<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VISUAL EDGE SYSTEMS INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 Rule 0-11(set forth the amount on which the
filing fee is calculated and state how it was determined)
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
April 7, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Visual Edge Systems Inc. (the "Company"), which will be held at
the Company's principal executive office, 2424 North Federal Highway, Suite
100, Boca Raton, Florida, on Friday, May 2, 1997, commencing at 10:00 a.m.
(local time). We look forward to greeting as many of our stockholders as are
able to be with us.
At the meeting, you will be asked to: (1) elect six Directors of the
Company to serve until the next Annual Meeting and until their successors are
duly elected and qualified; (2) consider and act upon the proposed Visual Edge
Systems Inc. Amended and Restated 1996 Stock Option Plan; and (3) transact such
other business as may properly come before the meeting and any adjournment
thereof.
We hope you will find it convenient to attend the meeting in person.
Whether or not you expect to attend, to assure your representation at the
meeting and the presence of a quorum, please complete, date, sign and mail
promptly the enclosed proxy card (the "Proxy"), for which a return envelope is
provided. No postage need be affixed to the Proxy if it is mailed in the
United States. After returning your Proxy, you may, of course, vote in person
on all matters brought before the meeting.
The Company's Annual Report for the fiscal year ended December 31,
1996 is being mailed to you together with the enclosed proxy materials.
Sincerely,
/s/ Earl T. Takefman
-------------------------------------
Earl T. Takefman
Chief Executive Officer and Secretary
<PAGE> 3
VISUAL EDGE SYSTEMS INC.
2424 NORTH FEDERAL HIGHWAY, SUITE 100
BOCA RATON, FLORIDA 33431
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Visual Edge Systems Inc., a Delaware corporation (the "Company"), will be held
at the Company's principal executive office, 2424 North Federal Highway, Suite
100, Boca Raton, Florida 33431, on Friday, May 2, 1997, at 10:00 a.m. (local
time), for the following purposes:
(1) to elect six Directors, each to serve until the next Annual
Meeting and until his successor is duly elected and qualified;
(2) to consider and act upon the proposed Visual Edge Systems Inc.
Amended and Restated 1996 Stock Option Plan; and
(3) to transact such other business as may properly come before
the Annual Meeting and any adjournment thereof.
The accompanying proxy is solicited by the Board of Directors of the
Company. A copy of the Company's Annual Report to Stockholders, Proxy
Statement and form of proxy are enclosed.
Only stockholders of record as of the close of business on March 31,
1997 are entitled to notice of, and to vote at, the Annual Meeting and any
adjournment thereof. Such stockholders may vote in person or by proxy.
You are cordially invited to be present at the Annual Meeting. It is
important to you and to the Company that your shares be voted at the Annual
Meeting.
By Order of the Board of Directors
Earl T. Takefman
Chief Executive Officer and Secretary
April 7, 1997
<PAGE> 4
================================================================================
IMPORTANT NOTICE:
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO READ THE ATTACHED PROXY STATEMENT CAREFULLY AND THEN TO SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND ADDRESSED
ENVELOPE. AS SET FORTH IN THE PROXY STATEMENT, THE GIVING OF THE PROXY WILL
NOT AFFECT YOUR RIGHT TO ATTEND AND TO VOTE AT THE ANNUAL MEETING.
================================================================================
<PAGE> 5
VISUAL EDGE SYSTEMS INC.
---------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 2, 1997
This Proxy Statement and the accompanying form of proxy ("Proxy") are
being furnished to the stockholders of Visual Edge Systems Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of Proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the Company's principal
executive office, 2424 North Federal Highway, Suite 100, Boca Raton, Florida,
on May 2, 1997, at 10:00 a.m. (local time), and at any adjournment thereof.
Only stockholders of record as of the close of business on March 31, 1997 (the
"Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting.
This Proxy Statement and the accompanying Proxy, together with a copy
of the Company's Annual Report to Stockholders for the year ended December 31,
1996 (the "Annual Report"), are being sent or given to the stockholders
commencing on or about April 7, 1997.
At the Annual Meeting, the stockholders of the Company will be asked:
(i) to elect six Directors of the Company to serve until the next Annual
Meeting and until their successors are duly elected and qualified; (ii) to
consider and act upon the Company's proposed Amended and Restated 1996 Stock
Option Plan ("Stock Option Plan"); and (iii) to transact any other business
that may properly come before the meeting and any adjournment thereof.
The principal executive office of the Company is located at 2424 North
Federal Highway, Suite 100, Boca Raton, Florida 33431 and the Company's
telephone number at that address is (561) 750-7559.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
FORM OF PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
<PAGE> 6
SOLICITATION OF PROXIES
If the accompanying Proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified in the Proxy. In the absence of instructions to the contrary, such
shares will be voted (i) in favor of the nominees for election to the Board of
Directors listed in this Proxy Statement and named in the accompanying Proxy
and (ii) in favor of the adoption of the Company's Amended and Restated 1996
Stock Option Plan. The Board of Directors does not intend to bring any other
matters before the Annual Meeting and is not aware of any matters that will
come before the Annual Meeting other than as described herein. In the absence
of instructions to the contrary, however, it is the intention of each of the
persons named in the accompanying Proxy to vote all properly executed Proxies
on behalf of the stockholders they represent in accordance with their
discretion with respect to any such other matters properly coming before the
Annual Meeting. The expenses with respect to this solicitation of Proxies will
be paid by the Company.
Any stockholder may revoke such stockholder's Proxy at any time prior
to the voting thereof on any matter (without, however, affecting any vote taken
prior to such revocation). A Proxy may be revoked by written notice of
revocation received prior to the Annual Meeting, by attending the Annual
Meeting and voting in person or by submitting a signed Proxy bearing a
subsequent date. A written notice revoking a previously executed Proxy should
be sent to the Company at 2424 North Federal Highway, Suite 100, Boca Raton,
Florida 33431, Attention: Secretary. Attendance at the Annual Meeting will not
in and of itself constitute a revocation of a Proxy.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
Only holders of record of the common stock, par value $.01 per share,
of the Company (the "Common Stock") as of the close of business on the Record
Date will be entitled to vote at the Annual Meeting. Each share of Common
Stock entitles the registered holder thereof to one vote on each matter to come
before the Annual Meeting. As of the close of business on the Record Date,
there were 4,715,000 shares of the Common Stock outstanding. The presence, in
person or by Proxy, of stockholders entitled to cast a majority of all votes
entitled to be cast at the Annual Meeting will constitute a quorum. Assuming a
quorum, the nominees receiving a plurality of the votes cast at the Annual
Meeting for the election of Directors will be elected as Directors. Votes that
are withheld will be counted for purposes of determining the presence or
absence of a quorum but will have no other effect. Broker non-votes, if any,
will be counted for purposes of determining the presence or absence of a quorum
but will have no effect on the outcome of the election of Directors.
The following table sets forth certain information, as of March 15,
1997, relating to the beneficial ownership of shares of the Common Stock by:
(i) each person or entity who is known by the Company to own beneficially five
percent or more of the outstanding Common Stock; (ii) each of the Company's
executive officers and directors; and (iii) all directors and executive
officers of the Company as a group.
3
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY SHARES BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) OWNED(2) OWNED(2)
---------------------------------------- -------- --------
<S> <C> <C>
Earl T. Takefman(3) . . . . . . . . . . . . . . . 1,314,118 26.2%
Alan L. Lubell(4) . . . . . . . . . . . . . . . . 1,255,958 25.0
Greg Norman . . . . . . . . . . . . . . . . . . . 300,000 6.0
Barry Minsky(5) . . . . . . . . . . . . . . . . . 248,503 5.0
Richard Parker(6) . . . . . . . . . . . . . . . . 0 -
Edward Smith(7) . . . . . . . . . . . . . . . . . 0 -
Eddie Einhorn(8) . . . . . . . . . . . . . . . . 1,666 *
Mark Hershhorn(8) . . . . . . . . . . . . . . . . 1,666 *
Beryl Artz(8) . . . . . . . . . . . . . . . . . . 1,666 *
All directors and executive officers as a group
(seven persons) . . . . . . . . . . . . . . . . . 3,123,577 62.2
</TABLE>
- - --------------------
*Less than 1%
(1) Unless otherwise indicated, the address for each named individual is in
care of Visual Edge Systems Inc., 2424 North Federal Highway, Suite 100,
Boca Raton, Florida 33431.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of the Common Stock beneficially owned by them. A person is deemed to be
the beneficial owner of securities which may be acquired by such person
within 60 days from the date of this Proxy Statement upon the exercise of
options, warrants or convertible securities. Each beneficial owner's
percentage ownership is determined by assuming that options that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days of the date of this Proxy Statement, have been
exercised.
