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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
(section) 240.14a-12
EDG Capital, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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)(1) 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 Rules 14a-6(i)(1) and 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
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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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(4) Date Filed:
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EDG CAPITAL, INC.
700 STEWART AVENUE
GARDEN CITY, NEW YORK 11530
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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TO BE HELD ON AUGUST 16, 2001
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The annual meeting of shareholders of EDG Capital, Inc. will be held at
the offices of Davis & Gilbert LLP, 1740 Broadway, New York, New York 10019, on
August 16, 2001, at 10:00 a.m. The matters to be considered and voted upon at
the meeting are set forth below and more fully described in the attached proxy
statement:
o The election of five (5) directors to serve until the next
annual meeting of shareholders and until their respective
successors are duly elected and qualified;
o A proposal to adopt our 2000 Long-Term Incentive Plan under
which options to purchase shares of common stock may be
granted to our directors, officers, employees and consultants;
o A proposal to ratify the selection of Lazar, Levine & Felix
LLP as our independent public accountants for the fiscal year
ending December 31, 2001; and
o To transact such other business as may properly be brought
before the meeting or any postponement or adjournment thereof.
Our board of directors has fixed the close of business on June 29,
2001, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting or any adjournment thereof.
A copy of the 2000 Annual Report accompanies this notice.
By order of the Board of Directors,
Shraga David Aranoff
Secretary
Garden City, New York
July 20, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
EDG CAPITAL, INC.
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished to our shareholders in connection
with the solicitation of proxies, in the accompanying form, by our board of
directors for use in voting at the annual meeting of shareholders, to be held at
the offices of Davis & Gilbert LLP, 1740 Broadway, New York, New York 10019, on
August 16, 2001, at 10:00 a.m., and at any and all adjournments thereof.
On or about July 20, 2001, this proxy statement and the accompanying
form of proxy are being mailed to each shareholder of record at the close of
business on June 29, 2001.
Our principal executive offices are located at 700 Stewart Avenue,
Garden City, New York 11530.
QUESTIONS AND ANSWERS
WHAT MATTERS AM I VOTING ON?
You are being asked to vote on the following matters:
o The election of five (5) directors to serve until the next
annual meeting of shareholders and until their respective
successors are duly elected and qualified;
o A proposal to adopt the 2000 Long-Term Incentive Plan under
which options to purchase shares of our common stock may be
granted to our directors, officers, employees and consultants;
and
o A proposal to ratify the selection of Lazar, Levine & Felix
LLP as our independent public accountants for the fiscal year
ending December 31, 2001.
WHO IS ENTITLED TO VOTE?
Persons who were holders of our common stock as of the close of
business on June 29, 2001, the record date, are entitled to vote at the meeting.
As of June 29, 2001, we had issued and outstanding 11,052,232 shares of common
stock, comprising all of our issued and outstanding voting stock.
Each holder of our common stock is entitled to one vote for each share
held on the record date.
All share amounts and prices in this proxy statement reflect our
2.57315-for-one common stock split, which was effected by us in August 2000 in
the form of a common stock dividend, and the issuance of an aggregate of
7,440,005 shares of our common stock in September 2000 to the former
shareholders of our subsidiary ISI in exchange for their shares of ISI's capital
stock.
WHAT IS THE EFFECT OF GIVING A PROXY?
Proxies in the form enclosed are solicited by and on behalf of the
board. The persons named in the proxy have been designated as proxies by the
board. If you sign and return the proxy in accordance with the procedures set
forth in this proxy statement, the persons designated as proxies by the board
will vote your shares at the meeting as specified in your proxy.
If you sign and return your proxy in accordance with the procedures set
forth in this proxy statement but you do not provide any instructions as to how
your shares should be voted, your shares will be voted as follows:
o FOR the election of the nominees listed below under Proposal
I;
o FOR the proposal to approve the 2000 Long-Term Incentive Plan
as described below under Proposal II; and
o FOR the ratification of the selection of Lazar, Levine & Felix
LLP as our independent public accountants for the fiscal year
ending December 31, 2001, as described below under Proposal
III.
If you give your proxy, your shares also will be voted 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. In the
event that any other matters are properly presented at the meeting for action,
the persons named in the proxy will vote the proxies in accordance with their
best judgment.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Any proxy given pursuant to this solicitation may be revoked by you at
any time before it is exercised. You may revoke your proxy by:
o delivering written notification of your revocation to our
corporate secretary;
o voting in person at the meeting; or
o delivering another proxy bearing a later date.
Please note that your attendance at the meeting will not alone serve to
revoke your proxy.
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WHAT IS A QUORUM?
The presence, in person or by proxy, of a majority of the votes
entitled to be cast at the meeting will constitute a quorum at the meeting. A
proxy submitted by a shareholder may indicate that all or a portion of the
shares represented by the proxy are not being voted ("shareholder withholding")
with respect to a particular matter. Similarly, a broker may not be permitted to
vote stock ("broker non-vote") held in street name on a particular matter in the
absence of instructions from the beneficial owner of the stock. The shares
subject to a proxy that are not being voted on a particular matter because of
either shareholder withholding or broker non-vote will not be considered shares
present and entitled to vote on that matter. These shares, however, may be
considered present and entitled to vote on other matters and will count for
purposes of determining the presence of a quorum if the shares are being voted
with respect to any matter at the meeting. If the proxy indicates that the
shares are not being voted on any matter at the meeting, the shares will not be
counted for purposes of determining the presence of a quorum. Abstentions are
voted neither "for" nor "against" a matter, but are counted in the determination
of a quorum.
WHAT IS A "BROKER NON-VOTE"?
A "broker non-vote" occurs when a broker submits a proxy that states
that the broker does not vote for some of the proposals because the broker has
not received instructions from the beneficial owners on how to vote on such
proposals and does not have discretionary authority to vote in the absence of
instructions.
HOW DO I VOTE?
You may vote your shares by mail or, if you attend the meeting in
person, by ballot. The prompt return of the completed proxy card will help us
prepare for the meeting.
To vote by mail, date, sign and return the accompanying proxy in the
envelope enclosed for that purpose (to which no postage need be affixed if
mailed in the United States). You can specify your choices by marking the
appropriate boxes on the proxy card. If you attend the meeting, you may deliver
your completed proxy card in person or fill out and return a ballot that will be
supplied to you.
HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH MATTER?
o Proposal I, the election of directors, requires a plurality
vote of the voting stock voted at the meeting. "Plurality"
means that the individuals who receive the largest number of
votes cast "FOR" them are elected as directors. Any shares not
voted "FOR" a particular nominee (whether as a result of a
direction of the shareholder to withhold authority,
abstentions or broker non-vote) will not be counted in such
nominee's favor.
o Proposal II, the approval of the 2000 Long-Term Incentive
Plan, must be approved by the affirmative vote of a majority
of the votes cast at the meeting.
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o Proposal III, the ratification of Lazar, Levine & Felix LLP as
our independent public accountants for the fiscal year ending
December 31, 2001, must be approved by the affirmative vote of
a majority of the votes cast at the meeting.
Shares deemed present at the meeting but not entitled to vote on
Proposal II or III (because of either shareholder withholding or broker
non-vote) are not deemed "votes cast" with respect to such proposal and
therefore will have no effect on such vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of July 16, 2001, there were 11,052,232 shares of common stock of
EDG outstanding. Each share of common stock is entitled to one vote.
The following table sets forth as of July 16, 2001 the number of
shares of common stock beneficially owned by:
o each person who is known by us to be the beneficial owner of
more than five percent of our common stock;
o each of our directors; and
o all directors and executive officers as a group.
AMOUNT AND NATURE PERCENTAGE OF
OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP (2) SHARES OWNED(3)
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Jack Schwartzberg (4) 1,534,644 13.8%
Shraga David Aranoff (5) 150,807 1.4%
Harry Barnett (6) 0 *
Stanley F. Barshay (7) 0 *
Jay M. Haft (8) 60,000 *
Bruce Baron 2,264,959 20.5%
2509 Avenue U
Brooklyn, New York 11229
Robert G.M. Keating 1,020,496 9.2%
105 Sixth Street
Garden City, New York 11530
Dennis Shields 783,158 7.1%
15 South Baylis Avenue
Port Washington, New York 11050
All directors and executive officers as 1,745,451 15.6%
a group (five persons) (9)
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* Less than one percent.
(1) The address of each of the persons named in the table, if not included
under each person's name, is 700 Stewart Avenue, Garden City, New York
11530.
(2) Unless otherwise indicated, we believe that all persons named in the
table have sole voting and investment power for all shares of common
stock beneficially owned by them. A person is deemed to be the
beneficial owner of common stock that can be acquired by such person
within 60 days from July 16, 2001
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upon the exercise of options or warrants or the conversion of
convertible securities.
(3) Each beneficial owner's percentage ownership is determined by assuming
that options, warrants or convertible securities that are held by the
person (but not those held by any other person) and that are
exercisable within 60 days from July 16, 2001 have been exercised or
converted.
(4) Includes 58,333 shares subject to options that are currently
exercisable, subject to shareholder approval of the 2000 Long Term
Incentive Plan. Does not include 116,667 shares subject to options
that are not currently exercisable.
(5) Includes 33,333 shares subject to options that are currently
exercisable, subject to shareholder approval of the 2000 Long Term
Incentive Plan. Does not include 166,667 shares subject to options
that are not currently exercisable.
(6) Does not include 80,000 shares subject to options that are not
currently exercisable.
(7) Does not include 80,000 shares subject to options that are not
currently exercisable.
