SCHEDULE
14A INFORMATION
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT
NO.___)
Filed
by
the Registrant
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Filed
by
a Party other than the Registrant
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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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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to sec. 240.14a-11(c) or sec.
240.14a-12
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ASIA
TIME CORPORATION
(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):
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Fee
not 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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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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o
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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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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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Date
Filed:
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ASIA
TIME CORPORATION
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
You
are
cordially invited to attend the Annual Meeting of Stockholders (the “Annual
Meeting”) of Asia Time Corporation, a Delaware corporation (the “Company”), to
be held at the Tang Room II, 3/F, Sheraton Hong Kong Hotel & Towers located
at 20 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong on September 27, 2008
at 10
a.m. Hong Kong local time.
The
Annual Meeting of the Company is being held for the following purposes:
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1.
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To
elect following persons to serve as
directors:
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Kwong
Kai Shun
Michael
Mak
Siu
Po Lee
Dr.
Ching Wah Leung
Wu
Hok Lun
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2.
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To
ratify the appointment of Dominic K.F. Chan & Co. as the independent
registered public accounting firm of the Company for the year ending
December 31, 2008;
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3.
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To
approve the Asia Time Corporation 2008 Equity Incentive Plan;
and
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4.
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To
transact such other business as may properly come before the meeting
or
any adjournments thereof.
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The
board of directors recommends a vote “for” the director nominees and for each
proposal listed above.
The
board
of directors has fixed the close of business on August 25, 2008 as the record
date (the “Record Date”) for determining those stockholders who will be entitled
to vote at the Annual Meeting.
The
Company’s Annual Report to Stockholders for the year ended December 31,
2007 is enclosed with this notice. The following proxy statement and enclosed
proxy card is being sent to each stockholder as of the Record Date. You are
cordially invited to attend the Annual Meeting, but if you do not expect to
attend, or if you plan to attend, but desire the proxy holders to vote your
shares, please date and sign your proxy card and return it in the enclosed
postage paid envelope. The giving of this proxy card will not affect your right
to vote in person in the event you find it convenient to attend. Please return
the proxy card promptly to avoid the expense of additional proxy solicitation.
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FOR
THE BOARD OF DIRECTORS
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Chief
Executive Officer and Chairman of the
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Board
of Directors
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Dated:
September 3, 2008
Kowloon,
Hong Kong
ASIA
TIME CORPORATION
PROXY
STATEMENT
For
Annual Meeting to be Held on
September
27, 2008, 10 a.m., Hong Kong local time
This
proxy statement is delivered to you by Asia Time Corporation (“we,” “us,” the
“Company,” or “Asia Time”), a Delaware corporation, in connection with the
Annual Meeting of Stockholders of the Company to be held on September 27, 2008
at the Tang Room II, 3/F, Sheraton Hong Kong Hotel & Towers located at 20
Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong on September 27, 2008 at 10
a.m.
Hong Kong local time (the “Annual Meeting”). The approximate mailing date for
this proxy statement and the enclosed proxy is September 5, 2008.
The
purpose of the Annual Meeting is to seek stockholder approval of three
proposals: (1) electing five directors to the board of directors;
(2) ratifying the appointment Dominic K.F. Chan & Co. as the Company’s
independent registered public accounting firm for the year ending
December 31, 2008; and (3) approving the Asia Time Corporation 2008 Equity
Incentive Plan.
Annual
Report
Our
annual report to stockholders for the year ended December 31, 2007 will be
concurrently provided to each stockholder at the time we send this proxy
statement and the enclosed proxy and is not to be considered a part of the
proxy-soliciting material.
Quorum;
Voting Rights
Holders
of our common stock of record at the close of business on August 25, 2008 (“the
Record Date”) will be entitled to vote at the Annual Meeting. There were
26,570,677 shares of common stock outstanding as of the Record Date. Each share
of our common stock is entitled to one vote, and the presence, in person or
by
proxy, of holders of a majority of the outstanding shares of our common stock,
is necessary to constitute a quorum for the Annual Meeting. Abstentions and
broker “non-votes” will be treated as present and entitled to vote for purposes
of determining the presence of a quorum. If a quorum is not present at the
Annual Meeting, we expect that the Annual Meeting will be adjourned to solicit
additional proxies. Stockholders may not cumulate their votes.
Voting
Your Proxy
Your
vote
is important. Your shares can be voted at the Annual Meeting only if you are
present in person or represented by proxy. Even if you plan to attend the Annual
Meeting, we urge you to vote in advance. If you choose to vote by mail, simply
mark your proxy card, and then date, sign and return it in the postage-paid
envelope provided.
Stockholders
who hold their shares beneficially in street name through a nominee (such as
a
bank or broker) may be able to vote by telephone, the Internet or mail. You
should follow the instructions you receive from your nominee to vote those
shares. If you are a stockholder who owns shares through a nominee and attends
the Annual Meeting, you should bring a letter from your nominee identifying
you
as the beneficial owner of the shares and acknowledging that you will vote
your
shares.
Counting
of Votes
If
a
proxy in the accompanying form is duly executed and returned, the shares
represented by the proxy will be voted as directed. If no direction is given,
the shares represented by the proxy will be voted for (1) the election of
the nominees for director named herein; (2) the reappointment of Dominic
K.F. Chan & Co. as the Company’s independent registered public accounting
firm for the year ending December 31, 2008; and (3) the approval of the
Asia Time Corporation 2008 Equity Incentive Plan. All properly executed proxies
delivered pursuant to this solicitation and not revoked will be voted at the
Annual Meeting in accordance with the directions given. Representatives of
our
transfer agent will assist us in the tabulation of the votes.
Effect
of Abstentions and Broker Non-Votes
An
abstention is the voluntary act of not voting by a stockholder who is present
at
a meeting and entitled to vote. A broker “non-vote” occurs when a broker nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary power for that particular item
and has not received instructions from the beneficial owner. Under American
Stock Exchange rules, brokers that hold shares of our common stock in “street”
name for customers that are the beneficial owners of those shares may not give
a
proxy to vote those shares on certain matters without specific instructions
from
those customers.
Abstentions
and broker “non-votes” will be treated as present and entitled to vote for
purposes of determining the presence of a quorum. Abstentions will have no
effect on the election of the director nominees, but will be counted as votes
against the ratification of the appointment of Dominic K.F. Chan & Co. and
the approval of the Asia Time Corporation 2008 Equity Incentive Plan. Brokers
that do not receive instructions are entitled to vote on the election of
directors and the ratification of the appointment of our independent registered
public accounting firm; however, brokers that do not receive instructions are
not entitled to vote on the approval of the 2008 Equity Incentive Plan. Any
broker “non-votes” will have no effect on the outcome of the matter (i.e. they
will be neither a vote “for” nor a vote “against” the proposal).
Revoking
Your Proxy
Any
proxy
given may be revoked at any time prior to its exercise by notifying the
Corporate Secretary of the Company in writing of such revocation, by duly
executing and delivering another proxy bearing a later date, or by attending
and
voting in person at the Annual Meeting. The Company’s principal executive office
is located at Room 1601-1604, 16/F., CRE Centre, 889 Cheung Sha Wan Road,
Kowloon, Hong Kong.
Solicitation
of Proxies
The
cost
of this solicitation of proxies will be borne by the Company. In addition,
the
Company will solicit stockholders by mail, and will request banks and brokers,
and other custodians, nominees and fiduciaries, to solicit their customers
who
have stock of Asia Time registered in the names of such persons and will
reimburse them for their reasonable, out-of-pocket costs. The Company may use
the services of its officers, directors, and others to solicit proxies,
personally or by telephone, without additional compensation.
Delivery
of Proxy Materials to Households
“Householding”
is a program, approved by the Securities and Exchange Commission (the “SEC”),
which allows companies and intermediaries (e.g. brokers) to satisfy the delivery
requirements for proxy statements and annual reports by delivering only one
package of stockholder proxy material to any household at which two or more
stockholders reside. If you and other residents at your mailing address own
shares of our common stock in street name, your broker or bank may have notified
you that your household will receive only one copy of our proxy materials.
Once
you have received notice from your broker that they will be “householding”
materials to your address, “householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no longer
wish
to participate in “householding” and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy statement and
wish to receive only one, please notify your broker if your shares are held
in a
brokerage account, or call or write us at the following address or phone number:
Asia Time Corporation, Room 1601-1604, 16/F., CRE Centre, 889 Cheung Sha Wan
Road, Kowloon, Hong Kong, by telephone at (852)-23100101. If you hold shares
of
our common stock in your own name as a holder of record, “householding” will not
apply to your shares.
Interest
of Executive Officers and Directors
None
of
the Company’s executive officers or directors has any interest in any of the
matters to be acted upon at the Annual Meeting, except, to the extent that
the
executive officers and directors are eligible to receive awards under the 2008
Equity Incentive Plan, and with respect to each director, to the extent that
a
director is named as a nominee for election to the board of directors.
ELECTION
OF DIRECTORS
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE DIRECTOR-NOMINEES.
The
Company currently has five authorized members on its board of directors. The
Company’s Bylaws give the board of directors the authority to establish,
increase or decrease the number of directors. The nominees for election at
the
Annual Meeting of Stockholders to the Board of Directors are Kwong Kai Shun,
Michael Mak, Siu Po Lee, Dr. Ching Wah Leung and Wu Hok Lun, all of whom
currently serve on the Board of Directors and advised the Company of their
willingness to serve as a member of the Company’s board of directors if elected.
You can find information about the nominees below under the section “Board of
Directors and Executive Officers.”
If
elected, the nominees will serve as directors until the Company’s Annual Meeting
of Stockholders in 2009 or until their successors are elected and qualified.
If
a nominee declines to serve or becomes unavailable for any reason, the proxies
may be voted for such substitute nominee as the proxy holders may
designate.
Vote
Required
You
may
vote in favor or against any or all of the nominees and you may also withhold
your vote as to any or all of the nominees. The affirmative vote of a plurality
of all of the votes cast at a meeting at which a quorum is present is necessary
for the election of each of the nominees for director. For purposes of the
election of directors, abstentions and broker non-votes will not be counted
as
votes cast and will have no effect on the result of the vote, although they
will
count toward the presence of a quorum.
PROPOSAL
NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY
THE
REAPPOINTMENT OF DOMINIC K.F. CHAN & CO.
The
Audit Committee has recommended the reappointment of Dominic K.F. Chan & Co.
as the Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2008. Dominic K.F. Chan & Co. has served as
the Company’s independent accountant since February 23, 2007. Dominic K.F. Chan
& Co. previously served as the independent registered public accounting firm
of the Company’s wholly-owned subsidiary, Times Manufacture & E-Commerce
Corporation Limited. The stockholders are being requested to ratify the
reappointment of Dominic K.F. Chan & Co. at the Annual Meeting.
Fees
to Independent Registered Public Accounting Firm for Fiscal Years 2007 and
2006
During
the fiscal years ended December 31, 2007 and 2006, we retained Dominic K.F.
Chan & Co., Certified Public Accountants to provide services as follows:
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Fees for the Year Ended December 31,
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Service
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2007
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2006
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Audit
fees (1)
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$
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81,864
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$
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62,695
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Audit-related
fees (2)
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–
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–
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Tax
fees (3)
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–
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–
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All
other fees (4)
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–
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–
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Total
audit and non-audit fees
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$
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81,864
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$
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62,695
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(1)
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These
are fees for professional services performed by Dominic K.F. Chan
&
Co., Certified Public Accountants, for the audit of our annual financial
statements, review of our quarterly reports, and review of our
Registration Statements.
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(2)
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No
fees were billed for each of fiscal year 2007 and fiscal 2006 for
assurance and related services by the principal accountant reasonably
related to the performance of the audit or review of the Company’s
financial statements.
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(3)
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There
were no tax return preparation fees for fiscal 2007 and fiscal 2006
paid
to our principal accountants.
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(4)
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No
fees were billed for each of fiscal 2007 and fiscal 2006 for products
and
services provided by the principal
accountant.
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Pre-Approval
Policy
In
accordance with our Audit Committee Charter, the Audit Committee pre-approves
all auditing services and permitted non-audit services, if any, including tax
services, to be performed for us by our independent auditor, subject to the
de
minimis
exceptions for non-audit services described in Section 10A(i)(1)(B) of the
Securities Exchange Act of 1934, as amended, which are approved by the Audit
Committee prior to the completion of the audit. The scope of the pre-approval
shall include pre-approval of all fees and terms of engagement. The Audit
Committee may form and delegate authority to subcommittees consisting of one
or
more members when appropriate, including the authority to grant pre-approvals
of
audit and permitted non-audit services, provided that decisions of such
subcommittee to grant pre-approvals shall be presented to the full Audit
Committee at its next scheduled meeting.
Vote
Required
The
affirmative vote of a majority of all votes cast or represented by proxy at
the
Annual Meeting is required to ratify the appointment Dominic K.F. Chan & Co.
as Asia Time’s independent registered public accounting firm. For purposes of
the vote on this matter, abstentions will be counted as votes cast against
the
proposal, whereas broker non-votes will not be counted as votes cast and will
have no effect on the result of the vote, although each type of vote will count
toward the presence of a quorum.
PROPOSAL
NO. 3
APPROVAL
OF THE ASIA TIME CORPORATION 2008 EQUITY INCENTIVE PLAN
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE
ASIA
TIME CORPORATION 2008 EQUITY INCENTIVE PLAN.
The
board
of directors of the Company approved of the Asia Time Corporation 2008 Equity
Incentive Plan (the “Incentive Plan”) and recommend that the stockholders of
Asia Time approve and adopt the Incentive Plan. The Incentive Plan will become
effective upon approval by the stockholders. Stockholder approval of the
Incentive Plan is desired, among other reasons, to meet the listing requirements
of the American Stock Exchange.
The
material features of the Incentive Plan are summarized below. The summary is
qualified in its entirety by reference to the specific provisions of the
Incentive Plan, the full text of which is set forth as
Appendix
A
to this
proxy statement.
Purpose
of the Equity Incentive Plan
The
purpose of the Incentive Plan is to provide additional incentive to our
officers, directors, other key employees and significant consultants by
encouraging them to invest in shares of our common stock, and thereby acquire
a
proprietary interest in Asia Time and an increased personal interest in our
continued success and progress. The adoption of such a plan will enable us
to
provide additional compensation to our directors, officers and other employees
to recognize and reward contributions to our success.
Administration
The
Incentive Plan is administered by the Company’s board of directors or any
committee of the board of directors to which the board of directors has
delegated all or a portion of responsibility for the implementation,
interpretation or administration of the Incentive Plan (the “Plan
Administrator”). The Plan Administrator has the authority to:
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(i)
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select
the participants to receive option grants or stock
issuances;
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(ii)
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fix
the number of shares purchasable by each
participant;
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(iii)
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establish
the vesting schedule to be in effect for the option grant or the
issued
shares; and
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(iv)
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determine
whether a granted option is to be an incentive stock option or a
non-statutory option under the U.S. Federal tax
laws.
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Principal
Features of the Equity Incentive Plan
The
Incentive Plan has been structured so as to provide us with maximum flexibility
in designing equity incentives for our executive officers and other employees,
the non-employee members of our Board of Directors and independent consultants
in Asia Time’s service. Our Board of Directors, as Plan Administrator, may make
grants under the Incentive Plan in the form of long-term option grants (through
the option grant program) or through immediate stock issuances of vested or
unvested shares of our common stock (through the stock issuance program). The
Incentive Plan and supporting notice of grant, option agreement and stock
purchase agreement documents are attached hereto as
Appendix
A
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Option
Grant Program
Grants
under the option grant program may be structured as installment options which
become exercisable for vested shares over the optionee's period of service
or as
immediately exercisable options for unvested shares which will be subject to
repurchase by Asia Time, at a price per share equal to the lower of the exercise
price paid per share or the fair market value per share upon the optionee's
termination of service prior to vesting in those shares. Immediately exercisable
options provide the opportunity for an early exercise so that the capital gain
holding period for the purchased shares can start before those shares actually
vest. The exercise price for stock options will be determined by the board
of
directors in its discretion, but may not be less than 100% of the closing sale
price of one share of the Company’s common stock on the American Stock Exchange
(or any other applicable exchange on which the stock is listed) on the date
when
the stock option is granted. Additionally, in the case of incentive stock
options granted to a holder of more than 10% of the total combined voting power
of all classes of stock of the Company on the date of grant, the exercise price
may not be less than 110% of the closing sale price of one share of common
stock
on the date the stock option is granted.
The
Incentive Plan provides a short-form notice of grant designed to incorporate
all
of the variable data applicable to each option grant (including grant date,
exercise price, number of shares and vesting schedule), to be used with a
standard form of option grant agreement, also included in the Incentive Plan
documents. Each option is to have a maximum term of ten (10) years (except
that
the exercise period of incentive stock options granted to a holder of more
than
10% of the total combined voting power of all classes of stock of the Company
on
the date of grant may not exceed five years), subject to earlier termination
in
the event the optionee leaves the Company's service. Accordingly, the optionee
will have up to a thirty (30)-day period following termination of service (for
reasons other than death or disability) in which to exercise the option. This
period will be extended to six (6) months if the optionee's service terminates
by reason of disability, and in the event of the optionee's death, the personal
representative of the optionee's estate (or the person inheriting the option)
will have up to a six (6)-month period following the optionee's death in which
to exercise the option. In no event may the options be exercised after the
scheduled expiration date of the options.
To
exercise the option, the optionee must execute a stock purchase agreement and
pay the exercise price for the purchased shares. Payment is to be made in cash;
however, the Plan Administrator may also permit the optionee to deliver a
full-recourse interest-bearing promissory note for the purchased shares payable
in one or more installments from individuals other than any executive officer
and director of the company, or the exercise price may be paid in shares of
our
common stock, or through the optionee's participation in a same-day sale
program. Under such program, the option shares are sold immediately following
the exercise of the option, and a portion of the sale proceeds is applied to
the
payment of the exercise price and all applicable withholding taxes. The stock
purchase agreement will provide Asia Time with the right to repurchase at a
price per share equal to the fair market value per share any unvested shares
held by the optionee at the time of his or her termination of service with
the
Company or its subsidiaries. The applicable vesting schedule will be set forth
in the Notice of Grant applicable to the particular option grant. In the event
of a change in control of Asia Time, the Plan Administrator, in its sole and
absolute discretion, may take any one or more of the following actions: (i)
provide that all outstanding repurchase rights will terminate, (ii) provide
that
all repurchase rights are assigned to the successor corporation, or (iii)
provide that some or all unvested shares will be repurchased. One or more
repurchase rights outstanding under the Incentive Plan may be structured so
that
those rights will subsequently lapse (and the option shares will immediately
vest) upon an involuntary termination of the optionee's service within eighteen
(18) months following the effective date of a change in control in which the
repurchase rights are assigned to the successor corporation or otherwise
continued in effect.
In
the
event of a change in control of Asia Time, the Plan Administrator, in its sole
and absolute discretion, may also take any one or more of the following actions:
(i) provide for acceleration of vesting of all options, (ii) provide that the
options will be assumed by the successor corporation, (iii) provide for the
termination of all options, or (iv) provide that the options will be replaced
by
a cash incentive program. The Plan Administrator will have the discretion to
structure one or more option grants under the Incentive Plan so that the shares
subject to those options will immediately vest in the event the optionee's
service is involuntarily terminated within up to eighteen (18) months following
a change in control in which Asia Time's repurchase rights are assigned or
continued in effect, and the optionee would then have a one-year period to
exercise the accelerated options for fully-vested shares. It is anticipated
that
this special vesting acceleration provision would be made available only on
a
limited case-by-case basis. A change in control will be deemed to occur in
the
event the Company is acquired by a merger or asset sale or in the event the
stockholders transfer ownership of more than fifty percent (50%) of the
outstanding voting securities.
Stock
Issuance Program
The
stock
issuance program allows eligible persons to purchase shares of common stock
at
fair market value or at a discount of up to fifteen percent (15%) of fair market
value. Additionally, in the case of shares granted to a holder of more than
10%
of the total combined voting power of all classes of stock of the Company on
the
date of grant, the purchase price may not be less than 100% of the closing
sale
price of one share of common stock on the date the stock is granted. The shares
may be fully vested when issued or may vest over time as the recipient provides
services or as specified performance objectives are attained. In addition,
shares of common stock may be issued as bonus awards in recognition of services
rendered to Asia Time, without any cash outlay required of the recipient.
The
Incentive Plan provides a short-form notice of grant designed to incorporate
all
of the variable data applicable to each restricted stock grant (including grant
date, price, number of shares and vesting schedule), to be used with a standard
form of stock issuance agreement, which includes the same repurchase rights
summarized above for the form of stock purchase agreement under the option
grant
program. The Incentive Plan provides for the surrender and cancellation of
unvested shares of common stock upon the participant’s termination of service or
failure to attain performance objectives, unless waived by the Plan
Administrator which results in the immediate vesting of the participant’s
interest in the shares as to which the waiver applies.
Eligibility
and Limitation on Awards
The
Plan
Administrator may grant awards to any employee, director, consultant or other
person providing services to the Company or its affiliates. As of June 30,
2008,
the Company had 41 employees.
The
maximum awards that can be granted under the Incentive Plan to a single
participant in any calendar year will be 2,000,000 shares of common
stock.
Shares
Subject to the Incentive Plan
An
aggregate of 2,500,000 shares of the Company’s common stock are reserved for
issuance and available for awards under the Incentive Plan, including incentive
stock options granted under the Incentive Plan. As of the date hereof, no awards
have been granted under the Incentive Plan.
Tax
Consequences of the Equity Incentive Plan
THE
FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON
THE
PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE INCENTIVE PLAN. THIS SUMMARY
DOES NOT PURPORT TO BE COMPLETE AND DOES NOT ADDRESS THE FEDERAL INCOME TAX
CONSEQUENCES TO TAXPAYERS WITH SPECIAL TAX STATUS. IN ADDITION, THIS SUMMARY
DOES NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE, AND DOES NOT
DISCUSS ESTATE, GIFT OR OTHER TAX CONSEQUENCES OTHER THAN INCOME TAX
CONSEQUENCES. THE COMPANY ADVISES EACH PARTICIPANT TO CONSULT HIS OR HER OWN
TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF PARTICIPATION IN THE INCENTIVE PLAN
AND FOR REFERENCE TO APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE.
The
Incentive Plan provides for the issuance of incentive stock options and
non-statutory options, which may have different tax consequences to the optionee
on the basis of his or her particular tax situation.
Incentive
Stock Options
Incentive
stock options are not subject to tax at the time of grant or at the time of
exercise. However, the excess of the fair market value of the purchased shares
at time of exercise over the exercise price is includible in income for
alternative minimum tax purposes. Upon the sale or other disposition of the
incentive option shares, the optionee will recognize income equal to the excess
of the sale proceeds or other amount realized over the exercise price. The
gain
(or loss) will be long-term, provided the disposition occurs more than two
(2)
years after the grant date and more than one (1) year after the exercise date.
Asia Time will not be entitled to a deduction in connection with the exercise
of
an incentive option unless the acquired shares are sold within two (2) years
after the grant date or within one (1) year after the exercise date.
