SCHEDULE 14A
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [section]240.14a-11(c) or
[section]240.14a-12
CZECH INDUSTRIES, 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A. (Fee eliminated effective October 7, 1996)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY COPIES
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CZECH INDUSTRIES, INC.
15245 Shady Grove Road, Suite 340
Rockville, Maryland 20850
October 29, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Stockholders of
Czech Industries, Inc. The meeting will be held at 10 a.m. (local time) on
Tuesday, December 10, 1996 at the Doubletree Hotel Rockville, 1750 Rockville
Pike, Rockville, Maryland. A formal Notice of the Annual Meeting and Proxy
Statement are attached hereto.
Please give these proxy materials your careful attention. It is important that
your shares be represented and voted at the Annual Meeting regardless of the
size of your holdings. Shareholders are urged to attend the meeting but may
vote by proxy in lieu thereof. If your shares are registered in your name and
you plan to attend the Annual Meeting, please mark the appropriate box on the
enclosed proxy card and you will be registered for the meeting. Whether or not
you plan to attend the Annual Meeting, please complete, sign, date and return
the accompanying proxy card in the enclosed envelope in order to make certain
that your shares will be represented at the Annual Meeting.
I look forward to greeting as many of you as possible at the meeting.
Sincerely,
Martin A. Sumichrast
Executive Vice President,
Chief Financial Officer
and Secretary
<PAGE>
CZECH INDUSTRIES, INC.
15245 Shady Grove Road, Suite 340
Rockville, Maryland 20850
NOTICE OF ANNUAL MEETING
Dear Stockholders:
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders of Czech
Industries, Inc., a Delaware corporation (the "Company"), will be held at the
Doubletree Hotel Rockville, 1750 Rockville Pike, Rockville, Maryland, at 10
a.m., local time, on Tuesday, December 10, 1996 for the following purposes:
1. To elect directors for a term of three years;
2. To amend the Certificate of Incorporation to change the name of the
Company;
3. To approve an amendment to the Certificate of Incorporation and
By-Laws of the Company so as to allow holders of 10% or more of the
issued and outstanding shares of Common Stock to call special
meetings;
4. To approve an amendment to the Certificate of Incorporation of the
Company so as to allow for the removal of Directors with or without
cause by the affirmative vote of the holders of a majority of the
issued and outstanding shares of Common Stock;
5. To approve a Stock Option Plan;
6. To ratify the appointment of Pannell Kerr Forster PC as the
Company's independent public accountants for fiscal year 1997; and
7. To transact such other business as may be properly brought before
the meeting and any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock as of the close of
business on October 24, 1996 are entitled to notice of and to vote at the
Annual Meeting and any adjournments or postponements thereof. A list of such
stockholders may be examined for any purpose germane to the meeting at the
Company's offices located at 15245 Shady Grove Road, Suite 340, Rockville,
Maryland 20850, during the ten-day period preceding the meeting.
Martin A. Sumichrast
Executive Vice President,
Chief Financial Officer
and Secretary
YOUR VOTE IS IMPORTANT, ACCORDINGLY, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE>
CZECH INDUSTRIES, INC.
15245 Shady Grove Road, Suite 340
Rockville, Maryland 20850
PROXY STATEMENT
This Proxy Statement and enclosed form of proxy are being furnished
commencing on or about October 29, 1996 in connection with the solicitation by
the Board of Directors of Czech Industries, Inc., a Delaware corporation (the
"Company"), of proxies in the enclosed form for use at the 1996 Annual Meeting
of Stockholders to be held on December 10, 1996. The cost of preparing,
printing and mailing the notice of meeting, proxy statement, proxy and annual
report will be borne by the Company. Proxy solicitation other than by use of
the mail may be made by regular employees of the Company by telephone and
personal solicitation. Banks, brokerage houses, custodians, nominees and
fiduciaries are being requested to forward the soliciting material to their
principals and to obtain authorization for the execution of proxies, and may
be reimbursed for their out-of-pocket expenses incurred in that connection.
Any proxy given pursuant to such solicitation and received in time for the
meeting will be voted as specified in such proxy. If no instructions are
given, proxies will be voted FOR the election of directors, FOR the amendments
to the Certificate of Incorporation and By-Laws, FOR the approval of the Stock
Option Plan, FOR the ratification of Pannell Kerr Forster PC, and in the
discretion of the proxies named on the proxy card with respect to any other
matters properly brought before the meeting and any adjournments thereof. Any
proxy may be revoked by written notice received by the Secretary of the
Company at any time prior to the voting thereof, by submitting a subsequent
proxy or by attending the meeting and voting in person.
Only holders of record of the Company's voting securities as of the
close of business on October 24, 1996 are entitled to notice of and to vote at
the annual meeting and any adjournments or postponements thereof. As of the
record date, 2,871,000 shares of Common Stock, par value $.05 per share
("Common Stock"), were outstanding. Each share of Common Stock entitles the
record date holder thereof to one vote. All share figures in this proxy
statement have been adjusted for the one-for-five reverse stock split which
became effective on September 10, 1996.
The presence of a majority of the outstanding shares of Common Stock,
represented in person or by proxy at the meeting, will constitute a quorum.
Shares represented by proxies that are marked "abstain" will be counted as
shares present for purposes of determining the presence of a quorum on all
matters. Proxies relating to "street name" shares that are voted by brokers on
some but not all of the matters will be treated as shares entitled to vote at
the annual meeting on those matters as to which authority to vote is withheld
by the broker ("broker non-votes"). The election of directors will require the
affirmative vote of a plurality of the shares represented at the meeting in
person or by proxy. The approval of the Stock Option Plan and of the
ratification of the appointment of auditors will require the affirmative vote
of a majority of the shares represented at the meeting. The proposed amendment
to the Company's Certificate of Incorporation to change the name of the
Company will require the affirmative vote of a majority of the shares of
Common Stock issued and outstanding as of the record date. The proposed
amendment to the Certificate of Incorporation to allow for holders of ten
percent of the outstanding Common Stock to call a special meeting and the
proposed amendment regarding the removal of a member of the Board of Directors
will each require the affirmative vote of sixty-six and two-thirds percent
(66 2/3%) of the Common Stock issued and outstanding as of the record date.
Accordingly, with respect to the proposed amendments, abstentions and broker
non-votes will have the same effect as negative votes. Certain of the
Company's stockholders have entered into an agreement to vote their shares in
accordance with the recommendations of the Board of Directors. See
"Eastbrokers Transaction."
A proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS TO COMPLETE, SIGN, DATE, AND RETURN THE PROXY CARD IN
THE ACCOMPANYING ENVELOPE, which is postage-paid if mailed in the United
States.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws, provide for not less than one director and not
more than nine (9). The Board of Directors has established that the number of
directors which constitute the entire Board shall be seven (7). The Company's
Certificate of Incorporation, as amended, provides for a staggered Board of
Directors, such that members of the Board of Directors are divided into three
classes, as nearly equal in numbers as the then total number of directors
constituting the entire Board permits, with the term of office of one class
expiring each year. Messrs. Michael Sumichrast, Ph.D., Petr Bednarik and
Martin A. Sumichrast have been elected as third class directors, each to serve
until the annual meeting of stockholders to be held during the year 1998.
Messrs. Greene and Schmid have been elected as second class directors, each to
serve until the annual meeting of stockholders to be held during the year
1997. Messrs. Kossner and de Roode, both of whom are currently directors of
the Company, are in the first class of directors. Both of these individuals
have been nominated to be elected at the meeting to be held on December 10,
1996 for a term of three years. There are no family relationships among any
officers and directors of the Company, except that Michael Sumichrast, Ph.D.
and Martin A. Sumichrast are father and son, respectively. Biographical
information, including the age, position held with the Company, term of office
as director, employment during the past five years, and certain other
directorships of each nominee and each director not up for election is set
forth below.
In connection with the Company's acquisition of Eastbrokers, certain
stockholders have the right to designate an additional director (See
"Eastbrokers Transaction"). These stockholders have not exercised such right
to date; however, it is possible that at a future date, the Board will be
expanded to eight (8) persons. In such event, under the Company's By-Laws, the
Board will be entitled to fill the vacancy created thereby with the designee
of such stockholders until the next stockholders meeting at which directors
are elected.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 1999 ANNUAL MEETING
WOLFGANG KOSSNER, 27, Executive Vice President and Director of the Company
since August 1996, is a founder and one of three principal shareholders of
Eastbrokers Beteiligungs AG ("Eastbrokers") a securities brokerage firm in
Central Europe which was acquired by the Company on August 1, 1996. Since 1993
Mr. Kossner has served as the managing director of WMP Borsenmakler AG, a
Vienna, Austria based subsidiary of Eastbrokers. Prior to that, Mr. Kossner
was the manager of securities trading at WMP Borsenmakler from 1991 to 1993.
