<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Zindart Limited
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and
<PAGE> 2
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 3
ZINDART LIMITED
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 6, 2000
To the Shareholders of Zindart Limited:
You are cordially invited to the Annual General Meeting of Shareholders of
Zindart Limited, a Hong Kong corporation (the "Company"), to be held on
September 6, 2000 at 2:00 p.m. local time at the Mandarin Oriental Hotel, 222
Sansome Street, San Francisco, California, United States of America for the
following purposes:
1. To adopt the audited financial statements and the reports of the
directors and auditors of the Company for the fiscal year ended March
31, 2000.
2. To re-elect ten directors to serve for the ensuing year and until their
successors are elected.
3. To authorize the Board of Directors to issue all or part of the
authorized but unissued shares of the Company, in such manner and to
such persons as they shall in their absolute discretion deem fit, such
authorization to lapse at the Company's next annual general meeting.
4. To re-appoint Arthur Andersen & Co. as independent auditors of the
Company for the fiscal year ending March 31, 2001.
5. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on August 3, 2000 as
the record date for the determination of Shareholders entitled to notice of this
Annual General Meeting.
By Order of the Board of Directors,
Feather S.Y. Fok
Chief Financial Officer
Tai Po, New Territories, Hong Kong
August , 2000
All shareholders are cordially invited to attend the meeting in person. Any
shareholder entitled to attend and vote at the meeting is entitled to appoint a
proxy to attend and vote on his or her behalf; a proxy holder need not be a
shareholder of the company. Whether or not you expect to attend the meeting,
please complete, date, sign and return the enclosed proxy as promptly as
possible in order to ensure your representation at the meeting. A
postage-prepaid return envelope is enclosed for that purpose. Even if you have
given your proxy, you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a broker, bank or other
nominee and you wish to vote at the meeting, you must obtain from the record
holder a proxy issued in your name.
<PAGE> 4
ZINDART LIMITED
FLAT C & D, 25/F BLOCK 1, TAI PING INDUSTRIAL CENTRE
57 TING KOK ROAD
TAI PO, NEW TERRITORIES
HONG KONG S.A.R., CHINA
------------------------
PROXY STATEMENT FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
SEPTEMBER 6, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Zindart Limited, a company incorporated with limited liability under
the laws of Hong Kong (the "Company"), for use at the Annual General Meeting of
Shareholders to be held on September 6, 2000, at 2:00 p.m. local time (the
"Annual General Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual General
Meeting. The Annual General Meeting will be held at the Mandarin Oriental Hotel,
222 Sansome Street, San Francisco, California, United States of America. The
Company intends to mail this proxy statement and accompanying proxy card on or
about August 7, 2000 to all holders of Ordinary Shares ("Shares") of the Company
("Shareholders") entitled to vote at the Annual General Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to Shareholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names Shares or American Depositary Shares ("ADSs")
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Shares and ADSs for
their costs of forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
electronic mail, facsimile transmission or personal solicitation by directors,
officers or other regular employees of the Company. No additional compensation
will be paid to directors, officers or other regular employees for such
services.
NOTICE, VOTING RIGHTS AND OUTSTANDING SHARES AND ADSS
Only holders of record of Shares (including those represented by ADSs) at
the close of business on August 3, 2000 will be entitled to notice of the Annual
General Meeting. At the close of business on August 3, 2000, the Company had
outstanding and entitled to vote 8,167,458 Shares, of which 5,556,347 were
represented by ADSs.
Each holder of record of Shares on such date will be entitled to one vote
for each share held on all matters to be voted upon at the Annual General
Meeting. The Bank of New York, as depositary of the ADSs (the "Depositary"), has
advised the Company that it intends to mail to all owners of the ADSs this Proxy
Statement and the accompanying Notice of Annual General Meeting. Upon the
written request of an owner of record of ADSs, the Depositary will endeavor,
insofar as practicable, to vote or cause to be voted the amount of Shares
represented by the ADSs evidenced by the American Depositary Receipts (the
"ADRs") related thereto in accordance with the instructions set forth in such
request. The Depositary has advised the Company that it will not vote or attempt
to exercise the right to vote that attaches to the Shares other than in
accordance with such instructions. As the holder of record for all of the Shares
represented by the ADSs, only the Depositary may vote such Shares at the Annual
General Meeting.