Non-Statutory
Options
Non-statutory
options are not taxable at the time of grant. Upon exercise, the optionee will
recognize ordinary income with respect to any vested shares purchased under
the
option. Such income will be in an amount equal to the excess of the value of
the
vested shares on the exercise date over the exercise price paid for those
shares. Taxable income will be recognized on the balance of the shares, as
the
optionee vests in those shares, in an amount equal to the spread between the
value of those shares on the vesting date and the exercise price paid for the
shares. The optionee may elect under Section 83(b) of the Internal Revenue
Code
to be taxed at the time the option is exercised for unvested shares subject
to
Asia Time's repurchase right. The election must be filed with the Internal
Revenue Service (“IRS”) within thirty (30) days after exercise. If the election
is made, the optionee will recognize taxable income equal to the excess of
the
fair market value of the unvested shares on the exercise date over the exercise
price paid for such shares. No additional income will be recognized as those
shares subsequently vest. Asia Time will, in general, be entitled to a deduction
at the time or times the optionee recognizes income with respect to the shares
acquired under his or her non-statutory option. The deduction will be equal
to
the amount of income so recognized.
Stock
Grants
An
individual who is issued vested shares of common stock under the stock issuance
program will recognize ordinary income in the year of purchase equal to the
excess of the fair market value of the shares on the purchase date over the
purchase price paid for those shares. Federal and state income and employment
taxes will have to be withheld or collected from such individual at the time
the
shares are issued.
An
individual who is issued unvested shares of common stock will not recognize
any
taxable income at the time the unvested shares are issued but will have to
report as ordinary income, for the taxable year in which his or her interest
in
such shares vests, an amount equal to the excess of the fair market value of
the
shares at the time of vesting over the purchase price paid for such shares.
Such
individual may, however, elect under Section 83(b) of the Internal Revenue
Code
to be taxed in the year of purchase on the excess (if any) of the fair market
value of the unvested shares at the time of purchase over the purchase price
paid for those shares, and such individual will thereby avoid the recognition
of
income as and when the shares subsequently vest. Such election must be filed
with the IRS within thirty (30) days after the purchase of the unvested shares.
Asia Time will be entitled to a deduction in an amount equal to the ordinary
income recognized by the recipient.
Transferability
of Shares
Shares
of
common stock acquired upon exercise of an option or as a stock issuance pursuant
to the Incentive Plan will be deemed to be “restricted securities” as defined in
Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”), until
such time as the shares to be issued pursuant to the Incentive Plan are
registered by us under the Securities Act.
Amendment
and Termination
The
board
of directors may at any time amend or terminate the Incentive Plan, provided
that no such action may be taken that adversely affects any rights or
obligations with respect to any awards theretofore made under the Incentive
Plan
without the consent of the recipient. No awards may be made under the Incentive
Plan after the tenth anniversary of its effective date.
Effective
Date
The
Incentive Plan will become effective upon approval by the stockholders of the
Company. If not approved by the stockholders, the Incentive Plan will not be
adopted.
No
Appraisal Rights
Under
the
Delaware Code, stockholders are not entitled to appraisal rights with respect
to
the adoption of an equity incentive plan, and we will not independently provide
stockholders with any such right.
Stockholder
Vote Required to Adopt Equity Incentive Plan
Approval
of the Incentive Plan will require the affirmative vote of at least a majority
in voting interest of the stockholders present in person or by proxy and voting
at the Annual Meeting, assuming the presence of a quorum. For purposes of the
vote on this matter, abstentions will be counted as votes cast against the
proposal, whereas broker non-votes will not be counted as votes cast and will
have no effect on the result of the vote, although each type of vote will count
toward the presence of a quorum. If the stockholders do not approve the
Incentive Plan, it will not be implemented, but the Company reserves the right
to adopt such other compensation plans and programs as it deems appropriate
and
in the best interests of the Company and its stockholders
BOARD
OF DIRECTORS AND EXECUTIVE OFFICERS
Information
Concerning Director Nominees
Our
executive officers, our current directors, and our director nominees who have
been nominated for election as directors at the Annual Meeting, the positions
held by them and their ages as of the date of this proxy statement are as
follows:
Name
|
|
Age
|
|
Position
|
Kwong
Kai Shun
.
|
|
45
|
|
Chief
Executive Officer and Chairman of the Board and director
nominee
|
King
Wai Lin
|
|
41
|
|
Chief
Financial Officer
|
Michael
Mak
|
|
61
|
|
Corporate
Secretary, Director and director nominee
|
Siu
Po Lee
|
|
39
|
|
Director
and director nominee
|
Dr.
Ching Wah Leung
..
|
|
49
|
|
Director
and director nominee
|
Wu
Hok Lun
|
|
51
|
|
Director
and director nominee
|
Kwong
Kai Shun
has been
the Chairman of the Board and Chief Executive Officer of our company since
2002.
Mr. Kwong also served as the Chief Financial Officer from 2002 to April 2008.
Mr. Kwong was educated in Hong Kong, receiving a Post-Secondary Diploma in
1983.
He started his career with Wah Kwong Hon Trading Ltd. In 1983; when he left
four
years later, he was sales manager for the optical and eyewear company. He held
management positions with Zeiss Optical Co. and Wing Hing Optical Co. Ltd.,
which were eyewear and lenses trading companies, for the next four years. Zeiss
was a public company listed in Germany. In 1991, he founded and served as
Managing Director for Song Lam Industrial Ltd., which was engaged in the watch
movement trading business, where he developed his network of contacts and
connections throughout China and Southeast Asia. He joined Stanford
International Holdings in 1999 and was part of management of BonusAmerica and
resigned in 2005.
King
Wai Lin
has
served as our Chief Financial Officer since April 2008. Mr. Lin is a Certified
Public Accountant in Hong Kong and prior to his appointment as an executive
officer of our company, he served as a sole proprietor of accounting services.
From 2003 to 2006, Mr. Lin served as a Senior Manager of Hong Kong Great Wall
Certified Public Accountant Limited, where he was responsible for tax compliance
and planning, insurance company audits, U.S. initial public offerings (“IPOs”)
and due diligence for mergers and acquisitions in China. Prior to that, he
served as a Manager at Moores Rowland form 2001 to 2003 where he was in charge
of audit advisory for companies listed on the Hong Kong stock exchange,
including Hong Kong IPOs. Mr. Lin also served in senior financial roles at
Deloitte Touche Tohmatsu from 1997 to 2001, and private accounting firms Kwan
Wong Tan & Fong CPA from 1992 to 1997 and Li Tan Chen CPA from 1989 to 1992.
Mr. Lin received a Certificate of Accountancy in 1991 from the Kwai Chung
Vocational Institute. Mr. Lin is a practicing member of the Hong Kong Institute
of Certified Public Accountants, a member of the Chartered Association of
Certified Accountants and a member of the Hong Kong Taxation
Association.
Michael
Mak
has been
Director of our company since 2005 and has served as corporate secretary since
2007. Mr. Mak currently serves as President, CEO and a Director of Asia Global
Holdings Corp. (formerly BonusAmerica Worldwide Corp.) (OTCBB: AAGH), an
E-Commerce and direct marketing firm providing online shopping. An independent
entrepreneur, Mr. Mak founded Stanford International Holding Corporation in
1999
and Asia Global Holdings in 2002. He ran eCommerce, a direct marketing firm,
from 1999 to present. Mr. Mak started his business career after high school
at
Berlin & Company (Hong Kong), a financial company, in 1963 as a foreign
exchange dealer. He was promoted to Manager five years later, and made Associate
Partner in 1972. He managed the organization until 1985 when he immigrated
to
the USA. He subsequently founded and managed the following corporations: Triwell
International Corporation, 1985 to 2005, an importer and wholesaler of general
merchandise; Unitex Trading Corporation, 1987 to present, a designer and
manufacturer of brand-name leather goods and watches, wholesaling to department
stores and specialties stores throughout North America; and Dingbats Inc.,
1995
to present, a designer and importer of timepieces and licensed watches to
discount stores.
Dr.
Ching Wah Leung (Tony)
has
served as a director of our company since January 2008. Since May 2006, Mr.
Leung has been the General Manager of Techtronics Industries Ltd. From 2002
to
2006, Dr. Leung was an Adjunct Professor at the Graduate School of Engineering
at the University of Bridgeport in Connecticut. Additionally, from June 2000
to
April 2006, Dr. Leung was the Program Manager for Johnson Electric (USA) Corp.
(OTCBB:JELCY), a provider of motion subsystems and motion components for
automotive and industrial applications. From 1999 to 2000, Dr. Leung served
as
the Senior Factory Manager for Johnson Electric (China) Ltd. Dr. Leung received
a Ph.D. in Manufacturing Strategy from the University of Wales, Swansea in
the
United Kingdom in 1997 and an MBA from the University of Macau in 1986.
Additionally, Dr. Leung has a diploma in Electronics Engineering form the Hong
Kong Polytechnic University and a diploma in Computer Programming and Internet
Application from the Institute for Computer Studies in Canada.
Siu
Po Lee (Simon)
has
served as a director of our company since January 2008. Since September 2006,
Mr. Lee has served as a lecturer in the Department of Accountancy and Law at
Hong Kong Baptist University, serving as the Assistant Director of the Centre
for Corporate Governance and Financial Policy since June 2007. From September
1999 to August 2006, Mr. Lee served as an instructor at the School of
Accountancy at the Chinese University of Hong Kong. Since January 2007, Mr.
Lee
has served as a director of Infosmart Group, Inc. (OTCBB: IFSG), a developer
of
recordable digital versatile disc media. Mr. Lee received an M.S. in Computer
Science from the Open University of Hong Kong in 2002, an MBA from the Chinese
University of Hong Kong in 1992, and a B.S. in Physics from the Chinese
University of Hong Kong in 1990.
Wu
Hok Lun (Benson)
has
served as a director of our company since January 2008. Since May 2005, Mr.
Wu
has served as a director of Woo Ping Investments, Ltd. (HK), a real estate
management firm. Since July 2004, Mr. Wu has also served as a director of Hainan
New Meyer Industry Ltd., China, a manufacturer of motor vehicle lubricants.
Additionally, Mr. Wu has been a director of Hong Kong Kentford Ltd., HK, a
company involved in the trading of motor lubricant, since March 2003; a director
of Meyer Technology International Ltd., HK, since July 1997; a director of
Meyer
International Ltd., HK, a pharmaceutical exporter since February 1995; a
director of Nidoway Investment Ltd., HK, a pharmaceutical wholesaler and
exporter since August 1992; and a director of Meyer Pharmaceuticals Ltd., HK,
a
pharmaceutical manufacturer since January 1990. Mr. Wu received a B.S. in 1982
from the School of Pharmacy at Brighton Polytechnic in the United Kingdom (now
known as the University of Brighton). Mr. Wu is a registered Pharmacist in
Hong
Kong and the United Kingdom.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Code
of Business Conduct and Ethics
Our
board
of directors has adopted a code of ethics, which applies to all our directors,
officers and employees. Our code of ethics is intended to comply with the
requirements of Item 406 of Regulation S-K. Our code of ethics is posted on
our
Internet website at
www.asiatimecorp.com
.
We will
provide our code of ethics in print without charge to any stockholder who makes
a written request to: Corporate Secretary, Asia Time Corporation, Room
1601-1604, 16/F., CRE Centre, 889 Cheung Sha Wan Road, Kowloon, Hong Kong.
Any
waivers of the application and any amendments to our code of ethics must be
made
by our board of directors. Any waivers of, and any amendments to, our code
of
ethics will be disclosed promptly on our Internet website.
Director
Independence
Subject
to certain exceptions, under the listing standards of the American Stock
Exchange (“AMEX”), a listed company’s board of directors must consist of a
majority of independent directors. Although we are eligible for an exemption
from this requirement because we are considered a “controlled company” pursuant
to Section 801(a) of the AMEX Company Guide as one of our shareholders owns
more
than 50% of our voting power, we have a majority of independent directors.
Our
Board of Directors has determined that three of the five members of our Board
of
Directors are independent under the listing standards of AMEX, as follows:
Siu
Po Lee, Dr. Ching Wah Leung, and Wu Hok Lun.
Family
Relationships
There
are
no family relationships among any of our executive officers or directors.
Legal
Proceedings
None
of
the nominees nor any director or executive officer has been involved in the
certain legal proceedings listed in Item 401 of Regulation S-K.
Attendance
of Directors at Board Meetings and Annual Meeting of Stockholders
During
the year ended December 31, 2007, the board of directors met four times.
Each current director who was on the board during 2007 attended at least 75%
of
the aggregate number of meetings held by the board of directors.
The
Company does not have a policy requiring its directors to attend the Annual
Meeting of Stockholders.
Board
Committees
Audit
Committee
We
established our audit committee in January 2008. The audit committee consists
of
Siu Po Lee, Dr. Ching Wah Leung, and Wu Hok Lun, each of whom is an independent
director. Siu Po Lee serves as the Chairman of the audit committee and is an
“audit committee financial expert” as defined under Item 407(d) of Regulation
S-K. The purpose of the audit committee is to represent and assist our board
of
directors in its general oversight of our accounting and financial reporting
processes, audits of the financial statements and internal control and audit
functions. The audit committee’s responsibilities include:
|
·
|
The
appointment, replacement, compensation, and oversight of work of
the
independent auditor, including resolution of disagreements between
management and the independent auditor regarding financial reporting,
for
the purpose of preparing or issuing an audit report or performing
other
audit, review or attest services.
|
|
·
|
Reviewing
and discussing with management and the independent auditor various
topics
and events that may have significant financial impact on our company
or
that are the subject of discussions between management and the independent
auditors.
|
The
audit
committee charter is posted in the corporate governance section of the Company’s
Web site located at
www.asiatimecorp.com
.
Our
Board
of Directors does not maintain a separate nominating or compensation committee.
Functions and duties customarily performed by such committees are performed
by a
majority of our independent directors in compliance with the requirements for
listing on AMEX. Such responsibilities include:
|
·
|
The
design, review, recommendation and approval of compensation arrangements
for our directors, executive officers and key employees, and for
the
administration of any equity incentive plans, including the approval
of
grants under any such plans to our employees, consultants and
directors.
|
|
·
|
The
review and determination of compensation of our executive officers,
including our Chief Executive
Officer.
|
|
·
|
The
selection of director nominees, the approval of director nominations
to be
presented for shareholder approval at our annual general meeting
and
filling of any vacancies on our board of directors, the consideration
of
any nominations of director candidates validly made by shareholders,
and
the review and consideration of developments in corporate governance
practices.
|
The
Director Nomination Process
Our
Board
of Directors considers nominees from all sources, including stockholders.
Stockholder nominees are evaluated by the same criteria used to evaluate
potential nominees from other sources. Minimally, nominees should have a
reputation for integrity, honesty and adherence to high ethical standards.
They
should have demonstrated business experience and the ability to exercise sound
judgment in matters related to the current and long-term objectives of the
Company, and should be willing and able to contribute positively to the
decision-making process of the Company. In addition, they should not have,
nor
appear to have, a conflict of interest that would impair the nominee’s ability
to represent the interests of the Company or to fulfill the responsibilities
of
a director. The value of diversity on the board should be considered and the
particular or unique needs of the Company shall be taken into account at the
time a nominee is being considered. Additionally, the Board of Directors
considers the respective qualifications needed for directors serving on various
committees of the board, and serving as chairs of such committees, should be
taken into consideration. In recruiting and evaluating nominees, the Board
of
Directors considers the appropriate mix of skills and experience and background
needed for members of the board and for members of each of the board’s
committees, so that the board and its committees have the necessary resources
to
perform their respective functions effectively. The Board of Directors also
believes that a prospective nominee should be willing to limit the number of
other corporate boards on which he or she serves so that the proposed director
is able to devote adequate time to his or her duties to the Company, including
preparing for and attending board and committee meetings. In addition, the
re-nomination of existing directors is not viewed as automatic, but based on
continuing qualification under the criteria set forth above. In addition, the
Board of Directors will consider the existing director’s performance on the
board and on any committee on which such director serves, which will include
attendance at board and committee meetings.
Director
Nominees by Stockholders
.
The
Board of Directors will consider nominees recommended in good faith by our
stockholders as long as these nominees for the appointment to the board of
directors meet the requirements set forth above. Possible candidates who have
been suggested by stockholders are evaluated by the Board of Directors in the
same manner as are other possible candidates.
Compensation
Committee Interlocks and Insider Participation
We
do not
maintain a separate compensation committee. The independent members of the
Board
of Directors include the following three Board members: Siu Po Lee, Dr. Ching
Wah Leung, and Wu Hok Lun. None of the independent directors is a former or
current officer or employee of Asia Time or had any relationship requiring
disclosure under Item 404 of Regulation S-K promulgated under the Securities
Exchange Act of 1934, as amended. No interlocking relationship exists between
our board of directors and the board of directors or compensation committee
of
any other company.
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
We
do not
maintain a separate compensation committee. The functions and duties customarily
performed by such a committee are performed by a majority of our independent
directors, which include Siu Po Lee, Dr. Ching Wah Leung, and Wu Hok
Lun.
General
Prior
to
the Share Exchange on January 23, 2007, we were a “blank check” shell company
that was formed to investigate and acquire a target company or business seeking
the perceived advantages of being a publicly held corporation. The officers
and
directors of our company prior to the Share Exchange are no longer employed
by
or affiliated with our company. Richard Rappaport and Anthony Pintsopolous,
our
President and Chief Financial Officer, respectively, during 2006 prior to Share
Exchange, received no compensation or other perquisites for serving in such
capacity.
Our
Chief
Executive Officer and Chairman of the Board, Kwong Kai Shun, determined the
compensation for our current executive officers that was earned and paid in
fiscal 2007, during which Mr. Kwong was our only executive officer. On January
1, 2007, Kwong Kai Shun began receiving compensation under a plan pursuant
to
which he received a monthly base salary of $20,000 and actual housing and
insurance expenses, which we expected to be approximately $3,000 and $1,000
per
month, respectively. For the year ended December 31, 2007, Mr. Kwong earned
$240,000 in base salary and $12,691 for housing expenses. Mr. Kwong also
received an annual bonus equivalent to three months salary, equal to $60,000.
The annual bonus was subject to a minimum company achievement of $2,000,000
annual profit before tax. The bonus for 2007 was paid after the 2007 fiscal
year
performance was determined and evaluated. The bonus of Kwong Kai Shun is solely
(100%) based on the achievement of annual profit before tax as we believe this
performance indicator is best to reflect his overall responsibility and
contribution to the company for the relevant period. In addition, we intend
to
adopt an equity incentive plan in 2008, subject to shareholder approval, after
which we intend to grant 200,000 stock options to Mr. Kwong. The specific terms
of the options will be determined by the independent members of the Board of
Directors of our company.
In
addition, we recorded a charge of $2,433,650 in 2007 for a performance-based
compensatory stock arrangement with Mr. Kwong. In connection with our January
2007 Private Placement, Mr. Kwong entered into an agreement (the “Escrow
Agreement”) with the investors pursuant to which he agreed to place 2,326,000
shares of his common stock in escrow for possible distribution to the investors
(the “Escrow Shares”). Pursuant to the Escrow Agreement, if our net income for
2006 or 2007, subject to specified adjustments, as set forth in our filings
with
the SEC was less than $6.3 million or $7.7 million, respectively, a portion,
if
not all, of the Escrow Shares were to be transferred to the investors based
upon
our actual net income, if any, for such fiscal years. We have accounted for
the
Escrow Shares as the equivalent of a performance-based compensatory stock plan
between Mr. Kwong and us. Accordingly, during the year ended December 31, 2007,
we recorded $2,433,650 as a charge to operations to recognize the grant date
fair value of stock-based compensation in conjunction with the Escrow
Agreement.
In
comparison to 2007, Mr. Kwong was paid a salary of $61,538 and automobile,
housing and medical personal benefits allowance in the amount of $12,312 for
the
year ended December 31, 2006. Mr. Kwong did not receive a cash bonus in 2006.
The increase in compensation during 2007 as compared to 2006 was primarily
due
to the increased level of responsibilities that were assumed by the executive
in
becoming a publicly-listed company. The compensation for Mr. Kwong was set
and
approved by the Board of Directors.
Compensation
for our executive officers is determined with the goal of attracting and
retaining high quality executive officers and encouraging them to work as
effectively as possible on our behalf. Key areas of corporate performance taken
into account in setting compensation policies and decisions are growth of sales,
cost control, profitability, and innovation. The key factors may vary depending
on which area of business a particular executive officer’s work is focused on.
Compensation is designed to reward executive officers for successfully meeting
their individual functional objectives and for their contributions to our
overall development. For these reasons, the elements of compensation of our
executive officers are salary, housing and bonus. The salary and housing
components of compensation are paid and rewarded to cover an appropriate level
of living expenses for the executive officers and the bonus is paid to reward
the executive officer for individual and company achievement. With respect
to
the amount of a bonus, we determine company achievement based on performance
factors and results of operations such as revenues generated, cost of revenues,
net income, and whether we obtain significant contracts. We determine
achievement level of an executive based on performance factors such as
contribution to the achievement of the company.
The
level
and components of the compensation packages for our executive officers are
primarily determined based upon previous compensation, comparisons with the
compensation packages of certain public companies in the United States and
Hong
Kong. We review and evaluate the compensation packages of specialty timepiece
manufacturers, distributors and retailers, in addition to other Chinese
specialty companies engaged in the manufacture and distribution of consumer
products.
As
a
result of these criteria, we have reviewed the following companies:
|
·
|
Hong
Kong/Chinese timepiece and jewelry companies
: National
Electronics Holdings Ltd. (SEHK:213), Hang Fung Gold Technology Limited
(SSEHK:870), and Peace Mark Holdings Ltd. (SEHK:304), LJ International,
Inc. (NasdaqNM: JADE), and Man Sang Holdings, Inc. (Amex:
MHJ).
|
|
·
|
Hong
Kong/Chinese companies listed in the United States
: China
Architectural Engineering, Inc. (AMEX: RCH), Wonder Auto Technology,
Inc.
(NasdaqNM:WATG — manufacturer of automotive electrical parts in
China), SORL Auto Parts, Inc. (NasdaqNM:SORL — manufacturer and
distributor of commercial vehicle air brake valves and related components
in China and internationally), and Orsus Xelent Technologies, Inc.
(Amex:ORS — designer for retail and wholesale distribution of
cellular phones).
|
Our
Board
of Directors focuses its evaluation and analysis on companies of similar market
size and stage of growth, while taking into account our relative performance
and
our own strategic goals. We believe that the companies that we evaluate are
comparable to us and provided valuable guidance to us in setting the appropriate
levels and form of compensation for our executive officers.
We
believe that the salary paid to our executive officer during 2007, 2006, and
2005 are indicative of the objectives of our compensation program and reflect
the fair value of the services provided to our company. We set an executive’s
base salary with the objective of attracting and retaining highly qualified
individuals for the relevant position and rewarding individual performance.
When
setting and adjusting individual executive salary levels, we consider the
relevant established salary range, the named executive officer’s
responsibilities, experience, potential, individual performance and
contribution. We also consider other factors such as our overall corporate
budget for annual merit increases, unique skills, demand in the labor market
and
succession planning.
