscal
year.
“Award”
means any Option, SAR (including Limited SAR), Restricted Stock, Deferred Stock,
Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other
Stock-Based Award, Performance Award or Annual Incentive Award, together with
any other right or interest, granted to a Participant under the
Plan.
“Beneficial
Owner”, “Beneficially Owning” and “Beneficial Ownership” shall have the meanings
ascribed to such terms in Rule 13d-3 under the Exchange Act and any successor to
such Rule.
“Beneficiary”
means the person, persons, trust or trusts which have been designated by a
Participant in his or her most recent written beneficiary designation filed with
the Committee to receive the benefits specified under the Plan upon such
Participant’s death or to which Awards or other rights are transferred if and to
the extent permitted under Section 10(b) hereof. If, upon a Participant’s
death, there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such
benefits.
“Board”
means the Company’s Board of Directors.
“Change
in Control” means Change in Control as defined with related terms in
Section 9 of the Plan.
“Change
in Control Price” means the amount calculated in accordance with
Section 9(c) of the Plan.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations
thereto.
“Committee”
means a committee designated by the Board to administer the Plan; provided,
however, that the Committee shall consist of at least two directors, and each
member of which shall be (i) a “non-employee director” within the meaning
of Rule 16b-3 under the Exchange Act, unless administration of the Plan by
“non-employee directors” is not then required in order for exemptions under Rule
16b-3 to apply to transactions under the Plan, and (ii) an “outside
director” within the meaning of Section 162(m) of the Code, unless
administration of the Plan by “outside directors” is not then required in order
to qualify for tax deductibility under Section 162(m) of the
Code.
“Corporate
Transaction” means a Corporate Transaction as defined in Section 9(b)(i) of
the Plan.
“Covered
Employee” means an Eligible Person who is a Covered Employee as specified in
Section 8(e) of the Plan.
“Deferred
Stock” means a right, granted to a Participant under Section 6(e) hereof,
to receive Stock, cash or a combination thereof at the end of a specified
deferral period.
“Director”
means a member of the Board.
“Disability”
means a permanent and total disability (within the meaning of Section 22(e)
of the Code), as determined by a medical doctor satisfactory to the
Committee.
“Dividend
Equivalent” means a right, granted to a Participant under Section 6(g)
hereof, to receive cash, Stock, other Awards or other property equal in value to
dividends paid with respect to a specified number of shares of Stock, or other
periodic payments.
“Effective
Date” means the effective date of the Plan, which shall be immediately following
the approval of the Plan by the shareholders of the Company at the annual
meeting of shareholders to be held on December 27, 2010.
“Eligible
Person” means each Executive Officer of the Company (as defined under the
Exchange Act) and other officers, Directors and employees of the Company or of
any Subsidiary, and independent contractors with the Company or any Subsidiary.
The foregoing notwithstanding, only employees of the Company or any Subsidiary
shall be Eligible Persons for purposes of receiving any Incentive Stock Options.
An employee on leave of absence may be considered as still in the employ of the
Company or a Subsidiary for purposes of eligibility for participation in the
Plan.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules
thereto.
“Executive
Officer” means an executive officer of the Company as defined under the Exchange
Act.
“Fair
Market Value” means the fair market value of Stock, Awards or other property as
determined by the Committee or the Board, or under procedures established by the
Committee or the Board. Unless otherwise determined by the Committee or the
Board, the Fair Market Value of Stock as of any given date shall be the closing
sale price per share reported on a consolidated basis for stock listed on the
principal stock exchange or market on which Stock is traded on the date as of
which such value is being determined or, if there is no sale on that date, then
on the last previous day on which a sale was reported.
“Incentive
Stock Option” or “ISO” means any Option intended to be designated as an
incentive stock option within the meaning of Section 422 of the Code or any
successor provision thereto.
“Incumbent
Board” means the Incumbent Board as defined in Section 9(b)(ii) of the
Plan.
“Limited
SAR” means a right granted to a Participant under Section 6(c)
hereof.
“Option”
means a right granted to a Participant under Section 6(b) hereof, to
purchase Stock or other Awards at a specified price during specified time
periods.
“Other
Stock-Based Awards” means Awards granted to a Participant under
Section 6(h) hereof.
“Parent
Corporation” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, if each of the corporations in the
chain (other than the Company) owns stock possessing 50% or more of the combined
voting power of all classes of stock in one of the other corporations in the
chain.
“Participant”
means a person who has been granted an Award under the Plan which remains
outstanding, including a person who is no longer an Eligible
Person.
“Performance
Award” means a right, granted to an Eligible Person under Section 8 hereof,
to receive Awards based upon performance criteria specified by the Committee or
the Board.
“Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a
“group” as defined in Section 13(d) thereof.
“Restricted
Stock” means Stock granted to a Participant under Section 6(d) hereof, that
is subject to certain restrictions and to a risk of forfeiture.
“Rule
16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3), as from
time to time in effect and applicable to the Plan and Participants, promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange
Act
“Stock”
means the Company’s Common Stock, par value $.0001 per share, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
“Stock
Appreciation Rights” or “SAR” means a right granted to a Participant under
Section 6(c) hereof.
