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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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 Section 240.14a-11(c)
or Section 240.14a-12
EUROWEB INTERNATION CORP.
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(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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.
[_] 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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Notes:
EUROWEB INTERNATIONAL CORP. EuroWeb Internet Szolgaltato Kft.
445 Park Avenue H-1122 Budapest o Varosmajor u. 13
New York NY 10022 1535 Budapest o Hungary
Tel: (212) 758-9870 Tel: (+36 1) 22 44 000
Fax: (212) 758-9896 Fax: (+36 1) 22 44 100
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TO THE STOCKHOLDERS OF EUROWEB INTERNATIONAL CORP.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of EuroWeb International Corp., a Delaware corporation (the "Company"), will be
held at 10:00 A.M. (New York time), on May 21, 1999 at the offices of Cohen &
Cohen, 445 Park Avenue, New York, New York 10022.
1. To elect five directors of the Company to serve until the 1999
Annual Meeting of Stockholders or until their successors have
been duly elected and qualified.
2. To vote upon a proposal to amend the Company's 1993 Incentive
Stock Option Plan to increase the number of shares of the
Company's common stock available thereunder from 350,000 shares
to 670,000 shares for use as incentive awards to certain key
employees, directors and consultants.
3. To ratify the appointment of BDO Seidman, LLP, as auditors of
the Company for the fiscal year ending December 31, 1999;
and to transact such other business as may properly come before the Meeting and
any adjournment or postponement thereof. The Board of Directors is not aware of
any other business to come before the meeting.
The Board of Directors has fixed April 23, 1999 as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Meeting and any adjournment or postponement thereof. Only
holders of record of the Company's common stock, par value $.001 per share
("Common Stock"), at the close of business on the Record Date are entitled to
vote on all matters coming before the Meeting or at any adjournment or
postponement thereof. A complete list of stockholders of record entitled to vote
at the Meeting will be maintained in the Company's offices at 445 Park Avenue,
New York, New York 10022, for ten days prior to the Meeting.
Whether or not you plan to attend the Meeting in person, please mark,
execute, date and return the enclosed proxy in the envelope provided (which
requires no postage if mailed within the United States). Should you attend the
Meeting in person you may, if you wish, withdraw your proxy and vote your shares
in person.
By Order of the Board of Directors,
/s/Frank R. Cohen
---------------------
Frank R. Cohen
Chairman of the Board
New York, New York
April 23, 1999
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
EUROWEB INTERNATIONAL CORP. EuroWeb Internet Szolgaltato Kft.
445 Park Avenue o New York NY 10022 H-1122 Budapest o Varosmajor u. 13
Tel: (212) 758-9870 o Fax: (212) 758-9896 1535 Budapest o Hungary
Tel: (+36 1) 22 44 000
Fax: (+36 1) 22 44 100
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</TABLE>
April 23, 1999
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PROXY STATEMENT
-------------------------------------------
AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1999
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of EuroWeb International Corp.
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
to be held at 10 a.m. New York time, on May 21, 1999 at the offices of Cohen &
Cohen, 445 Park Avenue, New York, New York 10022, or at any adjournments or
postponements thereof (the "Meeting"). This Proxy Statement and the accompanying
Notice of Annual Meeting and form of proxy are first being sent or given to
stockholders on or about April 23, 1999.
At the Meeting, the stockholders of the Company are being asked to
consider and vote upon: (i) the election of five directors of the Company to
serve until the next Annual Meeting of Stockholders or until their successors
are duly elected and qualified; (ii) a proposal to increase the number of shares
of the Common Stock available under the Company's Incentive Stock Option Plan,
as amended, from 350,000 shares to 670,000 shares for use as incentive awards to
certain key employees, directors, and consultants; and (iii) the ratification of
the appointment of BDO Seidman, LLP as auditors of the Company for the fiscal
year ending December 31, 1999.
VOTING RIGHTS AND PROXY INFORMATION
All shares of common stock, par value $.001 per share, of the Company
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for election of all nominees
for director named below, for increase in the number of shares available under
the Company's Incentive Stock Option Plan, and for the ratification of the
appointment of auditors. The Company does not know of any matters, other than as
described in the Notice of Annual Meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy and acting thereunder will have the
discretion to vote on such matters in accordance with their best judgement.
Proxies should not be sent by the stockholder to the Company, but to American
Stock Transfer & Trust Company, the Company's Registrar and Transfer Agent, at
40 Wall Street, New York, New York 10005. A pre-addressed, postage-paid envelope
is provided for this purpose.