Currently,
we have no specific plans to provide raises after becoming a company with
securities publicly traded in the United States. Although no specific plans
have
yet been discussed, we may adopt such a plan to provide raises to our executive
officers in the future. Adopting higher compensation in the future may be based
on the increased amount of responsibilities to be assumed by each of the
executive officers after we become a publicly listed company. We may also expand
the scope of our compensation, such as the possibility of granting options
to
executive officers and tying compensation to predetermined performance
goals.
Our
board
of directors does not currently have a compensation committee. We anticipate
that our board of directors will establish a compensation committee in fiscal
2008 that will be comprised of non-employee members of our board of directors.
Our current expectation is that the compensation committee of our board of
directors will perform, at least annually, a strategic review of the
compensation program for our executive officers to determine whether it provides
adequate incentives and motivation to our executive officers and whether it
adequately compensates our executive officers relative to comparable officers
in
other companies with which we compete for executives. Those companies may or
may
not be public companies or companies located in Hong Kong or China or even,
in
all cases, companies in a similar business. The companies that we review may
include the comparable companies listed above, in addition other companies
of a
size, scope and magnitude similar to us at the time we conduct our annual
review, which may include companies not currently listed or reporting. We
believe that the companies that we evaluate are comparable to us and can provide
valuable guidance to us in determining whether the levels and forms of
compensation for our executive officers are adequate. For 2008, until such
time
as a formal compensation program and committee is established, the independent
members of our board of directors will determine the bonus levels for 2008
after
the completion of the fiscal year. After the compensation committee is formed,
it will make such determinations.
Summary
Compensation Table
The
following table sets forth information concerning the compensation for the
three
fiscal years ended December 31, 2007, 2006, and 2005 of the principal executive
officer, principal financial officer, in addition to our three most highly
compensated officers whose annual compensation exceeded $100,000, and up to
two
additional individuals for whom disclosure would have been required but for
the
fact that the individual was not serving as an executive officer of the
registrant at the end of the last fiscal year.
Name and Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Option
Awards
($)
|
|
Stock
Awards
($)
|
|
All Other
Compensation
($) (1)
|
|
Total
($)
|
|
Kwong
Kai Shun (5)
|
|
|
2007
|
|
$
|
240,000
|
|
$
|
60,000
|
(2)
|
|
-
|
|
$
|
2,433,650
|
(3)
|
$
|
12,691
|
|
$
|
2,746,341
|
|
Chief
Executive Officer and Chairman of the Board
|
|
|
2006
|
|
$
|
61,538
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
12,312
|
|
$
|
73,850
|
|
|
|
|
2005
|
|
$
|
62,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
$
|
13,500
|
|
$
|
75,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Rappaport (4)
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Former
Chief Executive
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Officer
and Former Director
|
|
|
2005
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Pintsopoulos
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Former
Chief Financial
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Officer
and Former Director
|
|
|
2005
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
(1)
|
This
relates to automobile, housing and medical personal
benefits.
|
(2)
|
Mr.
Kwong received an annual bonus equivalent to three months salary,
equal to
$60,000, after we obtained a minimum company achievement of
$2,000,000 annual profit before tax for the year ended December 31,
2007.
|
(3)
|
In
connection with our January 2007 Private Placement, Mr. Kwong entered
into
an agreement (the “Escrow Agreement”) with the investors pursuant to which
he agreed to place 2,326,000 shares of his common stock in escrow
for
possible distribution to the investors (the “Escrow Shares”). Pursuant to
the Escrow Agreement, if our net income for 2006 or 2007, subject
to
specified adjustments, as set forth in our filings with the SEC is
less
than $6.3 million or $7.7 million, respectively, a portion, if not
all, of
the Escrow Shares will be transferred to the investors based upon
our
actual net income, if any, for such fiscal years. We have accounted
for
the Escrow Shares as the equivalent of a performance-based compensatory
stock plan between Mr. Kwong and us. Accordingly, during the year
ended
December 31, 2007, we recorded $2,433,650 as a charge to operations
to
recognize the grant date fair value of stock-based compensation in
conjunction with the Escrow
Agreement.
|
(4)
|
Messrs.
Rappaport and Pintsopoulos resigned from all positions with the Company
upon the close of the Share Exchange on January 23,
2007.
|
(5)
|
Mr.
Kwong resigned as our Chief Financial Officer in April
2008.
|
Grants
of Plan-Based Awards in 2007
There
were no option grants in 2007.
Outstanding
Equity Awards at 2007 Fiscal Year-End
There
were no option exercises or options outstanding in 2007.
Option
Exercises and Stock Vested in Fiscal 2007
There
were no option exercises or stock vested in 2007.
Employment
Agreements
On
April
21, 2008, we entered into an employment agreement with King Wai Lin (the
“Employment Agreement”) in connection with Mr. Lin’s employment as our Chief
Financial Officer. The Employment Agreement is effective as of April 21, 2008
and continues in effect until terminated by us or Mr. Lin as provided in the
Employment Agreement. Mr. Lin will receive a monthly base salary of HK$80,000,
or approximately USD $10,264. Further, after a two-month probation period,
Mr.
Lin will be eligible for a discretionary annual bonus and to receive paid
vacation and other benefits made available to our other employees, such as
paid
holidays and paid sick leave. During the two-month probation period, we may
terminated the Employment Agreement with not less than one month’s written
notice or payment of one months’ base salary in lieu thereof or by Mr. Lin with
not less than one month’s written notice. After the probation period, we may
terminate the Employment Agreement with not less than four month’s written
notice or payment of four months’ base salary in lieu thereof or by Mr. Lin with
not less than four month’s written notice. Upon termination of the Employment
Agreement, Mr. Lin may not work for any of our suppliers or clients for a period
of 12 months after his termination.
In
addition, Mr. Lin executed a Confidentiality Employment Agreement effective
as
of April 21, 2008. Pursuant to the Confidentiality Employment Agreement, Mr.
Lin
may not, without prior approval, engage in the conduct of any business or have
any financial interest in any other business which (i) competes or may compete
with our business; (ii) could jeopardize our reputation; or (iii) interfere
with
Mr. Lin’s performance of his duties to us. Additionally, Mr. Lin may not, for a
period of twelve months after the termination of his employment with us, engage
in or be interested in, any business which is in direct competition with our
business, subject to certain exceptions. Additionally, Mr. Lin may not for
a
period 12 months after the termination of his employment with us, within Hong
Kong, or in any other country where we have transacted business, solicit or
entice away our employees, customers or clients or employ or use the services
of
any of our employees or consultants
.
Director
Compensation
For
the
year ended December 31, 2007, our directors received compensation for his or
her
service as a director, as set forth in the table below.
2007
DIRECTOR COMPENSATION
Name (2)
|
|
Fees Earned or
Paid in Cash ($)
|
|
Option
Awards
|
|
All Other
Compensation ($)
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
Kwong
Kai Shun
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Michael
Mak
|
|
$
|
210,000
|
(1)
|
|
-
|
|
|
-
|
|
$
|
210,000
|
|
(1)
|
On
January 1, 2007, Michael Mak began receiving compensation under
a plan
pursuant to which he receives monthly compensation with respect
to salary,
housing and insurance in the amounts of $15,000, $3,000 and $1,000,
respectively. Mr. Mak did not claim any housing or insurance allowance
for
2007. Mr. Mak will also receive an annual bonus equivalent to two
months
salary subject to a minimum company achievement of $2,000,000 annual
profit before tax, which is the same company performance standard
to which
our CEO’s annual bonus is subject. The bonus for 2007 would be paid, if
at
all, only after the 2007 fiscal year performance has been evaluated,
which
we expect to occur on or around on March 31, 2008. Based on preliminary
results of operations for 2007, Mr. Mak will achieve this bonus
payment
for 2007. The compensation for Mr. Mak was set and approved by
the Board
of Directors.
|
(2)
|
Siu
Po Lee, Dr. Ching Wah Leung, and Wu Hok Lun were appointed to the
Board of
Directors in January 2008. The directors will be paid $10,000 annually
for
their services as a member of the Board of
Directors
|
We
have a
policy to pay our non-employee directors $10,000 per year as cash consideration
for serving on the Board of Directors. We further agree to reimburse all
reasonable travel and other expenses incurred for attendance at a board or
committee meeting, and we agree to pay the fees and documented reimbursements
within a reasonable time and in accordance with our current payment practices.
Directors will also eligible to participate in our 2008 Equity Incentive Plan.
To date, we have not granted any options to Directors, but may do so in the
future.
Indemnification
of Directors and Executive Officers and Limitations of Liability
Under
Section 145 of the General Corporation Law of the State of Delaware, we can
indemnify our directors and officers against liabilities they may incur in
such
capacities, including liabilities under the Securities Act of 1933, as amended
(the “Securities Act”). Our certificate of incorporation provides that, pursuant
to Delaware law, our directors shall not be liable for monetary damages for
breach of the directors’ fiduciary duty of care to our company and our
stockholders. This provision in the certificate of incorporation does not
eliminate the duty of care, and in appropriate circumstances equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available
under Delaware law. In addition, each director will continue to be subject
to
liability for breach of the director’s duty of loyalty to us or our
stockholders, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of the law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval
of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director’s responsibilities under any other
law, such as the federal securities laws or state or federal environmental
laws.
Our
bylaws provide for the indemnification of our directors to the fullest extent
permitted by the Delaware General Corporation Law. Our bylaws further provide
that our Board of Directors has discretion to indemnify our officers and other
employees. We are required to advance, prior to the final disposition of any
proceeding, promptly on request, all expenses incurred by any director or
executive officer in connection with that proceeding on receipt of an
undertaking by or on behalf of that director or executive officer to repay
those
amounts if it should be determined ultimately that he or she is not entitled
to
be indemnified under the bylaws or otherwise. We are not, however, required
to
advance any expenses in connection with any proceeding if a determination is
reasonably and promptly made by our Board of Directors by a majority vote of
a
quorum of disinterested Board members that (i) the party seeking an advance
acted in bad faith or deliberately breached his or her duty to us or our
stockholders and (ii) as a result of such actions by the party seeking an
advance, it is more likely than not that it will ultimately be determined that
such party is not entitled to indemnification pursuant to the applicable
sections of our bylaws.
We
have
been advised that in the opinion of the Securities and Exchange Commission,
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, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In
the
event a claim for indemnification against such liabilities (other than the
our
payment of expenses incurred or paid by our director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel
the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us
is
against public policy as expressed in the Securities Act and will be governed
by
the final adjudication of such issue.
We
may
enter into indemnification agreements with each of our directors and officers
that are, in some cases, broader than the specific indemnification provisions
permitted by Delaware law, and that may provide additional procedural
protection. We have not entered into any indemnification agreements with our
directors or officers, but may choose to do so in the future. Such
indemnification agreements may require us, among other things, to:
|
·
|
indemnify
officers and directors against certain liabilities that may arise
because
of their status as officers or
directors;
|
|
·
|
advance
expenses, as incurred, to officers and directors in connection with
a
legal proceeding, subject to limited exceptions;
or
|
|
·
|
obtain
directors’ and officers’ insurance.
|
At
present, there is no pending litigation or proceeding involving any of our
directors, officers or employees in which indemnification is sought, nor are
we
aware of any threatened litigation that may result in claims for
indemnification.
REPORT
OF INDEPENDENT DIRECTORS ON COMPENSATION
The
independent members of the Board of Directors, as set forth below, have reviewed
and discussed with management the Compensation Discussion and Analysis, or
CD&A, contained in this Proxy Statement on Schedule 14A required by Item
402(b) of Regulation S−K. Based on this review and discussion, the independent
members of the Board of Directors have recommended to the Board of Directors
that the CD&A be included in the Company’s Annual Report on Form 10-K and
this Proxy Statement on Schedule 14A.
Respectfully
submitted,
Siu
Po
Lee
Dr.
Ching
Wah Leung
Wu
Hok
Lun.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the securities. In computing the
number of shares beneficially owned by a person and the percentage of ownership
of that person, shares of common stock subject to options and warrants held
by
that person that are currently exercisable or become exercisable within 60
days
of the Record Date are deemed outstanding even if they have not actually been
exercised. Those shares, however, are not deemed outstanding for the purpose
of
computing the percentage ownership of any other person.
The
following table sets forth certain information with respect to beneficial
ownership of the Company’s common stock as of the Record Date, based on
26,570,677
issued
and outstanding shares of common stock and no options to purchase shares of
common stock. We also have outstanding variable rate convertible Bonds that
are
convertible into 2,285,714 shares of our common stock issuable upon the
conversion of the Bonds, subject to adjustment, based on an initial conversion
price equal to $3.50 per share, the price at which shares were sold in our
initial public offering on AMEX, and 600,000 shares of our common stock issuable
upon the exercise of outstanding Bond Warrants, subject to adjustment, by:
|
·
|
Each
person known to be the beneficial owner of 5% or more of the Company’s
outstanding common stock;
|
|
·
|
Each
executive officer;
|
|
·
|
All
of the executive officers and directors as a
group.
|
Unless
otherwise indicated, the persons and entities named in the table have sole
voting and sole investment power with respect to the shares set forth opposite
the stockholder’s name, subject to community property laws, where applicable.
Unless otherwise indicated, the address of each stockholder listed in the table
is c/o Asia Time Corporation, Room 1601-1604, 16/F., CRE Centre, 889 Cheung
Sha
Wan Road, Kowloon, Hong Kong.
|
|
|
|
Common Shares
Beneficially Owned
|
|
Name of Beneficial Owner
|
|
Title
|
|
Number of
Shares
|
|
Percentage
of Shares
|
|
Officers
and Directors
|
|
|
|
|
|
|
|
Kwong
Kai Shun
|
|
|
Chief
Executive Officer and Chairman of the Board
|
|
|
19,454,420
|
|
|
73.2
|
%
|
King
Wai Lin
|
|
|
Chief
Financial Officer
|
|
|
–
|
|
|
–
|
|
Michael
Mak
|
|
|
Director
and Corporate Secretary
|
|
|
–
|
|
|
–
|
|
Siu
Po Lee
|
|
|
Director
|
|
|
–
|
|
|
–
|
|
Dr.
Ching Wah Leung
|
|
|
Director
|
|
|
–
|
|
|
–
|
|
Wu
Hok Lun
|
|
|
Director
|
|
|
-
|
|
|
-
|
|
Officers
and Directors as a group (total of 6 persons)
|
|
|
|
|
|
19,454,420
|
|
|
73.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
5%
stockholders
:
|
|
|
|
|
|
|
|
|
|
|
Kam
Yuen
Suite
2911 Shell Tower
Times
Square 1
Matheson
Street
Causeway
Bay, Hong Kong
|
|
|
|
|
|
1,550,388
|
(1)
|
|
5.8
|
%
|
Debbie
Schwartzberg
1900
Avenue of the Stars
Suite
301
Los
Angeles, CA 90067
|
|
|
|
|
|
1,332,795
|
|
|
5.0
|
%
|
Richard
Rappaport
1900
Avenue of the Stars
Suite
301
Los
Angeles, CA 90067
|
|
|
|
|
|
1,332,795
|
|
|
5.0
|
%
|
(1)
|
Represents
775,194 shares of common stock held by Success Day International
Limited
and 775,194 shares of common stock held by Sino Sky Enterprise Limited.
Mr. Kam Yuen may be deemed to be the beneficial owner of the shares
as the
majority shareholder of each of Success Day International Limited
and Sino
Sky Enterprise Limited. Mr. Kam Yuen disclaims beneficial ownership
of the
shares except to the extent of his pecuniary
interest.
|
COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section
16(a) of the Exchange Act requires our directors and executive officers to
file
reports of holdings and transactions in our stock with the SEC. Based on a
review of written representations from our executive officers and directors,
we
believe that during the fiscal year ended December 31, 2007, our directors,
officers and owners of more than 10% of our common stock complied with all
applicable filing requirements.
REPORT
OF THE AUDIT COMMITTEE
The
Audit
Committee consists of three non-employee directors who are independent under
the
standards adopted by the board of directors and applicable American Stock
Exchange Rules and SEC standards. The Audit Committee represents and assists
the
board of directors in fulfilling its responsibility for oversight and evaluation
of the quality and integrity of Asia Time’s financial statements, Asia Time’s
compliance with legal and regulatory requirements, the qualifications and
independence of Asia Time’s registered public accounting firm, Dominic K.F. Chan
& Co., and the performance of Asia Time’s internal controls and of Dominic
K.F. Chan & Co.
The
Audit
Committee has reviewed and discussed with Asia Time’s management, internal
finance staff, internal auditors and Dominic K.F. Chan & Co., with and
without management present, Asia Time’s audited financial statements for the
fiscal year ended December 31, 2007 and management’s assessment of the
effectiveness of Asia Time’s internal controls over financial reporting. The
Audit Committee has also discussed with Dominic K.F. Chan & Co. the results
of the independent auditors’ examinations and the judgments of Dominic K.F. Chan
& Co. concerning the quality, as well as the acceptability, of Asia Time’s
accounting principles and such other matters that Asia Time is required to
discuss with the independent auditors under applicable rules, regulations or
generally accepted auditing standards (including Statement on Auditing Standards
No. 61). In addition, the Audit Committee has received from Dominic K.F.
Chan & Co. the written disclosures required by Independence Standards Board
Standard No. 1, as amended, and has discussed with Dominic K.F. Chan &
Co. their independence from Asia Time and management, including a consideration
of the compatibility of non-audit services with their independence, the scope
of
the audit and the fees paid to Dominic K.F. Chan & Co. during the year.
Based
on
our review and the discussions referred to above, the Audit Committee
recommended to the board of directors that the audited financial statements
be
included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2007 for filing with the SEC.
Respectfully
submitted,
Siu
Po
Lee
Dr.
Ching
Wah Leung
Wu
Hok
Lun
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Times
Manufacture & E-Commerce Corporation Limited
Times
Manufacture & E-Commerce Corporation Limited (“Times Manufacture”) is our
wholly-owned subsidiary, which has interlocking executive and director positions
with us.
January
2007 Share Exchange
On
January 23, 2007, we completed the Share Exchange with Times Manufacture and
Kwong Kai Shun, the former sole shareholder of Times Manufacture. At the close
of the Share Exchange, Times Manufacture became our wholly-owned subsidiary
and
100% of the issued and outstanding securities of Times Manufacture were
exchanged for our securities. An aggregate of 19,454,420 shares of our common
stock were issued to this shareholder. Further to the Share Exchange, Times
Manufacture paid an aggregate of $350,000 to the shareholders of SRKP 9, Inc.
As
of the close of the Share Exchange and as of January 1, 2008, Mr. Kwong owned
approximately 84.0% of our issued and outstanding stock. Moreover, concurrent
with the closing of the Share Exchange, our board appointed Kwong Kai Shun
as
Chairman of the Board, Chief Executive Officer and Chief Financial Officer,
as
well as Michael Mak as a director. Kwong Kai Shun is Chief Executive Officer
and
director of Times Manufacture and has since resigned as our Chief Financial
Officer.
WestPark
Capital, Inc.
On
January 23, 2007, concurrently with the close of the Share Exchange, we
conducted an initial closing of a private placement transaction pursuant to
which we sold an aggregate of 1,749,028 shares of Series A Convertible Preferred
Stock at $1.29 per share. On February 9, 2007, we conducted a second and final
closing of the private placement pursuant to which we sold 501,320 shares of
Series A Convertible Preferred Stock at $1.29 per share. Accordingly, a total
of
2,250,348 shares of Series A Convertible Preferred Stock were sold in the
private placement for an aggregate of $2,902,946 (the “Private Placement”).
WestPark Capital, Inc. (“WestPark”) acted as the placement agent for the Private
Placement. Of the gross proceeds, $50,000 is represented by a subscription
receivable from one investor. For its services as placement agent, WestPark
received an aggregate fee of approximately $261,265, which consisted of a
commission equal to 9.0% of the gross proceeds from the financing. WestPark
is
acting as the managing underwriter for our public offering that we intend to
conduct. Upon the closing of the offering, we agreed to sell to WestPark
Capital, Inc. warrants to purchase up to a number of shares of our common stock
that will be determined. The warrants will be exercisable on their date of
issuance at a per share exercise price equal to 120% of the public offering
price, subject to standard anti-dilution adjustments for stock splits and
similar transactions, and will expire five years. The holders of shares of
common stock acquired upon exercise of the warrants have the right to include
such shares in any future registration statements filed by us and to demand
one
registration for the shares. In addition, we have agreed to indemnify the
underwriters against some liabilities, including liabilities under the
Securities Act of 1933, as amended, and to contribute to payments that the
underwriters may be required to make in respect thereof. We will pay WestPark
a
non-accountable expense allowance to be determined.
Some
of
the controlling shareholders, control persons of WestPark were also, prior
to
the completion of the Share Exchange, shareholders and/or control persons of
our
company, including Richard Rappaport, who is the Chief Executive Officer of
WestPark and was the President and a significant shareholder of our company
prior to the Share Exchange, Anthony C. Pintsopoulos, who is the Chief Financial
Officer of WestPark and an officer, director and significant shareholder of
our
company prior to the Share Exchange and Kevin DePrimio and Jason Stern, each
employees of WestPark and shareholders of our company prior to the Share
Exchange. Each of Messrs. Rappaport and Pintsopoulos resigned from all of their
executive and director positions with our company upon the closing of the Share
Exchange. Affiliates of WestPark who own shares of our common stock have agreed
to a lock-up whereby they shall not sell an aggregate of 1,528,933 shares of
common stock held by them until that date which is nine months from the day
that
our common stock begins to be traded on either the New York Stock Exchange,
American Stock Exchange, NASDAQ Global Market, NASDAQ Capital Market, the OTC
Bulletin Board or the Pink Sheets.
We
believe that the WestPark Capital arrangements are at fair market value and
are
on terms comparable to those that would have been reached in arm’s-length
negotiations had the parties been unaffiliated at the time of the negotiations.
Agreement
of Kwong Kai Shun
In
connection with the Private Placement, Kwong Kai Shun, our Chairman of the
Board, Chief Executive Officer and Chief Financial Officer, entered into an
agreement with the investors in the Private Placement. Mr. Kwong agreed to
place
2,326,000 shares of his common stock in escrow for possible distribution to
the
investors (the “Escrow Shares”). According to the agreement, if our annual net
income for 2006 or 2007 (subject to specified adjustment) as set forth in its
filings with the Securities and Exchange Commission is less than $6.3 million
or
$7.7 million, respectively, a portion, if not all, of the Escrow Shares will
be
transferred to the investors based upon our actual net income for such fiscal
years. According to the agreement, the number of shares Mr. Kwong would
distribute to shareholders would be determined by a formula based on the number
of common stock held by the investors multiplied by the shortfall in a valuation
agreed upon by the parties. We met our net income threshold of $6.3 million
for
2006 and $7.7 for 2007, and the investors did not receive shares from Mr. Kwong.
If we did not meet any of these thresholds, the number of shares that would
have
been distributed would have been determined by the following
formula.
A
=
N × S
|
A
|
means
the number of additional shares of common stock to be transferred
by Mr.