“Subsidiary”
means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power of
the then outstanding securities or interests of such corporation or other entity
entitled to vote generally in the election of directors or in which the Company
has the right to receive 50% or more of the distribution of profits or 50% or
more of the assets on liquidation or dissolution.
3.
Administration
.
(a)
Authority of the Committee
.
The Plan shall be administered by the Committee; provided, however, that except
as otherwise expressly provided in this Plan or in order to comply with Code
Section 162(m) or Rule 16b-3 under the Exchange Act, the Board may exercise
any power or authority granted to the Committee under this Plan. The Committee
or the Board shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award agreements and correct defects, supply omissions or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee or the Board may deem necessary or advisable for the
administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
(b)
Manner of Exercise of Committee
Authority
. The Committee, and not the Board, shall exercise sole and
exclusive discretion on any matter relating to a Participant then subject to
Section 16 of the Exchange Act with respect to the Company to the extent
necessary in order that transactions by such Participant shall be exempt under
Rule 16b-3 under the Exchange Act. Any action of the Committee or the Board
shall be final, conclusive and binding on all persons, including the Company,
its subsidiaries, Participants, Beneficiaries, transferees under
Section 10(b) hereof or other persons claiming rights from or through a
Participant, and shareholders. The express grant of any specific power to the
Committee or the Board, and the taking of any action by the Committee or the
Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee or the Board shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions
as the Committee or the Board may determine, and (iii) with respect to
Participants subject to Section 16, to perform such other functions of the
Committee or the Board as the Committee or the Board may determine to the extent
performance of such functions will not result in the loss of an exemption under
Rule 16b-3 otherwise available for transactions by such persons, in each case to
the extent permitted under applicable law and subject to the requirements set
forth in Section 8(d). The Committee or the Board may appoint agents to
assist it in administering the Plan.
(c)
Limitation of Liability.
The
Committee and the Board, and each member thereof, shall be entitled to, in good
faith, rely or act upon any report or other information furnished to him or her
by any executive officer, other officer or employee of the Company or a
Subsidiary, the Company’s independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members of the Committee and the
Board, and any officer or employee of the Company or a subsidiary acting at the
direction or on behalf of the Committee or the Board, shall not be personally
liable for any action or determination taken or made in good faith with respect
to the Plan, and shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action or
determination.
4.
Stock Subject to
Plan
.
(a)
Limitation on Overall Number of
Shares Subject to Awards
. Subject to adjustment as provided in
Section 10(c) hereof, the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be
(i) one million two hundred thousand (1,200,000). If any Award
is cancelled, forfeited or terminated for any reason prior to exercise or
becoming fully vested, the shares of Stock that were subject to such
Award shall, to the extent cancelled, forfeited or terminated, immediately be
available for future Awards granted under the Plan as if said Award had never
been granted including any shares of Stock subject to an Award which is
cancelled, forfeited or terminated in order to pay the exercise price, purchase
price or any taxes or tax withholdings on an Award. Any shares of
Stock delivered under the Plan may consist, in whole or in part, of authorized
and unissued shares or treasury shares. Subject to adjustment as
provided in Section 10(c) hereof, in no event shall the aggregate number of
shares of Stock which may be issued pursuant to ISOs exceed one million two
hundred thousand (1,200,000) shares.
(b)
Application of Limitations
.
The limitation contained in Section 4(a) shall apply not only to Awards
that are settleable by the delivery of shares of Stock but also to Awards
relating to shares of Stock but settleable only in cash (such as cash-only
SARs). The Committee or the Board may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award.
5.
Eligibility; Per-Person Award
Limitations
. Awards may be granted under the Plan only to Eligible
Persons. In each fiscal year during any part of which the Plan is in effect, an
Eligible Person may not be granted Options, SAR's, Performance Awards or Annual
Incentive Awards relating to more than three hundred fifty thousand
(350,000) shares of Stock, subject to adjustment as provided in
Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(f), 6(g), 6(h),
8(b) and 8(c). In addition, the maximum amount that may be earned as an Annual
Incentive Award or other cash Award in any fiscal year by any one Participant
shall be $2,000,000, and the maximum amount that may be earned as a Performance
Award or other cash Award in respect of a performance period by any one
Participant shall be $5,000,000.
6.
Specific Terms of
Awards
.
(a)
General
. Awards may be
granted on the terms and conditions set forth in this Section 6. In
addition, the Committee or the Board may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee or the Board shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or her Award. The Committee or the Board shall retain full power and discretion
to accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. Except in cases in which the Committee or
the Board is authorized to require other forms of consideration under the Plan,
or to the extent other forms of consideration must be paid to satisfy the
requirements of Florida law, no consideration other than services may be
required for the grant (but not the exercise) of any Award.