1
<PAGE>
A proxy delivered pursuant to this solicitation may be revoked at any
time before it is voted. Proxies may be revoked by (i) filing with the Chairman
of the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Chairman of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Frank R.
Cohen, Chairman of the Board, EuroWeb International Corp., 445 Park Avenue, New
York, New York 10022.
VOTE REQUIRED FOR APPROVAL
The presence, in person or by proxy, of a majority of the shares of
Common Stock entitled to vote is required to constitute a quorum for the
transaction of business at the Meeting. The election of directors requires the
affirmative vote of a plurality of the shares of Common Stock voting in person
or by proxy at the Meeting. Thus, abstentions and proxies returned by brokers as
"non-votes" on behalf of shares held in"street name" will have no effect on the
outcome of the election of directors. The affirmative vote of a majority of the
outstanding shares is required for approval of the increase in the number of
shares available under the Company's 1993 Incentive Stock Option Plan, as
amended. Accordingly, abstentions will have the same effect as a vote against
such matter and proxies returned by brokers as "non-votes" will not affect the
outcome of such vote. Proxies submitted which contain abstentions or broker
"non-votes" will be deemed present at the Meeting in determining the presence of
a quorum.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED EACH OF THE PROPOSALS
SET FORTH HEREIN. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS, TO INCREASE THE NUMBER OF SHARES OF THE COMMON STOCK AVAILABLE UNDER
THE COMPANY'S INCENTIVE STOCK OPTION PLAN, AS AMENDED, FROM 350,000 SHARES TO
670,000 SHARES, AND THE RATIFICATION OF THE APPOINTMENT OF AUDITORS.
VOTING SECURITIES
April 23, 1999 has been set as the record date (the "Record Date") for
determining stockholders entitled to notice of, and to vote at, the Meeting. As
of the Record Date, there were outstanding 6,534,916 shares of Common Stock.
Each holder thereof is entitled to one vote per share.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of the Common Stock as of April 23, 1999 by (i) each person
known by the Company to own beneficially more than 5% of the outstanding Common
Stock; (ii) each director of the Company; and (iii) all executive officers and
directors as a group. Except as otherwise indicated below, each of the entities
or persons named in the table has sole voting and investment powers with respect
to all shares of Common Stock beneficially owned by it or him as set forth
opposite its or his name.
2
<PAGE>
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED(1) OWNED(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Frank R. Cohen 215,000(2) 3.19%
445 Park Avenue
New York, NY 10022
Robert Genova 185,000(3) 2.85%
227 Route 206, Unit 11
Flanders, NJ 07836
Donald K. Roberton 50,000(4) *
3350 Charles MacDonald Drive
Sarasota FL 34240
Richard Maresca 30,000(5) *
1111 Wyoming Drive
Mountainside, NJ 07082
Csaba Toro 150,000(6) 2.31%
1122 Budapest
Varosmajor utca 13
Hungary
All Officers and Directors as a 630,000 9.72%
Group (5 Persons)
- ---------------------------------------------------
</TABLE>
* less than 1%
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated, subject to community
property laws, where applicable. For purposes of this table, a person
or group of persons is deemed to have beneficial ownership" of any
shares which such person has the right to acquire within 60 days after
April 23, 1999. For purposes of computing the percentage of outstanding
shares held by each person or group of persons named above on December
31, 1998, any security which such person or group of persons has the
right to acquire within 60 days after such date is deemed to be
outstanding for the purpose of computing the percentage ownership for
such person or persons, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
(2) Includes 205,000 currently exercisable options to purchase 100,000
shares at $1 per share pursuant to his employment agreement and 105,000
shares between $1.25 and $1.625 per share pursuant to the Company's
1993 Stock Option Plan.
(3) Includes 130,000 currently exercisable options to purchase 100,000
shares at $1 per share pursuant to Mr. Genova's employment agreement
and options to purchase 30,000 shares at $1.625 pursuant to the
Company's 1993 Stock Option Plan.
(4) Includes 50,000 options granted to Mr. Roberton exercisable between
$1.25 and $1.625 per share pursuant to the Company's 1993 Stock
Option Plan.
(5) Includes 30,000 options granted to Mr. Maresca exercisable between
$1.25 and $1.625 per share pursuant to the Company's 1993 Stock
Option Plan.
(6) Includes 100,000 currently exercisable options to purchase 100,000
shares at $1 per share pursuant to his employment agreement and 50,000
options to purchase 50,000 shares at $2 per share pursuant to the
Company's 1993 Stock Option Plan.