Kwong to the investors.
|
|
N
|
means
the number of stock held by the investors.
|
|
S
|
means
the shortfall in agreed valuation per share of Common Stock calculated
as
follows: $1.29 - ((actual amount of net income for
2007 × 4) / 25,482,210).
|
For
illustration purposes, if our net income for fiscal 2007 was $7.0 million,
as
opposed to $7.7 million, then Mr. Kwong would be required to transfer
approximately 430,254 shares of common stock to the investors under the
agreement. In no circumstances will the shares distributed by Mr. Kwong exceed
2,326,000 shares. Each shareholder would have received a pro rata amount of
shares based on the number of the shares that they held at the time of any
distribution per the agreement.
We
have
accounted for the Escrow Shares as the equivalent of a performance-based
compensatory stock plan between Mr. Kwong and us. Accordingly, during the nine
months ended September 30, 2007, we recorded a charge to operations of
$1,852,494 to recognize the grant date fair value of stock-based compensation
in
conjunction with the Escrow Shares, and during the three months ended December
31, 2007, we recognized a final charge to operations of $581,156 with respect
to
the shares.
In
addition, Mr. Kwong has agreed to purchase all shares of Series A Preferred
Stock then held by such investors at a per-share purchase price of $1.29 if
our
common stock shall fail to be listed or quoted for trading on the American
Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the New York
Stock Exchange on or before an agreed upon date. The date for listing was
originally set by the parties at June 30, 2007 and was subsequently extended
to
March 31, 2008. Mr. Kwong and the investors also executed an amendment to the
agreement to revise the agreement to provide that our 2007 net income will
be
determined in accordance with US GAAP except that following will be added back
to our US GAAP net income for purposes of calculating our 2007 net income under
the agreement: (i) any and all non-cash charges and expenses related to the
Bonds and Bond Warrants that we issued in November 2007, and (ii) any and all
charges and expenses related to our Private Placement of the Series A
Convertible Preferred Stock in January 2007 and the reverse takeover that
occurred in January 2007.
We
believe that arrangement with Kwong Kai Shun is at fair market value and are
on
terms comparable to those that would have been reached in arm’s-length
negotiations had the parties been unaffiliated at the time of the negotiations.
Policy
for Approval of Related Party Transactions
Our
policy is to have our Audit Committee review and pre-approve any related party
transactions and other matters pertaining to the integrity of management,
including potential conflicts of interest, or adherence to standards of business
conduct as required by our policies.
NOMINATIONS
AND STOCKHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Proposals
to be Included in Proxy Statement
Stockholders
are hereby notified that if they wish a proposal to be included in our proxy
statement and form of proxy relating to the 2009 annual meeting of stockholders,
they must deliver a written copy of their proposal no later than June 30, 2009.
If the date of next year’s annual meeting is changed by more than 30 days
from the date of this year’s meeting, then the deadline is a reasonable time
before we begin to print and mail proxy materials. Proposals must comply with
the proxy rules relating to stockholder proposals, in particular Rule 14a-8
under the Securities Exchange Act of 1934, in order to be included in our proxy
materials.
Mailing
Instructions
Proposals
should be delivered to Asia Time Corporation, Room 1601-1604, 16/F., CRE Centre,
889 Cheung Sha Wan Road, Kowloon, Hong Kong, Attention: Michael Mak, Corporate
Secretary. To avoid controversy and establish timely receipt by the Company,
it
is suggested that stockholders send their proposals by certified mail, return
receipt requested.
STOCKHOLDER
COMMUNICATION WITH THE BOARD OF DIRECTORS
Stockholders
who wish to contact any of our directors either individually or as a group
may
do so by writing them c/o Corporate Secretary, Asia Time Corporation, Room
1601-1604, 16/F., CRE Centre, 889 Cheung Sha Wan Road, Kowloon, Hong Kong,
by
telephone at (852)-23100101 specifying whether the communication is directed
to
the entire board or to a particular director. Stockholder letters are screened
by Company personnel to filter out improper or irrelevant topics, such as
solicitations, and to confirm that that such communications relate to matters
that are within the scope of responsibilities of the board or a Committee.
OTHER
BUSINESS
The
board
of directors does not know of any other matter to be acted upon at the Annual
Meeting. However, if any other matter shall properly come before the Annual
Meeting, the proxyholders named in the proxy accompanying this Proxy Statement
will have authority to vote all proxies in accordance with their discretion.
APPENDIX
A-1
Asia
Time Corporation 2008 Equity Incentive Plan
A-2
Form
of Notice of Grant of Stock Option
A-3
Form
of Stock Option Agreement (including Addendum)
A-4
Form
of Stock Issuance Agreement (including Addendum)
A-5
Form
of Stock Purchase Agreement (including Addendum)
|
|
|
FOR
THE BOARD OF DIRECTORS
|
|
|
|
|
|
Chief
Executive Officer and Chairman of the
|
|
Board
|
Dated:
September 3, 2008
Kowloon,
Hong Kong
APPENDIX
A-1
ASIA
TIME CORPORATION
2008
EQUITY INCENTIVE PLAN
ARTICLE
ONE
GENERAL
PROVISIONS
This
2008
Equity Incentive Plan is intended to promote the interests of ASIA TIME
CORPORATION, a Delaware corporation, by providing eligible persons in the
Corporation’s employ or service with the opportunity to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Corporation
as an incentive for them to continue in such employ or service.
Capitalized
terms herein shall have the meanings assigned to such terms in the attached
Appendix.
|
II.
|
STRUCTURE
OF THE PLAN
|
A.
The
Plan
shall be divided into two (2) separate equity programs:
(i)
the
Option Grant Program under which eligible persons may, at the discretion
of the
Plan Administrator, be granted options to purchase shares of Common Stock,
and
(ii)
the
Stock
Issuance Program under which eligible persons may, at the discretion of the
Plan
Administrator, be issued shares of Common Stock directly, either through
the
immediate purchase of such shares or as a bonus for services rendered the
Corporation (or any Parent or Subsidiary).
B.
The
provisions of Articles One and Four shall apply to both equity programs under
the Plan and shall accordingly govern the interests of all persons under
the
Plan.
|
III.
|
ADMINISTRATION
OF THE PLAN
|
A.
The
Plan
shall be administered by the Board. However, any or all administrative functions
otherwise exercisable by the Board may be delegated to the Committee. Members
of
the Committee shall serve for such period of time as the Board may determine
and
shall be subject to removal by the Board at any time. The Board may also
at any
time terminate the functions of the Committee and reassume all powers and
authority previously delegated to the Committee.
B.
The
Plan
Administrator shall have full power and authority (subject to the provisions
of
the Plan) to establish such rules and regulations as it may deem appropriate
for
proper administration of the Plan and to make such determinations under,
and
issue such interpretations of, the Plan and any outstanding options or stock
issuances thereunder as it may deem necessary or advisable. Decisions of
the
Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any option grant or stock issuance
thereunder.
A.
The
persons eligible to participate in the Plan are as follows:
(i)
Employees,
(ii)
non-employee
members of the Board or the non-employee members of the board of directors
of
any Parent or Subsidiary, and
(iii)
consultants
and other independent advisors who provide services to the Corporation (or
any
Parent or Subsidiary).
B.
The
Plan
Administrator shall have full authority to determine, (i) with respect to
the
grants made under the Option Grant Program, which eligible persons are to
receive such grants, the time or times when those grants are to be made,
the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time
or
times when each option is to become exercisable, the vesting schedule (if
any)
applicable to the option shares and the maximum term for which the option
is to
remain outstanding, and (ii) with respect to stock issuances made under the
Stock Issuance Program, which eligible persons are to receive such issuances,
the time or times when those issuances are to be made, the number of shares
to
be issued to each Participant, the vesting schedule (if any) applicable to
the
issued shares and the consideration to be paid by the Participant for such
shares.
C.
The
Plan
Administrator shall have the absolute discretion either to grant options
in
accordance with the Option Grant Program or to effect stock issuances in
accordance with the Stock Issuance Program.
|
V.
|
STOCK
SUBJECT TO THE PLAN
|
A.
The
stock
issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock. The maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed Two Million Five Hundred Thousand
(2,500,000) shares.
B.
Shares
of
Common Stock subject to outstanding options shall be available for subsequent
issuance under the Plan to the extent (i) the options expire or terminate
for
any reason prior to exercise in full or (ii) the options are cancelled in
accordance with the cancellation-regrant provisions of Article Two. Unvested
shares issued under the Plan and subsequently repurchased by the Corporation,
at
a price per share not greater than the option exercise or direct issue price
paid per share, pursuant to the Corporation’s repurchase rights under the Plan
shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance
through one or more subsequent option grants or direct stock issuances under
the
Plan.
C.
Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or
other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, proportionate adjustments shall be made
to (i) the maximum number and/or class of securities issuable under the Plan,
including the number of shares by which the maximum number of shares may
be
increased annually, and the per individual limitations on the number of shares
of Common Stock that may be issued and (ii) the number and/or class of
securities and the exercise price per share in effect under each outstanding
option in order to prevent the dilution or enlargement of benefits thereunder.
The adjustments determined by the Plan Administrator shall be final, binding
and
conclusive. In no event shall any such adjustments be made in connection
with
the conversion of one or more outstanding shares of the Corporation’s preferred
stock into shares of Common Stock.
ARTICLE
TWO
OPTION
GRANT PROGRAM
Each
option shall be evidenced by one or more documents in the form approved by
the
Plan Administrator;
provided
,
however
,
that
each such document shall comply with the terms specified below. Each document
evidencing an Incentive Option shall, in addition, be subject to the provisions
of the Plan applicable to such options.
A.
Exercise
Price
.
1.
The
exercise price per share shall be fixed by the Plan Administrator in accordance
with the following provisions:
(i)
The
exercise price per share shall not be less than one hundred percent (100%)
of
the Fair Market Value per share of Common Stock on the option grant
date.
(ii)
Until
such time as the Corporation becomes subject to the reporting requirements
of
Section 13 or 15(d) of the 1934 Act, if the person to whom the option is
granted
is a 10% Stockholder, then the exercise price per share shall not be less
than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the option grant date.
2.
The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section I of Article Four and the documents
evidencing the option, be payable in cash or check made payable to the
Corporation. Should the Common Stock be registered under Section 12 of the
1934
Act at the time the option is exercised, then the exercise price may also
be
paid as follows:
(i)
in
shares
of Common Stock held for the requisite period necessary to avoid a charge
to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or
(ii)
to
the
extent the option is exercised for vested Option Shares and unless prohibited
by
Section 402 of the Sarbanes Oxley Act of 2002, through payment in accordance
with a brokerage transaction as permitted under the provisions of Regulation
T
applicable to cashless exercises promulgated by the Federal Reserve Board
out of
the sale proceeds available on the settlement date of sufficient funds to
cover
the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and the Optionee shall concurrently
provide irrevocable instructions to the Corporation to deliver the certificates
for the purchased shares directly to a brokerage firm in order to complete
the
sale.
Except
to
the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise
Date.
B.
Exercise
and Term of Options
.
Each
option shall be exercisable at such time or times, during such period and
for
such number of shares as shall be determined by the Plan Administrator and
set
forth in the documents evidencing the option grant. However, no option shall
have a term in excess of ten (10) years measured from the option grant
date.
C.
Effect
of Termination of Service
.
1.
The
following provisions shall govern the exercise of any options held by the
Optionee at the time of cessation of Service or death:
(i)
Should
the Optionee cease to remain in Service for any reason other than death,
Disability or Misconduct, then the Optionee shall have a period of thirty
(30)
days following the date of such cessation of Service during which to exercise
each outstanding option held by such Optionee.
(ii)
Should
Optionee’s Service terminate by reason of Disability, then the Optionee shall
have a period of six (6) months following the date of such cessation of Service
during which to exercise each outstanding option held by such Optionee.
(iii)
If
the
Optionee dies while holding an outstanding option, then the personal
representative of his or her estate or the person or persons to whom the
option
is transferred pursuant to the Optionee’s will or the laws of inheritance or the
Optionee’s designated beneficiary or beneficiaries of that option shall have a
six (6)-month period following the date of the Optionee’s death to exercise such
option.
(iv)
Under
no
circumstances, however, shall any such option be exercisable after the specified
expiration of the option term.
(v)
During
the applicable post-Service exercise period, the option may not be exercised
in
the aggregate for more than the number of vested shares for which the option
is
exercisable on the date of the Optionee’s cessation of Service. Upon the
expiration of the applicable exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be outstanding
for
any vested shares for which the option has not been exercised. However, the
option shall, immediately upon the Optionee’s cessation of Service, terminate
and cease to be outstanding with respect to any and all option shares for
which
the option is not otherwise at the time exercisable or in which the Optionee
is
not otherwise at that time vested.
(vi)
Should
Optionee’s Service be terminated for Misconduct or should Optionee otherwise
engage in Misconduct while holding one or more outstanding options under
the
Plan, then all those options shall terminate immediately and cease to remain
outstanding.
2.
The
Plan
Administrator shall have the discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding,
to:
(i)
extend
the period of time for which the option is to remain exercisable following
Optionee’s cessation of Service or death from the limited period otherwise in
effect for that option to such greater period of time as the Plan Administrator
shall deem appropriate, but in no event beyond the expiration of the option
term, and/or
(ii)
permit
the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for
which
such option is exercisable at the time of the Optionee’s cessation of Service
but also with respect to one or more additional installments in which the
Optionee would have vested under the option had the Optionee continued in
Service.
D.
Stockholder
Rights
.
The
holder of an option shall have no stockholder rights with respect to the
shares
subject to the option until such person shall have exercised the option,
paid
the exercise price and become the recordholder of the purchased
shares.
E.
Exercisability
and Unvested Shares
.
Options
shall be exercisable at such time or times and subject to such waiting periods,
exercise dates, restrictions on exercise and other terms and conditions as
shall
be determined by the Plan Administrator at or after the time of grant. The
Plan
Administrator shall have the discretion to grant options which are exercisable
for unvested shares of Common Stock. A Participant shall vest separately
in each
Option granted hereunder in accordance with a schedule determined by the
Plan
Administrator, in its sole discretion. The Plan Administrator may provide,
in
its discretion, that any option shall be exercisable only in installments,
and
the Plan Administrator may waive such installment exercise provisions at
any
time in whole or in part based on such factors as the Plan Administrator
may
determine in its sole discretion. Should the Optionee cease Service while
holding such unvested shares, the Corporation shall have the right to repurchase
any or all of those unvested shares at a price per share equal to
the
lower of
(i)
the
exercise price paid per share or (ii) the Fair Market Value per share of
Common
Stock at the time of Optionee’s cessation of Service. The terms upon which such
repurchase right shall be exercisable (including the period and procedure
for
exercise and the appropriate vesting schedule for the purchased shares) shall
be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right. Until such time as the Corporation becomes subject
to the
reporting requirements of Section 13 or 15(d) of the 1934 Act, the Plan
Administrator may not impose a vesting schedule upon any option grant or
the
shares of Common Stock subject to the right of repurchase which is more
restrictive than twenty percent (20%) per year vesting, with the initial
vesting
to occur not later than one (1) year after the option grant date. However,
such
limitation shall not be applicable to any option grants made to individuals
who
are officers of the Corporation, non-employee Board members or independent
consultants.
F.
Individual
Limit
.
In any
calendar year, no Participant may receive options that relate to more than
Two
Million (2,000,000) shares. The foregoing limitation will be adjusted
proportionately in connection with any change in the Corporation’s
capitalization as described in Section V.C. of Article I. If an option is
cancelled in the same calendar year in which it was granted (other than in
connection with a Change of Control) the cancelled option will be counted
against the limit set forth in this subsection F. For this purpose, if the
exercise price of an option is reduced, the transaction will be treated as
a
cancellation of the option and the grant of a new option. This subsection
F
applies only with respect to option grants that are made at the end of the
transition period prescribed by the regulations under Code Section
162(m).
G.
Limited
Transferability of Options
.
An
Incentive Stock Option shall be exercisable only by the Optionee during his
or
her lifetime and shall not be assignable or transferable other than by will
or
by the laws of inheritance following the Optionee’s death. If permitted by
applicable law and if the Agreement so provides, a Non-Statutory Option may
be
transferred by an Optionee to the Optionee’s family members as a gift, whether
directly or indirectly, or by means of a trust or partnership or otherwise,
or
pursuant to a qualified domestic relations order as defined in the Code or
Title
1 of the Employee Retirement Income Security Act of 1974, as amended,
provided
,
that
,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then as otherwise permitted pursuant to General Instructions
A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, or any
successor thereto. For purposes of this Plan, unless otherwise determined
by the
Plan Administrator, "
family
member
"
shall
have the meaning given to such term in Rule 701 promulgated under the Securities
Act,
provided
,
that
,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then it shall have the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
or any successor thereto.
The
assigned portion may only be exercised by the person or persons who acquire
a
proprietary interest in the Non-Statutory Option pursuant to the assignment.
The
terms applicable to the assigned portion shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth
in
such documents issued to the assignee as the Plan Administrator may deem
appropriate. Notwithstanding the foregoing, the Optionee may also designate
one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under the Plan, and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries
upon the Optionee’s death while holding those options. Such beneficiary or
beneficiaries shall take the transferred options subject to all the terms
and
conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee’s death.
The
terms
specified below shall be applicable to all Incentive Options. Except as modified
by the provisions of this Section II, all the provisions of Articles One,
Two
and Four shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options shall not be subject to
the
terms of this Section II.
A.
Eligibility
.
Incentive Options may only be granted to Employees.
B.
Exercise
Price
.
The
exercise price per share shall not be less than one hundred percent (100%)
of
the Fair Market Value per share of Common Stock on the option grant date;
provided
,
however
,
that if
the person to whom the option is granted is a 10% Stockholder, then the exercise
price per share shall not be less than one hundred ten percent (110%) of
the
Fair Market Value per share of Common Stock on the option grant
date.
C.
Dollar
Limitation
.
The
aggregate Fair Market Value of the shares of Common Stock (determined as
of the
respective date or dates of grant) for which one or more options granted
to any
Employee under the Plan (or any other option plan of the Corporation or any
Parent or Subsidiary) may for the first time become exercisable as Incentive
Options during any one (1) calendar year shall not exceed the sum of One
Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two (2) or
more
such options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in which such
options are granted.
D.
10%
Stockholder
.
If any
Employee to whom an Incentive Option is granted is a 10% Stockholder, then
the
option term shall not exceed five (5) years measured from the option grant
date.
A.
In
the
event of a pending or threatened Change of Control, the Plan Administrator
may,
in its sole and absolute discretion, and to the extent the acceleration of
options is not subject to other limitations imposed by the Plan Administrator
at
the time of the option grant or otherwise in accordance with the terms of
the
Plan, take any one or more of the following actions:
(i)
provide
that some or all of the options outstanding under the Plan at the time of
a
Change in Control shall automatically vest in full so that each such option
shall, immediately prior to the effective date of the Change in Control,
become
exercisable for all of the shares of Common Stock at the time subject to
that
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock; or
(ii)
provide
that some or all of the outstanding options previously granted under the
Plan,
whether or not then exercisable, shall terminate as of a date before or at
the
time of the Change of Control without any payment to the holder of the option,
provided the Plan Administrator gives prior written notice to the Participants
of such termination and gives such Participants the right to exercise their
outstanding options before such date to the extent then exercisable;
or
(iii)
provide
that some or all of the options will be assumed by the successor corporation
(or
parent thereof) or otherwise continued in full force and effect pursuant
to the
terms of the Change in Control transaction in effect; or
(iv)
provide
that at or immediately following the consummation of the Change in Control,
some
or all outstanding options shall terminate and cease to be outstanding, except
to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in effect pursuant to the terms of the Change in Control
transaction; or
(v)
provide
that some or all outstanding options are to be replaced with a cash incentive
program of the Corporation or any successor corporation which preserves the
spread existing on the unvested option shares at the time of the Change in
Control and provides for subsequent payout of that spread in accordance with
the
same vesting schedule applicable to those unvested option shares;
or
(vi)
provide
that before or at the time of the Change of Control some or all outstanding
options previously granted under the Plan shall terminate, whether or not
then
exercisable, in consideration of payment to the holder of the option, with
respect to each share of Common Stock for which the option is then exercisable,
of the excess, if any, of the Fair Market Value on such date of the Common
Stock
subject to the exercisable portion of the option over the exercise price
of such
option; or
(vii)
provide
that upon the occurrence of a Change in Control, some or all outstanding
options
previously granted under the Plan shall be subject to the terms of any
applicable agreement of merger or reorganization relating to such Change
in
Control.
B.
In
the
event of a pending or threatened Change of Control, the Plan Administrator
may,
in its sole and absolute discretion, and to the extent the treatment of
outstanding repurchase rights are not subject to other limitations imposed
by
the Plan Administrator at the time the repurchase right is issued or otherwise
in accordance with the terms of the Plan, take any one or more of the following
actions:
(i)
provide
that some or all outstanding repurchase rights shall terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control; or
(ii)
provide
that some or all of the shares of Common Stock subject to outstanding repurchase
rights shall be exchanged or otherwise converted into the right to receive
cash
or other adequate consideration (including, without limitation, such
consideration as received by other stockholders of the Company in connection
with the Change in Control); or
(iii)
provide
that some or all repurchase rights are assigned to the successor corporation
(or
parent thereof) or otherwise continue in full force and effect pursuant to
the
terms of the Change in Control transaction; or
(iv)
provide
that some or all unvested shares will be repurchased before or on the Control
Change Date pursuant to the Corporation’s right of repurchase; or
(v)
provide
that upon the occurrence of a Change in Control, some or all of the shares
of
Common Stock subject to outstanding repurchase rights shall be subject to
the
terms of any applicable agreement of merger or reorganization relating to
such
Change in Control.
C.
If
applicable, each option which is assumed in connection with a Change in Control
or otherwise continued in effect shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
which would have been issuable to the Optionee in consummation of such Change
in
Control, had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments shall also be made to (i) the number and
class
of securities available for issuance under the Plan following the consummation
of such Change in Control and (ii) the exercise price payable per share under
each outstanding option,
provided
the
aggregate exercise price payable for such securities shall remain the same.
To
the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the
Change
in Control, the successor corporation may, in connection with the assumption
of
the outstanding options under this Plan, substitute one or more shares of
its
own common stock with a fair market value equivalent to the cash consideration
paid per share of Common Stock in such Change in Control.
D.
The
Plan
Administrator shall have the discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to
structure one or more options so that those options shall automatically
accelerate and vest in full (and any repurchase rights of the Corporation
with
respect to the unvested shares subject to those options shall immediately
terminate) upon the occurrence of a Change in Control, whether or not those
options are to be assumed in the Change in Control or otherwise continued
in
effect.
E.
The
Plan
Administrator shall also have full power and authority, exercisable either
at
the time the option is granted or at any time while the option remains
outstanding, to structure such option so that the shares subject to that
option
will automatically vest on an accelerated basis should the Optionee’s Service
terminate by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any
Change
in Control in which the option is assumed or otherwise continued in effect
and
the repurchase rights applicable to those shares do not otherwise terminate.
Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the expiration or sooner termination of the option term. In
addition, the Plan Administrator may provide that one or more of the
Corporation’s outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately terminate
on an accelerated basis, and the shares subject to those terminated rights
shall
accordingly vest at that time.
F.
The
portion of any Incentive Option accelerated in connection with a Change in
Control shall remain exercisable as an Incentive Option only to the extent
the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded.