(b)
Options
. The Committee and
the Board each is authorized to grant Options to Participants on the following
terms and conditions:
(i)
Exercise Price
. The exercise
price per share of Stock purchasable under an Option shall be determined by the
Committee or the Board, provided that such exercise price shall not be less than
100% of the Fair Market Value of the Stock on the date of grant of the Option
and shall not, in any event, be less than the par value of a share of Stock on
the date of grant of such Option. In the case of Incentive Stock Options, if an
employee owns or is deemed to own (by reason of the attribution rules applicable
under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent Corporation and an
Incentive Stock Option is granted to such employee, the option price of such
Incentive Stock Option (to the extent required by the Code at the time of grant)
shall be no less than 110% of the Fair Market Value of the Stock on the date
such Incentive Stock Option is granted.
(ii)
Time and Method of
Exercise
. The Committee or the Board shall determine the time or times at
which or the circumstances under which an Option may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which Options shall cease to be or become
exercisable following termination of employment or upon other conditions, the
methods by which such exercise price may be paid or deemed to be paid (including
in the discretion of the Committee or the Board a cashless exercise procedure),
the form of such payment, including, without limitation, cash, Stock, other
Awards or awards granted under other plans of the Company or any subsidiary, or
other property (including notes or other contractual obligations of Participants
to make payment on a deferred basis), and the methods by or forms in which Stock
will be delivered or deemed to be delivered to Participants. In addition, the
Option may, but need not include, a provision whereby the Participant may elect
at any time while an Eligible Employee to exercise the Option as to any part or
all of the Stock subject to the Option prior to the full vesting of the
Option;
provided
that
any unvested shares of Stock so purchased shall be subject to a repurchase right
in favor of the Company, with the repurchase price to be equal to the lesser of
(x) the original repurchase price or (y) the Fair Market Value of the
shares of Stock on the date of such repurchase, or to any other restrictions the
Committee determines to be appropriate.
(iii)
ISOs
. The terms of any
ISO granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to ISOs shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be exercised, so as to disqualify either the Plan or any ISO under
Section 422 of the Code, unless the Participant has first requested the
change that will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as
Incentive Stock Options shall be subject to the following special terms and
conditions:
(A) the
Option shall not be exercisable more than ten years after the date such
Incentive Stock Option is granted; provided, however, that if a Participant owns
or is deemed to own (by reason of the attribution rules of Section 424(d)
of the Code) more than 10% of the combined voting power of all classes of stock
of the Company or any Parent Corporation and the Incentive Stock Option is
granted to such Participant, the term of the Incentive Stock Option shall be (to
the extent required by the Code at the time of the grant) for no more than five
years from the date of grant; and
(B) The
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of stock with respect to which Incentive Stock
Options granted under the Plan and all other option plans of the Company or its
Parent Corporation during any calendar year exercisable for the first time by
the Participant during any calendar year shall not (to the extent required by
the Code at the time of the grant) exceed $100,000.
(c)
Stock Appreciation Rights
.
The Committee and the Board each is authorized to grant SAR’s to Participants on
the following terms and conditions:
(i)
Right to Payment
. A SAR shall
confer on the Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of
stock on the date of exercise (or, in the case of a “Limited SAR” that may be
exercised only in the event of a Change in Control, the Fair Market Value
determined by reference to the Change in Control Price, as defined under
Section 9(c) hereof), over (B) the grant price of the SAR as
determined by the Committee or the Board. The grant price of an SAR shall not be
less than the Fair Market Value of a share of Stock on the date of
grant.
(ii)
Other Terms
. The
Committee or the Board shall determine at the date of grant, the time or times
at which and the circumstances under which a SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of employment or upon other conditions, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a Change in Control or other
event as specified by the Committee or the Board, may be granted on such terms,
not inconsistent with this Section 6(c), as the Committee or the Board may
determine.
(d)
Restricted Stock
. The
Committee and the Board each is authorized to grant Restricted Stock to
Participants and/or permit Participants to purchase Restricted Stock on the
following terms and conditions:
(i)
Grant and Restrictions
.
Restricted Stock shall be subject to such restrictions on transferability, risk
of forfeiture and other restrictions, if any, as the Committee or the Board may
impose, which restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance goals
and/or future service requirements), in such installments or otherwise, as the
Committee or the Board may determine at the date of grant or purchase or
thereafter. Except to the extent restricted under the terms of the Plan and any
agreement relating to the Restricted Stock, a Participant who is granted or has
purchased Restricted Stock shall have all of the rights of a shareholder,
including the right to vote the Restricted Stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other requirement
imposed by the Committee or the Board). During the restricted period applicable
to the Restricted Stock, subject to Section 10(b) below, the Restricted
Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise
encumbered by the Participant.
(ii)
Forfeiture
. Except as
otherwise determined by the Committee or the Board at the time of the Award or
purchase, upon termination of a Participant’s employment during the applicable
restriction period, the Participant’s Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company;
provided that the Committee or the Board may provide, by rule or regulation or
in any agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee or the Board may in other cases waive in whole or in part the
forfeiture of Restricted Stock.
(iii)
Certificates for Stock
.