3
<PAGE>
I
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
At the Meeting, five directors are to be elected. Pursuant to the
Company's By-laws, all directors are elected to serve for the ensuing year and
until their respective successors are elected and qualified. The shareholders
will be asked to elect the five (5) incumbent directors. Unless otherwise
directed, the persons named in the enclosed Proxy intend to cast all votes
pursuant to proxies received for the election of Messrs. Frank R. Cohen, Richard
G. Maresca, Donald K. Roberton, Robert Genova and Csaba Toro, (collectively, the
"Nominees"). If any of the Nominees becomes unavailable for any reason, which
event is not anticipated, the shares represented by the enclosed proxy will be
voted for such other person designated by the Board.
BACKGROUND OF NOMINEES
Incumbents
Frank R. Cohen, age 78, has been a Director and Secretary of the
Company since its inception in 1992, and has been Chairman of the Board and
Chief Executive Officer since February 6, 1997. Mr. Cohen has been practicing
law in the City of New York since 1946. Since 1985 he has been a member of the
law firm of Cohen & Cohen.
Robert Genova, age 58, has been a Director, President and Treasurer of
the Company since September 1998. Prior thereto Mr. Genova had been a management
and financial consultant to the Company since 1992 and to other companies since
1990.
Csaba Toro, age 33, has been a Director and Vice President since
September 1998, and managing director of the Company's Hungarian subsidiary
since 1997. Prior thereto, since 1994, he was managing director of ENET Kft.,
which company was acquired by the Company in 1997.
Richard G. Maresca, age 58, has been a director of the Company since
its inception. He has been Senior Telecommunications Manager for the American
Stock Exchange since 1991. From 1954 to 1991, he was Communications Manager for
Josephthal & Co., Inc., a brokerage firm.
Donald K. Roberton, age 57, was Vice Chairman and Chief Operating
Officer of Hungarian Telephone and Cable Corp. ("HTC"), until he resigned in
order become a director of the Company in 1996 and assist in the development of
EuroWeb's Internet Service Provider business. Prior to that, Mr. Roberton spent
five years with Citizens Utility Company as Assistant to the Chairman and Vice
President - Strategic Development Telecommunications and as Vice President,
Telecommunications. Prior to Citizens Utilities he had been with Centel for 28
years and an officer since 1984. During his tenure with Centel he held numerous
executive and managerial positions.
Board members are reimbursed for their expenses for each meeting
attended but do not receive fees for attendance at meetings.
Directors are elected annually and hold office until the next annual
meeting of the stockholders of the Company and until their successors are
elected and qualified. Officers are elected annually and serve at the discretion
of the Board of Directors.
4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS; SECURITIES AND EXCHANGE COMMISSION FILINGS
During the Company's last fiscal year, its Board of Directors held six
meetings. Each of the foregoing incumbent directors attended at least 75% of the
meetings of the Board of Directors which were held while he was serving as a
director during the Company's last fiscal year.
The Company has a standing audit and compensation committees.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more then 10
percent of the Company's Common Stock, to file with the SEC the initial reports
of ownership and reports of changes in ownership of common stock. Officers,
directors and greater than 10 percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Specific due dates for such reports have been established by the
Commission and the Company is required to disclose in this Proxy Statement any
failure to file reports by such dates during fiscal 1998. Based solely on its
review of the copies of such reports received by it, or written representations
from certain reporting persons that no Forms 5 were required for such persons,
the Company believes that during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and ten
percent shareholders were complied with.
POLICY WITH RESPECT TO SECTION 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that, unless an appropriate exemption applies, a tax deduction
for the Company for compensation of certain executive officers named in the
Summary Compensation Table will not be allowed to the extent such compensation
in any taxable year exceeds $1 million. As no executive officer of the Company
received compensation during 1998 approaching $1 million, and the Company does
not believe that any executive officer's compensation is likely to exceed $1
million in 1999, the Company has not developed an executive compensation policy
with respect to qualifying compensation paid to its executive officers for
deductibility under Section 162(m) of the Code.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long term compensation of the Company's chief executive officer, the only
executive officer of the Company, whose salary and bonus for 1998. exceeded
$100,000 for services in all capacities to the Company during the Company's
1996, 1997, and 1998 fiscal years:
5
<PAGE>
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- ------------------- ----------------------
Bonus and Securities
Name and Year Ended Other Annual Underlying
Principal Position December 31, Salary($) Compensation($) Options
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frank Cohen 1998 150,000 0 130,000
Chairman of the Board 1997 125,000 0 0
Chief Executive Officer 1996 82,000 0 75,000
Since February 7, 1997
</TABLE>
EMPLOYMENT AND MANAGEMENT AGREEMENTS
Effective October 1, 1998, Robert Genova ("Genova") and Csaba Toro
("Toro") were appointed President and Vice President of the Company. The Company
entered into six-year agreements with its Chairman of the Board, Frank R. Cohen
("Cohen"), Genova and Toro. The agreements provide for annual compensations of
$150,000, $72,000, and $96,000 for the Chairman of the Board, President and Vice
President of the Company, respectively, and the granting of options to each of
said officers to purchase 100,000 shares of common stock at the exercise price
of $1 per share. The closing high bid price for the shares on the date of the
grant was $1 per share. The Company also agreed to provide the Chairman of the
Board with a Split Dollar Life Insurance policy in the face amount of up to
$1,000,000 to be structured so that the premiums and other costs paid by the
Company would be recovered by the Company out of insurance proceeds, but has not
taken any action to date with regard to the policy.