Mr. Kossner presently serves on the Supervisory Boards of Eastbrokers'
subsidiaries in Vienna, Budapest, Ljubljana and Zagreb.
AUGUST A. DE ROODE, 27, Chief Executive Officer and Director of the Company
since August 1996, is one of three principal shareholders of Eastbrokers. Mr.
de Roode has been a managing director of Eastbrokers since 1993, and presently
serves on the Supervisory Board of Eastbrokers' subsidiaries in Vienna,
Budapest, Sofia and Moscow. From 1990 to 1993, Mr. de Roode was an independent
asset manager.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1997 ANNUAL MEETING
RANDALL F. GREENE, 47, has been a Director of the Company since January 1994.
Mr. Greene is also a Director of Eastbrokers U.S., Inc., a subsidiary of the
Company. Since 1995 Mr. Greene has been President and Chief Executive Officer
of Premier Chemical Products, Inc. located in Tampa, Florida and from 1988
until 1995, Mr. Greene served as Chairman of the
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Board and Chief Executive Officer of Blevins Concession Supply Company.
Presently, Mr. Greene serves as a director of Greene Realty, Inc., a real
estate investment company, and CITV, a Tampa, Florida television company.
PETER SCHMID, 30, President of the Company since August 1996, has been a
Director of the Company since January 1994. Since 1991, Mr. Schmid has been
founder, Chairman of the Board and Chief Executive Officer of Eastbrokers. Mr.
Schmid is also a director of WMP Borsenmakler AG, a Vienna based investment
firm, and East Invest Beteiligungs AG, a Vienna based investment firm.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING
MICHAEL SUMICHRAST, Ph.D., 75 has been Chairman of the Board of the Company
since its inception in 1993. From 1990 to 1994, Dr. Sumichrast served as
Chairman of the Board of Sumichrast Publications, Inc., a real estate
publication located in Rockville, Maryland. During this time he also served as
an economic adviser and representative of various international American
companies. From 1963 to 1990, Dr. Sumichrast was the senior vice president and
chief economist of the National Association of Home Builders (NAHB), a home
builders' professional association.
PETR BEDNARIK, ING., 40, is a founder of the Company and has been a Director
since the Company's inception in 1993 and was also President and Chief
Executive Officer of the Company from the time of its inception in 1993 until
August 1996. Since 1990, Mr. Bednarik has served as Chairman of the Board and
Chief Executive Officer of Stella Group a.s., a holding company located in
Prague, Czech Republic.
MARTIN A. SUMICHRAST, 30, is a founder of the Company and has been Executive
Vice President, Chief Financial Officer, Secretary, and a Director of the
Company since its inception in 1993. Mr. Sumichrast is also Chairman and Chief
Executive Officer of Eastbrokers U.S., Inc., a subsidiary of the Company. From
1987 until 1992, Mr. Sumichrast served as the President of Sumichrast
Publications, Inc., a real estate publication located in Rockville, Maryland.
Mr. Sumichrast also serves as President of Sumichrast Enterprises, Inc., a
holding company located in Rockville, Maryland.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 1995, the Board of
Directors met one time in person and had one telephonic conference meeting.
Also, the Board passed resolutions by unanimous written consent on two
separate occasions during such fiscal year. During the three month fiscal
period ended March 31, 1996, the Board of Directors met one time in person. No
member of the Board attended less than 75% of the sum of the total number of
meetings, including as meetings the voting on resolutions by unanimous written
consent.
The Board currently has no standing committees.
COMPENSATION OF DIRECTORS
Each non-officer director of the Company is entitled to receive
$1,500, plus reasonable expenses, for attending scheduled board meetings at
which members meet in person. Directors do not receive any compensation for
board meetings which they attend via telephone conference.
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EXECUTIVE COMPENSATION
The following table sets forth remuneration paid by the Company to
the executive officers of the Company for the three month fiscal period ended
March 31, 1996 and for the fiscal years ended December 31, 1995 and 1994.
Name Position with Company Year Salary
---- --------------------- ---- ------
Michael Sumichrast, Ph.D. Chairman of the Board 1996* $24,000
1995 $88,891
1994 -0-
Petr Bednarik, Ing. President, Former 1996* $30,000
Chief Executive 1995 $107,500
Officer, Director 1994 -0-
Martin A. Sumichrast Chief Financial 1996* $30,000
Officer, Secretary, 1995 $107,500
Director 1994 -0-
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* Partial year.
No bonuses or other compensation were paid to the named executives in
respect of the above periods.
EMPLOYMENT AGREEMENTS
Effective January 1995, the Company entered into employment
agreements ("Employment Agreements") with Messrs. Michael Sumichrast, Ph.D.,
Petr Bednarik, Ing., and Martin A. Sumichrast. Messr. Bednarik's employment
was terminated effective August 1, 1996 in connection with the Eastbrokers
transaction. Under the terms of Mr. Bednarik's Employment Agreement, Mr.
Bednarik received $24,000 in severance compensation in August 1996 as a result
of such termination of employment. Dr. Sumichrast's Employment Agreement
expires in December 1997, and will renew for a period of three years following
the expiration date, unless contrary notice is given by either party. Mr.
Martin Sumichrast's employment agreement will expire in December 1999, and
will renew for a period of five years following the expiration date, unless
contrary notice is given by either party. The Company has also entered into
employment agreements with Messrs. August de Roode, Peter Schmid and Wolfgang
Kossner, effective as of August 1, 1996. Messrs. de Roode's, Schmid's and
Kossner's agreements will expire on August 1, 1999, and each will have a
three-year renewal option, unless contrary notice is given by either party.
The current annual salary under the Employment Agreement of Dr. Sumichrast is
$100,000. The salaries for Martin A. Sumichrast, August de Roode, Peter Schmid
and Wolfgang Kossner are $120,000 each. The salaries under the agreements may
be increased to reflect annual cost of living increases and may be
supplemented by discretionary merit and performance increases as determined by
a compensation committee to consist of three outside directors of the Company,
except that during the three years following June 8, 1995, Mr. Martin
Sumichrast's salary may not exceed $150,000, and Dr. Sumichrast's salary may
not exceed
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$125,000. In the first three years following August 1, 1996, Messrs. de Roode,
Schmid and Kossner's salaries may not exceed $150,000. Messrs. Martin A.
Sumichrast, de Roode, Schmid and Kossner are each eligible to receive an
annual bonus of up to 25% of their salary under their respective agreements,
such bonuses to be determined by the Board and not subject to any specified
performance criteria. The agreements provide, among other things, for
participation in an equitable manner in any profit-sharing or retirement plan
for employees or executives and for participation in employee benefits
applicable to employees and executives of the Company. The agreements provide
that the Company will establish a performance incentive bonus plan providing
each executive the opportunity to earn an annual bonus of up to five percent
of the increase in the Company's pretax income, based upon the attainment of
performance goals to be established by the Compensation Committee of the
Company. The agreements further provide for the use of an automobile and other
fringe benefits commensurate with their duties and responsibilities. The
agreements also provide for benefits in the event of disability.
Pursuant to the agreements, employment may be terminated by the
Company with cause or by the executive with or without good reason.
Termination by the Company without cause, or by the executive for good reason,
would subject the Company to liability for liquidated damages in an amount
equal to the terminated executive's current salary and a pro rata portion of
their prior year's bonus for the remaining term of the Agreement, payable in
equal monthly installments, without any set-off for compensation received from
any new employment. In addition, the terminated executive would be entitled to
continue to participate in and accrue benefits under all employee benefit
plans and to receive supplemental retirement benefits to replace benefits
under any qualified plan for the remaining term of the Agreement to the extent
permitted by law.
Under the agreements, the Company agreed to purchase insurance
policies on the lives of Messrs. Martin A. Sumichrast, de Roode, Schmid and
Kossner. The Company will pay the premiums on these policies and upon the
death of the employee, the Company will receive an amount equal to the
premiums it paid under the policy and the remaining proceeds will go to the
employee's designated beneficiary.
OPTIONS
No options were granted to or exercised by any of the named
executives during the fiscal year ended December 31, 1995 or the three month
fiscal period ended March 31, 1996. No options were held by any named
executive as of either of such dates. Options have been granted to certain
executives subsequent to March 31, 1996 in connection with the Eastbrokers
transaction. See "Eastbrokers Transaction".
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<PAGE>
PRINCIPAL STOCKHOLDERS
On September 10, 1996, the Company effected a one-for-five reverse
split of its Common Stock. The following table sets forth the number of shares
of the Company's post-reverse split Common Stock owned as of October 1, 1996
by (i) each person who is known by the Company to own beneficially more than
five percent of the Company's Common Stock; (ii) each of the Company's
officers and directors; and (iii) all officers and directors as a group. The
following calculations were based upon there being 2,871,000 shares of the
Company's Common stock issued and outstanding as of October 24, 1996. Except
as otherwise noted, the persons named in the table below do not own any other
capital stock of the Company and have sole voting and investment power with
respect to all shares as beneficially owned by them.