(3) Includes (i) 1,164,118 shares owned by Status-One Investments Inc., a
Delaware corporation owned by Earl T. Takefman and certain family members
and controlled by Earl T. Takefman (which includes 10,000 shares of Common
Stock acquired in the Bridge Financing and 10,000 shares of Common Stock
underlying the Bridge Warrants) and (ii) presently exercisable options to
acquire 150,000 shares of Common Stock, but does not include (x) shares of
Common Stock underlying options held by Mr. Takefman and his spouse (as to
which Mr. Takefman disclaims beneficial ownership) to acquire an aggregate
of 193,310 shares of Common Stock, none of which are exercisable within 60
days or (y) 2,136 shares of Common Stock owned by Mr. Takefman's spouse, as
to which shares Mr. Takefman disclaims beneficial ownership.
(4) Includes (i) presently exercisable options to acquire 150,000 shares of the
Common Stock and (ii) shares underlying an aggregate of 134,236 options to
acquire shares owned by Mr. Lubell, which options Mr. Lubell granted to
certain persons and which are not exercisable within 60 days, but does not
include (x) 21,827 shares of the Common Stock that Mr. Lubell has agreed to
give to certain persons on July 24, 1997 upon the expiration of the
transfer restrictions on such shares and (y) 100,000 shares of the Common
Stock underlying the Executive Options, which are not exercisable within
60 days.
(5) The shares are owned by Greenwich Properties Inc., a company controlled by
Barry Minsky. Mr. Minsky's address is c/o Greenwich Properties Inc., 545
Madison Avenue, New York, New York 10022.
(6) Excludes shares underlying options to acquire 100,000 shares of the Common
Stock, none of which are exercisable within 60 days.
(7) Excludes shares underlying options to acquire 25,000 shares of the Common
Stock, none of which are exercisable within 60 days.
(8) Excludes shares underlying options to acquire 3,334 shares of the Common
Stock, none of which are exercisable within 60 days.
4
<PAGE> 8
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Six directors are to be elected to hold office until the next annual
meeting and until their respective successors are elected and qualified.
The following information is furnished with respect to the six
nominees for election as Directors. The Board of Directors has recommended the
nominees named below. Unless otherwise instructed, it is the intention of the
persons named in the accompanying Proxy to vote all shares of the Common Stock
represented by properly executed Proxies for the nominees named below.
Although such nominees have indicated that they will serve as Directors of the
Company, should any of them be unable to serve, the Proxies will be voted for
the election of a substitute nominee designated by the Board of Directors or
the Board of Directors will elect to reduce the number of Directors
constituting the Board of Directors. There is no cumulative voting for
Directors.
Nominees for Directors
Earl T. Takefman, age 47, a co-founder of the Company, has been Chief
Executive Officer of the Company since March 1995. Prior to founding the
Company, Mr. Takefman was Co-Chief Executive Officer of SLM International, Inc.
("SLM"), a publicly traded toy and sporting goods company, from December 1989
to August 1994. SLM filed for protection under Chapter 11 of the U.S.
Bankruptcy Code in October 1995. From 1980 to 1989, prior to joining SLM, Mr.
Takefman was Chief Operating Officer of Charan Industries ("Charan"), a
publicly traded Canadian toy and sporting goods company. Mr. Takefman received
a Bachelor of Architecture degree in 1971 and a Masters of Business
Administration degree from McGill University in Montreal, Canada in 1973.
Alan L. Lubell, age 58, a co-founder of the Company, has been Chairman
of the Board of the Company since July 1994 and Vice President since May 1996.
Prior to founding the Company, Mr. Lubell had been an entrepreneur in the area
of sports television. From 1977 to July 1994, Mr. Lubell served as President of
Marathon Entertainment, a sports television company which he founded that
created many events and programs that were sold to television stations and
networks and national advertisers. Among the events developed, packaged and
produced by Marathon Entertainment was the New York City Marathon. Mr. Lubell
received a Bachelor of Science degree in marketing from New York University in
1960.
Richard Parker,age 35, has been the Company's President and Chief
Operating Officer since July 1996. From February 1990 until his appointment as
Chief Operating Officer of the Company, Mr. Parker was the founder, owner and
president of Diomo Marketing Inc. and Devrew Merchandising Inc., companies
engaged in marketing and selling consumer products in Canada. From August 1984
to February 1990, Mr. Parker held various positions, including Vice President,
at Charan. Mr. Parker graduated from Vanier College in Montreal in 1980.
Eddie Einhorn, age 60, became a director of the Company on July 24,
1996 upon completion of the Company's initial public offering ("IPO"). Mr.
Einhorn currently serves, and has served for the past five years, as
Vice-Chairman of the Chicago White Sox baseball team franchise. Prior to being
appointed Vice-Chairman, he served the franchise as its President and Chief
Operating Officer from 1981 to 1991. Mr. Einhorn is a member of the Major
League Baseball Schedule Format Committee, the Professional Baseball
Association Committee, and was a member of the Television Committee from 1992
to 1995. In 1989, Mr. Einhorn was appointed television consultant to the
United States Olympic Committee. He is currently a television consultant for
the United States Figure Skating Association and the International Skating
Union,
5
<PAGE> 9
the governing bodies for figure skating throughout the world. Mr. Einhorn also
serves on the Board of Directors of the Chicago Bulls basketball team of the
National Basketball Association. Prior to 1981, Mr. Einhorn was executive
producer of CBS Sports Spectacular, where he was awarded an Emmy Award in 1980.
Mr. Einhorn holds a Bachelor's degree from the University of Pennsylvania and
is a graduate of Northwestern University School of Law.
Mark Hershhorn, age 48, became a director of the Company on July 24,
1996 upon completion of the Company's IPO. Mr. Hershhorn currently serves and
has served since November 1994 as President and Chief Executive Officer and as
a director of National Media Corporation of Philadelphia, a publicly-traded
worldwide infomercial company, and as Chairman of the Board of its
international subsidiary, Quantum International, Inc. From August 1994 to
November 1994, Mr. Hershhorn acted as President and Chief Operating Officer of
National Media. Mr. Hershhorn was President and Chief Operating Officer of
Buckeye Communications, a publicly traded corporation, from June 1993 to August
1994 and of National Media from December 1991 to April 1993. From 1990 to
December 1991, Mr. Hershhorn was a Senior Vice President of Food Marketing for
Nutri-Systems Inc., a diet food company. Prior to joining Nutri-Systems, he
held various positions at the Franklin Mint, including Chief Financial Officer,
Treasurer, Vice President and director, from 1985 to 1990. Mr. Hershhorn
received a Bachelor of Arts degree in economics Rutgers University and a
Masters of Business Administration degree from the Wharton School of Business
at the University of Pennsylvania. He currently serves as a member of the
Wharton School Graduate Executive Board and as a member of the Executive
Committee of the National Infomercial Marketing Associations.
Beryl Artz, age 44, became a director of the Company on March 19,
1997. Since March 1995, Mr. Artz has served as an Executive Vice President and
director for Club Corporation of America, a corporation that owns and manages
golf courses, in which position he has responsibility for private clubs, public
golf and semi-private club operations within Texas and the Southeast United
States. From January 1988 until January 1995, Mr. Artz was the Executive Vice
President of GolfCorp, a corporation that owns and manages golf courses, where
he had responsibility for the public golf course and semi-private club
operations. Mr. Artz also currently serves as an advisor to the Board of
Directors of Club Corporation International, a privately held corporation that
owns and manages golf courses and that has annual gross revenues of over $700
million and over 228,000 memberships nationwide.