To
the extent such dollar limitation is exceeded, the accelerated portion of
such
option shall be exercisable as a Non-Statutory Option under the Federal tax
laws.
G.
The
grant
of options under the Plan shall in no way affect the right of the Corporation
to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer
all
or any part of its business or assets.
|
IV.
|
CANCELLATION
AND REGRANT OF OPTIONS
|
The
Plan
Administrator shall have the authority to effect, at any time and from time
to
time, with the consent of the affected option holders, the cancellation of
any
or all outstanding options under the Plan and to grant in substitution therefor
new options covering the same or different number of shares of Common Stock
but
with an exercise price per share based on the Fair Market Value per share
of
Common Stock on the new option grant date.
ARTICLE
THREE
STOCK
ISSUANCE PROGRAM
Shares
of
Common Stock may be issued under the Stock Issuance Program through direct
and
immediate issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement which complies
with
the terms specified below.
A.
Purchase
Price
.
1.
The
purchase price per share shall be fixed by the Plan Administrator but shall
not
be less than eighty-five percent (85%) of the Fair Market Value per share
of
Common Stock on the issue date. However, the purchase price per share of
Common
Stock issued to a 10% Stockholder shall not be less than one hundred percent
(100%) of such Fair Market Value.
2.
Subject
to the provisions of Section I of Article Four, shares of Common Stock may
be
issued under the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:
(i)
cash
or
check made payable to the Corporation, or
(ii)
past
services rendered to the Corporation (or any Parent or
Subsidiary).
B.
Vesting
Provisions
.
1.
Shares
of
Common Stock issued under the Stock Issuance Program may, in the discretion
of
the Plan Administrator, be fully and immediately vested upon issuance or
may
vest in one or more installments over the Participant’s period of Service or
upon attainment of specified performance objectives. Until such time as the
Corporation becomes subject to the reporting requirements of Section 13 or
15(d)
of the 1934 Act, the Plan Administrator may not impose a vesting schedule
upon
any stock issuance effected under the Stock Issuance Program which is more
restrictive than twenty percent (20%) per year vesting, with initial vesting
to
occur not later than one (1) year after the issuance date. Such limitation
shall
not apply to any Common Stock issuances made to the officers of the Corporation,
non-employee Board members or independent consultants.
2.
Any
new,
substituted or additional securities or other property (including money paid
other than as a regular cash dividend) which the Participant may have the
right
to receive with respect to the Participant’s unvested shares of Common Stock by
reason of any stock dividend, stock split, recapitalization, combination
of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the
Participant’s unvested shares of Common Stock and (ii) such escrow arrangements
as the Plan Administrator shall deem appropriate.
3.
The
Participant shall have full stockholder rights with respect to any shares
of
Common Stock issued to the Participant under the Stock Issuance Program,
whether
or not the Participant’s interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares.
4.
Should
the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock issued under the Stock Issuance Program or should
the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately surrendered
to
the Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in
cash
or cash equivalent (including the Participant’s purchase-money indebtedness),
the Corporation shall repay to the Participant
the
lower of
(i)
the
cash consideration paid for the surrendered shares or (ii) the Fair Market
Value
of the shares at the time of Participant’s cessation of service and shall cancel
the unpaid principal balance of any outstanding purchase-money note of the
Participant attributable to such surrendered shares by the applicable clause
(i)
or (ii) amount.
5.
The
Plan
Administrator may in its discretion waive the surrender and cancellation
of one
or more unvested shares of Common Stock (or other assets attributable thereto)
which would otherwise occur upon the non-completion of the vesting schedule
applicable to those shares. Such waiver shall result in the immediate vesting
of
the Participant’s interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after
the
Participant’s cessation of Service or the attainment or non-attainment of the
applicable performance objectives.
A.
In
the
event of a pending or threatened Change of Control, the Plan Administrator
may,
in its sole and absolute discretion, and to the extent the treatment of
repurchase rights is not subject to other limitations imposed by the Plan
Administrator at the time of issuance of the repurchase right or otherwise
in
accordance with the terms of the Plan, take any one or more of the following
actions:
(i)
provide
that upon the occurrence of a Change in Control, some or all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated
rights
shall immediately vest in full; or
(ii)
provide
that upon the occurrence of a Change in Control, some or all of the shares
of
Common Stock subject to outstanding repurchase rights under the Stock Issuance
Program shall be exchanged or otherwise converted into the right to receive
cash
or other adequate consideration (including, without limitation, such
consideration as received by other stockholders of the Company in connection
with the Change in Control; or
(iii)
provide
that those repurchase rights are assigned to the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant
to the
terms of the Change in Control transaction; or
(iv)
provide
that some or all shares subject to the Corporation’s right of repurchase will be
repurchased before or at the time of the Change of Control; or
(v)
provide
that upon the occurrence of a Change in Control, some or all of the shares
of
Common Stock subject to outstanding repurchase rights under the Stock Issuance
Program shall be subject to the terms of any applicable agreement of merger
or
reorganization relating to such Change in Control.
B.
The
Plan
Administrator shall have the discretionary authority, exercisable either
at the
time the unvested shares are issued or any time while the Corporation’s
repurchase rights with respect to those shares remain outstanding, to provide
that those rights shall automatically terminate on an accelerated basis,
and the
shares of Common Stock subject to those terminated rights shall immediately
vest, in the event the Participant’s Service should subsequently terminate by
reason of an Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of any Change in Control
in
which those repurchase rights are assigned to the successor corporation (or
parent thereof) or otherwise continued in full force and
effect.
|
III.
|
SHARE
ESCROW/LEGENDS
|
Unvested
shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be
issued directly to the Participant with restrictive legends on the certificates
evidencing those unvested shares.
ARTICLE
FOUR
MISCELLANEOUS
To
the
extent permitted by applicable law, the Plan Administrator may permit any
Optionee or Participant to pay the option exercise price under the Option
Grant
Program or the purchase price for shares issued under the Stock Issuance
Program
by delivering a full-recourse promissory note payable in one or more
installments which bears interest at a market rate and is secured by the
purchased shares. However, any promissory note delivered by a consultant
must be
secured by collateral in addition to the purchased shares of Common Stock.
In no
event may the maximum credit available to the Optionee or Participant exceed
the
sum of (i) the aggregate option exercise price or purchase price payable
for the
purchased shares plus (ii) any applicable income and employment tax liability
incurred by the Optionee or the Participant in connection with the option
exercise or share purchase.
|
II.
|
EFFECTIVE
DATE AND TERM OF PLAN
|
A.
The
Plan
shall become effective when approved by the Corporation’s stockholders. The Plan
Administrator may grant options and issue shares under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of the Plan.
B.
The
Plan
shall terminate upon the
earliest
of (i)
the expiration of the ten (10)-year period measured from the date the Plan
is
adopted by the Board, (ii) the date on which all shares available for issuance
under the Plan shall have been issued as vested shares or (iii) the termination
of all outstanding options in connection with a Change in Control. All options
and unvested stock issuances outstanding at the time of a clause (i) termination
event shall continue to have full force and effect in accordance with the
provisions of the documents evidencing those options or issuances.
|
III.
|
AMENDMENT
OF THE PLAN
|
A.
The
Board
shall have complete and exclusive power and authority to amend or modify
the
Plan in any or all respects. However, no such amendment or modification shall
adversely affect the rights and obligations with respect to options or unvested
stock issuances at the time outstanding under the Plan unless the Optionee
or
the Participant consents to such amendment or modification. In addition,
certain
amendments may require stockholder approval pursuant to applicable laws and
regulations.
B.
Options
may be granted under the Option Grant Program and shares may be issued under
the
Stock Issuance Program which are in each instance in excess of the number
of
shares of Common Stock then available for issuance under the Plan, provided
any
excess shares actually issued under those programs shall be held in escrow
until
there is obtained stockholder approval of an amendment sufficiently increasing
the number of shares of Common Stock available for issuance under the Plan.
If
such stockholder approval is not obtained within twelve (12) months after
the
date the first such excess grants or issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund
to
the Optionees and the Participants the exercise or purchase price paid for
any
excess shares issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were
held
in escrow, and such shares shall thereupon be automatically cancelled and
cease
to be outstanding.
Any
cash
proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.
The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of
any options granted under the Plan or upon the issuance or vesting of any
shares
issued under the Plan shall be subject to the satisfaction of all applicable
income and employment tax withholding requirements.
The
implementation of the Plan, the granting of any options under the Plan and
the
issuance of any shares of Common Stock (i) upon the exercise of any option
or
(ii) under the Stock Issuance Program shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it and the shares
of Common Stock issued pursuant to it.
|
VII.
|
NO
EMPLOYMENT OR SERVICE
RIGHTS
|
Nothing
in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with
or
otherwise restrict in any way the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without
cause.
If
required by applicable law, the Corporation shall deliver a balance sheet
and an
income statement at least annually to each individual holding an outstanding
option under the Plan, unless such individual is a key Employee whose duties
in
connection with the Corporation (or any Parent or Subsidiary) assure such
individual access to equivalent information.
|
IX.
|
COMPLIANCE
WITH SECTION 409A OF THE
CODE
|
The
Corporation intends that any option granted under the Plan not be considered
to
provide for the deferral of compensation under Code Section 409A and that
any
other stock issuance that does provide for such deferral of compensation
shall
comply with the requirements of Section 409A of the Code and, accordingly,
this
Plan shall be so administered and construed. Further, the Corporation may
modify
the Plan and any option grant or stock issuance to the extent necessary to
fulfill this intent. Consistent with the intent of this Section IX, in the
event
that any provision that is necessary for the Plan to comply with Section
409A is
determined by the Plan Administrator, in its sole discretion, to have been
omitted, such omitted provision shall be deemed included herein and is hereby
incorporated as part of the Plan.
APPENDIX
The
following definitions shall be in effect under the Plan:
A.
Board
shall
mean the Corporation’s Board of Directors.
B.
Change
in Control
shall
mean a change in ownership or control of the Corporation effected through
any of
the following transactions:
(i)
a
merger,
consolidation or other reorganization approved by the Corporation’s
stockholders,
unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned
the
Corporation’s outstanding voting securities immediately prior to such
transaction, or
(ii)
a
stockholder-approved sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation, or
(iii)
the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders.
In
no
event shall any public offering of the Corporation’s securities be deemed to
constitute a Change in Control.
C.
Code
shall
mean the Internal Revenue Code of 1986, as amended.
D.
Committee
shall
mean a committee of two (2) or more Board members appointed by the Board
to
exercise one or more administrative functions under the Plan. To the extent
that
the Plan Administrator determines it is necessary to qualify stock options
and/or stock issuances under Section 162(m) of the Code, the Plan will be
administered in accordance with the requirements of Section 162(m) of the
Code,
and, to the extent that the Plan Administrator determines it is desirable
to
qualify transactions as exempt under Rule 16b-3 of the 1934 Act, transactions
will be structured to satisfy the requirements of Rule 16b-3 under the 1934
Act.
E.
Common
Stock
shall
mean the Corporation’s common stock.
F.
Corporation
shall
mean ASIA TIME CORPORATION, a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of
ASIA
TIME CORPORATION which shall by appropriate action adopt the Plan.
G.
Disability
shall
mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment and shall be determined by the Plan Administrator on the
basis
of such medical evidence as the Plan Administrator deems warranted under
the
circumstances.
H.
Employee
shall
mean an individual who is in the employ of the Corporation (or any Parent
or
Subsidiary), subject to the control and direction of the employer entity
as to
both the work to be performed and the manner and method of
performance.
I.
Exercise
Date
shall
mean the date on which the Corporation shall have received written notice
of the
option exercise.
J.
Fair
Market Value
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i)
If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock
on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii)
If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the
date
in question on the Stock Exchange determined by the Plan Administrator to
be the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii)
If
the
Common Stock is at the time neither listed on any Stock Exchange nor traded
on
the Nasdaq National Market, then the Fair Market Value shall be determined
by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
K.
Incentive
Option
shall
mean an option which satisfies the requirements of Code Section
422.
L.
Involuntary
Termination
shall
mean the termination of the Service of any individual which occurs by reason
of:
(i)
such
individual’s involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct, or
(ii)
such
individual’s voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B)
a
reduction in his or her level of compensation (including base salary, fringe
benefits and target bonus under any corporate-performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a relocation
of
such individual’s place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected without
the individual’s consent.
M.
Misconduct
shall
mean the commission of any act of fraud, embezzlement or dishonesty by the
Optionee or Participant, any unauthorized use or disclosure by such person
of
confidential information or trade secrets of the Corporation (or any Parent
or
Subsidiary), or any other intentional misconduct by such person adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not in any
way
preclude or restrict the right of the Corporation (or any Parent or Subsidiary)
to discharge or dismiss any Optionee, Participant or other person in the
Service
of the Corporation (or any Parent or Subsidiary) for any other acts or
omissions, but such other acts or omissions shall not be deemed, for purposes
of
the Plan, to constitute grounds for termination for Misconduct.
N.
1934
Act
shall
mean the Securities Exchange Act of 1934, as amended.
O.
Non-Statutory Option
shall
mean an option not intended to satisfy the requirements of Code Section
422.
P.
Option
Grant Program
shall
mean the option grant program in effect under the Plan.
Q.
Optionee
shall
mean any person to whom an option is granted under the Plan.
R.
Parent
shall
mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S.
Participant
shall
mean any person who is issued shares of Common Stock under the Stock Issuance
Program.
T.
Plan
shall
mean the Corporation’s 2008 Equity Incentive Plan, as set forth in this
document.
U.
Plan
Administrator
shall
mean either the Board or the Committee acting in its capacity as administrator
of the Plan.
V.
Service
shall
mean the provision of services to the Corporation (or any Parent or Subsidiary)
by a person in the capacity of an Employee, a non-employee member of the
board
of directors or a consultant or independent advisor, except to the extent
otherwise specifically provided in the documents evidencing the option
grant.
W.
Stock
Exchange
shall
mean either the American Stock Exchange or the New York Stock
Exchange.
X.
Stock
Issuance Agreement
shall
mean the agreement entered into by the Corporation and the Participant at
the
time of issuance of shares of Common Stock under the Stock Issuance
Program.
Y.
Stock
Issuance Program
shall
mean the stock issuance program in effect under the Plan.
Z.
Subsidiary
shall
mean any entity in which, directly or indirectly through one or more
intermediaries, the Corporation has at least a 50% ownership interest or,
where
permissible under Code Section 409A, at least a 20% ownership interest.
AA.
10%
Stockholder
shall
mean the owner of stock (as determined under Code Section 424(d)) possessing
more than ten percent (10%) of the total combined voting power of all classes
of
stock of the Corporation (or any Parent or Subsidiary).
APPENDIX
A-2
ASIA
TIME CORPORATION
NOTICE
OF GRANT OF STOCK OPTION
Notice
is
hereby given of the following option grant (the “
Option
”)
to
purchase shares of the Common Stock of ASIA TIME CORPORATION (the “
Corporation
”):
Optionee
:
____________________________________________________________________________
Grant
Date
:
__________________________________________________________________________
Vesting
Commencement Date
:
____________________________________________________________
Exercise
Price
:
$_________________________ per share
Number
of Option Shares
:
_________________ shares of Common Stock
Expiration
Date
:
_______________________________________________________________________
|
Type
of Option:
|
o
Incentive
Stock Option
|
o
Non-Statutory
Stock
Option
Date
Exercisable
:
Vesting
Schedule
:
The
Option Shares shall initially be unvested and subject to repurchase by the
Corporation at the
lower
of
(i) the
exercise price paid per share or (ii) Fair Market Value per share at the
time of
Optionee’s cessation of Service. Optionee shall acquire a vested interest in,
and the Corporation’s repurchase right shall accordingly lapse with respect to,
(i) ______________ percent (___%) of the Option Shares upon Optionee’s
completion of one (__) year of Service measured from the Vesting Commencement
Date and (ii) the balance of the Option Shares in a series of _______ (___)
successive equal monthly installments upon Optionee’s completion of each
additional month of Service over the ________ (___)-month period measured
from
the first anniversary of the Vesting Commencement Date. In no event shall
any
additional Option Shares vest after Optionee’s cessation of
Service.
Optionee
understands and agrees that the Option is granted subject to and in accordance
with the terms of the ASIA TIME CORPORATION 2008 Equity Incentive Plan (the
“
Plan
”).
Optionee hereby acknowledges receipt of a copy of the Plan in the form attached
hereto as
Exhibit
A
.
Optionee further agrees to be bound by the terms of the Plan and the terms
of
the Option as set forth in the Stock Option Agreement attached hereto as
Exhibit
B
.
[Optionee
understands that any Option Shares purchased under the Option will be subject
to
the terms set forth in the Stock Purchase Agreement attached hereto as
Exhibit
C
.]
REPURCHASE
RIGHTS
.
OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE
OF THE
OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE RIGHTS EXERCISABLE BY THE
CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE
ATTACHED STOCK PURCHASE AGREEMENT.
At
Will Employment
.
Nothing
in this Notice or in the attached Stock Option Agreement or Plan shall confer
upon Optionee any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of
the
Corporation (or any Parent or Subsidiary employing or retaining Optionee)
or of
Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee’s Service at any time for any reason, with or without
cause.
Definitions
.
All
capitalized terms in this Notice shall have the meaning assigned to them
in this
Notice or in the attached Stock Option Agreement.
DATED:
________________, _______
ASIA
TIME CORPORATION
|
|
By:
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
,
OPTIONEE
|
Attachments
:
Exhibit
A - 2008 Equity Incentive Plan
Exhibit
B - Stock Option Agreement
[Exhibit
C - Stock Purchase Agreement]
APPENDIX
A-3
ASIA
TIME CORPORATION
STOCK
OPTION AGREEMENT
RECITALS
A.
The
Board
has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or the board of directors of
any
Parent or Subsidiary and consultants and other independent advisors in the
service of the Corporation (or any Parent or Subsidiary).
B.
Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary),
and this Agreement is executed pursuant to, and is intended to carry out
the
purposes of, the Plan in connection with the Corporation’s grant of an option to
Optionee.
C.
All
capitalized terms in this Agreement shall have the meaning assigned to them
in
the attached Appendix.
NOW,
THEREFORE
,
it is
hereby agreed as follows:
1.
Grant
of Option
.
The
Corporation hereby grants to Optionee, as of the Grant Date, an option to
purchase up to the number of Option Shares specified in the Grant Notice.
The
Option Shares shall be purchasable from time to time during the option term
specified in Paragraph 2 at the Exercise Price.
2.
Option
Term
.
This
option shall have a term of [__] years measured from the Grant Date and shall
accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.
3.
Limited
Transferability
.
(a)
This
option shall be neither transferable nor assignable by Optionee other than
by
will or the laws of inheritance following Optionee’s death and may be exercised,
during Optionee’s lifetime, only by Optionee. However, Optionee may designate
one or more persons as the beneficiary or beneficiaries of this option, and
this
option shall, in accordance with such designation, automatically be transferred
to such beneficiary or beneficiaries upon the Optionee’s death while holding
this option. Such beneficiary or beneficiaries shall take the transferred
option
subject to all the terms and conditions of this Agreement, including (without
limitation) the limited time period during which this option may, pursuant
to
Paragraph 5, be exercised following Optionee’s death.
(b)
If
this
option is designated a Non-Statutory Option in the Grant Notice, then this
option may be assigned in whole or in part during Optionee’s lifetime to the
Optionee’s family members as a gift, whether directly or indirectly, or by means
of a trust or partnership or otherwise, or pursuant to a qualified domestic
relations order as defined in the Code or Title 1 of the Employee Retirement
Income Security Act of 1974, as amended,
provided
,
that
,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then as otherwise permitted pursuant to General Instructions
A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, or any
successor thereto. For purposes of this Agreement, unless otherwise determined
by the Plan Administrator, "
family
member
"
shall
have the meaning given to such term in Rule 701 promulgated under the Securities
Act,
provided
,
that
,
if the
Corporation is subject to the reporting requirements of Section 13 or 15(d)
of
the Exchange Act, then it shall have the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
or any successor thereto. The assigned portion shall be exercisable only
by the
person or persons who acquire a proprietary interest in the option pursuant
to
such assignment. The terms applicable to the assigned portion shall be the
same
as those in effect for this option immediately prior to such assignment.
4.
Dates
of Exercise
.
This
option shall become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice. As the option becomes exercisable
for such installments, those installments shall accumulate, and the option
shall
remain exercisable for the accumulated installments until the Expiration
Date or
sooner termination of the option term under Paragraph 5 or 6.
5.
Cessation
of Service
.
The
option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date should any of the
following provisions become applicable:
(a)
Should
Optionee cease to remain in Service for any reason (other than death, Disability
or Misconduct) while this option is outstanding, then Optionee (or any person
or
persons to whom this option is transferred pursuant to a permitted transfer
under Paragraph 3) shall have a period of thirty (30) days (commencing with
the date of such cessation of Service) during which to exercise this option,
but
in no event shall this option be exercisable at any time after the Expiration
Date.
(b)
Should
Optionee die while this option is outstanding, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or the laws of inheritance following Optionee’s
death or to whom the option is transferred during Optionee’s lifetime pursuant
to a permitted transfer under Paragraph 3 shall have the right to exercise
this option. However, if Optionee dies while holding this option and has
an
effective beneficiary designation in effect for this option at the time of
his
or her death, then the designated beneficiary or beneficiaries shall have
the
exclusive right to exercise this option following Optionee’s death. Any such
right to exercise this option shall lapse, and this option shall cease to
be
outstanding, upon the
earlier
of (i)
the expiration of the six (6)-month period measured from the date of Optionee’s
death or (ii) the Expiration Date.
(c)
Should
Optionee cease Service by reason of Disability while this option is outstanding,
then Optionee (or any person or persons to whom this option is transferred
pursuant to a permitted transfer under Paragraph 3) shall have a period of
six (6) months (commencing with the date of such cessation of Service) during
which to exercise this option. In no event shall this option be exercisable
at
any time after the Expiration Date.
Note
:
Exercise of this option on a date later than three (3) months following
cessation of Service due to Disability will result in loss of favorable
Incentive Option treatment,
unless
such
Disability constitutes Permanent Disability. In the event that Incentive
Option
treatment is not available, this option will be taxed as a Non-Statutory
Option
upon exercise.
(d)
During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares in which
Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to
the Vesting Schedule specified in the Grant Notice or the special vesting
acceleration provisions of Paragraph 6. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for which
the
option has not been exercised. To the extent Optionee is not vested in one
or
more Option Shares at the time of Optionee’s cessation of Service, this option
shall immediately terminate and cease to be outstanding with respect to those
shares.
(e)
Should
Optionee’s Service be terminated for Misconduct or should Optionee otherwise
engage in Misconduct while this option is outstanding, then this option shall
terminate immediately and cease to remain outstanding.
6.
Change
of Control Assumption
.
(a)
If
this
option is assumed in connection with a Change in Control or otherwise continued
in effect, then this option shall be appropriately adjusted, immediately
after
such Change in Control, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control,
and
appropriate adjustments shall also be made to the Exercise Price,
provided
the
aggregate Exercise Price shall remain the same. To the extent that the actual
holders of the Corporation’s outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Change in Control, the successor
corporation may, in connection with the assumption of this option, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control.
