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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
CHINA RESOURCES DEVELOPMENT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
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:
________________________________________________________________________________
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 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:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
CHINA RESOURCES DEVELOPMENT, INC.
[COMPANY LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 12, 2001
To the Stockholders of China Resources Development, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
"Annual Meeting") of China Resources Development, Inc., a Nevada corporation
(the "Company"), will be held at 2:30 p.m., Hong Kong time, on December 12, 2001
at 26/F, Securities Building, 5020 Binhe Road, Fu Tian District, Shenzhen
Province, People's Republic of China, for the following purposes:
1. To elect two Class II members to the Company's Board of Directors to
hold office until the Company's annual meeting of stockholders to be
held in 2004 and until their successors are duly elected and
qualified;
2. To ratify the appointment of Ernst & Young as independent auditors
of the Company for the fiscal year ending December 31, 2001; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
All stockholders are cordially invited to attend; however, only
stockholders of record at the close of business on October 31, 2001 are entitled
to notice of and to vote at the Annual Meeting or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE BOARD'S
NOMINEES TO SERVE AS CLASS II DIRECTORS, AND FOR PROPOSAL TWO.
By Order of the Board of Directors
Wong Wah On
CORPORATE SECRETARY
Hong Kong
November 12, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. STOCKHOLDERS
WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY
AND VOTE THEIR SHARES IN PERSON.
CHINA RESOURCES DEVELOPMENT, INC.
ROOM 2105
WEST TOWER, SHUN TAK CENTRE
200 CONNAUGHT ROAD C.
SHEUNG WAN, HONG KONG
------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
DECEMBER 12, 2001
------------------------------------
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors (the
"Board") of China Resources Development, Inc. (the "Company," "we", "us" and
similar terms) to be voted at the Annual Meeting of Stockholders to be held on
Wednesday, December 12, 2001 (the "Annual Meeting"), and any adjournments
thereof. When such proxy is properly executed and returned, the shares it
represents will be voted at the meeting as directed. If no specifications are
indicated, the shares will be voted in accordance with the recommendation of the
Board with respect to each matter submitted to the Company's stockholders for
approval. Abstentions and broker non-votes will not be voted, but will be
counted for determining the presence of a quorum.
The cost of preparing and mailing the enclosed proxy materials, which
is estimated to be approximately $28,000, will be borne by the Company. The
Company may use the services of its officers and employees (who will receive no
additional compensation) to solicit proxies. In addition to the use of the
mails, proxies may be solicited by telephone, Mailgram, facsimile, telegraph,
cable and personal interview. The Company intends to request banks and brokers
holding shares of the Company's Common Stock to forward copies of the proxy
materials to those persons for whom they hold shares and to request authority
for the execution of proxies. The Company will reimburse banks and brokers for
their out-of-pocket expenses. The Company may also retain the services of a
solicitation firm to aid in the solicitation of proxies. If it does so, the
Company will pay the fees and expenses of such firm.
A list of stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder for a proper purpose during normal
business hours at the offices of the Company for a period of at least ten days
preceding the Annual Meeting.
VOTING AT THE ANNUAL MEETING
The shares entitled to vote at the Annual Meeting consist of shares of
the Company's Common Stock and Series B Preferred Stock, with each share
entitling the holder to one vote. At the close of business on October 31, 2001,
the record date for the Annual Meeting, there were issued and outstanding
837,797 shares of the Company's Common Stock and 320,000 shares of the Company's
Series B Preferred Stock. This Proxy Statement and the accompanying form of
proxy are first being sent to stockholders on or about November 12, 2001.
Each proxy that is properly signed and received prior to the Annual
Meeting will, unless revoked, be voted in accordance with the instructions on
such proxy. If no instruction is indicated, the shares will be voted FOR the
election of the nominees for director listed in this proxy statement, FOR
ratification of the appointment of Ernst & Young, and FOR the approval of such
other business that may properly come before the Annual Meeting or any
postponement or adjournment thereof. A stockholder who has given a proxy may
revoke such proxy at any time before it is voted at the Annual Meeting by
delivering a written notice of revocation or duly executed proxy bearing a later
date to the Secretary of the Company or by attending the meeting and voting in
person.