VOTE REQUIRED FOR APPROVAL
The six nominees receiving a plurality of the votes cast at the Annual
Meeting for the election of Directors will be elected as Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ITS NOMINEES TO THE BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
The Company reimburses Directors for reasonable travel expenses
incurred in connection with their activities on behalf of the Company, but does
not give its Directors additional compensation for serving as Directors or for
attending Board of Directors meetings. Each Director who is not an employee of
the Company receives an initial grant of non-qualified options to purchase
5,000 shares of the Common Stock under the Company's Stock Option Plan.
Non-employee directors will, beginning with the Annual Meeting, receive annual
grants of non-qualified options to purchase 2,500 shares of the Common Stock.
In addition, Mr. Frank Williams, a former Director of the Company, currently
acts as an
6
<PAGE> 10
advisor to the Board of Directors and will receive an annual grant of
non-qualified options to purchase 2,500 shares of the Common Stock as long as
he continues to serve in such advisory capacity.
BOARD AND COMMITTEE MEETINGS
The Company's IPO was consummated on July 24, 1996. The Company's
Board of Directors did not meet after the completion of the IPO, although it
did act by unanimous written consent on several occasions.
Nominees for election as a director of the Company are selected by the
full Board of Directors, acting as a nominating committee. Nominations for
directors, other than those made by the entire Board of Directors, will not be
eligible to be voted upon at an annual meeting unless submitted in accordance
with the procedure set forth under the heading "STOCKHOLDER PROPOSALS AND
NOMINATIONS FOR THE 1998 ANNUAL MEETING."
The Board of Directors has an Audit Committee and a Compensation
Committee. The members of the Audit Committee presently consist of Messrs.
Einhorn and Hershhorn. The members of the Compensation Committee presently
consist of Messrs. Hershhorn and Artz.
The Audit Committee is generally responsible for recommending the
appointment of the Company's independent auditors and overseeing the accounting
and internal audit functions of the Company. Audit Committee members will meet
regularly with the Company's financial management and independent auditors to
review the results of their examinations, the general scope of their audit
services and their opinions on the adequacy of internal controls and quality of
financial reporting. The Audit Committee did not meet during 1996.
The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors concerning remuneration of the
Company's executive officers. The Compensation Committee also administers the
Company's Stock Option Plan and determines the amounts of, and the individuals
to whom, awards shall be made thereunder. The Compensation Committee did not
meet during 1996.
EXECUTIVE OFFICERS
The executive officers of the Company are appointed by the Board of
Directors of the Company and serve at the discretion of the Board of Directors.
The executive officers of the Company, other than Mr. Smith, their respective
ages and positions and certain other information with respect to each of them
are set forth herein under the section entitled "Election of Directors." In
addition, certain information is set forth below with respect to Mr. Thomas
Peters and Mr. Peter Gorski, each of whom is considered a key employee of the
Company.
Edward Smith, age 45, became the Company's Chief Financial Officer in
March 1997. From January 1996 until February 1997, Mr. Smith was the Vice
President of Finance for Enterprise Development Corporation, a Florida
corporation that provides consulting services to developing and early stage
companies. From January 1995 until January 1996, Mr. Smith was the Chief
Financial Officer for Kirker Enterprises, Inc., a Delaware corporation
specializing in the manufacturing of bulk cosmetics. From September 1985 until
January 1995, Mr. Smith was the Chief Financial Officer of the Calabrian
Corporation, a Delaware
7
<PAGE> 11
corporation which manufactures specialized chemicals. From February 1981 to
September 1985, Mr. Smith was a Manager at KPMG Peat Marwick in the consulting
area. Mr. Smith received a B.B.A. in accounting from Pace University in 1975
and an M.B.A. from Pace University in 1978.
Thomas Peters, age 51, has been Director of Software Development of
the Company since May 1996. Since July 1992, Mr. Peters has been the owner of
Smart View ("Smart View"), a company he founded to design and develop computer
golf software to be used by golf professionals when giving video golf lessons.
Since March 1995, Smart View has been engaged as an independent consultant to
the Company and is principally responsible for the development of the software
used in the Company's products. Smart View also has developed operating systems
used by the Golf Academy at PGA National and at the Doral Golf Learning Center,
each in Florida. Prior to founding Smart View, Mr. Peters, for 26 years, held
various positions at International Business Machines Corporation, including
Manager of Application Development from July 1989 to July 1992 and Personal
Computer Product Planning Manager from 1984 to 1989. Mr. Peters graduated from
Harper College at University of New York in 1967, with a B.A. in mathematics.
Peter Gorski, age 41, has been the Company's Vice President of
Operations since August 1996. From March 1996 until his appointment as Vice
President of Operations, Mr. Gorski was founder and owner and President of GHD
Systems, Inc., a company providing courier services in five states. From
February 1979 to March 1996, Mr. Gorski held various positions with the Federal
Express Corporation, including Managing Director of District Operations, South
Florida District. Mr. Gorski graduated from University of Wisconsin -
Whitewater in 1976.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation earned by or awarded to the Chief Executive Officer and each of
the other executive officers (the "Named Executive Officers") of the Company
for the fiscal year ended December 31, 1996. Prior to the consummation of the
Company's IPO on July 24, 1996, none of the Named Executive Officers received
compensation or benefits from the Company.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
------------------------------- -------------------------------------------
Restricted Securities All Other
Salary Bonus Other Stock Underlying Compensation
Name and Principal Position Year ($) ($) ($) Award(s)(#) Options(1) ($)
- - ------------------------------------------- ---- ------ ----- ----- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Earl T. Takefman, Chief Executive Officer . 1996 150,000 0 0 0 337,478 0
Alan L. Lubell, Chairman of the Board and
Vice President - Product Development . . . 1996 75,000 0 0 0 250,000 0
Richard Parker, President and Chief
Operating Officer . . . . . . . . . . . . . 1996 62,500 0 0 0 50,000 0
Ami Trauber, Chief Financial Officer(2) . . 1996(2) 62,500 0 0 0 25,000 0
</TABLE>
8
<PAGE> 12
(1) Reflects options to acquire shares of the Company that were granted
in 1996. The Company has not granted stock appreciation rights.
(2) Mr. Trauber was terminated on February 28, 1997, and was replaced as
Chief Financial Officer by Edward Smith. Mr. Smith receives an
annual salary of $100,000 in connection with his employment.
SEVERANCE ARRANGEMENT
Effective February 28, 1997, the employment of Ami Trauber, the
Company's former Chief Financial Officer, was terminated. Pursuant to the terms
of an agreement in principle (the "Release"), between the Company and Mr.
Trauber, the vesting of options to purchase 25,000 shares of Common Stock, at an
exercise price of $5.00 per share, granted to Mr. Trauber would be accelerated
so that all of such options vested immediately. Pursuant to the Release, Mr.
Trauber will exercise all of his options and sell the underlying shares of
Common Stock at prevailing market prices such that the Company will receive up
to $128,000 from such exercise, with Mr. Trauber retaining the remaining
proceeds.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, with respect to the Named Executive
Officers, information concerning the grant of stock options pursuant to the
Plan during the fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
Individual Grants(1)
----------------------------------------------------------
Number of Percentage of Total
Securities Options Granted to Exercise or Base
Underlying Employees in Fiscal Price Per Share
Name Options Granted 1996 ($/Share)(2) Expiration Date
- - --------------------- --------------- ------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Earl T. Takefman . . 337,478(3) 43.9% $5.00 July 24, 2006
Alan L. Lubell . . . 250,000(4) 32.6 $5.00 July 24, 2006
Richard Parker . . . 50,000 6.5 $5.00 July 24, 2006
Ami Trauber(5) . . . 25,000 3.3 $5.00 July 24, 2006
</TABLE>
(1) All options granted in fiscal 1996 expire ten years from the date of the
grant.
(2) The exercise price per share for all options granted is equal to the market
price of the underlying Common Stock as of the date of grant.
(3) Excludes (i) 10,000 warrants owned by Mr. Takefman to acquire shares of the
Common Stock at a price per share of $10.00, which were purchased by Mr.
Takefman upon the same terms as other unaffiliated investors in a Bridge
Financing consummated by the Company in March 1997, and (ii) 5,832 shares
underlying options owned by Mr. Takefman's spouse, as to which shares Mr.
Takefman disclaims beneficial ownership.