<TABLE>
<CAPTION>
Percentage of
Name and Address (1) Position with Company Number of Shares Shares
- -------------------- --------------------- ---------------- -------------
<S> <C> <C> <C>
Michael Sumichrast, Ph.D. (2) Chairman of the Board 10,700 *
August A. de Roode (3) Chief Executive Officer, 211,500 7.37
Director
Peter Schmid (4) President, Director 449,975 15.67
Wolfgang Kossner (4) Executive Vice President, 482,475 16.81
Director
Martin A. Sumichrast (2) Executive Vice President, 65,700 2.29
Chief Financial Officer,
Secretary, Director
Miloslav Chrobok, JUDr. Vice President 1,600 *
Petr Bednarik, Ing. (5) Director 120,000 4.18
Randall F. Greene Director 18,820 *
Karntner Landes Shareholder 417,175 14.53
und Hypothekenbank AG (6)
All Officers and Directors as 910,795 31.72
a Group (8 persons)
</TABLE>
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* Less than 1%
(1) Except as otherwise noted, c/o Czech Industries, 15245 Shady Grove
Road, Suite 340, Rockville, Maryland 20850.
(2) 76,400 shares are owned by Sumichrast Enterprises, Inc., a corporation
of which Martin A. Sumichrast, Dr. Sumichrast's son, is an officer
and director and the owner. Dr. Sumichrast may be deemed to have
voting and investment power with respect to 10,700 of these 76,400
shares. Sumichrast Enterprises, Inc. also owns 1,000 Class A
Warrants, each representing the right to acquire one share at a
purchase price of $20.00.
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(3) Includes 140,000 shares owned directly by Mr. de Roode and 71,500
shares owned indirectly through VCH Vermogensverwaltung and Holding
Ges.m.b.H. which is controlled by Mr. de Roode.
(4) 249,975 shares are owned indirectly through KHS Beteiligungs AG
("KHS") which is jointly controlled by Mr. Schmid and Mr. Kossner and
200,000 shares are owned by Karntner Landes und Hypothekenbank AG
(the "Bank") as nominee for KHS. Messrs. Schmid and Kossner may be
deemed to share voting and investment power with respect to these
shares. In the case of Mr. Kossner, this also includes 32,500 shares
held by the Bank as nominee for Central and Eastern European Fund
("Fund"), of which Mr. Kossner is a director. The inclusion of such
Fund shares shall not be construed as an admission that Mr. Kossner
is the beneficial owner of such shares.
(5) Petr Bednarik, Ing. is an officer, director and owner of Stella Group
a.s., a Prague based investment company, which is the record owner of
the shares of Common Stock indicated. Mr. Bednarik may be deemed to
be the beneficial owner of such shares.
(6) The Bank's address is: Domgasse 5, 9020 Klagenurt, Austria.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
On August 1, 1996, the Company acquired 80% of the issued and
outstanding capital stock of Eastbrokers. One of the Eastbrokers selling
stockholders was Peter Schmid, then a Director and now President and a
Director of the Company. (See "Eastbrokers Transaction").
In connection with the foregoing transaction, the Company retained
Randall F. Greene, an outside director and member of the Company's audit
committee, to lead a team of personnel to conduct a due diligence
investigation of Eastbrokers. In consideration for Mr. Greene's professional
and advisory services, the Company issued to Mr. Greene 50,000 shares of fully
paid and non-assessable Common Stock of the Company and paid Mr. Greene a
$20,000 expense allowance.
EASTBROKERS TRANSACTION
On August 1, 1996, the Company acquired 80% of the capital stock of
Eastbrokers Beteiligungs AG ("Eastbrokers"), a Vienna, Austria based
investment banking and brokerage firm. The consideration for this acquisition
was 1,080,000 newly issued shares of the Company's Common Stock, which
represents approximately 37.6% of the outstanding Common Stock following the
acquisition. This consideration is subject to adjustment conditional upon
satisfaction of certain financial targets. The shares issued have not been
registered under the Securities Act of 1933 (the "Act") and the holders have
agreed not to sell these shares in any U.S. public trading market, until
August 1, 1998 without the consent of the Company.
Eastbrokers is a holding company that, through its subsidiaries,
provides financial services in Eastern and Central Europe. Eastbrokers was
founded in 1991 after the fall of communism and upon the commencement of
privatization of the economies in the region. The principal strategic
objective of Eastbrokers has been to establish controlling ownership of
independent broker-dealers and to create a network that provides access to
emerging market investment opportunities in Eastern and Central Europe. The
company markets these investment opportunities to Western European
institutional and commercial investors.
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<PAGE>
Eastbrokers' primary business is to provide its customers with stock
brokering and investment banking services. The company conducts business
through its head office in Vienna, Austria and in regional offices located in
(a) Vienna, Austria, (b) Prague, Czech Republic (c) Budapest, Hungary, (d)
Bratislava, Slovakia, (e) Almaty, Kazakhstan, (f) Istanbul, Turkey, (g)
Moscow, Russia, (h) Bucharest, Romania, (i) Sofia, Bulgaria, (j) Ljubljana,
Slovenia, (k) Zagreb, Croatia, and (l) Warsaw, Poland. Eastbrokers is a member
of the Vienna Stock Exchange, the Budapest Stock Exchange, the Bratislava
Stock Exchange, the Zagreb Stock Exchange, the Ljubljana Stock Exchange, the
Bucharest Stock Exchange, the Central Asian Stock Exchange, the Warsaw Stock
Exchange and a shareholder and member of the Prague Stock Exchange.
Eastbrokers also owns forty-eight percent (48%) of WMP Borsenmakler AG, a
publicly held Austrian investment banking and brokerage firm which is included
in the Eastbrokers acquisition.
Eastbrokers' brokerage, trading and market making business accounts
for approximately 80% of all revenues. Eastbrokers conducts its sales
activities as principal and agent on behalf of its clients. Eastbrokers
primarily distributes and trades Eastern and Central European equity
securities and to a lesser degree, debt securities. Eastbrokers, through its
subsidiary WMP Borsenmakler AG, actively makes a market for the securities of
more than 400 companies on the Vienna and Prague Stock Exchanges.
Eastbrokers is also a leading Eastern and Central European investment
banking firm which provides advice to, and raises capital for Eastern and
Central European companies. The company provides advisory services on key
strategic matters such as mergers, acquisitions, privatizations, joint
ventures as well as long range financial planning. The company raises much of
its capital in Western Europe through institutional and commercial investors.
In connection with the foregoing transaction, the Board of Directors
was reduced from nine (9) directors to seven (7). Dr. Michael Sumichrast,
Martin A. Sumichrast, Petr Bednarik, Randall F. Greene and Peter Schmid
continued as directors of the Company and August A. de Roode and Wolfgang
Kossner joined the Board. Mr. Schmid was also a founder and one of the three
principal stockholders of Eastbrokers and is President of WMP Borsenmakler AG,
a subsidiary of Eastbrokers. Messrs. de Roode, Schmid and Kossner have the
right to designate an additional director. In the event such right is
exercised, the Board will be expanded to eight (8) directors. At the time of
the acquisition, Mr. de Roode became Chief Executive Officer of the Company,
Mr. Schmid became President and Mr. Kossner became an Executive Vice
President.
The former shareholders of Eastbrokers have agreed in connection with
the transaction to vote the shares of the Company's Common Stock received by
them in the transaction in favor of any recommendation of the Board of
Directors for the three year period ending August 1, 1999. Also, in respect of
any vacancy created by the resignation, removal or expiration of term of Dr.
Michael Sumichrast, Martin A. Sumichrast, Randall F. Greene or Ing. Petr
Bednarik or any successor to such persons, such former Eastbrokers
shareholders will vote their shares in favor of the person designated by the
majority of the above mentioned directors.
In addition, the Company's By-Laws were amended such that certain
material events, including but not limited to the nomination of directors and
the amendment of the Company's Certificate of Incorporation and By-Laws will
require a 66 2/3% vote of the Board of Directors present at a meeting at which
a quorum is present. As a result of the foregoing agreements, it is
anticipated that the 1,080,000 shares of the Company's Common Stock issued in
the Eastbrokers transaction will be voted in favor of the proposals set forth
in this proxy statement.
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The By-Laws were also amended to require, for purposes of
constituting a quorum, a majority of directors composed of at least two Buyer
directors and two Seller directors. Further, in the event an equal number of
directors each favor and oppose an item of business upon which a vote is
called, and a deadlock results, the status quo shall be maintained until a
vote of the majority of the board of directors at a meeting at which a quorum
is present alters the status quo. For purposes of the section of the By-Laws
describing the quorum provision only, the term Buyer director means Ing. Petr
Bednarik, Randall F. Greene, Michael Sumichrast, Ph.D., Martin A. Sumichrast
or any successor to such person. The term Seller Director means August A. de
Roode, Wolfgang Kossner, Peter Schmid, any designee of Eastbrokers
Beteiligungs AG and any successor to such person. Prior to this amendment, a
majority of the board of directors constituted a quorum, and the By-Laws had
no specific provision as to resolving a potential deadlock vote of the Board
of Directors.
