<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 21, 2000
----------------
Date of Report (Date of earliest event reported)
NHANCEMENT TECHNOLOGIES INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-21999 84-1360852
-------- ------- ----------
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
6663 Owens Drive
Pleasanton, California 94588
----------------------------
(Address of principal executive offices, including zip code)
(925) 251-3333
--------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective January 21, 2000 (the "EFFECTIVE DATE"), NHancement Technologies
Inc., a Delaware corporation ("NHANCEMENT"), completed its acquisition of
Trimark Incorporated, a California corporation ("TRIMARK"), pursuant to the Plan
and Agreement of Reorganization (the "AGREEMENT"), dated December 10, 1999,
among NHancement, Trimark, and Greg Darling and Richard Glover, the sole
shareholders of Trimark (the "SHAREHOLDERS"). Under the terms of the Agreement,
Trimark merged into NHancement Acquisition Corp., a newly formed California
corporation and wholly-owned subsidiary of NHancement ("MERGER SUB"), with
Merger Sub being the surviving corporation and a wholly-owned subsidiary of
NHancement (the "REORGANIZATION"). It is anticipated that Merger Sub will be
renamed NHancement Enterprise Software Solutions, Inc., dba Triad Marketing.
Under the Agreement, NHancement agreed to issue to the Shareholders an
aggregate of 750,000 shares, and warrants to purchase 250,000 shares, of
unregistered, restricted NHancement Common Stock. The warrants have a term of
three years and are exercisable at a warrant price equal to the average closing
price of a share of NHancement Common Stock as reported on the Nasdaq SmallCap
Market for the five consecutive trading days ending on December 9, 1999 (the
"VALUATION DATE"). NHancement's Board of Directors determined the fair value
of the Trimark business; no independent appraisal was obtained.
NHancement has agreed to use its best efforts to qualify for
registration on Form S-3 250,000 shares of the Common Stock (the "REGISTRABLE
SHARES") issued to the Shareholders as soon as practicable following the
Effective Date, but in no event later than June 10, 2000. Notwithstanding its
obligation to register the Registrable Shares, NHancement does have the
right, at its sole option, to terminate such registration obligation by
irrevocably offering, on or before March 10, 2000, to purchase all of such
Registrable Shares at a per share purchase price equal to the average closing
price of a share of NHancement Common Stock as reported on the Nasdaq
SmallCap Market for the five consecutive trading days ending on March 9,
2000, but in no event shall such purchase price be less than $1.50 per share.
Of the remaining 500,000 shares to be issued to the Shareholders, the
transfer of 250,000 shares is restricted by a lock-up agreement for a one
year period following the Valuation Date and the transfer of the remaining
250,000 is restricted by a lock-up agreement for a two year period following
the Valuation Date. The Agreement also provides for a subsequent adjustment
to the consideration delivered to the Shareholders in the event that the
average closing price of a share of NHancement Common Stock for the five
consecutive trading days, ending on the last trading day immediately prior to
the first anniversary and second anniversary of the Valuation Date is less
than $4.00 per share. Such additional consideration may be paid, at
NHancement's option, in cash or by delivery of shares of NHancement Common
Stock at then current fair market value (or any combination of the
foregoing). The amount of the additional consideration on each such
anniversary date shall be calculated by multiplying (i) 250,000 shares (and,
on the first anniversary date only, any additional registered shares still
held by the Shareholders) by (ii) the lesser of (a) $4.00 minus the then
current fair market value of a share of NHancement's Common Stock determined
in accordance with such five day average closing price or (b) $2.50.
In connection with the Reorganization, NHancement also entered into two
year non-compete and employment agreements with the Shareholders; the other
employees of Trimark will remain employed by Merger Sub, on an at-will basis, at
their current salaries and on the existing terms and conditions of their
employment. Employees other than the Shareholders may be issued stock options
consistent with NHancement's policy for stock option grants to employees
similarly situated.
Merger Sub (formerly, Trimark) designs, develops, markets and services
profile selling software products and services to corporate enterprises. The
software is designed to ascertain one-to-one customer-selling opportunities
based on marketing heuristics that are unique to the individual customer.
<PAGE>
The company charges a recurring fee based on usage for these services and has
about 30 customers currently.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired. Not applicable.
(b) ProForm Financial Information. Not applicable.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
2.3 Plan and Agreement of Reorganization, dated December
10, 1999, by and among Trimark Incorporated
("TRIMARK"), Greg Darling ("DARLING"), Richard Glover
("GLOVER") and NHancement Technologies Inc. (the
"COMPANY").
2.4 Agreement of Merger, by and between NHancement
Acquisition Corp. ("MERGER SUB") and Trimark, filed
with the Secretary of State of the State of California
effective January 21, 2000.
4.14 Warrant, dated January 21, 2000, delivered to Glover.
4.15 Warrant, dated January 21, 2000, delivered to Darling.
10.56 Employment Agreement, dated as of January 21, 2000, by
and between Glover and the Company.
10.57 Employment Agreement, dated as of January 21, 2000, by
and between Darling and the Company.
10.58 Form of Non-Compete Agreement, dated as of January 21,
2000, by and among the Company, Merger Sub and each of
Darling and Glover.
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NHancement Technologies Inc.
Date: February 7, 2000 By: /s/ Douglas S. Zorn
---------------------------------------------
Douglas S. Zorn, President and
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.3 Plan and Agreement of Reorganization, dated December
10, 1999, by and among Trimark Incorporated
("TRIMARK"), Greg Darling ("DARLING"), Richard Glover
("GLOVER") and NHancement Technologies Inc. (the
"COMPANY").
2.4 Agreement of Merger, by and between NHancement
Acquisition Corp. ("MERGER SUB") and Trimark, filed
with the Secretary of State of the State of California
effective January 21, 2000.
4.14 Warrant, dated January 21, 2000, delivered to Glover.
4.15 Warrant, dated January 21, 2000, delivered to Darling.
10.56 Employment Agreement, dated as of January 21, 2000, by
and between Glover and the Company.
10.57 Employment Agreement, dated as of January 21, 2000, by
and between Darling and the Company.
10.58 Form of Non-Compete Agreement, dated as of January 21,
2000, by and among the Company, Merger Sub and each of
Darling and Glover.
</TABLE>
<PAGE>
EXHIBIT 2.3
PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION ("AGREEMENT"), dated December
10, 1999, by and among Trimark Incorporated, a California corporation
("TRIMARK"), Greg Darling and Richard Glover (individually a "SHAREHOLDER" and
collectively the "SHAREHOLDERS"), and NHancement Technologies Inc., a Delaware
corporation ("NHANCEMENT").
PLAN OF REORGANIZATION
The reorganization (the "REORGANIZATION") will comprise, in general, the
merger of Trimark with and into a wholly-owned subsidiary of NHancement to be
named "NHancement Acquisition Corp." and incorporated following the date hereof
under the laws of the State of California ("MERGER SUB"), and the issuance by
NHancement to the Shareholders of shares of NHancement's authorized but unissued
voting common stock (the "COMMON STOCK") in exchange for the cancellation of
their shares of Trimark Common Stock, all upon and subject to the terms and
conditions of the agreement hereinafter set forth. The parties intend that the
Reorganization qualify as a tax-free reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "CODE"). The
parties further intend for the Reorganization to qualify for accounting
treatment as a tax-free reorganization.
AGREEMENT
In order to consummate the Reorganization, and in consideration of the
representations and undertakings herein set forth, the parties agree as follows:
1. THE MERGER. At the Effective Time (as defined in Section 1.1) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California Corporations Code (the "CCC"), Trimark
shall be merged with and into Merger Sub, the separate existence of Trimark
shall cease and Merger Sub shall continue as a surviving corporation and as a
wholly-owned subsidiary of NHancement, the name of which shall, on the Effective
Time, be changed to "Trimark Inc., dba Triad Marketing" (the "MERGER"). Merger
Sub as the surviving corporation after the Merger is sometimes referred to as
the "SURVIVING CORPORATION." The Merger shall be accomplished as follows:
1.1 EFFECTIVE TIME. Unless this Agreement is earlier
terminated pursuant to Section 9, the closing of the Merger (the "CLOSING") will
take place as promptly as practicable, but in no event later than five (5) days
following satisfaction of the conditions set forth in Section 8, at the offices
of Tomlinson Zisko Morosoli & Maser LLP, 200 Page Mill Road, Second Floor, Palo
Alto, California 94306. At the Closing, the parties shall cause the Merger to
be consummated by filing a Certificate of Merger with the California Secretary
of State (the "CERTIFICATE OF MERGER")
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 2
in accordance with the relevant provisions of the CCC. The date and time the
Merger becomes effective in accordance with the provisions of the CCC is the
"EFFECTIVE TIME."
1.2 EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the CCC.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Trimark and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Trimark and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.3 ARTICLES OF INCORPORATION; BYLAWS. Unless otherwise
determined by NHancement prior to the Effective Time, at the Effective Time, the
Articles of Incorporation and Bylaws of Merger Sub shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation.
1.4 DIRECTORS AND OFFICERS. The Directors of Merger Sub
immediately prior to the Effective Time shall be the initial Directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation. The officers of Merger
Sub immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, each to hold office in accordance with the Bylaws of the
Surviving Corporation.
1.5 MAXIMUM SHARES TO BE ISSUED. The maximum number of shares
of NHancement Common Stock to be issued in exchange for the cancellation of all
outstanding Trimark Capital Stock shall be Seven Hundred Fifty Thousand
(750,000) shares and warrants (in the form attached as Exhibit "A") to purchase
Two Hundred Fifty Thousand (250,000) shares of NHancement Common Stock at a
warrant price equal to the then current fair market value at Closing (further
subject to the Valuation Formula set forth in Section 4.2 below). Each share
of Common Stock of Trimark (the "TRIMARK COMMON STOCK") issued and outstanding
immediately prior to the Effective Time will be canceled and extinguished and be
converted automatically into the right to receive Seven Hundred Fifty (750)
shares, and Warrants to purchase on additional Two Hundred Fifty (250) shares,
of NHancement Common Stock upon surrender of the Certificate representing such
shares of Trimark Common Stock in the manner provided in Section 1.7. From the
date hereof until the Effective Time, Trimark agrees not to issue any additional
shares of its Capital Stock (including any options, warrants, conversion
privileges or other rights, commitments or agreements of any nature to purchase
any such shares of Trimark Capital Stock). All of the shares of Merger Sub
owned by NHancement immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and non-assessable share
of Common Stock of the Surviving Corporation. Each stock certificate of Merger
Sub evidencing ownership of any shares shall continue to evidence ownership of
shares of capital stock of the Surviving Corporation. No fraction of a share,
or a Warrant to purchase a fractional share, of NHancement Common Stock will be
issued, but in lieu thereof, each holder of shares of Trimark
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 3
Capital Stock who would otherwise be entitled to a fraction of a share of
NHancement Common Stock (after aggregating all fractional shares of NHancement
Common Stock to be received by such holder) shall be entitled to receive from
NHancement in the amount of cash (rounded to the nearest whole cent) equal to
the product of (i) such fraction, multiplied by (ii) the average closing price
of a share of NHancement Common Stock for the five (5) consecutive trading days
ending on the trading day immediately prior to the Closing, as reported on the
NASDAQ National Market and, in the case of the Warrants, a Warrant rounded up to
purchase the nearest whole share.
1.6 DISSENTING SHARES. Prior to the execution and delivery of
this Agreement by the parties, all of the holders of Trimark Capital Stock shall
have irrevocably consented to and approved the Merger and no holders of any
shares of Trimark Capital Stock shall be entitled to appraisal or dissenters'
rights.
1.7 SURRENDER OF CERTIFICATES. Prior to the Effective Time,
NHancement shall designate its transfer agent to act as the exchange agent (the
"EXCHANGE AGENT") in the Merger. Promptly after the Effective Time, NHancement
shall make available to the Exchange Agent for exchange in accordance with this
Section 1.7, the aggregate number of shares, and warrants to purchase shares, of
NHancement Common Stock issuable pursuant to Section 1.5 in exchange for all
issued and outstanding shares of Trimark Capital Stock. Promptly after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time represented outstanding shares of
Trimark Capital Stock whose shares were converted and to the right to receive
shares of NHancement Common Stock and Warrant pursuant to Section 1.5, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
the risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and shall have
such other provisions as NHancement may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of NHancement Common Stock and Warrants.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal duly completed and validly executed in
accordance with the instructions thereto, the holder of Certificate shall be
entitled to receive in exchange therefor a certificate representing the number
of whole shares of NHancement Common Stock plus cash in lieu of fractional
shares and Warrants in accordance with Section 1.5, to which such holder is
entitled pursuant to Section 1.5, and the Certificate so surrendered shall
forthwith be canceled. Until so surrendered, each outstanding Certificate that,
prior to the Effective Time, represented shares of Trimark Capital Stock will be
deemed from and after the Effective Time, for all corporate purposes, to
evidence the ownership of the number of full shares of NHancement Common Stock
and Warrants into which such shares of Trimark Capital Stock shall and been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.5.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 4
1.8 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the
parties hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) qualify for accounting treatment as
a tax free reorganization.
1.9 FURTHER ACTION. If, at any time after the Effective Date,
any such further action is necessary or desirable to carry out the purposes of
this Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, liabilities, properties, rights, privileges, powers
and franchises of Trimark and Merger Sub, the officers and Directors of Trimark
and Merger Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary actions.