The agreements provide that, if employment is terminated other than for
willful breach by the employee or for cause or in the event of a change in
control of the Company, then the employee has the right to terminate the
agreement. In the event of any such termination, the employee will be entitled
to receive the payment due on the balance of his employment agreement.
The Company has no pension or profit sharing plan or other contingent
forms of remuneration with any officer, director, employee or consultant.
OPTIONS/GRANTS IN LAST FISCAL YEAR
The Company's 1993 Stock Option Plan permits the grant of options to
employees of the Company, including officers and directors, who are serving in
such capacities. 30,000 options were granted in the 1998 fiscal year under the
plan to the chief executive officer Cohen, 30,000 options were granted to the
president Genova, 10,000 options were granted to Donald K. Roberton, a director,
and 10,000 were granted to Richard G. Maresca, a director.
OPTIONS EXERCISED IN LAST FISCAL YEAR AND YEAR-END VALUES
No options were exercised by Frank R. Cohen or by any employee,
director or officer of the Company during the fiscal year ended December 31,
1998. The following table contains information concerning the number and value
at December 31, 1998 of unexercised options held by Mr. Cohen:
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED "IN-
ACQUIRED ON VALUE OPTIONS HELD AT THE-MONEY" OPTIONS HELD AT
NAME EXERCISE REALIZED FISCAL YEAR-END FISCAL YEAR-END(1)
======================== ================== ============= ===================================== =================================
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------- ------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Frank R. Cohen 0 0 205,000 0 $110,250 0
- ------------------------
(1) Fair market value of underlying securities (the closing price of the
Company's Common Stock on the NASDAQ Small Cap system as of December 31,
1998, minus the exercise price).
</TABLE>
STOCK OPTION PLAN AND STOCK OPTIONS
In 1993, the Company adopted a Stock Option Plan (the "Plan"). An
aggregate of 350,000 shares of Common Stock are authorized for issuance under
the Plan and of which 340,000 options have been granted and are currently
outstanding under the plan. The Plan provides that qualified and non-qualified
options may be granted to officers, directors, employees and consultants to the
Company for the purpose of providing an incentive to those persons to work for
the Company. A proposal to add 320,000 additional shares to the 1993 Plan is to
be considered at the Annual Meeting.
OUTSTANDING STOCK OPTION AWARDS
The benefits to be awarded to and received by the officers, directors,
employees, and consultants of the Company under the Stock Option Plan in the
future are not presently determinable. All shares currently subject to Options,
as well as any additional shares that may become subject to future Options,
under the Stock Option Plan are comprised of authorized but unissued shares of
Common Stock. Accordingly, the exercise of any such Options and the issuance of
shares pursuant thereto will have the effect of diluting the interests of
existing stockholders to the extent of such issuance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. In February 1997, the Company's Chairman of the Board, Robert
Genova, resigned as an officer, director and employee, and agreed to a
cancellation of his employment agreement upon payment of $50,000, which
represented the approximate amount owed to him with respect to 1996 salary. In
addition, 125,000 stock options which were granted to him under his employment
agreement did not terminate as a result of the resignation, but will continue to
be governed by the original terms of the options which provided for an
expiration date of March 31, 1999. In February 1998, Mr. Genova was appointed a
director of the Company and in September 1998, he was appointed President,
Treasurer, and Chief Financial Officer of the Company at a salary of $72,000 per
annum.
2. In January 1999, the Company loaned Toro $150,000 for the purpose of
purchasing an apartment condominium in Budapest. The loan bears interest at the
rate of 11 1/2% per annum and is secured both by Toro's employment contract and
by a lien on the property.
Management believes that the transaction with Toro was made on terms no
less favorable to the Company than those available from unaffiliated parties. It
is intended that any future transactions with officers, directors and affiliates
of the Company will be made on terms no less favorable to the Company than those
available from unaffiliated parties.