(b)
This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part
of its business or assets.
7.
Adjustment
in Option Shares
.
Should
any change be made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or
other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made to
(i) the total number and/or class of securities subject to this option and
(ii)
the Exercise Price in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
8.
Stockholder
Rights
.
The
holder of this option shall not have any stockholder rights with respect
to the
Option Shares until such person shall have exercised the option, paid the
Exercise Price and become the record holder of the purchased
shares.
9.
Manner
of Exercising Option
.
(a)
In
order
to exercise this option with respect to all or any part of the Option Shares
for
which this option is at the time exercisable, Optionee (or any other person
or
persons exercising the option) must take the following actions:
(i)
Execute
and deliver to the Corporation a [Purchase Agreement/Exercise Notice] for
the
Option Shares for which the option is exercised.
(ii)
Pay
the
aggregate Exercise Price for the purchased shares in one or more of the
following forms:
(A)
cash
or
check made payable to the Corporation; or
(B)
a
promissory note payable to the Corporation, but only to the extent authorized
by
the Plan Administrator in accordance with Paragraph 14.
Should
the Common Stock be registered under Section 12 of the 1934 Act at the time
the
option is exercised, then the Exercise Price may also be paid as
follows:
(C)
in
shares
of Common Stock held by Optionee (or any other person or persons exercising
the
option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or
(D)
to
the
extent the option is exercised for vested Option Shares and unless prohibited
by
Section 402 of the Sarbanes Oxley Act of 2002, through payment in accordance
with a brokerage transaction as permitted under the provisions of Regulation
T
applicable to cashless exercises promulgated by the Federal Reserve Board
out of
the sale proceeds available on the settlement date of sufficient funds to
cover
the aggregate exercise price payable for the purchased shares plus all
applicable income and employment taxes required to be withheld by the
Corporation by reason of such exercise and the Optionee (or any other person
or
persons exercising the option) shall concurrently provide irrevocable
instructions to the Corporation to deliver the certificates for the purchased
shares directly to a brokerage firm in order to complete the sale.
(iii)
Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise
this
option.
(iv)
Execute
and deliver to the Corporation such written representations as may be requested
by the Corporation in order for it to comply with the applicable requirements
of
applicable securities laws.
(v)
Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all applicable income and
employment tax withholding requirements applicable to the option
exercise.
(b)
As
soon
as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option)
a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto.
10.
Compliance
with Laws and Regulations
.
(a)
The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b)
The
inability of the Corporation to obtain approval from any regulatory body
having
authority deemed by the Corporation to be necessary to the lawful issuance
and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of the Common Stock
as
to which such approval shall not have been obtained. The Corporation, however,
shall use its best efforts to obtain all such approvals.
11.
Successors
and Assigns
.
Except
to the extent otherwise provided in Paragraphs 3 and 6, the provisions of
this
Agreement shall inure to the benefit of, and be binding upon, the Corporation
and its successors and assigns and Optionee, Optionee’s assigns and the legal
representatives, heirs and legatees of Optionee’s estate.
12.
Notices
.
Any
notice required to be given or delivered to the Corporation under the terms
of
this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or delivered
to
Optionee shall be in writing and addressed to Optionee at the address indicated
below Optionee’s signature line on the Grant Notice. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
13.
Financing
.
The
Plan Administrator may, in its absolute discretion and without any obligation
to
do so, permit Optionee to pay the Exercise Price for the purchased Option
Shares
by delivering a full-recourse promissory note bearing interest at a market
rate
and secured by those Option Shares. The payment schedule in effect for any
such
promissory note shall be established by the Plan Administrator in its sole
discretion.
Note
:
If the
Optionee is a consultant, then the promissory note delivered in payment of
the
Exercise Price must be secured by collateral other than the purchased Option
Shares.
14.
Construction
.
This
Agreement and the option evidenced hereby are made and granted pursuant to
the
Plan and are in all respects limited by and subject to the terms of the Plan.
All decisions of the Plan Administrator with respect to any question or issue
arising under the Plan or this Agreement shall be conclusive and binding
on all
persons having an interest in this option.
15.
Governing
Law
.
The
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of Delaware without resort to that State’s
conflict-of-laws rules.
16.
Stockholder
Approval
.
If the
Option Shares covered by this Agreement exceed, as of the Grant Date, the
number
of shares of Common Stock which may be issued under the Plan as last approved
by
the stockholders, then this option shall be void with respect to such excess
shares, unless stockholder approval of an amendment sufficiently increasing
the
number of shares of Common Stock issuable under the Plan is obtained in
accordance with the provisions of the Plan.
17.
Additional
Terms Applicable to an Incentive Option
.
In the
event this option is designated an Incentive Option in the Grant Notice,
the
following terms and conditions shall also apply to the grant:
(a)
This
option shall cease to qualify for favorable tax treatment as an Incentive
Option
if (and to the extent) this option is exercised for one or more Option Shares:
(i) more than thirty (30) days after the date Optionee ceases to be an Employee
for any reason other than death or Permanent Disability or (ii) more than
six
(6) months after the date Optionee ceases to be an Employee by reason of
Permanent Disability.
(b)
This
option shall not become exercisable in the calendar year in which granted
if
(and to the extent) the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which this option would otherwise first become
exercisable in such calendar year would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common Stock
and
any other securities for which one or more other Incentive Options granted
to
Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in
the aggregate. To the extent the exercisability of this option is deferred
by
reason of the foregoing limitation, the deferred portion shall become
exercisable in the first calendar year or years thereafter in which the One
Hundred Thousand Dollar ($100,000) limitation of this Paragraph 17(b) would
not be contravened, but such deferral shall in all events end immediately
prior
to the effective date of a Change in Control in which this option is not
to be
assumed or otherwise continued in effect, whereupon the option shall become
immediately exercisable as a Non-Statutory Option for the deferred portion
of
the Option Shares.
(c)
Should
Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first time in the same calendar
year as this option, then the foregoing limitations on the exercisability
of
such options as Incentive Options shall be applied on the basis of the order
in
which such options are granted.
APPENDIX
The
following definitions shall be in effect under the Agreement:
A.
Agreement
shall
mean this Stock Option Agreement.
B.
Board
shall
mean the Corporation’s Board of Directors.
C.
Change
in Control
shall
mean a change in ownership or control of the Corporation effected through
any of
the following transactions:
(i)
a
merger,
consolidation or other reorganization approved by the Corporation’s
stockholders,
unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned
the
Corporation’s outstanding voting securities immediately prior to such
transaction, or
(ii)
a
stockholder-approved sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation, or
(iii)
the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders.
In
no
event shall any public offering of the Corporation’s securities be deemed to
constitute a Change in Control.
D.
Code
shall
mean the Internal Revenue Code of 1986, as amended.
E.
Common
Stock
shall
mean the Corporation’s common stock.
F.
Corporation
shall
mean ASIA TIME CORPORATION, a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of
ASIA
TIME CORPORATION which shall by appropriate action assume this
option.
G.
Disability
shall
mean the inability of Optionee to engage in any substantial gainful activity
by
reason of any medically determinable physical or mental impairment and shall
be
determined by the Plan Administrator on the basis of such medical evidence
as
the Plan Administrator deems warranted under the circumstances. Disability
shall
be deemed to constitute
Permanent
Disability
in
the
event that such Disability is expected to result in death or has lasted or
can
be expected to last for a continuous period of twelve (12) months or
more.
H.
Employee
shall
mean an individual who is in the employ of the Corporation (or any Parent
or
Subsidiary), subject to the control and direction of the employer entity
as to
both the work to be performed and the manner and method of
performance.
I.
Exercise
Date
shall
mean the date on which the option shall have been exercised in accordance
with
Paragraph 9 of the Agreement.
J.
Exercise
Price
shall
mean the exercise price payable per Option Share as specified in the Grant
Notice.
K.
Expiration
Date
shall
mean the date on which the option expires as specified in the Grant
Notice.
L.
Fair
Market Value
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i)
If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock
on the
date in question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii)
If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the
date
in question on the Stock Exchange determined by the Plan Administrator to
be the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii)
If
the
Common Stock is at the time neither listed on any Stock Exchange nor traded
on
the Nasdaq National Market, then the Fair Market Value shall be determined
by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
M.
Grant
Date
shall
mean the date of grant of the option as specified in the Grant
Notice.
N.
Grant
Notice
shall
mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant
to
which Optionee has been informed of the basic terms of the option evidenced
hereby.
O.
Incentive
Option
shall
mean an option which satisfies the requirements of Code Section 422.
P.
Misconduct
shall
mean the commission of any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of confidential information
or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not in any way preclude or restrict the right
of the
Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee
or
any other person in the Service of the Corporation (or any Parent or Subsidiary)
for any other acts or omissions, but such other acts or omissions shall not
be
deemed, for purposes of the Plan or this Agreement, to constitute grounds
for
termination for Misconduct.
Q.
1934
Act
shall
mean the Securities Exchange Act of 1934, as amended.
R.
Non-Statutory
Option
shall
mean an option not intended to satisfy the requirements of Code Section
422.
S.
Option
Shares
shall
mean the number of shares of Common Stock subject to the option.
T.
Optionee
shall
mean the person to whom the option is granted as specified in the Grant
Notice.
U.
Parent
shall
mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V.
Plan
shall
mean the Corporation’s 2008 Equity Incentive Plan.
W.
Plan
Administrator
shall
mean either the Board or a committee of the Board acting in its capacity
as
administrator of the Plan.
X.
Purchase
Agreement
shall
mean the stock purchase agreement in substantially the form of Exhibit C
to the
Grant Notice.
Y.
Service
shall
mean the Optionee’s performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an Employee, a non-employee member of the
board of directors or an independent consultant.
Z.
Stock
Exchange
shall
mean the American Stock Exchange or the New York Stock Exchange.
AA.
Subsidiary
shall
mean any entity in which, directly or indirectly through one or more
intermediaries, the Corporation has at least a 50% ownership interest or,
where
permissible under Code Section 409A, at least a 20% ownership interest.
BB.
Vesting
Schedule
shall
mean the vesting schedule specified in the Grant Notice pursuant to which
the
Optionee is to vest in the Option Shares in a series of installments over
his or
her period of Service.
ADDENDUM
TO
STOCK
OPTION AGREEMENT
The
following provisions are hereby incorporated into, and are hereby made a
part
of, that certain Stock Option Agreement (the “
Option
Agreement
”)
by and
between ASIA TIME CORPORATION (the “
Corporation
”)
and
________________________ (“
Optionee
”)
evidencing the stock option (the “
Option
”)
granted on this date to Optionee under the terms of the Corporation’s 2008
Equity Incentive Plan, and such provisions shall be effective immediately.
All
capitalized terms in this Addendum, to the extent not otherwise defined herein,
shall have the meanings assigned to them in the Option Agreement.
INVOLUNTARY
TERMINATION FOLLOWING
A
CHANGE IN CONTROL
A.
If
the
Option is to be assumed by the successor corporation (or the parent thereof)
in
connection with a Change in Control or is otherwise to be continued in full
force and effect pursuant to the terms of the Change in Control transaction,
then none of the Option Shares shall vest on an accelerated basis upon the
occurrence of that Change in Control, and Optionee shall accordingly continue,
over his or her period of Service following the Change in Control, to vest
in
the Option Shares in one or more installments in accordance with the provisions
of the Option Agreement. However, upon an Involuntary Termination of Optionee’s
Service within _________ (__) months following such Change in Control, all
the
Option Shares at the time subject to the Option shall automatically vest
in full
on an accelerated basis so that the Option shall immediately become exercisable
for all the Option Shares as fully-vested shares and may be exercised for
any or
all of those Option Shares as vested shares. The Option shall remain so
exercisable until the
earlier
of (i)
the Expiration Date or (ii) the expiration of the one (1)-year period measured
from the date of the Involuntary Termination.
B.
For
purposes of this Addendum, an
Involuntary
Termination
shall
mean the termination of Optionee’s Service by reason of:
(a)
Optionee’s
involuntary dismissal or discharge by the Corporation for reasons other than
for
Misconduct, or
(b)
Optionee’s
voluntary resignation following (A) a change in Optionee’s position with the
Corporation (or Parent or Subsidiary employing Optionee) which materially
reduces Optionee’s duties and responsibilities or the level of management to
which he or she reports, (B) a reduction in Optionee’s level of compensation
(including base salary, fringe benefits and target bonus under any
corporate-performance based incentive programs) by more than fifteen percent
(15%) or (C) a relocation of Optionee’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation
is effected by the Corporation without Optionee’s consent.
C.
The
provisions of Paragraph 1 of this Addendum shall govern the period for which
the
Option is to remain exercisable following the Involuntary Termination of
Optionee’s Service within _____ (__) months after the Change in Control and
shall supersede any provisions to the contrary in Paragraph 5 of the Option
Agreement.
IN
WITNESS WHEREOF
,
ASIA
TIME CORPORATION has caused this Addendum to be executed by its duly authorized
officer as of the Effective Date specified below.
|
ASIA
TIME CORPORATION
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Title:
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EFFECTIVE
DATE
:
________________, _______
APPENDIX
A-4
ASIA
TIME CORPORATION
STOCK
ISSUANCE AGREEMENT
AGREEMENT
made
as
of this ____ day of ______________________, _____ by and between ASIA TIME
CORPORATION, a Delaware corporation, and _____________________, Participant
in
the Corporation’s 2008 Equity Incentive Plan.
All
capitalized terms in this Agreement shall have the meaning assigned to them
in
this Agreement or in the attached Appendix.
A.
PURCHASE
OF SHARES
1.
Purchase
.
Participant hereby purchases ___________________ shares of Common Stock (the
“
Purchased
Shares
”)
pursuant to the provisions of the Stock Issuance Program at the purchase
price
of $_____________ per share (the “
Purchase
Price
”).
2.
Payment
.
Concurrently with the delivery of this Agreement to the Corporation, Participant
shall pay the Purchase Price for the Purchased Shares in cash or cash equivalent
and shall deliver a duly-executed blank Assignment Separate from Certificate
(in
the form attached hereto as Exhibit I) with respect to the Purchased
Shares.
3.
Stockholder
Rights
.
Until
such time as the Corporation exercises the Repurchase Right, Participant
(or any
successor in interest) shall have all stockholder rights (including voting,
dividend and liquidation rights equal to those of other holders of the Company’s
Common Stock) with respect to the Purchased Shares, subject, however, to
the
transfer restrictions of Articles B and C.
B.
SECURITIES
LAW COMPLIANCE
1.
Restricted
Securities
.
To the
extent the Purchased Shares are not issued pursuant to an effective registration
statement, The Purchased Shares have not been registered under the 1933 Act
and
are being issued to Participant in reliance upon the exemption from such
registration provided by SEC Rule 701 for stock issuances under compensatory
benefit plans such as the Plan. Participant hereby confirms that Participant
has
been informed that the Purchased Shares are restricted securities under the
1933
Act and may not be resold or transferred unless the Purchased Shares are
first
registered under the Federal securities laws or unless an exemption from
such
registration is available. Accordingly, Participant hereby acknowledges that
Participant is acquiring the Purchased Shares for investment purposes only
and
not with a view to resale and is prepared to hold the Purchased Shares for
an
indefinite period and that Participant is aware that SEC Rule 144 issued
under
the 1933 Act which exempts certain resales of unrestricted securities is
not
presently available to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act.
2.
Disposition
of Purchased Shares
.
Participant shall make no disposition of the Purchased Shares (other than
a
Permitted Transfer) unless and until there is compliance with all of the
following requirements:
(i)
Participant
shall have provided the Corporation with a written summary of the terms and
conditions of the proposed disposition.
(ii)
Participant
shall have complied with all requirements of this Agreement applicable to
the
disposition of the Purchased Shares.
(iii)
Participant
shall have provided the Corporation with written assurances, in form and
substance satisfactory to the Corporation, that (a) the proposed
disposition does not require registration of the Purchased Shares under the
1933
Act or (b) all appropriate action necessary for compliance with the
registration requirements of the 1933 Act or any exemption from registration
available under the 1933 Act (including Rule 144) has been taken.
The
Corporation shall
not
be
required (i) to transfer on its books any Purchased Shares which have been
sold
or transferred in violation of the provisions of this Agreement
or
(ii) to
treat as the owner of the Purchased Shares, or otherwise to accord voting,
dividend or liquidation rights to, any transferee to whom the Purchased Shares
have been transferred in contravention of this Agreement.
3.
Restrictive
Legends
.
The
stock certificates for the Purchased Shares shall be endorsed with one or
more
of the following restrictive legends:
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933. The shares may not be sold or offered for sale in
the
absence of (a) an effective registration statement for the shares under such
Act, (b) a “no action” letter of the Securities and Exchange Commission with
respect to such sale or offer or (c) satisfactory assurances to the Corporation
that registration under such Act is not required with respect to such sale
or
offer.”
“The
shares represented by this certificate are subject to certain repurchase
rights
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity
with
the terms of a written agreement between the Corporation and the registered
holder of the shares (or the predecessor in interest to the shares). A copy
of
such agreement is maintained at the Corporation’s principal corporate
offices.”
C.
TRANSFER
RESTRICTIONS
1.
Restriction
on Transfer
.
Except
for any Permitted Transfer, Participant shall not transfer, assign, encumber
or
otherwise dispose of any of the Purchased Shares which are subject to the
Repurchase Right.
2.
Transferee
Obligations
.
Each
person (other than the Corporation) to whom the Purchased Shares are transferred
by means of a Permitted Transfer must, as a condition precedent to the validity
of such transfer, acknowledge in writing to the Corporation that such person
is
bound by the provisions of this Agreement and that the transferred shares
are
subject to the Repurchase Right, to the same extent such shares would be
so
subject if retained by Participant.
D.
REPURCHASE
RIGHT
1.
Grant
.
The
Corporation is hereby granted the right (the “
Repurchase
Right
”),
exercisable at any time during the ninety (90)-day period following the date
Participant ceases for any reason to remain in Service, to repurchase at
the
Repurchase Price any or all of the Purchased Shares in which Participant
is not,
at the time of his or her cessation of Service, vested in accordance with
the
provisions of the Vesting Schedule set forth in Paragraph
D
.
3
or the
special vesting acceleration provisions of Paragraph
D
.
5
(such
shares to be hereinafter referred to as the “
Unvested
Shares
”)
.
2.
Exercise
of the Repurchase Right
.
The
Repurchase Right shall be exercisable by written notice delivered to each
Owner
of the Unvested Shares prior to the expiration of the ninety (90)-day exercise
period. The notice shall indicate the number of Unvested Shares to be
repurchased, the Repurchase Price to be paid per share and the date on which
the
repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested
Shares
to be repurchased shall be delivered to the Corporation on the closing date
specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount
equal
to the Repurchase Price for the Unvested Shares which are to be repurchased
from
Owner.
3.
Termination
of the Repurchase Right
.
The
Repurchase Right shall terminate with respect to any Unvested Shares for
which
it is not timely exercised under Paragraph
D
.
2
.
In
addition, the Repurchase Right shall terminate and cease to be exercisable
with
respect to any and all Purchased Shares in which Participant vests in accordance
with the following Vesting Schedule:
4.
Recapitalization
.
Any
new, substituted or additional securities or other property (including cash
paid
other than as a regular cash dividend) which is by reason of any
Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to reflect
such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the Repurchase Price per share to be paid
upon
the exercise of the Repurchase Right in order to reflect the effect of any
such
Recapitalization upon the Corporation’s capital structure;
provided
,
however, that the aggregate Repurchase Price shall remain the same.
5.
Change
in Control
.
(a)
To
the
extent the Repurchase Right remains in effect following a Change in Control,
such right shall apply to any new securities or other property (including
any
cash payments) received in exchange for the Purchased Shares in consummation
of
the Change in Control, but only to the extent the Purchased Shares are at
the
time covered by such right. Appropriate adjustments shall be made to the
Repurchase Price per share payable upon exercise of the Repurchase Right
to
reflect the effect (if any) of the Change in Control upon the Corporation’s
capital structure;
provided
,
however, that the aggregate Repurchase Price shall remain the same. The new
securities or other property (including any cash payments) issued or distributed
with respect to the Purchased Shares in consummation of the Change in Control
shall be immediately deposited in escrow with the Corporation (or the successor
entity) and shall not be released from escrow until Participant vests in
such
securities or other property in accordance with the same Vesting Schedule
in
effect for the Purchased Shares.
E.
SPECIAL
TAX ELECTION
1.
Section
83(b) Election
.
Under
Code Section 83, the excess of the Fair Market Value of the Purchased Shares
on
the date any forfeiture restrictions applicable to such shares lapse over
the
Purchase Price paid for those shares will be reportable as ordinary income
on
the lapse date. For this purpose, the term “forfeiture restrictions” includes
the right of the Corporation to repurchase the Purchased Shares pursuant
to the
Repurchase Right. Participant may elect under Code Section 83(b) to be taxed
at
the time the Purchased Shares are acquired, rather than when and as such
Purchased Shares cease to be subject to such forfeiture restrictions. Such
election must be filed with the Internal Revenue Service within thirty (30)
days
after the date of this Agreement. Even if the Fair Market Value of the Purchased
Shares on the date of this Agreement equals the Purchase Price paid (and
thus no
tax is payable), the election must be made to avoid adverse tax consequences
in
the future.
THE
FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT
UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY
(30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE
FORFEITURE RESTRICTIONS LAPSE.
2.
FILING
RESPONSIBILITY
.
PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT
THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF
PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING
ON HIS OR HER BEHALF.
F.
GENERAL
PROVISIONS
1.
Assignment
.
The
Corporation may assign the Repurchase Right and/or the First Refusal Right
to
any person or entity selected by the Board, including (without limitation)
one
or more stockholders of the Corporation.
2.
At
Will Employment
.
Nothing
in this Agreement or in the Plan shall confer upon Participant any right
to
continue in Service for any period of specific duration or interfere with
or
otherwise restrict in any way the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining Participant) or of Participant, which rights
are hereby expressly reserved by each, to terminate Participant’s Service at any
time for any reason, with or without cause.
3.
Notices
.
Any
notice required to be given under this Agreement shall be in writing and
shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated below such party’s signature
line on this Agreement or at such other address as such party may designate
by
ten (10) days advance written notice under this paragraph to all other parties
to this Agreement.
4.
No
Waiver
.
The
failure of the Corporation in any instance to exercise the Repurchase Right
or
the First Refusal Right shall not constitute a waiver of any other repurchase
rights and/or rights of first refusal that may subsequently arise under the
provisions of this Agreement or any other agreement between the Corporation
and
Participant. No waiver of any breach or condition of this Agreement shall
be
deemed to be a waiver of any other or subsequent breach or condition, whether
of
like or different nature.
5.
Cancellation
of Shares
.
If the
Corporation shall make available, at the time and place and in the amount
and
form provided in this Agreement, the consideration for the Purchased Shares
to
be repurchased in accordance with the provisions of this Agreement, then
from
and after such time, the person from whom such shares are to be repurchased
shall no longer have any rights as a holder of such shares (other than the
right
to receive payment of such consideration in accordance with this Agreement).
Such shares shall be deemed purchased in accordance with the applicable
provisions hereof, and the Corporation shall be deemed the owner and holder
of
such shares, whether or not the certificates therefor have been delivered
as
required by this Agreement.