2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each of the
Shareholders, jointly and severally, represent and warrant to NHancement that
all of the statements made below in this Section 2 are true and correct in all
respects. These representations and warranties are subject to the exceptions
set forth on attached Schedule 2 (the "SCHEDULE OF EXCEPTIONS"), specifically
identifying the relevant Section hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder. The phrase "to the best
knowledge of Trimark" shall, when included in a representation or warranty made
by a Shareholder, means to the best knowledge of such Shareholder.
2.1 ORGANIZATION AND STANDING. Trimark is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has full power and authority to carry on its business as now
conducted and as proposed to be conducted. Trimark is not required to be
qualified as a foreign corporation in any jurisdiction; provided, however, that
Trimark need not be qualified in any jurisdiction in which a failure to qualify
would not have a material and adverse effect on its operations or financial
condition.
2.2 CAPITALIZATION. The authorized capital stock of Trimark
consists of one million (1,000,000) shares of Common Stock, of which one
thousand (1,000) shares are presently, and at the Effective Time will be, issued
and outstanding. All of Trimark's issued and outstanding shares are owned
beneficially and of record by the Shareholders in the amounts set forth on
attached Schedule 2.2. All outstanding shares of Trimark Common Stock are duly
authorized, validly issued, fully paid and non-assessable and are not subject to
preemptive rights created by statute, the Articles of Incorporation or Bylaws of
Trimark or any agreement to which Trimark or either Shareholder is a party or by
which it is bound. There are no options, warrants, calls, rights, conversion
privileges, commitments or agreements of any character, written or oral, to
which Trimark is party or by which it is bound obligating Trimark to issue,
deliver, sell, repurchase or redeem, or caused to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of Trimark.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 5
2.3 SUBSIDIARIES. Trimark has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association, joint venture, partnership or
other business entity.
2.4 CORPORATE AUTHORITY AND AUTHORIZATION. Trimark has all
requisite, corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate action on the
part of Trimark, its officers, directors and Shareholder necessary for the
authorization, execution, delivery and performance of this Agreement by Trimark
and the performance of all of Trimark's obligations hereunder has been taken.
As set forth in Section 1.6 above, all of the holders of Trimark Capital Stock
have consented to and approved the Merger and no holders of any shares of
Trimark Capital Stock are entitled to appraisal or dissenters' rights. This
Agreement constitutes a valid and binding obligation of Trimark and the
Shareholders, enforceable against Trimark and the Shareholders in accordance
with its terms, except as the indemnification provisions of Section 7.7 hereof
may be limited by principles of public policy and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
2.5 GOVERNMENTAL CONSENT. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of Trimark is required in connection with the valid
execution and delivery of this Agreement, or the consummation of any transaction
contemplated hereby.
2.6 INTELLECTUAL PROPERTY.
2.6.1 Trimark possesses and has good, valid and marketable
title, free and clear of all security interests, liens, claims, charges,
encumbrances or any other defects in title of any nature whatsoever to, or has
the valid, enforceable right to use (pursuant to written agreements, true and
correct copies of which are listed on Schedule 2.6 and have been submitted to
NHancement), all trademarks, trademark rights, trade names, trade name rights,
licenses, franchises, service marks, patents, patent applications, copyrights,
inventions, discoveries, improvements, processes, trade secrets, confidential or
proprietary information, formulae, proprietary rights or data, shop rights,
algorithms, technical data, ideas or know-how (collectively the "INTELLECTUAL
PROPERTY") necessary to conduct its business as now being conducted or as
proposed to be conducted, without conflict with or infringement upon any valid
rights of others and the lack of which could adversely affect the operations or
condition, financial or otherwise, of Trimark. Trimark (i) owns or has the right
to use (and to make, use, sell, license and lease products incorporating or
manufactured using), free and clear of all liens, claims and restrictions, all
Intellectual Property used in the conduct of its business as now conducted or as
proposed to be conducted without infringing upon or otherwise acting adversely
to the right or claimed right of any person under or with respect to any of the
foregoing, and (ii) is not obligated or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise to any owner of, licensor
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 6
of or other claimant to any patent, trademark, service mark, trade name,
copyright, license or other right with respect to the use thereof in connection
with the conduct of its business or otherwise. Trimark owns and has the
unrestricted right to use all Intellectual Property required for or incident to
the development, manufacture, operation and sale of all products and services
sold or proposed to be sold by Trimark, free and clear of any rights, liens or
claims of others, including, without limitation, former employers of all
employees of Trimark. All of the foregoing rights to Intellectual Property will
be owned and enjoyed by the Surviving Corporation following the Merger without
the consent or approval of any third party and, following such Merger, the
Surviving Corporation will possess and enjoy all of such rights to Intellectual
Property as Trimark did immediately prior to such Merger.
2.6.2 Set forth in Schedule 2.6 is a complete listing of
all software related in any fashion or manner whatsoever to the business of
Trimark as now conducted or has proposed to be conducted (the "SOFTWARE"). All
copies of the Software were, as of the Closing, in Trimark's possession and
control, except for certain object code copies which then were in the possession
of customers of Trimark. All such customers have entered into license
agreements with Trimark that, to the best knowledge of Trimark, effectively
protect Trimark's rights in and to all such Software. For purposes of this
Section, the term "SOFTWARE" includes any set of instructions (including,
without limitation, arithmetic, logical, data transfer, data manipulation and
input/output) meant to run on, or to control the operation of, any computer,
whether those instructions are a complete program, a collection of programs
making up a subsystem or system or are merely subroutines or macroroutines meant
to operate in conjunction with other software, and whether such instructions
must be run through another computer program (commonly referenced as a
"compiler") before being usable on a computer, whether such instructions must be
used at execution time in conjunction with another computer program (commonly
referenced as an "interpreter") or whether such instructions are in a form that
can be run on a computer "as is" without additional programs.
2.6.3 The Software will not, due to a date change: (i)
have any operational impediments, (ii) malfunction, (iii) cease to perform, (iv)
generate incorrect or ambiguous data or results with respect to same-century and
multi-century, Leap Year and other calendar formulas, functions and data or (v)
produce incorrect or ambiguous results with respect to same-century and
multi-century, Leap Year and other calendar formulas, functions, date values and
date data interfaces. The Software is free from all computer "viruses" and other
elicit code. The Software performs in all material respects in accordance with
its specifications.
2.7 MANUFACTURING RIGHTS. Trimark has not granted rights to
manufacture or assemble its products to any other person or entity.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 7
2.8 OFFICERS, DIRECTORS AND EMPLOYEES.
2.8.1 To the best knowledge of Trimark, no present or
former officer, director or employee of Trimark is a party to or is otherwise
bound by any agreement or arrangement (including any agreement of
noncompetition) that in any way adversely affects his or her performance of his
or her duties as an officer, director or employee of Trimark or Trimark's
ability to conduct its business. Trimark has established appropriate policies
and procedures to ensure no officer, director or other employee of Trimark
misuses confidential information or trade secrets of others in the course of
their employment or other relationship with Trimark. Trimark is not a party to
any labor agreements, employment contracts, consulting agreements or any other
instruments which limit the rights of Trimark to terminate the employment or
other relationship with a particular individual at will. Trimark is not aware
that any officer, director or key employee, or that any group of officers,
directors or key employees, would not continue their employment with NHancement
on the same terms as previously employed by Trimark.
2.8.2 Trimark: (i) is not bound by or subject to any
collective bargaining agreement with respect to any of its employees nor has any
labor union requested or, to the best knowledge of Trimark, sought to represent
any of the employees, representatives or agents of Trimark, (ii) does not have
any current labor problems or disputes, pending or threatened, (iii) does not
have in effect any "employee pension benefit plans" (as defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974) or employee benefit or
similar plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, and (iv) does not maintain, has not in the past maintained and is
not and has not been a contributor to any multi-employer plan or single employer
plan, as defined in Section 4001 of the Employee Retirement Income Security Act
of 1974, as amended, for the employees of Trimark or any trade or business
(whether or not incorporated) which, together with Trimark, would be deemed to
be a "single employer" within the meaning of such Section 4001. Trimark has
complied in all material respects with all laws relating to the employment of
labor, including provisions relating to wages, hours, equal opportunity,
collective bargaining and payment of Social Security and other taxes.
2.9 CERTAIN TRANSACTIONS. Except as set forth in schedule 2.0,
Trimark is not indebted, directly or indirectly, to any of its officers,
directors or Shareholder, or to their respective affiliates, spouses or
children, in any amount whatsoever, except for salaries and fees accrued in the
ordinary course of business; none of said officers, directors or, to the best
knowledge of Trimark, either Shareholder, or any of their affiliates or members
of their immediate families, are indebted to Trimark or have any direct or
indirect ownership interest in any firm or corporation with which Trimark is
affiliated or with which Trimark has a business relationship, or any firm or
corporation which competes with Trimark (except with respect to any interest in
less than five percent (5%) of the stock of any corporation whose stock is
publicly traded). No officer, director or shareholder, or any affiliate or
member of their immediate families, is, directly or indirectly, interested in
any material contract with Trimark.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 8
2.10 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Trimark is not in violation of any term of its Articles of Incorporation or
Bylaws, as amended and in effect on and as of the Closing. Trimark is not in
violation in any respect of any term or provision of any mortgage, indebtedness,
indenture, contract, agreement, instrument, judgment or decree, order, statute,
rule or regulation applicable to it where such violation would adversely affect
Trimark, its operations or financial condition. The execution, delivery and
performance of and compliance with this Agreement have not resulted and will not
result in any violation of or conflict with, or constitute a material default
under, any mortgage, indebtedness, indenture, contract, agreement, instrument,
judgment or decree, order, statute, rule or regulation applicable to it, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of Trimark; and there is no such term or
provision which adversely affects Trimark, its operations or financial condition
as presently conducted or as contemplated to be conducted. Trimark and, to the
best knowledge of Trimark, its officers, directors and key employees, are not
parties to any mortgage, indebtedness, indenture, contract, agreement,
instrument, judgment, decree or order restricting its ability to enter or
compete in any line of business or market.
2.11 MATERIAL CONTRACTS AND OBLIGATIONS.
2.11.1 Included in the Schedule 2.11 is a list of all
agreements, contracts and other obligations to which Trimark is a party or by
which it is bound that are material to the operation of its business and
properties, which: (i) provide for aggregate payments to or by Trimark in
excess of Ten Thousand Dollars ($10,000), (ii) obligate Trimark to share,
license or develop any product or technology, (iii) appoint distributors,
dealers or sublicensees of Trimark's products, which agreements cannot be
terminated on thirty (30) days' notice or less or (iv) involve transactions or
proposed transactions between Trimark and its officers, directors, affiliates or
any affiliate thereof. Copies of such agreements and contracts and
documentation evidencing such other obligations have been delivered to
NHancement. All of such agreements and contracts are valid, binding and in full
force and effect in all material respects, assuming due execution by the other
parties to such agreements and contracts. There is no pending or threatened
dispute or disagreement, and there have been no events which may give rise to
any dispute or disagreement, between Trimark and any of the clients or customers
of Trimark, or any other person having a business relationship with Trimark,
which dispute or disagreement, if resolved unfavorably to Trimark, would have a
materially adverse effect on Trimark's operations or financial condition. No
significant client or customer of Trimark, or any other significant person
having a business relationship with Trimark, has indicated that it presently
contemplates terminating its business relationship with Trimark.
2.11.2 All open orders, licenses and contracts for
Trimark's products and services can be fulfilled by Trimark within its current
capacity, in accordance with the terms thereof, and the fulfillment thereof will
not result in material losses or material warranty or other liabilities to the
Surviving Corporation. Section 2.11 sets forth a summary of Trimark's backlog
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 9
(including deferred revenue recorded on Trimark financials), which included the
total backlog as of the date of this Agreement reflected and written agreements
and a monthly breakdown of the expected shipment dates for the orders
represented by such backlog. All orders reflected in such backlog are evidenced
by written purchase orders or contracts. All such orders or contracts are firm,
fixed, committed and non-cancelable. To the best of its knowledge, Trimark will
collect the revenue from such orders and contracts in accordance with the terms
of their respective purchase orders or contracts, including, without limitation,
receiving payment in accordance with the deadline set forth therein.
2.12 HAZARDOUS WASTE DISPOSAL. To the best knowledge of
Trimark, Trimark has materially complied with all laws regulating the discharge
and disposal of hazardous waste, the violation of which would have a material,
adverse effect on the operations or financial condition of Trimark, including,
but not limited to:
2.12.1 Comprehensive Environmental Response, Compensation
and Liability Act, 42 USC Sections 9601, et seq.;
2.12.2 Resource Conservation and Recovery Act, 42 USC
Sections 6901, et seq.;
2.12.3 Toxic Substances Control Act, 15 USC Sections 2601,
et seq.;
2.12.4 California Hazardous Substances Information and
Training Act, California Labor Code Sections 6360, et seq.;
2.12.5 California Hazardous Waste Act, California Health &
Safety Code Sections 25100, et seq.;
2.12.6 California Hazardous Substances Act, California
Health & Safety Code Sections 28740, et seq.; and
2.12.7 California Safe Drinking Water and Toxic
Enforcement Act of 1986, California Health & Safety Code Sections 25249.5,
et seq.
2.13 LICENSES AND PERMITS. Included in the Schedule 2.13 is a
complete and accurate list of all of the licenses, permits, authorizations and
franchises issued to, possessed by, used by or otherwise in effect with respect
to the business of Trimark. Trimark has delivered to NHancement complete and
accurate copies of all of the licenses, permits, authorizations and franchises
identified in said Schedule. All of the licenses, permits, authorizations and
franchises identified are valid and in full force and effect. Said licenses,
permits, authorizations and franchises constitute all of the licenses, permits,
authorizations and franchises required to permit Trimark to conduct its business
in the manner in which it is now being conducted, and Trimark is
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 10
not in violation or breach of any of the terms, requirements or conditions of
any of said licenses, permits, authorizations or franchises.