A quorum of stockholders is necessary to take action at the Annual
Meeting. A majority of the outstanding shares of the Company's Common Stock and
Preferred Stock, counted together, represented in person or by proxy, will
constitute a quorum. Votes cast by proxy or in person at the Annual Meeting will
be tabulated by the inspector of election appointed for the Annual Meeting. The
inspector of election will determine whether or not a quorum is present at the
Annual Meeting. The inspector of election will treat abstentions as shares of
Common Stock or Preferred Stock that are present and entitled to vote for
purposes of determining the presence of a quorum.
The two nominees for director who receive the greatest number of votes
cast in person or by proxy at the Annual Meeting shall be elected as Class II
directors of the Company. The vote required for adoption of the other proposals
herein is the affirmative vote of a majority of the shares of Common Stock and
Preferred Stock, counted together, present in person or represented by proxy at
the Annual Meeting; and, for purposes of determining stockholder approval of
such proposals, abstentions will be treated as shares of Common Stock or
Preferred Stock voted against adoption of such proposals.
2
CONVENTIONS
Unless otherwise specified, all references in this proxy statement to
"U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all
references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all
references to "Renminbi" or "RMB" or "Yuan" are to Renminbi Yuan, which is the
lawful currency of the People's Republic of China ("China" or "PRC"). The
Company and Billion Luck maintain their accounts in U.S. Dollars and Hong Kong
Dollars, respectively. HARC and its subsidiaries maintain their accounts in
Renminbi. The financial statements of the Company and its subsidiaries are
prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and
from Hong Kong Dollars to U.S. Dollars are for the convenience of the reader.
Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or
from U.S. Dollars to Renminbi have been made at the single rate of exchange as
quoted by the People's Bank of China (the "PBOC Rate") on September 30, 2001,
which was approximately U.S.$1.00 = Rmb8.28. Translations from Hong Kong Dollars
to U.S. Dollars have been made at the single rate of exchange as quoted by the
Hongkong and Shanghai Banking Corporation Limited on September 30, 2001, which
was approximately US$1.00 = HK$7.80. The Renminbi is not freely convertible into
foreign currencies and the quotation of exchange rates does not imply
convertibility of Renminbi into U.S. Dollars or other currencies. All foreign
exchange transactions take place either through the Bank of China or other banks
authorized to buy and sell foreign currencies at the exchange rates quoted by
the People's Bank of China. No representation is made that the Renminbi or U.S.
Dollar amounts referred to herein could have been or could be converted into
U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.
References to "Billion Luck" are to Billion Luck Company Ltd., a
British Virgin Islands company, which is a wholly-owned subsidiary of the
Company.
References to "Company" and "Registrant" are to China Resources
Development, Inc., and include, unless the context requires otherwise, the
operations of its subsidiaries.
References to "HARC" are to Hainan Cihui Industrial Company Limited
(formerly known as Hainan Zhongwei Agricultural Resources Company Limited), a
company organized in the PRC, whose capital was owned, as of December 31, 2000,
39% by the Farming Bureau and 61% by the Company. During fiscal year 2001, the
Company acquired the 39% interest in HARC previously owned by the Farming
Bureau.
References to the "PRC" or "China" include all territory claimed by or
under the control of the Central Government, except Hong Kong, Macau, and
Taiwan.
3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of shares of Common Stock and Series B Voting
Preferred Stock as of October 31, 2001 by (i) each person known by the Company
to be the owner of more than 5% of the outstanding shares of Common Stock and
Preferred Stock combined, (ii) each of the Company's directors, (iii) each of
the Company's executive officers, and (iv) all executive officers and directors
as a group. Unless otherwise indicated, each person has sole investment and
voting power with respect to all shares shown as beneficially owned.
Unless otherwise indicated the address of each beneficial owner is Room
2105, West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong.
Amount and Nature of
Beneficial Ownership
-------------------------------------------------------------
Common Stock Preferred Stock Percent
Name and Address of ---------------------------- ------------------------- of
Beneficial Owner # of Shares % of Class # of Shares % of Class Vote
- ---------------- ----------- ---------- ----------- ---------- ----
Ching Lung Po 73,480(1) 4.0% 320,000(1) 100% 30.5%
Worlder International
Company Limited 48,600(2) 5.8% -- --
4.2%
21/F Great Eagle Centre
23 Harbour Road
Hong Kong
Tam Cheuk Ho 284, 897(3) 29.2% -- --
21.2%
Wong Wah On 289,217(4) 29.8% -- --
21.5%
Wan Yin Ling -- -- -- -- --
Ng Kin Sing -- -- -- -- --
Lo Kin Cheung -- -- -- -- --
Executive Officers and
Directors as a group
(of 6 persons) ........ 402,697(1)(3)(4) 33.7% 320,000 100% 52.1%
- --------------
(1) Shares registered to Winsland Capital Limited, a company beneficially owned
by Mr. Ching. Also includes an option granted to Mr. Ching to purchase
40,000 shares of Common Stock.