Restricted Stock granted and/or purchased under the Plan may be evidenced in
such manner as the Committee or the Board shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee or the Board may require that such certificates bear an appropriate
legend referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.
(iv)
Dividends and Splits
.
As a condition to the grant or purchase of Restricted Stock, the Committee or
the Board may require that any cash dividends paid on a share of Restricted
Stock be automatically reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee or the Board, Stock distributed in connection with a
Stock split or Stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property has been
distributed.
(e)
Deferred Stock
. The Committee
and the Board each is authorized to grant Deferred Stock to Participants, which
are rights to receive Stock, cash, or a combination thereof at the end of a
specified deferral period, subject to the following terms and conditions, and in
compliance with Section 409A of the Code:
(i)
Award and Restrictions
.
Satisfaction of an Award of Deferred Stock shall occur upon expiration of the
deferral period specified for such Deferred Stock by the Committee or the Board
(or, if permitted by the Committee or the Board, as elected by the Participant).
In addition, Deferred Stock shall be subject to such restrictions (which may
include a risk of forfeiture) as the Committee or the Board may impose, if any,
which restrictions may lapse at the expiration of the deferral period or at
earlier specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination, in
installments or otherwise, as the Committee or the Board may determine. Deferred
Stock may be satisfied by delivery of Stock, cash equal to the Fair Market Value
of the specified number of shares of Stock covered by the Deferred Stock, or a
combination thereof, as determined by the Committee or the Board at the date of
grant or thereafter. Prior to satisfaction of an Award of Deferred Stock, an
Award of Deferred Stock carries no voting or dividend or other rights associated
with share ownership.
(ii)
Forfeiture
. Except as
otherwise determined by the Committee or the Board, upon termination of a
Participant’s employment during the applicable deferral period thereof to which
forfeiture conditions apply (as provided in the Award agreement evidencing the
Deferred Stock), the Participant’s Deferred Stock that is at that time subject
to deferral (other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee or the Board may provide, by rule or
regulation or in any Award agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Deferred Stock shall be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee or the Board may in other cases waive in whole or in
part the forfeiture of Deferred Stock.
(iii)
Dividend Equivalents
.
Unless otherwise determined by the Committee or the Board at date of grant,
Dividend Equivalents on the specified number of shares of Stock covered by an
Award of Deferred Stock shall be either (A) paid with respect to such
Deferred Stock at the dividend payment date in cash or in shares of unrestricted
Stock having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such Deferred Stock and the amount or value
thereof automatically deemed reinvested in additional Deferred Stock, other
Awards or other investment vehicles, as the Committee or the Board shall
determine or permit the Participant to elect.
(f)
Bonus Stock and Awards in Lieu of
Obligations
. The Committee and the Board each is authorized to grant
Stock as a bonus, or to grant Stock or other Awards in lieu of Company
obligations to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, provided that, in the case of Participants
subject to Section 16 of the Exchange Act, the amount of such grants
remains within the discretion of the Committee to the extent necessary to ensure
that acquisitions of Stock or other Awards are exempt from liability under
Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as shall be determined by the Committee or the
Board.
(g)
Dividend Equivalents
. The
Committee and the Board each is authorized to grant Dividend Equivalents to a
Participant entitling the Participant to receive cash, Stock, other Awards, or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments. Dividend Equivalents may
be awarded on a free-standing basis or in connection with another Award. The
Committee or the Board may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee or the
Board may specify.
(h)
Other Stock-Based Awards
. The
Committee and the Board each is authorized, subject to limitations under
applicable law, to grant to Participants such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock, as deemed by the Committee or the
Board to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with
value and payment contingent upon performance of the Company or any other
factors designated by the Committee or the Board, and Awards valued by reference
to the book value of Stock or the value of securities of or the performance of
specified subsidiaries or business units. The Committee or the Board shall
determine the terms and conditions of such Awards. Stock delivered pursuant to
an Award in the nature of a purchase right granted under this Section 6(h)
shall be purchased for such consideration, paid for at such times, by such
methods, and in such forms, including, without limitation, cash, Stock, other
Awards or other property, as the Committee or the Board shall determine. Cash
awards, as an element of or supplement to any other Award under the Plan, may
also be granted pursuant to this Section 6(h).
7.
Certain Provisions Applicable to
Awards
.
(a)
Term of Awards
. The term of
each Award shall be for such period as may be determined by the Committee or the
Board; provided that in no event shall the term of any Option or SAR exceed a
period of ten years (or such shorter term as may be required in respect of an
ISO under Section 422 of the Code).
(b)
Form and Timing of Payment Under
Awards; Deferrals
. Subject to the terms of the Plan and any applicable
Award agreement, payments to be made by the Company or a subsidiary upon the
exercise of an Option or other Award or settlement of an Award may be made in
such forms as the Committee or the Board shall determine, including, without
limitation, cash, Stock that have been held for at least 6 months, other Awards
or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
at the discretion of the Committee or the Board. Installment or deferred
payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant
on terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(c)
Exemptions from Section 16(b)
Liability
. It is the intent of the Company that this Plan comply in all
respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the
extent necessary to ensure that neither the grant of any Awards to nor other
transaction by a Participant who is subject to Section 16 of the Exchange
Act is subject to liability under Section 16(b) thereof (except for
transactions acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award agreement does not
comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then
applicable to any such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability
under Section 16(b). In addition, the purchase price of any Award
conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8.