2.14 LITIGATION, ETC. Except as set forth in schedule 2.0.
There are no actions, suits, proceedings or investigations pending against
Trimark or, to the best knowledge of Trimark, any of its officers, directors or
employees or its properties, before any court or governmental agency (nor, to
the best knowledge of Trimark, is there any reasonable basis therefor or threat
thereof), which, either in any case or in the aggregate, might result in any
material adverse change in the business or financial condition of Trimark, or in
any material impairment of the right or ability of Trimark to carry on its
business as now conducted or as proposed to be conducted or in any material
liability on the part of Trimark, or any change in the current equity ownership
of Trimark, and none which questions the validity of this Agreement or any
action taken or to be taken in connection herewith. The foregoing includes,
without limiting its generality, actions pending or threatened (or any basis
therefor known to Trimark) involving the prior employment of any of Trimark's
employees, their use in connection with Trimark's business of any information or
techniques allegedly proprietary to any of their former employers or their
obligations under any agreements with prior employers.
2.15 CRIMINAL INVESTIGATIONS AND ACTIVITIES. Trimark, its past
and present officers and directors and the Shareholder: (i) have never been
convicted of a felony, (ii) have not been named as a defendant in a pending
criminal proceeding involving a felony, and (iii) are not now or ever have been
the subject of any governmental decree or order prohibiting it or any of them
from engaging in certain business activities. There is no pending criminal
investigation of any nature whatsoever into the activities of Trimark, its
officers, directors and Shareholder. Trimark has fully complied with the
provisions of the United States Export Administration Act and all rules and
regulations promulgated thereunder.
2.16 MATERIAL LIABILITIES. Trimark has no liabilities which
are, individually or in the aggregate, material to the financial condition or
operating results of Trimark which have not been disclosed on Schedule 2.16 and
schedule 2.0.
2.17 TRIMARK FINANCIAL STATEMENTS. Schedule 2.17 sets forth
Trimark's unaudited balance sheets as of December 31, 1998 and November 30,1999
(the "BALANCE SHEETS") and the related unaudited statements of operations,
stockholders' equity and cash flows for the years then ended and the Company's
unaudited balance sheets dated as of November 30, 1999 and the unaudited
statements of operations for the period then ended (all of the foregoing
collectively the "TRIMARK FINANCIALS"). The Trimark Financials have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods presented except that the
unaudited Trimark Financials do not contain the footnotes required by GAAP and
are subject to normal year-end adjustments which will not be material
individually or in the aggregate. The Trimark Financials fairly present the
financial position of Trimark as of their dates and results of operations for
the periods there ended. Except as set forth in the Trimark
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 11
Financials, Trimark does not have any liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured or otherwise (whether or not required to
be reflected in financial statements in accordance with GAAP), which
individually or in the aggregate has not arisen in the ordinary course of
Trimark's business since the unaudited Trimark Financials, in all cases
consistent with past practices and amounts.
2.18 TAX AND OTHER RETURNS AND REPORTS.
2.18.1 DEFINITION OF TAXES. For the purposes of this
Agreement, "TAX" or, collectively, "TAXES", means any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
2.18.2 TAX RETURNS AND AUDITS. Except as set forth in
Schedule 2.18:
2.18.2.1 Trimark as of the Effective Time will
have prepared and filed all federal, state, local and foreign returns,
estimates, information statements and reports ("RETURNS") required to be filed
by such date relating to any and all Taxes concerning or attributable to Trimark
or its operations and such Returns are or will be true and correct and have been
completed in accordance with applicable law.
2.18.2.2 Trimark as of the Effective Time: (a)
will have paid or accrued all Taxes it is required to pay or accrue and (b) will
have withheld with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
2.18.2.3 Trimark has not been delinquent in the
payment of any Tax nor is there any Tax deficiency outstanding, proposed or
assessed against Trimark, nor has Trimark executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
2.18.2.4 No audit or other examination of any
Return of Trimark is presently in progress, nor has Trimark been notified of any
request for such an audit or other examination.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 12
2.18.2.5 Trimark does not have any liabilities
for unpaid federal, state, local or foreign Taxes which have not been accrued or
reserved against on the Trimark Financials, whether asserted or unasserted,
contingent or otherwise, and Trimark has no knowledge of any basis for the
assertion of any such liability attributable to Trimark, its assets or
operations.
2.18.2.6 Trimark has provided to NHancement
copies of all federal and state income and all state sales and use Tax Returns
filed to date for all periods since the date of Trimark's incorporation.
2.18.2.7 There are (and as of immediately
following the Closing there will be) no liens, pledges, charges, claims,
security interests or other encumbrances of any sort ("LIENS") on the assets of
Trimark relating to or attributable to Taxes except liens for current taxes not
yet delinquent.
2.18.2.8 Trimark has no knowledge of any basis
for the assertion of any claims relating or attributable to Taxes which, if
adversely determined, would result in any Lien on the asserts of Trimark.
2.18.2.9 None of Trimark's assets are treated
as "tax-exempt use property" within the meaning of Section 168(h) of the Code.
2.18.2.10 As of the Effective Time, there will
not be any contract, agreement, plan or arrangement, including but not limited
to the provisions of this Agreement, covering any employee or former employee of
Trimark that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or 162 of the
Code.
2.18.2.11 Trimark has not filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by Trimark.
2.18.2.12 Trimark is not a party to a tax
sharing or allocation agreement nor does Trimark owe any amount under any such
agreement.
2.18.2.13 Trimark is not, and has not been at
any time, a "United States real property holding corporation" within the meaning
of Section 897(c)(2) of the Code.
2.18.2.14 Trimark has not agreed to and is not
required to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 13
reason of any change in any accounting method, and there is no application by
Trimark pending with any taxing authority requesting permission for any changes
in any accounting method of Trimark. No taxing agency (domestic or foreign) has
proposed any adjustment or change in Trimark's method of accounting for tax
purposes.
2.19 TITLE. Except as set forth in schedule 2.0. Trimark has
good and marketable title to all of its assets and properties (both tangible and
intangible). Such assets and properties (both tangible and intangible) are not
subject to any security interests, liens, mortgages, pledges, encumbrances or
charges of any kind.
2.20 CHANGE OF CONTROL. There is no plan or agreement pursuant
to which any amounts may become payable (whether currently or in the future) to
current or former employees, officers and directors of Trimark as a result of or
in connection with the Merger.
2.21 BROKER'S FEES. Trimark has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.22 DISCLOSURE. Trimark has fully provided NHancement with all
of the information which NHancement has requested for deciding whether to enter
into the Reorganization hereunder and all information reasonably necessary to
enable NHancement to make such decision. This Agreement, the Trimark
Financials, and any written statement or certificate furnished to NHancement
pursuant to this Agreement in connection with the transactions contemplated by
this Agreement, when taken together, do not contain any untrue statement of a
material fact nor omit to state a material fact necessary to make the statements
made not misleading.
2.23 TAX TREATMENT OF TRANSACTION. Trimark, to the best of its
knowledge and based upon consultation with its independent advisors, has not
taken or agreed to take any action, and is not aware of any condition that
(without giving effect to any action taken or agreed to be taken by Trimark),
would effect the ability of the parties hereto to report the business
combination to be effected by the Merger as a tax-free reorganization within the
meaning of Section 368 of the Code.
3. REPRESENTATIONS AND WARRANTIES OF NHANCEMENT. NHancement
represents and warrants to the Shareholders that:
3.1 CORPORATE STATUS. NHancement is a corporation duly
organized and existing under the laws of Delaware, with an authorized, issued
and outstanding capital stock as set forth in the 1934 Act documents in defined
Section 3.4 below.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 14
3.2 CORPORATE AUTHORITY AND AUTHORIZATION. NHancement has the
corporate right and authority to issue and deliver the NHancement Common Stock
and Warrants required to be issued hereunder to Trimark; and such shares and
Warrants when delivered at or after the Closing will be fully paid and
nonassessable. All corporate action on the part of NHancement necessary for the
authorization, execution, delivery and performance of this Agreement by
NHancement and the performance of all of NHancement's obligations hereunder has
been taken. This Agreement constitutes a valid and binding obligation of
NHancement, and enforceable against NHancement in accordance with its terms,
except of the indemnification provisions of Section 7.7 hereof may be limited by
principals of public policy and subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
3.3 GOVERNMENTAL CONSENT. No consent, approval or
authorization or designation, declaration or filing with any governmental
authority on the part of NHancement is required in connection with the valid
execution and delivery of this Agreement, or of the consummation of any other
transaction contemplated hereby except as specifically referenced in the
Agreement.
3.4 1934 ACT DOCUMENTS. NHancement has delivered to Trimark
and the Shareholders a copy of its Form 10-K for the fiscal year ending
September 30, 1998 and its Form 10-Q for the quarter ending June 30, 1999 (the
"1934 ACT DOCUMENTS") filed with the SEC by NHancement pursuant to the
Securities Exchange Act of 1934 (the "1934 ACT"). None of the 1934 Documents,
when taken together, contain any untrue statement of the material fact or omit
to state a material fact necessary to make the statements made not misleading.
3.5 BROKER'S FEES. NHancement has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
4. ADDITIONAL AGREEMENTS. NHancement, Trimark and the Shareholders
further agree as follows:
4.1 TAX ACCOUNTING. Neither NHancement nor Trimark has taken
nor shall take any action which reasonably would be expected to jeopardize the
tax-free nature of the reorganization hereunder.
4.2 SUBSEQUENT ADJUSTMENT. In the event that the average
closing price of a share of NHancement Common Stock as reported on the Nasdaq
SmallCap Market for the five (5) consecutive trading days ending on the trading
day immediately prior to the first anniversary and second anniversary of the
Closing (the "VALUATION FORMULA") is then less than $4.00 per share (as
presently constituted and subject to appropriate adjustment for stock splits,
combinations, dividends and the like), NHancement shall provide to the
Shareholders, in proportion to their respective
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 15
proportionate interests in Trimark at the Closing, at NHancement's option,
either (i) cash in the aggregate amount of the Adjustment Amount, (ii) shares of
NHancement's restricted Common Stock then valued in accordance with the
Valuation Formula in aggregate value equal to the Adjustment Amount or (iii)
some combination of (i) and (ii). For purposes of this Section, at the first
anniversary the term "ADJUSTMENT AMOUNT" shall mean one half of the unregistered
shares plus those registered shares still owned by the Shareholders (as
presently constituted and subject to appropriate adjustment for stock splits,
combinations, dividends and the like) multiplied by the lesser of (a) $4.00
minus the then current fair market value of a share of NHancement's Common Stock
determined in accordance with the Valuation Formula or (b) $2.50 (i.e. $4.00 -
$1.50). By way of illustration, if at the first anniversary date the
Shareholders had a total of five hundred thousand (500,000) registered and
unregistered shares and the value of a share of NHancement Common Stock
calculated pursuant to the Valuation Formula was then $1.50 per share, the
Shareholders as a group would be entitled to $1,250,000 in cash or in shares of
NHancement Common Stock (then valued in accordance with the Valuation Formula)
or some combination of cash and shares allocated between them in accordance with
their proportionate interests in Trimark at the Closing. In other words, the
Shareholders as a group would be entitled to, in this example, the differential
in value between $4.00 and $1.50 (or $2.50) multiplied by 500,000 shares in
accordance with the foregoing. ). For purposes of this Section, at the second
anniversary the term "ADJUSTMENT AMOUNT" shall mean two hundred and fifty
thousand (250,000) unregistered shares owned by the Shareholders (as presently
constituted and subject to appropriate adjustment for stock splits,
combinations, dividends and the like) multiplied by the lesser of (a) $4.00
minus the then current fair market value of a share of NHancement's Common Stock
determined in accordance with the Valuation Formula or (b) $2.50 (i.e. $4.00 -
$1.50) By way of illustration, at the second anniversary date the Shareholders
have a total of 250,000 unregistered shares and if the value of a share of
NHancement Common Stock calculated pursuant to the Valuation Formula was then
$1.50 per share, the Shareholders as a group would be entitled to $625,000 in
cash or in shares of NHancement Common Stock (then valued in accordance with the
Valuation Formula) or some combination of cash and shares allocated between them
in accordance with their proportionate interests in Trimark at the Closing. In
other words, the Shareholders as a group would be entitled to, in this example,
the differential in value between $4.00 and $1.50 (or $2.50) multiplied by
250,000 shares in accordance with the foregoing. All shares of NHancement Common
Stock issued pursuant to this section shall be "restricted securities" for
purposes of federal and state securities laws and may not be resold or
transferred by the Shareholders except in compliance with such laws. Each of the
Shareholders shall execute and deliver to NHancement an investment
representation letter with respect to such shares in usual and customary form.
5. SURVIVAL OF REPRESENTATIONS, WARRANTIES; INDEMNITY. The
respective representations and warranties given by NHancement, Trimark and the
Shareholders contained herein shall remain effective against their respective
successors, heirs and assigns and shall survive the Closing. NHancement shall
indemnify and hold Trimark and the Shareholders harmless from any damage, claim,
liability or expense, including reasonable attorneys' fees, arising out of the
breach of any representation or warranty or the nonfulfillment of any agreement
contained herein,
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 16
or in any certificate to be delivered at the Closing, by NHancement. Trimark and
each of the Shareholders shall, jointly and severally, indemnify and hold
NHancement harmless from any damage, claim, liability or expense, including
reasonable attorneys' fees, arising out of the breach of any representation or
warranty or the nonfulfillment of any agreement contained herein, or in any
certificate to be delivered at the Closing, by Trimark or the Shareholder.