(2) Includes13,500 shares registered to Silverich Limited, a wholly-owned
subsidiary of Worlder International Company Limited.
(3) Includes 244,897 shares registered to Anka Capital Limited, a company owned
50% by Mr. Tam. Mr. Tam disclaims beneficial ownership of the shares owned
by Anka Capital Limited, except to the extent of his pecuniary interest in
the shares. Also includes an option granted to Mr. Tam to purchase 40,000
shares of Common Stock.
(4) Includes 244,897 shares registered to Anka Capital Limited, a company owned
50% by Mr. Wong. Mr. Wong disclaims beneficial ownership of the shares
owned by Anka Capital Limited, except to the extent of his pecuniary
interest in the shares. Also includes 4,320 shares registered to Brender
Services Limited, a company beneficially owned by Mr. Wong and an option
granted to Mr. Wong to purchase 40,000 shares of Common Stock.
4
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
- ----------------------
Article VIII of the Company's Articles of Incorporation permits the
Board of Directors to fix the number of directors at not less than three nor
more than 25. At the annual meeting of stockholders held in 1996, an amendment
to the Articles of Incorporation was approved, dividing the directors into three
classes. Pursuant to the amendment, one class of directors is elected each year,
to serve a three-year term.
Two Class II directors will be elected at the Annual Meeting. The
nominees for Class II directors, if elected, will serve until the annual meeting
of stockholders to be held in 2004 and until his successor is duly elected and
qualified. Ching Lung Po and Ng Kin Sing both currently serve as directors. Mr.
Ng currently serves as a Class III director, but effective upon his election at
the Annual Meeting, will resign as such and continue as a Class II director. Mr.
Ng's resignation and election as a Class II director will result in there being
two directors from each of Class I, II and III.
Both nominees have consented to being named herein and have indicated
their intention to serve as Class II directors of the Company, if elected.
Unless authority to do so is withheld, the persons named as proxies will vote
the shares represented by such proxies for the election of the named nominees.
In case any of the nominees become unavailable for election to the Board of
Directors, which is not anticipated, the persons named as proxies shall have
full discretion and authority to vote or refrain from voting for any other
nominees in accordance with their judgment. Vacancies on the Board may be filled
by the remaining director or directors, even though less than a quorum, for the
unexpired term of such vacant position.
The following persons have been nominated for election to the Board of
Directors:
Name Age Position
---- --- ---------
Ching Lung Po 54 Chairman, President and Chief
Executive Officer
Ng Kin Sing 39 Director
Business Experience.
- -------------------
Mr. Ching Lung Po has been a director of the Company since February 4,
1998. He was appointed Chairman of the Board of Directors on January 25, 1999,
Chief Executive Officer and President of the Company on February 1, 1999 and
June 1, 1999, respectively. Mr. Ching has also been the Chairman of the Board of
Directors and President of OVM International Holding Corp. (OTC Bulletin Board:
OVMI), which is included on the OTC Bulletin Board operated by the Nasdaq, since
September 1996, and the Chariman of Asia Fiber Holdings Limited (OTC Bulletin
Board: AFBR), which is included on the OTC Bulletin Board operated by the
Nasdaq, since January 2000. Mr. Ching has been involved for more than 20 years
in the management of production and technology for industrial enterprises in
PRC. He worked in Heilongjiang Suihua
5
Electronic Factory as an engineer from 1969 to 1976 and was the Head of the
Heilongjiang Suihua Industrial Science & Technology Research Institute from 1975
to 1976. Mr. Ching joined the Heilongjiang Qingan Factory in 1976 and has been
the General Manager since 1976. In 1988, Mr. Ching started his own business and
established the Shenzhen Hongda Science & Technology Company Limited in
Shenzhen, which manufactures electronic products. Mr. Ching graduated from the
Harbin Military and Engineering Institute and holds the title of Senior
Engineer.
Mr. Ng Kin Sing has been a director of the Company since February 1,
1999, and also serves as a member of the Audit Committee. From April 1998 to the
present, Mr. Ng has been the managing director of Action Plan Limited, a
securities investment company. From November 1995 until March 1998, Mr. Ng was
sales and dealing director for NatWest Markets (Asia) Limited; and from May 1985
until October 1995, he was the dealing director of BZW Asia Limited, an
international securities brokerage house. Mr. Ng holds a Bachelor's degree in
Business Administration from the Chinese University of Hong Kong.