When proxies are properly dated, executed and returned, the Shares they
represent will be voted at the Annual General Meeting in accordance with the
instructions of the stockholder. If no specific instructions are
<PAGE> 5
given, the shares will be voted FOR proposals 1, 2, 3 and 4 and in the proxy
holder's discretion as to other matters that may properly come before the Annual
General Meeting. A stockholder giving a proxy has the power to revoke it at any
time prior to its exercise by voting in person at the Annual General Meeting, by
giving written notice to the Secretary prior to the Annual General Meeting or by
giving a later-dated proxy.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions, broker non-votes and depositary non-votes. Abstentions will be
counted towards a quorum but will not be counted for any purpose in determining
whether a matter is approved. Broker non-votes and depositary non-votes will not
be counted towards a quorum or for any purpose in determining whether a matter
is approved.
SHAREHOLDER PROPOSALS
Proposals which shareholders of the Company wish to be considered for
inclusion in the Company's proxy statement and proxy card for the 2001 Annual
General Meeting must be received by the Secretary of the Company by April 6,
2001 and must comply with the requirements of Rule 14a-8 under the Securities
Exchange Act of 1934, as amended. The submission of a proposal does not assure
that it will be included in the proxy statement or proxy card.
The Hong Kong Companies Ordinance provides that shareholders who hold at
least 5% of the total number of outstanding Shares, or a group of at least 100
Shareholders who hold Shares on which there has been paid an average of at least
HK$2,000 per Shareholder, may submit a proposal to be presented at the Company's
2001 Annual General Meeting of Shareholders. Such proposals must be deposited at
the Company's registered office at least six weeks prior to the Company's 2001
Annual General Meeting of Shareholders, which the Company anticipates will take
place in September 2001. If a proposal has been submitted and the Company's 2001
Annual General Meeting of Shareholders is thereafter called for a date six weeks
or less after the date of submission, then such proposal will be deemed to have
been timely submitted.
PROPOSAL 1
ADOPTION OF AUDITED FINANCIAL STATEMENTS
The Board recommends that the audited financial statements for the fiscal
year ended March 31, 2000, which are included in the Annual Report sent to the
Shareholders of the Company concurrently with this proxy statement, be adopted.
The financial statements for the fiscal year ended March 31, 2000 were audited
by Arthur Andersen & Co. and were reviewed and approved by the Board prior to
the Annual General Meeting.
The affirmative vote of the holders of a majority of the Shares present in
person or represented by proxy and voting at the meeting will be required to
approve this Proposal 1.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1.
PROPOSAL 2
ELECTION OF DIRECTORS
There are ten nominees for the eleven Board positions presently authorized
in the Company's Articles of Association. Each director to be elected will hold
office until the next annual meeting of Shareholders and until such director's
successor is elected and has qualified, or until such director's earlier death,
resignation or removal. Each nominee listed below is currently a director of the
Company, and each director other than George Chen and Peter A.J. Gardiner was
elected by the Shareholders at the 1999 Annual General Meeting.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the ten nominees named below. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as
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<PAGE> 6
management may propose. Each person nominated for election has agreed to serve
if elected, and management has no reason to believe that any nominee will be
unable to serve.
Directors will be elected by a majority of the votes present in person or
represented by proxy and entitled to vote.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF ALL OF THE LISTED NOMINEES.
NOMINEES
The names of the nominees, their ages as of March 31, 2000, and the
principal positions with the Company held by them, are as follows:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION HELD WITH THE COMPANY
---- --- ----------------------------------------
<S> <C> <C>
Robert A. Theleen(1)(2)...... 54 Chairman of the Board
Alexander M. K. Ngan......... 49 President, Chief Executive Officer and Director
Feather S. Y. Fok............ 38 Chief Financial Officer and Director
George Chen.................. 49 Director
Peter A.J. Gardiner(2)....... 64 Director
James E. Gilleran(2)......... 66 Director
Christopher Guest............ 53 Director
Leo Paul Koulos(1)........... 66 Director
Gordon L. M. Seow............ 67 Director
Victor Yang(1)(2)............ 54 Director
</TABLE>
---------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
Robert A. Theleen serves as Chairman of the Board of the Company and is the
founder and Chairman of ChinaVest, a group of venture capital investment funds
("ChinaVest"). Mr. Theleen joined the Board in January 1997. Mr. Theleen is a
director of several other ChinaVest portfolio companies. Mr. Theleen is a
founding member of the executive committee of the Hong Kong-Taipei Business
Cooperation Committee of the Hong Kong General Chamber of Commerce. Mr. Theleen
received a B.A. from Duquesne University and an M.B.A. from the American School
of International Management.