6. SECURITIES LAWS MATTERS. Because of the exemptions from the
registration requirements of the Securities Act of 1933 (the "ACT") and from the
qualification requirements of the California Corporate Securities Law of 1968
(the "LAW") relied upon by NHancement in issuing the shares of NHancement Common
Stock under Section 1 above (the "SECURITIES"), the Shareholders represent and
warrant that they:
6.1 Are aware that such Securities are highly speculative and
that there can be no assurance as to what return, if any, there may be.
6.2 Are aware of NHancement's business affairs and financial
condition and have acquired sufficient information about NHancement to reach an
informed and knowledgeable decision to acquire such Securities.
6.3 Are each acquiring such Securities for investment FOR HIS
OR HER OWN ACCOUNT ONLY and not with a view to, or for sale in connection with,
any "distribution" thereof within the meaning of the Act or the Law (except that
shares of Registrable Stock may be resold pursuant to and on the effectiveness
of the S-3 Registration Statement referred to in Section 7 below (the "S-3").
6.4 Except for shares of Registrable Stock registered under the
S-3, understand that such Securities have not been registered under the Act or
qualified under the Law by reason of specific exemptions therefrom, which
exemptions depend upon, among other things, the bona fide nature of the
Shareholders' investment intent as expressed herein. In this connection, the
Shareholders understand that, in the view of the SEC, the statutory basis for
one exemption from the Act may not be present if their representations mean that
their present intentions are to hold such shares for a minimum capital gains
period under the tax statutes, for a deferred sale, for a market rise, for a
sale if the market does not rise, or for a year or any other fixed period in the
future.
6.5 Except for shares of Registrable Stock registered under the
S-3, further understand that such Securities must be held indefinitely unless
subsequently registered under the Act and qualified under the Law or an
exemption from such registration and such qualification is available, and that,
except as set forth in Section 7 below, NHancement is under no obligation to
effect such registration or qualification or to assure the availability of any
such exemption.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 17
6.6 Are aware of Rule 144 promulgated under the Act which
permits limited public resale of the Securities if it is acquired in a
non-public offering subject to the satisfaction of certain conditions,
including, among other things: the availability of certain public information
about the NHancement, the resale occurring not less than one (1) year after he
or she purchased and completed payment for the Securities to be sold, the sale
being made on the public market through a broker in an unsolicited "broker's
transaction" or to a "market maker" and the amount of the Securities sold during
any three-month period not exceeding specified limitations (generally, one
percent (1%) of all Common Stock outstanding); except that such conditions need
not be met by a person who is not an affiliate of the NHancement at the time of
sale and has not been an affiliate for the preceding three (3) months, if the
Securities to be sold have been beneficially owned by such person for at least
two (2) years prior to their sale. The Common Stock may not be publicly traded
or NHancement may not be satisfying the current public information requirements
of Rule 144 at the time Trimark or a Shareholder wishes to sell the Securities;
and thus, they may be precluded from selling the Securities under Rule 144 even
though the minimum holding period may have been satisfied.
6.7 Further understand that in the event the requirements of
Rule 144 are not met, registration under the Act, compliance with Regulation A
or some other registration exemption will be required for any disposition of the
Securities; and that, although Rule 144 is not exclusive, the Commission has
expressed its opinion that persons proposing to sell private placement
Securities other than in a registered offering and other than pursuant to Rule
144 will have a substantial burden of proof in establishing that an exemption
from registration is available for such offers or sales and that such persons
and the brokers who participate in such transactions do so at their own risk.
6.8 Except for shares of Registrable Stock registered under the
S-3, understand that the certificates evidencing the Securities will be
imprinted with legends in substantially the following form:
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT FOR THE SHAREHOLDERS OWN ACCOUNT AND
NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NO SALE OR OTHER DISPOSITION OF SUCH SHARES
MAY BE EFFECTED WITHOUT THE (1) REGISTRATION OF SUCH SALE OR
DISPOSITION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND (2) QUALIFICATION OF SUCH SALE OR DISPOSITION UNDER
THE CALIFORNIA CORPORATE SECURITIES LAW OF 1968, AS AMENDED, OR
WITHOUT AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED."
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 18
7. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION
RIGHTS; COMPLIANCE WITH SECURITIES ACT.
7.1 RESTRICTIONS ON TRANSFERABILITY. The Securities shall not
be sold, assigned, transferred or pledged except upon the conditions specified
in this Section 7.
7.2 CERTAIN DEFINITIONS. As used in this Section 7, the
following terms shall have the following respective meanings:
7.2.1 "REGISTRABLE SECURITIES" shall mean Two Hundred
Fifty Thousand (250,000) shares of the Securities as so designated by the
Shareholders jointly in writing to NHancement and any Common Stock of NHancement
issued as a dividend or other distribution with respect to or in exchange for
replacement of any such shares.
7.2.2 The terms "REGISTER," "REGISTERED" and
"REGISTRATION" shall refer to a registration effected by preparing and filing an
S-3 Registration Statement in compliance with the Act, and the declaration or
ordering of the effectiveness of such registration statement. Such terms shall
also include an undertaking to file all required pre and post-effective
amendments to such registration statement and the preparation, filing and
declaration or ordering of the effectiveness of appropriate applications for the
qualification or registration of securities pursuant to applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Act and any other governmental requirements or
regulations necessary to permit the lawful offer and sale of Registrable
Securities in the United States of America.
7.2.3 "REGISTRATION EXPENSES" shall mean all expenses
incurred by Trimark in complying with Section 7.3, including, without
limitation, all registration, qualification and filing fees, printing expenses,
fees and disbursements of counsel for NHancement.
7.2.4 "SELLING EXPENSES" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities.
7.2.5 "HOLDER" shall mean any Shareholder so long as such
Shareholder holds outstanding Registrable Securities.
7.3 REGISTRATION ON FORM S-3.
7.3.1 NHancement shall use its best efforts to qualify for
registration on Form S-3 (or successor forms); and, to that end, NHancement
shall comply with the reporting requirements of the 1934 Act. NHancement will
use its best efforts to effect promptly the registration of all shares of
Registrable Securities on Form S-3 (or successor form) as soon as practicable
but in no event later than six (6) months following the Closing.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 19
7.4 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 7.3 shall be borne by NHancement. All Selling Expenses
related to securities registered by the Holders shall be borne by the Holders.
7.5 REGISTRATION PROCEDURES. In the case of the registration
effected by NHancement pursuant to this Section 7, NHancement will keep each
Holder advised in writing as to the initiation of such registration,
qualification and compliance and as to the completion thereof. At its expense
NHancement shall:
7.5.1 Keep such registration effective for a period of one
hundred eighty (180) days, or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
shall occur first; and
7.5.2 Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request.
7.6 DELAY OF REGISTRATION. No Holder shall have any right to
take any action to restrain, enjoin or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 7.
7.7 INDEMNIFICATION. In the event any Registrable Securities
shall be included in a registration statement pursuant to this Section 7:
7.7.1 To the extent permitted by law, NHancement will
indemnify and hold harmless each Holder requesting or joining in a registration
and each person, if any, who controls such Holder within the meaning of the Act
against any losses, claims, damages or liabilities, joint or several, to which
they may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or arise out of any violation by NHancement of
any rule or regulation promulgated under the Act or any other applicable law,
rule or regulation applicable to NHancement and relating to action or inaction
required of NHancement in connection with any such registration; and will
reimburse each such Holder or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7.7.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of NHancement (which consent shall
not be unreasonably withheld) nor shall NHancement be liable in any such case
for any such loss, claim,
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 20
damage, liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto, in reliance upon and in
conformity with information furnished expressly for use in connection with such
registration by any such Holder or controlling person seeking the
indemnification.
7.7.2 To the extent permitted by law, each Holder
requesting or joining in the registration will indemnify and hold harmless
NHancement, each of its directors, each of its officers who have signed the
registration statement and each person, if any, who controls NHancement within
the meaning of the Act and each other such Holder against any losses, claims,
damages or liabilities to which NHancement or any such director, officer,
controlling person or other Holder may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus or amendments or
supplements thereto, in reliance upon and in conformity with information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by NHancement or any such director, officer, controlling person or
other Holder in connection with investigating or defending such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 7.7.3 shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld), and provided, further, that the liability of each Holder to reimburse
legal or other expenses pursuant to this Section shall, in each case, be limited
to the total dollar amount received by such Holder for the securities sold
pursuant to such registration by that Holder.
7.7.3 Promptly after receipt by an indemnified party under
this Section 7.7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such action, if
materially prejudicial to such indemnifying party's ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section, but the omission to so notify the
indemnifying party will not relieve such
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 21
indemnifying party of any liability that such indemnifying party may have to any
indemnified party otherwise than under this Section.
7.8 REPORTS UNDER THE 1934 ACT. With a view to making
available to the Holders the benefits of certain rules and regulations
promulgated by the SEC that may permit the Holders to sell shares of
NHancement's stock to the public without registration, NHancement agrees to:
7.8.1 Make and keep adequate current public information
available, as those terms are understood and defined in Rule 144, at all times
subsequent to the Closing; and
7.8.2 Furnish to any Holder forthwith upon request, so
long as such Holder shall own any Registrable Securities, a written statement by
NHancement that it has complied with the reporting requirements of Rule 144, and
of the Act and the 1934 Act, a copy of the most recent annual or quarterly
report of NHancement, and such other reports and documents so filed by
NHancement as may be reasonably requested in availing the Holder of any rule or
regulation promulgated by the Commission that allows the selling of any such
securities without registration.
7.9 LOCKUP AGREEMENT. In consideration for NHancement's
agreeing to its obligations under this Agreement and to ensure compliance with
the Act, each Shareholder agrees not to sell, make any short sale of, loan,
grant any option for the purchase of or otherwise dispose of (i) any shares of
the Securities (other than Registrable Securities registered and sold under a
then effective S-3) for a one (1) year period following the Closing and (ii)
one-half (1/2) of such shares of the stock for an additional one (1) year period
following the first anniversary date of the Closing. All subsequent transferees
or assignees of the shares of Stock must agree in writing to the provisions set
forth in this Section 7.9 a precondition to any such transfer or assignment.
Following the expiration of any such lock-up, shares of such Securities may be
resold by the Shareholders only in compliance with all applicable federal and
state securities laws.
7.10 ASSIGNMENT OF REGISTRATION RIGHTS. With the exception of a
spouse or immediate family member of Shareholder, the rights hereby granted to
the Holders to cause NHancement to register securities under Section 7.3 above
may not be assigned, in whole or in part, to any transferee or assignee of
Registrable Securities.
7.11 TERMINATION OF REGISTRATION RIGHTS. In lieu of registering
the Registrable Securities pursuant to this Section 7 and upon mutual agreement
between NHancement and Shareholders, NHancement shall have the right, to
terminate its obligations to effect such registration by irrevocably offering to
purchase all of such Registrable Securities on the third (3rd) month anniversary
date of the Closing at a purchase price equal to the then current fair market
value determined in accordance with the Valuation Formula, but in no event less
than $1.50 per share (as presently constituted and subject to appropriate
adjustment for stock splits, combinations,
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 22
dividends and the like). In the event NHancement so elects to terminate such
registration rights, NHancement shall provide the Holders with written notice
thereof at least ten (10) days prior to such third (3rd) month anniversary date
and the Holders shall then have the option, exercisable by written notice to
NHancement within ten (10) days following receipt of NHancement's notice to
elect to have all or any portion of such Registrable Securities repurchased at
such purchase price. Such repurchase shall occur within twenty (20) days
following receipt by NHancement of written acceptance by such Holders. In the
event the Holders decline to accept such offer with respect to all or any
portion of the Registrable Securities, the registration rights granted hereby
shall nevertheless terminate.
8. CONDITIONS TO THE MERGER.
8.1 CONDITIONS TO OBLIGATIONS OF EACH TO PARTY TO AFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction at or prior to the Closing of
the following conditions:
8.1.1 NHANCEMENT BOARD APPROVAL. This Agreement and the
Merger shall have been approved and adopted by the Board of Directors of
NHancement.
8.1.2 NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restrain or
prohibition preventing the consummation of the Merger shall be in effect. No
litigation challenging the legality of the transactions contemplated by this
Agreement shall be pending or overtly threatened.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF NHANCEMENT AND
MERGER SUB. The obligations of NHancement and Merger Sub to consummate the
Merger and the transactions contemplated by this Agreement shall be subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any of which may be waived, in writing, exclusively by NHancement and Merger
Sub:
8.2.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Trimark and the Shareholders contained in this Agreement shall
have been true and correct in all material respects when made and shall continue
to be true and correct in all material respects as of the Effective Time except
for changes contemplated by this Agreement, and NHancement shall have received a
certificate to such effect signed by Trimark and the Shareholders.
8.2.2. AGREEMENTS AND COVENANTS. Trimark and the
Shareholders shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Effective
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 23
Time, and NHancement shall have received a certificate to such effect signed by
Trimark and the Shareholders.
8.2.3 MATERIAL ADVERSE CHANGE. There shall not have
occurred any material adverse change in the business, assets (including
intangible assets), financial condition or results of operation of Trimark since
the date of this Agreement.
8.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF TRIMARK AND
SHAREHOLDERS. The obligations of Trimark and Shareholders to consummate the
Merger and the transactions contemplated by this Agreement shall be subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any of which may be waived, in writing, exclusively by Trimark and the
Shareholders:
8.3.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of NHancement contained in this Agreement shall have been true
and correct in all material respects when made and shall continue to be true and
correct in all material respects as of the Effective Time, and Trimark and the
Shareholders shall have received a certificate to such effect signed by
NHancement.