7
<PAGE>
3. See employment agreements of Messrs. Cohen, Genova and Toro above.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF DIRECTORS
II
PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE UNDER THE COMPANY'S 1993 INCENTIVE STOCK OPTION
PLAN, AS AMENDED, FROM 350,000 SHARES TO 670,000 SHARES
FOR USE AS INCENTIVE AWARDS TO CERTAIN KEY EMPLOYEES,
DIRECTORS AND CONSULTANTS
(ITEM 2 ON THE PROXY CARD)
BACKGROUND OF THE PROPOSED AMENDMENT
The Company's 1993 Incentive Stock Option Plan, as amended (the "Stock
Option Plan") presently provides that the aggregate number of shares of Common
Stock subject to options granted thereunder shall not exceed 350,000. Following
a review of the options granted to date under the Stock Option Plan and the
number of options which the Board of Directors believes should be available for
awards in the future, the Board of Directors has determined that the number of
shares presently available for awards under the Stock Option Plan is
insufficient to achieve the purposes of the Stock Option Plan. Based upon that
determination, the Board of Directors has determined that an increase in the
number of shares of Common Stock subject to Options under the Stock Option Plan
would be in the best interests of the Company and its stockholders. Accordingly,
the Board of Directors unanimously determined that the number of shares of
Common Stock subject to stock options available for grants under the Stock
Option Plan, be increased from 350,000 shares to 670,000 shares in order to
provide incentive for certain key employees, directors and consultants. The
Board of Directors also unanimously recommended that the Company's stockholders
approve such increase.
DESCRIPTION OF THE STOCK OPTION PLAN
The following description of the Stock Option Plan does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Stock Option Plan, which may obtained by any stockholder of the Company by
contacting EuroWeb International Corp., Attn.: Frank R. Cohen, Chairman, 445
Park Avenue, New York, New York 10022.
Purpose. The purpose of the Stock Option Plan is to provide an
incentive to employees of the Company (including directors, employees and
consultants of the Company), to encourage proprietary interest in the Company,
to encourage employees to remain in the employ of the Company and to attract to
the Company individuals of experience and ability to serve as employees,
directors and consultants.
Shares Subject to the Stock Option Plan. The maximum number of shares
of Common Stock as to which options may be granted under the Stock Option Plan
(subject to adjustment as described below) presently is 350,000 shares. Any
shares subject to an option which for any reason expires or terminates
unexercised may again be the subject of another option granted under the Stock
Option Plan. As of the Record Date, options with respect to 340,000 of Common
Stock have been granted and are outstanding under the Stock Option Plan.
8
<PAGE>
Administration. The Stock Option Plan is administered by the Board of
Directors. The Board shall from time to time, at its discretion, make
determinations with respect to individuals who shall be granted options
(Incentive Stock Options or Non-Qualified Stock Options, which may be referred
to collectively as "Options"), the number of shares subject to Options and the
designations of such Options as Incentive Stock Options (an option described in
Section 422(b) of the Internal Revenue Code of 1986, as amended, and also known
as "Qualified Option") or Non-Statutory Stock Options (an option not described
in Section 422(b) or 423(b) of the Internal Revenue Code of 1986, as amended,
and also known as a "Non-Qualified Option"). Notwithstanding such designations,
to the extent that the aggregate fair market value of the shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any optionee during any calendar year exceeds $100,000, such
Options shall be treated as Non-Qualified Options. The Board determines vesting
requirements and other conditions of such awards, interprets the Stock Option
Plan, and makes all other decisions relating to the operation of Stock Option
Plan.
Eligibility. All key employees (including directors who are employees),
or directors who are not employees, and consultants (who are neither employees
nor directors) (individually, an "Optionee," and together, the "Optionees") of
the Company or any of its subsidiaries who perform services of special
importance to the management, operation and development of the business of the
Company as the Board may select are eligible to receive Options under the Stock
Option Plan. As of the Record Date, there were nine (9) persons eligible to
participate in the Stock Option Plan as directors, employees or consultants.
Option Contracts. Each grant of an Option is evidenced by a written
contract between the Company and the Optionee receiving the grant, containing
such terms and conditions not inconsistent with the Stock Option Plan. Each
Optionee shall agree to remain in the employ of, and to render to, the Company
his or her services for a period of one (1) year from the date of the granting
of any Option, but such agreement shall not impose upon the Company any
obligation to retain the Optionee for any period of time.