Alexander M.K. Ngan has served as President and Chief Executive Officer
since May 8, 1998 and as a Director since October 1995. Mr. Ngan is a partner of
ChinaVest, which he joined in 1993 and is a director of several privately held
ChinaVest portfolio companies. Prior to joining ChinaVest, Mr. Ngan worked for
over 20 years in banking and financial consulting in Canada and Hong Kong. Mr.
Ngan received a Bachelor's degree in Mathematics from the University of
Waterloo, Ontario.
Feather S.Y. Fok has served as a Director since August 1993 and has served
as Chief Financial Officer since 1993. Ms. Fok joined the Company in January
1989. Before joining the Company, Ms. Fok worked in the Audit and Business
Services Advisory division of Arthur Andersen & Co. in Hong Kong. Ms. Fok is a
Certified Public Accountant in Hong Kong and an associate member of the Hong
Kong Society of Accountants. Ms. Fok is also a member of the Chartered
Association of Certified Accountants, United Kingdom. Ms. Fok received a
bachelor's degree in Business Administration from the Chinese University of Hong
Kong.
Christopher Guest joined the Board as a director in July 1999. Mr. Guest is
the Chief Executive Officer of Corgi Classics Ltd. ("Corgi"), a subsidiary of
the Company. Mr. Guest joined Corgi in 1984 as Sales and Marketing director. He
was appointed managing director of Corgi in 1988, and was responsible for the
integration of Corgi with Mattel in connection with Mattel's acquisition of
Corgi. He left Corgi in January 1995 after completion of the integration. Later
in 1995, he led Corgi's management in a leveraged buyout of the company from
Mattel. His previous marketing experience includes seven years with Unilever PLC
and
3
<PAGE> 7
eight years with Mars Inc. Mr. Guest received a Bachelor of Arts degree in
English and Economics from the University of York.
James E. Gilleran joined the Board in March 1997. Mr. Gilleran has served
as Chairman of the Board and Chief Executive Officer of Bank of San Francisco
and its holding company since 1994. Prior thereto, Mr. Gilleran served as
Superintendent of Banks of the California State Banking Department. In addition,
Mr. Gilleran serves as a director of The Fritz Companies Inc. Mr. Gilleran
received a B.B.A. from Pace University, and a J.D. from Northwestern California
University.
Leo Paul Koulos joined the Board in March 1997. Mr. Koulos is Chairman of
the Board of National Coupon Redemption Service, Inc., a national clearinghouse
for manufacturers' cents-off coupons. Mr. Koulos is also Chairman of the Board
of Coupon Processing Associates, Inc. and Chairman of the Advisory Board of
International Data, LLC. Mr. Koulos received a B.A. degree from the University
of San Francisco.
Gordon L.M. Seow joined the Board in March 1998. He is a barrister-at-law
from Lincoln's Inn, United Kingdom. Mr. Seow was a director of Shell Eastern
Petroleum (Pte) Ltd., Singapore and retired from the company in 1987 after 30
years of service. He then joined the Ministry of Foreign Affairs in 1988 and
served as Singapore's Commissioner to Hong Kong from 1988 until his retirement
in 1994. Mr. Seow is currently a director of several companies in Singapore,
including Hotel Properties Ltd, Kim Eng Holdings Ltd and Pacific Century
Regional Developments Ltd. He is a member of the advisory board of ChinaVest
IV-B, a ChinaVest fund.
Victor Yang joined the Board in March 1998. He is a founding partner of and
has practiced for over 20 years with the Canadian law firm Boughton Peterson
Yang Anderson, Solicitors and resides currently in the firm's Hong Kong office.
Mr. Yang has served on the boards of directors of various publicly listed
companies in Canada, Singapore and Hong Kong. He is also a member of the law
societies of British Columbia, Hong Kong and the United Kingdom.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 2000, the Board held four meetings.
With the exception of Mr. Stanley Wang, who resigned as a director of the
Company as of November 8, 1999, all of the directors were present either in
person or by telephone at no fewer than three of these four meetings.
The Company's Audit Committee meets with the Company's independent auditors
at least annually to review the results of the annual audit and discuss the
financial statements; recommends to the Board the independent auditors to be
retained; and receives and considers the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. The Audit Committee is composed of Messrs.
Gardiner, Gilleran, Theleen and Yang. It met three times during fiscal year
2000.
The Company's Compensation Committee makes recommendations concerning
salaries and incentive compensation, awards stock options to employees and
consultants under the Company's stock option plans, otherwise determines
compensation levels and performs such other functions regarding compensation as
the Board may delegate. The Compensation Committee is composed of Messrs.