(8) Includes 10,000 shares subject to options that are currently
exercisable, subject to shareholder approval of the 2000 Long Term
Incentive Plan. Does not include 70,000 shares subject to options
that are not currently exercisable.
(9) Includes 101,666 shares subject to options that are currently
exercisable, subject to shareholder approval of the 2000 Long Term
Incentive Plan. Does not include 513,334 shares subject to options
that are not currently exercisable.
Information contained in this table about stock ownership was obtained
from our shareholders list, filings with governmental authorities, or from the
named individuals, directors and officers.
ACQUISITION OF ISOTOPE SOLUTIONS, INC.
On September 13, 2000, EDG acquired Isotope Solutions, Inc., a New York
corporation (formerly known as "Molecular Radiation Management, Inc."). To
effect the acquisition, all of ISI's outstanding capital stock, excluding its
treasury stock, which was canceled, was converted into the right to receive an
aggregate of 7,440,005 shares of EDG's common stock, and ISI was merged into a
wholly-owned subsidiary of EDG. Contemporaneously with the acquisition, EDG
effected a 2.57315-for-one stock split in the form of a stock dividend payable
to shareholders of record on August 23, 2000, and raised gross proceeds of
$2,100,000 in a private placement of 2,603,844 shares of common stock at a price
of $.8065 per share. All share and per share numbers in this proxy statement
have been adjusted to effect the acquisition of ISI and the stock split.
As a result of the transactions consummated on September 13, 2000, the
former shareholders of ISI collectively own an aggregate of 7,440,005 shares of
common stock, or approximately 67% of the 11,052,232 outstanding shares of
common stock.
In connection with the acquisition of ISI, Linda Green and Seth Green
resigned as directors of EDG, the board of directors was increased to six
persons and Jack Schwartzberg, Shraga David Aranoff, Robert G. M. Keating, Gail
Shields, Jay M. Haft and Maurice Kolodin, all nominees of the former
shareholders of ISI, became the new directors to fill the vacancies on the
board.
On January 5, 2001, Robert G.M. Keating and Maurice Kolodin resigned
from the board and on January 15, 2001, Gail Shields resigned from the board. On
January 15, 2001, the remaining directors elected Stanley F. Barshay to fill one
of the vacancies on the board. The size of the board was reduced to five persons
by resolution adopted at a meeting of the board held on January 22, 2001.
Subsequently, on May 4, 2001, the board elected Harry Barnett to fill the
remaining vacancy on the board.
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PROPOSAL I
ELECTION OF DIRECTORS
The board presently consists of five directors. The incumbent directors
are Jack Schwartzberg, Shraga David Aranoff, Harry Barnett, Stanley F. Barshay
and Jay M. Haft. The board is not classified.
Five persons will be elected at the meeting to serve as directors for a
term of one year. The board has nominated Jack Schwartzberg, Shraga David
Aranoff, Harry Barnett, Stanley F. Barshay and, Jay M. Haft, the incumbent
directors, as the candidates for election. Unless otherwise specified in the
form of proxy, the proxies solicited by management will be voted "FOR" the
election of these candidates. In case any of these nominees becomes unavailable
for election to the board, an event that is not anticipated, the persons named
as proxies, or their substitutes, shall have full discretion and authority to
vote or refrain from voting for any other nominee in accordance with their
judgment. The following information was furnished by the nominees:
INFORMATION CONCERNING NOMINEES
The following table sets forth the names of the nominees and certain
information with regard to each nominee as of the record date:
NAME AGE TITLE
---- --- -----
Jack Schwartzberg 66 Chief Executive Officer, President, and Chairman of the Board of Directors
Shraga David Aranoff 33 Chief Operating Officer, Vice President, Treasurer and Director
Harry Barnett 39 Director
Stanley F. Barshay 61 Director
Jay M. Haft 65 Director
JACK SCHWARTZBERG has served as the Chairman of the Board, Chief Executive
Officer, and President of EDG since September 13, 2000. He has been Chairman of
the Board, Chief Executive Officer and President of ISI since November 1997. He
served as a Vice President of Complete Management, Inc., a New York Stock
Exchange physician practice management company, from 1994 to June 1997 and as a
marketing consultant to Complete Management, Inc. from June 1997 to October
1997. Mr. Schwartzberg was president and publisher of Madison Avenue Magazine
and Runway New York Publishing Company from 1976 to 1993. Mr. Schwartzberg
practiced law as a partner in the law firm of Schwartzberg & Sack from 1963 to
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1976. He holds a J.D. degree from Brooklyn Law School and a B.A. degree from
Hunter College. Mr. Schwartzberg was also a commissioned officer in the United
States Navy, serving as Commanding Officer of the United States Naval Base in
South Portland, Maine, from 1957 to 1960.
SHRAGA DAVID ARANOFF has served as the Chief Operating Officer and Vice
President of EDG, as a Director of EDG since September 13, 2000 and as EDG's
Treasurer since September 25, 2000. He has been Chief Operating Officer and Vice
President of ISI since August 1998. He served as a consultant to ISI from ISI's
inception in November 1997 and joined ISI on a full-time basis in August 1998.
Mr. Aranoff was Director of Medical / Legal Affairs for Complete Management,
Inc. from October 1996 through July 1998. He was an attorney with the law firm
of Slotnick, Shapiro & Crocker, LLP from August 1994 to September 1996. From
1991 to 1994, Mr. Aranoff was a law student. From 1989 to 1991 Mr. Aranoff was a
programmer analyst for Goldman Sachs & Company. He holds a J.D. from Benjamin N.
Cardozo School of Law and a B.S. degree, summa cum laude, in Computer Science
from Brooklyn College.
HARRY BARNETT has served as a director of EDG since May 4, 2001. He has been the
manager of Clinical Assistance Programs LLC, a company he founded that provides
comprehensive training and consulting services to biotechnology and
pharmaceutical companies conducting clinical trials, since December 1999, and
the manager of Biomodels LLC, a full-service, pre-clinical research firm
affiliated with Brigham and Women's Hospital that he founded, since January
1997. He has also been the president of the corporate general partner of IBT,
LP, which holds the exclusive rights to a patent for the treatment of heartburn
used in the over-the-counter product Pepcid Complete, since January 1996. From
1993 to June 1997, Mr. Barnett was Vice President and General Counsel of Faneuil
Advisors, Inc., a mortgage acquisition and investment banking firm. Mr. Barnett
is a graduate of Tufts University and holds a J.D. degree from Boston University
School of Law.
STANLEY F. BARSHAY has served as a director of EDG since January 15, 2001. He
retired in 1997 as Senior Vice President of American Home Products Corporation,
where he was employed for 32 years in various capacities. He was President of
the Whitehall Laboratories division of American Home Products Corporation from
1978 to 1986. He served as Vice President of American Home Products Corporation
from 1975 to 1977. He was the President of its Boyle-Midway Household Products
Corporation subsidiary from 1972 to 1974 and he held various other positions
with Boyle-Midway from 1964 to 1971. He holds a B.S. in Business Administration
from Long Island University. Mr. Barshay serves on the Executive Committee of
the Board of Trustees of Long Island University. He also serves on the Board of
Directors of Nice-Pak Corp. and J.C.C.A.
JAY M. HAFT has served as a director of EDG since September 13, 2000. He has
acted as a strategic and financial consultant for growth stage companies since
1993. He is also currently of counsel to Parker Duryee Rosoff & Haft, a law firm
of which he was a partner from 1989 to 1994. He has been a managing general
partner of GenAm "1" Venture Fund, an international venture capital fund, since
1988. He is a director of Robotic Vision Systems, Inc., NCTI Group, Inc., DCAP
Group, Inc., Encore Medical Corporation, DUSA Pharmaceuticals, Inc., Oryx
Technology Corp. and Thrift Management, Inc. He is a Trustee of Florida
International
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University and a Trustee of the Wolfsonian Museum. He is a graduate of Yale
College and Yale Law School.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
Our board did not meet at all during 2000, but acted by written consent
on six occasions. The board has held one meeting in 2001 through the date of
this proxy statement.
The board does not currently maintain any standing committees.
All directors are reimbursed for certain expenses in connection with
attendance at board meetings. Directors are also eligible to be granted options
to purchase shares of our common stock under the 2000 plan. Other than with
respect to participation in the 2000 plan and reimbursement of expenses,
directors who are employees or officers or who are associated with EDG do not
receive compensation for service as directors.
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid to Jack Schwartzberg, our Chief Executive Officer, for
services rendered by him in all capacities for the fiscal years ended December
31, 2000, 1999 and 1998 and to Shraga David Aranoff, our Chief Operating
Officer, for services rendered by him in all capacities for the fiscal year
ended December 31, 2000. There were no other executive officers whose total
annual salary and bonus exceeded $100,000 for those fiscal years. We sometimes
refer to Messrs. Schwartzberg and Aranoff in this proxy statement as the Named
Executive Officers.
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ANNUAL COMPENSATION
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OTHER ANNUAL
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
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Jack Schwartzberg 2000 200,000 - 29,161(1)
Chairman, CEO and President 1999 200,000 - 30,673(1)
1998 200,000 - 28,167(1)
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Shraga David Aranoff 2000 103,333 - 22,081(1)
COO, Vice President and Treasurer
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(1) Includes costs associated with a leased automobile and health benefits
package.
STOCK OPTION GRANTS
The following table sets forth certain information about stock options
granted during 2000 to the Named Executive Officers.