8.3.2 AGREEMENTS AND COVENANTS. NHancement shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time, and Trimark and the Shareholders shall have received a
certificate to such effect signed by NHancement.
8.3.3 MATERIAL ADVERSE CHANGE. There shall not occurred
any material adverse change in the business, assets (including intangible
assets), financial condition or results of operation of NHancement since the
date of this Agreement. For purposes of this condition, a reduction in the
trading price of NHancement's Common Stock as quoted by NASDAQ shall not
constitute a material adverse change.
9. TERMINATION, AMENDMENT AND WAIVER.
9.1 TERMINATION. This Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
9.1.1 By the mutual consent of NHancement and Trimark;
9.1.2 By NHancement or Trimark if (i) the condition
specified in Section 8.1.1 shall not have been satisfied by December 11, 1999,
(ii) the Effective Time has not occurred by January 31, 2000 (provided that the
right to terminate this Agreement under this Section shall not be available to
any party whose willful failure to fulfil any obligation hereunder has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 24
date); (iii) there shall be a final non-appealable order of a federal or state
court in effect preventing consummation of the Merger or (iv) there shall be any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any governmental entity that would make the
consummation of the Merger illegal;
9.1.3 By NHancement (if it is not a material breach of its
obligations under this Agreement) if there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Trimark or the Shareholders or a material adverse change in the
financial condition of Trimark as set forth in Section 8.2.3.
9.1.4 By Trimark and Shareholders (if they are not in
breach of their obligations under this Agreement) if there has been a breach of
any representation, warranty, covenant or agreement contained in this Agreement
on the part of NHancement or a material adverse change in the financial
condition of NHancement as set forth in Section 8.3.3.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of NHancement, Merger
Sub, Trimark or the Shareholders, or their respective officers, directors or
stockholders.
9.3 EXTENSION; WAIVER. At any time prior to the Effective
Time, NHancement and Merger Sub, on the one hand, and the Company and the
Shareholders, on the other, may (i) extend the time for the performance of any
of the obligations of the other party(s) hereto, (ii) waive any inaccuracies in
the representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance of any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of party hereto to any such extension or waiver shall be
valid only if set forth in an instrument and writing signed on behalf of such
party.
10. EXPENSES. Except as provided to the contrary herein, each party
shall pay all of its own costs and expenses incurred with respect to the
negotiation, execution and delivery of this Agreement. Except, NHancement
agrees to pay Trimark's attorney expenses not to exceed $10,000.
11. SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 25
12. ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or implied, written or
oral, between the parties with respect hereto and thereto. The express terms
hereof control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
14. FINDER'S FEES. Each party agrees to indemnify and to hold
harmless all other parties from any liability for any commission or compensation
in the nature of a brokerage or finders' fee or agents' commission or any
similar charge (and the costs and expenses of defending against such liability
or asserted liability) for which such indemnifying party, its employees, agents
or representatives is responsible.
15. OTHER REMEDIES. Any and all remedies herein expressly conferred
upon a party shall be deemed cumulative with and not exclusive of any other
remedy conferred hereby or by law on such party, and the exercise of any one
remedy shall not preclude the exercise of any other.
16. AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or succeeding breach or default.
17. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
18. NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
19. ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party shall be entitled to recover,
as an element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal).
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 26
20. NOTICES. Whenever any party hereto desires or is required to give
any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
If to Trimark: Trimark Inc.
d.b.a. Triad Marketing
4725 Mercury Street, Suite 210
San Diego, CA 92111-2125
If to a Shareholder: Trimark Inc.
d.b.a. Triad Marketing
4725 Mercury Street, Suite 210
San Diego, CA 92111-2125
If to NHancement: NHancement Technologies Inc.
6663 Owens Drive
Pleasanton, CA 94588
If to NHancement, William E. Zisko, Esq.
with a copy to: Tomlinson Zisko Morosoli & Maser LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306
Such communications shall be effective when they are received by the
addressee thereof; but if sent by certified mail in the manner set forth above,
they shall be effective five (5) days after being deposited in the United States
mail. Any party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section.
21. TIME. Time is of the essence of this Agreement.
22. CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof shall
not be construed for or against any party. A reference in this Agreement to any
Section shall include a reference to every Section the number of which begins
with the number of the Sections to which reference is specifically made (e.g., a
reference to Section 5.8 shall include a reference to Sections 5.8.1 and
5.8.2.1). The titles and headings herein are for reference purposes only and
shall not in any manner limit the construction of this Agreement which shall be
considered as a whole.
23. NO JOINT VENTURE. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 27
by virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party shall have the power to control the
activities and operations of any other and their status is, and at all times,
will continue to be, that of independent contractors with respect to each other.
No party shall have any power or authority to bind or commit any other. No party
shall hold itself out as having any authority or relationship in contravention
of this Section.
24. FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
any other party, to better evidence and reflect the transactions described
herein and contemplated hereby, and to carry into effect the intents and
purposes of this Agreement.
25. ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this
Agreement are intended nor shall be interpreted to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, or partner of any party hereto or any other
person; unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof shall be personal solely between the parties to
this Agreement.
26. EXECUTION OF DOCUMENTS. At any time and from time to time after
the Closing, the Shareholders will execute and deliver to NHancement such
further conveyances, assignments and other written assurances as NHancement
shall reasonably request in order to consummate the Merger.
27. PARTIES IN INTEREST. Nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any person, firm or
corporation other than the parties hereto any rights or remedies under or by
reason hereof.
28. BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
29. GOVERNING LAW. It is the intention of the parties hereto that the
internal laws of the State of California, U.S.A. (irrespective of its choice of
law principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
30. COMPLETENESS OF AGREEMENT. This Agreement and the other
agreements entered into among the parties on even date herewith contain the
entire understanding between the parties hereto with respect to the transactions
contemplated hereby and there are no prior or contemporaneous agreements other
than are in writing signed by the parties which alter or modify this written
instrument. It is intended by the parties that this Agreement supercede all
oral or
<PAGE>
Trimark Inc./ NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 28
contemporaneous agreements other than those signed by the parties mentioned
above. This Agreement constitutes the final, complete and exclusive embodiment
of the parties' agreement.
31. NEGOTIATED AGREEMENT. This Agreement has been negotiated by the
parties hereto and their respective legal counsel, and the language hereof shall
not be construed for or against any such party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
NHANCEMENT: TRIMARK:
NHANCEMENT TECHNOLOGIES INC. TRIMARK INCORPORATED
By: /s/ Douglas S. Zorn By: /s/ Richard Glover
----------------------------- -----------------------------------
Douglas S. Zorn, Richard Glover,
President and Chief Executive President and Chief Executive
Officer Officer
By: /s/ Greg Darling
-----------------------------------
Greg Darling
SHAREHOLDERS: Executive Vice President and Chief
Operating Officer
/s/ Greg Darling
- -----------------------------
Greg Darling
/s/ Richard Glover
- -----------------------------
Richard Glover
<PAGE>
EXHIBIT 2.4
AGREEMENT OF MERGER
This Agreement of Merger is entered into between Trimark Incorporated, a
California corporation (the "Merging Corporation") and NHancement Acquisition
Corp., a California corporation (the "Surviving Corporation"), a wholly-owned
subsidiary of NHancement Technologies Inc., a Delaware corporation
("NHancement").
1. Merging Corporation shall be merged into Surviving Corporation.
2. Each outstanding share of Merging Corporation shall be converted to
seven hundred fifty (750) shares of NHancement Common Stock, plus Warrants to
purchase two hundred fifty (250) shares of NHancement Common Stock.
3. The outstanding shares of Surviving Corporation shall remain
outstanding and are not affected by the merger.
4. Merging Corporation shall from time to time, as and when requested by
Surviving Corporation, execute and deliver all such documents and instruments
and take all such action necessary or desirable to evidence or carry out this
merger.
5. The effect of the merger and the effective date of the merger are as
prescribed by law.
IN WITNESS WHEREOF, the parties have executed this Agreement.
NHANCEMENT ACQUISITION CORP.,
a California corporation
By: /s/ Douglas S. Zorn
-----------------------------------------
Douglas S. Zorn
President and Secretary
TRIMARK INCORPORATED,
a California corporation
By: /s/ Richard Glover
-----------------------------------------
Richard Glover, President
By: /s/ Gregory Darling
-----------------------------------------
Gregory Darling, Secretary
<PAGE>
EXHIBIT 4.14
NHANCEMENT TECHNOLOGIES INC.
Issued as of the 21st day (1) Aggregate Price: $234,375
of January, 2000 (2) Initial Warrant Price: $1.525
(3) Number of Shares Initially Subject to Warrant: 150,000
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF,
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER
APPLICABLE SECURITIES LAWS ("STATE SECURITIES LAWS"), AND THIS WARRANT HAS BEEN,
AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE
WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT
REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS
HAVE BEEN SATISFIED.
COMMON STOCK WARRANT
This certifies that RICHARD GLOVER, ("PURCHASER"), whose address for notice
is c/o Triad Marketing, 4725 Mercury Street, Suite 210, San Diego, California
92111-2125 or any party to whom this Warrant is assigned in compliance with the
terms hereof (Purchaser and any such assignee being hereinafter sometimes
referenced as "HOLDER"), is entitled to subscribe for and purchase, during the
period commencing at the issue date set forth above and ending at 5:00 p.m.,
California, local time, on the third (3rd) anniversary of such issue date, the
number of shares of fully paid and nonassessable unregistered, restricted Common
Stock ("COMMON STOCK") of NHANCEMENT TECHNOLOGIES INC, A DELAWARE CORPORATION
(the "COMPANY"), that have an aggregate purchase price equal to the Aggregate
Price as defined below. The purchase price of each such share shall be equal to
the Warrant Price, as defined below.
ARTICLE 1
DEFINITIONS
1.1 "AGGREGATE PRICE" shall be $ 234,375.
1.2 "WARRANT PRICE" shall be One Dollar Fifty-Two and One-Half Cents
($1.525), as adjusted herein.
ARTICLE 2
EXERCISE AND PAYMENT
2.1 CASH EXERCISE. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this Warrant at
the principal office of the Company, located at the address set forth on the
signature page hereof, accompanied by the form of Notice of Cash Exercise
attached hereto as Exhibit "A-1", and by the payment to the
<PAGE>
Common Stock Warrant
Page 2
Company, by cash or by certified, cashier's or other check acceptable to the
Company, of an amount equal to the aggregate Warrant Price of the shares being
purchased.
2.2 NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive shares of Common Stock equal to the
value of this Warrant determined in the manner described below (or of any
portion thereof remaining unexercised) by surrender of this Warrant at the
principal office of the Company together with the form of Notice of Cashless
Exercise attached hereto as Exhibit "A-2", in which event the Company shall
issue to Holder a number of shares of the Company's Common Stock computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under
this Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation).
B = Warrant Price.
2.3 FAIR MARKET VALUE. For purposes of this Article II, fair market value of
one share of the Company's Common Stock shall mean:
(i) The average of the closing bid and asked prices of the Common
Stock quoted in the Over-The-Counter Market Summary, the last reported
sale price of the Common Stock or the closing price quoted on the Nasdaq
SmallCap Market System ("SCMS") or on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the trading day prior to the date
of determination of fair market value; or
(ii) If the Common Stock is not traded Over-The-Counter, on the
SCMS or on an exchange, the per share fair market value of the Common
Stock shall be as determined by mutual agreement of the Company and the
Holder; provided, however that if such agreement cannot be reached
within twenty (20) calendar days, such value shall be determined by an
independent appraiser appointed in good faith by the Company's Board of
Directors. The cost of such appraisal shall be borne equally by the
Company and the Holder. Such appraiser shall meet the following
criteria: (a) it shall not be associated or affiliated with the Company
in any fashion and shall not have previously provided services to the
Company; (b) the appraiser shall have reasonable qualifications to
appraise the value of the Common Stock; (c) it is not (and none of its
affiliates is) a promoter, director or officer of the Company or any of
its affiliates or an underwriter with respect to any of the securities
of the Company; and (d) it does not provide any advice or opinions of
the Company except as an appraiser under this section. In the event
such an appraisal is required it should be conducted under the following
procedures: the Company shall select the appraiser within ten (10) days
of receipt of written notice from the Holder that agreement cannot be
reached and the Company shall submit the name of such appraiser to
Holder. Twenty (20) days after selection of the appraiser, the Company
and the Holder shall each submit to the appraiser a single value
representing such party's contention as to the fair market value of one
share of the Company's Common Stock. Within fifteen (15) days after
receipt of the submission of the Company and the Holder, the appraiser
shall select one of the two values submitted by the parties, and such
value shall be the fair market value of one share of the Common Stock
for purpose of this Warrant. The appraiser shall have no discretion to
take any action other than selection of one of the two values submitted
to the appraiser. The partes may submit to the appraiser and one
another, at the time they submit their respective single values, such
supporting documentation as they
<PAGE>
Common Stock Warrant
Page 3
deem necessary or appropriate. The parties shall have the opportunity seven
(7) business days after receipt of the other party's proposed valuation and
supporting documentation to provide the appraiser and each other with
supplemental written information. The appraiser may, in its discretion,
hold a single six (6) hour hearing on valuation issues. If a hearing is
held, each party shall be allocated three (3) hours. The appraiser may
conduct the hearing in accordance with any rules of procedure it deems
appropriate. The value selected by the appraiser shall be final and binding
upon the parties without any further right of appeal.
2.4 STOCK CERTIFICATES. In the event of any exercise of the rights represented
by this Warrant, certificates for the shares of Common Stock so purchased shall
be delivered to Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the remaining
unexercised Aggregate Price shall also be issued to Holder at such time.
