FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
Deswell Industries, Inc.
(Translation of Registrant's Name Into English)
Unit 516-517 Hong Leong Industrial Complex
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F: X Form 40-F:
-
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.)
Yes: No: X
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(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- .)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DESWELL INDUSTRIES, INC.
------------------------
(Registrant)
Date 12/08/01 By:/S/ RICHARD LAU
---------------
Richard Lau
Chief Executive Officer
2
[DESWELL LOGO]
Unit 516-517 Hong Leong Industrial Complex
No. 4 Wang Kwong Road
Kowloon Bay
Hong Kong
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------------
To the shareholders of Deswell Industries, Inc.:
The Annual Shareholders Meeting of Deswell Industries, Inc. (the
"Company") will be held at 10:00 a.m. (Pacific Time), on January 7, 2002 at the
Linden Room, Four Seasons Hotel, 300 S. Doheny Drive, Los Angeles, California,
90048 USA for the following purposes:
1. To elect five members of the Board of Directors to serve for the
ensuing year;
2. To approve the adoption of the Company's 2001 Stock Option Plan
authorizing 500,000 Common Shares of the Company that can be optioned
and sold under the 2001 Stock Option Plan. A copy of the 2001 Stock
Option Plan is attached hereto as Exhibit A to the Proxy Statement
accompanying this Notice;
3. To ratify the selection of Deloitte Touche Tohmatsu as the independent
public accountants of the Company for the year ending March 31, 2002;
4. To consider and act upon such other business as may properly come
before the Meeting or any adjournments thereof.
Only holders of common shares, $0.01 par value per share (the "Common
Shares"), of record at the close of business on November 30, 2001 (the "Record
Date") will be entitled to vote at the Meeting. Regardless of your plan to
attend or not attend the Meeting, please complete the enclosed proxy card and
sign date and return it promptly in the enclosed postage paid envelope. Sending
in your proxy will not prevent you from voting in person at the Meeting.
By order of the Board of Directors
/S/ C.P. LI
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C. P. Li
Secretary
Dated: December 7, 2001
Hong Kong
3
[DESWELL LOGO]
Unit 516-517 Hong Leong Industrial Complex
No. 4 Wang Kwong Road
Kowloon Bay
Hong Kong
PROXY STATEMENT
Meeting at 10:00 a.m. Pacific Time on January 7, 2002
Your proxy is solicited on behalf of the Board of Directors of Deswell
Industries, Inc. (the "Company") for use at the Annual Meeting of Shareholders
to be held at 10:00 a.m. (Pacific Time), on January 7, 2002 at the Linden Room,
Four Seasons Hotel, 300 S. Doheny Drive, Los Angeles, California, 90048 USA. 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 will be voted for the election of the five (5) nominees for directors
named herein, the adoption of the 2001 Stock Option Plan, and for the approval
of Deloitte Touche Tohmatsu as the Company's independent accountants for the
year ending March 31, 2002. A proxy given by a shareholder may be revoked at any
time before it is exercised by notifying the Secretary of the Company in writing
of such revocation, by giving another proxy bearing a later date or by voting in
person at the Meeting.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail. The Company will reimburse banks, brokerage
firms, other custodians, nominees and fiduciaries for reasonable expenses
incurred in sending proxy materials to beneficial owners of Common Shares of the
Company.
The Company's annual report, including financial statements for its
fiscal year ended March 31, 2001, was previously mailed to all shareholders. The
annual report is not part of the proxy materials.
THE COMPANY'S ANNUAL REPORT ON FORM 20-F FOR THE YEAR ENDED MARCH 31,
2001, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT
CHARGE UPON WRITTEN REQUEST FROM THE SECRETARY OF THE COMPANY AT DESWELL
INDUSTRIES, INC., UNIT 516-517, HONG LEONG INDUSTRIAL COMPLEX, NO. 4 WANG KWONG
ROAD, KOWLOON BAY, HONG KONG.
Holders of Common Shares of record at the close of business on the
Record Date will be entitled to vote at the Meeting and there were 5,601,431
Common Shares outstanding at that date. No business shall be transacted at any
Meeting of shareholders unless a quorum of shareholders is present at the time
when the Meeting proceeds to business. A quorum shall consist of one or more
shareholders present in person or by proxy representing at least one half of the
votes of the Common Shares. Each Common Share is entitled to one vote.