Also in connection with the Eastbrokers transaction, the Company
granted options effective August 1, 1996 to the following officers and
directors of the Company. Each option represents the right to acquire one
share of the Company's Common Stock at $10 per share.
Name No. of Shares Subject to Option(a)
---- -------------------------------
Wolfgang Kossner 33,000
August A. de Roode 34,000
Peter Schmid 33,000
Martin A. Sumichrast(b) 100,000
- -------------------
(a) All amounts adjusted to reflect one-for-five reverse split effective
September 10, 1996.
(b) Options are held in the name of Sumichrast Enterprises, Inc., a corporation
which is owned and controlled by Mr. Sumichrast.
Peter Schmid, a director of the Company and the President and a
principal shareholder of Eastbrokers, has received, either directly or
indirectly, 1,094,125 shares of newly issued, fully paid and non-assessable
shares of common stock of the Company's Common Stock as consideration for his
shares of Eastbrokers. As further consideration, Mr. Schmid may receive
additional shares of Common Stock of the Company subject to the earnings of
certain net profit targets and upon the receipt of certain net cash proceeds
from the future sale of a substantial Company owned asset, as described above.
The shares Mr. Schmid has received will not be registered under the Securities
Act of 1933 (the "Act") and may not be offered or sold in the United States
absent registration under the Act or on applicable exemption therefrom. Mr.
Schmid has also agreed not to sell his shares on any United States public
trading market for a period of two years from August 1, 1996, and the shares
issued to Mr. Schmid bear a legend restricting their sale or transfer in
accordance with such agreement.
In connection with the acquisition, the Company has organized a
Delaware corporation ("Eastbrokers US"), and this subsidiary will act as a
merchant banking operation for the Company and its subsidiaries. Eastbrokers
US intends to facilitate investment by U.S. entities into companies targeted
by Eastbrokers for investment, facilitate merger and acquisition and related
activities of the Company, organize, raise investment capital for and manage
offshore funds as market conditions prevail and provide business consulting
services to U.S. based companies. The Company intends to contribute from cash on
hand, $100,000 to the capital of Eastbrokers US in consideration of being
issued 1,000,000 shares of Eastbrokers US (representing 100% of its issued and
outstanding shares). Concurrently, the Company will also
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contribute from cash on hand, $900,000 to Eastbrokers US in consideration of
being issued 900,000 redeemable (at the Company's option, after three years)
preferred shares of Eastbrokers US. Management of this subsidiary will
include, among other persons, Martin A. Sumichrast, Chief Financial Officer
and a director of the Company, and Randall F. Greene, a director of the
Company ("Sumichrast" and "Greene", respectively). Eastbrokers US intends to
issue to its management an amount of Class A Warrants to purchase Eastbrokers
US Common Stock that will allow management to buy a 52% controlling equity
interest over a three year period. Sumichrast and Greene shall be issued
330,000 and 275,000, respectively, of the total amount of Class A Warrants
issued. Thirty percent (30%) of these Class A Warrants shall vest and become
exercisable commencing one year from August 1, 1996, thirty percent (30%) of
the Class A Warrants shall vest and become exercisable commencing two years
from such date, and forty percent (40%) of the Class A Warrants shall vest and
become exercisable commencing three years from such date. Vesting shall be
conditioned upon the holders continued management participation in Eastbrokers
US during the vesting period and will accelerate in the event of termination
without cause. Each Class A Warrant entitles the holder to purchase one share
of common stock of Eastbrokers US for $.15 each for a period of five years
from the date of August 1, 1996. Other terms and conditions of the Class A
Warrants shall be subject to a mutually satisfactory warrant agreement. No
additional shares of Eastbrokers US shall be issued during the three years
from the date of August 1, 1996, unless unanimously agreed upon by the Board
of Directors of the Company. Sumichrast and Greene shall also receive an
incentive based salary yet to be determined.
SECTION 16(a) REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and persons who own more than 10% of the
Company's registered common stock to file, on Forms 3, 4 and 5, reports of
ownership and changes in ownership of such securities with the Commission and
the National Association of Securities Dealers. The Company, on behalf of its
officers and directors, inadvertently, untimely filed Form 3 and the Initial
Statements of Beneficial Ownership of Securities, due upon the effective date
of the registration of the Company's securities under the Securities Exchange
Act of 1934. The Company believes that, subsequently, its executive officers
and directors have complied with the filing requirements of the Securities and
Exchange Commission as to reports on Forms 4 and 5.
REQUIRED VOTE OF STOCKHOLDERS
Election of the above nominees as Directors of the Company requires a
plurality of the votes represented at the meeting in person or by proxy. In
case any of the nominees should become unavailable for election for any reason
not presently known or contemplated, the persons named on the proxy still have
discretionary authority to vote pursuant to the proxy for a substitute.
The Board of Directors recommends a vote FOR the above-named
nominees, and signed proxies which are returned will be so voted unless a
contrary vote is designated on the proxy card.
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PROPOSAL NO.2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE THE
NAME OF THE CORPORATION TO
EASTBROKERS INTERNATIONAL INCORPORATED
The Board of Directors proposes that the name of the Company be
changed to Eastbrokers International Incorporated to better reflect the nature
and scope of the Company's business. The Board believes that the name change
will serve to enhance the Company's recognition by reflecting the expansion of
its business activities into Central and Eastern Europe.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of the majority of the votes entitled to be cast
by all holders of outstanding Common Stock of the Company is required for
approval of this amendment to the Certificate of Incorporation.
PROPOSAL NO. 3
AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND
BY-LAWS REGARDING STOCKHOLDER MEETINGS
In connection with the Company's June 1995 underwritten public
offering, the Department of Corporations of the State of California required
the Board of Directors to submit to the stockholders for their approval
amendments to the Certificate of Incorporation and By-Laws including one
whereby special meetings of stockholders may be held by the call of the
holders of ten percent (10%) or more of the outstanding shares of capital
stock of the Company entitled to vote at such a meeting. Under the current
Certificate of Incorporation and By-Laws, special meetings can be called only
by the President, the Secretary, or by resolution of the directors. The effect
of this proposed change, if approved, will facilitate the ability of
stockholders to call special meetings. The text of the proposed amendments to
the Certificate of Incorporation and By-Laws is set forth in Appendix A
hereto.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of sixty-six and two thirds percent (66 2/3%) of
the shares of outstanding Common Stock of the Company is required for approval
of these amendments.
The Board of Directors recommends a vote FOR Proposal No. 3 and
signed proxies which are returned will be so voted unless a contrary vote is
designated on the proxy card.
PROPOSAL NO. 4
AMENDMENT TO CERTIFICTE OF INCORPORATION REGARDING REMOVAL
OF A MEMBER OF THE BOARD OF DIRECTORS
In connection with the Company's June 1995 underwritten public
offering, the Department of Corporations of the State of California required
the Board of Directors to submit to the stockholders for their approval an
amendment to the Certificate of Incorporation pursuant to which Directors may
be removed with or without cause by the affirmative vote of the holders of a
majority of the issued and outstanding shares of Common Stock of the Company.
Under
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the current Certificate of Incorporation, directors can only be removed for
cause by the vote of the holders of sixty-six and two-thirds percent (66 2/3%)
of the outstanding shares entitled to vote generally in the election of
directors. The effect of this proposed change, if approved, will be to
facilitate the ability of the stockholders to remove directors by permitting
their removal with or without cause and by a majority rather than a sixty-six
and two-thirds percent (66 2/3%) vote.
The text of the proposed amendment to the Certificate of
Incorporation is set forth in Appendix A hereto.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of sixty-six and two thirds percent (66 2/3%) of
the shares of outstanding Common Stock of the Company is required for approval
of this amendment.
The Board of Directors recommends a vote FOR Proposal No. 4 and
signed proxies which are returned will be so voted unless a contrary vote is
designated on the proxy card.
PROPOSAL NO. 5
APPROVAL OF STOCK OPTION PLAN
SUMMARY OF THE 1996 STOCK OPTION PLAN.
The Board of Directors submits to the stockholders for their approval
a 1996 Stock Option Plan (the "Plan"), which is summarized below. The summary
is qualified in its entirety by reference to the text of the Plan which is
attached hereto as Appendix B. The purpose of such Plan is to advance the
interests of the Company by enabling officers, employees, directors and
consultants of the Company and its Affiliates, as such term is defined by the
Plan, to participate in the Company's future and to enable the Company to
attract and retain such persons by offering them proprietary interests in the
Company.
Administration
The Plan shall be administered by a Stock Award Committee (the
"Committee"), which would be composed of not less than two directors of the
Company all of whom shall be non-employee directors, as that term is defined
in the Plan. Each member of the Committee will be appointed by the Board. In
the absence of such a committee, the Plan shall be administered by the entire
Board.
