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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.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.
<PAGE>
[ ] 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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<PAGE>
CZECH INDUSTRIES, INC.
15245 Shady Grove Road, Suite 340
Rockville, Maryland 20850
November 5, 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 (the
"Meeting") 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 the 1996 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
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.
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<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 November 5, 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 (the "Meeting") 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 1996 Stock
Option Plan, FOR the ratification of the appointment 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
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. For
the purposes of determining the number of votes cast with respect to any voting
matter, only those cast FOR or AGAINST are included. Abstentions and broker
non-votes are counted only for the purpose of determining whether a quorum is
present at the Meeting. 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 1996 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 (1) director and not
more than nine (9) directors. 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 class three 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 class two 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 being nominated for election as class one 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 a
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 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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<PAGE>
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-
- - ------------------
* 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. Mr. 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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<PAGE>
$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 is obligated 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 24, 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 15,700 *
August A. de Roode (3) Chief Executive Officer, 211,500 7.37
Director
Peter Schmid (4) President, Director 573,275 19.97
Wolfgang Kossner (4) Executive Vice President, 605,775 21.10
Director
Martin A. Sumichrast (2) Executive Vice President, 70,700 2.46
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 1,044,095 36.37
a Group (8 persons)
</TABLE>
- - -------------------------
* 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. Dr. Sumichrast
and Martin Sumichrast each own 5,000 shares directly.
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<PAGE>
(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) 373,275 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 Klagenfurt, 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, 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 which, 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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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 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.
KHS Beteiligungs AG ("KHS"), a company controlled by Mr. Schmid and Mr.
Kossner, received, either directly or indirectly, 218,825 shares of newly
issued, fully paid and non-assessable shares of the Company's Common Stock as
consideration for its shares of Eastbrokers. As further consideration, KHS 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 KHS has received have not been registered under the
Act and may not be offered or sold in the United States absent registration
under the Act or an 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 contribute from cash
on hand, $900,000 to Eastbrokers US in consideration of being issued
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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 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 ByLaws 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 CERTIFICATE 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 1996 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 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.
Options to purchase Common Stock and warrants to purchase stock of Eastbrokers
US 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 Meeting. Pannell Kerr Forster audited the
Company's 1994 and 1995 financial statements, and for the fiscal period ending
March 31, 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 July 1, 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 three month 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,
Executive Vice President,
Chief Financial Officer
and Secretary
Date: November 5, 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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<PAGE>
APPENDIX A
----------
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 deleting
clause 2.2 of Article II in its entirety and substituting the following in lieu
therefor:
"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 ByLaws 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.
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
<PAGE>
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.
bb. "Stock Appreciation Right" means a right granted under Section 9.
B-2
<PAGE>
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 time no Committee shall be in
place, the functions of the Committee specified in the Plan shall be exercised
by the Board.
B-3
<PAGE>
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.
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
B-4
<PAGE>
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 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.
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<PAGE>
(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 death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
B-6
<PAGE>
(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 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-7
<PAGE>
(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;
(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
B-8
<PAGE>
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
(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
B-9
<PAGE>
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 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
B-10
<PAGE>
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.
B-11
<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 at right [ ] WITHHOLD AUTHORITY [ ]
(EXCEPT AS MARKED TO THE CONTRARY BELOW) to vote for both nominees
listed at right
Nominees: 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. PROPOSAL TO APPROVE 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 INTHE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
- - -------------------------------------------------------------------------------