9
<PAGE> 13
(4) Excludes 15,832 shares underlying options owned by Mr. Lubell's son, Mark
Lubell, as to which shares Mr. Alan Lubell disclaims beneficial ownership.
(5) Mr. Trauber's employment as the Company's Chief Financial Officer was
terminated on February 28, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
The following table shows, with respect to the Named Executive Officers,
information with respect to the unexercised options to purchase shares of the
Common Stock granted under the Plan and held as of December 31, 1996. None of
the Named Executive Officers exercised options during the year ended December
31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1996 AT DECEMBER 31, 1996 (1)
------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------ ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Earl T. Takefman . . . 0 337,478(2) 0 $253,108.50
Alan L. Lubell . . . . 0 250,000(3) 0 187,500.00
Richard Parker . . . . 0 50,000 0 37,500.00
Ami Trauber(4) . . . . 0 25,000 0 18,750.00
</TABLE>
(1) Options are "in-the-money" if the closing market price of the Company's
Common Stock exceeds the exercise price of the options. The value of the
unexercised options represents the difference between the exercise price
of such options and the closing market price of the Company's Common Stock
on December 31, 1996.
(2) Excludes (i) 10,000 warrants owned by Mr. Takefman to acquire shares of
the Common Stock at a price per share of $10.00, which were purchased by
Mr. Takefman upon the same terms as other unaffiliated investors in a
Bridge Financing consummated by the Company in March 1997, and (ii) 5,832
shares underlying options owned by Mr. Takefman's spouse, as to which
shares Mr. Takefman disclaims beneficial ownership.
(3) Excludes 15,832 shares underlying options owned by Mr. Lubell's son, Mark
Lubell, as to which shares Mr. Alan Lubell disclaims beneficial ownership.
(4) Mr. Trauber's employment as the Company's Chief Financial Officer was
terminated on February 28, 1997. In connection with such termination, Mr.
Trauber and the Company reached an agreement in principle pursuant to which
the vesting of all of Mr. Trauber's options to purchase 25,000 shares of
the Common Stock granted to Mr. Trauber would be accelerated. All of such
options are exercisable at a price of $5.00 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Compensation Committee are non-employee
Directors of the Company and are not former officers of the Company or its
subsidiaries. No executive officer of the Company serves as a member of the
Board of Directors or on the compensation committee of a corporation for which
any of the Company's Directors serving on the Compensation Committee or on the
Board of Directors of the Company is an executive officer.
EMPLOYMENT AGREEMENTS
Effective January 1, 1996, the Company entered into a three-year
employment agreement with Earl T. Takefman, the Chief Executive Officer of the
Company. Pursuant to the agreement, Mr. Takefman is
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<PAGE> 14
entitled to receive a base salary of $150,000 per annum, subject to increase to
$200,000 in July 1997 and $250,000 in July 1998 if the Company achieves pre-tax
earnings of $2 million and $4 million in the prior 12-month periods,
respectively. The agreement also provides for additional compensation in the
amount of 5% of pre-tax earnings of the Company in each year if the Company
achieves pre-tax earnings of a least $3 million and $5 million in fiscal 1997
and 1998, respectively. In addition, pursuant to the agreement, Mr. Takefman
received 250,000 options (the "Executive Options") upon the consummation of the
Company's IPO, which options vest five years from the date of grant, subject to
acceleration if the trading price of the Common Stock reaches certain
thresholds, and which have an exercise price of $5.00. Specifically, the
vesting of 150,000 of the Executive Options would accelerate to the date
that the market price of the Common Stock equaled or exceeded $10.00 per share
for at least five consecutive trading days on or prior to January 24, 1998, if
the price reaches such threshold. This threshold was achieved on February 7,
1997, and, accordingly, 150,000 of the Executive Options became exercisable as
of such date. The vesting of the remaining 100,000 of the Executive Options
will accelerate to the date that the trading price of the Common Stock equals
or exceeds $15.00 per share for at least five consecutive trading days on or
prior to January 24, 1999, if the price reaches such threshold. The agreement
is automatically renewed for additional one-year periods unless Mr. Takefman or
the Company provides notice to the other of its termination. In the event that
Mr. Takefman is terminated without cause, he will be entitled to receive as
severance the amount of his base salary for the lesser of one year or the
remaining term of the agreement.
Effective January 1, 1996, the Company entered into a three-year
employment agreement with Alan L. Lubell, the Chairman of the Board and Vice
President of the Company. Pursuant to the agreement, Mr. Lubell is entitled to
receive a base salary of $75,000 per annum, subject to increase to $100,000 in
July 1997 and $125,000 in July 1998 if the Company achieves pre-tax earnings,
of $2 million and $4 million in the prior 12-month periods, respectively. In
addition, Mr. Lubell shall have the right to receive a bonus based on the
Company's performance, as determined by the board of Directors, and received
250,000 Executive Options on the same terms and subject to the same conditions
as Mr. Takefman. The agreement is automatically renewed for additional
one-year periods unless Mr. Lubell or the Company provides notice to the other
of its termination. In the event Mr. Lubell is terminated without cause, he
will be entitled to receive as severance the amount of his base salary for six
months.
Effective June 1, 1996, the Company entered into an employment
agreement with Richard Parker, pursuant to which Mr. Parker serves as the
President and Chief Operating Officer of the Company. Mr. Parker is entitled
to receive a base salary of $150,000 per annum, subject to increase to $175,000
in 1998 if the Company achieves certain pre-tax earnings during 1997. Pursuant
to his employment agreement, Mr. Parker is also eligible to receive a cash
bonus and additional options under a formula based upon (i) the Company's stock
price at the end of its fiscal year, or (ii) whether the Company achieves
certain pre-determined target earnings per share thresholds. The agreement
expires on December 31, 1998 but will automatically be renewed annually unless
terminated by one or both of the parties. If Mr. Parker is terminated without
cause, he will be entitled to received as severance the amount of his base
salary for the lesser of six months or the remaining term of the agreement.
PROPOSAL NO. 2 - APPROVAL OF THE VISUAL EDGE SYSTEMS INC. AMENDED AND RESTATED
1996 STOCK OPTION PLAN
In April 1996, prior to the Company's IPO, the Board of Directors
adopted, and the Company's then stockholders approved, the Company's 1996 Stock
Option Plan pursuant to which key employees and non-employee directors of the
Company have been granted stock options. Effective January 1, 1997, the Board
of Directors approved an amendment to the 1996 Stock Option Plan, which, as
amended, was renamed the Visual Edge Systems Inc. Amended and Restated 1996
Stock Option Plan. The amendment increased the limitation on the number of
shares of the Common Stock that may be subject to outstanding options from
11
<PAGE> 15
900,000 to the greater of 1,200,000 or 12% of the total number of shares of the
Common Stock outstanding. The purpose of this amendment is (i) to ensure that
a sufficient number of shares are available for grants of options at any given
time and (ii) to give the Compensation Committee added flexibility in
compensating key employees and other individuals with stock options.
At the 1997 Annual Meeting, Stockholders will be asked to approve the
Stock Option Plan, as amended and restated. All option grants made pursuant to
the Stock Option Plan from and after the date of the Annual Meeting are
contingent upon the approval of the Stock Option Plan by Stockholders at the
1997 Annual Meeting.
In the Board of Director's judgment, the Stock Option Plan provides a
critical long-term incentive for the management employees and non-employee
directors of the Company and its subsidiaries. The Board of Directors believes
that the Company's policy of granting stock options to directors and employees
will continue to provide it with a critical advantage in attracting and
retaining qualified candidates. In addition, the Stock Option Plan, in its
amended and restated form, is intended to provide the Committee with maximum
flexibility to compensate plan participants. It is expected that such
flexibility will be an integral part of the Company's policy to encourage
directors and key employees to focus on the long-term growth of Stockholder
value. The Board of Directors believes that important advantages to the
Company are gained by an option program such as the Stock Option Plan which
includes incentives for motivating employees of the Company, while at the same
time promoting a closer identity of interests between directors and employees
on the one hand, and the Stockholders on the other.
The principal terms of the Stock Option Plan are summarized below and
a copy of the Stock Option Plan is annexed to this Proxy Statement as Annex A.
The summary of the Stock Option Plan set forth below is not intended to be a
complete description thereof and such summary is qualified in its entirety by
the actual text of the Stock Option Plan to which reference is made.
