UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the
Registrant [ ]
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only
(As Permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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CHINA ADVANCED CONSTRUCTION MATERIALS GROUP,
INC.
(Name of Registrant as Specified In Its Charter)
___________________________________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]
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No fee required
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which
transaction applies:
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Aggregate number of securities to which
transaction applies:
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined):
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Proposed maximum aggregate value of
transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of its
filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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China Advanced Construction Materials Group, Inc.
9
North West Fourth Ring Road
Yingu Mansion Suite 1708
Haidian District,
Beijing
Peoples Republic of China 100190
+(86) (10) 825 25361
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 2, 2017
Dear Stockholder:
Notice is hereby given that the Annual Meeting of Stockholders
of China Advanced Construction Materials Group, Inc., a Nevada corporation (the
Company), will be held on Friday, June 30, 2017, at 8:00 a.m., Eastern Time
(Thursday, June 30, 2017, at 8:00 p.m., Beijing Time), at the principal office
of the Company located at 9 North West Fourth Ring Road, Yingu Mansion Suite
1708, Haidian District, Beijing, Peoples Republic of China, 100190, for the
following purposes:
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To elect five persons to the Board of Directors of the
Company, each to serve until the next annual meeting of stockholders of
the Company or until such person shall resign, be removed or otherwise
leave office;
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2.
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To ratify the selection by the Audit Committee of
Friedman LLP as the Companys independent registered public accounting
firm for the fiscal year ending June 30, 2017;
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To approve the Amendment No. 4 to the Companys 2009
Equity Incentive Plan to increase 200,000 shares of Common Stock that are
available for issuance thereunder;
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To approve, on a non-binding, advisory basis, the
compensation of our named executive officers as disclosed in this Proxy
Statement pursuant to the compensation disclosure rules of the Securities
and Exchange Commission; and
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To transact such other business as may properly come
before the meeting or any adjournment thereof.
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If you owned our common stock at the close of business on May
23, 2017, you may attend and vote at the meeting.
A Proxy Statement describing the matters to be considered at
the meeting is attached to this Notice. Our 2016 Annual Report accompanies this
Notice, but it is not deemed to be part of the Proxy Statement.
Your vote is important. Whether or not you plan to attend
the meeting, I hope that you will vote as soon as possible. You may vote your
shares by either completing, signing and returning the accompanying proxy card
or casting your vote via a toll-free telephone number or over the Internet.
Sincerely,
/s/ Xianfu Han
Xianfu Han
Chairman
3
China Advanced Construction Materials Group, Inc.
9
North West Fourth Ring Road
Yingu Mansion Suite 1708
Haidian District,
Beijing
Peoples Republic of China 100190
+(86) (10) 8252 5361
_______________________________
PROXY STATEMENT
_______________________________
The Board of Directors of China Advanced Construction Materials
Group, Inc., a Nevada corporation (the Company, China ACM or we) is
furnishing this Proxy Statement and the accompanying proxy to you to solicit
your proxy for the fiscal year 2016 Annual Meeting of Stockholders (the
Meeting). The Meeting will be held on Friday, June 30, 2017, at 8:00 a.m.,
E.T., which is 8:00 p.m., Friday, June 30, 2017 local time, at the principal
office of the Company located at 9 North West Fourth Ring Road, Yingu Mansion
Suite 1708, Haidian District, Beijing, Peoples Republic of China, 100190.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
What is this Proxy Statement?
You have received this Proxy Statement and our annual report
because the Board of Directors of the Company (hereinafter sometimes referred to
as the Board of Directors or Board) is soliciting your proxy to vote your
shares at the annual meeting. This Proxy Statement includes information that we
are required to provide to you under the rules of the Securities and Exchange
Commission (SEC) and that is designed to assist you in voting your shares.
What is the purpose of the annual meeting?
At the annual meeting, our stockholders will act upon the
matters described in this Proxy Statement. These actions include those items
listed under the answer to the question regarding the proposals of the annual
meeting below. An additional purpose of the annual meeting is to transact any
other business that may properly come before the annual meeting and any and all
adjournments or postponements of the annual meeting.
Who can attend the annual meeting?
All stockholders of record at the close of business on May 23,
2017, the record date, or their duly appointed proxies, may attend the annual
meeting.
What proposals will be voted on at the annual
meeting?
Stockholders will vote on four proposals at the annual
meeting:
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the election of directors;
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the ratification of Friedman LLP as the
Companys independent auditors for the fiscal year ending June 30, 2017;
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approval of the Amendment No. 4 to the
Companys 2009 Equity Incentive Plan to increase 200,000 shares of Common
Stock that are available for issuance thereunder; and
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an advisory vote on executive compensation.
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What are the Boards recommendations?
Our Board recommends that you vote:
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FOR
election of the nominated directors;
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FOR
the ratification of Friedman LLP as the
Companys independent auditors for the fiscal year ending June 30, 2017;
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FOR
the approval of the Amendment No. 4 to
Companys 2009 Equity Incentive Plan to increase 200,000 shares of Common
Stock that are available for issuance thereunder; and
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FOR
the approval of the executive compensation as
described in the compensation narrative discussion and the compensation
tables in this Proxy Statement.
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Will there be any other business on the
agenda?
The Board knows of no other matters that are likely to be
brought before the annual meeting. If any other matters properly come before the
annual meeting, however, the persons named in the enclosed proxy, or their duly
appointed substitute acting at the annual meeting, will be authorized to vote or
otherwise act on those matters in accordance with their judgment.
Who is entitled to vote?
Only stockholders of record at the close of business on May 23,
2017, which we refer to as the record date, are entitled to notice of, and to
vote at, the annual meeting. As of the record date, there were 2,387,658 shares
of our common stock outstanding. Holders of common stock as of the record date
are entitled to one vote for each share held for each of the proposals.
What is the difference between holding shares as a
stockholder of record and as a beneficial owner?
Stockholder of Record.
If your shares are registered
directly in your name with our transfer agent, Action Stock Transfer Corp., you
are considered, with respect to those shares, the stockholder of record. This
proxy and our Annual Report have been sent directly to you by us.
Beneficial Owner.
If your shares are held in a stock
brokerage account or by a bank or other nominee, you are considered the
beneficial owner of shares held in street name. This proxy and the Annual
Report have been forwarded to you by your broker, bank or nominee who is
considered, with respect to those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker, bank or nominee how
to vote your shares by using the voting instructions included with your proxy
materials.
How do I vote my shares?
Stockholders can vote in person at the annual meeting or by
proxy. There are three ways to vote by proxy:
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By Telephone Stockholders located in the United States
can vote by telephone by calling the number listed on your proxy materials
and following the instructions;
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By Internet You can vote over the Internet going to the
link provided on your proxy materials and following the instructions; or
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By Mail You can vote by mail by signing, dating and
mailing the enclosed proxy card.
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Telephone and Internet voting facilities for stockholders of
record will be available 24 hours a day and will close at 11:59 a.m. (ET) on
June 29, 2017.
If your shares are held in the name of a bank, broker or other
holder of record, you will receive instructions from the holder of record. You
must follow the instructions of the holder of record in order for your shares to
be voted. Telephone and Internet voting also will be offered to stockholders
owning shares through certain banks and brokers. If your shares are not
registered in your own name and you plan to vote your shares in person at the
annual meeting, you should contact your broker or agent to obtain a legal proxy
or brokers proxy card and bring it to the annual meeting in order to vote.
If you vote by proxy, the individuals named on the proxy card
(your proxies) will vote your shares in the manner you indicate. You may
specify how your shares should be voted for each of the proposals. If you grant
a proxy without indicating your instructions, your shares will be voted as follows:
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FOR the election of the five nominees for director;
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FOR the ratification of Friedman LLP as the Companys
independent auditors for the fiscal year ending June 30, 2017;
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FOR the approval of the Amendment No. 4 to the Companys
2009 Equity Incentive Plan to increase 200,000 shares of Common Stock that
are available for issuance thereunder; and
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FOR the approval of the executive compensation as
described in the compensation narrative discussion and the compensation
tables in this Proxy Statement.
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You may revoke or change your proxy at any time before it is
exercised by (1) delivering to us a signed proxy card with a date later than
your previously delivered proxy, (2) voting in person at the Annual Meeting, (3)
granting a subsequent proxy through the Internet or telephone, or (4) sending a
written revocation to the Corporate Secretary. Your most current proxy card or
telephone or Internet proxy is the one that is counted.
Each share of common stock is entitled to one vote. The record
date for determining stockholders entitled to notice of and to vote at the
annual meeting is May 23, 2017. As of that date, there were 2,387,658 shares of
our common stock outstanding.
What constitutes a quorum?
A quorum is the presence, in person or by proxy, of the holders
of one-third (1/3
rd
) of the shares of the common stock entitled to vote. An abstaining
vote is counted as present and are, therefore, included for purposes of
determining whether a quorum of shares is present at the annual meeting.
What is a broker non-vote and what is its effect on
voting?
If you are a beneficial owner of shares held in street name and
do not provide the organization that holds your shares with specific voting
instructions, under the rules of various national and regional securities
exchanges, the organization that holds your shares may generally vote on routine
matters but cannot vote on non-routine matters. If the organization that holds
your shares does not receive instructions from you on how to vote your shares on
a non-routine matter, the organization that holds your shares does not have the
authority to vote on the matter with respect to those shares. This is generally
referred to as a broker non-vote.
Both proposals involve matters that we believe will be
considered non-routine. We encourage you to provide voting instructions to the
organization that holds your shares by carefully following the instructions
provided on your proxy card.
What is required to approve each item?
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For Proposal No. 1 (election of directors), each director
must be elected by a majority of votes cast with respect to such director
(i.e., the number of shares voted for a director nominee must exceed the
number of votes withheld from that nominee). Abstentions and broker
non-votes are not counted for purposes of the election of directors.
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For Proposal No. 2 (ratification of independent
auditors), Proposal No. 3 (approval of the Amendment No. 4 to the
Companys 2009 Equity Incentive Plan to increase 200,000 shares of Common
Stock that are available for issuance thereunder), and Proposal No. 4,
(non-binding advisory vote on approval of executive compensation), the
affirmative vote of the holders of a majority of the stockholders shares
present in person or represented by proxy at the meeting and entitled to
vote, is required. Abstentions and broker non-votes are not counted for
purposes of Proposal No. 3 or Proposal No. 4.
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For any other matters on which stockholders are entitled
to vote, the affirmative vote of the holders of a majority of the
stockholders shares present in person or represented by proxy at the
meeting and entitled to vote, is required.