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PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE PRICE
NAME UNDERLYING OPTIONS GRANTED EMPLOYEES IN 2000 ($/SH) EXPIRATION DATE
- -------------------------------------------------------------------------------------------------------------
Jack Schwartzberg 175,000 57.8% $.8872 09/13/05
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Shraga David Aranoff 100,000 33.0% $.8065 09/13/10
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STOCK OPTION EXERCISES AND HOLDINGS
The Named Executive Officers did not exercise any options in 2000. The
following table sets forth the number of shares of common stock underlying
unexercised options held by the Named Executive Officers at December 31, 2000.
At December 31, 2000, neither Named Executive Officer held any "in-the-money"
stock options.
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NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT DECEMBER 31, 2000
NAME EXERCISABLE/UNEXERCISABLE
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Jack Schwartzberg 0/175,000
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Shraga David Aranoff 0/100,000
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EMPLOYMENT AGREEMENTS
Effective September 8, 2000, EDG and Jack Schwartzberg entered into an
employment agreement for a term ending on September 7, 2003, subject to
automatic extension thereafter until either party gives 180 days' advance notice
of termination to the other party. The employment agreement provides for an
annual salary of $200,000, a cash bonus based on performance in an amount to be
determined by our board of directors, the grant of options to purchase 175,000
shares of our common stock at a price of $.8872 per share under the 2000 plan,
subject to the approval by our shareholders, one leased automobile at our
expense and participation in other executive and employee benefit programs if
and when put into effect by us. Mr. Schwartzberg may be discharged for cause,
including failure or refusal to perform his duties, misappropriation of our
funds or property, the use of alcohol or illegal drugs in a manner that
interferes with his duties to us, and conviction of a felony or a crime
involving moral turpitude, dishonesty or theft. Mr. Schwartzberg may terminate
the employment agreement for "good reason," including the assignment to Mr.
Schwartzberg of any duties inconsistent with his position, our requiring him to
be based at an office outside the New York City metropolitan area without his
consent, a failure by us to comply with the compensation provisions of the
agreement, any other material breach by us of the employment agreement, Mr.
Schwartzberg's removal as a director or a change in control of EDG (as defined
in the employment agreement). If the employment agreement is terminated by Mr.
Schwartzberg for good reason or by us other than for cause or at any time after
the end of the initial term, Mr. Schwartzberg will be entitled to be paid his
base salary and bonus through the later of September 7, 2004 or the 12-month
anniversary of the date of termination, he will be entitled to continue to
participate during such period in all executive and employee benefit programs,
and his stock options will become fully vested. The employment agreement
includes noncompete restrictions during its term and for 12 months thereafter
and a confidentiality provision.
Effective September 8, 2000, EDG and Shraga David Aranoff entered into
an employment agreement for a term ending on September 7, 2003, subject to
automatic extension thereafter until either party gives 90 days' advance notice
of termination to the other party. The employment agreement provides for an
annual salary of $125,000, a cash bonus based on performance in an amount to be
determined by our board of directors, the grant of options to
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purchase 100,000 shares of our common stock at a price of $.8065 per share under
the 2000 plan, subject to approval by our shareholders, one leased automobile at
our expense and participation in other executive and employee benefit programs
if and when put into effect by us. Mr. Aranoff may be discharged for cause,
including failure or refusal to perform his duties, misappropriation of our
funds or property, the use of alcohol or illegal drugs in a manner that
interferes with his duties to us, and conviction of a felony or a crime
involving moral turpitude, dishonesty or theft. Mr. Aranoff may terminate the
employment agreement for "good reason," including the assignment to Mr. Aranoff
of any duties inconsistent with his position, our requiring him to be based at
an office outside the New York City metropolitan area without his consent, a
failure by us to comply with the compensation provisions of the employment
agreement, any other material breach by us of the employment agreement, Mr.
Aranoff's removal as a director or a change in control of EDG (as defined in the
employment agreement). If the employment agreement is terminated by Mr. Aranoff
for good reason or by us other than for cause or at any time after the end of
the initial term, Mr. Aranoff will be entitled to be paid his base salary and
bonus through the later of September 7, 2003 or the three-month anniversary of
the date of termination, he will be entitled to continue to participate during
such period in all executive and employee benefit programs, and his stock
options will become fully vested. The employment agreement includes noncompete
restrictions during its term and for 12 months thereafter and a confidentiality
provision.
2000 LONG-TERM INCENTIVE PLAN
In September 2000, our board of directors adopted, subject to the
approval of our shareholders, the EDG Capital, Inc. 2000 Long-Term Incentive
Plan. The 2000 plan was established to enable EDG and its subsidiaries to
attract, retain and motivate employees, directors and consultants. The 2000 plan
authorizes the grant of individual incentive stock options or non-qualified
options to purchase shares of our common stock. The maximum number of shares
that may be issued under the 2000 plan is 1,247,983, subject to adjustment in
the event of stock splits, stock dividends, split-ups, spin-offs, combinations
or exchanges or any other change affecting the common stock. Unless we terminate
it earlier, the 2000 plan will expire on December 31, 2010. Employees,
directors, advisory board members or consultants of EDG or a subsidiaries of EDG
are eligible to receive options under the 2000 plan. The 2000 plan is
administered by our board of directors, which determines the persons to whom
awards will be granted, the number of options to be granted and the specific
terms of each grant. Under the 2000 plan, no incentive stock option may be
granted having a term of more than 10 years and an exercise price less than the
fair market value of our common stock on the date of grant, and no incentive
stock option having a term of more than five years and an exercise price less
than 110% of the fair market value of our common stock on the date of grant may
be granted to a person who holds 10% or more of our outstanding common stock. We
describe the 2000 plan in more detail in the discussion of Proposal II below.
As of July 16, 2001, options to purchase an aggregate of 958,000
shares are outstanding under the 2000 plan, all of which are subject to the
approval of the 2000 plan by our shareholders.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who beneficially own more than 10
percent of our common stock to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock. Executive officers,
directors and greater-than-ten percent shareholders are required by SEC
regulations to furnish us with copies of all such reports they file. To our
knowledge, based solely on review of the copies of such reports furnished to us
and written representations that no other reports were required during the year
ended December 31, 2000, all filings under Section 16(a) were made as required.
CERTAIN TRANSACTIONS
No member of our current management and no beneficial owner of five
percent or more of our outstanding common stock has had any transactions with
EDG or ISI during the past year, nor proposes any such transaction, in which the
amount involved exceeded $60,000, except as follows:
Jack Schwartzberg, Shraga David Aranoff, directors and officers of EDG
Capital, and Bruce Baron, Robert G.M. Keating and Dennis Shields, who each hold
five percent or more of our outstanding common stock, received their shares of
our common stock in exchange for their shares of ISI on September 13, 2000 in
connection with EDG's acquisition of ISI.
As of September 8, 2000, Jack Schwartzberg and Shraga David Aranoff
entered into the employment agreements with EDG described in the section of this
proxy statement entitled "Executive Compensation".
In connection with EDG's acquisition of ISI, EDG and each of Jack
Schwartzberg, Robert G.M. Keating, Bruce Baron, Dennis Shields, Shraga David
Aranoff and certain other former shareholders of ISI entered into a registration
rights agreement. The registration rights agreement gives Messrs. Schwartzberg,
Keating, Shields and Aranoff and the other former shareholders of ISI who signed
the registration rights agreement the right to have their shares of common stock
of EDG included in any registration statement we file, except for the
registration statement we filed in February 2000 covering the resale of certain
shares we issued in a private placement in September 2000 and subject to certain
other customary exceptions. All of the former shareholders of ISI have agreed
that in the event their shares of our common stock are included in a
registration statement filed by us for an underwritten public offering, if
requested by the managing underwriter, they will agree not to sell or otherwise
transfer the shares without the consent of the managing underwriter for a period
of up to one year following consummation of the underwritten offering.
11
PROPOSAL II
APPROVAL OF THE 2000 LONG-TERM INCENTIVE PLAN
In September 2000, our board adopted the 2000 Long-Term Incentive Plan,
subject to shareholder approval at the annual meeting. EDG is a growing company
that operates in an intensely competitive industry. A particularly competitive
area of our business is attracting and retaining talented employees and medical
groups comprised of talented physicians. It is our policy to compensate
employees and physicians in the medical groups we manage with stock options in
order to incentivize them and align their interests with those of our
shareholders.
It is imperative that we continue to attract and retain quality
employees and medical groups in order to continue our growth and effect our
business plan. If we are unable to do this, we will be at a significant
competitive disadvantage in the marketplace and shareholder value could be
adversely impacted. The ability to continue to compensate employees and
consultants with stock options is key to competing for talent. For these
reasons, we are requesting that the shareholders approve the 2000 plan.
The board of directors recommends voting "FOR" Proposal II.
SUMMARY OF THE 2000 PLAN
ADMINISTRATION
The 2000 plan is administered by the board. The board has full
authority, subject to the provisions of the 2000 plan, to award stock options.
The board determines, among other things, the persons to whom from time to time
stock options may be granted, the number of shares subject to each stock option,
exercise prices, any restrictions or limitations on stock option awards, and the
vesting, surrender, cancellation, acceleration, termination, exercise or
forfeiture provisions related to stock option awards.