SUMMARY DESCRIPTION OF THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The purpose of the Stock Option Plan, attached hereto as Annex A, is
to provide directors, officers and key employees of, and consultants to the
Company and its subsidiaries with additional incentives by increasing their
ownership interests in the Company. Directors, officers and other key
employees of the Company and its subsidiaries are eligible to participate in
the Stock Option Plan. Options may also be granted to consultants providing
valuable services to the Company and its subsidiaries . In addition,
individuals who have agreed to become a key employee of or a consultant to the
Company and its subsidiaries are eligible for option grants, conditional in
each case on actual employment or consultant status. Awards of options to
purchase Common Stock may include incentive stock options ("ISOs") and/or
non-qualified stock options ("NQSOs").
The maximum number of shares of the Common Stock that may be subject
to outstanding options, determined immediately after the grant of any option,
is equal to the greater of 1,200,000 shares (reduced by the number of options
not granted or, if granted, forfeited in accordance with their terms) or 12% of
the aggregate number of shares of the Company's Common Stock outstanding,
provided, however, that options to purchase no more than 300,000 shares of the
Common Stock may be granted as ISOs. Prior to its January 1, 1997 amendment,
the Stock Option Plan provided that no more than 900,000 shares of the Common
Stock may be subject to options under the Stock Option Plan.
12
<PAGE> 16
The Compensation Committee administers the Stock Option Plan. Except
with respect to nondiscretionary stock options granted to non-employee
directors (described below) the Compensation Committee generally has discretion
to determine the terms of any option grant, including the number of option
shares, option price, term, vesting schedule, the post-termination exercise
period, and whether the grant will be an ISO or NQSO. Notwithstanding this
discretion: (i) the number of shares subject to options granted to any
individual in any calendar year may not exceed 250,000; (ii) the term of any
option may not exceed 10 years (unless granted as an ISO to a 10% or more
stockholder, which term may not exceed five years); and (iii) an option will
terminate upon a grantee's termination of employment for cause. In addition,
unless otherwise specified by the Compensation Committee, all outstanding
options vest upon a "change in control" of the Company (as defined in the Stock
Option Plan), and all options will terminate three months following any
termination of employment.
The Stock Option Plan also provides for automatic, non-discretionary
option grants to directors who are not otherwise employed by the Company. Upon
commencement of service, non-employee directors receive a nonqualified option
to purchase 5,000 shares of the Common Stock, and continuing non-employee
directors receive annual grants of stock options to purchase 2,500 shares of
the Common Stock. Options granted to non-employee directors become exercisable
as to one-third of the shares on the date of grant, and as to one-third on each
of the next two anniversaries of the date of grant, have a term of five years
from the date of grant, and are granted with an exercise price equal to the
fair market value of the Common Stock on the date of their grant.
The Stock Option Plan may be amended, altered, suspended, discontinued
or terminated by the Board of Directors without further Stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common Stock is then
listed or quoted. Thus, Stockholder approval will not necessarily be required
for amendments which might increase the cost of the Stock Option Plan or
broaden eligibility. The Stock Option Plan will remain in effect until
terminated by the Board of Directors.
Option grants under the Stock Option Plan that may in the future be
received by or allocated to the Company's executive officers or to such other
group or groups of persons from and after the date of the Annual Meeting are
not presently determinable (other than with respect to options granted to the
Company's non-employee directors, who will receive automatic, non-discretionary
grants in such amounts and on such terms as described in this summary).
FEDERAL TAX CONSEQUENCES
The following is a brief description of the federal income tax
consequences generally arising with respect to options that may be granted
under the Stock Option Plan. This discussion is intended for the information
of Stockholders considering how to vote at the Annual Meeting and not as tax
guidance to individuals who participate in the Stock Option Plan.
The grant of an option will create no tax consequences for the grantee
or the Company. A grantee will not have taxable income upon exercising an ISO
(except that the alternative minimum tax may apply) and the Company will
receive no deduction at that time. Upon exercising a NQSO, the participant
must generally recognize ordinary income equal to the difference between the
exercise price and fair market value of the freely transferable and
nonforfeitable stock received. In each case, the Company will be entitled to a
deduction equal to the amount recognized as ordinary income by the participant.
13
<PAGE> 17
A participant's disposition of shares acquired upon the exercise of an
option generally will result in short- term capital gain or loss measured by
the difference between the sale price and the participant's tax basis in such
shares (or the exercise price of the option in the case of shares acquired by
exercise of an ISO and held for the applicable ISO holding periods).
Generally, there will be no tax consequences to the Company in connection with
a disposition of shares acquired under an option except that the Company will
be entitled to a deduction (and the participant will recognize ordinary taxable
income) if shares acquired upon exercise of an ISO are disposed of before the
applicable ISO holding periods have been satisfied.
Section 162(m) of the Internal Revenue Code generally disallows a
public company's tax deduction for compensation to its chief executive officer
and the four other most highly compensated executive officers in excess of $1
million. Compensation that qualifies as "performance-based compensation" is
excluded from the $1 million deductibility cap, and therefore remains fully
deductible by the company that pays it. The Company intends that options
granted to the relevant officers with an exercise price at least equal to 100%
of fair market value of the underlying stock at the date of grant will qualify
as such "performance-based compensation," although other option grants under
the Stock Option Plan may not so qualify.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the outstanding shares of the
Common Stock present in person or represented by Proxy at the Annual Meeting
and entitled to vote is required to approve the adoption of the Stock Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE COMPANY'S AMENDED AND RESTATED STOCK OPTION PLAN.
CERTAIN TRANSACTIONS
STOCK ISSUANCES AND LOANS
In March 1995, the Company issued (i) 1,708,938 shares of the Common
Stock to Alan L. Lubell, its Chairman of the Board and Vice President, (ii)
732,402 shares of the Common Stock to Status-One Investments Inc.
("Status-One"), a company controlled by Earl Takefman, its Chief Executive
Officer, and (iii) 488,268 shares of the Common Stock to Greenwich Properties
Inc. ("Greenwich"), a company controlled by Barry Minsky, for nominal
consideration.
In March 1995, Mr. Lubell transferred 427,235 shares of the Common
Stock to Status-One in accordance with the terms of a shareholders agreement,
dated March 1, 1995, by and between Status-One and Mr. Lubell (the
"Shareholders Agreement"). The Shareholders Agreement has since been
terminated. Between June 1995 and March 1996, Mr. Lubell sold an additional
102,536 shares of the Common Stock to various investors for $630,000 in the
aggregate, and Greenwich sold 9,765 shares in consideration of $60,000 in the
aggregate.
Since its inception, the Company borrowed $191,750, $162,500 and
$48,450, respectively, from Mr. Lubell, Status-One and Greenwich. In December
1995, these loans were contributed to the capital of the Company for no
consideration.
14
<PAGE> 18
In March 1995, the Company issued an additional 24,413 shares of the
Common Stock to Status-One and granted options to purchase 87,478 shares of the
Common Stock to Earl Takefman in exchange for financing considerations arranged
by Status-One. In addition, in March 1995 the Company issued an additional
24,413 shares of the Common Stock to Status- One in consideration of services
rendered to the Company by Earl Takefman, 9,155 shares to Thomas Peters in
consideration of software development services rendered to the Company, 2,136
shares to Mona-Lee Takefman, the spouse of Earl Takefman, the Company's Chief
Executive Officer, in consideration of clerical and secretarial services
rendered to the Company and 2,136 shares to Mark Lubell, the son of Alan
Lubell, the Company's Chairman of the Board of Directors and Vice President, in
consideration of managerial services rendered to the Company during its market
testing activities. The value of the foregoing services were, in each case,
determined by the Board of Directors of the Company based upon a per share
valuation of $.17.
In April 1996, Greenwich, Status-One and Mr. Lubell transferred
180,000, 56,250 and 63,750 shares of the Common Stock, respectively, to Greg
Norman, upon his exercise of an option granted to him pursuant to the terms of
the Shareholders Agreement and the Greg Norman License. Pursuant to the Greg
Norman License, the Company is required to make guaranteed payments aggregating
$3,300,000 during the three-year period commencing July 1, 1996.