Performance and Annual Incentive
Awards
.
(a)
Performance Conditions
. The
right of a Participant to exercise or receive a grant or settlement of any
Award, and the timing thereof, may be subject to such performance conditions as
may be specified by the Committee or the Board. The Committee or the Board may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce the amounts payable under any Award subject to performance
conditions, except as limited under Sections 8(b) and 8(c) hereof in the case of
a Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code
Section 162(m), any power or authority relating to a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m), shall
be exercised by the Committee and not the Board.
(b)
Performance Awards Granted to
Designated Covered Employees
. If and to the extent that the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(b).
(i)
Performance Goals Generally
.
The performance goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine that such Performance
Awards shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.
(ii)
Business Criteria
. One
or more of the following business criteria for the Company, on a consolidated
basis, and/or specified subsidiaries or business units of the Company (except
with respect to the total shareholder return and earnings per share criteria),
shall be used exclusively by the Committee in establishing performance goals for
such Performance Awards: (1) total shareholder return; (2) such total
shareholder return as compared to total return (on a comparable basis) of a
publicly available index such as, but not limited to, the Standard &
Poor’s 500 Stock Index or the S&P Specialty Retailer Index; (3) net
income; (4) pretax earnings; (5) earnings before interest expense,
taxes, depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or special
items; (7) operating margin; (8) earnings per share; (9) return
on equity; (10) return on capital; (11) return on investment;
(12) operating earnings; (13) working capital or inventory; and
(14) ratio of debt to shareholders’ equity. One or more of the foregoing
business criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under
Section 8(c) hereof that are intended to qualify as “performance-based
compensation under Code Section 162(m).
(iii)
Performance Period; Timing For
Establishing Performance Goals
. Achievement of performance goals in
respect of such Performance Awards shall be measured over a performance period
of up to ten years, as specified by the Committee. Performance goals shall be
established not later than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date as may be required
or permitted for “performance-based compensation” under Code
Section 162(m).
(iv)
Performance Award Pool
.
The Committee may establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring Company performance in connection with
Performance Awards. The amount of such Performance Award pool shall be based
upon the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business
criteria.
(v)
Settlement of Performance Awards;
Other Terms
. Settlement of such Performance Awards shall be in cash,
Stock, other Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance Awards. The Committee shall specify
the circumstances in which such Performance Awards shall be paid or forfeited in
the event of termination of employment by the Participant prior to the end of a
performance period or settlement of Performance Awards.
(c)
Annual Incentive Awards Granted to
Designated Covered Employees
. If and to the extent that the Committee
determines that an Annual Incentive Award to be granted to an Eligible Person
who is designated by the Committee as likely to be a Covered Employee should
qualify as “performance-based compensation” for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this
Section 8(c).
(i)
Annual Incentive Award Pool
.
The Committee may establish an Annual Incentive Award pool, which shall be an
unfunded pool, for purposes of measuring Company performance in connection with
Annual Incentive Awards. The amount of such Annual Incentive Award pool shall be
based upon the achievement of a performance goal or goals based on one or more
of the business criteria set forth in Section 8(b)(ii) hereof during the
given performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business
criteria.
(ii)
Potential Annual Incentive
Awards
. Not later than the end of the 90th day of each fiscal year, or at
such other date as may be required or permitted in the case of Awards intended
to be “performance-based compensation” under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially receive
Annual Incentive Awards, and the amounts potentially payable thereunder, for
that fiscal year, either out of an Annual Incentive Award pool established by
such date under Section 8(c)(i) hereof or as individual Annual Incentive
Awards. In the case of individual Annual Incentive Awards intended to qualify
under Code Section 162(m), the amount potentially payable shall be based
upon the achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof in the given
performance year, as specified by the Committee; in other cases, such amount
shall be based on such criteria as shall be established by the Committee. In all
cases, the maximum Annual Incentive Award of any Participant shall be subject to
the limitation set forth in Section 5 hereof.
(iii)
Payout of Annual Incentive
Awards
. After the end of each fiscal year, the Committee shall determine
the amount, if any, of (A) the Annual Incentive Award pool, and the maximum
amount of potential Annual Incentive Award payable to each Participant in the
Annual Incentive Award pool, or (B) the amount of potential Annual
Incentive Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as an Annual
Incentive Award shall be reduced from the amount of his or her potential Annual
Incentive Award, including a determination to make no Award whatsoever. The
Committee shall specify the circumstances in which an Annual Incentive Award
shall be paid or forfeited in the event of termination of employment by the
Participant prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d)
Written Determinations
.