Terms and Conditions of Options. Options may be granted for terms
determined by the Board; provided, however, that no Option shall be exercisable
after the expiration of 10 1/2 years from the date it is granted; and provided
further that, an Incentive Stock Option may not exceed 10 years (5 years if the
option holder owns (or is deemed to own) stock possessing more than 10% of the
voting power of the Company). In the case of an Incentive Stock Option, the per
share exercise price shall be no less than 100% of the "fair market value per
share" (as defined below) on the date of grant, except that, if granted to an
employee who, at the time of the grant of such Incentive Stock Option, owns (or
is deemed to own) stock representing more than 10% of the voting power of all
classes of stock of the Company or any parent or subsidiary, the per share
exercise price shall be no less than 110% of the fair market value per share on
the date of grant. In the case of a Non-Qualified Option, the per share exercise
price may be less than, equal to, or greater than the fair market value per
share on the date of grant, as determined by the Board. The "fair market value
per share" shall be the closing price per share of the Common Stock on the
principal exchange or quotations system on which the Common Stock is traded or
quoted on the date of the grant.
The consideration to be paid for shares to be issued upon exercise of
an Option shall be United States dollars; provided, however, that, with the
consent of the Board, the purchase price may be paid by the surrender of shares
of Common Stock in good form for transfer owned by the person exercising the
Option and having a fair market value on the date of exercise equal to the
purchase price or in any combination of cash and shares, so long as the total of
the cash so paid and the fair market value of the shares surrendered equals the
purchase price. No shares shall be issued until full payment therefor has been
made.
Options may not be transferred other than by will or by the laws of
descent and distribution, and may be exercised during the Optionee's lifetime
only by him or his legal representatives. With respect to an Option granted to
an employee, if the employment of such employee is terminated for any reason
other than death or a
9
<PAGE>
permanent and total disability, the Option may be exercised, to the extent
exercisable by the holder at the time of termination of employment, within three
months thereafter (twelve months if termination was due to disability or, in the
case of Non-Qualified Options, if termination was due to retirement), but in no
event after expiration of the term of the Option. In the case of death of the
Optionee while employed (or within three months after termination of
employment), his executor or administrator of his or her estate may exercise the
Option, to the extent exercisable on the date of death, within one year after
such death, but in no event after the expiration of the term of the Option.
Adjustment in Event of Capital Changes. Subject to any required action
by the Company's stockholders, the number of shares covered by the Stock Option
Plan, the number of shares covered by each outstanding Option, and the exercise
price thereof shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
consolidation of the Common Stock, stock split, or the payment of a stock
dividend.
Subject to any required action by the Company's stockholders, if the
Company shall be the surviving corporation in any merger or consolidation, each
outstanding Option shall pertain and apply to the securities to which a holder
of the number of shares subject to the Option would have been entitled. A
dissolution or liquidation of the Company or a merger or consolidation in which
the Company is not the surviving corporation shall cause each outstanding Option
to terminate, unless the agreement of merger or consolidation shall otherwise
provide; provided that, each Optionee shall in such event, if a period one (1)
year from the date of the grant of the Option shall have elapsed, have the right
immediately prior to such dissolution or liquidation, or merger or consolidation
in which the Company is not the surviving corporation, to exercise the Option in
whole or in part, subject to limitations on exercisability under the Stock
Option Plan.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the Common Stock
within the meaning of the Stock Option Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Duration and Amendments of the Stock Option Plan. Options may be
granted pursuant to the Stock Option Plan until the termination of the Stock
Option Plan on May 4, 2003. The Board of Directors may at any time, subject to
applicable law, suspend, terminate or amend the Stock Option Plan in any
respect; provided, however, that, without the approval of the Company's
stockholders, no amendment may be made which would (a) increase the number of
shares available for the grant of Options (except the anti-dilution adjustments
described above), (b) materially increase benefits accruing to participants
under the Stock Option Plan or (c) change the eligibility requirements for
participating in the Stock Option Plan.
Federal Income Tax Treatment. The following is a general summary of the
federal income tax consequences under current tax law of Incentive Stock Options
and Non-Qualified Options. It does not purport to cover all of the special
rules, including the exercise of an option with previously acquired shares, or
the state or local income or other tax consequences inherent in the ownership
and exercise of stock options and the ownership and disposition of the
underlying shares.
An Optionee will not recognize taxable income for federal income tax
purposes upon the grant of an Incentive Stock Option or a Non-Qualified Option
and the Company obtains no deduction from the grant of such Options.