Theleen, Koulos and Yang. The Compensation Committee met twice during fiscal
year 2000.
PROPOSAL 3
AUTHORIZATION OF BOARD TO ISSUE ALL OR PART OF THE AUTHORIZED BUT UNISSUED
SHARES OF THE COMPANY IN SUCH MANNER AND TO SUCH PERSONS AS THEY SHALL IN THEIR
ABSOLUTE DISCRETION DEEM FIT, SUCH AUTHORIZATION TO LAPSE AT THE COMPANY'S NEXT
ANNUAL GENERAL MEETING.
Unlike the laws of most states of the United States, the Companies
Ordinance of Hong Kong (the "Companies Ordinance") generally prohibits a
corporation from issuing additional shares of its capital stock without the
approval of its shareholders (unless the issue is pro rata to its existing
shareholders). However, the
4
<PAGE> 8
Companies Ordinance also provides that a corporation's board of directors may
issue authorized but unissued shares of that corporation at such time and in
such a manner as the board of directors of the corporation may, in its
discretion, deem fit, if the shareholders give general authorization to the
board of directors to do so. If such authorization is provided, the corporation
can avoid calling an extraordinary general meeting each time it wishes to issue
shares. Such general authorization automatically lapses at the corporation's
next annual general meeting.
Accordingly, you are requested in this Proposal 3 to authorize the Board to
issue all or part of the authorized and unissued Shares, subject to Section 57B
of the Companies Ordinance, in such manner and to such persons as the Board may
in its absolute discretion deem fit.
The Board recommends that the unissued shares of the Company be available
to the Board for issuance in their discretion in order to provide additional
flexibility to use its capital stock for business, investment and financial
purposes in the future. If this Proposal 3 is approved, the additional Shares
may be issued, without further shareholder approval, for any purpose recommended
by the board including, without limitation, raising capital, providing equity
incentives to employees, officers or directors, establishing strategic
relationships with other companies and expanding the Company's business or
product lines through the acquisition of other businesses or products.
The affirmative vote of the holders of a majority of the Shares present in
person or represented by proxy and voting at the meeting will be required to
approve this Proposal 3.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
PROPOSAL 4
RE-APPOINTMENT OF INDEPENDENT AUDITORS
The Board recommends that Arthur Andersen & Co. be re-appointed as the
Company's independent auditors for the fiscal year ending March 31, 2001. Arthur
Andersen & Co. has audited the Company's financial statements since 1983.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual General Meeting, will have an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the Shares present in
person or represented by proxy and voting at the Annual General Meeting will be
required to approve the selection of Arthur Andersen & Co.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership of the Company's
outstanding Shares as of April 15, 2000 by (1) each person known by the Company
to own beneficially more than 5% of the outstanding Shares, (2) each member of
the Board, (3) the Company's Chief Executive Officer and its other four most
highly compensated executive officers at March 31, 2000 (the "Named Executive
Officers") and (4) the executive officers, directors and nominees for director
of the Company as a group.
5
<PAGE> 9
Information with respect to beneficial ownership is based upon information
furnished by each director, officer or holder or contained in filings made with
the Securities and Exchange Commission. Except as set forth below, the business
address of each named individual is that of the Company.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY SHARES
NAME OF BENEFICIAL OWNER OWNED OUTSTANDING(1)
------------------------ -------------- --------------
<S> <C> <C>
ZIC Holdings Limited(2)..................................... 2,611,111 29.6
ChinaVest Funds(3).......................................... 2,050,232 23.2
Heartland Advisors, Inc.(4)................................. 1,977,900 22.4
Alexander M.K. Ngan(5)(6)................................... 308,337 3.4
Feather S.Y. Fok(6)......................................... 6,250 *
Tony D.H. Lai(6)............................................ 5,000 *
Trevor Dyer................................................. -- --
George Chen................................................. -- --
Peter A.J. Gardiner......................................... -- --
James E. Gilleran........................................... 27,500 *
Christopher Guest........................................... -- --
Leo Paul Koulos(6).......................................... 27,500 *
Gordon L.M. Seow(6)......................................... 27,500 *
Robert A. Theleen(5)........................................ 4,000 *
Victor Yang(6).............................................. 18,750 *
All executive officers, directors and nominees for director
as a group (12 persons)(8)................................ 424,837 4.5
</TABLE>
---------------
* Less than 1%
(1) Based on 8,834,125 Shares outstanding on April 15, 2000, assuming the
issuance of 666,667 Shares reserved for future issuance pursuant to the Hua
Yang Acquisition. See "Certain Relationships and Related Transactions -- The
Hua Yang Acquisition."