The Committee shall have the authority to adopt, alter and repeal
administrative rules, guidelines and practices governing the Plan as it, from
time to time, deems advisable to supervise the administration of the Plan.
However, no amendment to the Plan shall be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement, except that the Board of Directors of the Company shall have the
authority to amend the Plan to take into account changes in law and tax and
accounting rules, as well as other developments and to grant Awards which
qualify for beneficial treatment under such rules without shareholder
approval. The Committee may act only by a majority of its members then in
office. The duration of the Plan shall be ten years from the date upon which
the Plan is approved by the stockholders of the Company.
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<PAGE>
Eligibility
Officers, employees, directors and consultants of the Company and its
Affiliates who are responsible for or contribute to the management growth and
profitability of management, the business of the Company and its Affiliates
are eligible to be granted Awards under the Plan. The Company estimates the
approximate number of officers, employees, directors and consultants eligible
to participate in the Plan as of November 12, 1996 to be five (5), thirty
(30), seven (7) and five (5), respectively. The benefits or amounts that will
be received by or allocated to the Company's chief executive officer, the
Company's next four most highly compensated officers who were serving as
executive officers at the end of the last completed fiscal year, and other
Plan beneficiaries cannot be determined. The Company will not incur any
expense and has no obligation to issue Awards with respect to past services
and current services.
Types of Awards
The Committee will have the plenary authority to grant Awards to
officers, employees, directors and consultants of the Company or its
Affiliates. Awards granted to participants of the Plan include Stock Options,
Stock Appreciation Rights, Restricted Stock, or any combination of the
foregoing, as these terms are defined and regulated under the Plan. The
Committee shall have the authority to grant either Incentive Stock Options or
Non-qualified Stock Options under the Plan; however, the former may be granted
only to employees of the Company and its subsidiaries. The Awards are subject
to such terms and conditions as determined by the Committee and which may
differ from Award to Award. The prices, expiration dates and other material
conditions upon which the Stock Options and Stock Appreciation Rights may be
exercised and the consideration received or to be received by the Company or
its Affiliates for the granting or extension of the Awards are to be
determined by the Committee and are indeterminable as of the date of this
Proxy Statement.
Number of Shares
The total number of shares of Stock reserved and available for
distribution as Awards under the Plan will be 400,000 shares of the Company's
Common Stock. As of October 24, 1996, no Awards had been issued under the
Plan. Stock options have been granted outside of the Plan to certain executive
officers in connection with the Eastbrokers transaction. See "Eastbrokers
Transaction."
Change of Control
The Plan provides that, subject to such additional conditions and
restrictions as the Committee may determine at the time of the grant of an
Award, options granted under the Plan shall become immediately exercisable and
restrictions on restricted stock granted under the Plan shall lapse in the
event of a change of control. Under the Plan, a change in control will occur
in the event that a person acquires 20% or more of the Company's voting
securities, the stockholders have approved a merger or sale of assets
including the Company, or there occurs a significant change in the composition
of the Board of Directors.
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<PAGE>
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 1996 STOCK OPTION
PLAN
This summary of certain federal income tax consequences is provided
as general information, but does not purport to be a complete and detailed
description of all possible tax consequences to the recipient of an Option and
the Company. It describes the federal tax consequences in effect as of the
date set forth in the notice. Each holder of an Option is advised to consult
his tax advisor because tax consequences may vary depending upon the
individual circumstances of the holder.
Incentive Options ("ISO"). ISOs are designed to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). In the case of ISOs no taxable gain will be realized by
a recipient upon grant or exercise of the option, and the Company will not be
entitled to a tax deduction at the time any such option is granted or
exercised. However, the excess of the fair market value of any stock received
over the option price will constitute an adjustment in computing alternative
minimum taxable income at the time of the transfer of stock pursuant to the
exercise of the option, or if later, at the earlier of the time that the stock
is transferable or is not subject to a substantial risk of forfeiture.
Alternative minimum taxable income is the base for calculating an individual
taxpayer's liability for the alternative minimum tax, a tax which is payable
if it exceeds the amount of the individual's tax liability calculated on the
regular method. Additionally, the basis of the stock for alternative minimum
tax purposes would be increased by this adjustment.
If a recipient of an ISO does not dispose of stock acquired by him
upon the exercise of the option within one year after the date of transfer of
such stock or within two years after the date of grant of such an option, any
gain realized by him on a subsequent sale of such stock will be capital gain,
which will be long term capital gain if the stock was held for the appropriate
holding period (currently more than one year). In determining the amount of
taxable gain or loss on a subsequent sale or other disposition of stock
obtained by exercise of an ISO, the tax basis of such stock (for regular tax
purposes) will be an amount equal to the option price paid therefor.
On the other hand, if the recipient sells or otherwise disposes of
the stock obtained by exercise of an ISO within one year of the date of grant
of the option (other than certain permitted disposition), he will at that time
recognize ordinary income to the extent that the fair market value of the
stock on the date that the option was exercised or the amount realized on sale
or disposition, whichever is less, exceeds the option price. If the amount
realized on sale or disposition is greater than the fair market value of the
stock on the date the option was exercised, such excess will be treated as
capital gain, which will be a long-term capital gain if the stock was held for
the appropriate holding period (currently more than one year).
In general, in any year in which a recipient recognizes ordinary
income because of the disposition of his shares within one year from the date
of exercise or two years from the date of grant of an ISO, the Company will
receive a corresponding deduction for federal income tax purposes. No
deduction will be allowed to the Company if the stock acquired upon exercise
of an ISO is held for more than one year after the date of transfer of such
stock and more than two years from the date of grant of the ISO.
Non-Qualified Options. The treatment of Non-Qualified Options for
federal income tax purposes depends on whether the option has a readily
ascertainable fair market value at the time it is granted. If a Non-Qualified
Option has a readily ascertainable fair market value at the time of grant, the
excess of the fair market value of Non-Qualified Options received by a
recipient over the amount, if any, paid for the options must be included in
the recipient's gross income
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<PAGE>
at the time the option is granted, or if later, at the earlier of the time
that the option is transferable or is not subject to a substantial risk of
forfeiture. If an option with a readily ascertainable fair market value is not
taxable at the time the option is granted because the option is
nontransferable and subject to a substantial risk of forfeiture, the recipient
may nevertheless elect to include such amount in gross income in the year of
grant of the option. Because the Non-Qualified Options are not actively traded
on an established market and because it is likely that the Non-Qualified
Options will be nontransferable by the recipient or will not be immediately
exercisable, it is not expected that the Non-Qualified Options will have a
readily ascertainable fair market value. If a Non-Qualified Option does not
have a readily ascertainable fair market value at the time of grant, there is
no taxable event at grant; rather, the excess of (i) the value of the stock on
the date it is acquired pursuant to exercise of the option over (ii) the
exercise price plus the amount, if any, paid for the option must be included
in the recipient's gross income at the time of the receipt of the stock
pursuant to the exercise of the option, or, if later, at the earlier of the
time that the stock is transferable or is not subject to a substantial risk of
forfeiture. If stock received pursuant to the exercise of a Non-Qualified
Option is not taxable at receipt because the stock is nontransferable and
subject to a substantial risk of forfeiture, the recipient may elect to
include such amount in gross income in the year the stock is received pursuant
to exercise of the option.
The receipt of taxable income upon exercise of a Non-Qualified Option
may be ameliorated if the underlying stock is registered because the recipient
may sell a portion of his stock to pay the income tax liability; such is not
the case with the receipt of income upon grant of a Non-Qualified Option. The
grant or exercise of a Non-Qualified Option will not result in any adjustment
for alternative minimum tax purposes. In general, with respect to
Non-Qualified Options, a corresponding deduction is allowed to the Company for
the amount and at the time that the recipient recognizes income, and such
income is subject to withholding and employment taxes, if applicable.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of a majority of the shares of the Common Stock
represented at the meeting in person or by proxy is required for approval of
the 1996 Stock Option Plan.
The Board of Directors recommends a vote FOR Proposal No. 5 and
signed proxies which are returned will be so voted unless a contrary vote is
designated on the proxy card.
PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Pannell Kerr Forster PC as
independent public accountants of the Company for the year ending March 31,
1997. The Board of Directors is submitting the appointment of Pannell Kerr
Forster PC for ratification at the Annual Meeting. Pannell Kerr Forster
audited the Company's financial statements in 1994 and 1995, and for the
fiscal period ending March 1996 and the Board believes that this firm has
demonstrated that it is well qualified to make an independent examination of
the accounts of the Company. If the appointment is not approved, the Board
will reconsider its appointment. Representatives of Pannell Kerr Forster PC
will be present at the meeting, and will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
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<PAGE>
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote for a majority of the shares represented at the
meeting in person or by proxy of the Common Stock is required for approval of
the appointment of auditors.