Information Concerning the Board of Directors.
- ---------------------------------------------
During the year ended December 31, 2000 the Company's Board of
Directors held eight meetings. Each member of the Board participated in each
action of the Board.
Committees of the Board of Directors.
- ------------------------------------
The Audit Committee, which currently consists of Ng Kin Sing, Wan Ying
Lin and Lo Kin Cheung, reviews the professional services provided by our
independent auditors, the independence of our auditors from our management, our
annual financial statements and our system of internal accounting controls. The
Audit Committee also reviews other matters with respect to our accounting,
auditing and financial reporting practices and procedures as it may find
appropriate or may be brought to its attention. The Company's Board of Directors
has adopted a written Charter of the Audit Committee, a copy of which is
attached to this Proxy Statement as Appendix A. The members of the Audit
Committee are all independent, as defined in the National Association of
Securities Dealers' listing standards. The Audit Committee met on four occasions
during the year ended December 31, 2000.
The Company does not have a formal compensation committee. The Board of
Directors, acting as a compensation committee, periodically meets to discuss and
deliberate on issues surrounding the terms and conditions of executive officer
compensation, including base salaries, bonuses, awards of stock options and
reimbursement of certain business related costs and expenses.
The Company does not have a formal nominating committee. The Board of
Directors, acting as a nominating committee, recommends candidates who will be
nominated as management's slate of directors at each annual meeting of
stockholders. The Board of Directors will also consider candidates for directors
nominated by stockholders. A stockholder who wishes to submit a candidate for
consideration at the annual meeting of stockholders to be held in 2002, must
notify the Secretary of the Company, in writing, no later than July 15, 2002.
The written notice must include information about each proposed nominee,
including name, age, business address, principal occupation, shares beneficially
owned and other information required to be included in proxy solicitations. The
nomination notice must also include the nominating stockholder's name and
address, the number of shares beneficially owned and a statement that such
stockholder intends to nominate his candidate. A statement from the
6
candidate must also be furnished, indicating the candidate's desire and ability
to serve as a director. Adherence to these procedures is a prerequisite to a
stockholder's right to nominate a candidate for director at the annual meeting.
Audit Committee Report.
- ----------------------
The following statement made by the Audit Committee, shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of such Acts.
The Audit Committee reviews our financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the system of internal
controls.
Management represented to the committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The committee discussed with the independent auditors matters required to be
discussed by auditing standards generally accepted in the United States.
In addition, the committee has discussed with the independent auditors
the auditor's independence from the Company and its management, including the
matters in the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees).
The committee also discussed with our independent auditors the overall
scope and plans for their respective audit. The committee meets with the
independent auditors with and without management present, to discuss the results
of their examinations, the evaluations of the Company's internal controls, and
the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the
committee recommended to the Board of Directors, and the board has approved,
that the audited consolidated financial statements be included in the Company's
Form 10-K for the year ended December 31, 2000, for filing with the Securities
and Exchange Commission.
Submitted by the
Audit Committee of
the Board of
Directors:
/s/ Ng Kin Sing
/s/ Wan Ying Lin
/s/ Lo Kin Cheung
7
Report of the Board of Directors on Executive Compensation.
- ----------------------------------------------------------
The following statement made by the Board of Directors, sitting as a
Compensation Committee, shall not be deemed incorporated by reference into any
filing under the Securities Act or the Exchange Act, and shall not otherwise be
deemed filed under either of such Acts.
The Company does not have a formal compensation committee. The Board of
Directors, acting as a compensation committee, periodically meets to discuss and
deliberate on issues surrounding the terms and conditions of executive officer
compensation, including base salaries, bonuses, awards of stock options and
reimbursement of certain business related costs and expenses.
In determining the compensation of the Company's executive officers,
the Board of Directors takes into account all factors which it considers
relevant, including business conditions, in general, and in the Company's line
of business during the year in light of such conditions, the market compensation
for executives of similar background and experience, the performance of the
Company, in general, and the performance of the specific executive officer under
consideration, including the business area of the Company for which such
executive officer is responsible. In light of these factors, the Board of
Directors determined that the payment of discretionary bonuses to executive
officers was not appropriate for the fiscal year ended December 31, 2000.