10
<PAGE>
In the case of an Incentive Stock Option, no taxable income is
recognized upon exercise of the Incentive Stock Option and the Company will not
be entitled to a tax deduction by reason of such exercise; provided that, the
holder is still employed by the Company (or terminated employment no longer than
three months before the exercise date). Additional exceptions to this exercise
timing requirement apply upon the death or disability of the Optionee. If the
Optionee disposes of the shares acquired pursuant to the exercise of an
Incentive Stock Option more than two years after the date of grant and more than
one year after the exercise, the Optionee will recognize long-term capital gain
or loss in the amount of the difference between the amount realized on the sale
and the exercise price for such shares and the Company will not be entitled to a
deduction. Generally, upon a sale or disposition of the shares prior to the
foregoing holding requirements (referred to as "disqualifying disposition"), the
Optionee will recognize ordinary compensation income, and the Company will
receive a corresponding deduction equal to the lesser of (i) the excess of the
fair market value of the shares on the date of transfer to the Optionee over the
exercise price, or (ii) the excess of the amount realized on the disposition
over the exercise price.
Upon the exercise of a Non-Qualified Option, the amount by which the
fair market value of the shares on the date of exercise exceeds the exercise
price will be taxed to the Optionee as ordinary compensation income. The Company
will generally be entitled to a deduction in the same amount; provided that, it
satisfies certain requirements relating to the terms of the Option and makes all
required wage withholdings on the compensation element attributable to the
exercise. In general, the Optionee's tax basis in the shares acquired by
exercising a Non-Qualified Option is equal to the fair market value of such
shares on the date of exercise. Upon a subsequent sale of any such shares in a
taxable transaction, the Optionee will realize capital gain or loss in an amount
equal to the difference between his or her basis in the shares and the sales
price.
In addition to the federal income tax consequences described above, an
Optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the Optionee's regular tax. For this purpose, upon the
exercise of an Incentive Stock Option, the excess of the fair market value of
the shares over the exercise price therefor is an adjustment which increases
alternative minimum taxable income. In addition, the Optionee's basis in such
shares is increased by such amount for purposes of computing the gain or loss on
the disposition of the shares for alternative minimum purposes. If an optionee
is required to pay an alternative minimum tax, the amount of such tax which is
attributable to deferral preferences (including the incentive stock option
adjustment) is allowed as a credit against the Optionee's regular tax liability
in subsequent years. To the extent the credit is not used, it is carried
forward.
To the extent required by applicable federal, state, local or foreign
law, the recipient of any payment or distribution under the Stock Option Plan
will make arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise by reason of such payment or
distribution. The Company will not be required to make such payment or
distribution until such obligations are satisfied.
OUTSTANDING STOCK OPTION AWARDS
The benefits to be awarded to and received by the employees, directors
and consultants of the Company under the Stock Option Plan, as proposed to be
amended, in the future are not presently determinable. The benefits that would
have been received by the employees, directors and consultants of the Company
for the last completed fiscal year if the Stock Option Plan, as proposed to be
amended, had been in effect is not presently determinable. All shares currently
subject to Options, as well as any additional shares that may become subject to
future Options (including the proposed increase in shares subject to stockholder
approval), under the Stock Option Plan are comprised of authorized but unissued
shares of Common Stock. Accordingly, the exercise of any such Options and the
issuance of shares pursuant thereto will have the effect of diluting the
interests of existing stockholders to the extent of such issuance.
11
<PAGE>
The table below sets forth the number of shares subject to current
Options granted under the Stock Option Plan to date to (i) the Named Executives;
(ii) each nominee for election as a director; (iii) all current executive
officers as a group; (iv) all current directors who are not executive officers
as a group; and (v) all employees and consultants who are not executive
officers, as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME TITLE SUBJECT TO OPTIONS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Frank R. Cohen Chairman of the Board and 105,000
Chief Executive Officer
Robert Genova Director and President 30,000
Donald K. Roberton Director 50,000
Richard G. Maresca Director 30,000
Csaba Toro Director and Vice President 50,000
Current executive officers as a group 185,000
(3 persons)
Current directors who are not executive 80,000
officers, as a group (2 persons)
Employees and consultants who are not 75,000
executive officers, as a group (4 persons)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendations of the Board of Directors with
respect to the increase in the number of shares available under the Stock Option
Plan, stock holders should be aware that the members of the Board of Directors
have certain interests which may present them with conflicts of interest in
connection with such proposal. As discussed above, all current directors of the
Company are eligible to participate in the Stock Option Plan.