All determinations by the Committee as to the establishment of performance
goals, the amount of any Performance Award pool or potential individual
Performance Awards and as to the achievement of performance goals relating to
Performance Awards under Section 8(b), and the amount of any Annual
Incentive Award pool or potential individual Annual Incentive Awards and the
amount of final Annual Incentive Awards under Section 8(c), shall be made
in writing in the case of any Award intended to qualify under Code
Section 162(m). The Committee may not delegate any responsibility relating
to such Performance Awards or Annual Incentive Awards if and to the extent
required to comply with Code Section 162(m).
(e)
Status of Section 8(b) and
Section 8(c) Awards Under Code Section 162(m)
. It is the intent
of the Company that Performance Awards and Annual Incentive Awards under
Section 8(b) and 8(c) hereof granted to persons who are designated by the
Committee as likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute “qualified performance-based compensation” within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c), (d) and (e), including the definitions of
Covered Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot determine with certainty
whether a given Participant will be a Covered Employee with respect to a fiscal
year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee, at the time of grant of
Performance Awards or an Annual Incentive Award, as likely to be a Covered
Employee with respect to that fiscal year. If any provision of the Plan or any
agreement relating to such Performance Awards or Annual Incentive Awards does
not comply or is inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements.
9.
Change in
Control
.
(a)
Effect of “Change in
Control.
” If and to the extent provided in the Award, in the event of a
“Change in Control,” as defined in Section 9(b), the following provisions
shall apply:
(i) Any
Award carrying a right to exercise that was not previously exercisable and
vested shall become fully exercisable and vested as of the time of the Change in
Control, subject only to applicable restrictions set forth in Section 10(a)
hereof;
(ii)
Limited SARs (and other SARs if so provided by their terms) shall become
exercisable for amounts, in cash, determined by reference to the Change in
Control Price;
(iii) The
restrictions, deferral of settlement, and forfeiture conditions applicable to
any other Award granted under the Plan shall lapse and such Awards shall be
deemed fully vested as of the time of the Change in Control, except to the
extent of any waiver by the Participant and subject to applicable restrictions
set forth in Section 10(a) hereof;
(iv) With
respect to any such outstanding Award subject to achievement of performance
goals and conditions under the Plan, such performance goals and other conditions
will be deemed to be met if and to the extent so provided by the Committee in
the Award agreement relating to such Award;
(v) the
Board may in its sole and absolute discretion, provide on a case by case basis
that Options shall terminate, provided however, that a Participant holding such
options shall have the right, immediately prior to the occurrence of such Change
in Control and during such period as the Board in its sole discretion shall
determine and designate, to exercise any Option, to the extent exercisable, in
whole or in part; and
(vi)
the Board may in its sole and absolute discretion, provide on a case by case
basis that any Award entitled to be settled in shares of Stock shall instead be
entitled to be settled, during such period as the Board in its sole discretion
shall determine and designate, by means of a cash payment equal to the fair
market value of such Award immediately prior to the occurrence of such Change in
Control, as determined in good faith by the Board.
(b)
Definition of “Change in
Control.
” A “Change in Control” shall be deemed to have occurred
upon:
(i)
Approval by the shareholders of the Company of a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions,
in each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company’s then outstanding voting
securities, or a liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale (any such event being referred to as a “Corporate Transaction”) is
subsequently abandoned);
(ii)
Individuals who, as of the date on which the Award is granted, constitute the
Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date on which the Award was granted whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or
(iii) the
acquisition (other than from the Company) by any person, entity or “group”,
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 50% of either the then outstanding shares of the
Company’s Common Stock or the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a “Controlling Interest”)
excluding, for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, (2) any person, entity or “group” that as of the date on
which the Award is granted owns beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest
or (3) any employee benefit plan of the Company or its
Subsidiaries.
(c)
Definition of “Change in Control
Price.
” The “Change in Control Price” means an amount in cash equal to
the higher of (i) the amount of cash and fair market value of property that
is the highest price per share paid (including extraordinary dividends) in any
Corporate Transaction triggering the Change in Control under
Section 9(b)(i) hereof or any liquidation of shares following a sale of
substantially all of the assets of the Company, or (ii) the highest Fair
Market Value per share at any time during the 60-day period preceding and the
60-day period following the Change in Control.
10.
General
Provisions
.
(a)
Compliance With Legal and Other
Requirements
. The Company may, to the extent deemed necessary or
advisable by the Committee or the Board, postpone the issuance or delivery of
Stock or payment of other benefits under any Award until completion of such
registration or qualification of such Stock or other required action under any
federal or state law, rule or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which the Stock
or other Company securities are listed or quoted, or compliance with any other
obligation of the Company, as the Committee or the Board, may consider
appropriate, and may require any Participant to make such representations,
furnish such information and comply with or be subject to such other conditions
as it may consider appropriate in connection with the issuance or delivery of
Stock or payment of other benefits in compliance with applicable laws, rules,
and regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take
or cause to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any postponement of
the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to the
extent that such postponement or other condition would represent a greater
burden on a Participant than existed on the 90th day preceding the Change in
Control.