The Board of Directors also believes that granting stock options
provides an additional incentive to executive officers to continue in the
service of the Company and gives them an interest similar to stockholders in the
success of the Company. In the future, the Board of Directors intends to make
use of stock options, along with other traditional salary and bonus components
of executive compensation packages, to provide incentives to attract and
maintain qualified executive officers.
Submitted by the Board of Directors,
Sitting as a Compensation Committee:
/s/ Ching Lung Po
/s/ Tam Cheuk Ho
/s/ Wong Wah On
/s/ Wan Ying Lin
/s/ Ng Kin Sing
/s/ Lo Kin Cheung
Compensation Committee Interlocks and Insider Participation.
- -----------------------------------------------------------
The current Board of Directors includes Ching Lung Po, Tam Cheuk Ho and
Wong Wah On, each of whom also serves as an executive officer of the Company. As
a result, these directors discuss and participate in deliberations of the Board
of Directors on matters relating to the terms of executive compensation. In this
regard, a director whose executive compensation is voted upon by the Board of
Directors must abstain from such vote.
8
Performance Graph.
- -----------------
The following graph compares the cumulative total returns on the
Company's common stock during the preceding five fiscal years, with the returns
on companies in the Nasdaq Market Index and an Industry Index Group selected by
the Company (Standard Industrial Classification Code No. 5411 - Grocery Stores).
The graph assumes that $100 was invested in the Company's common stock and each
of the indices presented on December 31,1995, and that dividends, if any, were
reinvested.
This information is presented in accordance with requirements of the
Securities and Exchange Commission, should not necessarily be viewed as
indicative of future performance, and shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing made by the Company under the Securities Act of 1933
or the Securities Exchange Act of 1934 (except to the extent that the Company
specifically incorporates this information by reference).
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CHINA RESOURCES DEVELOPMENT, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
STOCK PRICE PERFORMANCE COMPARISON OF
5-YEAR CUMULATIVE RETURNS
Fiscal Years Ended December 31
1995 1996 1997 1998 1999 2000
-----------------------------------------------------------
China Resources Development 100.00 4.50 2.80 1.05 1.34 .48
Grocery Stores 100.00 129.12 159.29 225.55 160.77 189.09
NASDAQ Market Index 100.00 124.27 152.00 214.39 378.12 237.66
9
Section 16(a) Beneficial Ownership Reporting Compliance.
- -------------------------------------------------------
Based solely upon a review of Forms 3, 4, and 5, and amendments
thereto, furnished to the Company for the fiscal year ended December 31, 2000,
Mr. Lo Kin Cheung failed to timely file Form 3 to report his appointment as a
director.
EXECUTIVE COMPENSATION
- ----------------------
Summary Compensation Table.
- --------------------------
The following table shows, for each of the three years ended December
31, 2000, the cash and other compensation paid by the Company to its President
and Chief Executive Officer and each other executive officer whose annual
compensation was $100,000 or more.
|----------------|
Annual Compensation | Long Term |
| Compensation |
------------------------------------- |----------------|
| |
Other | Securities |
Annual | Underlying | All Other
Salary Bonus Compensation | Options | Compensation
Name and Principal Position Year (US$) (US$) (US$) | (1) | (US$)
- -------------------------------- -------- --------- ---------- ---------------- |----------------|-----------------
Ching Lung Po, President and 2000 276,923 -0- -0- | -0- | -0-
Chief Executive Officer | |
| |
1999 253,846 -0- -0- | -0- | -0-
| |
1998 -0- -0- -0- | -0- | -0-
| |
| |
Tam Cheuk Ho, Director and 2000 230,769 -0- -0- | 60 | -0-
Chief Financial Officer | |
| |
1999 212,538 -0- -0- | 60 | -0-
| |
1998 -0- -0- -0- | 60 | -0-
| |
| |
Wong Wah On, Director, 2000 153,846 -0- -0- | 60 | -0-
Secretary and Financial | |
Controller | |
| |
1999 141,026 -0- -0- | 60 | -0-
| |
1998 -0- -0- -0- | 60 | -0-
| |
| |
Li Fei Lie, Vice President(2) 2000 69,231 -0- -0- | 1,000 | -0-
| |
1999 69,231 -0- -0- | 1,000 | -0-
| |
1998 46,795 -0- 22,436 | 1,000 | -0-
===================================================================================================================
(1) As of December 31, 2000, none of the stock options held by Mr. Li, Mr. Tam
and Mr. Wong were exercisable. None of such options was "in-the-money" at
such date, as the fair market value (as defined in the Company stock option
plan and adjusted as a result of the one-for-ten reverse stock split) of
the Common Stock on December 31, 2000, was US$2.94 per share.
