EGR » Topics » Background

This excerpt taken from the EGR DEF 14A filed May 16, 2008.

Background

        The Board of Directors adopted the SIP as a flexible vehicle for making future awards of share-based incentive compensation to eligible employees, consultants and directors of the Company and its affiliates.

        The SIP permits the granting of stock options (both incentive and nonqualified), share appreciation rights ("SARs"), restricted shares, restricted share units, deferred share units and performance-based awards. Each of the Company's executive officers and directors is eligible to receive awards pursuant to the SIP.

        Currently, the maximum number of shares of its Common Stock that may be issued pursuant to awards under the SIP is 1,453,334 shares. In addition, the SIP provides that no additional awards shall be made under the 1999 Equity Incentive Plan. As of the Record Date, 835,000 shares of restricted stock have been awarded and not forfeited under the SIP and options to purchase 350,000 shares of Common Stock have been awarded and not cancelled under the SIP (of which options to purchase zero shares have been exercised and options to purchase 350,000 shares remain outstanding), leaving only 268,334 shares of Common Stock remaining to be issued or transferred pursuant to awards made under the SIP.

        At the most recent Annual Meeting of Stockholders on March 27, 2008, Gregory L. Craig, the Company's new Chairman and Chief Executive Officer, stated that there is a critical need for additional shares of Common Stock available for awards under the SIP to attract needed new key talent to the management team, as well as to retain and motivate existing officers, employees and directors.

        The Board of Directors also continues to believe that such a compensatory award program is a key factor in attracting, retaining and motivating officers, employees, directors and consultants of the Company and its subsidiaries. In light of the fact that the number of shares of Common Stock available for awards under the SIP is nearly depleted and faced with the Company's continued hiring needs, the Board of Directors also has recognized the need for an additional number of shares of Common Stock which may be issued or transferred in connection with awards made under the SIP.

        In view of the foregoing, the Board of Directors believes that it is appropriate to increase the number of shares of Common Stock which may be issued or transferred pursuant to the SIP. Accordingly, subject to stockholder approval, the Board of Directors has adopted an amendment to, and a restatement of, the SIP, which amends Section 3 of the SIP to increase the number of shares of Common Stock that may be issued or transferred pursuant to awards granted under the SIP by 800,000 shares, from 1,453,334 to 2,253,334 shares of Common Stock. As noted above, in all other respects, the SIP would remain unchanged.

        The Company has registered with the SEC on a Form S-8 Registration Statement the 1,453,334 shares of Common Stock currently issuable under the SIP. If the Amended and Restated SIP is approved by the stockholders, the Board intends to cause the additional 800,000 shares of Common

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Stock that will become available for issuance or transfer under the Amended and Restated SIP to be registered on a Form S-8 Registration Statement to be filed with the SEC at the Company's expense.

        If the Amended and Restated SIP is not approved by the stockholders at the Special Meeting, the SIP will remain in effect; however, as stated above, only 268,334 shares of Common Stock remain available for grant as of the Record Date. If the Amended and Restated SIP is approved by the stockholders at the Special Meeting, further dilution to the stockholders would occur upon the exercise of such future awards granted under the Amended and Restated SIP.

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