(2) The address of ZIC Holdings Limited ("ZICHL") is P.O. Box 309, Ugland House,
South Church Street, Grand Cayman, Cayman Island.
(3) Based on the Schedule 13D filed on October 2, 1998, the ChinaVest Funds
consist of ChinaVest Partners IV, a Delaware limited partnership
("Partners"), ChinaVest Management, Inc., a Bermuda limited partnership
("Management"), ChinaVest IV, L.P., a Delaware limited partnership ("IV"),
ChinaVest IV-A, L.P., a Delaware limited partnership ("IV-A"), and ChinaVest
IV-B, a Bermuda limited partnership ("IV-B"). Partners is the general
partner of IV and IV-A, and Management is the general partner of IV-B.
Messrs. Theleen and Ngan are general partners of Partners. The address of
the ChinaVest Funds is c/o ChinaVest Ltd., 160 Sansome Street, 18th Floor,
San Francisco, CA 94104.
(4) Based on the Schedule 13G/A filed February 3, 2000 by Heartland Advisors.
The address of Heartland Advisors, Inc. is 790 North Milwaukee Street,
Milwaukee, WI 53202.
(5) Excludes 2,050,232 Shares held by the ChinaVest Funds. Mr. Ngan and Mr.
Theleen are general partners of ChinaVest Partners IV. Mr. Ngan and Mr.
Theleen disclaim beneficial ownership over such Shares except to the extent
they have pecuniary interest in such Shares. See note 3.
(6) Includes 16,666, 1,250, 2,500, 2,500, 2,500 and 1,250 ADSs issuable upon
exercise of options within 60 days after the date of this table with respect
to Mr. Ngan, Ms. Fok, Mr. Lai, Mr. Gilleran, Mr. Koulos and Mr. Yang,
respectively.
6
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
In the fiscal year ended March 31, 2000, each director of the Company who
is not an executive officer and is not affiliated with ChinaVest received
options to purchase up to 10,000 Shares or ADSs. Such options were fully vested
upon grant. These directors do not receive any other compensation for serving on
the Board or any committee thereof, but are reimbursed for their expenses for
each Board or committee meeting they attend.
COMPENSATION OF EXECUTIVES
The following table shows for the fiscal years ended March 31, 2000, 1999
and 1998 compensation awarded or paid to, or earned by, the Named Executive
Officers.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
OTHER
NAME AND PRINCIPAL ANNUAL
POSITION FISCAL YEAR SALARY($) BONUS($) COMPENSATION($)
------------------ ----------- --------- -------- ---------------
<S> <C> <C> <C> <C>
Alexander M.K. Ngan...... 2000 455,000 146,532 --
Chief Executive 1999 408,493 82,016 --
Officer 1998 --(1) --(1) --
Feather S.Y. Fok......... 2000 205,316 65,626 --
Chief Financial 1999 205,316 48,206 --
Officer 1998 171,539 99,288 --
Tony D.H. Lai............ 2000 155,497 44,306 --
Senior Vice President 1999 162,581 20,323 --
of Production 1998 135,834 50,938 --
Christopher Guest........ 2000 124,722(2) 34,345(2) 21,812(2)(3)
Chief Executive 1999 --(1) --(1) --
Officer, Corgi 1998 --(1) --(1) --
Classics Ltd.
Trevor Dyer,............. 2000 93,211(2) 21,718(2) 59,231(2)(3)
Operations Director 1999 --(1) --(1) --
(Hong Kong), Corgi 1998 --(1) --(1) --
Classics Ltd.
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------------
AWARDS
---------------------------- PAYOUTS
RESTRICTED SECURITIES ----------------------
NAME AND PRINCIPAL STOCK UNDERLYING LTIP ALL OTHER
POSITION FISCAL YEAR AWARDS($) OPTIONS/SARS(#) PAYOUTS COMPENSATION
------------------ ----------- ---------- --------------- ------- ------------
<S> <C> <C> <C> <C>
Alexander M.K. Ngan...... 2000 -- -- -- --
Chief Executive 1999 -- 400,000 -- --
Officer 1998 -- -- -- --
Feather S.Y. Fok......... 2000 -- 10,000 -- --
Chief Financial 1999 -- 10,000 -- --
Officer 1998 -- 5,000 -- --
Tony D.H. Lai............ 2000 -- 10,000 -- --
Senior Vice President 1999 -- 10,000 -- --
of Production 1998 -- 10,000 -- --
Christopher Guest........ 2000 -- -- -- --
Chief Executive 1999 -- -- -- --
Officer, Corgi 1998 -- -- -- --
Classics Ltd.