Management recommends a vote FOR the election of directors named, FOR the
adoption of the 2001 Stock Option Plan, and FOR the election of Deloitte Touche
Tohmatsu as independent accountants for the Company for the year ending March
31, 2002.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's directors are elected annually to serve until the next
Annual General Meeting of Shareholders and until their successors are qualified
and elected. The number of directors presently authorized by the Company's
Articles of Association is not less than one nor more than 12. The current
number is fixed at five.
Unless otherwise directed by shareholders, the proxy holders will vote
all shares represented by proxies held by them for the election of the following
nominees. The Company is advised that all nominees have indicated their
availability and willingness to serve if elected. In the event that any nominee
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxy holder will vote for a substitute nominee in the exercise of
his best judgment.
INFORMATION CONCERNING NOMINEES
Information concerning the nominees based on data provided by them is
set forth below:
RICHARD LAU, 57, has served as Chief Executive Officer and Chairman of
the Board of Directors of the Company and its predecessors since their inception
in 1987.
C. P. LI, 56, has served the Company as a Member of the Board of
Directors and in various executive capacities with the Company and its
predecessors since their inception in 1987. He became Secretary of the Company
in February 1995 and Chief Financial Officer in May 1995. As Executive Director
and General Manager of Manufacturing and Administration for Plastic Operations,
Mr. Li is in charge of the day-to-day manufacturing and administrative
operations for the Company's plastic products. Mr. Li received his Bachelor of
Science degree from Chun Yan Institute College, Taiwan in 1967.
C. W. LEUNG, 46, has served the Company as a Member of the Board of
Directors and in various executive capacities with the Company and its
predecessors since their inception in 1987. As Executive Director of Engineering
for Plastic Operations, Mr. Leung is in charge of the mold division and
engineering for the Company's plastic manufacturing operations.
STEPHEN K. SEUNG, 54, has been a director of the Company and member of
the Audit Committee since July 1995. Mr. Seung is an attorney and since 1981 has
been engaged in the private practice of law in New York, New York. Mr. Seung
received a B.S. degree in Engineering from the University of Minnesota in 1969,
an M.S. degree in Engineering from the University of California at Berkeley in
1971, an MBA degree from New York University in 1973 and a J.D. degree from New
York Law School in 1979. Mr. Seung also serves the Company as its authorized
agent in the United States.
HUNG-HUM LEUNG, 55, has been a director of the Company and member of
the Audit Committee since December 1999. Mr. Leung has over 25 years of
experience in the manufacture of electronic products. Mr. Leung was the founder
of Sharp Brave Holdings Ltd., a Hong Kong public company listed on the Hong Kong
Stock Exchange, and from 1991 to 1995 served as the Chairman of Sharp Brave
Holdings Ltd. Since 1995, Mr. Leung has been an independent consultant to the
electronics industry. He received his Bachelor of Science degree in Physics from
the National Taiwan University in 1971.
-2-
No family relationship exists among any of the named directors,
executive officers or key employees and no arrangement or understanding exists
between any director or officer and any other persons pursuant to which any
director or executive officer was elected as a director or executive officer of
the Company. The directors of the Company are elected at its annual meeting of
shareholders and serve until their successors take office or until their death,
resignation or removal. The executive officers serve at the pleasure of the
Board of Directors of the Company.
INFORMATION CONCERNING AUDIT COMMITTEE
The Audit Committee consists of Messrs. Stephen Seung and Hung-Hum
Leung. If reelected to the Board, Messrs. Seung and Leung will continue to serve
on the Audit Committee. The Audit Committee meets from time to time to review
the financial statements and matters relating to the audit and has full access
to management and the Company's auditors in this regard. The Audit Committee
recommends the engagement or discharge of the Company's independent accountants,
consults on the adequacy of the Company's internal controls and accounting
procedures and reviews and approves financial statements and reports.
EXECUTIVE OFFICERS
The aggregate amount of compensation (including non-cash benefits) paid
by the Company and its subsidiaries during the year ended March 31, 2001 to all
directors and officers as a group for services in all capacities was
approximately $3,367,000. This excludes amounts paid by the Company to
shareholders as dividends during the year ended March 31, 2001.
DIRECTORS
Directors who are not employees of the Company or any of the
subsidiaries are paid $1,000 per month for services as a director, respectively,
and are reimbursed for all reasonable expenses incurred in connection with
services as a director.