The Board of Directors recommends a vote FOR Proposal No. 6 and
signed proxies which are returned will be so voted unless a contrary vote is
designated on the proxy card.
OTHER BUSINESS
It is not expected that any business other than that set forth in the
Notice of Annual Meeting of Stockholders and more specifically described in
this Proxy Statement will be brought before the meeting. However, if any other
business should properly come before the meeting, it is the intention of the
persons named on the enclosed proxy card to vote the signed proxies received
by them in accordance with their best judgment on such business and any
matters dealing with the conduct of the meeting.
1997 STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's Proxy Statement for the
1997 Annual Meeting of Stockholders, to be held on or about September 10,
1997, stockholder proposals must be received by the Company at its principal
executive office, Czech Industries, Inc., 15245 Shady Grove Road, Suite 340,
Rockville, MD 20850, on or before April 15, 1997.
ANNUAL REPORT
The Securities and Exchange Commission rules require that an annual
report precede or accompany proxy material. Copies of the Company's Annual
Report on Form 10-KSB for the fiscal period ended March 31, 1996 and for the
fiscal year ended December 31, 1995 accompany this proxy statement. More than
one annual report need not be sent to the same address, if the recipient
agrees. If more than one annual report is being sent to your address, at your
request, mailing of the duplicate copy to the account you select will be
discontinued.
By order of the Board of Directors,
Martin A. Sumichrast,
Secretary
Date: October 29, 1996
STOCKHOLDERS WHO DESIRE TO HAVE THEIR STOCK VOTED AT THE MEETING ARE REQUESTED
TO MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. STOCKHOLDERS MAY REVOKE THEIR PROXY AT ANY TIME PRIOR TO
THE MEETING AND STOCKHOLDERS WHO ARE PRESENT AT THE MEETING MAY REVOKE THEIR
PROXIES AND VOTE, IF THEY SO DESIRE, IN PERSON.
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APPENDIX A
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PROPOSAL NO. 2: The Certificate of Incorporation of the Corporation
is proposed to be amended by deleting Article FIRST in its entirety and
substituting the following in lieu therefor:
"FIRST: The name of the corporation is
EASTBROKERS INTERNATIONAL INCORPORATED."
----------------
PROPOSAL NO. 3: The Certificate of Incorporation of the Corporation
is proposed to be amended by deleting clause 6) of Article SEVENTH in its
entirety and substituting the following in lieu therefor:
"6) Meetings of the stockholders may be held at such place,
either within or without the State of Delaware as the By-Laws may provide.
Special meetings of stockholders for any purpose may be held at the call of
the President, the Secretary, by resolution of the Board of Directors or by
the call of the holders of ten percent (10%) or more of the outstanding shares
of capital stock of the Corporation entitled to vote at such a meeting. No
action required or permitted to be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting except upon the
written consent of the holders of one hundred percent (100%) of the shares of
the capital stock of the Corporation entitled to vote upon such action. In
addition to any requirements of law and any other provisions of the
Certificate of Incorporation (and notwithstanding that a lesser percentage may
be specified by law, this Certificate of Incorporation or otherwise), the
affirmative vote of sixty-six and two thirds percent (66 2/3%) of the votes
entitled to be cast by all holders of outstanding capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend, alter or repeal or
adopt any provision inconsistent with this clause."
The By-Laws of the Corporation are proposed to be amended by clause
2.2 of Article II thereof so that, as amended, said Article shall be and read
as follows:
"2.2 SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be held at the call of the President, the Secretary,
by resolution of the Board of Directors or by the call of the holders of ten
percent (10%) or more of the outstanding shares of capital stock of the
Corporation entitled to vote at such a meeting."
----------------
PROPOSAL NO. 4: The Certificate of Incorporation of the Corporation
is proposed to be amended by deleting subparagraph (c) of clause 1) of Article
SEVENTH in its entirety and substituting the following in lieu therefor:
"(c) Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding that a
lesser percentage may be specified by law, this Certificate of Incorporation
or otherwise), any director or the entire Board of Directors may be removed at
any time with or without cause and only by the affirmative vote of a majority
of the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors."
<PAGE>
APPENDIX B
----------
CZECH INDUSTRIES, INC.
1996 STOCK OPTION PLAN
SECTION 1. Purpose. The purpose of the Czech Industries, Inc. 1996 Stock
Option Plan is to advance the interests of Czech Industries, Inc. (the
"Company") by enabling officers, employees, directors and consultants of the
Company and its Affiliates to participate in the Company's future and to
enable the Company to attract and retain such persons by offering them
proprietary interests in the Company.
SECTION 2. Definitions. For purposes of the Plan, the following terms are
defined as set forth below:
a. "Affiliate" means a corporation or other entity controlled directly,
or indirectly through one or more intermediaries, by the Company and
designated by the Committee as such.
b. "Award" means an award granted to a Participant in the form of a
Stock Appreciation Right, Stock Option, or Restricted Stock, or any
combination of the foregoing.
c. "Board" means the Board of Directors of the Company.
d. "Cause" shall have the meaning set forth in Section 8.
e. "Change in Control" shall have the meaning set forth in Section 11.
f. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
g. "Commission" means the Securities and Exchange Commission or any
successor agency.
h. "Committee" means the Committee referred to in Section 5.
i. "Common Stock" means common stock, $.05 per share par value, of the
Company.
j. "Company" means Czech Industries, Inc., a Delaware corporation.
k. "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the Plan.
l. "Non-Employee Director" shall mean a director who qualifies as such
under Rule 16b-3(b)(3), as promulgated under the Exchange Act, or as such term
is defined under any successor rule adopted by the Commission.
m. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
<PAGE>
n. "Fair Market Value" means the average, as of any given date,
between the highest and lowest reported closing bid and asked prices of the
Stock on NASDAQ or the closing sale price as of any given date if the Stock is
listed on a national securities exchange or the NASDAQ National Market System.
If there is no regular public trading-market for such Stock under
circumstances specified above, the Fair Market Value of the Stock shall be
determined by the Committee in good faith.
o. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
p. "Non-qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
q. "Normal Retirement" means retirement from active employment with the
Company or an Affiliate at or after age 65 or at such other age as may be
specified by the Committee.
r. "Participant" means an employee, director or consultant of the
Company or of an Affiliate to whom an Award has been granted which has not
terminated, expired or been fully exercised.
s. "Plan" means the Czech Industries, Inc. 1996 Stock Option Plan, as
set forth herein and as hereinafter amended from time to time.
t. "Restricted Period" means the period of time, which may be a
single period or multiple periods, during which Restricted Stock awarded to a
Participant remains subject to the restrictions imposed on such Stock, as
determined by the Committee.
u. "Restrictions" means the restrictions and conditions imposed on
Restricted Stock awarded to a Participant, as determined by the Committee,
which must be satisfied in order for the Restricted Stock to vest, in whole or
in part, in the Participant.
v. "Restricted Stock" means an Award of Stock on which are imposed
Restriction Period(s) and Restrictions whereby the Participant's rights to
full enjoyment of the Stock are conditioned upon the future performance of
substantial services by any individual or are otherwise subject to a
"substantial risk of forfeiture" within the meaning of Section 83 of the Code,
as amended.
w. "Restricted Stock Agreement" means a written agreement between a
Participant and the Company evidencing an award of Restricted Stock.
x. "Restricted Stock Award Date" means the date on which the Committee
awarded Restricted Shares to the Participant.
y. "Retirement" means Normal Retirement or early retirement if a
defined benefit or 401(K) retirement plan of the Company provides for same.
z. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
granted under Section 16(b) of the Exchange Act, as amended from time to time.
aa. "Stock" means the Common Stock.
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<PAGE>
bb. "Stock Appreciation Right" means a right granted under Section 9.
cc. "Stock Option" or "Option" means an option granted under Section 8.
dd. "Termination of Employment" means the termination of the
Participant's employment with the Company and any Affiliate. A Participant
employed by an Affiliate shall also be deemed to incur a Termination of
Employment if the Affiliate ceases to be an Affiliate and the Participant does
not immediately thereafter become an employee of the Company or another
Affiliate.
In addition, certain other terms used herein have definitions given
to them in the first place in which they are used.
SECTION 3. Effective Date.
The effective date of the Plan shall be the date upon which the
Plan is approved by the stockholders of the Company.
SECTION 4. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution pursuant to Awards under the Plan shall be 400,000 shares of
Stock. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
If any shares of Stock that have been Optioned cease to be subject
to a Stock Option, if any shares of Stock that are subject to any Award are
forfeited or if any Award otherwise terminates without a distribution being
made to the Participant in the form of Stock, such shares shall again be
available for distribution in connection with Awards under the Plan. In
addition, any stock purchased by a Participant upon exercise of an Option
under the Plan which is subsequently repurchased by the Company pursuant to
the terms of such Option may again be the subject of an Option under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization (including but not limited to the issuance of Stock or any
securities convertible into Stock in exchange for securities of the Company),
stock dividend, stock split or reverse stock split, extraordinary distribution
with respect to the Stock or other similar change in corporate structure
affecting the Stock, such substitution or adjustments shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the number
and Option price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, and in the number of shares subject to other outstanding
Awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion; provided, however, that the number of
shares subject to any Award shall always be a whole number. Such adjusted
Option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right associated with any Stock
Option.