STOCK SUBJECT TO THE 2000 PLAN
The 2000 plan authorizes the grant of stock options the exercise of
which would allow up to an aggregate of 1,247,983 shares of common stock to be
acquired by the holders of such stock options. In order to prevent the dilution
or enlargement of the rights of participants, the number of shares of common
stock authorized by the 2000 plan is subject to adjustment by the board in the
event of any dividend on shares of common stock payable in shares of common
stock, stock split, reverse stock split or other extraordinary or unusual event
that results in a change in the shares of common stock as a whole. In the event
of any of the foregoing, the board will make equitable adjustments in the terms
of any awards and the aggregate number of shares reserved for issuance under the
2000 plan. There are presently options outstanding under the 2000 plan to
purchase an aggregate of 958,000 shares of common stock, all of which have been
granted subject to the approval of the 2000 plan by our shareholders.
12
If any stock option granted under the 2000 plan is forfeited,
surrendered, canceled, terminated or settled in cash in lieu of common stock,
the shares of common stock that were available pursuant to such stock option
shall again be available for distribution in connection with stock options
subsequently granted under the 2000 plan.
ELIGIBILITY
Subject to the provisions of the 2000 plan, stock options may be
granted to employees, officers, directors, advisory board members and
consultants who are responsible for or contribute to the management, growth and
protection of the business of EDG and its wholly- or majority-owned subsidiaries
or whose performance or contribution benefits or will benefit EDG. Incentive
Stock Options, as defined below, may be granted only to persons who, at the time
of grant, are, or have agreed to become, employees of EDG or its wholly- or
majority-owned subsidiaries. As of the date of this proxy statement, an
aggregate of 12 employees of, and consultants to, EDG and/or ISI, and three
non-employee directors of EDG, are eligible to participate in the 2000 Plan.
There are limits on the number of shares of common stock underlying
stock options to be granted under the 2000 plan to any one participant in any
calendar year and to all participants in any one calendar year.
TYPES OF OPTIONS
The 2000 plan provides both for "incentive" stock options ("Incentive
Stock Options") as defined in Section 422 of the Code and for options not
qualifying as incentive options ("Non-Qualified Stock Options"). The board
determines the exercise price per share of common stock purchasable under an
Incentive or Non-Qualified Stock Option. The exercise price of Incentive Stock
Options may not be less than 100% of the fair market value on the day of the
grant. However, the exercise price of an Incentive Stock Option granted to a
person who owns more than 10% of the total combined voting power of all classes
of EDG's stock may not be less than 110% of such fair market value on the date
of grant. An Incentive Stock Option may be exercised only within ten years from
the date of the grant (or within five years in the case of an Incentive Stock
Option granted to a person who, at the time of the grant, owns stock possessing
more than 10% of the total combined voting power of all classes of EDG's stock).
Subject to vesting provisions and any limitations or conditions the board may
impose, a stock option may be exercised, in whole or in part, at any time during
the term of the stock option by giving written notice of exercise to EDG
specifying the number of shares of common stock to be purchased. Such notice
must be accompanied by payment in full of the purchase price, either in cash, by
certified check, bank draft or money order or, if permitted by the board and
applicable law, by delivery of, alone on in conjunction with a partial cash or
instrument payment, a fully-secured promissory note or notes, shares of common
stock already owned by the participant for at least six months, or some other
form of payment approved by the board. The board may also permit a participant
to simultaneously exercise a stock option and sell the shares of common stock
thereby acquired on a "cashless exercise" basis.
13
Generally, stock options granted under the 2000 plan may not be
transferred other than by will or by the laws of descent and distribution.
Generally, if a participant's employment with EDG terminates for any
reason any then unexercisable stock options will be forfeited and canceled and
any then exercisable stock options will be forfeited and canceled 90 days after
the date the participant's employment terminates unless the stock options
terminate sooner by their terms. The board may determine that exercisable stock
options may remain exercisable for an additional specified period, but not
beyond the stated term of the stock options. If a participant's employment
terminates due to death, retirement or disability, the participant or his
representative will have the right, with respect to stock options that were
exercisable immediately prior to the termination of employment, to exercise the
stock options at any time during the one year period following the termination
of employment (but not beyond the stated term of the stock options).
WITHHOLDING TAXES
The board may deduct from the exercise of any stock option, or any
other payment or settlement under the 2000 plan, any federal, state, local or
other taxes of any kind that the board determines to be necessary to be withheld
to comply with applicable law, rule or regulation. If the board permits common
stock to be used to satisfy any withholding requirement, the common stock will
be valued at the fair market value of EDG's common stock on the date the tax
withholding is required to be made.
AGREEMENTS
Stock options granted under the 2000 plan will be evidenced by
agreements consistent with the 2000 plan in such form and having such additional
terms (not contrary to the requirements of the 2000 plan) as the board may
prescribe. Neither the 2000 plan, the grant of any stock options nor the
execution of any stock option agreement confer any right to continued employment
upon any participant.
TERM AND AMENDMENTS
Unless terminated by the board, the 2000 plan will terminate on
December 31, 2010, except with respect to stock options then outstanding. The
board may at any time, and from time to time, amend the 2000 plan, but no
amendment may be made that would materially impair the rights of a participant
under any agreement entered into pursuant to the 2000 plan without the
participant's consent.
MERGERS AND CHANGES IN CONTROL
The 2000 plan provides that in the event of a merger or consolidation
of EDG with another entity, participants will be entitled to receive substitute
options that substantially preserve the value, rights and benefits of the
options they had before the merger or consolidation, subject to the right of EDG
to instead pay them cash equal to the difference between the fair market value
of the stock underlying their options and the exercise price of the options.
14
The 2000 plan also contains certain change in control provisions that
could cause stock options to become immediately exercisable in the event:
o any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934)
acquires voting or investment control over 50% or more of
EDG's common stock or voting securities, subject to exceptions
for acquisitions by employee benefit plans sponsored by EDG or
a subsidiary, underwriters in connection with firm commitment
offerings of securities to be issued by EDG, or by any
corporation if the ownership of the acquiring corporation is
substantially the same as the ownership of EDG before the
acquisition.
o members of the board on the effective date of the 2000 plan
(together with any directors elected after the effective date
whose election by the board or whose nomination for election
by the shareholders of EDG was approved by a vote of at least
two thirds of the directors then in office who were directors
on the effective date of the 2000 plan or whose election or
nomination was previously so approved but excluding any
director who became a director as a result of any actual or
threatened election contest) cease for any reason to
constitute a majority of the board of directors.
o of a reorganization, merger or consolidation of EDG, or the
approval by EDG's shareholders of a reorganization, merger or
consolidation of EDG, other than one in which the ownership of
the corporation resulting from such merger or consolidation is
substantially the same as the ownership of EDG before the
acquisition.
o of a complete liquidation or substantial dissolution of EDG,
or the sale or other disposition of all or substantially all
of the assets of EDG, or the approval by EDG's shareholders of
such an event or transaction, other than a sale of assets to a
wholly owned subsidiary or pursuant to a transaction in which
the ownership of the corporation or other business entity
acquiring the assets is substantially the same as the
ownership of EDG before the acquisition.
o of the occurrence of any other event that EDG would be
required to report in response to Item 1 (changes in control)
or Item 2 (acquisition or disposition of assets) of Form 8-K
under the Securities Exchange Act of 1934.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of
participation in the 2000 plan is only a summary of the general rules applicable
to the grant and exercise of stock options and does not give specific details or
cover, among other things, state, local and foreign tax treatment of
participation in the 2000 plan. The information contained in this section is
based
15
on present law and regulations, which are subject to being changed prospectively
or retroactively.
INCENTIVE STOCK OPTIONS
A participant will recognize no taxable income upon the grant of an
Incentive Stock Option. The participant will realize no taxable income when the
Incentive Stock Option is exercised if the participant has been an employee of
EDG or its subsidiaries at all times from the date of the grant until three
months before the date of exercise (one year if the participant is disabled).
EDG will not qualify for any deduction in connection with the grant or exercise
of Incentive Stock Options. Upon a disposition of the shares after the later of
two years from the date of grant or one year after the transfer of the shares to
the participant, the participant will recognize the difference, if any, between
the amount realized and the exercise price as long-term capital gain or
long-term capital loss (as the case may be) if the shares are capital assets.
The excess, if any, of the fair market value of the shares on the date of
exercise of an Incentive Stock Option over the exercise price will be treated as
an item of adjustment for a participant's taxable year in which the exercise
occurs and may result in an alternative minimum tax liability for the
participant.
If common stock acquired upon the exercise of an Incentive Stock Option
is disposed of prior to the expiration of the holding periods described above,
the participant will recognize ordinary compensation income in the taxable year
of disposition in an amount equal to the excess, if any, of the lesser of the
fair market value of the shares on the date of exercise or the amount realized
on the disposition of the shares, over the exercise price paid for such shares,
and we will qualify for a deduction equal to the amount recognized by the
participant as ordinary compensation income, subject to the limitation that the
compensation be reasonable.
NON-QUALIFIED STOCK OPTIONS
With respect to Non-Qualified Stock Options:
o upon grant of the stock option, the participant will recognize
no income,
o upon exercise of the stock option (if the shares of common
stock are not subject to a substantial risk of forfeiture),
the participant will recognize ordinary compensation income in
an amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise over the exercise
price, and we will qualify for a deduction in the same amount,
subject to the requirement that the compensation be
reasonable, and
o EDG will be required to comply with applicable federal income
tax withholding requirements with respect to the amount of
ordinary compensation income recognized by the participant. On
a disposition of the shares, the participant will recognize
gain or loss equal to the difference between the amount
realized and the sum of the exercise price and the ordinary
compensation income recognized. The gain or loss will be
treated as capital gain or loss if the shares are capital
assets
16
and as short-term or long-term capital gain or loss, depending
upon the length of time that the participant held the shares.