2.5 AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, and if the fair market value of one share of the Company's Common
Stock is greater than the Warrant Price, as adjusted, this Warrant shall be
deemed automatically exercised in accordance with Section 2.2 hereof (even if
not surrendered) immediately before its expiration. For purposes of such
automatic exercise, the fair market value of one share of the Company's Common
Stock upon such expiration shall be the fair market value determined pursuant to
Section 2.3 above. To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 2.5, the Company agrees to
notify Holder within a reasonable period of time of the number of shares of the
Company's Common Stock, if any, Holder is to receive by reason of such automatic
exercise.
2.6 STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants and agrees
that all Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof
(excluding taxes based on the income of Holder). The Company further covenants
and agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved for issuance a sufficient number of shares of its Common Stock or other
securities as would be required upon the full exercise of the rights represented
by this Warrant (including conversion of all such Common Stock issuable
hereunder).
2.7 FRACTIONAL SHARES. No fractional share of Common Stock will be issued in
connection with any exercise hereof; in lieu of a fractional share upon complete
exercise hereof, Holder may purchase a whole share by delivering payment equal
to the appropriate portion of the then effective Warrant Price.
ARTICLE 3
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
3.1 RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of: (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant; (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification, change or exchange of outstanding securities issuable upon
exercise of this Warrant); or (iii) any sale or transfer to another corporation
of all, or substantially all, of the property of the Company, then, and in each
such event, the Company or such successor or purchasing corporation, as the case
may be, shall execute a new Warrant of like form, tenor and
<PAGE>
Common Stock Warrant
Page 4
effect and which will provide that Holder shall have the right to exercise such
new Warrant and purchase upon such exercise, in lieu of each share of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount of
securities, money and property receivable upon such reclassification, change,
consolidation, merger, sale or transfer by a holder of one share of Common Stock
issuable upon exercise of this Warrant had this Warrant been exercised
immediately prior to such reclassification, change, consolidation, merger, sale
or transfer. Such new Warrant shall be as nearly equivalent in all substantive
respects as practicable to this Warrant and the adjustments provided in this
Article III and the provisions of this Section 3.1, shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
transfers.
3.2 SUBDIVISION OR COMBINATION OF SHARES. If the Company shall at any time
while this Warrant remains outstanding and less than fully exercised: (i) divide
its Company Stock, the Warrant Price shall be proportionately reduced; or (ii)
shall combine shares of its Common Stock, the Warrant Price shall be
proportionately increased.
3.3 STOCK DIVIDENDS. If the Company, at any time while this Warrant is
outstanding and unexpired, shall pay a dividend payable in, or make any other
distribution to holders of, Common Stock (except any distribution described in
Sections 3.1 and 3.2 hereof) then the Warrant Price shall be adjusted to that
price determined by multiplying the Warrant Price then in effect by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
3.4 OTHER ACTION AFFECTING COMMON STOCK. If the Company takes any action
affecting its Common Stock after the date hereof (including dividends and
distributions), other than an action described in any of Sections 3.1 and 3.2
hereof, which would have an adverse effect upon Holder's rights hereunder, the
Warrant Price shall be adjusted downward in such manner and at such time as the
Board of Directors of the Company shall in good faith determine to be equitable
under the circumstances.
3.5 TIME OF ADJUSTMENTS TO THE WARRANT PRICE. All adjustments to the Warrant
Price and the number of shares purchasable hereunder, unless otherwise specified
herein, shall be effective as of the earlier of:
(i) the date of issue of the security causing the adjustment;
(ii) the date of sale of the security causing the adjustment;
(iii) the effective date of a division or combination of shares;
(iv) the record date of any action of holders of any class of the Company's
capital stock taken for the purpose of entitling shareholders to receive a
distribution or dividend payable in equity securities, provided that such
division, combination, distribution or dividend actually occurs.
3.6 NOTICE OF ADJUSTMENTS. In each case of an adjustment in the Warrant Price
and the number of shares purchasable hereunder, the Company, at its expense,
shall cause the Chief Financial Officer of the Company to compute such
adjustment and prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based. The Company shall
promptly mail a copy of each such certificate to Holder pursuant to Section 6.8
hereof.
3.7 DURATION OF ADJUSTED WARRANT PRICE. Following each adjustment of the
Warrant Price, such adjusted Warrant Price shall remain in effect until a
further adjustment of the Warrant Price.
<PAGE>
Common Stock Warrant
Page 5
3.8 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Warrant Price
pursuant to this Article III, the number of shares of Common Stock purchasable
hereunder shall be adjusted to the nearest whole share, to the number obtained
by dividing the Aggregate Price by the Warrant Price as adjusted.
ARTICLE 4
TRANSFER, EXCHANGE AND LOSS
4.1 TRANSFER. This Warrant is transferable on the books of the Company at its
principal office by the registered Holder hereof upon surrender of this Warrant
properly endorsed, subject to compliance with federal and state securities laws.
The Company shall issue and deliver to the transferee a new Warrant or Warrants
representing the Warrants so transferred. Upon any partial transfer, the
Company will issue and deliver to Holder a new Warrant or Warrants with respect
to the Warrants not so transferred. Notwithstanding the foregoing, Holder shall
not be entitled to transfer a number of shares or an interest in this Warrant
representing less than five percent (5%) of the aggregate shares initially
covered by this Warrant (as presently constituted, with appropriate adjustment
being made in the event of stock splits, combinations, reorganizations and the
like occurring after the issue date hereof). Any transferee shall be subject to
the same restrictions on transfer with respect to this Warrant as the Purchaser.
4.2 SECURITIES LAWS. Upon any issuance of shares of Common Stock upon exercise
of this Warrant, if required by the Company, in connection with each issuance of
shares of Common Stock upon exercise of this Warrant, the Holder will give:
(i) assurances in writing, satisfactory to the Company, that such shares are not
being purchased with a view to the distribution thereof in violation of
applicable laws, (ii) sufficient information, in writing, to enable the Company
to rely on exemptions from the registration or qualification requirements of
applicable laws, if available, with respect to such exercise, and (iii) its
cooperation to the Company in connection with such compliance.
4.3 EXCHANGE. This Warrant is exchangeable at the principal office of the
Company for Warrants which represent, in the aggregate, the Aggregate Price
hereof; each new Warrant to represent the right to purchase such portion of the
Aggregate Price as Holder shall designate at the time of such exchange. Each
new Warrant shall be identical in form and content to this Warrant, except for
appropriate changes in the number of shares of Common Stock covered thereby, the
percentage stated in Section 4.1 above, and any other changes which are
necessary in order to prevent the Warrant exchange from changing the respective
rights and obligations of the Company and the Holder as they existed immediately
prior to such exchange.
4.4 LOSS OR MUTILATION. Upon receipt by the Company of evidence satisfactory
to it of the ownership of, and the loss, theft, destruction or mutilation of,
this Warrant and (in the case of loss, theft, or destruction) of indemnity
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Warrant.
ARTICLE 5
HOLDER RIGHTS
NO SHAREHOLDER RIGHTS UNTIL EXERCISE. No Holder hereof, solely by virtue
hereof, shall be entitled to any rights as a shareholder of the Company. Holder
shall have all rights of a shareholder with respect to securities purchased upon
exercise hereof at the time: (i) the cash exercise price for such securities is
delivered pursuant to Section 2.1 hereof and this Warrant is surrendered, (ii)
of delivery of notice of cashless exercise pursuant to Section 2.2 hereof and
this Warrant is surrendered, or (iii) of automatic exercise hereof (even if not
surrendered) pursuant to Section 2.5 hereof.
<PAGE>
Common Stock Warrant
Page 6
ARTICLE 6
MISCELLANEOUS
6.1 GOVERNING LAWS. IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT AS
SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS
WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT
OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.
6.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms, provisions, and
agreements contained herein shall be binding upon, and inure to the benefit of
the permitted successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
6.3 SEVERABILITY. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Warrant and the application of such
provisions to other persons or circumstances shall be interpreted so as best to
reasonably effect the intent of the parties hereto. The parties further agree
to replace any such void or unenforceable provisions of this Warrant with valid
and enforceable provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provisions.
6.4 DEFAULT, AMENDMENT AND WAIVERS. This Warrant may be amended upon the
written consent of the Company and the Holder. The waiver by a party of any
breach hereof for default in payment of any amount due hereunder or default in
the performance hereof shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default. The failure to cure any breach of
any term of this Warrant within ten (10) days of written notice thereof shall
constitute an event of default under this Warrant.
6.5 NO WAIVER. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.6 ATTORNEYS' FEES. Should suit be brought to enforce or interpret any part
of this Warrant, the prevailing party shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal). The prevailing party shall be the party entitled to recover its
costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.
6.7 NOTICES. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Warrant, each such communication
shall be in writing and shall be effective only if it is delivered by personal
service or mailed, United States certified mail, postage prepaid, return receipt
requested, addressed as follows:
<PAGE>
Common Stock Warrant
Page 7
Company: NHancement Technologies Inc.
39420 Liberty Street
Suite 250
Fremont, California 94538
Attn: Douglas S. Zorn
Holder: Triad Marketing
4725 Mercury Street, Suite 210
San Diego, CA 92111-2125
Such communications shall be effective when they are received by the addressee
thereof; but if sent by certified mail in the manner set forth above, they shall
be effective three (3) business days after being deposited in the United States
mail. Any party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section.
6.8 TIME. Time is of the essence of this Warrant.
6.9 CONSTRUCTION OF AGREEMENT. A reference in this Warrant to any
Section shall include a reference to every Section the number of which begins
with the number of the Section to which reference is specifically made (E.G., a
reference to Section 3 shall include a reference to Sections 3.5 and 3.7). The
titles and headings herein are for reference purposes only and shall not in any
manner affect the interpretation of this Warrant.
6.10 NO ENDORSEMENT. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the fairness of
investment in the Company or purchase of the Common Stock hereunder and that no
federal or state securities administrator has recommended or endorsed the
offering of securities by the Company hereunder.
6.11 PRONOUNS. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person, persons, entity or entities may require.
6.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested by any
other party to better evidence and reflect the transactions described herein and
contemplated hereby, and to carry into effect the intents and purposes of this
Warrant.
NHancement Technologies Inc., a Delaware corporation
By: /s/ Douglas S. Zorn
--------------------------------------------
Douglas S. Zorn, Chief Executive Officer
<PAGE>
Common Stock Warrant
Page 8
EXHIBIT A-1
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
DATE:
--------------
NHancement Technologies Inc.___________ Aggregate Price of Warrant
6663 Owens Drive_____________________ Before Exercise: $______________
Pleasanton, CA 94588__________________Aggregate Price
Being Exercised: $______________
Attention: Chief Financial Officer
Warrant Price: $____________ per share
Number of Shares of Common Stock to be Issued
Under this Notice:_____________
Remainder Aggregate
Price (if any) After Issuance: $_________
CASH EXERCISE
Gentlemen:
The undersigned registered Holder of the Common Stock Warrant delivered
herewith ("WARRANT"), hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of NHancement Technologies,
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$____________ , thereby leaving a remainder Aggregate Price (if any) equal to
$______________ . Such exercise shall be pursuant to the cash exercise
provisions of Section 2.1 of the Warrant. Therefore, Holder makes payment with
this Notice of Exercise by way of check payable to the Company in the amount of
$____________. Such check is payment in full under the Warrant for
_________________ shares of Common Stock based upon the Warrant Price of
$__________________per share, as currently in effect under the Warrant. Holder
requests that the certificates for the purchased shares of Common Stock be
issued in the name of and delivered to " ________________________ ",
__________________________________ . To the extent the foregoing exercise is for
less than the full Aggregate Price, a Replacement Warrant representing the
remainder of the Aggregate Price and otherwise of like form, tenor and effect
should be delivered to Holder along with the share certificates evidencing the
Common Stock issued in response to this Notice of Exercise.
By:
------------------------------------------
[NAME]
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond
to the name of the Holder on the Warrant.
<PAGE>
Common Stock Warrant
Page 9
EXHIBIT A-2
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
[DATE]
NHancement Technologies Inc.__ Aggregate Price of Warrant
6663 Owens Drive_____________________ Before Exercise: $________________
Pleasanton, CA 904588_________________Aggregate Price
Being Exercised: $____________
Warrant Price: $_______________ per share
Number of Shares of Common Stock to be Issued
Under this Notice: _______________
Remainder Aggregate
Price (if any) After Issuance: $_______
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered Holder of the Common Stock Warrant delivered
herewith ("WARRANT", hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of _NHancement Technologies
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$________________ , thereby leaving a remainder Aggregate Price (if any) equal
to $______________ . Such exercise shall be pursuant to the net issue exercise
provisions of Section 2.2 of the Warrant; therefore, Holder makes no payment
with this Notice of Exercise. The number of shares to be issued pursuant to this
exercise shall be determined by reference to the formula in Section 2.2 of the
Warrant which, by reference to Section 2.3, requires the use of the current per
share fair market value of the Company's Common Stock. The current fair market
value of one share of the Company's Common Stock shall be determined in the
manner provided in Section 2.3, which amount has been determined or agreed to by
Holder and the Company to be $____________, which figure is acceptable to Holder
for calculations of the number of shares of Common Stock issuable pursuant to
this Notice of Exercise [SPECIFY ANY ALTERNATIVE ARRANGEMENTS TO THE FOREGOING,
IF NECESSARY OR APPLICABLE]. Holder requests that the certificates for the
purchased shares of Common Stock be issued in the name of and delivered to
"___________________________", ______________________________ . To the extent
the foregoing exercise is for less than the full Aggregate Price of the Warrant,
a replacement Warrant representing the remainder of the Aggregate Price (and
otherwise of like form, tenor and effect) shall be delivered to Holder along
with the share certificate evidencing the Common Stock issued in response to
this Notice of Exercise.