The Board of Directors recognizes that approval of the proposal to
increase the number of shares available under the Stock Option Plan may benefit
such individual directors of the Company and their successors, but it believes
that approval of the additional shares available under the Stock Option Plan
will strengthen the Company's ability to continue to attract, motivate and
retain certain qualified employees and officers. Furthermore, the Board of
Directors believes that such approval will advance the interests of the Company
and its stockholders by encouraging key employees, directors and consultants to
make significant contributions to the long-term success of the Company. The
Board of Directors believes that the increase in the number of shares available
under the Stock Option Plan is in the best interests of the Company and its
stockholders, and therefore, unanimously recommends a vote FOR the approval of
the proposal to increase the number of shares of Common Stock available under
the Stock Option Plan from the current 350,000 shares to 670,000 shares for use
as incentive awards for key employees, directors and consultants. In considering
the foregoing recommendation of the Board of Directors, stockholders should be
aware that the current members of the Board of Directors own, in the aggregate,
630,000 shares of Common Stock or approximately 9.7% of the shares of the
Company's issued and outstanding Common Stock, assuming full exercise of options
and warrants exercisable by them within 60 days of the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER
THE STOCK OPTION PLAN FROM 350,000 SHARES TO 670,000
12
<PAGE>
SHARES FOR USE AS INCENTIVE AWARDS TO CERTAIN KEY EMPLOYEES,
DIRECTORS AND CONSULTANTS.
III
RATIFICATION OF THE APPOINTMENT OF AUDITORS
(ITEM 3 ON THE PROXY CARD)
The Board of Directors has appointed the firm of BDO Seidman, LLP as
independent auditors of the Company for the year ending December 31, 1999,
subject to ratification of the appointment by the Company's stockholders. A
representative of BDO Seidman, LLP is expected to attend the Meeting to respond
to appropriate questions and will have an opportunity to make a statement if he
or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1999 Annual
Meeting must be received by the Company by October 1, 1998 for possible
inclusion in the proxy materials relating to such meeting.
OTHER BUSINESS
The Board of Directors is not aware of any matter other than the
matters described above to be presented for action at the Meeting. However, if
any other proper items of business should come before the Meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
By Order of the Board of Directors
/s/Frank R. Cohen
---------------------
Frank R. Cohen
Chairman of the Board
Dated: April 23, 1999
New York, New York
13
<PAGE>
EUROWEB INTERNATIONAL CORP.
ANNUAL MEETING OF STOCKHOLDERS - TO BE HELD MAY
21, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby appoints ROBERT GENOVA
and FRANK R. COHEN, and each of them, with full power of substitution in each,
as proxies for the undersigned, to represent the undersigned and to vote all the
shares of Common Stock of the Company which the undersigned would be entitled to
vote, as fully as the undersigned could vote and act if personally present, at
the Annual Meeting of Stockholders (the "Meeting") to be held on May 21, 1999,
at 10:00 a.m. local time, at the offices of Cohen & Cohen, New York, New York
10022, or at any adjournments or postponements thereof.
Should the undersigned be present and elect to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR DIRECTOR
AND EACH OF THE LISTED PROPOSALS.
(1) The election as directors of all nominees listed below to serve until the
2000 Annual Meeting of Stockholders or until their successors have been
duly elected and qualified (except as marked to the contrary).
INSTRUCTION: To withhold your vote for any individual nominee, strike a
line in that nominee's name in the list below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FRANK R. COHEN ROBERT GENOVA RICHARD MARESCA DONALD K. ROBERTON CSABA TORO
2) Proposal to increase the number of shares of the Company's common stock
available under the Company's 1993 Incentive Stock Option Plan, as
amended, from 350,000 shares to 670,000 for use as incentive awards for
certain key employees, directors and consultants.
FOR |_| AGAINST |_| ABSTAIN |_|
3) Ratification of the appointment of BDO Seidman, LLP as auditors of the Company for the fiscal year ending December 31, 1999.
FOR |_| AGAINST |_| ABSTAIN |_|
</TABLE>
The shares represented by this proxy will be voted as directed by the
stockholder, but if no instructions are specified, this proxy will be voted for
the election of the Board nominees and for the listed proposals. If any other
business is presented at the Meeting, this proxy will be voted by those named in
this proxy in their best judgment. At the present time, the Board of Directors
knows of no other business to be presented at the Meeting.
PLEASE MARK, DATE AND SIGN AS YOUR NAME(S) APPEAR(S) TO THE LEFT AND
RETURN IN THE ENCLOSED ENVELOPE. IF ACTING AS AN EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS, ETC., YOU SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS
CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME, BY DULY AUTHORIZED OFFICER. IF
SHARES ARE HELD JOINTLY, EACH SHAREHOLDER NAMED SHOULD SIGN.
The undersigned acknowledges receipt
from the Company, prior to the
execution of this proxy, of the
Notice of Annual Meeting and
accompanying Proxy Statement relating
to the Meeting and an Annual Report
to Stockholders for the fiscal year
ended December 31, 1998.
DATED: , 1999
Signature