Trevor Dyer,............. 2000 -- -- -- --
Operations Director 1999 -- -- -- --
(Hong Kong), Corgi 1998 -- -- -- --
Classics Ltd.
</TABLE>
---------------
(1) The Named Executive Officer was not employed by the Company during the
applicable period.
(2) Based on an exchange rate of $1.5922 = 1 British pound sterling as of March
31, 2000. Includes only compensation for the eight months commencing August
1999, the month of the Corgi acquisition.
(3) Comprised of automobile allowance, pension contribution, health insurance
premiums and, in respect of Mr. Dyer, residential rent allowance.
COMPENSATION PURSUANT TO PLANS
The following tables show for the fiscal year ended March 31, 2000, certain
information regarding options granted to, exercised by, and held at year end by
the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE
SHARES OF PERCENT OF VALUE AT ASSUMED
COMMON TOTAL ANNUAL RATES OF STOCK
STOCK OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE PER OPTION TERM($)(4)
OPTIONS EMPLOYEES IN SHARE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(3) DATE 5% 10%
---- ---------- -------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alexander M.K. Ngan...... 0 0 -- -- -- --
Feather S.Y. Fok......... 10,000 8.6% $6.88 1/20/10 41,973 109,570
Tony D.H. Lai............ 10,000 8.6% $6.88 1/20/10 41,973 109,570
Christopher Guest........ 0 0 -- -- -- --
Trevor Dyer.............. 0 0 -- -- -- --
</TABLE>
---------------
(1) Such options are exercisable in installments of 25% per year beginning on
the date of grant.
(2) Based on options to purchase 116,500 ADSs granted to employees in fiscal
year 2000.
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<PAGE> 11
(3) Represents the fair market value of the ADSs on January 21, 2000, the date
of such grant.
(4) In accordance with Securities and Exchange Commission rules, these columns
show gains that might exist for the respective options, assuming that the
market price of ADSs appreciates from the date of grant over a period of 10
years at the annualized rates of 5% and 10%, respectively. If the stock
price does not increase above the exercise price at the time of exercise,
realized value to the named executives from these options will be zero.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES FOR FISCAL YEAR ENDED
MARCH 31, 2000
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alexander M.K. Ngan......... 0 -- -- -- -- --
Feather S.Y. Fok............ 0 -- -- -- -- --
Tony D.H. Lai............... 5,000 11,250 2,500 22,500 -- --
Christopher Guest........... 0 -- -- -- -- --
Trevor Dyer................. 0 -- -- -- -- --
</TABLE>
SERVICE AGREEMENTS
The Company has entered into service agreements with each of Mr. Ngan, Mr.
Lai and Ms. Fok. Generally, these service agreements are dated October 1, 1998
and shall continue thereafter unless and until terminated by either the employer
or the employee giving to the other not less than three months' written notice.
These service agreements provide for an annual bonus to be determined by the
Board.
Corgi entered into service agreements with Mr. Guest on July 28, 1999 and
Mr. Dyer on August 4, 1995. These service contracts have no fixed term. Mr.
Guest's service agreement is terminable by three months notice from the employee
and one year from Corgi. Mr. Dyer's service agreement is terminable by one
month's notice from the employee and six months from Corgi.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company applies a consistent philosophy to compensation for all
employees, including senior management. It is based on the premise that
achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives focused on meeting customer and
shareholder expectations.
The goals of the Company's compensation program are to align compensation
with business objectives and performance while enabling the Company to attract,
retain and reward employees who contribute to the long-term success of the
Company. In all cases, attention is given to fairness in the administration of
compensation and to assuring that all employees understand the related
performance evaluation and administrative process.
The Company's compensation program for executive officers is based on the
principles described above and it is administered by the Compensation Committee.
The Company's executive compensation is intended to be consistent with
leading companies in the Company's industry while being contingent upon the
Company's achievement of near- and long-term objectives and goals. For the
fiscal year ended March 31, 2000, the principal measures the Compensation
Committee looked to in evaluating the Company's progress towards these
objectives and goals were growth in revenues, net profits and customer
satisfaction. The Company's executive compensation is based on four components,
each of which is intended to serve the overall compensation philosophy.
BASE SALARY
Base salary is targeted toward the middle to the top of the range
established by comparable manufacturing companies in the People's Republic of
China and Hong Kong. Base salaries are reviewed annually to ensure that the
Company's salaries are competitive within the target range.