NEW PLAN BENEFITS
The following table sets forth as of July 16, 2001, the options granted
to each of our Named Executive Officers, each nominee for election as a
director, all current executive officers as a group, all current directors who
are not executive officers as a group, and all employees and consultants other
than executive officers as a group.
------------------------------------------------------------------------------
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING
OPTIONS GRANTED
NAME AND POSITION
------------------------------------------------------------------------------
Jack Schwartzberg, Chairman, CEO and President
175,000
------------------------------------------------------------------------------
Shraga David Aranoff, COO, Vice President and
Treasurer 200,000
------------------------------------------------------------------------------
Harry Barnett, Director 80,000
------------------------------------------------------------------------------
Stanley F. Barshay, Director 80,000
------------------------------------------------------------------------------
Jay M. Haft, Director 80,000
------------------------------------------------------------------------------
All current executive officers as a group (two
persons) 373,000
------------------------------------------------------------------------------
All current directors who are not executive
officers as a group (three persons) 240,000
------------------------------------------------------------------------------
All employees and consultants other than executive
officers as a group (nine persons) 343,000
------------------------------------------------------------------------------
The average of the bid and ask prices of EDG's common stock as reported
by the OTC Bulletin Board on July 13, 2001, was $3.00 per share.
PROPOSAL III
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our board of directors has approved the engagement of Lazar, Levine &
Felix LLP as our independent public accountants for the fiscal year ending
December 31, 2001. Lazar, Levine & Felix LLP audited our financial statements
for the fiscal year ended December 31, 2000, which was the year in which EDG
acquired ISI. The board believes that it is appropriate to submit for
ratification by the shareholders its selection of Lazar, Levine & Felix LLP as
our independent public accountants.
CHANGE IN ACCOUNTANTS
On September 29, 2000, we dismissed Scott & Guilfoyle as EDG's
independent accountants. The reports of Scott & Guilfoyle on the financial
statements for the fiscal years ended June 30, 1999, and 2000 contained no
adverse opinion or disclaimer of opinion and were
17
not modified as to uncertainty, audit scope or accounting principles. Our board
of directors approved the decision to change independent accountants on
September 29, 2000.
In connection with Scott & Guilfoyle's audits for the fiscal years
ended June 30, 1999, and 2000, there were no disagreements with Scott &
Guilfoyle on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Scott & Guilfoyle would have caused them to make
reference thereto in their report on the consolidated financial statements for
such years.
We engaged Lazar Levine & Felix LLP as our new independent accountants
as of September 29, 2000. During the two most recent fiscal years, we have not
consulted with Lazar Levine & Felix LLP regarding either (i) the application of
accounting principles to a specified completed or contemplated transaction, or
the type of audit opinion that might be rendered on the registrant's financial
statements and either written or oral advice was provided that was an important
factor considered by the registrant in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was the subject
of a disagreement or event identified in response to Item 304(a) (1) (iv) of
Regulation S-B.
AUDIT AND OTHER FEES
The aggregate fees for professional services rendered by Lazar Levine &
Felix LLP for the audit of our annual financial statements for the fiscal year
ended December 31, 2000 were $44,000. Lazar Levine & Felix LLP also charged us
an aggregate of $7,000 for its review of our financial statements included in
the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2000.
Our financial statements included in our Quarterly Reports on Form 10-QSB for
the quarter ended March 31, 2000 were reviewed by Scott & Guilfoyle, which
charged us $525 for such review.
As a result of the acquisition of ISI by EDG in September 2000, EDG
adopted the financial statements of ISI and its fiscal year end changed from
June 30 to December 31. We paid Scott & Guilfoyle an aggregate of $1,640 for
professional services rendered in connection with Scott & Guilfoyle's audit of
EDG's financial statements for the fiscal year ended June 30, 2000. Also, we
paid the former accountants of ISI, Kurcias Jaffe & Company LLP, an aggregate of
$14,112 in 2000 for professional services rendered by Kurcias Jaffe & Company
LLP in connection with the audits of ISI's financial statements for the fiscal
years ended December 31, 1998 and 1999.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
We did not pay any fees in 2000 to Lazar Levine & Felix LLP, Scott &
Guilfoyle or Kurcias Jaffe & Company LLP for financial information systems
design and implementation.
We have been advised that neither Lazar, Levine & Felix LLP nor any of
its partners has any material direct or indirect relationship with EDG. The
board considers Lazar, Levine & Felix LLP to be well qualified for the function
of serving as our independent public accountants.
18
Representatives of Lazar, Levine & Felix LLP are expected to be present
at the meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
If the shareholders do not approve Proposal VI, the selection of
independent public accountants will be reconsidered by the board.
The board of directors recommends voting "FOR" Proposal III.
2002 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 2002 annual meeting of
shareholders to be eligible for inclusion in EDG's proxy statement, they must be
received by EDG at its principal office in Garden City, New York by March 22,
2002. A shareholder must have been a continuously registered or beneficial owner
of at least 1% of EDG's outstanding stock or stock with a market value of at
least $2,000 for at least one year prior to submitting the proposal, and the
shareholder must continue to own such stock through the date on which the 2002
annual meeting of shareholders is held.
OTHER MATTERS
The board knows of no matter that will be presented for consideration
at the meeting other than the matters referred to in this proxy statement.
Should any other matter properly come before the meeting, it is the intention of
the persons named in the accompanying proxy to vote such proxy in accordance
with their best judgment.
SOLICITATION OF PROXIES
The cost of proxy solicitations will be borne by EDG. In addition to
solicitations of proxies by use of the mails, some officers or employees of EDG,
without additional remuneration, may solicit proxies personally or by telephone.
EDG may also request brokers, dealers, banks and their nominees to solicit
proxies from their clients, where appropriate, and may reimburse them for
reasonable expenses related thereto.
Shraga David Aranoff
Secretary
Garden City, New York
July 20, 2001
19
ANNEX A
EDG CAPITAL, INC.
2000 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the 2000 Long-Term Incentive Plan (the
"Plan") is to further and promote the interests of EDG Capital, Inc. (the
"Company"), its Subsidiaries and its shareholders by enabling the Company and
its Subsidiaries to attract, retain and motivate employees and consultants or
those who will become employees or consultants, and to align the interests of
those individuals and the Company's shareholders. To do this, the Plan offers
stock options providing such employees and consultants with a proprietary
interest in maximizing the growth, profitability and overall success of the
Company and its Subsidiaries.
2. DEFINITIONS. For purposes of the Plan, the following terms
shall have the meanings set forth below:
2.1 "AWARD" means an award or grant made to a Participant
under Section 6 of the Plan.
2.2 "AWARD AGREEMENT" means the agreement executed by a
Participant pursuant to Sections 3.2 and 17.7 of the Plan in connection with the
granting of an Award.
2.2 "BOARD" means the Board of Directors of the Company, as
constituted from time to time.
2.3 "CODE" means the Internal Revenue Code of 1986, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.
2.4 "COMMITTEE" means the committee of the Board established
to administer the Plan, as described in Section 3 of the Plan.
2.5 "COMMON STOCK" means the Common Stock, par value $.001 per
share, of the Company or any security of the Company issued by the Company in
substitution or exchange therefor.
2.6 "COMPANY" means EDG Capital, Inc., a New York corporation,
or any successor corporation to EDG Capital, Inc.
2.7 "DISABILITY" means disability as defined in the
Participant's then effective employment agreement, or if the participant is not
then a party to an effective
A-1
employment agreement with the Company which defines disability, "Disability"
means disability as determined by the Committee in accordance with standards and
procedures similar to those under the Company's long-term disability plan, if
any. Subject to the first sentence of this Section 2.7, at any time that the
Company does not maintain a long-term disability plan, "Disability" shall mean
any physical or mental disability which is determined to be total and permanent
by a physician selected in good faith by the Company.
2.8 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as in effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.
2.9 "FAIR MARKET VALUE" means on, or with respect to, any
given date(s), the average of the highest and lowest market prices of the Common
Stock, as reported on the OTB Bulletin Board or other exchange or market for
such date(s) or, if the Common Stock was not traded on such date(s), on the next
preceding day or days on which the Common Stock was traded. If at any time the
Common Stock is not traded on such exchange, the Fair Market Value of a share of
the Common Stock shall be determined in good faith by the Board.
2.10 "INCENTIVE STOCK OPTION" means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is intended to be (and is specifically designated as) an
"incentive stock option" within the meaning of Section 422 of the Code.
2.11 "NON-QUALIFIED STOCK OPTION" means any stock option
granted pursuant to the provisions of Section 6 of the Plan (and the relevant
Award Agreement) that is not (and is specifically designated as not being) an
Incentive Stock Option.
2.12 "PARTICIPANT" means any individual who is selected from
time to time under Section 5 to receive an Award under the Plan.
2.13 "PLAN" means the EDG Capital, Inc. 2000 Long-Term
Incentive Plan, as set forth herein and as in effect and as amended from time to
time (together with any rules and regulations promulgated by the Committee with
respect thereto).
2.14 "RETIREMENT" means the voluntary retirement by the
Participant from active employment with the Company and its Subsidiaries on or
after the attainment of (i) age 65, or (ii) 60, with the consent of the Board.
2.15 "SUBSIDIARY(IES)" means any corporation (other than the
Company) in an unbroken chain of corporations, including and beginning with the
Company, if each of such corporations, other than the last corporation in the
unbroken chain, owns, directly or indirectly, more than fifty percent (50%) of
the voting stock in one of the other corporations in such chain.