1995 STOCK OPTION PLAN
In 1995, the Company adopted its 1995 Stock Option Plan permitting the
Company to grant options to purchase up to 450,000 Common Shares to employees,
officers, directors and consultants of the Company. On September 29, 1997, the
Company's Board of Directors and shareholders approved an increase of 244,000
shares in the number of shares that can be optioned and sold under the 1995
Stock Option Plan bringing to a total of 694,000 shares the number of Common
Shares that can be optioned and sold under the 1995 Stock Option Plan. The Board
of Directors or a committee appointed by the Board administers the 1995 Stock
Option Plan. The Board or committee, if so appointed, determines the terms of
options granted, including the exercise price, the number of shares subject to
the option and the option's exercisability. The exercise price of all options
granted under the 1995 Stock Option Plan must be at least equal to the fair
market value of such shares on the date of grant. The maximum term of options
granted under the 1995 Stock Option Plan is 10 years. At the Record Date,
options to purchase an aggregate of 660,000 Common Shares had been granted under
the 1995 Stock Option Plan and options to purchase an aggregate of 34,000 Common
Shares were outstanding.
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CERTAIN RELATED PARTY TRANSACTIONS
During the year ended March 31, 1999, Nam Tai Electronic (Shenzhen) Co.
Limited accounted for 11.2% of our total sales. During the years ended March 31,
2000 and 2001, sales to Nam Tai amounted to less than 10% of our total sales.
Namtai Shenzhen is an indirect wholly owned subsidiary of Nam Tai Electronics,
Inc., which in September 2000 purchased an aggregate of 500,000 common shares of
the Company, equal to approximately 9% of the Company's outstanding common
shares.
The Company rents staff quarters in China from Mr. S. K. Lee and Mr.
M.C. Tam, who are executive officers of the Company and minority shareholders of
Integrated International Ltd., a majority owned subsidiary of the Company. The
charges for these premises approximate the amount negotiable, in management's
opinion, on an arms length basis. Rentals charged by these parties to the
Company are summarized as follows:
YEAR ENDED MARCH 31,
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1999 2000 2001
---- ---- ----
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Rent charged by Mr. S.K. Lee and
Mr. M.C. Tam $15,000 $12,000 $12,000
In June 1995, the Company's Board of Directors adopted a policy
resolution prohibiting the Company from making any loan or advance of money or
property, or guaranteeing the obligation of any directors of the Company, and
limiting the Company's ability to make such loans, advances or guarantees to
officers of the Company or its subsidiaries unless approved by a majority of
independent disinterested outside directors.
Since the Company completed its initial public offering in the United
States, it has been the policy of the Company that all transactions between the
Company and any interested director or executive officer be approved by a
majority of the disinterested directors and be on terms that are no more
favorable than would be available from an independent third party
CONTROL OF THE COMPANY
Except as disclosed in the footnotes to the table below with respect to
Leesha Holdings, Inc., the Company is not directly owned or controlled by
another corporation or by any foreign government. The following table sets
forth, as of the Record Date, the beneficial ownership of the Company's common
shares by each person known by the Company to beneficially own 5% or more of the
common shares of the Company and by each of the Directors and Senior Management
of the Company who beneficially own in excess of one percent of our common
shares.
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NUMBER OF SHARES
BENEFICIALLY OWNED(1)
-------------------------------
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
OR IDENTITY OF GROUP
- ----------------------------------------------- ------------------ ---------
Richard Lau 1,813,610(2) 32.0%
C. P. Li 1,814,810(3) 32.1%
C. W. Leung 1,779,210(4) 31.4%
Leesha Holdings Ltd. 1,535,000(5) 27.4%
Nam Tai Electronics, Inc. 500,000 8.9%
Micropower Enterprises Limited 455,000 8.1%
Group consisting of Royce & Associates, Inc.
("Royce"), Royce Management Company
("RMC"), and Charles M. Royce (6) 291,000(6) 5.2%
S. K. Lee * *
M. C. Tam * *
Dickson Lam * *
Eliza Y. P. Pang * *
Stephen K. Seung * *
Hung-Hum Leung * *
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* Less than 1%.
(1) Based on 5,601,431 common shares outstanding on the Record Date. However, in
accordance with Rule 13d-3(d)(1) under the Securities Exchange Act of 1934,
common shares not outstanding but which are the subject of currently exercisable
options have been considered outstanding for the purpose of computing the
percentage of outstanding common shares owned by the listed person holding such
options, but are not considered outstanding for the purpose of computing the
percentage of common shares owned by any of the other listed persons.