RECAPITALIZATION
In March 1996, the Company effected a recapitalization of its capital
stock. Each outstanding share of Class A Common Stock was converted into the
right to receive .488268 shares of the Common Stock, and each outstanding share
of Class B Common Stock was converted into the right to receive 4,882.68 shares
of the Common Stock. In addition, options to purchase 505,000 shares of Class
A Common Stock were converted, on the same terms and conditions, into the right
to purchase 294,508 shares of the Common Stock.
LOAN GUARANTEES
As of May 31, 1996, the Company borrowed an aggregate of $507,000 from
Republic National Bank of New York, which was repaid from the proceeds of the
IPO. Prior to such repayment, all of the Company's assets were pledged as
collateral to secure such indebtedness and Earl T. Takefman, Alan Lubell and
Barry Minsky, principal stockholders of the Company, had guaranteed and pledged
personal assets in the form of letters of credit and certificates of deposit
and in the amounts of $354,400, $106,325 and $39,275, respectively, to secure
the loan. Such personal guarantees and pledges of collateral were released
upon the Company's repayment of the indebtedness.
BRIDGE FINANCING
In March 1997, the Company consummated a bridge financing (the "Bridge
Financing") pursuant to which it issued to 13 investors, one of which was
Status-One, an aggregate of (i) 100,000 shares of the Common Stock and (ii)
100,000 warrants to purchase 100,000 shares of the Common Stock at a price of
$10.00 per share (the "Bridge Warrants"), subject to adjustment in certain
circumstances. As consideration for such securities, the investors in the
Bridge Financing pledged an aggregate of $3,500,000 in cash and other
marketable securities as cash collateral to Republic Bank of Canada (New York)
Ltd. ("Republic"), which in turn issued a stand-by letter of credit (the
"Letter of Credit") to the Company in an amount of $3,500,000. The Company has
used the Letter of Credit to secure a $3,500,000 line of credit from Barnett
Bank.
15
<PAGE> 19
Of the aggregate $3,500,000 cash collateral delivered to Republic to
secure the Letter of Credit, $350,000 was contributed by Status-One. As
consideration for the use of such collateral, the Company issued to Status-One
10,000 shares of the Common Stock and 10,000 warrants, each to purchase one
share of the Common Stock at a price of $10.00 per share, subject to adjustment
in certain circumstances. In the event that some or all of the cash collateral
delivered by Status-One is not returned, Status-One will receive additional
shares of the Common Stock from the Company. Status One's investment in the
Bridge Financing was made on the same terms as the other investors in the Bridge
Financing who are not affiliated with the Company.
OTHER
Prior to the IPO, the Company utilized office space in New York, New
York provided to it at no charge by Alan L. Lubell, its Chairman of the Board
and Vice President. The Company does not owe any rental charges to Mr. Lubell
as a result of the use of such space.
The Company believes that each of the foregoing transactions were on
terms no less favorable than those which could have been obtained from
unaffiliated third parties. All future transactions between the Company and
its affiliates will be on terms no less favorable than would be obtained from
unaffiliated third parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities and Exchange Act of 1934, the
Company's Directors, executive officers and holders of more than 10% of the
Common Stock are required to report their initial ownership of the Company's
equity securities and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established, and the Company is required to disclose any failure to file
by these dates with respect to 1996. Based on representations of its
directors and executive officers and copies of reports they have filed with the
Securities and Exchange Commission, there were no late reports filed for 1996.
INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
selected KPMG Peat Marwick LLP for fiscal 1997. KPMG Peat Marwick LLP audited
the Company's books, records and accounts for fiscal 1996, and representatives
of the firm will attend the Annual Meeting, will have the opportunity to make a
statement and will be available to answer questions that may be asked by
stockholders.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented
for consideration at the Annual Meeting other than the matters described in the
Notice of Annual Meeting, but if other matters are presented, it is the
intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their judgment.
16
<PAGE> 20
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 1998
ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals to be presented at the 1998 Annual Meeting of
Stockholders must be received, in writing, by the Secretary of the Company at
the Company's principal executive offices no later than December 8, 1997 in
order to be included in the Company's proxy materials relating to that meeting.
REPORT ON FORM 10-KSB/A
The Company's Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 1996, filed with the Securities and Exchange Commission, is
available to stockholders, without charge, upon written request. Requests for
copies should be directed to Visual Edge Systems Inc., 2424 North Federal
Highway, Suite 100, Boca Raton, Florida 33431, Attention: Secretary.
SOLICITATION OF PROXIES
The accompanying Proxy is solicited by the Board of Directors, and the
cost of such solicitation will be borne by the Company. Proxies may be
solicited by Directors, officers and employees of the Company, none of whom
will receive any additional compensation for his or her services. Solicitation
of Proxies may be made personally or by mail, telephone, telegraph, facsimile
or messenger. The Company will pay persons holding shares of the Common Stock
in their names or in the names of nominees, but not owning such shares
beneficially, such as brokerage houses, banks and other fiduciaries, for the
reasonable expense of forwarding soliciting materials to their principals.
By Order of the Board of Directors
Earl T. Takefman
Chief Executive Officer and Secretary
Boca Raton, Florida
April 7, 1997
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<PAGE> 21
ANNEX A
VISUAL EDGE SYSTEMS INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
Section 1. Purpose
The Plan (i) authorizes the Committee to provide to Employees and
Consultants of the Corporation and its Subsidiaries, who are in a position to
contribute materially to the long-term success of the Corporation, with options
to acquire Stock of the Corporation, and (ii) provides for the automatic grant
of options to Non-Employee Directors of the Corporation in accordance with the
terms specified herein. The Corporation believes that this incentive program
will cause those persons to increase their interest in the Corporation's
welfare, and aid in attracting and retaining Employees, Consultants and
Directors of outstanding ability.
Section 2. Definitions
Unless the context clearly indicates otherwise, the following terms,
when used in this Plan, shall have the meanings set forth in this Section:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) any person (as defined in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act), other than the Corporation or an employee
benefit plan of the Corporation, acquires directly or indirectly the
Beneficial Ownership (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) of any voting security of the
Corporation and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities
representing 30% or more of the total voting power of all of the
then-outstanding voting securities of the Corporation;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board and whose election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election) (such individuals being the "Continuing
Directors"), cease for any reason to constitute a majority of the
members of the Board;
(iii) the stockholders of the Corporation shall approve a
merger, consolidation, recapitalization, or reorganization of the
Corporation, a reverse stock split of outstanding voting securities,
or consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities
<PAGE> 22
of the Corporation immediately prior to the transaction, with the
voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of the Corporation shall approve a plan
of complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or a substantial portion
of the Corporation's assets (i.e., 50% or more of the total assets of
the Corporation).
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may
be amended from time to time.
(d) "Committee" shall mean the Board, or any Committee of two or
more Directors that may be designated by the Board to administer the Plan.
(e) "Consultant" shall mean (i) any person who is engaged to
perform services for the Corporation or its Subsidiaries, other than as an
Employee or Director, or (ii) any person who has agreed to become a consultant
within the meaning of clause (i).
(f) "Control Person" shall mean any person who, as of the date of
grant of an Option, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
or value of all classes of stock of the Corporation or of any parent or
Subsidiary.
(g) "Corporation" shall mean Visual Edge Systems Inc., a Delaware
corporation.
(h) "Director" shall mean any member of the Board.
(i) "Employee" shall mean (i) any full-time employee of the
Corporation or its Subsidiaries (including Directors who are otherwise employed
on a full-time basis by the Corporation or its Subsidiaries), or (ii) any
person who has agreed to become an employee within the meaning of clause (i).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as it may be amended from time to time.
(k) "Fair Market Value" of the Stock on a given date shall be
based upon: (i) if the Stock is listed on a national securities exchange or
quoted in an interdealer quotation system, the last sales price or, if
unavailable, the average of the closing bid and asked prices per share of the
Stock on such date (or, if there was no trading or quotation in the Stock on
such date, on the next preceding date on which there was trading or quotation)
as provided by one of such organizations; or (ii) if the Stock is not listed on
a national securities exchange or quoted in an interdealer quotation system, as
determined by the Board in good faith in its sole discretion; provided,
however, that the "fair market value" of Stock on the date on which shares of
Stock are first issued and sold pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission shall be the
Initial Public Offering price of the shares so issued and sold, as set forth in
the first final prospectus used in such offering.