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For the purpose of determining whether the stockholders have
approved matters other than the election of directors, abstentions are treated
as shares present or represented and voting, so abstaining has the same effect
as a negative vote. Stockholders may not cumulate votes in the election of directors, which means
that each stockholder may vote no more than the number of shares he or she owns
for a single director candidate.
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Our bylaws require that, in uncontested elections, each
director be elected by the majority of votes cast with respect to such director.
This means that the number of shares voted for a director nominee must exceed
the number of votes withheld from that nominee in order for that nominee to be
elected. Only votes for or withheld are counted as votes cast with respect
to a director. Abstentions and broker non-votes will have no effect.
How will shares of common stock represented by properly
executed proxies be voted?
All shares of common stock represented by proper proxies will,
unless such proxies have previously been revoked, be voted in accordance with
the instructions indicated in such proxies. If you do not provide voting
instructions, your shares will be voted in accordance with the Boards
recommendations as set forth herein. In addition, if any other matters properly
come before the annual meeting, the persons named in the enclosed proxy, or
their duly appointed substitute acting at the annual meeting, will be authorized
to vote or otherwise act on those matters in accordance with their judgment.
Can I change my vote or revoke my proxy?
Any stockholder executing a proxy has the power to revoke such
proxy at any time prior to its exercise. You may revoke your proxy prior to
exercise by:
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filing with us a written notice of revocation of your
proxy,
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submitting a properly signed proxy card bearing a later
date,
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voting over the Internet or by telephone, or
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voting in person at the annual meeting.
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What does it mean if I receive more than one Proxy?
If your shares are registered under different names or are in
more than one account, you may receive more than one set of proxy materials. To
ensure that all your shares are voted, please vote by telephone, through the
Internet using each personal identification number you are provided, or
complete, sign and date the multiple proxy cards relating to your multiple
accounts. We encourage you whenever possible to have all accounts registered in
the same name and address. You can accomplish this by contacting our transfer
agent, Action Stock Transfer Corp., at (801) 274-1088.
Who paid for this proxy solicitation?
The cost of preparing, printing, assembling and mailing this
Proxy Statement and other material furnished to stockholders in connection with
the solicitation of proxies is borne by us.
How do I learn the results of the voting at the annual
meeting?
Preliminary results will be announced at the annual meeting.
Final results will be published in a Current Report on Form 8-K filed with the
SEC within four business days of the annual meeting.
How are proxies solicited?
In addition to the mail solicitation of proxies, our officers,
directors, employees and agents may solicit proxies by written communication,
telephone or personal call. These persons will receive no special compensation
for any solicitation activities. We will reimburse banks, brokers and other
persons holding common stock for their expenses in forwarding proxy solicitation
materials to beneficial owners of our common stock.
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What is householding?
Householding means that we deliver a single set of proxy
materials when requested to households with multiple stockholders, provided
certain conditions are met. Householding reduces our printing and mailing
costs.
If you or another stockholder of record sharing your address
would like to receive an additional copy of the proxy materials, we will
promptly deliver it to you upon your request in one of the following
manners:
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by sending a written request by mail to:
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China Advanced Construction Materials
Group, Inc.
9 North West Fourth Ring Road
Yingu Mansion Suite 1708
Haidian District, Beijing
Peoples Republic of China 100190
Attention: Corporate Secretary
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by calling our Corporate Secretary, at +(86)
(10) 825 25361.
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If you would like to opt out of householding in future
mailings, or if you are currently receiving multiple mailings at one address and
would like to request householded mailings, you may do so by contacting our
Corporate Secretary as indicated above.
Can I receive future stockholder communications
electronically through the Internet?
Yes. You may elect to receive future notices of meetings, proxy
materials and annual reports electronically through the Internet. To consent to
electronic delivery, vote your shares using the Internet. At the end of the
Internet voting procedure, the on-screen Internet voting instructions will tell
you how to request future stockholder communications be sent to you
electronically.
Once you consent to electronic delivery, you must vote your
shares using the Internet and your consent will remain in effect until
withdrawn. You may withdraw this consent at any time during the voting process
and resume receiving stockholder communications in print form.
Whom may I contact for further assistance?
If you have any questions about giving your proxy or require
any assistance, please contact our Corporate Secretary:
China Advanced Construction Materials
Group, Inc.
9 North West Fourth Ring Road
Yingu Mansion Suite 1708
Haidian District, Beijing
Peoples Republic of China 100190
Attention: Corporate Secretary
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by telephone, at +(86) (10) 825 25361.
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8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is responsible for establishing broad
corporate policies and monitoring the overall performance of the Company. It
selects the Companys executive officers, delegates authority for the conduct of
the Companys day-today operations to those officers, and monitors their
performance. Members of the Board keep themselves informed of the Companys
business by participating in Board and Committee meetings, by reviewing analyses
and reports, and through discussions with the Chairman and other officers.
See Nominating and Governance Committee below for a
discussion of the process for selecting directors.
There are currently five directors serving on the Board. At the
Meeting, five directors will be elected. The individuals who have been nominated
for election to the Board at the Meeting are listed in the table below. Each of
the nominees is a current director of the Company.
If, as a result of circumstances not now known or foreseen, any
of the nominees is unavailable to serve as a nominee for director at the time of
the Meeting, the holders of the proxies solicited by this Proxy Statement may
vote those proxies either (i) for the election of a substitute nominee who will
be designated by the proxy holders or by the present Board or (ii) for the
balance of the nominees, leaving a vacancy. Alternatively, the size of the Board
may be reduced accordingly. The Board has no reason to believe that any of the
nominees will be unwilling or unable to serve, if elected as a Director. The
five nominees for election as directors are uncontested. In uncontested
elections, directors are elected by plurality of the votes cast at the meeting.
Proxies submitted on the accompanying proxy card will be voted for the
election of the nominees listed below, unless the proxy card is marked
otherwise
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Director Selection
There have been no material
changes to the procedures by which stockholders may recommend nominees to our
Board of Directors since such procedures were last disclosed. As provided in its
Charter, the Nominating and Governance Committee of the Companys Board is
responsible for identifying individuals qualified to become Board members and
recommending to the Board nominees for election as directors. The Nominating and
Governance Committee considers recommendations for director nominees, including
those submitted by the Companys stockholders, on the bases described below.
Stockholders may recommend nominees by writing to the Nominating and Governance
Committee c/o the Corporate Secretary, China Advanced Construction Materials
Group, Inc., 9 North West Fourth Ring Road, Yingu Mansion Suite 1708, Haidian
District, Beijing, PRC, 100190. Stockholder recommendations will be promptly
provided to the chairman of the Nominating and Governance Committee. To be
considered by the Nominating and Governance Committee for inclusion in the proxy
for the 2017 fiscal year meeting, recommendations must be received by the
Secretary of the Company not later than the close of business on January 19,
2018 or, if the date of the 2017 fiscal year meeting has been changed by more
than 30 days from the date of this years meeting, by no later than 30 days
prior to the date of printing and mailing our material for the annual meeting.
In identifying and evaluating
nominees, the Nominating and Governance Committee may consult with the other
Board members, management, consultants, and other individuals likely to possess
an understanding of the Companys business and knowledge of suitable candidates.
In making its recommendations, the Nominating and Governance Committee assesses
the requisite skills and qualifications of nominees and the composition of the
Board as a whole in the context of the Board's criteria and needs. In evaluating
the suitability of individual Board members, the Nominating and Governance
Committee may take into account many factors, including general understanding of
marketing, finance and other disciplines relevant to the success of a publicly
traded company in todays business environment; understanding of the Companys
business and technology; the nature of the Companys operations; educational and
professional background; and personal accomplishment. The Nominating and
Governance Committee evaluates each individual in the context of the Board as a
whole, with the objective of recommending a group that can best perpetuate the
success of the Companys business and represent stockholder interests through
the exercise of sound judgment, using its diversity of experience. The
Nominating and Governance Committee also ensures that a majority of nominees
would be independent directors as defined under the applicable rules of the
SEC and Nasdaq. For a description of the qualifications that the Nominating and
Corporate Governance Committee seeks in potential nominees, please see Nominees
Qualifications for All Directors below.
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NOMINEES
The names, the positions with the Company and the ages as of
the Record Date of the individuals who are our nominees for election as
directors are:
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Position with the
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Term as Director of
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Name
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Age
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Company
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Company
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Xianfu Han
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56
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Chairman, Chief Executive
Officer and Director
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April 2008 Present
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Weili He
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58
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Chief Operating Officer, Interim CFO, Vice
Chairman and Director
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April 2008 Present
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Tao Jin
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48
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Director
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May 2011 Present
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Xinyong Gao
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44
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Director
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June 2012 Present
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Ken Ren
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40
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Director
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June 2012 Present
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Director Qualifications - General
Directors are responsible for overseeing the Companys business
consistent with their fiduciary duty to shareowners. This significant
responsibility requires highly-skilled individuals with various qualities,
attributes and professional experience. The Board believes that there are
general requirements for service on the Companys Board of Directors that are
applicable to all directors and that there are other skills and experience that
should be represented on the Board as a whole but not necessarily by each
director. The Board and the Nominating and Governance Committee of the Board
consider the qualifications of directors and director candidates individually
and in the broader context of the Boards overall composition and the Companys
current and future needs.
Qualifications for All Directors
In its assessment of each potential candidate, including those
recommended by shareowners, the Nominating and Governance Committee considers
the nominees judgment, integrity, experience, independence, understanding of
the Companys business or other related industries and such other factors the
Nominating and Governance Committee determines are pertinent in light of the
current needs of the Board. The Nominating and Governance Committee also takes
into account the ability of a director to devote the time and effort necessary
to fulfill his or her responsibilities to the Company.
The Board and the Nominating and Governance Committee require
that each director be a recognized person of high integrity with a proven record
of success in his or her field. Each director must demonstrate innovative
thinking, familiarity with and respect for corporate governance requirements and
practices, an appreciation of multiple cultures and a commitment to
sustainability and to dealing responsibly with social issues. In addition to the
qualifications required of all directors, the Board assesses intangible
qualities including the individuals ability to ask difficult questions and,
simultaneously, to work collegially.
The Board does not have a specific diversity policy, but
considers diversity of race, ethnicity, gender, age, cultural background and
professional experiences in evaluating candidates for Board membership.
Diversity is important because a variety of points of view contribute to a more
effective decision-making process.