(b)
Limits on Transferability;
Beneficiaries
. No Award or other right or interest of a Participant under
the Plan, including any Award or right which constitutes a derivative security
as generally defined in Rule 16a-1(c) under the Exchange Act, shall be pledged,
hypothecated or otherwise encumbered or subject to any lien, obligation or
liability of such Participant to any party (other than the Company or a
Subsidiary), or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution or to a Beneficiary upon the death
of a Participant, and such Awards or rights that may be exercisable shall be
exercised during the lifetime of the Participant only by the Participant or his
or her guardian or legal representative, except that Awards and other rights may
be transferred to one or more Beneficiaries or other transferees during the
lifetime of the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the
Board.
(c)
Adjustments
. In the event
that any dividend or other distribution (whether in the form of cash, Stock, or
other property), recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects
the Stock such that a substitution or adjustment is determined by the Committee
or the Board to be appropriate in order to prevent dilution or enlargement of
the rights of Participants under the Plan, then the Committee or the Board
shall, in such manner as it may deem equitable, substitute or adjust any or all
of (i) the number and kind of shares of Stock which may be delivered in
connection with Awards granted thereafter, (ii) the number and kind of
shares of Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (iii) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards and (iv) the exercise
price, grant price or purchase price relating to any Award and/or make provision
for payment of cash or other property in respect of any outstanding Award. In
addition, the Committee (and the Board if and only to the extent such authority
is not required to be exercised by the Committee to comply with Code
Section 162(m)) is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including Performance
Awards and performance goals, and Annual Incentive Awards and any Annual
Incentive Award pool or performance goals relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding sentence, as well as acquisitions and dispositions of
businesses and assets) affecting the Company, any Subsidiary or any business
unit, or the financial statements of the Company or any Subsidiary, or in
response to changes in applicable laws, regulations, accounting principles, tax
rates and regulations or business conditions or in view of the Committee’s
assessment of the business strategy of the Company, any Subsidiary or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made if
and to the extent that such authority or the making of such adjustment would
cause Options, SARs, Performance Awards granted under Section 8(b) hereof
or Annual Incentive Awards granted under Section 8(c) hereof to
Participants designated by the Committee as Covered Employees and intended to
qualify as “performance-based compensation” under Code Section 162(m) and
the regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations
thereunder.
(d)
Taxes
. The Company and any
Subsidiary is authorized to withhold from any Award granted, any payment
relating to an Award under the Plan, including from a distribution of Stock, or
any payroll or other payment to a Participant, amounts of withholding and other
taxes due or potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee or the Board may deem
advisable to enable the Company and Participants to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.
(e)
Changes to the Plan and
Awards
. The Board may amend, alter, suspend, discontinue or terminate the
Plan, or the Committee’s authority to grant Awards under the Plan, without the
consent of shareholders or Participants, except that any amendment or alteration
to the Plan shall be subject to the approval of the Company’s shareholders not
later than the annual meeting next following such Board action if such
shareholder approval is required by any federal or state law or regulation
(including, without limitation, Rule 16b-3 or Code Section 162(m)) or the
rules of any stock exchange or automated quotation system on which the Stock may
then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to the Plan to shareholders for approval;
provided that, without the consent of an affected Participant, no such Board
action may materially and adversely affect the rights of such Participant under
any previously granted and outstanding Award. The Committee or the Board may
waive any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right
so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.
(f)
Limitation on Rights Conferred Under
Plan
. Neither the Plan nor any action taken hereunder shall be construed
as (i) giving any Eligible Person or Participant the right to continue as
an Eligible Person or Participant or in the employ of the Company or a
Subsidiary; (ii) interfering in any way with the right of the Company or a
Subsidiary to terminate any Eligible Person’s or Participant’s employment at any
time, (iii) giving an Eligible Person or Participant any claim to be
granted any Award under the Plan or to be treated uniformly with other
Participants and employees, or (iv) conferring on a Participant any of the
rights of a shareholder of the Company unless and until the Participant is duly
issued or transferred shares of Stock in accordance with the terms of an
Award.
(g)
Unfunded Status of Awards; Creation
of Trusts
. The Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation. With respect to any payments not yet made
to a Participant or obligation to deliver Stock pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Company; provided that
the Committee may authorize the creation of trusts and deposit therein cash,
Stock, other Awards or other property, or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant. The trustee of such
trusts may be authorized to dispose of trust assets and reinvest the proceeds in
alternative investments, subject to such terms and conditions as the Committee
or the Board may specify and in accordance with applicable law.
(h)
Nonexclusivity of the Plan
.
Neither the adoption of the Plan by the Board nor its submission to the
shareholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other
incentive arrangements as it may deem desirable including incentive arrangements
and awards which do not qualify under Code Section 162(m).
(i)
Payments in the Event of
Forfeitures; Fractional Shares
. Unless otherwise determined by the
Committee or the Board, in the event of a forfeiture of an Award with respect to
which a Participant paid cash or other consideration, the Participant shall be
repaid the amount of such cash or other consideration. No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee or the Board shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(j)
Governing Law
. The validity,
construction and effect of the Plan, any rules and regulations under the Plan,
and any Award agreement shall be determined in accordance with the laws of the
State of Florida without giving effect to principles of conflicts of laws, and
applicable federal law.