(2) Mr. Li resigned in October 2001.
10
Option/SAR Grants Table.
- -----------------------
The following table sets forth information with respect to the grant of
options to purchase shares of Common Stock during the fiscal year ended December
31, 2000 to each person named in the Summary Compensation Table.
Potential Realiz-
able Value At
Assumed Rates
Number % Of Of Stock Price
Of Shares Total Options Appreciation For
Underlying Granted To Exercise Or Option Term
Options Employees In Base Price Expiration
Name Granted Fiscal Year $/Share Date 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------------------
Ching Lung Po -- -- -- -- -- --
Tam Cheuk Ho -- -- -- -- -- --
Wong Wah On -- -- -- -- -- --
Li Fei Lie(1) -- -- -- -- -- --
- --------------------
(1) Mr. Li resigned in October 2001.
Aggregated Option Exercises and Fiscal Year-End Option Value Table.
- -------------------------------------------------------------------
The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stock during the fiscal year ended
December 31, 2000 by each person named in the Summary Compensation Table.
Number of Shares Values of Unexercised
Shares ($) Underlying Unexercised In the Money Options
Acquired on Value Options At Year End at Year End (1)
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- -------------------------------------------------------------------------------------------------------------
Ching Lung Po -- -- -- / -- -- / --
Tam Cheuk Ho -- -- 60 / 60 -- / --
Wong Wah On -- -- 60 / 60 -- / --
Li Fei Lie(2) -- -- 1,000 / 1,000 -- --/
- --------------------------
(1) Value based on the difference between the closing price of the Company's
Common Stock on the NASDAQ SmallCap Market of $3.00 per share on December
31, 2000, and the exercise price of the options.
(2) Mr. Li resigned in October 2001.
11
Stock Option Plan.
- -----------------
The Company adopted a Stock Option Plan (the "Plan") as of March 31,
1995. The Plan allows the Board of Directors, or a committee thereof at the
Board's discretion, to grant stock options to officers, directors, key
employees, consultants and affiliates of the Company. Initially, 24,000 shares
of common stock could be issued and sold pursuant to options granted under the
Plan. "Incentive Stock Options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), may be granted to
employees, including officers, whether or not they are members of the Board of
Directors, and nonqualified stock options may be granted to any such employee or
officer and to directors, consultants, and affiliates who perform substantial
services for or on behalf of the Company or its subsidiaries.
The Board of Directors, or a committee appointed by the Board (the
"Committee"), is vested with authority to (i) select persons to participate in
the Plan; (ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
grants will be made; (iii) interpret the Plan; and (iv) adopt, amend, or rescind
such rules and regulations for carrying out the Plan as it may deem appropriate.
The Board of Directors has the power to modify or terminate the Plan and from
time to time may suspend, and if suspended may reinstate, any or all of the
provisions of the Plan except that (i) no modification, suspension, or
termination of the Plan may, without the consent of the grantee affected, alter
or impair any grant previously made under the Plan; and (ii) no modification
shall become effective without prior consent of the stockholders of the Company
that would (a) increase the maximum number of shares reserved for issuance under
the Plan, except for certain adjustments allowed by the Plan; (b) change the
classes of employees eligible to participate in the Plan; or (c) materially
increase the benefits accruing to participants in the Plan. On October 12, 2000,
by virtue of an amendment adopted by the stockholders of the Company, the
requirement of stockholder approval of any modification of the Plan that would
materially increase the benefits accruing to participants in the Plan was
eliminated.
The Plan provides that the price per share deliverable upon the
exercise of each Incentive Stock Option shall not be less than 100% of the fair
market value of the shares on the date the option is granted, as the Committee
determines. In the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total combined
voting power of all classes of stock of the Company or any of its subsidiaries,
such price per share, if required by the Code at the time of grant, shall not be
less than 110% of the fair market value of the shares on the date the option is
granted. The price per share deliverable upon the exercise of each nonqualified
stock option shall not be less than the higher of (i) the net tangible assets
per share of the Company as of the end of the fiscal year immediately preceding
the date of such granting; or (ii) 80% of the fair market value of the shares on
the date the option is granted, as the Committee determines. On October 12,
2000, by virtue of an amendment adopted by the stockholders of the Company to
modify the pricing procedure for the exercise of nonqualified stock options, the
price per share deliverable upon the exercise of each nonqualified stock option
shall not be less than 80% of the fair market value of the shares of the date
the option is granted, as the Committee determines.