(l) "Grantee" shall mean a person granted an Option under the
Plan.
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<PAGE> 23
(m) "Initial Public Offering" shall mean an initial public
offering of shares of Stock in a firm commitment underwriting registered with
the Securities and Exchange Commission in compliance with the provisions of the
1933 Act.
(n) "ISO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock and intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.
(o) "1933 Act" shall mean the Securities Act of 1933, as amended.
(p) "Non-Employee Director" shall mean a Director of the
Corporation who is not an Employee, nor has been an Employee at any time during
the prior one year period.
(q) "NQSO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock that is not an ISO.
(r) "Options" shall refer collectively to NQSOs and ISOs issued
under and subject to the Plan.
(s) "Parent" shall mean any parent corporation as defined in
Section 424 of the Code.
(t) "Plan" shall mean this Amended and Restated 1996 Stock Option
Plan as set forth herein and as amended from time to time.
(u) "Stock" shall mean shares of the Common Stock of the
Corporation, par value $0.01 per share.
(v) "Stock Option Agreement" shall mean a written agreement
between the Corporation and the Grantee, or a certificate accepted by the
Grantee, evidencing the grant of an Option hereunder and containing such terms
and conditions, not inconsistent with the Plan, as the Committee shall approve.
(w) "Subsidiary" shall mean (i) any corporation with respect to
which the Corporation owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such corporation, or (ii) any
entity which the Committee reasonably expects to become a subsidiary within the
meaning of clause (i).
Section 3. Shares of Stock Subject to the Plan
The total amount of Stock that may be subject to outstanding Options,
determined immediately after the grant of any Option, shall not exceed the
greater of 1,200,000 shares, or 12% percent of the total number of shares of
Stock outstanding. Notwithstanding the foregoing, the number of shares that
may be delivered upon exercise of ISOs shall not exceed 300,000, provided,
however, that shares subject to ISOs shall not be deemed delivered if such
Options are forfeited, expire or otherwise terminate without delivery of shares
to the Grantee. Any shares of Stock delivered pursuant to an Option may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
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Section 4. Administration of the Plan
The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have the authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of Stock Option
Agreements thereunder and to make all other determinations necessary or
advisable for the administration of the Plan. Any controversy or claim arising
out of or related to this Plan or the Options granted thereunder shall be
determined unilaterally by, and at the sole discretion of, the Committee. Any
action of the Committee with respect to the Plan shall be final, conclusive,
and binding on all persons, including the Corporation, subsidiaries of the
Corporation, Grantees, any person claiming any rights under the Plan from or
through any Grantee, and stockholders. The express grant of any specific power
to the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. To the extent
necessary to comply with Rule 16b-3 under the Exchange Act, determinations
concerning Options granted to any person who is subject to Section 16(b) of the
Exchange Act shall be made by the Committee, all of whose members shall be
"disinterested persons" within the meaning of Rule 16b-3 under the Exchange
Act. The Committee may delegate to officers or managers of the Corporation or
any Subsidiary the authority, subject to such terms as the Committee shall
determine, to perform administrative functions and, with respect to persons not
subject to Section 16 of the Exchange Act, to perform such other functions as
the Committee may determine, to the extent permitted under Rule 16b-3, if
applicable, and other applicable law.
Section 5. Types of Options
Options granted under the Plan may be of two types: ISOs or NQSOs.
The Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant in the Stock Option Agreement. Grantees who
are not Employees (determined with reference to Section 2(i)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i) only)
on the date an Option is granted shall only receive NQSOs.
Section 6. Grant of Options to Employees and Consultants
(a) Employees and Consultants of the Corporation and its
Subsidiaries shall be eligible to receive Options under the Plan.
(b) The exercise price per share of Stock subject to an Option
granted to an Employee or Consultant shall be determined by the Committee and
specified in the Stock Option Agreement, provided, however, that the exercise
price of each share subject to an ISO shall be not less than 100%, or, in the
case of an ISO granted to a Control Person, 110%, of the Fair Market Value of a
share of the Stock on the date such Option is granted.
(c) The term of each Option granted to an Employee or Consultant
shall be determined by the Committee and specified in a Stock Option Agreement,
provided that no Option shall be exercisable more than ten years from the date
such Option is granted, and provided further that no ISO granted to a Control
Person shall be exercisable more than five years from the date of Option grant.
(d) The Committee shall determine and designate from time to time
Employees or Consultants who are to be granted Options, and shall specify in
the Stock Option Agreement the nature of each Option granted and the number of
shares of Stock subject to each such Option, provided, however, that in any
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<PAGE> 25
calendar year, no Employee or Consultant may be granted an Option to purchase
more than 250,000 shares of Stock (determined without regard to when such
Option is exercisable), subject to adjustment pursuant to Section 10.
(e) Notwithstanding any other provisions hereof, the aggregate
Fair Market Value (determined at the time the ISO is granted) of the Stock with
respect to which ISOs are exercisable for the first time by any Employee during
any calendar year under all plans of the Corporation and any Parent or
Subsidiary corporation shall not exceed $100,000. To the extent the limitation
set forth in the preceding sentence is exceeded, the Options with respect to
such excess shall be treated as NQSOs.
(f) The Committee shall determine whether any Option granted to an
Employee or Consultant shall become exercisable in one or more installments and
specify the installment dates in the Stock Option Agreement. The Committee may
also specify in the Stock Option Agreement such other provisions, not
inconsistent with the terms of this Plan, as it may deem desirable, including
such provisions as it may deem necessary to qualify any ISO under the
provisions of Section 422 of the Code. Unless otherwise determined by the
Committee and specified in the Stock Option Agreement, all Options shall
immediately become exercisable upon a Change in Control.
(g) The Committee may, at any time, grant new or additional
options to any eligible Employee or Consultant who has previously received
Options under this Plan, or options under other plans, whether such prior
Options or other options are still outstanding, have been exercised previously
in whole or in part, or have been cancelled. The exercise price of such new or
additional Options may be established by the Committee, subject to Section 6(b)
hereof, without regard to such previously granted Options or other options.
Section 7. Grants of Options to Non-Employee Directors
(a) Non-Employee Directors of the Corporation who serve on the
Committee shall be eligible to receive Options under the Plan only pursuant to
the provisions of this Section 7. Each individual who agrees to become a Non-
Employee Director prior to the consummation of the Corporation's Initial Public
Offering shall receive, without the exercise of the discretion of any person,
an NQSO under the Plan relating to the purchase of 5,000 shares of Stock at an
exercise price per share equal to the Initial Public Offering price per share.
Such option grant shall be conditional upon, and for all purposes hereunder,
deemed granted upon, the Initial Public Offering. Each individual who becomes
a Non-Employee Director thereafter shall, on the date such individual becomes a
Non-Employee Director, receive, without the exercise of the discretion of any
person, an NQSO under the Plan relating to the purchase of 5,000 shares of
Stock. In addition, on the day of the annual meeting of stockholders next
following the date of an Initial Public Offering, and the day of each
subsequent annual meeting, each individual who is a continuing Non-Employee
Director on any such date (other than a Non-Employee Director who was granted
an Option pursuant to the preceding sentence within 30 days of the date of any
such annual meeting) shall receive, without the exercise of the discretion of
any person, an NQSO under the Plan relating to the purchase of 2,500 shares of
Stock. In the event that there are not sufficient shares available under this
Plan to allow for the grant to each Non-Employee Director of an NQSO for the
number of shares provided herein, each Non-Employee Director shall receive an
NQSO for his pro rata share of the total number of shares of Stock available
under the Plan.
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(b) The exercise price of each share of Stock subject to an Option
granted to a Non-Employee Director shall equal the Fair Market Value of a share
of Stock on the date such Option is granted. Payment of the exercise price for
the shares being purchased shall be made in cash.
(c) Each Option granted to a Non-Employee Director shall become
exercisable in three equal annual installments on the date of grant and on each
of the first two anniversaries of the date of grant, and shall have a term of
five years from the date of grant. Notwithstanding the exercise period of any
Option granted to a Non-Employee Director, all such Options shall immediately
become exercisable upon a Change in Control.