(k)
Plan Effective Date and Shareholder
Approval; Termination of Plan
. The Plan shall become effective on the
Effective Date, subject to subsequent approval within 12 months of its adoption
by the Board by shareholders of the Company eligible to vote in the election of
directors, by a vote sufficient to meet the requirements of Code Sections 162(m)
and 422, Rule 16b-3 under the Exchange Act, applicable NASDAQ requirements, and
other laws, regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to shareholder approval, but may not be exercised
or otherwise settled in the event shareholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.
(l)
Code Section 409A
. The
provisions of Section 409A of the Code are incorporated herein by reference
to the extent necessary for any Award that is subject Section 409A of the
Code to comply therewith and this Plan is intended to comply with the
requirements of such Section. The provisions of this Plan shall be interpreted
in a manner that satisfies the requirements of Section 409A of the Code and
the related regulations, and the Plan shall be operated accordingly. If any
provision of this Plan or any term or condition of any Award would otherwise
frustrate or conflict with this intent, the provision, term or condition will be
interpreted and deemed amended so as to avoid this conflict. Notwithstanding any
other provisions of the Plan, neither the Board nor any other person may
decrease the exercise price of any Option or SAR, nor take any action that would
result in a deemed decrease of the exercise price under Section 409A of the
Code, after the date such Option or SAR is granted. Notwithstanding any other
provisions of the Plan, the Company does not guarantee to any Participant or any
other person with an interest in an Award that any Award intended to be exempt
from Section 409A of the Code shall be so exempt, nor that any Award
intended to comply with Section 409A of the Code shall so comply, nor will
the Company indemnify, defend or hold harmless any individual with respect to
the tax consequences of any such failure.
ANNUAL
MEETING OF SHAREHOLDERS OF
CHINA
CERAMICS CO., LTD.
December
27, 2010
NOTICE
OF INTERNET AVAILABLITY OF PROXY MATERIAL:
The
Notice of Meeting, Proxy Statement and Proxy Card are available at:
http://www.cceramics.com
Please
sign, date and mail your proxy card in the envelope provided
promptly.
PROXY
CHINA
CERAMICS CO., LTD.
ANNUAL
MEETING OF SHAREHOLDERS
This
Proxy is Solicited on Behalf of the Board of Directors
The
undersigned hereby appoints Huang Jia Dong or Hen Man Edmund, individually, as
proxy to represent the undersigned at the Annual Meeting of Shareholders to be
held on December 27, 2010 at the Westport Inn, 1595 Post Road East, Westport, CT
06880 at 7:30 a.m. local time, and at any adjournments thereof, and to vote the
shares the undersigned would be entitled to vote if personally present, as
indicated below.
The Board of Directors
recommends that you vote “FOR” each proposal.
1. Election
of Directors
|
o
|
FOR
ALL NOMINEES
|
¡
|
Huang
Jia Dong
|
|
o
|
WITHHOLDING
AUTHORITY
FOR
ALL NOMINEES
|
¡
|
Su
Pei Zhi
|
|
o
|
FOR
ALL EXCEPT
(SEE
INSTRUCTIONS BELOW)
|
¡
|
Paul
K. Kelly
|
|
¡
|
Cheng
Yan Davis
|
|
¡
|
Ding
Wei Dong
|
|
|
|
¡
|
Bill
Stulginsky
|
|
|
|
¡
|
Su
Wei Feng
|
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT” and fill in the circle next to each nominee you which to withhold, as
shown here: ●
_____________________________________________________
2. Approval
of the 2010 Incentive Plan.
FOR
o
AGAINST
o
ABSTAIN
o
3. Ratification
of the appointment of Grant Thornton as independent auditors.
FOR
o
AGAINST
o
ABSTAIN
o
If any
other business is presented at the meeting, this proxy will be voted by those
named in this proxy in their best judgment. At the present time, the Board of
Directors is not aware of any other business to be presented at the
meeting.
The
shares represented by this proxy, when properly executed, will be voted as
directed; however, abstentions will have no effect on the election of directors
(Item 1). Abstentions will be treated as being present and entitled to vote on
the other items presented at the annual meeting and, therefore, will have the
effect of votes against such proposals. If you do not provide your broker or
other nominee with instructions on how to vote your “street name” shares, your
broker or nominee will not be permitted to vote them on non-routine matters (a
broker “non-vote”) such as Item 1. Shares subject to a broker “non-vote” will
not be considered entitled to vote with respect to Item 1, and will not affect
the outcome on that Item. Please note that this year the rules regarding how
brokers may vote your shares have changed. Brokers may no longer vote your
shares on the election of directors in the absence of your specific instructions
as to how to vote. We encourage you to provide instructions to your broker
regarding the voting of your shares.
Signature
of Shareholder: _________________________ Date: ______________________,
2010
Signature
of Shareholder: _________________________ Date: ______________________,
2010
Note: If
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.