Options may be exercised in whole or in part upon payment of the
exercise price of the shares to be acquired. Payment shall be made in cash or,
in the discretion of the Committee, in shares previously acquired by the
participant or in a combination of cash and shares of Common Stock. The fair
market value of shares of Common Stock tendered on exercise of options shall be
determined on the date of exercise.
12
On December 30, 1996, the stockholders of the Company adopted an
amendment to the Plan (a) to change the number of shares of Common Stock subject
to the Plan to that number of shares which would, in the aggregate and if deemed
outstanding, constitute 20% of the Company's then-outstanding shares of Common
Stock, as determined at the time of granting stock options, and (b) to allow
Nonqualified Stock Options, as defined in the Plan, to be exercisable in less
than one year (no currently outstanding options were changed by such amendment).
As of December 31, 2000, options to purchase 13,820 shares of Common
Stock had been granted and remain outstanding, and 10,180 were available for
future grant. Of the options outstanding as of such date, options to purchase
2,120 shares were beneficially owned by officers and directors of the Company.
Report on Repricing of Options.
- ------------------------------
No options were repriced during the year ended December 31, 2000.
Director Compensation.
- ---------------------
During the fiscal years ended December 31, 2000 and 1999, directors of
the Company did not receive compensation for their services as such.
Employment and Consulting Agreements.
- ------------------------------------
On February 1, 1999, the Company entered into an Employment Agreement
with Tam Cheuk Ho. In accordance with the terms of the Employment Agreement, Mr.
Tam is employed by the Company as its Chief Financial Officer, to perform such
duties as the Board of Directors from time to time determines. Mr. Tam receives
a base salary of HK$1,800,000 (US$230,769) annually, which base salary is to be
adjusted on each anniversary of the Employment Agreement to reflect a change in
the applicable consumer price index, or such greater amount as the Company's
Board of Directors may determine. The Employment Agreement has a term of two
years and will be automatically renewed, subject to earlier termination in
accordance with the terms thereof.
On February 1, 1999, the Company entered into an Employment Agreement
with Wong Wah On. In accordance with the terms of the Employment Agreement, Mr.
Wong is employed by the Company as its Financial Controller and Corporate
Secretary, to perform such duties as the Board of Directors from time to time
determines. Mr. Wong receives a base salary of HK$1,200,000 (US$153,846)
annually, which base salary is to be adjusted on each anniversary of the
Employment Agreement to reflect a change in the applicable consumer price index,
or such greater amount as the
13
Company's Board of Directors may determine. The Employment Agreement has a term
of two years and will be automatically renewed, subject to earlier termination
in accordance with the terms thereof.
On February 1, 1999, the Company entered into a Service Agreement with
Ching Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching
is employed by the Company as its Chief Executive Officer, to perform such
duties as the Board of Directors from time to time determines. Mr. Ching
receives a base salary of HK$2,160,000 (US$276,923) annually, which base salary
is to be adjusted on each anniversary of the Employment Agreement to reflect a
change in the applicable consumer price index, or such greater amount as the
Company's Board of Directors may determine. The Employment Agreement has a term
of two years and will be automatically renewed, subject to earlier termination
in accordance with the terms thereof.
Except for the foregoing, the Company has no employment contracts with
any of its officers or directors and maintains no retirement, fringe benefit or
similar plans for the benefit of its officers or directors. The Company may,
however, enter into employment contracts with its officers and key employees,
adopt various benefit plans and begin paying compensation to its officers and
directors as it deems appropriate to attract and retain the services of such
persons.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As disclosed above under "Stock Options", the Company has adopted a
Stock Option Plan to grant stock option to officers, directors, key employees,
consultants and affiliates of the Company.
As disclosed above under "Executive Compensation", Ching Lung Po, Tam
Cheuk Ho and Wong Wah On are parties to employment agreements with the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE
DIRECTOR NOMINEES.
14
PROPOSAL 2
PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT
AUDITORS OF THE COMPANY
At the Annual Meeting, stockholders will be requested to ratify the
Board of Directors' engagement of Ernst & Young for the fiscal year ending
December 31, 2001.
Fees to Auditors.