G.
MISCELLANEOUS
PROVISIONS
1.
Governing
Law
.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California without resort to that State’s conflict-of-laws
rules.
2.
Participant
Undertaking
.
Participant hereby agrees to take whatever additional action and execute
whatever additional documents the Corporation may deem necessary or advisable
in
order to carry out or effect one or more of the obligations or restrictions
imposed on either Participant or the Purchased Shares pursuant to the provisions
of this Agreement.
3.
Agreement
is Entire Contract
.
This
Agreement constitutes the entire contract between the parties hereto with
regard
to the subject matter hereof. This Agreement is made pursuant to the provisions
of the Plan and shall in all respects be construed in conformity with the
terms
of the Plan.
4.
Counterparts
.
This
Agreement may be executed in counterparts, each of which shall be deemed
to be
an original, but all of which together shall constitute one and the same
instrument.
5.
Successors
and Assigns
.
The
provisions of this Agreement shall inure to the benefit of, and be binding
upon,
the Corporation and its successors and assigns and upon Participant,
Participant’s assigns and the legal representatives, heirs and legatees of
Participant’s estate, whether or not any such person shall have become a party
to this Agreement and have agreed in writing to join herein and be bound
by the
terms hereof.
IN
WITNESS WHEREOF
,
the
parties have executed this Agreement on the day and year first indicated
above.
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ASIA
TIME CORPORATION
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By:
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Title:
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Address:
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,
PARTICIPANT
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Address:
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SPOUSAL
ACKNOWLEDGMENT
The
undersigned spouse of Participant has read and hereby approves the foregoing
Stock Issuance Agreement. In consideration of the Corporation’s granting
Participant the right to acquire the Purchased Shares in accordance with
the
terms of such Agreement, the undersigned hereby agrees to be irrevocably
bound
by all the terms of such Agreement, including (without limitation) the right
of
the Corporation (or its assigns) to purchase any Purchased Shares in which
Participant is not vested at the time of his or her cessation of Service.
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PARTICIPANT’S
SPOUSE
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Address:
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EXHIBIT
I
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE RECEIVED
________________ hereby sell(s), assign(s) and transfer(s) unto ASIA TIME
CORPORATION (the “Corporation”), ______________ (_____) shares of the Common
Stock of the Corporation standing in his or her name on the books of the
Corporation represented by Certificate No. _______________ herewith and do(es)
hereby irrevocably constitute and appoint _________________ Attorney to transfer
the said stock on the books of the Corporation with full power of substitution
in the premises.
Instruction:
Please
do not fill in any blanks other than the signature line. Please sign exactly
as
you would like your name to appear on the issued stock certificate. The purpose
of this assignment is to enable the Corporation to exercise the Repurchase
Right
without requiring additional signatures on the part of Participant.
EXHIBIT
II
SECTION
83(b) TAX ELECTION
SECTION
83(b) TAX ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1)
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The
taxpayer who performed the services
is:
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Name:
Address:
Taxpayer
Ident. No.:
(2)
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The
property with respect to which the election is being made is
______________ shares of the common stock of ASIA TIME
CORPORATION
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(3)
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The
property was issued on __________________,
_____.
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(4)
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The
taxable year in which the election is being made is the calendar
year
_____.
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(5)
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The
property is subject to a repurchase right pursuant to which the
issuer has
the right to acquire the property at the lower of the purchase
price paid
per share, or the fair market value per share if for any reason
taxpayer’s
service with the issuer terminates. [The issuer’s repurchase right or the
fair market value will lapse in a series of annual and monthly
installments over a [four (4)-year] period ending on ________________,
20___.]
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(6)
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The
fair market value at the time of transfer (determined without regard
to
any restriction other than a restriction which by its terms will
never
lapse) is $_____ per share.
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(7)
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The
amount paid for such property is $ _______ per
share.
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(8)
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A
copy of this statement was furnished to ASIA TIME CORPORATION for
whom
taxpayer rendered the services underlying the transfer of
property.
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(9)
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This
statement is executed on _______________,
_____.
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This
election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Issuance Agreement.
This
filing should be made by registered or certified mail, return receipt requested.
Participant must retain two (2) copies of the completed form for filing with
his
or her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
EXHIBIT
III
2008
EQUITY INCENTIVE PLAN
APPENDIX
The
following definitions shall be in effect under the Agreement:
A.
Agreement
shall
mean this Stock Issuance Agreement.
B.
Board
shall
mean the Corporation’s Board of Directors.
C.
Change
in Control
shall
mean a change in ownership or control of the Corporation effected through
any of
the following transactions:
(i)
a
merger,
consolidation or other reorganization approved by the Corporation’s
stockholders,
unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned
the
Corporation’s outstanding voting securities immediately prior to such
transaction, or
(ii)
a
stockholder-approved sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation, or
(iii)
the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders.
In
no
event shall any public offering of the Corporation’s securities be deemed to
constitute a Change in Control.
D.
Code
shall
mean the Internal Revenue Code of 1986, as amended.
E.
Common
Stock
shall
mean the Corporation’s common stock.
F.
Corporation
shall
mean ASIA TIME CORPORATION, a California corporation, and any successor
corporation to all or substantially all of the assets or voting stock of
ASIA
TIME CORPORATION which shall by appropriate action adopt the Plan.
G.
Fair
Market Value
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i)
If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock
on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii)
If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the
date
in question on the Stock Exchange determined by the Plan Administrator to
be the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii)
If
the
Common Stock is at the time neither listed on any Stock Exchange nor traded
on
the Nasdaq National Market, then the Fair Market Value shall be determined
by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
H.
1933
Act
shall
mean the Securities Act of 1933, as amended.
I.
Owner
shall
mean Participant and all subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from
Participant.
J.
Parent
shall
mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
K.
Participant
shall
mean the person to whom shares are issued under the Stock Issuance
Program.
L.
Permitted
Transfer
shall
mean (i) a transfer of title to the Purchased Shares effected pursuant to
Participant’s will or the laws of inheritance following Participant’s death,
(ii) a transfer to the Corporation in pledge as security for any purchase-money
indebtedness incurred by Participant in connection with the acquisition of
the
Purchased Shares, or (iii) a transfer by a Participant to the Participant’s
family members as a gift, whether directly or indirectly, or by means of
a trust
or partnership or otherwise, or pursuant to a qualified domestic relations
order
as defined in the Code or Title 1 of the Employee Retirement Income Security
Act
of 1974, as amended, provided, that, if the Corporation is subject to the
reporting requirements of Section 13 or 15(d) of the 1934 Act, then as otherwise
permitted pursuant to General Instructions A.1(a)(5) to Form S-8 under the
1933
Act. For purposes of this definition, "family member" shall have the meaning
given to such term in Rule 701 promulgated under the Securities Act, provided,
that, if the Corporation is subject to the reporting requirements of Section
13
or 15(d) of the 1934 Act, then it shall have the meaning given to such term
in
General Instructions A.1(a)(5) to Form S-8 under the 1933 Act.
M.
Plan
shall
mean the Corporation’s 2008 Equity Incentive Plan attached hereto as Exhibit
III.
N.
Plan
Administrator
shall
mean either the Board or a committee of the Board acting in its capacity
as
administrator of the Plan.
O.
Purchase
Price
shall
have the meaning assigned to such term in Paragraph A.1.
P.
Purchased
Shares
shall
have the meaning assigned to such term in Paragraph A.1.
Q.
Recapitalization
shall
mean any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Corporation’s outstanding
Common Stock as a class without the Corporation’s receipt of
consideration.
R.
Reorganization
shall
mean any of the following transactions:
(i)
a
merger
or consolidation in which the Corporation is not the surviving
entity,
(ii)
a
sale,
transfer or other disposition of all or substantially all of the Corporation’s
assets,
(iii)
a
reverse
merger in which the Corporation is the surviving entity but in which the
Corporation’s outstanding voting securities are transferred in whole or in part
to a person or persons different from the persons holding those securities
immediately prior to the merger, or
(iv)
any
transaction effected primarily to change the state in which the Corporation
is
incorporated or to create a holding company structure.
S.
Repurchase
Price
shall
mean shall mean the Fair Market Value per share of Common Stock on the date
of Participant’s cessation of Service.
T.
Repurchase
Right
shall
mean the right granted to the Corporation in accordance with Article
D
.
U.
SEC
shall
mean the Securities and Exchange Commission.
V.
Service
shall
mean the Participant’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an employee, subject to the control
and
direction of the employer entity as to both the work to be performed and
the
manner and method of performance, a non-employee member of the board of
directors or an independent consultant.
W.
Stock
Issuance Program
shall
mean the Stock Issuance Program under the Plan.
X.
Subsidiary
shall
mean any entity in which, directly or indirectly through one or more
intermediaries, the Corporation has at least a 50% ownership interest or,
where
permissible under Code Section 409A, at least a 20% ownership interest.
Y.
Vesting
Schedule
shall
mean the vesting schedule specified in Paragraph
D.3
pursuant
to which Participant is to vest in the Purchased Shares in a series of
installments over the Participant’s period of Service.
Z.
Unvested
Shares
shall
have the meaning assigned to such term in Paragraph
D.1
.
ADDENDUM
TO
STOCK
ISSUANCE AGREEMENT
The
following provisions are hereby incorporated into, and are hereby made a
part
of, that certain Stock Issuance Agreement (the “
Issuance
Agreement
”)
by and
between ASIA TIME CORPORATION (the “
Corporation
”)
and
_________________ (“
Participant
”)
evidencing the shares of Common Stock purchased on this date by Participant
under the Corporation’s 2008 Equity Incentive Plan, and such provisions shall be
effective immediately. All capitalized terms in this Addendum, to the extent
not
otherwise defined herein, shall have the meanings assigned to such terms
in the
Issuance Agreement.
INVOLUNTARY
TERMINATION FOLLOWING
A
CHANGE
IN CONTROL
TO
THE EXTENT THE REPURCHASE RIGHT IS ASSIGNED TO THE SUCCESSOR CORPORATION
(OR
PARENT THEREOF) IN CONNECTION WITH A CHANGE IN CONTROL OR IS OTHERWISE TO
CONTINUE IN FULL FORCE AND EFFECT PURSUANT TO THE TERMS OF THE CHANGE IN
CONTROL
TRANSACTION, NO ACCELERATED VESTING OF THE PURCHASED SHARES SHALL OCCUR UPON
THAT CHANGE IN CONTROL, AND THE REPURCHASE RIGHT SHALL CONTINUE TO REMAIN
IN
FULL FORCE AND EFFECT IN ACCORDANCE WITH THE PROVISIONS OF THE ISSUANCE
AGREEMENT. PARTICIPANT SHALL, OVER HIS OR HER PERIOD OF SERVICE FOLLOWING
SUCH
CHANGE IN CONTROL, CONTINUE TO VEST IN THE PURCHASED SHARES IN ONE OR MORE
INSTALLMENTS IN ACCORDANCE WITH THE PROVISIONS OF THE ISSUANCE AGREEMENT.
HOWEVER, UPON AN INVOLUNTARY TERMINATION OF PARTICIPANT’S SERVICE WITHIN
_________ (__) MONTHS FOLLOWING SUCH CHANGE IN CONTROL, THE REPURCHASE RIGHT
SHALL TERMINATE AUTOMATICALLY, AND ALL THE PURCHASED SHARES SHALL IMMEDIATELY
VEST IN FULL AT THAT TIME. ANY UNVESTED ESCROW ACCOUNT MAINTAINED ON
PARTICIPANT’S BEHALF PURSUANT TO PARAGRAPH D.5 OF THE ISSUANCE AGREEMENT SHALL
ALSO VEST AT THE TIME OF SUCH INVOLUNTARY TERMINATION AND SHALL BE PAID TO
PARTICIPANT PROMPTLY THEREAFTER.
FOR
PURPOSES OF THIS ADDENDUM, THE FOLLOWING DEFINITIONS SHALL BE IN
EFFECT:
An
Involuntary
Termination
shall
mean the termination of Participant’s Service by reason of:
Participant’s
involuntary dismissal or discharge by the Corporation for reasons other than
for
Misconduct, or
Participant’s
voluntary resignation following (1) a change in his or her position with
the
Corporation (or Parent or Subsidiary employing Participant) which materially
reduces his or her duties and responsibilities or the level of management
to
which he or she reports, (2) a reduction in Participant’s level of compensation
(including base salary, fringe benefits and target bonus under any
corporate-performance based incentive programs) by more than fifteen percent
(15%) or (3) a relocation of Participant’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation
is
effected by the Corporation without Participant’s consent.
Misconduct
shall
include the termination of Participant’s Service by reason of Participant’s
commission of any act of fraud, embezzlement or dishonesty, any unauthorized
use
or disclosure by Participant of confidential information or trade secrets
of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by Participant adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or
any
Parent or Subsidiary) to discharge or dismiss Participant or any other person
in
the Service of the Corporation (or any Parent or Subsidiary) for any other
acts
or omissions, but such other acts or omissions shall not be deemed, for purposes
of the Plan and this Addendum, to constitute grounds for termination for
Misconduct.
IN
WITNESS WHEREOF
,
ASIA
TIME CORPORATION has caused this Addendum to be executed by its duly-authorized
officer as of the Effective Date specified below.
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ASIA
TIME CORPORATION
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By:
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Title:
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EFFECTIVE
DATE:
_______________________, ________
APPENDIX
A-5
ASIA
TIME CORPORATION
STOCK
PURCHASE AGREEMENT
AGREEMENT
made
this
_____ day of ___________________, _____ by and between ASIA TIME CORPORATION,
a
Delaware corporation, and _____________________, Optionee under the
Corporation’s 2008 Equity Incentive Plan.
All
capitalized terms in this Agreement shall have the meaning assigned to them
in
this Agreement or in the attached Appendix.
1.
Exercise
.
Optionee hereby purchases _______ shares of Common Stock (the “
Purchased
Shares
”)
pursuant to that certain option (the “
Option
”)
granted Optionee on ____________________, _______ (the “
Grant
Date
”)
to
purchase up to _______________ shares of Common Stock (the “
Option
Shares
”)
under
the Plan at the exercise price of $___________ per share (the “
Exercise
Price
”).
2.
Payment
.
Concurrently with the delivery of this Agreement to the Corporation, Optionee
shall pay the Exercise Price for the Purchased Shares in accordance with
the
provisions of the Option Agreement and shall deliver whatever additional
documents may be required by the Option Agreement as a condition for exercise,
together with a duly-executed blank Assignment Separate from Certificate
(in the
form attached hereto as Exhibit I) with respect to the Purchased
Shares.
3.
Stockholder
Rights
.
Until
such time as the Corporation exercises the Repurchase Right, Optionee (or
any
successor in interest) shall have all the rights of a stockholder (including
voting, dividend and liquidation rights equal to those of other holders of
the
Company’s Common Stock) with respect to the Purchased Shares, subject, however,
to the transfer restrictions of Articles B and C.
|
B.
|
SECURITIES
LAW COMPLIANCE
|
1.
Restricted
Securities
.
To the
extent the Purchased Shares are not issued pursuant to an effective registration
statement, the Purchased Shares have not been registered under the 1933 Act
and
are being issued to Optionee in reliance upon the exemption from such
registration provided by SEC Rule 701 for stock issuances under compensatory
benefit plans such as the Plan. Optionee hereby confirms that Optionee has
been
informed that the Purchased Shares are restricted securities under the 1933
Act
and may not be resold or transferred unless the Purchased Shares are first
registered under the Federal securities laws or unless an exemption from
such
registration is available. Accordingly, Optionee hereby acknowledges that
Optionee is acquiring the Purchased Shares for investment purposes only and
not
with a view to resale and is prepared to hold the Purchased Shares for an
indefinite period and that Optionee is aware that SEC Rule 144 issued under
the
1933 Act which exempts certain resales of unrestricted securities is not
presently available to exempt the resale of the Purchased Shares from the
registration requirements of the 1933 Act.
2.
Restrictions
on Disposition of Purchased Shares
.
Optionee shall make no disposition of the Purchased Shares (other than a
Permitted Transfer) unless and until there is compliance with all of the
following requirements:
(i)
Optionee
shall have provided the Corporation with a written summary of the terms and
conditions of the proposed disposition.
(ii)
Optionee
shall have complied with all requirements of this Agreement applicable to
the
disposition of the Purchased Shares.
(iii)
Optionee
shall have provided the Corporation with written assurances, in form and
substance satisfactory to the Corporation, that (a) the proposed disposition
does not require registration of the Purchased Shares under the 1933 Act
or (b)
all appropriate action necessary for compliance with the registration
requirements of the 1933 Act or any exemption from registration available
under
the 1933 Act (including Rule 144) has been taken.
The
Corporation shall
not
be
required (i) to transfer on its books any Purchased Shares which have been
sold
or transferred in violation of the provisions of this Agreement
or
(ii) to
treat as the owner of the Purchased Shares, or otherwise to accord voting,
dividend or liquidation rights to, any transferee to whom the Purchased Shares
have been transferred in contravention of this Agreement.
3.
Restrictive
Legends
.
The
stock certificates for the Purchased Shares shall be endorsed with one or
more
of the following restrictive legend(s):
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933. The shares may not be sold or offered for sale in
the
absence of (a) an effective registration statement for the shares under such
Act, (b) a ‘no action’ letter of the Securities and Exchange Commission with
respect to such sale or offer or (c) satisfactory assurances to the Corporation
that registration under such Act is not required with respect to such sale
or
offer.”
“The
shares represented by this certificate are subject to certain repurchase
rights
granted to the Corporation and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in conformity
with
the terms of a written agreement between the Corporation and the registered
holder of the shares (or the predecessor in interest to the shares). A copy
of
such agreement is maintained at the Corporation’s principal corporate offices.”
1.
Restriction
on Transfer
.
Except
for any Permitted Transfer, Optionee shall not transfer, assign, encumber
or
otherwise dispose of any of the Purchased Shares which are subject to the
Repurchase Right.
2.
Transferee
Obligations
.
Each
person (other than the Corporation) to whom the Purchased Shares are transferred
by means of a Permitted Transfer must, as a condition precedent to the validity
of such transfer, acknowledge in writing to the Corporation that such person
is
bound by the provisions of this Agreement and that the transferred shares
are
subject to the Repurchase Right to the same extent such shares would be so
subject if retained by Optionee.
1.
Grant
.
The
Corporation is hereby granted the right (the “
Repurchase
Right
”),
exercisable at any time during the ninety (90)-day period following the date
Optionee ceases for any reason to remain in Service or (if later) during
the
ninety (90)-day period following the execution date of this Agreement, to
repurchase at the Repurchase Price any or all of the Purchased Shares in
which
Optionee is not, at the time of his or her cessation of Service, vested in
accordance with the Vesting Schedule applicable to those shares or any special
vesting acceleration provisions of Paragraph D.6 of this Agreement (such
shares
to be hereinafter referred to as the “
Unvested
Shares
”).
2.
Exercise
of the Repurchase Right
.
The
Repurchase Right shall be exercisable by written notice delivered to each
Owner
of the Unvested Shares prior to the expiration of the ninety (90)-day exercise
period. The notice shall indicate the number of Unvested Shares to be
repurchased, the Repurchase Price to be paid per share and the date on which
the
repurchase is to be effected, such date to be not more than thirty (30) days
after the date of such notice. The certificates representing the Unvested
Shares
to be repurchased shall be delivered to the Corporation on the closing date
specified for the repurchase. Concurrently with the receipt of such stock
certificates, the Corporation shall pay to Owner, in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness), an amount
equal
to the Repurchase Price for the Unvested Shares which are to be repurchased
from
Owner.
3.
Termination
of the Repurchase Right
.
The
Repurchase Right shall terminate with respect to any Unvested Shares for
which
it is not timely exercised under Paragraph D.2. In addition, the Repurchase
Right shall terminate and cease to be exercisable with respect to any and
all
Purchased Shares in which Optionee vests in accordance with the Vesting
Schedule.
4.
Aggregate
Vesting Limitation
.
If the
Option is exercised in more than one increment so that Optionee is a party
to
one or more other Stock Purchase Agreements (the “
Prior
Purchase Agreements
”)
which
are executed prior to the date of this Agreement, then the total number of
Purchased Shares as to which Optionee shall be deemed to have a fully-vested
interest under this Agreement and all Prior Purchase Agreements shall not
exceed
in the aggregate the number of Purchased Shares in which Optionee would
otherwise at the time be vested, in accordance with the Vesting Schedule,
had
all the Purchased Shares (including those acquired under the Prior Purchase
Agreements) been acquired exclusively under this Agreement.
5.
Recapitalization
.
Any
new, substituted or additional securities or other property (including cash
paid
other than as a regular cash dividend) which is by reason of any
Recapitalization distributed with respect to the Purchased Shares shall be
immediately subject to the Repurchase Right and any escrow requirements
hereunder, but only to the extent the Purchased Shares are at the time covered
by such right or escrow requirements. Appropriate adjustments to reflect
such
distribution shall be made to the number and/or class of Purchased Shares
subject to this Agreement and to the Repurchase Price per share to be paid
upon
the exercise of the Repurchase Right in order to reflect the effect of any
such
Recapitalization upon the Corporation’s capital structure;
provided
,
however, that the aggregate Repurchase Price shall remain the same.
6.
Change
in Control
.
To the
extent the Repurchase Right remains in effect following a Change in Control,
such right shall apply to any new securities or other property (including
any
cash payments) received in exchange for the Purchased Shares in consummation
of
the Change in Control, but only to the extent the Purchased Shares are at
the
time covered by such right. Appropriate adjustments shall be made to the
Repurchase Price per share payable upon exercise of the Repurchase Right
to
reflect the effect (if any) of the Change in Control upon the Corporation’s
capital structure;
provided
,
however, that the aggregate Repurchase Price shall remain the same. The new
securities or other property (including any cash payments) issued or distributed
with respect to the Purchased Shares in consummation of the Change in Control
shall be immediately deposited in escrow with the Corporation (or the successor
entity) and shall not be released from escrow until Optionee vests in such
securities or other property in accordance with the same Vesting Schedule
in
effect for the Purchased Shares.
The
acquisition of the Purchased Shares may result in adverse tax consequences
which
may be avoided or mitigated by filing an election under Code Section 83(b).
Such
election must be filed within thirty (30) days after the date of this Agreement.
A description of the tax consequences applicable to the acquisition of the
Purchased Shares and the form for making the Code Section 83(b) election
are set
forth in Exhibit II.
OPTIONEE
SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES
OF
ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING
THE CODE SECTION 83(b) ELECTION. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE’S
SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER
CODE SECTION 83(b), EVEN IF OPTIONEE REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.
1.
Assignment
.
The
Corporation may assign the Repurchase Right to any person or entity selected
by
the Board, including (without limitation) one or more stockholders of the
Corporation.
2.
At
Will Employment
.
Nothing
in this Agreement or in the Plan shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with
or
otherwise restrict in any way the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining Optionee) or of Optionee, which rights
are
hereby expressly reserved by each, to terminate Optionee’s Service at any time
for any reason, with or without cause.
3.
Notices
.