By:
---------------------------------------
[NAME]
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond
to the name of the Holder on the Warrant.
<PAGE>
EXHIBIT 4.15
NHANCEMENT TECHNOLOGIES INC.
Issued as of the 21st day (1) Aggregate Price: $156,250
-------
of January, 2000 (2) Initial Warrant Price: $1.525
------
(3) Number of Shares Initially Subject to Warrant: 100,000
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF,
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
SECURITIES ACT"), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER
APPLICABLE SECURITIES LAWS ("STATE SECURITIES LAWS"), AND THIS WARRANT HAS BEEN,
AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE
WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT
REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS
HAVE BEEN SATISFIED.
COMMON STOCK WARRANT
This certifies that GREG DARLING, ("PURCHASER"), whose address for notice
is c/o Triad Marketing, 4725 Mercury Street, Suite 210, San Diego, California
92111-2125 or any party to whom this Warrant is assigned in compliance with the
terms hereof (Purchaser and any such assignee being hereinafter sometimes
referenced as "HOLDER"), is entitled to subscribe for and purchase, during the
period commencing at the issue date set forth above and ending at 5:00 p.m.,
California, local time, on the third (3rd) anniversary of such issue date, the
number of shares of fully paid and nonassessable unregistered, restricted Common
Stock ("COMMON STOCK") of NHANCEMENT TECHNOLOGIES INC, A DELAWARE CORPORATION
(the "COMPANY"), that have an aggregate purchase price equal to the Aggregate
Price as defined below. The purchase price of each such share shall be equal to
the Warrant Price, as defined below.
ARTICLE 1
DEFINITIONS
1.1 "AGGREGATE PRICE" shall be $ 156,250.
1.2 "WARRANT PRICE" shall be One Dollar Fifty-Two and One-Half Cents
($1.525), as adjusted herein.
ARTICLE 2
EXERCISE AND PAYMENT
2.1 CASH EXERCISE. The purchase rights represented by this Warrant may be
exercised by Holder, in whole or in part, by the surrender of this Warrant at
the principal office of the Company, located at the address set forth on the
signature page hereof, accompanied by the form of Notice of Cash Exercise
attached hereto as Exhibit "A-1", and by the payment to the Company, by cash or
by certified, cashier's or other check acceptable to the Company, of an amount
equal to the aggregate Warrant Price of the shares being purchased.
<PAGE>
Common Stock Warrant
Page 2
2.2 NET ISSUE EXERCISE. In lieu of exercising this Warrant pursuant to
Section 2.1, Holder may elect to receive shares of Common Stock equal to the
value of this Warrant determined in the manner described below (or of any
portion thereof remaining unexercised) by surrender of this Warrant at the
principal office of the Company together with the form of Notice of Cashless
Exercise attached hereto as Exhibit "A-2", in which event the Company shall
issue to Holder a number of shares of the Company's Common Stock computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under
this Warrant (at the date of such calculation).
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation).
B = Warrant Price.
2.3 FAIR MARKET VALUE. For purposes of this Article II, fair market value of
one share of the Company's Common Stock shall mean:
(i) The average of the closing bid and asked prices of the Common
Stock quoted in the Over-The-Counter Market Summary, the last reported sale
price of the Common Stock or the closing price quoted on the Nasdaq
SmallCap Market System ("SCMS") or on any exchange on which the Common
Stock is listed, whichever is applicable, as published in the Western
Edition of The Wall Street Journal for the trading day prior to the date
of determination of fair market value; or
(ii) If the Common Stock is not traded Over-The-Counter, on the SCMS
or on an exchange, the per share fair market value of the Common Stock
shall be as determined by mutual agreement of the Company and the Holder;
provided, however that if such agreement cannot be reached within twenty
(20) calendar days, such value shall be determined by an independent
appraiser appointed in good faith by the Company's Board of Directors. The
cost of such appraisal shall be borne equally by the Company and the
Holder. Such appraiser shall meet the following criteria: (a) it shall not
be associated or affiliated with the Company in any fashion and shall not
have previously provided services to the Company; (b) the appraiser shall
have reasonable qualifications to appraise the value of the Common Stock;
(c) it is not (and none of its affiliates is) a promoter, director or
officer of the Company or any of its affiliates or an underwriter with
respect to any of the securities of the Company; and (d) it does not
provide any advice or opinions of the Company except as an appraiser under
this section. In the event such an appraisal is required it should be
conducted under the following procedures: the Company shall select the
appraiser within ten (10) days of receipt of written notice from the Holder
that agreement cannot be reached and the Company shall submit the name of
such appraiser to Holder. Twenty (20) days after selection of the
appraiser, the Company and the Holder shall each submit to the appraiser a
single value representing such party's contention as to the fair market
value of one share of the Company's Common Stock. Within fifteen (15) days
after receipt of the submission of the Company and the Holder, the
appraiser shall select one of the two values submitted by the parties, and
such value shall be the fair market value of one share of the Common Stock
for purpose of this Warrant. The appraiser shall have no discretion to
take any action other than selection of one of the two values submitted to
the appraiser. The partes may submit to the appraiser and one another, at
the time they submit their respective single values, such supporting
documentation as they deem necessary or appropriate. The parties shall
have the opportunity seven (7) business days after receipt of the other
party's proposed valuation and supporting documentation to
<PAGE>
Common Stock Warrant
Page 3
provide the appraiser and each other with supplemental written information.
The appraiser may, in its discretion, hold a single six (6) hour hearing on
valuation issues. If a hearing is held, each party shall be allocated three
(3) hours. The appraiser may conduct the hearing in accordance with any
rules of procedure it deems appropriate. The value selected by the
appraiser shall be final and binding upon the parties without any further
right of appeal.
2.4 STOCK CERTIFICATES. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of Common Stock so
purchased shall be delivered to Holder within a reasonable time and, unless this
Warrant has been fully exercised or has expired, a new Warrant representing the
remaining unexercised Aggregate Price shall also be issued to Holder at such
time.
2.5 AUTOMATIC EXERCISE. To the extent this Warrant is not previously
exercised, and if the fair market value of one share of the Company's Common
Stock is greater than the Warrant Price, as adjusted, this Warrant shall be
deemed automatically exercised in accordance with Section 2.2 hereof (even if
not surrendered) immediately before its expiration. For purposes of such
automatic exercise, the fair market value of one share of the Company's Common
Stock upon such expiration shall be the fair market value determined pursuant to
Section 2.3 above. To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 2.5, the Company agrees to
notify Holder within a reasonable period of time of the number of shares of the
Company's Common Stock, if any, Holder is to receive by reason of such automatic
exercise.
2.6 STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof
(excluding taxes based on the income of Holder). The Company further covenants
and agrees that during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved for issuance a sufficient number of shares of its Common Stock or other
securities as would be required upon the full exercise of the rights represented
by this Warrant (including conversion of all such Common Stock issuable
hereunder).
2.7 FRACTIONAL SHARES. No fractional share of Common Stock will be issued
in connection with any exercise hereof; in lieu of a fractional share upon
complete exercise hereof, Holder may purchase a whole share by delivering
payment equal to the appropriate portion of the then effective Warrant Price.
ARTICLE 3
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
The number and kind of securities purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
3.1 RECLASSIFICATION, CONSOLIDATION OR MERGER. In case of: (i) any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant; (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification, change or exchange of outstanding securities issuable upon
exercise of this Warrant); or (iii) any sale or transfer to another corporation
of all, or substantially all, of the property of the Company, then, and in each
such event, the Company or such successor or purchasing corporation, as the case
may be, shall execute a new Warrant of like form, tenor and effect and which
will provide that Holder shall have the right to exercise such new Warrant and
purchase upon such exercise, in lieu of each share of Common Stock theretofore
issuable upon
<PAGE>
Common Stock Warrant
Page 2
exercise of this Warrant, the kind and amount of securities, money and property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer by a holder of one share of Common Stock issuable upon exercise of this
Warrant had this Warrant been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or transfer. Such new
Warrant shall be as nearly equivalent in all substantive respects as practicable
to this Warrant and the adjustments provided in this Article III and the
provisions of this Section 3.1, shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and transfers.
3.2 SUBDIVISION OR COMBINATION OF SHARES. If the Company shall at any time
while this Warrant remains outstanding and less than fully exercised: (i) divide
its Company Stock, the Warrant Price shall be proportionately reduced; or (ii)
shall combine shares of its Common Stock, the Warrant Price shall be
proportionately increased.
3.3 STOCK DIVIDENDS. If the Company, at any time while this Warrant is
outstanding and unexpired, shall pay a dividend payable in, or make any other
distribution to holders of, Common Stock (except any distribution described in
Sections 3.1 and 3.2 hereof) then the Warrant Price shall be adjusted to that
price determined by multiplying the Warrant Price then in effect by a fraction,
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.
3.4 OTHER ACTION AFFECTING COMMON STOCK. If the Company takes any action
affecting its Common Stock after the date hereof (including dividends and
distributions), other than an action described in any of Sections 3.1 and 3.2
hereof, which would have an adverse effect upon Holder's rights hereunder, the
Warrant Price shall be adjusted downward in such manner and at such time as the
Board of Directors of the Company shall in good faith determine to be equitable
under the circumstances.
3.5 TIME OF ADJUSTMENTS TO THE WARRANT PRICE. All adjustments to the Warrant
Price and the number of shares purchasable hereunder, unless otherwise specified
herein, shall be effective as of the earlier of:
(i) the date of issue of the security causing the adjustment;
(ii) the date of sale of the security causing the adjustment;
(iii) the effective date of a division or combination of shares;
(iv) the record date of any action of holders of any class of the Company's
capital stock taken for the purpose of entitling shareholders to receive a
distribution or dividend payable in equity securities, provided that such
division, combination, distribution or dividend actually occurs.
3.6 NOTICE OF ADJUSTMENTS. In each case of an adjustment in the Warrant Price
and the number of shares purchasable hereunder, the Company, at its expense,
shall cause the Chief Financial Officer of the Company to compute such
adjustment and prepare a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based. The Company shall
promptly mail a copy of each such certificate to Holder pursuant to Section 6.8
hereof.
3.7 DURATION OF ADJUSTED WARRANT PRICE. Following each adjustment of the
Warrant Price, such adjusted Warrant Price shall remain in effect until a
further adjustment of the Warrant Price.
3.8 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Warrant Price
pursuant to this Article III, the number of shares of Common Stock purchasable
hereunder shall be
<PAGE>
Common Stock Warrant
Page 5
adjusted to the nearest whole share, to the number obtained by dividing the
Aggregate Price by the Warrant Price as adjusted.
ARTICLE 4
TRANSFER, EXCHANGE AND LOSS
4.1 TRANSFER. This Warrant is transferable on the books of the Company at its
principal office by the registered Holder hereof upon surrender of this Warrant
properly endorsed, subject to compliance with federal and state securities laws.
The Company shall issue and deliver to the transferee a new Warrant or Warrants
representing the Warrants so transferred. Upon any partial transfer, the
Company will issue and deliver to Holder a new Warrant or Warrants with respect
to the Warrants not so transferred. Notwithstanding the foregoing, Holder shall
not be entitled to transfer a number of shares or an interest in this Warrant
representing less than five percent (5%) of the aggregate shares initially
covered by this Warrant (as presently constituted, with appropriate adjustment
being made in the event of stock splits, combinations, reorganizations and the
like occurring after the issue date hereof). Any transferee shall be subject to
the same restrictions on transfer with respect to this Warrant as the Purchaser.
4.2 SECURITIES LAWS. Upon any issuance of shares of Common Stock upon exercise
of this Warrant, if required by the Company, in connection with each issuance of
shares of Common Stock upon exercise of this Warrant, the Holder will give:
(i) assurances in writing, satisfactory to the Company, that such shares are not
being purchased with a view to the distribution thereof in violation of
applicable laws, (ii) sufficient information, in writing, to enable the Company
to rely on exemptions from the registration or qualification requirements of
applicable laws, if available, with respect to such exercise, and (iii) its
cooperation to the Company in connection with such compliance.
4.3 EXCHANGE. This Warrant is exchangeable at the principal office of the
Company for Warrants which represent, in the aggregate, the Aggregate Price
hereof; each new Warrant to represent the right to purchase such portion of the
Aggregate Price as Holder shall designate at the time of such exchange. Each
new Warrant shall be identical in form and content to this Warrant, except for
appropriate changes in the number of shares of Common Stock covered thereby, the
percentage stated in Section 4.1 above, and any other changes which are
necessary in order to prevent the Warrant exchange from changing the respective
rights and obligations of the Company and the Holder as they existed immediately
prior to such exchange.
4.4 LOSS OR MUTILATION. Upon receipt by the Company of evidence satisfactory
to it of the ownership of, and the loss, theft, destruction or mutilation of,
this Warrant and (in the case of loss, theft, or destruction) of indemnity
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Warrant.
ARTICLE 5
HOLDER RIGHTS
NO SHAREHOLDER RIGHTS UNTIL EXERCISE. No Holder hereof, solely by virtue
hereof, shall be entitled to any rights as a shareholder of the Company. Holder
shall have all rights of a shareholder with respect to securities purchased upon
exercise hereof at the time: (i) the cash exercise price for such securities is
delivered pursuant to Section 2.1 hereof and this Warrant is surrendered, (ii)
of delivery of notice of cashless exercise pursuant to Section 2.2 hereof and
this Warrant is surrendered, or (iii) of automatic exercise hereof (even if not
surrendered) pursuant to Section 2.5 hereof.