A-2
3. ADMINISTRATION.
3.1 THE COMMITTEE. The Plan shall be administered by the Board
or the Committee. The Committee shall be appointed from time to time by the
Board and shall be comprised of not less than two (2) of the then members of the
Board who are Non-Employee Directors (within the meaning of SEC Rule
16b-3(b)(3)) of the Company. Consistent with the Bylaws of the Company, members
of the Committee shall serve at the pleasure of the Board and the Board, subject
to the immediately preceding sentence, may at any time and from time to time
remove members from, or add members to, the Committee.
3.2 PLAN ADMINISTRATION AND PLAN RULES. The Board or the
Committee is authorized to construe and interpret the Plan and to promulgate,
amend and rescind rules and regulations relating to the implementation,
administration and maintenance of the Plan. Subject to the terms and conditions
of the Plan, the Board or the Committee shall make all determinations necessary
or advisable for the implementation, administration and maintenance of the Plan
including, without limitation, (a) selecting the Plan's Participants, (b) making
Awards in such amounts and form as the Board or the Committee shall determine,
(c) imposing such restrictions, terms and conditions upon such Awards as the
Board or the Committee shall deem appropriate, and (d) correcting any technical
defect(s) or technical omission(s), or reconciling any technical
inconsistency(ies), in the Plan and/or any Award Agreement. The Committee may
designate persons other than members of the Board or the Committee to carry out
the day-to-day ministerial administration of the Plan under such conditions and
limitations as it may prescribe, except that the Board or the Committee shall
not delegate its authority with regard to the selection for participation in the
Plan and/or the granting of any Awards to Participants. The Board or the
Committee's determinations under the Plan need not be uniform and may be made
selectively among Participants, whether or not such Participants are similarly
situated. Any determination, decision or action of the Board or the Committee in
connection with the construction, interpretation, administration, implementation
or maintenance of the Plan shall be final, conclusive and binding upon all
Participants and any person(s) claiming under or through any Participants. The
Company shall effect the granting of Awards under the Plan, in accordance with
the determinations made by the Board or the Committee, by execution of written
agreements and/or other instruments in such form as is approved by the Board or
the Committee.
3.3 LIABILITY LIMITATION. Neither the Board nor the Committee,
nor any member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan (or
any Award Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys' fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under any directors and officers liability insurance coverage which may be in
effect from time to time.
A-3
4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.
4.1 TERM. The Plan shall terminate on December 31, 2010,
except with respect to Awards then outstanding. After such date no further
Awards shall be granted under the Plan.
4.2 COMMON STOCK. The maximum number of shares of Common Stock
in respect of which Awards may be granted or paid out under the Plan, subject to
adjustment as provided in Section 10.2 of the Plan, shall not exceed 1,247,983
shares. In the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to "Capital Stock" or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be the Common Stock
for purposes of the Plan. Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have been
reacquired by the Company (in the open-market or in private transactions) and
which are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan.
4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of
computing the total number of shares of Common Stock available for Awards under
the Plan, there shall be counted against the limitations set forth in Section
4.2 of the Plan the maximum number of shares of Common Stock potentially subject
to issuance upon exercise or settlement of Awards granted under Section 6 of the
Plan, in each case determined as of the date on which such Awards are granted.
If any Awards expire unexercised or are forfeited, surrendered, cancelled,
terminated or settled in cash in lieu of Common Stock, the shares of Common
Stock which were theretofore subject (or potentially subject) to such Awards
shall again be available for Awards under the Plan to the extent of such
expiration, forfeiture, surrender, cancellation, termination or settlement of
such Awards.
5. ELIGIBILITY. Individuals eligible for Awards under the Plan
shall consist of all employees, directors, advisory board members and
consultants, or those who will become such employees , directors, advisory board
members or consultants, of the Company and/or its Subsidiaries who are
responsible for or contribute to the management, growth and protection of the
business of the Company and/or its Subsidiaries or whose performance or
contribution, in the sole discretion of the Board or the Committee, benefits or
will benefit the Company.
6. STOCK OPTIONS.
6.1 TERMS AND CONDITIONS. Stock options granted under the Plan
shall be in respect of Common Stock and may be in the form of Incentive Stock
Options or Non-Qualified Stock Options (sometimes referred to collectively
herein as the "Stock Option(s))". Such Stock Options shall be subject to the
terms and conditions set forth in this Section 6 and any additional terms and
conditions, not inconsistent with the express terms
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and provisions of the Plan, as the Committee shall set forth in the relevant
Award Agreement.
6.2 GRANT. Stock Options may be granted under the Plan in such
form as the Board or the Committee may from time to time approve. Special
provisions shall apply to Incentive Stock Options granted to any employee who
owns (within the meaning of Section 422(b)(6) of the Code) more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or its parent corporation or any subsidiary of the Company, within the meaning
of Sections 424(e) and (f) of the Code (a "10% Shareholder").
6.3 EXERCISE PRICE. The exercise price per share of Common
Stock subject to a Stock Option shall be determined by the Board or the
Committee; provided , however, that the exercise price of an Incentive Stock
Option shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of the grant of such Incentive Stock
Option; provided, further, however, that, in the case of a 10% Shareholder, the
exercise price of an Incentive Stock Option shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the date of
grant.
6.4 TERM. The term of each Stock Option shall be such period
of time as is fixed by the Committee; provided, however, that the term of any
Incentive Stock Option shall not exceed ten (10) years (five (5) years, in the
case of a 10% Shareholder) after the date immediately preceding the date on
which the Incentive Stock Option is granted.
6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Secretary of the
Company, or the Secretary's designee, specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in fall of the exercise
price in cash, by certified check, bank draft or money order payable to the
order of the Company or, if permitted by the Board or the Committee (in its sole
discretion) and applicable law, by delivery of, alone or in conjunction with a
partial cash or instrument payment, (a) a fully-secured promissory note or
notes, (b) shares of Common Stock already owned by the Participant for at least
six (6) months, or (c) some other form of payment acceptable to the Board or the
Committee. The Board or the Committee may also permit Participants (either on a
selective or group basis) to simultaneously exercise Stock Options and sell the
shares of Common Stock thereby acquired, pursuant to a "cashless exercise"
arrangement or program, selected by and approved of in all respects in advance
by the Committee. Payment instruments shall be received by the Company subject
to collection. The proceeds received by the Company upon exercise of any Stock
Option may be used by the Company for general corporate purposes. Any portion of
a Stock Option that is exercised may not be exercised again.
6.6 EXERCISABILITY. In respect of any Stock Option granted
under the Plan, unless otherwise provided in the Award Agreement at the time of
grant or in the Participant's employment agreement in respect of any such Stock
Option, such Stock
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Option shall become exercisable as to the aggregate number of shares of Common
Stock underlying such Stock Option, as determined on the date of grant, as
follows:
o 33%, on the first anniversary of the date of grant of
the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries;
o 66%, on the second anniversary of the date of grant
of the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries; and
o 100%, on the third anniversary of the date of grant
of the Stock Option, provided the Participant is then
employed by the Company and/or one of its
Subsidiaries.
7. MAXIMUM YEARLY AWARDS. The maximum annual Common Stock amounts
in this Section 7 are subject to adjustment under Section 10.2 and are subject
to the Plan maximum under Section 4.2. All Participants in the aggregate may not
receive in any calendar year Awards of Options, in the aggregate, exceeding
975,000 underlying shares of Common Stock. Each individual Participant may not
receive in any calendar year Awards of Options exceeding 400,000 underlying
shares of Common Stock.
8. TERMINATION OF EMPLOYMENT. Except as is otherwise provided (a)
in the relevant Award Agreement as determined by the Board or Committee (in its
sole discretion) at the time of grant, or (b) in the Participant's then
effective employment agreement, if any, the following terms and conditions shall
apply as appropriate and as not inconsistent with the terms and conditions, if
any, contained in such Award Agreement and/or such employment agreement. If a
Participant's employment with the Company terminates for any reason any then
unexercisable Stock Options shall be forfeited and cancelled by the Company.
Except as otherwise provided in this Section 8, if a Participant's employment
with the Company and its Subsidiaries terminates for any reason, such
Participant's rights, if any, to exercise any then exercisable Stock Options, if
any, shall terminate ninety (90) days after the date of such termination (but
not beyond the stated term of any such Stock Option as determined under Section
6.4) and thereafter such Stock Option shall be forfeited and cancelled by the
Company. The Board or the Committee, in its sole discretion, may determine that
any such Participant's Stock Options, if any, to the extent exercisable
immediately prior to any termination of employment (other than a termination due
to death, Retirement or Disability), may remain exercisable for an additional
specified time period after such ninety (90) day period expires (subject to any
other applicable terms and provisions of the Plan and the relevant Award
Agreement), but not beyond the stated term of any such Stock Option. If any
termination of employment is due to death, Retirement or Disability, a
Participant (and such Participant's estate, designated beneficiary or other
legal representative, as the case may be and as determined by the Committee)
shall have the right, to the extent exercisable immediately prior to any such
termination, to exercise such Stock Options, if any, at any time within the one
(1) year period following such termination due to death, Retirement or
Disability (but not beyond the term of any such Stock Option as determined under
Section 6.4).
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9. NON-TRANSFERABILITY OF AWARDS. Unless otherwise provided in
the Award Agreement, no Award under the Plan or any Award Agreement, and no
rights or interests herein or therein, shall or may be assigned, transferred,
sold, exchanged, encumbered, pledged, or otherwise hypothecated or disposed of
by a Participant or any beneficiary(ies) of any Participant, except by
testamentary disposition by the Participant or the laws of intestate succession.