Qualifications, Attributes, Skills and Experience to be
Represented on the Board as a Whole
The Board has identified particular qualifications, attributes,
skills and experience that are important to be represented on the Board as a
whole, in light of the Companys current needs and business priorities. The
Companys services are performed in areas of future growth located outside of
the United States. Accordingly, the Board believes that international experience
or specific knowledge of key geographic growth areas and diversity of
professional experiences should be represented on the Board. In addition, the
Companys business is multifaceted and involves complex financial transactions.
Therefore, the Board believes that the Board should include some directors with
a high level of financial literacy and some directors who possess relevant
business experience as a Chief Executive Officer or President. Our business
involves complex technologies in a highly specialized industry. Therefore, the
Board believes that extensive knowledge of the Companys business and industry
should be represented on the Board. The Companys business also requires
compliance with a variety of regulatory requirements and relationships with
various governmental entities. Therefore, the Board believes that governmental,
political or diplomatic expertise should be represented on the Board.
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Summary of Qualifications of Nominees for Director
Set forth below is a summary of some of the specific
qualifications, attributes, skills and experiences of our directors which we
believe qualify them to serve on our Board. For more detailed information,
please refer to the biographical information for each director set forth below.
Xianfu Han
. Mr. Han has extensive senior management
experience in the industry in which we operate, having served as our Chief
Executive Officer and Chairman since September 2008 and as the Chairman of Xin
Ao since 2003. Mr. Han has over 25 years of management experience in the
building material industry, and has worked extensively with various governmental
agencies on behalf of our industry in Beijing.
Weili He
. Mr. He has extensive experience in the
concrete and construction industry, and has specific expertise in strategic
planning and plant management and operation.
Tao Jin
. Mr. Jin brings to the Board extensive legal and
transactional capital markets experience and has worked extensively with both
U.S. and PRC based companies, and has a high level of both legal and financial
literacy and sophistication.
Xinyong Gao
. Mr. Gao brings to the Board extensive
experience in the construction industry, both within China and internationally,
and years of service in various senior management positions.
Ken Ren
. Mr. Ren brings to the Board extensive
experience in finance and banking and has a high level of financial literacy and
sophistication.
General Information
For information as to the shares of the common stock held by
each nominee, see Security Ownership of Certain Beneficial Owners and
Management below.
See Directors and Executive Officers below for biographical
summaries for each of our director nominees.
There are no arrangements or understandings between any of the
nominees, directors or executive officers and any other person pursuant to which
any of our nominees, directors or executive officers have been selected for
their respective positions. No nominee, member of the Board of Directors or
executive officer is related to any other nominee, member of the Board of
Directors or executive officer.
The Board of Directors recommends a vote FOR the election of
the nominees listed above.
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Directors and Executive Officers
Set forth below are the names of our directors, executive
officers and significant employees and their business experience during at least
the last five years.
Name
|
Position with the Company and Principal
Occupations
|
|
|
Xianfu Han
|
Mr. Han became our Chairman and Chief Executive Officer
on April 29, 2008. From January 2003 to the present, Mr. Han has served as
chairman of the board of directors of the Companys subsidiary Beijing Xin
Ao Concrete Group, or Xin Ao. His main responsibilities include daily
board leadership and strategy initiatives. Since November 2002, Mr. Han
has been Chairman at Beijing Tsinghua University Management Schools
Weilun Club. His responsibilities involved daily management work. From
January 2001 to March 2007, Mr. Han acted as Executive Vice Chairman of
the Beijing Concrete Association. His primary functions involved public
relations and communication with various governmental agencies. Mr. Han is
a senior engineer with over 25 years of management experience in the
building material industry. He contributed to the draft of the "Local
Standard of Mineral Admixtures" regulations and was responsible for the
"Research and Application of Green High Performance Concrete" published by
the Ministry of Construction. Mr. Han has not held any other public
company directorships during the past five years. Mr. Han graduated in
1995 from the Tsinghua University executive MBA program. Mr. Han received
his Bachelor degree in engineering management in 1992 from Northern China
University of Technology.
|
|
|
Weili He
|
Mr. He became our Vice-Chairman and Chief Operating
Officer on April 29, 2008, and became our Interim Chief Financial Officer
on September 21, 2012. His primary responsibility is large client
development. From August 2007 to present, Mr. He has worked as Vice
Chairman of the board of directors of Xin Ao. From January 2003 to August
2007, Mr. He worked as Chairman of the board of directors of Beijing
Xinhang Construction Materials Co., Ltd. His primary responsibilities
included strategic planning. Since 2007, Mr. He has served as Vice
Chairman of the Beijing Concrete Associations. His primary functions
included market research. Mr. He has extensive construction and concrete
engineering experience in China and Japan on numerous high profile
projects. His primary expertise is plant management and operations. Mr. He
received a bachelors degree in law from Party School of the Central
Committee of C.P.C. Mr. He has not held any other public company
directorships during the past five years.
|
|
|
Tao Jin
|
Mr. Jin became a member of our Board of Directors on May
4, 2011. Mr. Jin is a partner at Vestasia Limited. Prior to that, he had been a senior partner with
the Chinese law firm of Jincheng TongDa & Neal, based in Beijing,
where he specialized in mergers and acquisitions, foreign investments in
China and capital market transactions. Mr. Jin started his legal practice
in 1996 at the New York office of Cleary, Gottlieb, Steen & Hamilton
where he represented numerous investment banks and corporations in a
variety of mergers and acquisitions and capital markets transactions. Mr.
Jin joined Sullivan & Cromwells Hong Kong office in 1999 where he
continued to focus on merger and acquisition transactions. His clients
included major multinational corporations, investment banks, PRC
corporations and private equity funds. Mr. Jin joined JP Morgans legal
department in 2002 as head legal counsel for mergers and acquisitions and
capital market transactions in China. Immediately prior to joining
Jincheng TongDa, Mr. Jin was a partner with Jun He Law Offices from 2005
through 2010. Mr. Jin received his B.S. from Beijing University and his
J.D. from Columbia University, and is fluent in English and Mandarin. Mr.
Jin is admitted to the New York bar. Mr. Jin has not held any other public
company directorships during the past five years.
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|
|
|
Mr. Jin serves as Chairman of our Compensation Committee
and as a member of our Audit Committee and Nominating and Governance
Committee.
|
|
|
Xinyong Gao
|
Mr. Gao is currently the Deputy General Manager of
Beijing Capital Development Holding (Group) Co., Ltd., a real estate
development company based in China, a position he has held since February
2013. From September 2011 to February 2013, he was the Operations Director
of the same company. From July 1994 to September 2011, Mr. Gao served in
various capacities, most recently the Deputy General Manager,
International Engineering Contracting Dept., with Beijing Urban
Construction Group Co. Ltd., a China-based construction company which
built 41 structures for the 2008 Beijing Olympics. Mr. Gao received his
B.A. from Shandong Normal University and his M.B.A. from the Open
University of Hong Kong. Mr. Gao has not held any other public company
directorships during the past five years.
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12
|
Mr. Gao serves as Chairman of the Companys Nominating
and Governance Committee and as a member of our Audit Committee and
Compensation Committee.
|
|
|
Ken Ren
|
Mr. Ren is currently the Chief Financial Officer of China
Green Agriculture Inc., a position he has held since 2010. Previously, Mr.
Ren served as a capital market analyst for the Federal Home Loan Bank of
Des Moines, where he analyzed, priced, and assisted in trading investments
and issuing debt, conducted hedges and performed analytical work for the
banks $20 billion investment portfolio of mortgage whole loan and
mortgage backed securities. Before this, Mr. Ren served as a senior
investment associate at an asset management subsidiary of Wells Fargo,
which provides money management services to institutional clients.
Earlier, Mr. Ren worked at Residential Capital LLC, a subsidiary of Ally
Financial, where he was responsible for risk analytics and reporting while
managing its credit residual portfolio. Mr. Ren received Ph.D. in
operations research in 2006, and M.S. in computational finance in 2004,
both from Purdue University, West Lafayette. Mr. Ren has not held any
other public company directorships during the past five years.
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|
|
|
Mr. Ren serves as Chairman of the Companys Audit
Committee and as a member of our Compensation Committee and Nominating and
Governance Committee.
|
All directors of our company hold office until the next annual
meeting of our stockholders or until their successors have been elected and
qualified. The executive officers of our company are appointed by our Board of
Directors and hold office until their death, resignation or removal from
office.
Family Relationships
There is no family relationship among any of our officers or
directors.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or
executive officers were involved in any legal proceedings during the last 10
years as described in Item 401(f) of Regulation S-K.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires directors, executive
officers and stockholders who own more than ten percent of the outstanding
Common Stock of the Company to file with the SEC and Nasdaq reports of ownership
and changes in ownership of voting securities of the Company and to furnish
copies of such reports to us.
Based solely on a review of Forms 3, 4 and 5 (including
amendments to such form) furnished to the Company during and with respect to the
year ended June 30, 2016 and written representations from certain persons that
no other reports were required for them, we believe that each of the Companys
directors, officers and more than ten-percent stockholders filed all such
required forms on a timely basis.
13
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected Friedman LLP (Friedman) to
serve as the independent registered public accounting firm of the Company for
the fiscal year ending June 30, 2017. Friedman was the Companys independent
registered public accounting firm from December 27, 2010 until October 27, 2015
and was reappointed as the Companys independent registered public accounting
firm on June 29, 2016.
Representatives of Friedman are not expected to be present at
the annual meeting, either in person or by teleconference.
We are asking our stockholders to ratify the selection of
Friedman as our independent registered public accounting firm. Although
ratification is not required by our bylaws or otherwise, the Board is submitting
the selection of Friedman to our stockholders for ratification as a matter of
good corporate practice. However, the Audit Committee has sole authority to
appoint the independent registered public accounting firm.
Independent Registered Public Accounting Firms Fees
The following are the fees billed to us by our auditors during
the fiscal years ended June 30, 2015 and 2016:
|
|
Years Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Audit Fees
|
$
|
133,000
|
|
$
|
165,000
|
|
Audit related fees
|
|
-
|
|
|
-
|
|
Tax fees
|
|
-
|
|
|
-
|
|
All Other Fees
|
|
-
|
|
|
-
|
|
Total
|
$
|
133,000
|
|
$
|
165,000
|
|
Total fees billed to us by Friedman was $88,000 and $165,000
during the fiscal years ended June 30, 2016 and 2015, respectively. Total fees
billed to us by Kabani & Company, Inc. was $45,000 during the fiscal year
ended June 30, 2016.
Audit Fees
consist of the aggregate fees billed for
professional services rendered for the audit of our annual financial statements
and the reviews of the financial statements included in our Forms 10-Q and for
any other services that were normally provided by our independent auditor,
respectively, in connection with our statutory and regulatory filings or
engagements.