SECTION 5. Administration.
The Plan shall be administered by the Stock Award Committee
("Committee") of the Board or such other committee of the Board, composed of
not less than two directors all of whom shall be Non-Employee Directors unless
otherwise determined by the Board. Each member of the Committee shall be
appointed by and serve at the pleasure of the Board. If at any
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<PAGE>
time no Committee shall be in place, the functions of the Committee specified
in the Plan shall be exercised by the Board.
The Committee shall have plenary authority to grant Awards to
officers, employees, directors and consultants of the Company or an Affiliate.
Among other things, the Committee shall have the authority, subject to the terms
of the Plan:
(a) to select the officers, employees, directors and consultants to
whom Awards may from time to time be granted;
(b) to determine whether and to what extent Incentive Stock
Options, Non-qualified Stock Options, Stock Appreciation Rights and
Restricted Stock, or any combination thereof are to be granted hereunder;
(c) to determine the number of shares of Stock to be covered by
each Award granted hereunder;
(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the Option price, any vesting
restrictions or limitation, any repurchase rights in favor of the Company and
any vesting acceleration or forfeiture waiver regarding any Award and the
shares of Stock relating thereto, based on such factors as the Committee shall
determine);
(e) to adjust the terms and conditions, at any time or from time to
time, of any Award, including with respect to performance goals and
measurements applicable to performance-based Awards pursuant to the terms of
the Plan;
(f) to determine under what circumstances an Award may be settled
in cash or Stock;
(g) if appropriate, to determine Fair Market Value; and
(h) to substitute new Stock Options for previously granted Stock
Options, including previously granted Stock Options having higher Option
prices.
The Committee shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any agreement
relating thereto) and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on
behalf of the Committee.
Any determination made by the Committee pursuant to the provisions
of the Plan with respect to any Award shall be made in its sole discretion at
the time of the grant of the Award or, unless in contravention of any express
term of the Plan, at any time thereafter. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants.
SECTION 6. Eligibility.
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Officers, employees, directors and consultants of the Company and
its Affiliates who are responsible for or contribute to the management, growth
and profitability of the business of the Company and its Affiliates are
eligible to be granted Awards under the Plan. Any person who files with the
Committee, in a form satisfactory to the Committee, a written waiver of
eligibility to receive any Award under the Plan shall not be eligible to
receive an Award under the Plan for the duration of the waiver.
SECTION 7. Duration of the Plan.
The Plan shall terminate ten (10) years from the effective date
specified in Section 3 of the Plan, unless terminated earlier pursuant to
Section 12 hereto, and no Awards may be granted thereafter.
SECTION 8. Stock Options.
Stock options granted under the Plan may be of two types: Incentive
Stock options and Non-qualified Stock Options. Any Stock Option granted under
the Plan shall be in such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee
Incentive Stock Options, Non-qualified Stock Options or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Incentive
Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). To the extent
that any Stock Option is not designated as an Incentive Stock Option or even
if so designated does not qualify as an Incentive Stock Option, it shall
constitute a Non-qualified Stock Option.
Stock Options shall be evidenced by Option agreements, the terms
and provisions of which may differ. An Option agreement shall indicate on its
face whether it is an agreement for an Incentive Stock Option or a
Non-qualified Stock Option. The grant of a Stock Option shall occur on the
date the Committee by resolution selects an individual to be a participant in
any grant of a Stock Option, determines the number of shares of Stock to be
subject to such Stock Option to be granted to such individual and specifies
the terms and provisions of the Option agreement. The Company shall notify a
Participant of any grant of a Stock Option, and a written Option agreement or
agreements shall be duly executed and delivered by the Company to the
Participant, which among other things, will make appropriate arrangements with
respect to the Company's tax withholding obligations. Such agreement or
agreements shall become effective upon execution by the participant.
Anything in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the optionee affected, to disqualify any Incentive
Stock Option under such Section 422.
Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The Option price per share of Stock purchasable
under an Option shall be determined by the Committee and set forth in the
Option agreement, and shall not be less than the Fair Market Value of the
Stock subject to the Option on the date of grant
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<PAGE>
in the case of Incentive Stock Options and not less than 50% of the Fair
Market Value of the Stock subject to the Option on the date of grant in the
case of Non-Qualified Stock Options.
(b) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more than 10
years after the date of grant; and no Non-Qualified Stock Option shall be
exercisable more than 10 years and one day after the date the Stock Option is
granted.
(c) Exercisability. Subject to Section 12, Stock Options shall
otherwise be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may
at any time waive such installment exercise provisions, in whole or in part,
based on such factors as the Committee may determine. In addition, the
Committee may at any time accelerate the exercisability of any Stock Option.
(d) Methods of Exercise. Subject to the provisions of this Section
8, Stock Options may be exercised, in whole or in part, at any time during the
Option period by giving written notice of exercise to the Company specifying
the number of shares of Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment in full or in part may also be
made in the form of unrestricted Stock already owned by the optionee of the
same class as the Stock subject to the Stock Option provided, however, that,
in the case of an Incentive Stock Option, the right to make a payment in the
form of already owned shares of Stock of the same class as the Stock subject
to the Stock option shall be authorized only at the time the Stock Option is
granted.
An optionee shall have all of the rights of a stockholder of the
Company holding the class or series of Stock that is subject to such Stock
Option (including, if applicable, the right to vote the shares and the right
to receive dividends), when the optionee has given written notice of exercise,
and has paid in full for such shares. In the discretion of the Committee,
payment for any Stock subject to an option may also be made by delivering a
properly executed exercise notice to the Company together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the purchase price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures
with one or more brokerage firms. The value of previously owned Stock
exchanged in full or partial payment for the shares purchased upon the
exercise of an Option shall be equal to the aggregate Fair Market Value of
such shares on the date of the exercise of such Option.
(e) Non-transferability of Options. Except as may otherwise be
determined by the Committee, no Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable, during the optionee's lifetime, only
by the optionee or by the guardian or legal representative of the optionee, it
being understood that the terms "holder" and "optionee" include the guardian
and legal representative of the optionee named in the Option agreement and any
person to whom an Option is transferred by will or the laws of descent and
distribution.
(f) Termination by Death. If an optionee's employment terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as the
Committee may determine, for a period of one year and one day (or such other
period as the Committee may specify) from the date of such
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<PAGE>
death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) Termination by Reason of Disability. If any optionee's
employment terminates by reason of Disability, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine, for a period or one year and one day (or such shorter
period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period in the shorter; provided, however, that if the
optionee dies within such one year and one day period (or such shorter period
ending upon the expiration of the stated term of the Stock Option), any
unexercised Stock Option held by such optionee shall, notwithstanding the
expiration of such one year and one day period, continue to be exercisable to
the extent to which it was exercisable at the time of death for a period of
one year and one day from the date of such death or until the expiration of
the stated term of such Stock Option, whichever period is the shorter. In the
event of termination of employment by reason of disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-qualified Stock Option.
(h) Other Termination. Unless otherwise determined by the Committee
and subject to the provisions of Section 11 of the Plan, if an optionee incurs
a Termination of Employment for any reason other than death or Disability, any
Stock Option held by such optionee shall thereupon terminate, except that such
Stock Option, to the extent then exercisable, may be exercised for the lesser
of three months and one day from the date of such Termination of Employment or
the balance of such Stock Option's term if such Termination of Employment of
the optionee is involuntary and without Cause. Unless otherwise determined by
the Committee, for the purposes of the Plan "Cause" shall have the same
meaning as that set forth in any employment or severance agreement, in effect
between the Company and the Participant. Otherwise, it shall mean (1) the
conviction of the optionee for committing a felony under Federal law or the
law of the state in which such action occurred, (2) dishonesty in the course
of fulfilling the optionee's employment duties or (3) willful and deliberate
failure on the part of the optionee to perform his employment duties in any
material respect.
(i) Cashing Out of Option. On receipt of written notice of
exercise, the Committee may, in its sole discretion, elect to cash out all or
part of any Stock Option to be exercised by paying the optionee an amount, in
cash or Stock, equal to the excess of the Fair Market Value of the Stock that
is the subject of the Option over the Option price times the number of shares
of Stock subject to the option on the effective date of such cash out.