(2) Consists of 1,535,000 common shares held of record by Leesha, 218,610 common
shares held of record by Mr. Lau and options to purchase 60,000 common shares
granted to Mr. Lau under the Company's Stock Option Plan. Mr. Lau's options are
exercisable at a weighted average exercise price of $14.75 per share until
January 21, 2008. As a director of Leesha, Mr. Lau shares the voting and
investment power as to the common shares held by Leesha.
(3) Consists of 1,535,000 common shares held of record by Leesha, 219,810 common
shares held of record by Mr. Li and options to purchase 60,000 common shares
granted to Mr. Li under the Company's Stock Option Plan. Mr. Li's options are
exercisable at a weighted average exercise price of $14.75 per share until
January 21, 2008. As a director of Leesha, Mr. Li shares the voting and
investment power as to the common shares held by Leesha.
(4) Consists of 1,535,000 common shares held of record by Leesha, 184,210 common
shares held of record by Mr. Leung and options to purchase 60,000 common shares
granted to Mr. Leung under the Company's Stock Option Plan. Mr. Leung's options
are exercisable at a weighted average exercise price of $14.75 per share until
January 21, 2008. As a director of Leesha, Mr. Leung shares the voting and
investment power as to the common shares held by Leesha.
-5-
(5) Leesha is an investment holding company organized as an International
Business Company under the laws of the British Virgin Islands. Messrs. Lau, Li
and Leung, who are its directors, wholly own Leesha in equal shares. Among other
investments, Leesha owns the 1,535,000 common shares of Deswell, which were
transferred to Leesha by Messrs. Lau, Li and Leung after Deswell's initial
public offering.
(6) Based on a Schedule 13G filed with the SEC on February 8, 2001. According to
this 13G: Royce owed 288,000 common shares (5.1% at the Record Date) and RMC
owned 3,000 common shares (0.1% at the Record Date); Mr. Royce may be deemed to
be a controlling person of Royce and RMC, and as such may be deemed to
beneficially own the common shares beneficially owned by Royce and RMC; and Mr.
Royce does not own any shares outside of Royce and RMC, and disclaims beneficial
ownership of the shares held by Royce and RMC.
PROPOSAL 2
TO APPROVE THE ADOPTION OF THE COMPANY'S 2001 STOCK
OPTION PLAN TO AUTHORIZE 500,000 SHARES OF COMMON
SHARES THAT CAN BE OPTIONED AND SOLD UNDER THE 2001
STOCK OPTION PLAN
The 2001 Stock Option Plan was originally adopted by the Company's
Board of Directors on August 15, 2001. Five hundred thousand (500,000) shares
can be optioned and sold under the 2001 Stock Option Plan. The adoption of the
2001 Stock Option Plan is subject to the approval of shareholders, which the
Company is seeking at the Annual Meeting.
The Board of Directors believes that the selective use of stock options
is an effective means of attracting, motivating and retaining employees and that
the availability of the number of shares covered by the 2001 Stock Option Plan,
as amended, is essential to the success of the Company. The Board of Directors
recommends that the shareholders approve the adoption of the 2001 Stock Option
Plan. THE AFFIRMATIVE VOTE OF A MAJORITY OF ALL SHARES OF THE COMPANY PRESENT AT
THE MEETING IN PERSON OR BY PROXY IS REQUIRED TO APPROVE THE ADOPTION OF THE
2001 STOCK OPTION PLAN.
The summary of the provisions of the 2001 Stock Option Plan which
follows is not intended to be complete. A copy of the 2001 Stock Option Plan is
annexed to this Proxy Statement as Exhibit A.
SUMMARY OF THE PROVISIONS OF THE 2001 STOCK OPTION PLAN AS AMENDED
The purpose of the 2001 Stock Option Plan is to induce key employees to
remain in the employ of the Company or of any subsidiary of the Company, and to
encourage such employees to secure or increase on reasonable terms their stock
ownership in the Company. The board of directors of the Company believes the
2001 Stock Option Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those who are
primarily responsible for shaping and carrying out the long-range plans of the
Company and securing its continued growth and financial success.