Audit Related Fees
consist of the aggregate fees billed
for professional services rendered for assurance and related services that were
reasonably related to the performance of the audit or review of our financial
statements and were not otherwise included in Audit Fees.
Tax Fees
consist of the aggregate fees billed for
professional services rendered for tax compliance, tax advice and tax planning.
Included in such Tax Fees were fees for preparation of our tax returns and
consultancy and advice on other tax planning matters.
All Other Fees
consist of the aggregate fees billed for
products and services provided by our independent auditors and not otherwise
included in Audit Fees, Audit Related Fees or Tax Fees.
Our Audit Committee has considered whether the provision of the
non-audit services described above is compatible with maintaining auditor
independence and determined that such services are appropriate. Before auditors
are engaged to provide us audit or non-audit services, such engagement is
(without exception, required to be) approved by the Audit Committee of the
Board.
Pre-Approval Policies and Procedures
Under the Sarbanes-Oxley Act of 2002, all audit and non-audit
services performed by our auditors must be approved in advance by our Audit
Committee to assure that such services do not impair the auditors independence
from us. In accordance with its policies and procedures, the Audit Committee pre-approved the
audit service performed by Friedman for our consolidated financial statements as
of and for the year ended June 30, 2017.
14
The Companys principal accountant, Friedman, did not engage
any other persons or firms other than the principal accountants full-time,
permanent employees.
Vote Required; Board of Directors Recommendation
Approval of and ratification of the selection of Friedman as
our independent registered public accounting firm will require the affirmative
vote of the holders of a majority of the shares of our common stock present in
person or by proxy and entitled to vote at the annual meeting, assuming the
presence of a quorum at the annual meeting.
The Board of Directors recommends a vote FOR ratification of
the selection of Friedman LLP as the Companys independent registered public
accounting firm for the fiscal year ending June 30, 2017.
15
PROPOSAL NO. 3
APPROVAL OF AMENDMENT NO.3 TO THE COMPANYS 2009 EQUITY
INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED UNDER THE PLAN
Our Board of Directors, acting
upon the recommendation of the Board of Directors Compensation Committee, has
approved an amendment to the Companys 2009 Equity Incentive Plan (the Plan)
for an increase in the number of authorized shares of common stock under the
Plan (the Amendment No. 4) and recommends that the Amendment No. 4 be approved
and adopted by the Companys stockholders and directs that such proposal be
submitted to the stockholders at the annual meeting.
On June 19, 2009, our Board of
Directors adopted the Plan. On March 4, 2014, our Board of Directors adopted and
approved the Amendment No. 1 of the 2009 Stock Incentive Plan to increase the
number of shares of the Companys common stock available for issuance thereunder
from 116,667 shares to 350,000. The Amendment No. 1 was approved by the
shareholders at the annual shareholders meeting on April 9, 2014. On May 20,
2015, our Board of Directors adopted and approved the Amendment No. 2 of the
2009 Stock Incentive Plan to increase the number of shares of the Companys
common stock available for issuance thereunder from 350,000 shares to 550,000.
The Amendment No. 2 was approved by the shareholders at the annual shareholders
meeting on June 29, 2015. On May 18, 2016, our Board of Directors adopted and
approved the Amendment No. 3 of the 2009 Stock Incentive Plan to increase the
number of shares of the Companys common stock available to issuance thereunder
from 550,000 to 750,000. The Amendment No. 3 was approved by the shareholders at
the annual shareholders meeting on June 30, 2016. On May 23, 2017, our Board of
Directors adopted and approved the Amendment No. 4 of the 2009 Stock Incentive
Plan subject to shareholders approval. The primary purpose for the Amendment No.
3 was to increase the number of shares of the Companys common stock available
for issuance thereunder by 200,000 shares to 950,000 shares of the Companys
common stock.
Pursuant to Section 2.1 of the
Plan, the maximum number of shares of common stock of the Company that are
available for issuance under the Plan is 750,000. As of May 23, 2017, we have
issued shares of restricted stock or stock options to purchase of shares of
common stock in an aggregate of 531,664 shares and 218,336 shares of common
stock are available for issuance under the Plan.
The Compensation Committee of our
Board of Directors has reviewed the Plan and determined that the Plan requires
additional available shares for issuance to provide flexibility with respect to
stock-based compensation that the Compensation Committee believes is necessary
to establish appropriate long-term incentives to achieve our objectives. Our
Board of Directors believes that it is advisable to increase the 750,000 share
limit to 950,000 shares in order to attract and compensate employees, officers,
directors and other eligible participants upon whose judgment, initiative and
effort we depend. The issuance of award under the Plan to these eligible
participants is designed to align the interests of such participants with those
of our stockholders.
The proposed Amendment No. 4 to
the Plan increases the number of shares of common stock that may be issued as
awards under the Plan by 200,000 shares, or approximately 8.3% of the 2,387,658
shares of common stock outstanding as of May 23, 2017. As amended, the Plan will
continue to provide that all of the shares authorized for issuance (including
the increased shares) may be granted as incentive stock options and the Plan
will also continue to provide for appropriate adjustments in the number of
shares in the event of a stock dividend, recapitalization, merger or similar
transaction.
The following is a summary of the
principal features of the Plan. The summary below is qualified in its entirety
by the terms of the Plan, as proposed to be amended. A copy of the Amendment No.
4 is attached hereto as
Appendix B
and is incorporated by reference
herein.
Shares Available
Our Board of Directors has
authorized, subject to stockholder approval, 950,000 shares of our common stock
for issuance under the Plan. In the event of any stock dividend,
recapitalization, stock split, reverse stock split, subdivision or similar
change in the capital structure of the Company without consideration,
appropriate adjustments will be made to the (a) the number of shares reserved
for issuance under the Plan; (b) the exercise prices of and number of shares
subject to outstanding Options; and (c) the number of shares subject to other
outstanding Awards.
In certain circumstances, shares
subject to an outstanding Award may again become available for issuance pursuant
to other Awards available under the Plan. For example, shares subject to
forfeited, terminated, canceled or expired Awards will again become available for future grants under the Plan.
16
Administration
The Plan will be administered by
a committee of our Board of Directors appointed by our Board of Directors to
administer the Plan or if such a committee is not appointed or unable to act,
then our entire Board of Directors (the Committee). The Committee will consist
of at least two members who are non-employee directors within the meaning of
Rule 16b-3 under the Exchange Act. With respect to the participation of
individuals who are subject to Section 16 of the Exchange Act, the Plan is
administered in compliance with the requirements of Rule 16b-3 under the
Exchange Act. Subject to the provisions of the Plan, the Committee determines
the persons to whom grants of options and shares of restricted stock are to be
made, the number of shares of common stock to be covered by each grant and all
other terms and conditions of the grant. If an option is granted, the Committee
determines whether the option is an incentive stock option or a nonstatutory
stock option, the option's term, vesting and exercisability, the amount and type
of consideration to be paid to our company upon the option's exercise and the
other terms and conditions of the grant. The terms and conditions of restricted
stock Awards are also determined by the Committee. The Committee has the
responsibility to interpret the Plan and to make determinations with respect to
all Awards granted under the Plan. All determinations of the Committee are final
and binding on all persons having an interest in the Plan or in any Award made
under the Plan. The costs and expenses of administering the Plan are borne by
our company.
Eligibility
Eligible individuals include
employees, officers, directors, consultants and advisors of the Company or any
Parent, Subsidiary or Affiliate of the Company, provided such consultants and
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. All eligible individuals may
receive one or more Awards under the Plan, upon the terms and conditions set
forth in the Plan. There is no assurance that an otherwise eligible individual
will be selected by the Committee to receive an Award under the Plan. Because
future Awards under the Plan will be granted in the discretion of the Committee,
the type, number, recipients and other terms of such Awards cannot be determined
at this time.
Stock Options
Under the Plan, the Committee is
authorized to grant stock options. Stock options may be either designated as
non-qualified stock options or incentive stock options. Incentive stock options,
which are intended to meet the requirements of Section 422 of the Internal
Revenue Code such that a participant can receive potentially favorable tax
treatment, may only be granted to employees. Therefore, any stock option granted
to consultants and non-employee directors are non-qualified stock options. The
tax treatment of incentive and non-qualified stock options is generally
described later in this summary. Any shares that are canceled will be made
available for future Awards. The Committee, in its sole discretion, determines
the terms and conditions of each stock option granted under the Plan, including
the grant date, option or strike price (which, in no event, will be less than
the par value of a share), the term of each option, exercise conditions and
restrictions, conditions of forfeitures, and any other terms, conditions and
restrictions consistent with the terms of the Plan, all of which will be
evidenced in an individual Award agreement between us and the participant.
Certain limitations apply to
incentive stock options. The per share exercise price of an incentive stock
option may not be less than 100% of the fair market value of a share of our
common stock on the date of the option's grant and the term of any such option
shall expire not later than the tenth anniversary of the date of the option's
grant. In addition, the per share exercise price of any option granted to a
person who, at the time of the grant, owns stock possessing more than 10% of the
total combined voting power or value of all classes of our stock must be at
least 110% of the fair market value of a share of our common stock on the date
of grant and such option shall expire not later than the fifth anniversary of
the date of the option's grant.
Options granted under the Plan
become exercisable at such times as may be specified by the Committee. However,
the aggregate value (determined as of the grant date) of the shares subject to
incentive stock options that may become exercisable by a participant in any year
may not exceed $100,000.
Except as otherwise set forth in
the Award agreement, options shall expire after a term of five years. However,
the maximum term of options granted under the Plan is ten years. If any
participant terminates employment due to death or disability or retirement, the
portion of his or her option Awards that were exercisable at the time of such
termination may be exercised for 12 months from the date of termination(or such
shorter time period as may be specified in the Option Agreement), but in any
event no later than the expiration date of the Options. In the case of any other
termination, the portion of his or her option Awards that were exercisable at
the time of such termination may be exercised for three months from the date of
termination (or such shorter time period as may be specified in
the Option Agreement), but in any event, no later than the expiration date of
the Options.
17
Options may be exercised only by
delivery to the Company of a written stock option exercise agreement in a form
approved by the Committee (which need not be the same for each Participant).
Payment for Shares purchased pursuant to the Plan may be made in cash (by check)
or, where expressly approved for the Participant by the Committee and where
permitted by law by cancellation of indebtedness of the Company to the
Participant; waiver of compensation due or accrued to Participant for services
rendered; transfer of Shares owned by the participant; tender of property; with
a promissory note in favor of the Company; or by cashless exercise.