No such interest shall be subject to execution, attachment or similar legal
process, including, without limitation, seizure for the payment of the
Participant's debts, judgements, alimony, or separate maintenance. Unless
otherwise provided in the Award Agreement, during the lifetime of a Participant,
Stock Options are exercisable only by the Participant.
10. CHANGES IN CAPITALIZATION AND OTHER MATTERS.
10.1 NO CORPORATE ACTION RESTRICTION. The existence of the
Plan, any Award Agreement and/or the Awards granted hereunder shall not limit,
affect or restrict in any way the right or power of the Board or the
shareholders of the Company to make or authorize (a) any adjustment,
recapitalization, reorganization or other change in the Company's or any
Subsidiary's capital structure or its business, (b) any merger, consolidation or
change in the ownership of the Company or any Subsidiary, (c) any issue of
bonds, debentures, capital, preferred or prior preference stocks ahead of or
affecting the Company's or any Subsidiary's capital stock or the rights thereof,
(d) any dissolution or liquidation of the Company or any Subsidiary, (e) any
sale or transfer of all or any part of the Company's or any Subsidiary's assets
or business, or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person shall have any claim
against any member of the Board or the Committee, the Company or any Subsidiary,
or any employees, officers or agents of the Company or any subsidiary, as a
result of any such action.
10.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change
in capitalization affecting the Common Stock of the Company, including, without
limitation, a stock dividend or other distribution, stock split, reverse stock
split, recapitalization, consolidation, subdivision, split-up, spin-off,
split-off, combination or exchange of shares or other form of reorganization or
recapitalization, or any other change affecting the Common Stock, the Board or
the Committee shall authorize and make such proportionate adjustments, if any,
as the Board or the Committee deems appropriate to reflect such change,
including, without limitation, with respect to the aggregate number of shares of
the Common Stock for which Awards in respect thereof may be granted under the
Plan, the maximum number of shares of the Common Stock which may be granted or
awarded to any Participant, the number of shares of the Common Stock covered by
each outstanding Award, and the exercise price or other price per share of
Common Stock in respect of outstanding Awards.
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10.3 CERTAIN MERGERS.
10.3.1 If, after September 13, 2000, the Company
enters into or is involved in any merger, reorganization or other
business combination with any person or entity (such merger,
reorganization or other business combination to be referred to herein
as a "Merger Event") and as a result of any such Merger Event the
Company will be or is the surviving corporation, a Participant shall be
entitled, as of the date of the execution of the agreement evidencing
the Merger Event (the "Execution Date") and with respect to both
exercisable and unexercisable Stock Options (but only to the extent not
previously exercised), to receive substitute stock options in respect
of the shares of the surviving corporation on such terms and
conditions, as to the number of shares, pricing and otherwise, which
shall substantially preserve the value, rights and benefits of any
affected Stock Options granted hereunder as of the date of the
consummation of the Merger Event. Notwithstanding anything to the
contrary in this Section 10.3, if any Merger Event occurs, the Company
shall have the right, but not the obligation, to pay to each affected
Participant an amount in cash or certified check equal to the excess of
the Fair Market Value of the Common Stock underlying any affected
unexercised Stock Options as of the Execution Date (whether then
exercisable or not) over the aggregate exercise price of such
unexercised Stock Options, as the case may be.
10.3.2 If, in the case of a Merger Event in which the
Company will not be, or is not, the surviving corporation, and the
Company determines not to make the cash or certified check payment
described in Section 10.3.1 of the Plan, the Company shall compel and
obligate, as a condition of the consummation of the Merger Event, the
surviving or resulting corporation and/or the other party to the Merger
Event, as necessary, or any parent, subsidiary or acquiring corporation
thereof, to grant, with respect to both exercisable and unexercisable
Stock Options (but only to the extent not previously exercised),
substitute stock options in respect of the shares of common or other
capital stock of such surviving or resulting corporation on such terms
and conditions, as to the number of shares, pricing and otherwise,
which shall substantially preserve the value, rights and benefits of
any affected Stock Options previously granted hereunder as of the date
of the consummation of the Merger Event.
10.3.3 Upon receipt by any affected Participant of
any such cash, certified check, or substitute stock options as a result
of any such Merger Event, such Participant's affected Stock Options for
which such cash, certified check or substitute awards was received
shall be thereupon cancelled without the need for obtaining the consent
of any such affected Participant.
10.3.4 The foregoing adjustments and the manner of
application of the foregoing provisions, including, without limitation,
the issuance of any substitute stock options, shall be determined in
good faith by the Board or the Committee in its
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sole discretion. Any such adjustment may provide for the elimination of
fractional shares.
11. CHANGE OF CONTROL.
11.1 ACCELERATION OF AWARDS VESTING. Anything in the Plan to
the contrary notwithstanding, if a Change of Control of the Company occurs,
unless otherwise provided in the Participant's Award Agreement, all Stock
Options then unexercised and outstanding shall become fully vested and
exercisable as of the date of the Change of Control. The immediately preceding
sentence shall apply to only those Participants (i) who are employed by the
Company and/or one of its Subsidiaries as of the date of the Change of Control,
or (ii) to whom Section 11.3 below is applicable.
11.2 PAYMENT AFTER CHANGE OF CONTROL. Notwithstanding anything
to the contrary in the Plan, in the case only of a Change of Control under
Section 11.4.1 of the Plan, the holders of any Stock Options shall have the
right, but not the obligation, to elect, within thirty (30) business days after
the Participant has actual knowledge of the occurrence of such Change of
Control, to require the Company to substitute for such Stock Options replacement
stock options of the acquiring company or any affiliate thereof covering the
most liquid thereof and on such terms and conditions, as to the number of
shares, pricing and otherwise which shall substantially preserve the value,
rights and benefits of any affected Stock Options.
11.3 TERMINATION AS A RESULT OF A CHANGE OF CONTROL. Anything
in the Plan to the contrary notwithstanding, if a Change of Control occurs and
if the Participant's employment is terminated before such Change of Control and
it is reasonably demonstrated by the Participant that such employment
termination (a) was at the request, directly or indirectly, of a third party who
has taken steps reasonably calculated to effect the Change of Control, or (b)
otherwise arose in connection with or in anticipation of the Change of Control,
then for purposes of this Section 11, the Change of Control, unless otherwise
provided in the Participant's Award Agreement, shall be deemed to have occurred
immediately prior to such Participant's employment termination (for all purposes
other than those set forth in Section 11.2 of the Plan).
11.4 CHANGE OF CONTROL. For the purpose of this Agreement,
"Change of Control" shall mean:
11.4.1 The acquisition, after the effective date of
the Plan, by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule l3d-3 promulgated under the
Exchange Act) of 50% or more of either (a) the shares of the Common
Stock, or (b) the combined voting power of the voting securities of the
Company entitled to vote generally in the election of directors (the
"Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (x) any
acquisition by any employee benefit plan (or related
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trust) sponsored or maintained by the Company or any Subsidiary, (y)
any acquisition by any underwriter in connection with any firm
commitment underwriting of securities to be issued by the Company, or
(z) any acquisition by any corporation if, immediately following such
acquisition, more than 50% of the then outstanding shares of common
stock or common ownership interests and the combined voting power of
the then outstanding voting securities or common ownership interests of
such corporation or other entity (entitled to vote generally in the
election of directors or other managers), is beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who, immediately prior to such acquisition, were the
beneficial owners of the Common Stock and the Voting Securities in
substantially the same proportions, respectively, as their ownership,
immediately prior to such acquisition, of the Common Stock and Voting
Securities; or
11.4.2 Individuals who, as of the effective date of
the Plan, constitute the Board (the "Incumbent Board") cease thereafter
for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent
to the effective date of the Plan whose election, or nomination for
election by the Company's shareholders, was approved by at least
two-thirds of the directors then serving and comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used
in Rule 14a- 11 of Regulation 14A promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents; or
11.4.3 Approval by the shareholders of the Company
of, or the occurrence of, a reorganization, merger or consolidation,
other than a reorganization, merger or consolidation with respect to
which all or substantially all of the individuals and entities who were
the beneficial owners, immediately prior to such reorganization, merger
or consolidation, of the Common Stock and Voting Securities
beneficially own, directly or indirectly, immediately after such
reorganization, merger or consolidation more than 50% of the then
outstanding common stock or common ownership interests and voting
securities or voting ownership interests (entitled to vote generally in
the election of directors or other managers) of the corporation
resulting from such reorganization, merger or consolidation in
substantially the same proportions as their respective ownership,
immediately prior to such reorganization, merger or consolidation, of
the Common Stock and the Voting Securities; or
11.4.4 Approval by the shareholders of the Company
of, or the occurrence of, (a) a complete liquidation or substantial
dissolution of the Company, or (b) the sale or other disposition of all
or substantially all of the assets of the Company, other than (i) to a
Subsidiary, wholly-owned, directly or indirectly, by the Company, or
(ii) pursuant to a transaction with respect to which all or
substantially
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all of the individuals and entities who were the beneficial owners,
immediately prior to such transaction, of the Common Stock and the
Voting Securities beneficially own, directly or indirectly, immediately
after such transaction, more than 50% of the then outstanding common
stock or common ownership interests and voting securities or voting
ownership interests (entitled to vote generally in the election of
directors or other managers) of the corporation or other business
entity acquiring such assets in substantially the same proportions as
their respective ownership, immediately prior to such transaction, of
the Common Stock and the Voting Securities.