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The 2001 Stock Option Plan is administered by the Company's Board of
Directors (the "Board"). Subject to the express provisions of the 2001 Stock
Option Plan, the Board has complete authority, in its discretion, to determine
those key employees (hereinafter referred to as "participants") to whom, and the
price at which options shall be granted, the option periods and the number of
shares to be subject to each option. The Board also has the authority in its
discretion to prescribe the time or times at which the options may be exercised
and limitations upon the exercise of options (including limitations effective
upon the death or termination of employment of the participant), and the
restrictions, if any, to be imposed upon the transferability of shares acquired
upon exercise of options. In making such determinations, the Board may take into
account the nature of the services rendered by respective employees, their
present and potential contributions to the success of the Company or its
subsidiaries and such other factors as the Board in its discretion shall deem
relevant.
Subject to the express provisions of the 2001 Stock Option Plan, the
Board also has complete authority to interpret the 2001 Stock Option Plan, to
prescribe, amend and rescind rules and relations relating to the 2001 Stock
Option Plan, to determine the terms and provisions of the respective option
agreements (which need not be identical), to determine whether the shares
delivered upon exercise of stock options will be treasury shares or will be
authorized but previously unissued shares, and to make all other determinations
necessary or advisable for the administration of the 2001 Stock Option Plan.
An option may be granted under the 2001 Stock Option Plan only to an
officer or other key employee or a director of the Company and of its present
and future subsidiary corporations. The granting of an option to any employee
shall not confer upon the employee any right to continue in the employ of the
Company or of any such subsidiary and shall not interfere in any way with the
right of the Company or of any such subsidiary to terminate the employment of
the employee at any time.
The option price is determined by the Board at the time the option is
granted and must be at least equal to the fair market value of the Common Shares
on the date of the grant as is reasonably determined by the Board.
An option is considered granted on the date the Board acts to grant the
option.
The board of directors, without approval of the shareholders may
terminate the 2001 Stock Option Plan at any time, but no termination shall,
without the participant's consent, alter or impair any of the rights under any
option theretofore granted to him under the 2001 Stock Option Plan.
The term of each option granted under the 2001 Stock Option Plan will
be for such period (hereinafter referred to as the "option period") not
exceeding ten (10) years as the Board shall determine. The following sets forth
information concerning the terms of the options heretofore granted under the
2001 Stock Option Plan.
Each option granted under the 2001 Stock Option Plan is exercisable on
such date or dates and during such period and for such number of shares as shall
be determined pursuant to the provisions of the option agreement evidencing such
option. Subject to the express provisions of the 2001 Stock Option Plan, the
Board shall have complete authority, in its discretion, to determine the extent,
if any, and the conditions under which an option may be exercised in the event
of the death of the participant or in the event the participant leaves the
employ of the Company or has his employment terminated by the Company. An option
may be exercised, by (a) written notice of intent to exercise the option with
respect to a specified number of shares of stock, and (b) payment to the Company
in U.S. dollars (or the Hong Kong dollar equivalent) of the amount of the option
purchase price for the number of Common Shares with respect to which the option
is then exercised.
-7-
With respect to the outstanding options, in the event that the
optionee's employment or directorship with the Company or its subsidiaries is
terminated for any reason other than death or disability, any unexercised
options (regardless of whether the same are then exercisable) shall expire and
become unexercisable as of the earlier of (a) their normal expiration date, or
(b) the date that such termination occurs. In the event that the optionee's
employment or directorship with the Company is terminated due to the death or
disability of the optionee, any unexercised options (regardless of whether the
same are then exercisable) shall expire and become unexercisable as of the
earlier of (a) their normal expiration date, or (b) the first anniversary of the
date of death of such optionee (if applicable) or (c) the first anniversary of
the date of the termination of employment or directorship or consulting or other
arrangement by reason of disability (if applicable). Any such options of a
deceased optionee may be exercised prior to their expiration by (and only by)
the person or persons to whom the optionee's option right shall pass by will or
by the laws of descent and distribution, if applicable; subject, however, to all
of the terms and conditions of the 2001 Stock Option Plan or the applicable
Stock Option Agreement.
Options under the 2001 Stock Option Plan are not transferable otherwise
than by will or the laws of descent or distribution, and may be exercised during
the lifetime of a participant only by such participant.
Options granted pursuant to the 2001 Stock Option Plan shall be
evidenced by stock option agreements in such form as the Board shall adopt from
time to time.