Restricted Stock
Under the Plan, the Committee is
also authorized to make Awards of restricted stock. A restricted stock Award
entitles the participant to all of the rights of a stockholder of our company,
including the right to vote the shares and the right to receive any dividends.
An Award of restricted stock will
be evidenced by a written agreement between us and the participant. The Award
agreement will specify the number of shares of our common stock subject to the
Award, the nature and/or length of the restrictions, the conditions that will
result in the automatic and complete forfeiture of the shares and the time and
manner in which the restrictions will lapse, subject to the Award holder's
continued employment by us, and any other terms and conditions the Committee
shall impose consistent with the provisions of the Plan. The Committee also
determines the amount, if any, that the participant shall pay for the shares of
restricted stock. However, the participant must be required to pay at least the
par value for each share of restricted stock. Upon the lapse of the
restrictions, any legends on the shares of our common stock subject to the Award
will be re-issued to the participant without such legend.
Unless the Committee determines
otherwise in the Award or other agreement, if a participant terminates
employment for any reason, all rights to restricted stock that are then
forfeitable will be forfeited. Restricted stock that is forfeited by the
participant will again be available for Award under the Plan.
Fair Market Value
Under the Plan, fair market value
means the fair market value of the shares based upon (i) the closing selling
price of a share of our common stock as quoted on Nasdaq or a national
securities exchange on which the stock is traded, if the stock is then traded on
Nasdaq or a national securities exchange, or, if no such reported sale takes
place on such date, the average of the closing bid and asked prices (ii) the
average of the closing bid and ask price per share last quoted on that date by
an established quotation service for over-the-counter securities, if the common
stock is not then traded on a national securities exchange or (iii) if none of
the foregoing is applicable, by the Board of Directors in good faith.
Transferability Restrictions
Awards granted under the Plan,
and any interest therein, are not be transferable or assignable by the
participant, and may not be made subject to execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution or as
consistent with the specific Plan and Award Agreement provisions relating
thereto.
Termination or Amendment of the Incentive Plan
Unless sooner terminated, no
Awards may be granted under the Plan after June 19, 2019. Our Board of Directors
may amend or terminate the Plan at any time, but our Board of Directors may not,
without stockholder approval, amend the Plan to increase the total number of
shares of our common stock reserved for issuance of Awards. In addition, any
amendment or modification of the Plan shall be subject to stockholder approval
as required by any securities exchange on which our common stock is listed. No
amendment or termination may deprive any participant of any rights under Awards
previously made under the Plan.
Summary of Federal Income Tax Consequences of the
Plan
The following summary is intended
only as a general guide as to the federal income tax consequences under current
United States law with respect to participation in the Plan and
does not attempt to describe all possible federal or other tax consequences of
such participation. Furthermore, the tax consequences of awards made under the
Plan are complex and subject to change, and a taxpayer's particular situation
may be such that some variation of the described rules is applicable.
18
Options.
There are three
points in time when a participant and our company could potentially incur
federal income tax consequences: date of grant, upon exercise and upon
disposition. First, when an option is granted to a participant, the participant
does not recognize any income for federal income tax purposes on the date of
grant. We similarly do not have any federal income tax consequences at the date
of grant. Second, depending upon the type of option, the exercise of an option
may or may not result in the recognition of income for federal income tax
purposes. With respect to an incentive stock option, a participant will not
recognize any ordinary income upon the option's exercise (except that the
alternative minimum tax may apply). However, a participant will generally
recognize ordinary income upon the exercise of a non-qualified stock option. In
this case, the participant will recognize income equal to the difference between
the option price and the fair market value of shares purchased pursuant to the
option on the date of exercise.
Incentive stock options are
subject to certain holding requirements before a participant can dispose of the
shares purchased pursuant to the exercise of the option and receive capital
gains treatment on any income realized from the exercise of the option.
Satisfaction of the holding periods determines the tax treatment of any income
realized upon exercise. If a participant disposes of shares acquired upon
exercise of an incentive stock option before the end of the applicable holding
periods (called a "disqualifying disposition"), the participant must generally
recognize ordinary income equal to the lesser of (i) the fair market value of
the shares at the date of exercise of the incentive stock option minus the
exercise price or (ii) the amount realized upon the disposition of the shares
minus the exercise price. Any excess of the fair market value on the date of
such disposition over the fair market value on the date of exercise must be
recognized as capital gains by the participant. If a participant disposes of
shares acquired upon the exercise of an incentive stock option after the
applicable holding periods have expired, such disposition generally will result
in long-term capital gain or loss measured by the difference between the sale
price and the participant's tax "basis" in such shares (generally, in such case,
the tax "basis" is the exercise price).
Generally, we will be entitled to
a tax deduction in an amount equal to the amount recognized as ordinary income
by the participant in connection with the exercise of options. However, we are
generally not entitled to a tax deduction relating to amounts that represent
capital gains to a participant. Accordingly, if the participant satisfies the
requisite holding period with respect to an incentive stock option before
disposition to receive the favorable tax treatment accorded incentive stock
options, we will not be entitled to any tax deduction with respect to an
incentive stock option. In the event the participant has a disqualifying
disposition with respect to an incentive stock option, we will be entitled to a
tax deduction in an amount equal to the amount that the participant recognized
as ordinary income.
Restricted Stock Awards.
A
participant will not be required to recognize any income for federal income tax
purposes upon the grant of shares of restricted stock. With respect to Awards
involving shares or other property, such as restricted stock Awards, that
contain restrictions as to their transferability and are subject to a
substantial risk of forfeiture, the participant must generally recognize
ordinary income equal to the fair market value of the shares or other property
received at the time the shares or other property become transferable or are no
longer subject to a substantial risk of forfeiture, whichever occurs first. We
generally will be entitled to a deduction in an amount equal to the ordinary
income recognized by the participant. A participant may elect to be taxed at the
time he or she receives shares (e.g., restricted stock) or other property rather
than upon the lapse of transferability restrictions or the substantial risk of
forfeiture. However, if the participant subsequently forfeits such shares he or
she would not be entitled to any tax deduction or, to recognize a loss, for the
value of the shares or property on which he or she previously paid tax.
Alternatively, if an Award that results in a transfer to the participant of
cash, shares or other property does not contain any restrictions as to their
transferability and is not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of shares or other property actually received. We generally
will be entitled to a deduction for the same amount.
Vote Required and Board of Directors Recommendation
Assuming a quorum is present, the
affirmative vote of a majority of the shares present at the Meeting and entitled
to vote, either in person or by proxy, is required for approval of Proposal No.
3. For purposes of the approval of the Amendment No. 4 of our 2009 Equity
Incentive Plan, abstentions will have the same effect as a vote against this
proposal and broker non-votes will have no effect on the result of the vote.
The Board of Directors recommends a vote FOR the approval of
the Amendment No. 4 to the Companys 2009 Equity Incentive Plan.
19
PROPOSAL NO. 4
ADVISORY VOTE ON EXECUTIVE COMPENSATION
(Say-On-Pay)
The Company seeks a non-binding
advisory vote from its stockholders to approve the compensation of the Companys
executive officers as described under Executive Compensation and the tabular
disclosure regarding our named executive officers compensation (together with
the accompanying narrative disclosure) in this Proxy Statement.
This proposal, commonly known as
a say-on-pay proposal, gives the Companys stockholders the opportunity to
express their views on our executive officers compensation. Because your vote
is advisory, it will not be binding upon the Board of Directors. However, the
Compensation Committee will take into account the outcome of the vote when
making future executive officer compensation decisions. This vote is not
intended to address any specific item of compensation, but rather the overall
compensation of our named executive officers as described pursuant to applicable
SEC rules in this Proxy Statement.
The Company believes that its
compensation policies and decisions, designed to deliver a performance-based pay
philosophy, are aligned with the long-term interests of the Companys
stockholders and are competitive. Our principal compensation policies, which
enable the Company to attract and retain talented executive officers to lead the
Company in the achievement of our business objectives, include:
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The Company makes annual cash compensation decisions
based on assessment of performance against measurable financial goals, as
well as each executives individual performance.
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The Company emphasizes long-term incentive compensation
awards that collectively reward executive officers based on performance,
external and internal peer equity compensation practices, and the
executive officers job responsibilities.
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The Company designs pay practices to retain a highly
talented and experienced senior executive team.
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The Company encourages stock ownership by our senior
executive officers.
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As a result, the Company is
presenting this proposal, which gives you as a stockholder the opportunity to
approve, on an advisory basis, the Companys executive officer compensation as
disclosed in this Proxy Statement under the heading entitled Executive
Compensation by voting for or against the following resolution:
RESOLVED, that the compensation
paid to the Company's named executive officers, as disclosed pursuant to Item
402 of Regulation S-K, including the compensation tables and narrative
discussion, is hereby ratified and approved.
Vote Required; Board of Directors Recommendation
This Say-on-Pay proposal is
advisory and non-binding. To be approved, on a non-binding advisory basis, this
proposal must receive the affirmative vote of a majority of the shares entitled
to vote and present, in person or by properly executed proxy, at the
Meeting. However, the approval or disapproval of this proposal by stockholders
will not require the Board of Directors or the Compensation Committee to take
any action regarding the Companys executive compensation practices. The final
decision on the compensation and benefits of the Companys Named Executive
Officers and on whether, and if so, how, to address stockholder disapproval
remains with the Board of Directors and the Compensation Committee. Brokers are
prohibited from giving proxies to vote on executive compensation matters unless
the beneficial owner of such shares has given voting instructions on the matter.
This means that if your broker is the record holder of your shares, you must
give voting instructions to your broker with respect to Proposal No. 4 if you
want your broker to vote your shares on Proposal No. 4.
The Board of Directors believes that the compensation of the
executive officers is appropriate and recommends a vote FOR the approval of the
executive compensation as described in the compensation narrative discussion and
the compensation tables and otherwise in this Proxy Statement.
20
CORPORATE GOVERNANCE
Our current corporate governance practices and policies are
designed to promote stockholder value and we are committed to the highest
standards of corporate ethics and diligent compliance with financial accounting
and reporting rules. Our Board provides independent leadership in the exercise
of its responsibilities. Our management oversees a system of internal controls
and compliance with corporate policies and applicable laws and regulations, and
our employees operate in a climate of responsibility, candor and integrity.