8
<PAGE> 12
MERIT INCREASE
Merit increases are designed to encourage management to perform at
consistently high levels. Salaries for executives are reviewed by the
Compensation Committee on an annual basis and may be increased at that time
based on the Compensation Committee's agreement that the individual's overall
contribution to the Company merits recognition. The salary adjustments reflected
in the Summary Compensation Table were also affected, in the case of executive
officers other than the Chief Executive Officer, by the evaluation of individual
contributions to the Company as provided to the Compensation Committee by the
Chief Executive Officer.
BONUSES
Bonuses for executives are intended to be used as an incentive to encourage
management to perform at a high level or to recognize a particular contribution
by an employee or exceptional Company performance. Generally, the higher the
employee's level of job responsibility, the larger the portion of the
individual's compensation package that may be represented by a bonus. As is
customary in Hong Kong and the People's Republic of China, the range of possible
bonus amounts are determined upon commencement of employment. See "Executive
Compensation -- Service Agreements." The actual bonus amount must be approved by
the Chief Executive Officer and the Compensation Committee in the case of
executives other than the Chief Executive Officer and by the Compensation
Committee alone in the case of the Chief Executive Officer. In determining the
bonus element of compensation, the Compensation Committee places particular
emphasis on the Company's performance against the management objectives and
goals described above.
STOCK OPTIONS
The Compensation Committee believes that stock ownership by management is
beneficial in aligning management and shareholder interests with respect to
enhancing shareholder value. Stock options are also used to retain executives
and motivate them to improve long-term stock market performance. Stock options
are granted at the prevailing market value and will only have value if the
Company's stock price increases. Generally, stock option grants vest 25% per
year over four years.
The Compensation Committee determines the number of options to be granted
based upon the competitive marketplace, with a particular focus on determining
what level of equity incentive is necessary to retain a particular individual.
Outstanding historical performance by an individual is additionally recognized
through larger than normal option grants.
CHIEF EXECUTIVE OFFICER
The Compensation Committee uses the same philosophy described above with
respect to other executive officers in setting the compensation for the Chief
Executive Officer.
COMPENSATION COMMITTEE
Robert A. Theleen, Chairman
Leo Paul Koulos
Victor Yang
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Theleen, Koulos and Yang, and Stanley Wang, a former director of
the Company, served on the Compensation Committee in fiscal year 2000. No
director or executive officer of the Company serves on the compensation
committee of the board of directors of any company for which Messrs. Theleen,
Koulos, Yang or Wang serve as executive officers or directors.
9
<PAGE> 13
PERFORMANCE MEASUREMENT COMPARISON
Set forth below is a line graph comparing (a) the cumulative total
shareholder return of an investment of $100 in cash on March 4, 1997, the date
of the Company's initial public offering of ADSs, in the Company's ADSs, based
on its initial public offering price, with (b) the Standard & Poors Small Cap
600 Index and (c) the Russell 2000 Index. All values assume reinvestment of the
full amount of all dividends and are calculated as of March 31 of each year.
This graph assumes that the value of the investment in the Company's Shares was
$100 on March 4, 1997 and was $100 on February 28, 1997 for each of the
comparison groups.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
ZINDART LIMITED S&P SMALLCAP 600 RUSSELL 2000
--------------- ---------------- ------------
<S> <C> <C> <C>
3/4/97 100.00 100.00 100.00
3/97 93.00 95.00 95.00
3/98 143.00 140.00 135.00
3/99 56.00 118.00 113.00
3/00 44.00 144.00 147.00
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE HUA YANG ACQUISITION
In February 1998, the Company entered into an Exchange Agreement with Hua
Yang Holdings Co., Ltd. ("Parent"), Hua Yang Printing Holdings Co., Limited
("Subsidiary"), HYP Holdings Limited ("HYP"), Karl Chan (BVI) Holdings Limited
("Chan Holdings"), Karl K.W. Chan ("Chan" and, together with HYP and Chan
Holdings, the "Hua Yang Shareholders"), certain investment funds operated by
China Vest and Advent that are shareholders of HYP (the "Principal HYP
Shareholders") and China Vest Management Limited, as the Agent on behalf of the
Hua Yang Shareholders and the Principal HYP Shareholders. Pursuant to the
Exchange Agreement, the Hua Yang Shareholders exchanged all of Parent's
outstanding ordinary shares and preferred shares for $35.0 million in cash and
up to 1,000,000 Shares (collectively, the "Acquisition Consideration"), thereby
resulting in the Company's acquisition of Parent and Subsidiary (the "Hua Yang
Acquisition").