In the event that a dividend shall be declared upon the Common Shares
of the Company payable in Common Shares of the Company the number of Common
Shares then subject to any such option and the number of shares reserved for
issuance pursuant to the 2001 Stock Option Plan but not yet covered by an
option, shall be adjusted by adding to each such share the number of shares
which would be distributable thereon if such share had been outstanding on the
date fixed for determining the shareholders entitled to receive such stock
dividend. In the event that the outstanding Common Shares of the Company shall
be changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger
or consolidation, then there shall be substituted for each Common Share reserved
for issuance upon exercise of options pursuant to the 2001 Stock Option Plan,
the number and kind of shares of stock or other securities into which each
outstanding Common Share shall be so changed or for which each such share shall
be exchanged. In the event there shall be any change, other than as specified
above in this paragraph in the number or kind of outstanding Common Shares of
the Company or of any stock or other securities into which such Common Shares
shall have been changed or for which it shall have been exchanged, then if the
Board shall in sole discretion determine that such change equitably requires an
adjustment in the number or kind of shares theretofore reserved for issuance
pursuant to the 2001 Stock Option Plan, but not yet covered by an option and of
the shares then subject to an option or options, such adjustment shall be made
by the Board and shall be effective and binding for all purposes of the 2001
Stock Option Plan and of each stock option agreement. The option price in each
stock option agreement for each share of stock or other securities substituted
or adjusted as provided for in this paragraph shall be determined by dividing
the option price in such agreement for each share prior to such substitution or
adjustment by the number of shares or the fraction of a share substituted for
such share or to which such share shall have been adjusted. No adjustment or
substitution provided for in this paragraph shall require the Company in any
stock option agreement to sell a fractional share, and the total substitution or
adjustment with respect to each stock option agreement shall be limited
accordingly.
The Board of Directors, without approval of the shareholders, may amend
from time to time the 2001 Stock Option Plan in such respects as the Board may
deem advisable. No amendment shall, without the participant's consent, alter or
impair any of the rights or obligations under any option theretofore granted to
him under the 2001 Stock Option Plan.
-8-
Common Shares issued pursuant to the exercise of an option granted
under the 2001 Stock Option Plan, or any interest therein, may be sold,
assigned, gifted, pledged, hypothecated, encumbered or otherwise transferred or
alienated in any manner by the holder(s) thereof, subject however to such
restrictions as may be contained in the Stock Option Agreement and to any
representations or warranties requested under the 2001 Stock Option Plan and
also subject to compliance with any applicable United States, state or other
local law, regulation or rule governing the sale or transfer of stock or
securities.
PROPOSAL 3
RATIFY SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Deloitte Touche Tohmatsu as
independent accountants of the Company for the year ending March 31, 2002 and
further directed that the Company submit the selection of independent
accountants for ratification by shareholders at the Company's Annual Meeting.
Deloitte Touche Tohmatsu has acted for the Company as independent accountants
for over five years.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at
the Meeting. However, if any other matter shall properly come before the
Meeting, the proxy holder named in the proxy accompanying this statement will
have discretionary authority to vote all proxies in accordance with his best
judgment.
By order of the Board of Directors
/s/ C.P. LI
-----------
C. P. Li
Secretary
Dated December 7, 2001
Hong Kong
-9-
EXHIBIT A
2001 STOCK OPTION PLAN
OF
DESWELL INDUSTRIES, INC.
(As adopted August 15, 2001)
1. PURPOSE. The purpose of the Deswell Industries, Inc. 2001 employees'
stock option plan (the "Plan") is to induce key employees to remain in the
employ of Deswell Industries, Inc., a British Virgin Island international
business company (hereinafter referred to as the "Company") or of any subsidiary
of the Company, and to encourage such employees to secure or increase on
reasonable terms their stock ownership in the Company. The Board of Directors of
the Company believes the Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company by those
who are primarily responsible for shaping and carrying out the long-range plans
of the Company and securing its continued growth and financial success.
2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on
August 15, 2001, the date adopted by the Board of Directors.
3. STOCK SUBJECT TO PLAN. The maximum number of Common Shares which may
be issued pursuant to the exercise of options granted under the Plan is five
hundred thousand (500,000) subject to the adjustments provided in paragraph 13
below. Five hundred thousand (500,000) of the authorized but unissued Common
Shares of the Company shall be reserved for issue upon exercise of options
granted under the Plan (less any shares heretofore issued upon exercise of
options heretofore granted under the Plan), subject to the adjustments provided
in paragraph 13 below; provided, however, that the number of such authorized but
unissued shares so reserved shall from time to time be reduced to the extent
that a corresponding amount of issued and outstanding shares have been purchased
by the Company and set aside for issue upon the exercise of options granted
under the Plan. If any options shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for further grants under the Plan.
4. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board") or a committee of the Company's Board of
Directors (the "Committee") consisting of not less than two members of the
Board. Subject to the express provisions of the Plan, the Board or the
Committee, if so appointed, shall have complete authority, in its discretion, to
determine those key employees (hereinafter referred to as "participants") to
whom, and the price at which options shall be granted, the option periods and
the number of shares to be subject to each option. The Board or the Committee,
if so appointed, shall also have the authority in its discretion to prescribe
the time or times at which the options may be exercised and limitations upon the
exercise of options (including limitations effective upon the death or
termination of employment of the participant), and the restrictions, if any, to
be imposed upon the transferability of shares acquired upon exercise of options.
In making such determinations, the Board or the Committee, if so appointed, may
take into account the nature of the services rendered by respective employees,
their present and potential contributions to the success of the Company or its
subsidiaries and such other factors as the Board or the Committee, if so
appointed, in its discretion shall deem relevant. Subject to the express
provisions of the Plan, the Board or the Committee, if so appointed, shall also
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements (which need not be identical), to
determine whether the shares delivered upon exercise of stock options will be
treasury shares or will be authorized but previously unissued shares, and to
make all other determinations necessary or advisable for the administration of
the Plan.
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5. ELIGIBILITY. An option may be granted under the Plan only to
officers or other key employees or Directors of the Company and of its present
and future subsidiary corporations. The granting of an option to any employee
shall not confer upon the employee any right to continue in the employ of the
Company or of any such subsidiary and shall not interfere in any way with the
right of the Company or of any such subsidiary to terminate the employment of
the employee at any time.
6. OPTION PRICE. The option price will be determined by the Board or
the Committee, if so appointed, at the time the option is granted but may not be
less than the fair market value of the Common Shares as shall reasonably be
determined by the Board or the Committee, if so appointed, as of the date the
option is granted.
7. DATE OF OPTION GRANT. An option shall be considered granted on the
date the Board or the Committee, if so appointed, acts to grant the option, or
such date thereafter as the Board or the Committee, if so appointed, shall
specify.
8. TERM OF PLAN. The Board of Directors, without approval of the
shareholders may terminate the Plan at any time, but no termination shall,
without the participant's consent, alter or impair any of the rights under any
option theretofore granted to him under the Plan.
9. TERM OF OPTIONS. The term of each option granted under the Plan will
be for such period (hereinafter referred to as the "option period") not
exceeding ten (10) years as the Board or the Committee, if so appointed, shall
determine. Each option shall be subject to earlier termination as described
under "exercise of options."
10. EXERCISE OF OPTIONS. Each option granted under the Plan will be
exercisable on such date or dates and during such period and for such number of
shares as shall be determined pursuant to the provisions of the option agreement
evidencing such option. Subject to the express provisions of the Plan, the Board
or the Committee, if so appointed, shall have complete authority, in its
discretion, to determine the extent, if any, and the conditions under which an
option may be exercised in the event of the death of the participant or in the
event the participant leaves the employ or as a director of the Company or has
his or her employment terminated by the Company. An option may be exercised, by
(a) written notice of intent to exercise the option with respect to a specified
number of shares of stock, and (b) payment to the Company of the amount of the
option purchase price for the number of shares of stock with respect to which
the option is then exercised.
11. NONTRANSFERABILITY. Options under the Plan are not transferable
otherwise than by will or the laws of descent or distribution, and may be
exercised during the lifetime of a participant only by such participant.
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12. AGREEMENTS. Options granted pursuant to the Plan shall be evidenced
by stock option agreements in such form as the Board or the Committee, if so
appointed, shall from time to time adopt.