Corporate Governance Guidelines
We and our Board are committed to high standards of corporate
governance as an important component in building and maintaining stockholder
value. To this end, we regularly review our corporate governance policies and
practices to ensure that they are consistent with the high standards of other
companies. We also closely monitor guidance issued or proposed by the SEC and
the provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street
Reform and Consumer Protection Act, as well as the emerging best practices of
other companies. The current corporate governance guidelines are available on
the Companys website
www.China-ACM.com
. Printed copies of our corporate
governance guidelines may be obtained, without charge, by contacting the
Corporate Secretary, China Advanced Construction Materials Group, Inc., 9 North
West Fourth Ring Road, Yingu Mansion Suite 1708, Haidian District, Beijing, PRC,
100190.
The Board and Committees of the Board
The Company is governed by the Board that currently consists of
five members as identified above. On August 7, 2009, the Board established three
committees: the Audit Committee, the Compensation Committee and the Nominating
and Governance Committee. Each of these committees is comprised entirely of
independent directors. From time to time, the Board may establish other
committees. The Board has adopted a written charter for each of the committees
which may be obtained, without charge, by contacting the Corporate Secretary,
China Advanced Construction Materials Group, Inc., 9 North West Fourth Ring
Road, Yingu Mansion Suite 1708, Haidian District, Beijing, PRC, 100190, or
through our website at
www.China-ACM.com
.
Prior to establishing the committees of the Board of Directors,
our entire Board of Directors handled the functions that would otherwise be
handled by each of the committees.
During the fiscal year ended June 30, 2016, the Board of
Directors held four meetings. We do not have a policy with regard to Board
members attendance at annual meetings of stockholders.
Governance Structure
Currently, our Chief Executive Officer is also our Chairman.
The Board of Directors believes that, at this time, having a combined Chief
Executive Officer and Chairman is the appropriate leadership structure for the
Company. In making this determination, the Board of Directors considered, among
other matters, the size of the company as well as Mr. Hans experience and
tenure of having been Chairman and Chief Executive Officer since 2008, and felt
that his experience, knowledge, and personality allowed him to serve ably as
both Chairman and Chief Executive Officer. Among the benefits of a combined
Chief Executive Officer/Chairman considered by the Board of Directors is that
such structure promotes clearer leadership and direction for our Company and
allows for a single, focused chain of command to execute our strategic
initiatives and business plans. We have not appointed a lead independent
director for our Board of Directors.
The Boards Role in Risk Oversight
The Board oversees that the assets of the Company are properly
safeguarded, that the appropriate financial and other controls are maintained,
and that the Companys business is conducted wisely and in compliance with
applicable laws and regulations and proper governance. Included in these
responsibilities is the Board of Directors oversight of the various risks
facing the Company. In this regard, the Board seeks to understand and oversee
critical business risks. The Board does not view risk in isolation. Risks are
considered in virtually every business decision and as part of the Companys
business strategy. The Board recognizes that it is neither possible nor prudent
to eliminate all risk. Indeed, purposeful and appropriate risk-taking is
essential for the Company to be competitive on a global basis and to achieve its
objectives.
While the Board oversees risk management, Company management is
charged with managing risk. The Company has internal processes and a strong internal control environment to identify
and manage risks and to communicate with the Board. The Board and the Audit
Committee monitor and evaluate the effectiveness of the internal controls and
the risk management program at least annually. The Board implements its risk
oversight function both as a whole and through Committees. Much of the work is
delegated to various Committees, which meet regularly and report back to the
full Board. All Committees play significant roles in carrying out the risk
oversight function. In particular:
21
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The Audit Committee oversees risks related to the
Companys financial statements, the financial reporting process,
accounting and legal matters. The Audit Committee also oversees the
internal audit function and the Companys ethics programs, including the
Codes of Business Conduct. The Audit Committee members meet separately
with representatives of the independent auditing firm and the Companys
internal audit group; and
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The Compensation Committee evaluates the risks and
rewards associated with the Companys compensation philosophy and
programs. The Compensation Committee reviews and approves compensation
programs with features that mitigate risk without diminishing the
incentive nature of the compensation. Management discusses with the
Compensation Committee the procedures that have been put in place to
identify and mitigate potential risks in compensation.
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Independent Directors
Our Board has determined that the majority of the Board is
comprised of independent directors within the meaning of applicable Nasdaq
listing standards relating to Board composition and Section 301 of the
Sarbanes-Oxley Act of 2002. Our independent directors are Mr. Jin, Mr. Ren and
Mr. Gao.
Audit Committee
Our Audit Committee consists of Mr. Ren, Mr. Jin and Mr. Gao,
each of whom is independent as that term is defined under the Nasdaq listing
standards. The Audit Committee oversees our accounting and financial reporting
processes and the audits of the financial statements of our company. Mr. Ren
serves as our Audit Committee financial expert as that term is defined by Item
407 of Regulation S-K of the Exchange Act. The Audit Committee is responsible
for, among other things:
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selecting our independent auditors and pre-approving all
auditing and non-auditing services permitted to be performed by our
independent auditors;
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reviewing with our independent auditors any audit
problems or difficulties and managements response;
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reviewing and approving all proposed related-party
transactions, as defined in Item 404 of Regulation S-K under the
Securities Act of 1933, as amended;
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discussing the annual audited financial statements with
management and our independent auditors;
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reviewing major issues as to the adequacy of our internal
controls and any special audit steps adopted in light of significant
internal control deficiencies;
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annually reviewing and reassessing the adequacy of our
Audit Committee charter;
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meeting separately and periodically with management and
our internal and independent auditors; and
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reporting to the full Board of Directors; and
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such other matters that are specifically delegated to our
Audit Committee by our Board of Directors from time to time.
|
All members of the Audit Committee met by telephone or in
person four times during the fiscal year ended June 30, 2016.
The Report of the Audit Committee regarding the audited
financial statements of the Company for the fiscal year ended June 30, 2016 is
located on
Appendix A
to this Proxy Statement.
Our Audit Committee is governed by a written Audit Committee
Charter. Our Board of Directors most recently reviewed and adopted an Audit Committee Charter at a meeting held on August
11, 2009. A copy of the Audit Committee Charter is available via our website at
www.China-ACM.com
.
22
Compensation Committee
Our Compensation Committee consists of Mr. Jin, Mr. Ren and Mr.
Gao, each of whom is independent as that term is defined under the Nasdaq
listing standards. Our Compensation Committee assists the Board in reviewing and
approving the compensation structure of our directors and executive officers,
including all forms of compensation to be provided to our directors and
executive officers. Our Chief Executive Officer may not be present at any
committee meeting during which his compensation is deliberated. The Compensation
Committee is responsible for, among other things:
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approving and overseeing the compensation package for our
executive officers;
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reviewing and making recommendations to the board with
respect to the compensation of our directors;
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reviewing and approving corporate goals and objectives
relevant to the compensation of our Chief Executive Officer, evaluating
the performance of our Chief Executive Officer in light of those goals and
objectives, and setting the compensation level of our Chief Executive
Officer based on this evaluation; and
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reviewing periodically and making recommendations to the
board regarding any long-term incentive compensation or equity plans,
programs or similar arrangements, annual bonuses, employee pension and
welfare benefit plans.
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The Compensation Committee has sole authority to retain and
terminate outside counsel, compensation consultants retained to assist the
Compensation Committee in determining the compensation of the Chief Executive
Officer or senior executive officers, or other experts or consultants, as it
deems appropriate, including sole authority to approve the firms' fees and other
retention terms. The Compensation Committee may also form and delegate authority
to subcommittees and may delegate authority to one or more designated members of
the Compensation Committee. The Compensation Committee may from time to time
seek recommendations from the executive officers of the Company regarding
matters under the purview of the Compensation Committee, though the authority to
act on such recommendations rests solely with the Compensation Committee.
All members of the Compensation Committee met by telephone or
in person one time during the fiscal year ended June 30, 2016.
Nominating and Governance Committee
Our Nominating and Governance Committee consists of Mr. Gao,
Mr. Ren and Mr. Jin, each of whom is independent as that term is defined under
the Nasdaq listing standards. The Nominating and Governance Committee assists
the Board of Directors in identifying individuals qualified to become our
directors and in determining the composition of the board and its committees.
The Nominating and Governance Committee is responsible for, among other things:
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identifying and recommending to the board nominees for
election or re-election to the board, or for appointment to fill any
vacancy;
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reviewing annually with the board the current composition
of the board in light of the characteristics of independence, age, skills,
experience and availability of service to us;
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identifying and recommending to the board the directors
to serve as members of the boards committees; and
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monitoring compliance with our code of business conduct
and ethics.
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All members of the Nominating and Governance Committee met by
telephone or in person one time during the fiscal year ended June 30, 2016.
23
Code of Ethics
The Board has adopted a Code of Conduct and Ethics that applies
to the Companys directors, officers and employees. A copy of this policy is
available via our website at
www.China-ACM.com
. Printed copies of our
Code of Ethics may be obtained, without charge, by contacting the Corporate
Secretary, China Advanced Construction Materials Group, Inc., 9 North West
Fourth Ring Road, Yingu Mansion Suite 1708, Haidian District, Beijing, PRC,
100190. During the fiscal year ended June 30, 2016, there were no waivers of our
Code of Ethics.
Stockholder Communication with the Board of
Directors
.
Stockholders may communicate with the Board, including
non-management directors, by sending a letter to our Board of Directors, c/o
Corporate Secretary, China Advanced Construction Materials Group, Inc., 9 North
West Fourth Ring Road, Yingu Mansion Suite 1708, Haidian District, Beijing, PRC,
100190 for submission to the Board or a committee or to any specific director to
whom the correspondence is directed. Stockholders communicating through this
means should include with the correspondence evidence, such as documentation
from a brokerage firm, that the sender is a current record or beneficial
stockholder of the Company. All communications received as set forth above will
be opened by the Corporate Secretary or his designee for the sole purpose of
determining whether the contents contain a message to one or more of our
directors. Any contents that are not advertising materials, promotions of a
product or service, patently offensive materials or matters deemed, using
reasonable judgment, inappropriate for the Board will be forwarded promptly to
the chairman of the Board, the appropriate committee or the specific director,
as applicable.
EXECUTIVE COMPENSATION
Summary Compensation Table Fiscal Years Ended June 30, 2016
and 2015
The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to our principal
executive officer and our other most highly paid executive officer (the named
executive officers) for services rendered in all capacities during the noted
periods. No other executive officers received total annual salary and bonus
compensation in excess of $100,000 during the fiscal years ended June 30, 2016
and 2015.