Of the 1,000,000 Shares, 666,667 were reserved for issuance at the closing
of the Hua Yang Acquisition and placed in escrow for a period of six months to
secure certain indemnification obligations under the Exchange Agreement.
10
<PAGE> 14
The Company financed $30.0 million of the cash portion of Acquisition
Consideration and related fees and expenses from a credit facility syndicated by
Credit Suisse First Boston, Singapore Branch (the "Credit Facility"). The
remaining cash was provided from Zindart's working capital. The Company fully
repaid its obligations under the Credit Facility in February 1999.
OTHER TRANSACTIONS
The Company has entered into an agreement to pay ChinaVest an annual fee of
$500,000 for management services. Such agreement is terminable upon notice by
either party.
The Company intends that all future transactions with affiliates will be
approved by a committee of disinterested directors.
OTHER MATTERS
The Board knows of no other matters that will be presented for
consideration at the Annual General Meeting. If any other matters are properly
brought before the meetings, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors,
/s/ FEATHER S. Y. FOK
--------------------------------------
Feather S.Y. Fok
Chief Financial Officer
August , 2000
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended March 31, 2000 is available
without charge upon written request to: Secretary, Zindart Limited, Flat C & D,
25/F Block 1, Tai Ping Industrial Centre, 57 Ting Kok Road, Tai Po, New
Territories, Hong Kong S.A.R., China.
11
<PAGE> 15
ZINDART LIMITED
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL GENERAL MEETING OF
SHAREHOLDERS TO BE HELD ON SEPTEMBER 6, 2000
The undersigned, being a shareholder of Zindart Limited (the "Company"),
hereby appoints Robert A. Theleen or ________________________________(*) as
attorney and proxy of the undersigned, with full power of substitution, to vote
all of the shares of the Company that the undersigned may be entitled to vote at
the Annual General Meeting of Shareholders of the Company to be held at the
Mandarin Oriental Hotel located at 222 Sansome Street, San Francisco,
California, United States of America on Wednesday, September 6, 2000 at 2:00
p.m. local time, and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
(*) If a proxy other than Robert A. Theleen is preferred, strike out this name
and insert the name of the desired proxy in the space provided.
Unless a contrary direction is indicated, this proxy will be voted for
all nominees listed in Proposal 2 and for Proposals 1, 3 and 4, as more
specifically described in the proxy statement. If specific instructions are
indicated, this proxy will be voted in accordance therewith.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 1.
Proposal 1: To adopt the audited financial statements and the reports of the
directors and auditors of the Company for the fiscal year ended
March 31, 2000.
______FOR ______AGAINST ______ABSTAIN
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
Proposal 2: To elect the following nominees for director until the next Annual
General Meeting of Shareholders and until their successors are
elected.
Mr. Robert A. Theleen FOR _____ AGAINST _____ ABSTAIN _____
Mr. Alexander M.K. Ngan FOR _____ AGAINST _____ ABSTAIN _____
Ms. Feather S.Y. Fok FOR _____ AGAINST _____ ABSTAIN _____
Mr. George Chen FOR _____ AGAINST _____ ABSTAIN _____
Mr. Peter A.J. Gardiner FOR _____ AGAINST _____ ABSTAIN _____
Mr. James E. Gilleran FOR _____ AGAINST _____ ABSTAIN _____
Mr. Christopher Guest FOR _____ AGAINST _____ ABSTAIN _____
Mr. Leo Paul Koulos FOR _____ AGAINST _____ ABSTAIN _____
Mr. Gordon L. M. Seow FOR _____ AGAINST _____ ABSTAIN _____
Mr. Victor Yang FOR _____ AGAINST _____ ABSTAIN _____
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS 3 AND 4.
Proposal 3: To authorize the Board to issue all or part of the authorized but
unissued Shares of the Company, in such manner and to such persons
as the Board shall deem fit in its absolute
<PAGE> 16
discretion, such authorization to lapse at the Company's next annual
general meeting.
______FOR ______AGAINST ______ABSTAIN
Proposal 4: To re-appoint Arthur Andersen & Co. as independent auditors of the
Company for the fiscal year ending March 31, 2001.
______FOR ______AGAINST ______ABSTAIN
Dated: __________, 2000 ___________________________________________
___________________________________________
SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have a
duly authorized officer sign, stating
title. If signer is a partnership, please
sign in partnership name by authorized
person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
POSTAGE-PREPAID RETURN ENVELOPE.