13. ADJUSTMENT OF NUMBER OF SHARES. In the event that a dividend shall
be declared upon the Common Shares of the Company payable in Common Shares of
the Company, the number of Common Shares then subject to any such option and the
number of shares reserved for issuance pursuant to the Plan but not yet covered
by an option, shall be adjusted by adding to each such share the number of
shares which would be distributable thereon if such share had been outstanding
on the date fixed for determining the shareholders entitled to receive such
stock dividend. In the event that the outstanding Common Shares of the Company
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
merger or consolidation, then there shall be substituted for each common share
reserved for issuance pursuant to the Plan or option, the number and kind of
shares of stock or other securities into which each outstanding common share
shall be so changed or for which each such share shall be exchanged. In the
event there shall be any change, other than as specified above in this paragraph
in the number or kind of outstanding Common Shares of the Company or of any
stock or other securities into which such Common Shares shall have been changed
or for which it shall have been exchanged, then if the Board or the Committee,
if so appointed, shall in its sole discretion determine that such change
equitably requires an adjustment in the number or kind of shares theretofore
reserved for issuance pursuant to the Plan, but not yet covered by an option and
of shares then subject to an option or options, such adjustment shall be made by
the Board or the Committee, if so appointed, and shall be effective and binding
for all purposes of the Plan and of each stock option agreement. The option
price in each stock option agreement for each share of stock or other securities
substituted or adjusted as provided for in this paragraph shall be determined by
multiplying the option price then in effect by the fraction, the numerator of
which shall be the number of shares issuable upon exercise of the options prior
to such substitution or adjustment, and the denominator of which shall be the
number of shares or the fraction of a share substituted for such shares or to
which such shares shall have been adjusted. No adjustment or substitution
provided for in this paragraph shall require the Company in any stock option
agreement to sell a fractional share, and the total substitution or adjustment
with respect to each stock option agreement shall be limited accordingly.
14. AMENDMENTS. The Board of Directors, without approval of the
shareholders, may from time to time amend the Plan in such respects as the Board
may deem advisable. No amendment shall, without the participant's consent, alter
or impair any of the rights or obligations under any option theretofore granted
to him under the Plan.
IN WITNESS WHEREOF, the Board of Directors of the Company has adopted
this Plan on the 15th day of August, 2001.
DESWELL INDUSTRIES, INC.
By:
Richard Lau, Chairman of the
Board and Chief Executive
Officer
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DESWELL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 7, 2002
THIS PROXY IS SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned, having received notice of the Annual Meeting of
Shareholders and the Proxy Statement of the Board of Directors furnished
therewith, hereby appoints Richard Lau, C. P. Li and C. W. Leung, and each of
them, attorneys of the undersigned (each with full power of substitution), for
and in the name(s) of the undersigned to attend the Annual Meeting of
Shareholders of Deswell Industries, Inc. (the "Company") to be held at the
Linden Room, Four Seasons Hotel, 300 S. Doheny Drive, Los Angeles, California,
90048 on January 7, 2002 at 10:00 a.m. Pacific Time, and any adjournment or
adjournments thereof, and there to vote and act in regard to all matters which
may properly come before said meeting (except those matters as to which
authority is hereinafter withheld) upon and in respect to all Common Shares of
the Company upon or in respect of which the undersigned would be entitled to
vote or act, and with all power the undersigned would possess, if personally
present, and especially (but without limiting the general authorization and
power hereby given) to vote and act as follows.
1. ELECTION OF DIRECTORS
__ FOR all nominees listed below (except as marked to the contrary
below)
__ WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below.)
Richard Lau C. P. Li
C. W. Leung Stephen K. Seung
Hung-Hum Leung
2. To approve the adoption of the Company's 2001 Stock Option Plan
authorizing options to purchase up to 500,000 Common Shares of the
Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the appointment of Deloitte Touche Tohmatsu as independent
accountants for the year ending March 31, 2002.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
4. In their discretion, the Proxies are each authorized to vote upon
such other business as may properly come before the meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
Proxy will be voted FOR Proposals 1, 2 and 3.
THE UNDERSIGNED HEREBY CONFER(S) UPON SAID ATTORNEYS PROXY
DISCRETIONARY AUTHORITY TO VOTE UPON ANY OTHER MATTERS OF PROPOSALS NOT KNOWN AT
THE TIME OF SOLICITATION OF THIS PROXY WHICH MAY PROPERLY COME BEFORE THE
MEETING.
Attendance of the undersigned at said meeting or at any adjournment or
adjournments thereof will not be deemed to revoke this Proxy unless the
undersigned shall affirmatively indicate thereat his intention to vote said
shares in person. If a fiduciary capacity is attributed to the undersigned in
imprint below, this Proxy is signed by the undersigned in that capacity.
Signature(s)____________________________________________________________________
Date____________
IMPORTANT: In signing this Proxy, please write name exactly as appearing on
imprint. For stock held jointly, each joint owners should personally sign. For
stock held by corporation, please affix corporate seal.