Name and
Principal
Position
|
Year
Ended
June 30
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compensa
tion
Earnings
($)
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Comp
ensati
on
($)
|
Total
($)
|
Xianfu Han
Chairman
and CEO
|
2016
2015
|
300,000
300,000
|
-
|
-
|
-
|
-
|
-
|
-
|
300,000
300,000
|
Weili He,
Vice
Chairman,
interim CFO
and COO
|
2016
2015
|
300,000
300,000
|
-
|
-
|
-
|
-
|
-
|
-
|
300,000
300,000
|
The Company has not used a compensation consultant to determine
or recommend the amount or form of executive or director compensation but our
management believes that our executive officer compensation package is
comparable to similar businesses in our location of operations.
Employment Agreements
In connection with the reverse acquisition of BVI-ACM on April
29, 2008, Mr. Han was elected as our Chairman and Chief Executive Officer
effective immediately. In January 2011, we entered into a three-year Employment
Agreement with Mr. Han pursuant to which he receives an annual salary of
$140,000 for service as our Chief Executive Officer. The initial term of three
years as set forth in the agreement expired and the Company and Mr. Han renewed
the agreement for another three years from July 1, 2014 to June 30, 2017 on the
same terms except for the increased annual salary to $300,000.
24
Upon termination of Mr. Hans employment because of death,
disability or for cause, the Company will pay or provide to Mr. Han or his
estate, as the case may be (i) any unpaid base salary and any accrued vacation
through the date of termination; (ii) any unpaid annual bonus accrued with
respect to the fiscal year ending on or preceding the date of termination; (iii)
reimbursement for any unreimbursed expenses properly incurred through the date
of termination; and (iv) all other payments or benefits to which Mr. Han may be
entitled under the terms of any applicable employee benefit plan, program or
arrangement.
Upon the termination of Mr. Hans employment by the Company
without cause, the Company will pay or provide to Mr. Han (i) all amounts due as
if Mr. Hans employment were terminated because of death, disability or for
cause, and (ii) subject to Mr. Hans execution (and non-revocation) of a general
release of claims against the Company and its affiliates in a form reasonably
requested by the Company, (a) continued payment of his base salary for two
months after termination, payable in accordance with the regular payroll
practices of the Company, but off the payroll; and (b) payment of his cost of
continued medical coverage for two (2) months after termination (subject to his
co-payment of the costs in the same proportion as such costs were shared
immediately prior to the date of termination). Payments provided as set forth in
this section shall be in lieu of any termination or severance payments or
benefits for which Mr. Han may be eligible under any of the plans, policies or
programs of the Company.
In January 2011, we also entered into a three year Employment
Agreement with Mr. He pursuant to which he receives an annual salary of $109,169
for service as our Chief Operating Officer. The initial term of three years as
set forth in the agreement expired and the Company and Mr. He renewed the
agreement for another three years from July 1, 2014 to June 30, 2017 on the same
terms except for the increased annual salary to $300,000.
Upon termination of Mr. Hes employment because of death,
disability or for cause, the Company will pay or provide to Mr. He or his
estate, as the case may be (i) any unpaid base salary and any accrued vacation
through the date of termination; (ii) any unpaid annual bonus accrued with
respect to the fiscal year ending on or preceding the date of termination; (iii)
reimbursement for any unreimbursed expenses properly incurred through the date
of termination; and (iv) all other payments or benefits to which Mr. He may be
entitled under the terms of any applicable employee benefit plan, program or
arrangement.
Upon the termination of Mr. Hes employment by the Company
without cause, the Company will pay or provide to Mr. He (i) all amounts due as
if Mr. Hes employment were terminated because of death, disability or for
cause, and (ii) subject to Mr. Hes execution (and non-revocation) of a general
release of claims against the Company and its affiliates in a form reasonably
requested by the Company, (a) continued payment of his base salary for two
months after termination, payable in accordance with the regular payroll
practices of the Company, but off the payroll; and (b) payment of his cost of
continued medical coverage for two (2) months after termination (subject to his
co-payment of the costs in the same proportion as such costs were shared
immediately prior to the date of termination). Payments provided as set forth in
this section shall be in lieu of any termination or severance payments or
benefits for which Mr. He may be eligible under any of the plans, policies or
programs of the Company.
Outstanding Equity Awards at Fiscal Year End
None.
Director Compensation
|
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Fees Earned or
Paid
in
Cash
|
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|
Stock
Awards
|
|
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Option
Awards
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|
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Total
|
|
Name
|
|
($)
|
|
|
($) (1)
|
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|
($) (1)
|
|
|
($)
|
|
Tao Jin
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$25,000
|
|
|
|
|
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$25,000
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Xinyong Gao
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$25,000
|
|
|
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$25,000
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Ken Ren
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$25,000
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$25,000
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(1) The amounts in these columns represent the compensation
cost of shares of restricted stock awarded by the Company during the fiscal
year, except that these amounts do not include any estimate of forfeitures. The
aggregate grant date fair value of restricted stock awards granted were
determined in accordance with Financial Accounting Standard Board Accounting
Standards Codification Topic 718 (formerly SFAS123(R)) and are recognized as
compensation cost over the requisite service period.
25
On May 4, 2011, we entered into a director agreement with Tao
Jin pursuant to which he is entitled to receive, annually, a fee of $25,000 in
cash and 833 (10,000 on a pre-split basis) restricted shares of the Companys
common stock, which vested in four equal quarterly installments.
On June 12, 2012, we entered into a director agreement with
Xinyong Gao pursuant to which he is entitled to receive, annually, a fee of
$25,000 in cash and 833 restricted shares of the Companys common stock, which
vested in four equal quarterly installments.
On June 12, 2012, we entered into a director agreement with Ken
Ren pursuant to which he is entitled to receive, annually, a fee of $25,000 in
cash and 833 restricted shares of the Companys common stock, which vested in
four equal quarterly installments.
As of the date of this report none of the restricted shares
noted above have been issued to the independent directors.
Compensation Committee Interlocks and Insider
Participation
All current members of the Compensation Committee are
independent directors, and all past members were independent directors at all
times during their service on such Committee. None of the past or present
members of our Compensation Committee are present or past employees or officers
of ours or any of our subsidiaries. No member of the Compensation Committee has
had any relationship with us requiring disclosure under Item 404 of Regulation
S-K under the Securities Exchange Act of 1934, as amended. None of our executive
officers serves on the Board of Directors or compensation committee of a company
that has an executive officer that serves on our Board or Compensation
Committee.
Indemnification of Directors and Executive Officers and
Limitation of Liability
Indemnification under
Nevada Law
Nevada law generally permits us to indemnify our directors,
officers, employees and agents. Pursuant to the provisions of Nevada Revised
Statutes 78.7502, we, as a corporation organized in Nevada, may indemnify our
directors, officers, employees and agents in accordance with the following:
(a) A corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
action, except an action by or in the right of the corporation, by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation, against
expenses, actually and reasonably incurred by him in connection with the action,
suit or proceeding if he: (a) is not liable for breach of his fiduciary duties
as a director or officer pursuant to Nevada Revised Statutes 78.138; or (b)
acted in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
(b) A corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
action by or in the right of the corporation to procure a judgment in its favor,
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
against expenses actually and reasonably incurred by him in connection with the
defense or settlement of the action or suit if he: (a) is not liable for breach
of his fiduciary duties pursuant to Nevada Revised Statutes 78.138; or (b) acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification may not be
made for any claim, issue or matter as to which such a person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals there
from, to be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
(c) To the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding, or in defense
of any claim, issue or matter therein, the corporation shall indemnify him
against expenses, including attorneys fees, actually and reasonably incurred by
him in connection with the defense.
26
Charter Provisions, Bylaws
and Other Arrangements of the Registrant
Article 9 of our Articles of
Incorporation provides as follows:
The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director or officer of the Corporation, or who is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such parson in connection With
the action, suit or proceeding, to the full extent permitted by the Nevada
Revised Statutes as such statutes may be amended from time to time.
Article 8.9 of our bylaws
provides that we shall indemnify our directors and officers to the fullest
extent permitted by the Nevada Revised Statutes and may, if and to the extent
authorized by the Board, indemnify any other person whom it has the power to
indemnify against liability, reasonable expense or other matter whatsoever.
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy and is,
therefore, unenforceable.
Changes in Control
There are no compensatory plans or arrangements with respect to
any officer, director, manager or other executive which would in any way result
in payments to any such person because of his or her resignation, retirement, or
other termination of employment with the Company, or any change in control of
the Company, or a change in the persons responsibilities following a change of
control of the Company.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of May 23, 2017, the Record
date, certain information with respect to the beneficial ownership of our common
shares by each shareholder known by us to be the beneficial owner of more than
5% of our common shares, as well as by each of our current directors and
executive officers as a group. Each person has sole voting and investment power
with respect to the shares of common stock, except as otherwise indicated.
Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and does not necessarily bear on the economic
incidents of ownership or the rights to transfer the shares described below.
Unless otherwise indicated, (a) each stockholder has sole voting power and
dispositive power with respect to the indicated shares and (b) the address of
each stockholder who is a director or executive officer is c/o Yingu Plaza,
#1708, 9 Beisihuanxi Road, Haidian District, Beijing 100080, China.
Name & Address of
|
Office, If Any
|
Amount and Nature of
|
Percent of
|
Beneficial Owner
|
Officers and Directors
|
Beneficial Ownership
|
Class
(1)
(2)
|
|
|
|
|
Xianfu Han
(3)
|
Chairman and CEO
|
533,378
|
22.3%
|
Weili He
(4)
|
Vice Chairman, COO and Interim CFO
|
375,622
|
15.7%
|
Ken Ren
(5)
|
Director
|
10,000
|
*
|
Tao Jin
(6)
|
Director
|
--
|
--
|
Xinyong Gao
(7)
|
Director
|
10,000
|
*
|
All officers and directors as a group (5 persons named
above)
|
|
929,000
|
38.9%
|
*Less than 1%
(1) As of the close of business on May 23, 2017, the Record
date, there were 2,387,658 shares of our common stock outstanding.
(2) In determining beneficial ownership of the common stock,
the number of shares shown includes shares which the beneficial owner may
acquire within 60 days upon exercise or conversion of convertible securities,
warrants or options. In accordance with Rule 13d-3 in determining the percentage of common stock
owned by a person on May 23, 2017 (a) the numerator is the number of shares of
the class beneficially owned by such person, including shares which the
beneficial owner may acquire within 60 days upon conversion or exercise of the
warrants and other convertible securities, and (b) the denominator is the sum of
(i) the total shares of that class outstanding on May 23, 2017, and (ii) the
total number of shares that the beneficial owner may acquire upon conversion or
exercise of other securities. Unless otherwise stated, each beneficial owner has
sole power to vote and dispose of the shares.