- ----------------
Audit Fees: The aggregate fees, including expenses, billed by Ernst &
Young in connection with the audit of the Company's consolidated financial
statements for the most recent fiscal year and for the review of the Company's
financial information included in its Annual Report on Form 10-K and its
quarterly reports on Form 10-Q during the year 2000 was HK$630,000 (US$80,769).
All Other Fees: The aggregate fees, including expenses, billed for all
other services rendered to the Company by Ernst & Young during year 2000 was
HK$65,000 (US$8,333). These non-audit fees relate to corporate compliance, tax
services, SEC consulting services and registration filing services performed for
the Company.
General.
- -------
A representative of Ernst & Young is expected to be present at the
Annual Meeting, and if so, will be provided with an opportunity to make a
statement if such representative desires to do so, and is expected to be
available to respond to appropriate questions from stockholders.
The approval of Proposal 2 by the stockholders requires that the votes
cast favoring Proposal 2 exceed the votes cast opposing Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ERNST &
YOUNG AS INDEPENDENT AUDITORS OF THE COMPANY.
15
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the annual meeting of stockholders to be held
in 2002 must be received by the Company no later than July 15, 2002, in order to
have them included in the proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for action
at the Meeting. However, if any other matter is properly presented, it is the
intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.
ACCOMPANYING REPORTS
The Company's Annual Report on Form 10-K (without exhibits), including
audited consolidated financial statements as at and for the years ended December
31, 2000, 1999 and 1998, and the Company's Quarterly Report on Form 10-Q,
including unaudited consolidated financial statements as at and for the three
and six months ended June 30, 2001, accompany this proxy statement.
16
APPENDIX A
AUDIT COMMITTEE CHARTER
CHINA RESOURCES DEVELOPMENT, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
- ------------
This charter governs the operations of the audit committee. The committee shall
review and reassess the charter at least annually and obtain the approval of the
board of directors. The committee shall be appointed by the board of directors
and shall comprise at least three directors, each of whom are independent of
management and the Company. Members of the committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All committee members shall
be financially literate, and at least one member shall have accounting or
related financial management expertise.
STATEMENT OF POLICY
- -------------------
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the stockholders, potential
stockholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
- ------------------------------
The primary responsibility of the audit committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.
The following shall be the principal recurring processes of the audit committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the committee may supplement them as
appropriate.
o The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's stockholders. The committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate,
recommend the replacement of the independent auditors. The committee
shall discuss with the auditors their independence from management and
the Company and the
A-1
included in the written disclosures required by the Independence
Standards Board. Annually, the committee shall review and recommend to
the board the selection of the Company's independent auditors, subject to
stockholders' approval.
o The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
committee shall discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the
committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss the
results of their examinations.
o The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
o The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to stockholders if distributed prior to
the filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards.
A-2
CHINA RESOURCES DEVELOPMENT, INC.
ANNUAL MEETING OF STOCKHOLDERS
December 12, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CHINA RESOURCES DEVELOPMENT, INC.
The undersigned hereby appoints Ching Lung Po proxy with power of
substitution and hereby authorizes him to represent and to vote, as designated
below, all of the shares of common stock of China Resources Development, Inc.
held of record by the undersigned on October 31, 2001 at the Annual Meeting of
Stockholders to be held at 26/F, Securities Building, 5020 Binhe Road, Fu Tian
District, Shenzhen Province, People's Republic of China, on Wednesday, December
12, 2001 at 2:30 p.m., Hong Kong time, and at all adjournments thereof, with all
powers the undersigned would possess if personally present. In his or her
discretion, the Proxy is authorized to vote upon such other business as may
properly come before the meeting.
1. Election of Directors
Nominees: Ching Lung Po and Ng Kin Sing.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY [ ] FOR all nominees,
except as noted below:
-----------------------
Nominee exception(s)
2. Proposal to ratify the appointment of Ernst & Young as independent
auditors of the Company for the fiscal year ending December 31, 2001 to
serve at the pleasure of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNEDSTOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF 2001 ANNUAL
MEETING AND PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH.
DATED:
--------------------- ---------------------------------------------
(Signature)
---------------------------------------------
(Signature if jointly held)
---------------------------------------------
(Printed name(s))
Please sign exactly as name appears herein. When shares are held by Joint
Tenants, both should sign, and for signing as attorney, as executor, as
administrator, trustee or guardian, please give full title as such. If held by a
corporation, please sign in the full corporate name by the president or other
authorized officer. If held by a partnership, please sign in the partnership
name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE. THANK YOU.