SECTION 9. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-qualified Stock Option, such rights may be granted either
at or after the time of grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of grant
of such Stock Option. A Stock Appreciation Right shall terminate and no longer
be exercisable upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 9(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee. Upon such exercise and surrender, the optionee
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<PAGE>
shall be entitled to receive on amount determined in the manner prescribed in
Section 9(b). Stock Options which have been so surrendered shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:
(i) Stock Appreciation Rights shall be exercisable only at such
time or times and to the extent that the Stock Options to which they relate
are exercisable in accordance with the provisions of Section 8 and this
Section 9 or as may otherwise be determined by the Committee.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash, shares of Stock or both equal
in value to the excess of the Fair Market Value of one share of Stock over the
option price per share specified in the related Stock Option multiplied by the
number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right, in its sole discretion,
to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only when
and to the extent that the underlying Stock Option would be transferable under
Section 8(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related shall
be deemed to have been exercised for the purpose of determining the number of
shares of Stock available for issuance under the Plan in accordance with
Section 5 of the Plan, but only to the extent of the number of shares
resulting from dividing the value of the Stock Appreciation Right at the time
of exercise by the Fair Market Value of one share of Stock determined in
accordance with this Section 9.
SECTION 10. Terms of Restricted Stock Awards.
Subject to and consistent with the provisions of the Plan, with
respect to each Award of Restricted Stock to a Participant, the Committee
shall determine:
(a) the terms and conditions of the Restricted Stock Agreement
between the Company and the Participant evidencing the Award;
(b) the Restricted Period for all or a portion of the Award;
(c) the Restrictions applicable to the Award, including, but not
limited to, continuous employment with the Company for a specified term or the
attainment of specific corporate, divisional or individual performance
standards or goals, which Restricted Period and Restrictions may differ with
respect to each Participant;
(d) whether the Participant shall receive the dividends and other
distributions paid with respect to an award of the Restricted Stock as
declared and paid to the holders of Stock during the Restricted Period or
shall be withheld by the Company for the account of the Participant until the
Restricted Periods have expired or the Restrictions have been satisfied, and
whether interest shall be paid on such dividends and other distributions
withheld, and if so, the rate of interest to be paid;
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<PAGE>
(e) the percentage of the Award which shall vest in the
Participant in the event of death, Disability or Retirement prior to the
expiration of the Restricted Period or the satisfaction of the Restrictions
applicable to an award of Restricted Stock; and
(f) notwithstanding the Restricted Period and the Restrictions
imposed on the Restricted Shares, as set forth in a Restricted Stock
Agreement, whether to shorten the Restricted Period or waive any Restrictions,
if the Committee concludes that it is in the best interests of the Company to
do so.
Upon an award of Restricted Stock to a Participant, the stock
certificate representing the Restricted Stock shall be issued and transferred
to and in the name of the Participant, whereupon the Participant shall become
a stockholder of the Company with respect to such Restricted Stock and shall
be entitled to vote the Stock. Such stock certificates shall be held in
custody by the Company, together with stock powers executed by the Participant
in favor of the Company, until the Restricted Period expires and the
Restrictions imposed on the Restricted Stock are satisfied.
SECTION 11. Change of Control.
(a) Upon the occurrence of an event of "Change of Control", as
defined below and subject to such additional conditions and restrictions as
the Committee may determine at the time of the granting of the Award:
(i) any and all outstanding Options shall become immediately
exercisable;
(ii) the Restricted Period and Restrictions imposed on the
Restricted Stock shall lapse, and the Restricted Stock shall vest in the
Participant to the extent determined by the Committee; and
(iii) within ten business days after the occurrence of a Change of
Control, the certificates representing the Restricted Stock so vested, without
any restrictions or legend thereon, other than as required by law, shall be
delivered to the Participant, and any dividends and distributions paid with
respect to the Restricted Stock which were escrowed during the Restricted
Period and the earnings thereon shall be paid to the Participant.
(b) A "Change of Control" shall occur when, in addition to the
occurrence of such other events as the Committee may determine at the time of
the grant of the Award, one or more of the following events occurs following
the effective date of the Plan:
(i) any "Person" (which term, when used in this Section 11, shall
mean one or more persons acting as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities of the issuer or shall have such other meaning assigned to it in a
successor provision to Section 13(d) of the Exchange Act) is or becomes
without the approval of a majority of the Continuing Directors (as defined
below) the "Beneficial Owner" (which term, when used in this Section 11, shall
include any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares (i) voting
power which includes the power to vote or to direct the voting of such
security; and/or (ii) investment power which includes the power to dispose or
to direct the disposition of such security, or such other meaning assigned to
it in a successor provision to Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of Voting Stock (as defined below) representing twenty
percent (20%) or more of the votes entitled to be cast by the holders of all
then outstanding Shares of the Company; or
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<PAGE>
(ii) the stockholders of the Company approve a definitive
agreement or plan to merge or consolidate the Company with or into another
corporation, or to sell, or otherwise dispose of, all or substantially all of
the Company's property and assets, or to liquidate the Company or the business
of the Company for which the Participant's services are principally performed
is disposed of by the Company pursuant to a sale of assets (including stock of
a subsidiary of the Company), a merger or consolidation or otherwise; or
(iii) the individuals who are Continuing Directors of the Company
cease without the approval of a majority of the Continuing Directors for any
reason to constitute at least a majority of the Board of the Company.
The term "Continuing Director" means (i) any member of the Board
who is a member of the Board on October 1, 1996, or (ii) any person who
subsequently becomes a member of the Board whose nomination for election or
election to the Board is recommended or approved by a two-thirds majority of
the Continuing Directors. The term "Voting Stock" means all capital stock of
the Company which by its terms may be voted on all matters submitted to
stockholders of the Company generally.
SECTION 12. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made which would (i) impair
the rights of an Award theretofore granted without the Participant's consent,
except such an amendment made to cause the Plan to qualify for the exemption
provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without
the approval of the Company's stockholders to the extent such approval is
required by law or agreement.
The Committee may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively, but no such
amendment shall impair the rights of any holder without the holder's consent
except such an amendment made to cause the Plan or Award to qualify for the
exemption provided by Rule 16b-3. The Committee may also substitute new Stock
Options for previously granted Stock Options, including previously granted
Stock Options having higher option prices.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting
rules, as well as other developments and to grant Awards which qualify for
beneficial treatment under such rules without shareholder approval.
SECTION 13. General Provisions.
(a) Nothing contained in the Plan shall prevent the Company or an
Affiliate from adopting other or additional compensation arrangements for its
employees.
(b) The Plan shall not confer upon any employee any right to
continued employment nor shall it interfere in any way with the right of the
Company or an Affiliate to terminate the employment of any employee at any
time.
(c) No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay
to the Company, or make arrangements satisfactory to
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<PAGE>
the Company regarding the payment of, any Federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to such amount.
Unless otherwise determined by the Company, withholding obligations may be
settled with Stock, including Stock that is part of the Award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and the Company and its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant.
(d) The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid.
(e) Agreements entered into by the Company and Participants
relating to Awards under the Plan, in such form as may be approved by the
Committee from time to time, to the extent consistent with or permitted by the
Plan shall control with respect to the terms and conditions of the subject
Award. If any provisions of the Plan or any agreement entered into pursuant to
the Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions of the Plan or the
subject agreement.
(f) The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware.
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<PAGE>
CZECH INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS
PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS
PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, 4, 5 AND 6.
The undersigned hereby appoints Michael Sumichrast, August A. de Roode and
Martin A. Sumichrast as Proxies, each with the full power of substitution, and
hereby authorizes each of them, to represent and vote, as designated on the
reverse hereof, all shares of Common Stock of Czech Industries, Inc. (the
"Company") held of record by the undersigned on October 24, 1996, at the
Annual Meeting of Stockholders to be held on December 10, 1996, or any
adjournment thereof, upon all such matters as may properly come before the
Meeting.
[X] Please mark your
votes as in this example. If you plan to attend [ ]
the Annual Meeting, place an
X in this box.
1. ELECTION OF DIRECTORS
FOR both nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(EXCEPT AS MARKED TO THE CONTRARY BELOW) to vote for both nominees
listed below
Wolfgang Kossner, August de Roode
TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME ABOVE.
2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION to change the name of
the Company from Czech Industries, Inc. to Eastbrokers International
Incorporated.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND
BY-LAWS to allow holders of 10% or more of the outstanding shares of the
Company to call special meetings.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(THE PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
<PAGE>
4. PROPOSAL TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION to
allow for the removal of Directors with or without cause by the majority vote
of the holders of the Company's issued and outstanding common stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. APPROVAL OF THE STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. RATIFICATION OF APPOINTMENT OF PANNELL KERR FORSTER PC to serve as the
Company's independent public accountants for fiscal year ending March 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
7. In their discretion upon such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
SIGNATURE: DATE:
----------------------------------------- ----------------
SIGNATURE: DATE:
----------------------------------------- ----------------
(SIGNATURE IF HELD JOINTLY)
NOTE: Please sign exactly as name or names appear on stock certificate
as indicated hereon. Joint owners should each sign. When
signing as attorney, executor, administrator or guardian, please
give full title as such.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