Any
notice required to be given under this Agreement shall be in writing and
shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, postage prepaid and properly addressed to the party
entitled to such notice at the address indicated in the Grant Notice or at
such
other address as such party may designate by ten (10) days advance written
notice under this paragraph to all other parties to this Agreement.
4.
No
Waiver
.
The
failure of the Corporation in any instance to exercise the Repurchase Right
or
the First Refusal Right shall not constitute a waiver of any other repurchase
rights and/or rights of first refusal that may subsequently arise under the
provisions of this Agreement or any other agreement between the Corporation
and
Optionee. No waiver of any breach or condition of this Agreement shall be
deemed
to be a waiver of any other or subsequent breach or condition, whether of
like
or different nature.
5.
Cancellation
of Shares
.
If the
Corporation shall make available, at the time and place and in the amount
and
form provided in this Agreement, the consideration for the Purchased Shares
to
be repurchased in accordance with the provisions of this Agreement, then
from
and after such time, the person from whom such shares are to be repurchased
shall no longer have any rights as a holder of such shares (other than the
right
to receive payment of such consideration in accordance with this Agreement).
Such shares shall be deemed purchased in accordance with the applicable
provisions hereof, and the Corporation shall be deemed the owner and holder
of
such shares, whether or not the certificates therefor have been delivered
as
required by this Agreement.
|
G.
|
MISCELLANEOUS
PROVISIONS
|
1.
Optionee
Undertaking
.
Optionee hereby agrees to take whatever additional action and execute whatever
additional documents the Corporation may deem necessary or advisable in order
to
carry out or effect one or more of the obligations or restrictions imposed
on
either Optionee or the Purchased Shares pursuant to the provisions of this
Agreement.
2.
Agreement
is Entire Contract
.
This
Agreement constitutes the entire contract between the parties hereto with
regard
to the subject matter hereof. This Agreement is made pursuant to the provisions
of the Plan and shall in all respects be construed in conformity with the
terms
of the Plan.
3.
Governing
Law
.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware without resort to that State’s conflict-of-laws
rules.
4.
Counterparts
.
This
Agreement may be executed in counterparts, each of which shall be deemed
to be
an original, but all of which together shall constitute one and the same
instrument.
5.
Successors
and Assigns
.
The
provisions of this Agreement shall inure to the benefit of, and be binding
upon,
the Corporation and its successors and assigns and upon Optionee, Optionee’s
permitted assigns and the legal representatives, heirs and legatees of
Optionee’s estate, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by
the
terms hereof.
IN
WITNESS WHEREOF
,
the
parties have executed this Agreement on the day and year first indicated
above.
ASIA
TIME CORPORATION
|
|
|
By:
|
|
|
|
Title:
|
|
|
|
|
|
|
,
OPTIONEE
|
SPOUSAL
ACKNOWLEDGMENT
The
undersigned spouse of Optionee has read and hereby approves the foregoing
Stock
Purchase Agreement. In consideration of the Corporation’s granting Optionee the
right to acquire the Purchased Shares in accordance with the terms of such
Agreement, the undersigned hereby agrees to be irrevocably bound by all the
terms of such Agreement, including (without limitation) the right of the
Corporation (or its assigns) to purchase any Purchased Shares in which Optionee
is not vested at time of his or her cessation of Service.
|
|
|
OPTIONEE’S
SPOUSE
|
|
|
Address:
|
|
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EXHIBIT
I
ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR
VALUE RECEIVED
___________________ hereby sell(s), assign(s) and transfer(s) unto ASIA TIME
CORPORATION (the “Corporation”), _______________ (_________) shares of the
Common Stock of the Corporation standing in his or her name on the books
of the
Corporation represented by Certificate No. ________________ herewith and
do(es)
hereby irrevocably constitute and appoint _____________________ Attorney
to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises.
Dated:
____________________
Instruction
:
Please
do not fill in any blanks other than the signature line. Please sign exactly
as
you would like your name to appear on the issued stock certificate. The purpose
of this assignment is to enable the Corporation to exercise the Repurchase
Right
without requiring additional signatures on the part of
Optionee.
EXHIBIT
II
FEDERAL
INCOME TAX CONSEQUENCES AND
SECTION
83(b) TAX ELECTION
I.
Federal
Income Tax Consequences and Section 83(b) Election For Exercise of Non-Statutory
Option
.
If the
Purchased Shares are acquired pursuant to the exercise of a Non-Statutory
Option, as specified in the Grant Notice, then under Code Section 83, the
excess
of the Fair Market Value of the Purchased Shares on the date any forfeiture
restrictions applicable to such shares lapse over the Exercise Price paid
for
those shares will be reportable as ordinary income on the lapse date. For
this
purpose, the term “forfeiture restrictions” includes the right of the
Corporation to repurchase the Purchased Shares pursuant to the Repurchase
Right.
However, Optionee may elect under Code Section 83(b) to be taxed at the time
the
Purchased Shares are acquired, rather than when and as such Purchased Shares
cease to be subject to such forfeiture restrictions. Such election must be
filed
with the Internal Revenue Service within thirty (30) days after the date
of the
Agreement. Even if the Fair Market Value of the Purchased Shares on the date
of
the Agreement equals the Exercise Price paid (and thus no tax is payable),
the
election must be made to avoid adverse tax consequences in the future. The
form
for making this election is attached as part of this exhibit.
FAILURE
TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT
IN
THE RECOGNITION OF ORDINARY INCOME BY OPTIONEE AS THE FORFEITURE RESTRICTIONS
LAPSE.
II.
Federal
Income Tax Consequences and Conditional Section 83(b) Election For Exercise
of
Incentive Option
.
If the
Purchased Shares are acquired pursuant to the exercise of an Incentive Option,
as specified in the Grant Notice, then the following tax principles shall
be
applicable to the Purchased Shares:
(i)
For
regular tax purposes, no taxable income will be recognized at the time the
Option is exercised.
(ii)
The
excess of (a) the Fair Market Value of the Purchased Shares on the date the
Option is exercised or (if later) on the date any forfeiture restrictions
applicable to the Purchased Shares lapse over (b) the Exercise Price paid
for
the Purchased Shares will be includible in Optionee’s taxable income for
alternative minimum tax purposes.
(iii)
If
Optionee makes a disqualifying disposition of the Purchased Shares, then
Optionee will recognize ordinary income in the year of such disposition equal
in
amount to the excess of (a) the Fair Market Value of the Purchased Shares
on the
date the Option is exercised or (if later) on the date any forfeiture
restrictions applicable to the Purchased Shares lapse over (b) the Exercise
Price paid for the Purchased Shares. Any additional gain recognized upon
the
disqualifying disposition will be either short-term or long-term capital
gain
depending upon the period for which the Purchased Shares are held prior to
the
disposition.
(iv)
For
purposes of the foregoing, the term “forfeiture restrictions” will include the
right of the Corporation to repurchase the Purchased Shares pursuant to the
Repurchase Right. The term “disqualifying disposition” means any sale or other
disposition
1
of the
Purchased Shares within two (2) years after the Grant Date or within one
(1)
year after the exercise date of the Option.
(v)
In
the
absence of final Treasury Regulations relating to Incentive Options, it is
not
certain whether Optionee may, in connection with the exercise of the Option
for
any Purchased Shares at the time subject to forfeiture restrictions, file
a
protective election under Code Section 83(b) which would limit Optionee’s
ordinary income upon a disqualifying disposition to the excess of the Fair
Market Value of the Purchased Shares on the date the Option is exercised
over
the Exercise Price paid for the Purchased Shares. Accordingly, such election
if
properly filed will only be allowed to the extent the final Treasury Regulations
permit such a protective election.
(vi)
The
Code
Section 83(b) election will be effective in limiting the Optionee’s alternative
minimum taxable income to the excess of the Fair Market Value of the Purchased
Shares at the time the Option is exercised over the Exercise Price paid for
those shares.
Page
2 of
the attached form for making the election should be filed with any election
made
in connection with the exercise of an Incentive Option.
1
Generally, a disposition of shares purchased under an Incentive Option
includes
any transfer of legal title, including a transfer by sale, exchange or
gift, but
does not include a transfer to the Optionee’s spouse, a transfer into joint
ownership with right of survivorship if Optionee remains one of the joint
owners, a pledge, a transfer by bequest or inheritance or certain tax-free
exchanges permitted under the Code.
SECTION
83(b) ELECTION
This
statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1)
|
The
taxpayer who performed the services is:
|
Address:
Taxpayer
Ident. No.:
(2)
|
The
property with respect to which the election is being made is _____________
shares of the common stock of ASIA TIME CORPORATION
|
(3)
|
The
property was issued on ______________,
_____.
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(4)
|
The
taxable year in which the election is being made is the calendar
year
_____.
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(5)
|
The
property is subject to a repurchase right pursuant to which the
issuer has
the right to acquire the property at the fair market value per
share, if
for any reason taxpayer’s service with the issuer terminates. [The
issuer’s repurchase right will lapse in a series of annual and monthly
installments over a four (4)-year period ending on ___________,
20__.]
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(6)
|
The
fair market value at the time of transfer (determined without regard
to
any restriction other than a restriction which by its terms will
never
lapse) is $__________per share.
|
(7)
|
The
amount paid for such property is $___________ per
share.
|
(8)
|
A
copy of this statement was furnished to ASIA TIME CORPORATION for
whom
taxpayer rendered the services underlying the transfer of
property.
|
(9)
|
This
statement is executed on _________________,
______.
|
This
election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement.
This
filing should be made by registered or certified mail, return receipt requested.
Optionee must retain two (2) copies of the completed form for filing with
his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
The
property described in the above Section 83(b) election is comprised of shares
of
common stock acquired pursuant to the exercise of an incentive stock option
under Section 422 of the Internal Revenue Code (the “Code”). Accordingly, it is
the intent of the Taxpayer to utilize this election to achieve the following
tax
results:
1.
One
purpose of this election is to have the alternative minimum taxable income
attributable to the purchased shares measured by the amount by which the
fair
market value of such shares at the time of their transfer to the Taxpayer
exceeds the purchase price paid for the shares. In the absence of this election,
such alternative minimum taxable income would be measured by the spread between
the fair market value of the purchased shares and the purchase price which
exists on the various lapse dates in effect for the forfeiture restrictions
applicable to such shares.
2.
Section
421(a)(1) of the Code expressly excludes from income any excess of the fair
market value of the purchased shares over the amount paid for such shares.
Accordingly, this election is also intended to be effective in the event
there
is a “disqualifying disposition” of the shares, within the meaning of Section
421(b) of the Code, which would otherwise render the provisions of Section
83(a)
of the Code applicable at that time. Consequently, the Taxpayer hereby elects
to
have the amount of disqualifying disposition income measured by the excess
of
the fair market value of the purchased shares on the date of transfer to
the
Taxpayer over the amount paid for such shares. Since Section 421(a) presently
applies to the shares which are the subject of this Section 83(b) election,
no
taxable income is actually recognized for regular tax purposes at this time,
and
no income taxes are payable, by the Taxpayer as a result of this election.
The
foregoing election is to be effective to the full extent permitted under
the
Code.
THIS
PAGE 2 IS TO BE ATTACHED TO ANY SECTION 83(b) ELECTION FILED IN CONNECTION
WITH
THE EXERCISE OF AN INCENTIVE STOCK OPTION UNDER THE FEDERAL TAX
LAWS.
APPENDIX
The
following definitions shall be in effect under the Agreement:
A.
Agreement
shall
mean this Stock Purchase Agreement.
B.
Board
shall
mean the Corporation’s Board of Directors.
C.
Change
in Control
shall
mean a change in ownership or control of the Corporation effected through
any of
the following transactions:
(i)
a
merger,
consolidation or other reorganization approved by the Corporation’s
stockholders,
unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned
the
Corporation’s outstanding voting securities immediately prior to such
transaction, or
(ii)
a
stockholder-approved sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the
Corporation, or
(iii)
the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders.
In
no
event shall any public offering of the Corporation’s securities be deemed to
constitute a Change in Control.
D.
Code
shall
mean the Internal Revenue Code of 1986, as amended.
E.
Common
Stock
shall
mean the Corporation’s common stock.
F.
Corporation
shall
mean ASIA TIME CORPORATION, a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of
ASIA
TIME CORPORATION which shall by appropriate action adopt the Plan.
G.
Fair
Market Value
per
share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i)
If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock
on the
date in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii)
If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the
date
in question on the Stock Exchange determined by the Plan Administrator to
be the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange and published in
The
Wall Street Journal
.
If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii)
If
the
Common Stock is at the time neither listed on any Stock Exchange nor traded
on
the Nasdaq National Market, then the Fair Market Value shall be determined
by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
H.
Grant
Date
shall
have the meaning assigned to such term in Paragraph A.1.
I.
Grant
Notice
shall
mean the Notice of Grant of Stock Option pursuant to which Optionee has been
informed of the basic terms of the Option.
J.
Incentive
Option
shall
mean an option which satisfies the requirements of Code Section 422.
K.
1933
Act
shall
mean the Securities Act of 1933, as amended.
L.
1934
Act
shall
mean the Securities Exchange Act of 1934, as amended.
M.
Non-Statutory
Option
shall
mean an option not intended to satisfy the requirements of Code Section
422.
N.
Option
shall
have the meaning assigned to such term in Paragraph A.1.
O.
Option
Agreement
shall
mean all agreements and other documents evidencing the Option.
P.
Optionee
shall
mean the person to whom the Option is granted under the Plan.
Q.
Owner
shall
mean Optionee and all subsequent holders of the Purchased Shares who derive
their chain of ownership through a Permitted Transfer from
Optionee.
R.
Parent
shall
mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S.
Permitted
Transfer
shall
mean (i) a transfer of title to the Purchased Shares effected pursuant to
Participant’s will or the laws of inheritance following Participant’s death (ii)
a transfer to the Corporation in pledge as security for any purchase-money
indebtedness incurred by Participant in connection with the acquisition of
the
Purchased Shares or (iii) a transfer by a Participant to the Participant’s
family members as a gift, whether directly or indirectly, or by means of
a trust
or partnership or otherwise, or pursuant to a qualified domestic relations
order
as defined in the Code or Title 1 of the Employee Retirement Income Security
Act
of 1974, as amended, provided, that, if the Corporation is subject to the
reporting requirements of Section 13 or 15(d) of the 1934 Act, then as otherwise
permitted pursuant to General Instructions A.1(a)(5) to Form S-8 under the
1933
Act. For purposes of this definition, "family member" shall have the meaning
given to such term in Rule 701 promulgated under the Securities Act, provided,
that, if the Corporation is subject to the reporting requirements of Section
13
or 15(d) of the 1934 Act, then it shall have the meaning given to such term
in
General Instructions A.1(a)(5) to Form S-8 under the 1933 Act.
T.
Plan
shall
mean the Corporation’s 2008 Equity Incentive Plan.
U.
Plan
Administrator
shall
mean either the Board or a committee of the Board acting in its capacity
as
administrator of the Plan.
V.
Prior
Purchase Agreement
shall
have the meaning assigned to such term in Paragraph D.4.
W.
Purchased
Shares
shall
have the meaning assigned to such term in Paragraph A.1.
X.
Recapitalization
shall
mean any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the Corporation’s outstanding
Common Stock as a class without the Corporation’s receipt of
consideration.
Y.
Reorganization
shall
mean any of the following transactions:
(i)
a
merger
or consolidation in which the Corporation is not the surviving entity,
(ii)
a
sale,
transfer or other disposition of all or substantially all of the Corporation’s
assets,
(iii)
a
reverse
merger in which the Corporation is the surviving entity but in which the
Corporation’s outstanding voting securities are transferred in whole or in part
to a person or persons different from the persons holding those securities
immediately prior to the merger, or
(iv)
any
transaction effected primarily to change the state in which the Corporation
is
incorporated or to create a holding company structure.
Z.
Repurchase
Price
shall
mean the
lower
of
(i) the
Exercise Price or (ii) the Fair Market Value per share of Common Stock on
the
date of Optionee’s cessation of Service.
AA.
Repurchase
Right
shall
mean the right granted to the Corporation in accordance with Article
D.
BB.
SEC
shall
mean the Securities and Exchange Commission.
CC.
Service
shall
mean the Optionee’s performance of services for the Corporation (or any Parent
or Subsidiary) in the capacity of an employee, subject to the control and
direction of the employer entity as to both the work to be performed and
the
manner and method of performance, a non-employee member of the board of
directors or an independent consultant.
DD.
Target
Shares
shall
have the meaning assigned to such term in Paragraph E.2.
EE.
Subsidiary
shall
mean any entity in which, directly or indirectly through one or more
intermediaries, the Corporation has at least a 50% ownership interest or,
where
permissible under Code Section 409A, at least a 20% ownership
interest.
FF.
Vesting
Schedule
shall
mean the vesting schedule specified in the Grant Notice pursuant to which
the
Optionee is to vest in the Option Shares in a series of installments over
his or
her period of Service.
GG.
Unvested
Shares
shall
have the meaning assigned to such term in Paragraph D.1.
ADDENDUM
TO
STOCK
PURCHASE AGREEMENT
The
following provisions are hereby incorporated into, and are hereby made a
part
of, that certain Stock Purchase Agreement (the “
Purchase
Agreement
”)
by and
between ASIA TIME CORPORATION (the “
Corporation
”)
and
_____________________________ (“
Optionee
”)
evidencing the shares of Common Stock purchased on this date by Optionee
under
the Corporation’s 2008 Equity Incentive Plan, and such provisions shall be
effective immediately. All capitalized terms in this Addendum, to the extent
not
otherwise defined herein, shall have the meanings assigned to such terms
in the
Purchase Agreement.
INVOLUNTARY
TERMINATION FOLLOWING
A
CHANGE IN CONTROL
To
the extent the Repurchase Right is assigned to the successor corporation
(or
parent thereof) in connection with a Change in Control or otherwise continued
in
full force and effect pursuant to the terms of the Change in Control
transaction, no accelerated vesting of the Purchased Shares shall occur upon
that Change in Control, and the Repurchase Right shall continue to remain
in
full force and effect in accordance with the provisions of the Purchase
Agreement. Optionee shall, over his or her period of Service following such
Change in Control, continue to vest in the Purchased Shares in one or more
installments in accordance with the provisions of the Purchase Agreement.
However, upon an Involuntary Termination of Optionee’s Service within __________
(___) months following such Change in Control, the Repurchase Right shall
terminate automatically, and all the Purchased Shares shall immediately vest
in
full at that time. Any unvested escrow account maintained on Optionee’s behalf
pursuant to Paragraph D.6 of the Purchase Agreement shall also vest at the
time
of such Involuntary Termination and shall be paid to Optionee promptly
thereafter.
For
purposes of this Addendum, the following definitions shall be in
effect:
An
Involuntary
Termination
shall
mean the termination of Optionee’s Service by reason of:
Optionee’s
involuntary dismissal or discharge by the Corporation for reasons other than
for
Misconduct, or
Optionee’s
voluntary resignation following (A) a change in his or her position with
the
Corporation (or Parent or Subsidiary employing Optionee) which materially
reduces his or her duties and responsibilities or the level of management
to
which he or she reports, (B) a reduction in Optionee’s level of compensation
(including base salary, fringe benefits and target bonus under any
corporate-performance based incentive programs) by more than fifteen percent
(15%) or (C) a relocation of Optionee’s place of employment by more than
fifty (50) miles, provided and only if such change, reduction or relocation
is effected by the Corporation without Optionee’s consent.
Misconduct
shall
mean the termination of Optionee’s Service by reason of Optionee’s commission of
any act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure
by Optionee of confidential information or trade secrets of the Corporation
(or
any Parent or Subsidiary), or any other intentional misconduct by Optionee
adversely affecting the business or affairs of the Corporation (or any Parent
or
Subsidiary) in a material manner. The foregoing definition shall not in any
way
preclude or restrict the right of the Corporation (or any Parent or Subsidiary)
to discharge or dismiss Optionee or any other person in the Service of the
Corporation (or any Parent or Subsidiary) for any other acts or omissions,
but
such other acts or omissions shall not be deemed, for purposes of the Plan
and
this Addendum, to constitute grounds for termination for
Misconduct.
IN
WITNESS WHEREOF
,
ASIA
TIME CORPORATION has caused this Addendum to be executed by its duly authorized
officer as of the Effective Date specified below.
ASIA
TIME CORPORATION
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By:
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Title:
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EFFECTIVE
DATE:
_____________, ______
ANNUAL
MEETING OF STOCKHOLDERS OF
ASIA
TIME CORPORATION
September
27, 2008, 10 a.m., Hong Kong local time
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
â
Please
detach along perforated
line and mail in the envelope provided.
â
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES
LISTED IN PROPOSAL 1, “FOR” PROPOSAL 2 AND “FOR” PROPOSAL 3. PLEASE SIGN, DATE
AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE.
x
1.
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Election
of
Directors
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FOR
ALL
THE
NOMINEES
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WITHHOLD
AUTHORITY
FOR
ALL
NOMINEES
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FOR ALL EXCEPT
(See
instructions below)
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NOMINEE:
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o
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o
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o
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o
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Kwong
Kai Shun
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o
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Michael
Mak
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o
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Siu
Po Lee
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o
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Dr. Ching Wah Leung
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o
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Wu
Hok Lun
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT” and check the box next to each nominee(s) you wish to withhold, as shown
here:
x
2.
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Approve
the reappointment of Dominic K.F. Chan & Co., as the Company’s
independent registered public accounting firm for the year ending
December 31, 2008.
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FOR
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AGAINST
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ABSTAIN
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o
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o
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o
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3.
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Approve
the Asia Time Corporation 2008 Equity Incentive Plan.
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FOR
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AGAINST
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ABSTAIN
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o
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o
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o
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Each
of
the persons named as proxies herein are authorized, in such person’s discretion,
to vote upon such other matters as may properly come before the Annual Meeting,
or any adjournments thereof.
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
o
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Please
check here if you plan to attend the meeting.
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o
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Signature of
Stockholder:
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Date:
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Signature of
Stockholder:
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Date:
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Note:
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Please
sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as
such. If the signer is a corporation, please sign full corporate
name by
duly authorized officer, giving full title as such. If signer is
a
partnership, please sign in partnership name by authorized
person.
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ASIA
TIME CORPORATION
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON SEPTEMBER 27, 2008
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned stockholder(s) of Asia Time Corporation, a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders
and
Proxy Statement dated September 3, 2008, and hereby appoints Michael Mak and
Kwong Kai Shun, or either of them acting singly in the absence of the other,
with full power of substitution, as attorneys-in-fact and proxies for, and
in
the name and place of, the undersigned, and hereby authorizes each of them
to
represent and to vote all of the shares which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of Asia Time Corporation to be held
on September 27, 2008, at 10 a.m., Hong Kong local time, and at any adjournments
thereof, upon the matters as set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement, receipt of which is hereby
acknowledged.
THIS
PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE VOTED
AT
THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THE PROXY WILL
BE VOTED FOR ELECTION OF THE NOMINEE LISTED IN PROPOSAL 1 AND FOR APPROVAL
OF
PROPOSAL 2 AND PROPOSAL 3 AS DESCRIBED IN THE PROXY, AND IN ACCORDANCE WITH
THE
JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE
ENCLOSED
ENVELOPE.
(continued,
and to be signed and dated, on reverse side)
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