27
(3) On June 11, 2008, Mr. Han entered into a Securities Escrow
Agreement by and among the investors to the private placement that closed on
June 11, 2008, and American Stock Transfer & Trust Company, or AST, whereby
291,667 shares (3,500,000 shares pre-reverse split) of the Companys common
stock owned by Mr. Han were placed into escrow, with AST appointed as the escrow
agent. The 291,667 shares were thereafter transferred into the name of AST and
are to be held in escrow and released to Mr. Han if the Company does, or to the
investors if the Company does not, meet certain performance milestones described
in the Securities Escrow Agreement. Mr. Han maintains voting power over all
291,667 shares until such time as any such shares are transferred to the
investors, at which time, such transferred shares will be beneficially owned by
such investors.
(4) On June 11, 2008, Mr. He entered into a Securities Escrow
Agreement by and among the investors to the private placement that closed on
June 11, 2008, and American Stock Transfer & Trust Company, or AST, whereby
166,667 shares (2,000,000 shares pre-reverse split) of the Companys common
stock owned by Mr. He were placed into escrow, with AST appointed as the escrow
agent. The 166,667 shares were thereafter transferred into the name of AST and
are to be held in escrow and released to Mr. He if the Company does, or to the
investors if the Company does not, meet certain performance milestones described
in the Securities Escrow Agreement. Mr. He maintains voting power over all
166,667 shares until such time as any such shares are transferred to the
investors, at which time, such transferred shares will be beneficially owned by
such investors.
(5) Mr. Ren is entitled to receive 833 restricted shares of the
Companys common stock per annum under his director agreement but as of the date
hereof such shares have not yet been issued.
(6) Mr. Jin is entitled to receive 833 restricted shares of the
Companys common stock per annum under his director agreement but as of the date
hereof such shares have not yet been issued.
(7) Mr. Gao is entitled to receive 833 restricted shares of the
Companys common stock per annum under his director agreement but as of the date
hereof such shares have not yet been issued.
TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND
CERTAIN CONTROL PERSONS
Transactions with Related Persons
Except as discussed below, since the beginning of the 2012,
there have not been any transaction, nor is there any currently proposed
transaction, in which we were or are to be a participant and the amount involved
exceeded or exceeds $120,000, and in which any related person had or will have a
direct or indirect material interest (other than compensation described under
Executive Compensation).
Mr. Xianfu Han, the Companys Chief Executive Officer and Mr.
Weili He, the Companys Chief Operating Officer and interim Chief Financial
Officer, had advanced funds to BVI-ACM, for working capital purposes. The loans
are non-interest bearing, unsecured, and are payable in cash on demand. On
December 2, 2014, the Board authorized the Company to issue 92,897 and 81,968
shares of common stock of the Company (collectively, the Shares), to each of
Mr. Xianfu Han and Mr. Weili He, at $5.49 per share, the closing bid price
quoted by Nasdaq on December 1, 2014. The Shares offset the payables advanced by
the two executives in the amount of approximately $510,000 and $450,000,
respectively, to the Company. Therefore, as of June 30, 2016, approximately
$16,000 and $68,000 remained payable to Mr. Han and Mr. He, respectively.
Certain short-term bank loans and bank guarantees are
guaranteed by our officers, see note 9 to the consolidated financial statements
in our 2016 Annual Report.
Policies and Procedures for Review, Approval or Ratification
of Transactions with Related Persons
On May 20, 2015, the Board adopted a written related-person
transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and
approval or ratification of related-persons transactions.
28
Pursuant to the Companys Related Party Transactions Policy
(the Policy), a Related Party Transaction is a transaction, arrangement or
relationship (or any series of similar transactions, arrangements or
relationships) in which the Company (including any of its subsidiaries) was, is
or will be a participant and the amount involved exceeds $120,000, and in which
any related party had, has or will have a direct or indirect material
interest. The Policys definition of a Related Party is in line with what was
defined under the instruction to Item 404(a) of Regulation S-K promulgated by
the Commission, i.e. , a director or an executive officer of the Company or a
nominee to become a director of the Company at the time of the transaction; the
beneficial owner of more than 5% of the Company's common stock; and any
Immediate Family Member of any of the foregoing persons.
Under the Policy, the Companys Chief Financial Officer is the
one who determines whether a proposed transaction, as submitted by a Related
Party, is a Related Party Transaction that requires the consideration and
discussion by the Audit Committee. The Audit Committee is responsible in
evaluating and assessing a proposed transaction based on facts and circumstances
including those listed in the Policy including comparing the terms of the
proposed transaction and the terms available to unrelated third parties or to
employees generally.
The Policy also sets forth the procedure for the ratification
of past related party transactions and the review of ongoing related party
transactions.
Promoters and Certain Control Persons
We did not have any promoters at any time during the past five
fiscal years.
Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.
STOCKHOLDER PROPOSALS FOR THE 2017 ANNUAL MEETING
If you wish to have a proposal included in our proxy statement
for next years annual meeting in accordance with Rule 14a-8 under the Exchange
Act, your proposal must be received by the Corporate Secretary of China Advanced
Construction Materials Group, Inc. at 9 North West Fourth Ring Road, Yingu
Mansion Suite 1708, Haidian District, Beijing, PRC, 100190, no later than the
close of business on January 19, 2018. A proposal which is received after that
date or which otherwise fails to meet the requirements for stockholder proposals
established by the SEC will not be included. The submission of a stockholder
proposal does not guarantee that it will be included in the proxy statement.
ANNUAL REPORT ON FORM 10-K
We will provide without charge to each person solicited by this
Proxy Statement, on the written request of such person, a copy of our Annual
Report on Form 10-K, including the financial statements and financial statement
schedules, as filed with the SEC for our most recent fiscal year. Such written
requests should be directed to China Advanced Construction Materials Group,
Inc., c/o Corporate Secretary, 9 North West Fourth Ring Road, Yingu Mansion
Suite 1708, Haidian District, Beijing, PRC, 100190. A copy of our Annual Report
on Form 10-K is also made available on our website after it is filed with the
SEC.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors
has no knowledge of any business which will be presented for consideration at
the Meeting other than the election of directors and the ratification of the
appointment of the accountants of the Company. Should any other matters be
properly presented, it is intended that the enclosed proxy card will be voted in
accordance with the best judgment of the persons voting the proxies.
29
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June 2, 2017
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By Order of the Board of
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Directors
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/s/
Xianfu Han
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Xianfu Han
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Chairman
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30
APPENDIX A
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board is comprised of three
non-employee Directors, each of whom has been determined by the Board to be
independent under the meaning of Rule 10A-3(b)(1) under the Exchange Act. The
Board has determined, based upon an interview of Ken Ren and a review of Mr.
Rens responses to a questionnaire designed to elicit information regarding his
experience in accounting and financial matters, that Mr. Ren shall be designated
as an Audit Committee financial expert within the meaning of Item 401(e) of
SEC Regulation S-K, as Mr. Ren has past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in his financial
sophistication.
The Audit Committee assists the Boards oversight of the
integrity of the Companys financial reports, compliance with legal and
regulatory requirements, the qualifications and independence of the Companys
independent registered public accounting firm, the audit process, and internal
controls. The Audit Committee operates pursuant to a written charter adopted by
the Board. The Audit Committee is responsible for overseeing the corporate
accounting and financing reporting practices, recommending the selection of the
Companys registered public accounting firm, reviewing the extent of non-audit
services to be performed by the auditors, and reviewing the disclosures made in
the Companys periodic financial reports. The Audit Committee also reviews and
recommends to the Board that the audited financial statements be included in the
Companys Annual Report on Form 10-K.
Following the end of the fiscal year ended June 30, 2016, the
Audit Committee (1) reviewed and discussed the audited financial statements for
the fiscal year ended June 30, 2016 with Company management; (2) discussed with
the independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards), as may be modified or
supplemented; and (3) received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), as may be modified or supplemented, and has discussed with
the independent accountant its independence.
Based on the review and discussions referred to above, the
Audit Committee had recommended to the Board of Directors that the audited
financial statements be included in the Companys Annual Report on Form 10-K for
the fiscal year ended June 30, 2016 for filing with the SEC.
The Audit Committee:
By:
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/s/
Ken Ren
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Ken
Ren
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By:
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/
s/
Xinyong Gao
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Xinyong Gao
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By:
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/s/
Tao Jin
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Tao Jin
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31
APPENDIX B
AMENDMENT NO. 4 TO
2009 EQUITY INCENTIVE PLAN
OF
CHINA ADVANCED CONSTRUCTION MATERIALS GROUP, INC.
China Advanced Construction
Materials Group, Inc. (the Company) previously approved and adopted the 2009
Equity Incentive Plan, its Amendment No. 1, No. 2 and No. 3 (the Plan) to
promote the success and enhance the value of the Company by linking the personal
interests of the Plans participants to those of the Companys stockholders and
by providing such individuals with an incentive for outstanding performance in
order to help grow the Company and to generate superior returns to its
stockholders. By this Amendment No. 4, the Company desires to amend the Plan to
increase the number of shares available under the Plan.
1. Capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned to such
terms in the Plan.
2. The effective date of this
Amendment No. 4 to the Plan shall be June 30, 2017, upon the stockholders
approval.
3. Section 2.1 of the Plan is
amended and restated in its entirety as follows:
2.1
Number of Shares
Available
. Subject to Sections 2.2 and 17, the total number of Shares
reserved and available for grant and issuance pursuant to the Plan shall be Nine
Hundred and Fifty Thousand (950,000) Shares. Subject to Sections 2.2 and 17,
Shares shall again be available for grant and issuance in connection with future
Awards under the Plan that: (a) are subject to issuance upon exercise of an
Option but cease to be subject to such Option for any reason other than exercise
of such Option; (b) are subject to an Award granted hereunder but are forfeited;
or (c) are subject to an Award that otherwise terminates without Shares being
issued.
4. This Amendment No. 4 shall
amend only the provisions of the Plan as set forth herein. Those provisions of
the Plan not expressly amended hereby shall be considered in full force and
effect.
IN WITNESS WHEREOF, the Company
has caused this Amendment No. 4 to be executed by its duly authorized
representative on this June 2, 2017.
China Advanced Construction Materials Group, Inc.
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By: /s/Xianfu Han
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Name: Xianfu Han
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Title: Chief Executive Officer
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32
Exhibit A
33
34
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