Section 8. Exercise of Options
(a) A Grantee shall exercise an Option by delivery of written
notice to the Corporation setting forth the number of shares with respect to
which the Option is to be exercised, together with cash, certified check, bank
draft, wire transfer, or postal or express money order payable to the order of
the Corporation for an amount equal to the Option price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price by delivery of
Stock or other property (including notes or other contractual obligations of
Grantees to make payment on a deferred basis, such as through "cashless
exercise" arrangements, to the extent permitted by applicable law), and the
methods by which Stock will be delivered or deemed to be delivered to Grantees.
(b) Except as provided pursuant to Section 9(a), no Option granted
to an Employee or Consultant shall be exercised unless at the time of such
exercise the Grantee is then an Employee (determined with reference to Section
2(i)(i) only) or Consultant (determined with reference to Section 2(e)(i) only)
of the Corporation or a Subsidiary (determined with reference to Section
2(w)(i) only).
(c) Except as provided in Section 9(a), no Option granted to a
Non-Employee Director shall be exercised unless at the time of such exercise
the Grantee is then a Non-Employee Director.
Section 9. Exercise of Options upon Termination
(a) Unless otherwise determined by the Committee, upon termination
of a Grantee's employment with the Corporation and its Subsidiaries, such
Grantee may exercise any Options during the three month period following such
termination of employment, but only to the extent such Option was exercisable
immediately prior to such termination of employment. Notwithstanding the
foregoing, if the Committee determines that such termination is for cause, all
Options held by the Grantee shall immediately terminate. In addition, all
Options granted on the basis of clause (ii) of Section 2(e), (i) or (w) shall
immediately terminate if the Committee determines, in its sole discretion, that
the Consultant, Employee or Subsidiary, as the case may be, will not become a
Consultant, Employee or Subsidiary within the meaning of clause (i) of such
Sections.
(b) Unless otherwise determined by the Committee and specified in
the Stock Option Agreement, in no event shall any Option be exercisable for
more than the maximum number of shares that the Grantee was entitled to
purchase at the date of termination of the relationship with the Corporation
and its Subsidiaries.
(c) The sale of any Subsidiary shall be treated as a termination
of employment with respect to any Grantee employed by such Subsidiary.
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(d) Subject to the foregoing, in the event of death, Options may
be exercised by a Grantee's legal representative.
Section 10. Adjustment Upon Changes in Capitalization
In the event of any dividend or other distribution (whether in the
form of cash, Stock, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Grantees under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock deemed to be available thereafter
for grants of Options under Section 3, (ii) the number and kind of shares of
Stock that may be delivered or deliverable in respect of outstanding Options,
(iii) the number of shares with respect to which Options may be granted to a
given Grantee in the specified period as set forth in Section 6(d), and (iv)
the exercise price (or, if deemed appropriate, the Committee may make provision
for a cash payment with respect to any outstanding Option). In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Options (including, without limitation, cash payments
in exchange for an Option or substitution of Options using stock of a successor
or other entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Corporation or any Subsidiary or the financial statements of the Corporation or
any Subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles.
Section 11. Restrictions on Issuing Shares
The Corporation shall not be obligated to deliver Stock upon the
exercise or settlement of any Option or take other actions under the Plan until
the Corporation shall have determined that applicable federal and state laws,
rules, and regulations have been complied with and such approvals of any
regulatory or governmental agency have been obtained and contractual
obligations to which the Option may be subject have been satisfied. The
Corporation, in its discretion, may postpone the issuance or delivery of Stock
under any Option until completion of such stock exchange listing or
registration or qualification of such Stock or other required action under any
federal or state law, rule, or regulation as the Corporation may consider
appropriate, and may require any Grantee to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Stock under the Plan.
Section 12. Tax Withholding
The Corporation shall have the right to require that the Grantee make
such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant or exercise of Options granted under the Plan or the
sale of Stock issued with respect to Options. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Grantee's tax obligations.
Section 13. Transferability
No Option shall be subject to anticipation, sale, assignment, pledge,
encumbrance, charge or transfer except by will or the laws of descent and
distribution, and an Option shall be exercisable during the Grantee's lifetime
only by the Grantee, provided, however, that the Committee may permit a Grantee
to
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<PAGE> 28
transfer an Option to a family member or a trust created for the benefit of
family members. In the case of such a transfer, the transferee's rights and
obligations with respect to the Option shall be determined by reference to the
Grantee and the Grantee's rights and obligations with respect to the Option had
no transfer been made. Notwithstanding such transfer, the Grantee shall remain
obligated pursuant to Section 11 if required by applicable law.
Section 14. General Provisions
(a) Each Option shall be evidenced by a Stock Option Agreement.
The terms and provisions of such Stock Option Agreements may vary among
Grantees and among different Options granted to the same Grantee.
(b) The grant of an Option in any year shall not give the Grantee
any right to similar grants in future years, any right to continue such
Grantee's employment relationship with the Corporation or its Subsidiaries, or,
until such Option is exercised and share certificates are issued, any rights as
a Stockholder of the Corporation. All Grantees shall remain subject to
discharge to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under
or through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation or its Subsidiaries, or any
shares of Stock allocated or reserved for the purposes of the Plan or subject
to any Option except as set forth herein. The Corporation shall not be
required to establish any fund or make any other segregation of assets to
assure the payment of any Option.
(d) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.
Section 15. Amendment or Termination
The Board may, at any time, alter, amend, suspend, discontinue or
terminate this Plan; provided, however, that no such action shall adversely
affect the rights of Grantees to Options previously granted hereunder and,
provided further, however, that any shareholder approval necessary or desirable
in order to comply with Rule 16b-3 under the Exchange Act or with Section 422
of the Code (or other applicable law or regulation) shall be obtained in the
manner required therein. In addition, no plan provision, within the meaning of
Rule 16b-3(c)(2)(i)(D), shall be amended more than once every six months, other
than to comport with changes in the Code or rules thereunder. The Committee
may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Option theretofore granted and any Stock Option
Agreement relating thereto; provided, however, that, without the consent of an
affected Grantee, no such action may materially impair the rights of such
Grantee under such Option.
Section 16. Effective Date of Plan
This Plan is effective upon its adoption by the Board and shall
continue in effect until terminated by the Board. No ISO may be granted more
than ten years after such date. The Plan has been amended and restated
effective as of January 1, 1997. No grant of options hereunder shall be
effective if made on or after the date of 1997 annual meeting of stockholders
of the Company, unless the Company's stockholders approve the Plan in
connection with the 1997 annual meeting.
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APPENDIX A
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
VISUAL EDGE SYSTEMS INC.
MAY 2, 1997
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
<TABLE>
<S> <C> <C> <C>
FOR all nominees listed WITHHOLD AUTHORITY to
at right (except as vote for all nominees
marked to the contrary listed at right
below)
1. Election NOMINEES:
of Directors [ ] [ ] ALAN L. LUBELL
EARL T. TAKEFMAN
EDDIE EINHORN
MARK HERSHHORN RICHARD PARKER
BERYL ARTZ
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "FOR" box and write that nominee's name in the space provided below.)
_____________________________________________________
2. Approval of the Company's Amended and Restated 1996 Stock Option Plan (the
"Plan").
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the Annual Meeting and any
adjournment thereof.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE CHECK HERE IF YOU PLAN TO
ATTEND THE ANNUAL MEETING [ ]
Signature__________________ Signature_____________________ Dated: ________,1997
NOTE: Please sign exactly as your name appears above. When signing as
an attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.
</TABLE>
<PAGE> 30
VISUAL EDGE SYSTEMS INC.
ANNUAL MEETING OF STOCKHOLDERS - MAY 2, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan L. Lubell and Earl T. Takefman,
and each of them, proxies, with full power of substitution, to appear on behalf
of the undersigned and to vote all shares of Common Stock, par value $.01 per
share, of Visual Edge Systems Inc. (the "Company") which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held at the
Company's principal executive office, 2424 North Federal Highway, Suite 100,
Boca Raton, Florida 33431 on Friday, May 2, 1997, commencing at 10:00 a.m.
(local time), and at any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF
NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
LISTED NOMINEES AS DIRECTORS AND FOR THE ADOPTION OF THE COMPANY'S AMENDED AND
RESTATED 1996 STOCK OPTION PLAN.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