11.4.5 The occurrence of any event (not covered by
clauses (11.4.1 through 11.4.4 above) which would be required to be
reported by the Company in response to Items 1 or 2 of Form 8-K under
the Exchange Act.
12. AMENDMENT, SUSPENSION AND TERMINATION.
12.1 IN GENERAL. The Board may suspend or terminate the Plan
(or any portion thereof) at any time and may amend the Plan at any time and from
time to time in such respects as the Board may deem advisable to insure that any
and all Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to benefit from any
change in applicable laws or regulations, or in any other respect the Board may
deem to be in the best interests of the Company or any Subsidiary. No such
amendment, suspension or termination shall (x) materially adversely effect the
rights of any Participant under any outstanding Stock Options, without the
consent of such Participant, or (y) make any change that would disqualify the
Plan, or any other plan of the Company or any Subsidiary intended to be so
qualified, from the benefits provided under Section 422 of the Code, or any
successor provisions thereto.
12.2 AWARD AGREEMENT MODIFICATIONS. The Committee may (in its
sole discretion) amend or modify at any time and from time to time the terms and
provisions of any outstanding Stock Options, in any manner to the extent that
the Committee under the Plan or any Award Agreement could have initially
determined the restrictions, terms and provisions of such Stock Options,
including, without limitation, changing or accelerating the date or dates as of
which such Stock Options shall become exercisable. No such amendment or
modification shall, however, materially adversely affect the rights of any
Participant under any such Award without the consent of such Participant.
13. MISCELLANEOUS.
13.1 TAX WITHHOLDING. The Company shall have the right to
deduct from any payment or settlement under the Plan, including, without
limitation, the exercise of any Stock Option, any federal, state, local or other
taxes of any kind which the Committee, in its sole discretion, deems necessary
to be withheld to comply with the Code and/or any other applicable law, rule or
regulation. If the Committee, in its sole discretion, permits shares of Common
Stock to be used to satisfy any such tax withholding, such Common Stock shall be
valued based on the Fair Market Value of such stock as of the date the tax
withholding is
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required to be made, such date to be determined by the Committee. The Committee
may establish rules limiting the use of Common Stock to meet withholding
requirements by Participants who are subject to Section 16 of the Exchange Act.
13.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan,
the granting of any Award, nor the execution of any Award Agreement, shall
confer upon any employee of the Company or any Subsidiary any right to continued
employment with the Company or any Subsidiary, as the case may be, nor shall it
interfere in any way with the right, if any, of the Company or any Subsidiary to
terminate the employment of any employee at any time for any reason.
13.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company
shall not be required to segregate any assets in connection with any Awards
under the Plan. Any liability of the Company to any person with respect to any
Award under the Plan or any Award Agreement shall be based solely upon the
contractual obligations that may be created as a result of the Plan or any such
award or agreement. No such obligation of the Company shall be deemed to be
secured by any pledge of, encumbrance on, or other interest in, any property or
asset of the Company or any Subsidiary. Nothing contained in the Plan or any
Award Agreement shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between the Company, any Subsidiary
and/or any such Participant, any beneficiary thereof or any other person.
13.4 PAYMENTS TO A TRUST. The Committee is authorized to cause
to be established a trust agreement or several trust agreements or similar
arrangements from which the Committee may make payments of amounts due or to
become due to any Participants under the Plan.
13.5 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments
and other benefits received by a Participant under an Award made pursuant to the
Plan shall not be deemed a part of a Participant's compensation for purposes of
the determination of benefits under any other employee welfare or benefit plans
or arrangements, if any, provided by the Company or any Subsidiary unless
expressly provided in such other plans or arrangements, or except where the
Board expressly determines in writing that inclusion of an Award or portion of
an Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.
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13.6 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No
Awards or shares of the Common Stock shall be required to be issued or granted
under the Plan unless legal counsel for the Company shall be satisfied that such
issuance or grant will be in compliance with all applicable federal and state
securities laws and regulations and any other applicable laws or regulations.
The Committee may require, as a condition of any payment or share issuance, that
certain agreements, undertakings, representations, certificates, and/or
information, as the Committee may deem necessary or advisable, be executed or
provided to the Company to assure compliance with all such applicable laws or
regulations. Certificates for shares of the Common Stock delivered under the
Plan may be subject to such stock-transfer orders and such other restrictions as
the Committee may deem advisable under the rules, regulations, or other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law. In addition, if, at any time specified herein (or in any Award
Agreement or otherwise) for (a) the making of any Award, or the making of any
determination, (b) the issuance or other distribution of Common Stock, or (c)
the payment of amounts to or through a Participant with respect to any Award,
any law, rule, regulation or other requirement of any governmental authority or
agency shall require either the Company, any Subsidiary or any Participant (or
any estate, designated beneficiary or other legal representative thereof) to
take any action in connection with any such determination, any such shares to be
issued or distributed, any such payment, or the making of any such
determination, as the case may be, shall be deferred until such required action
is taken. With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of SEC Rule 16b-3. To the extent any provision of the Plan or any
action by the administrators of the Plan fails to so comply with such rule, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
13.7 AWARD AGREEMENTS. Each Participant receiving an Award
under the Plan shall enter into an Award Agreement with the Company in a form
specified by the Committee. Each such Participant shall agree to the
restrictions, terms and conditions of the Award set forth therein and in the
Plan.
13.8 DESIGNATION OF BENEFICIARY. Each Participant to whom an
Award has been made under the Plan may designate a beneficiary or beneficiaries
to exercise any option or to receive any payment which under the terms of the
Plan and the relevant Award Agreement may become exercisable or payable on or
after the Participant's death. At any time, and from time to time, any such
designation may be changed or cancelled by the Participant without the consent
of any such beneficiary. Any such designation, change or cancellation must be on
a form provided for that purpose by the Committee and shall not be effective
until received by the Committee. If no beneficiary has been designated by a
deceased Participant, or if the designated beneficiaries have predeceased the
Participant, the beneficiary shall be the Participant's estate. If the
Participant designates more than one beneficiary, any payments under the Plan to
such beneficiaries shall be made in equal shares unless the Participant has
expressly designated otherwise, in which case the payments shall be made in the
shares designated by the Participant.
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13.9 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the
power to promulgate rules and regulations and to make determinations, as it
deems appropriate, under the Plan in respect of any leave of absence from the
Company or any Subsidiary granted to a Participant. Without limiting the
generality of the foregoing, the Committee may determine whether any such leave
of absence shall be treated as if the Participant has terminated employment with
the Company or any such Subsidiary. If a Participant transfers within the
Company, or to or from any Subsidiary, such Participant shall not be deemed to
have terminated employment as a result of such transfers.
13.10 LOANS. Subject to applicable law, the Committee may
provide, pursuant to Plan rules, for the Company or any Subsidiary to make loans
to Participants to finance the exercise price of any Stock Options, as well as
the withholding obligation under Section 13.1 of the Plan and/or the estimated
or actual taxes payable by the Participant as a result of the exercise of such
Stock Option and the Committee may prescribe the terms and conditions of any
such loan.
13.11 GOVERNING LAW. The Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
New York, without reference to the principles of conflict of laws thereof. Any
titles and headings herein are for reference purposes only, and shall in no way
limit, define or otherwise affect the meaning, construction or interpretation of
any provisions of the Plan.
13.12 EFFECTIVE DATE. The Plan shall be effective upon its
approval by the Board and adoption by the Company, subject to the approval of
the Plan by the Company's shareholders in accordance with Sections 162(m) and
422 of the Code.
* * * * *
IN WITNESS WHEREOF, this Plan is adopted by the Company on
this 13th day of September, 2000.
EDG CAPITAL, INC.
By: /s/ Shraga David Aranoff
-------------------------------------------
Name: Shraga David Aranoff
-----------------------------------------
Title: Chief Operating Officer, Vice President
----------------------------------------
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EDG CAPITAL, INC.
FORM OF PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
August 16, 2001
The undersigned hereby appoints Jack Schwartzberg and Shraga David Aranoff,
and each of them, as agents and proxies, each with the power to appoint his
substitute, to represent and to vote, as designated below, all of the shares of
Common Stock, $.001 par value, of EDG CAPITAL, INC. (the "Company"), held of
record by the undersigned at the close of business on June 29, 2001 at the
Annual Meeting of Shareholders (the "Meeting") of EDG CAPITAL, INC. on August
16, 2001 at 10:00 a.m. local time, or at any adjournments or postponements
thereof.
1. ELECTION OF DIRECTORS
[ ] For all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated otherwise below)
INSTRUCTION: To withhold authority to vote for an individual nominee,
write such nominee's name in the space below.
NOMINEES: Jack Schwartzberg, Shraga David Aranoff, Harry Barnett, Stanley
F. Barshay and Jay M. Haft.
NOMINEE(S) FOR WHOM AUTHORITY IS WITHHELD:
------------------------------
------------------------------------------------------------------------
2. ADOPTION OF THE 2000 LONG TERM INCENTIVE PLAN.
For Against Abstain
------ ------ ------
3. RATIFICATION OF THE SELECTION OF LAZAR, LEVINE & FELIX LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
For Against Abstain
------ ------ ------
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
For Against Abstain
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(To be signed below)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN ABOVE
Please sign exactly as your name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please indicate the capacity in which
signing. When a ballot is given by a corporation, please give your full
corporation name and have the ballot signed by the president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED: , 2001
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Shareholder Name
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Shareholder Signature
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Signature if held jointly
PLEASE SIGN, DATE AND MAIL THIS PROXY IMMEDIATELY IN THE ENCLOSED ENVELOPE