<PAGE>
Common Stock Warrant
Page 6
ARTICLE 6
MISCELLANEOUS
6.1 GOVERNING LAWS. IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT AS
SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS
WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT
OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.
6.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless otherwise
provided in, this Warrant, each and all of the covenants, terms, provisions, and
agreements contained herein shall be binding upon, and inure to the benefit of
the permitted successors, executors, heirs, representatives, administrators and
assigns of the parties hereto.
6.3 SEVERABILITY. If any one or more provisions of this Warrant, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Warrant and the application of such
provisions to other persons or circumstances shall be interpreted so as best to
reasonably effect the intent of the parties hereto. The parties further agree
to replace any such void or unenforceable provisions of this Warrant with valid
and enforceable provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provisions.
6.4 DEFAULT, AMENDMENT AND WAIVERS. This Warrant may be amended upon the
written consent of the Company and the Holder. The waiver by a party of any
breach hereof for default in payment of any amount due hereunder or default in
the performance hereof shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default. The failure to cure any breach of
any term of this Warrant within ten (10) days of written notice thereof shall
constitute an event of default under this Warrant.
6.5 NO WAIVER. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.6 ATTORNEYS' FEES. Should suit be brought to enforce or interpret any part
of this Warrant, the prevailing party shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees to
be fixed by the court (including without limitation, costs, expenses and fees on
any appeal). The prevailing party shall be the party entitled to recover its
costs of suit, regardless of whether such suit proceeds to final judgment. A
party not entitled to recover its costs shall not be entitled to recover
attorneys' fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment for purposes of determining if a party is entitled to
recover costs or attorneys' fees.
6.7 NOTICES. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Warrant, each such communication
shall be in writing and shall be effective only if it is delivered by personal
service or mailed, United States certified mail, postage prepaid, return receipt
requested, addressed as follows:
<PAGE>
Common Stock Warrant
Page 7
Company: NHancement Technologies Inc.
39420 Liberty Street
Suite 250
Fremont, California 94538
Attn: Douglas S. Zorn
Holder: Triad Marketing
4725 Mercury Street, Suite 210
San Diego, CA 92111-2125
Such communications shall be effective when they are received by the addressee
thereof; but if sent by certified mail in the manner set forth above, they shall
be effective three (3) business days after being deposited in the United States
mail. Any party may change its address for such communications by giving notice
thereof to the other party in conformity with this Section.
6.8 TIME. Time is of the essence of this Warrant.
6.9 CONSTRUCTION OF AGREEMENT. A reference in this Warrant to any
Section shall include a reference to every Section the number of which begins
with the number of the Section to which reference is specifically made (E.G., a
reference to Section 3 shall include a reference to Sections 3.5 and 3.7). The
titles and headings herein are for reference purposes only and shall not in any
manner affect the interpretation of this Warrant.
6.10 NO ENDORSEMENT. Holder understands that no federal or state securities
administrator has made any finding or determination relating to the fairness of
investment in the Company or purchase of the Common Stock hereunder and that no
federal or state securities administrator has recommended or endorsed the
offering of securities by the Company hereunder.
6.11 PRONOUNS. All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person, persons, entity or entities may require.
6.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to
give such further written assurances, as may be reasonably requested by any
other party to better evidence and reflect the transactions described herein and
contemplated hereby, and to carry into effect the intents and purposes of this
Warrant.
NHancement Technologies Inc., a Delaware corporation
By: /s/ Douglas S. Zorn
--------------------------------------------
Douglas S. Zorn, Chief Executive Officer
<PAGE>
Common Stock Warrant
Page 8
EXHIBIT A-1
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
DATE:_____________
NHancement Technologies Inc.___________ Aggregate Price of Warrant
6663 Owens Drive_____________________ Before Exercise: $_______________
Pleasanton, CA 94588__________________Aggregate Price
Being Exercised: $________________
Attention: Chief Financial Officer
Warrant Price: $____________ per share
Number of Shares of Common Stock to be Issued
Under this Notice:___________
Remainder Aggregate
Price (if any) After Issuance: $__________
CASH EXERCISE
Gentlemen:
The undersigned registered Holder of the Common Stock Warrant delivered
herewith ("WARRANT"), hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of NHancement Technologies,
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$___________ , thereby leaving a remainder Aggregate Price (if any) equal to
$______________ . Such exercise shall be pursuant to the cash exercise
provisions of Section 2.1 of the Warrant. Therefore, Holder makes payment with
this Notice of Exercise by way of check payable to the Company in the amount of
$_____________. Such check is payment in full under the Warrant for
______________ shares of Common Stock based upon the Warrant Price of
$_______________ per share, as currently in effect under the Warrant. Holder
requests that the certificates for the purchased shares of Common Stock be
issued in the name of and delivered to " __________________________ ",
______________________________ . To the extent the foregoing exercise is for
less than the full Aggregate Price, a Replacement Warrant representing the
remainder of the Aggregate Price and otherwise of like form, tenor and effect
should be delivered to Holder along with the share certificates evidencing the
Common Stock issued in response to this Notice of Exercise.
By:
-----------------------------------------
[NAME]
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond
to the name of the Holder on the Warrant.
<PAGE>
Common Stock Warrant
Page 9
EXHIBIT A-2
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
[DATE]
NHancement Technologies Inc.__ Aggregate Price of Warrant
6663 Owens Drive_____________________ Before Exercise: $_______________
Pleasanton, CA 904588_________________Aggregate Price
Being Exercised: $__________________
Warrant Price: $______________per share
Number of Shares of Common Stock to be Issued
Under this Notice:__________________
Remainder Aggregate
Price (if any) After Issuance: $___________
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered Holder of the Common Stock Warrant delivered
herewith ("WARRANT", hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of _NHancement Technologies
Inc., a Delaware corporation, as provided below. Capitalized terms used herein,
unless otherwise defined herein, shall have the meanings given in the Warrant.
The portion of the Aggregate Price (as defined in the Warrant) to be applied
toward the purchase of Common Stock pursuant to this Notice of Exercise is
$________ , thereby leaving a remainder Aggregate Price (if any) equal to
$___________ . Such exercise shall be pursuant to the net issue exercise
provisions of Section 2.2 of the Warrant; therefore, Holder makes no payment
with this Notice of Exercise. The number of shares to be issued pursuant to this
exercise shall be determined by reference to the formula in Section 2.2 of the
Warrant which, by reference to Section 2.3, requires the use of the current per
share fair market value of the Company's Common Stock. The current fair market
value of one share of the Company's Common Stock shall be determined in the
manner provided in Section 2.3, which amount has been determined or agreed to by
Holder and the Company to be $________________ , which figure is acceptable to
Holder for calculations of the number of shares of Common Stock issuable
pursuant to this Notice of Exercise [SPECIFY ANY ALTERNATIVE ARRANGEMENTS TO THE
FOREGOING, IF NECESSARY OR APPLICABLE]. Holder requests that the certificates
for the purchased shares of Common Stock be issued in the name of and delivered
to "___________________________", ________________________________ . To the
extent the foregoing exercise is for less than the full Aggregate Price of the
Warrant, a replacement Warrant representing the remainder of the Aggregate Price
(and otherwise of like form, tenor and effect) shall be delivered to Holder
along with the share certificate evidencing the Common Stock issued in response
to this Notice of Exercise.
By:
--------------------------------------
[NAME]
NOTE
The execution to the foregoing Notice of Exercise must exactly correspond to the
name of the Holder on the Warrant.
<PAGE>
EXHIBIT 10.56
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
January 21, 2000, by and between NHancement Technologies Inc., a Delaware
corporation (the "Company"), Richard Glover (the "Employee").
RECITAL
The Employee has been hired by the Company to serve as the Chief
Marketing Officer of the Company.
The Company and the Employee desire to set forth the terms and
conditions of the Employee's employment. This Agreement supersedes and replaces
all existing employment agreements between the parties, oral or written.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained in this Agreement, and intending to be legally bound, the parties
agree as follows:
1. AGREEMENT TO SERVE
1.1 TITLE. The Company shall employ the Employee and the
Employee shall serve in the employ of the Company as President of eRM Software
Group of NHancement Technologies Inc. and Chief Marketing Officer.
1.2 DUTIES. The Employee shall assume and discharge the
responsibilities of President eRM Software Group of the Company and Chief
Marketing Officer, as well as such other duties and responsibilities as may be
assigned to him by the Chief Executive Officer and the Board of Directors of the
Company and as are appropriate to the offices he holds. The Employee shall
perform his duties to the best of his abilities and shall devote most of his
business time and attention to the good faith performance of his duties. The
Employee shall not engage in other businesses or activities for compensation
during the term of this Agreement to the extent such other business or
activities would constitute a conflict of interest with the interests of the
Company or would substantially interfere with the performance of his duties
hereunder. The Employee shall perform his services to the Company at its
principal offices in San Diego.
2. TERMS OF EMPLOYMENT
2.1 BASIC TERM. The term of the Employee's employment under this
Agreement (the "Term") shall be for a period of two (2) years from the effective
date of this Agreement (the "Initial Term"), subject to the remaining provisions
of this Section 2. The Term will be extended for successive one-year periods
beginning on the first day after the final day of the Initial Term, except in
the event the Employee or the Company provides written notice to the
<PAGE>
Employment Agreement/Richard Glover
Page 2
other at least 180 days before the beginning of such one-year period, of the
intention not to extend the Term. During the Term, the same terms and conditions
contained in this Agreement (including salary as may be determined under Section
3.1) shall remain in effect during the continuance of the Employee's employment.
2.2 TERMINATION FOR CAUSE. The Company shall have the right to
terminate the Employee for cause and said termination shall be effected by and
upon written notification to Employee. Grounds for termination for cause will
be: (i) the Employee's material breach of any terms of the Agreement, if such
material breach has not been substantially cured within thirty (30) days
following written notice of such breach to the Employee from the Company setting
forth with specificity the nature of the breach or, if cure cannot reasonably be
effected within such 30-day period, if the Employee does not commence to cure
the breach within such 30-day period and thereafter pursue such cure
continuously and with due diligence until cure has been fully effected; (ii) the
Employee's willful dishonesty towards, fraud upon, crime against,
misrepresentation, embezzlement, deliberate or attempted injury or bad faith
action with respect to, or deliberate or attempted injury to, the Company; (iii)
the Employee's gross negligence in the performance of, willful failure or
refusal to perform, the services required of him under this Agreement, or to
carry out proper directions by the Board of Directors of the Company with
respect to the services rendered by him under this Agreement or the manner of
rendering such services, his willful misconduct in the performance of his duties
under this Agreement or the manner of rendering such services, his willful
misconduct in the performance of his duties under this Agreement; (iv) any
unlawful or criminal activity of a serious nature; or (v) the Employee's
conviction for any felony crime (whether in connection with the Company's
affairs or otherwise).
2.3 TERMINATION WITHOUT CAUSE. The Company shall have the
right, upon sixty (60) days written notification to the Employee, to terminate
the Employee's employment without cause (as defined above). Except as otherwise
provided in Section 3.5, upon any termination without cause pursuant to this
Section 2.3, the Employee shall be paid all accrued salary, vested deferred
compensation (other than pension plan or profit-sharing plan benefits, which
will be paid in accordance with the provisions of the applicable plan), any
benefits then due under any plans of the Company in which the Employee is a
participant, accrued vacation pay, sick-leave pay, and any appropriate business
expenses incurred by the Employee in connection with his duties under this
Agreement, all to the effective date of termination ("Accrued Compensation"),
and all severance compensation provided for in Section 4.1.
2.4 DISABILITY. If, during the Term of this Agreement, the
Employee, in the reasonable judgement of the Board of Directors of the Company,
has failed to perform his duties under this Agreement on the account of illness
or physical or mental disability, which condition renders the Employee incapable
of performing the duties of his office (disability as defined by a disability
insurance policy purchased by Company on the Employee), and such condition
continues for a total of six months during any 12-month (or shorter) period, the
Company shall have the right to terminate the Employee's employment upon written
notification to the Employee (which may also be considered notice not to extend
the Term pursuant to Section 2.1) and payment to the Employee of all Accrued
Compensation to the date of termination, and disability benefits as provided in
Section 4.2, severance and all other reimbursement accrued by the Employee.
<PAGE>
Employment Agreement/Richard Glover
Page 3
2.5 DEATH. In the event of the Employee's death during the Term
of this Agreement, the Employee's employment shall be deemed to have terminated
as of the last day of the month during which his death occurs, and the Company
shall pay to his estate all Accrued Compensation to the date of termination,
severance and all other reimbursement accrued by the Employee.
2.6 TERMINATION UPON CHANGE IN CONTROL.
(a) In the event of a Termination Upon change in Control,
the Employee shall immediately be paid all Accrued Compensation and the
severance compensation provided for in Section 4.1. "Termination Upon a Change
in Control" shall mean a termination by the Company without cause, or by the
Employee for "Good Reason", of the Employee's employment with the Company
following a "Change in Control", as defined below.
(b) For the purpose of this Agreement. "Good Reason" shall
include but not be limited to, any of the following (without the Employee's
express written consent):
(i) within the first 12 months after the Change in Control,
the assignment to the Employee by the Company of duties inconsistent with, or a
substantial alteration in the nature or status of, the Employee's
responsibilities immediately prior to a Change in Control;
(ii) within the first 12 months after the Change in Control,
a reduction by the Company in the Employee's compensation or benefits as in
effect on the date of the Change in Control;
(iii) the Company's relocation of the Employee to any place
other than the principal offices of the Company in San Diego (or such other
location as the Board of Director has agreed the Employee may be located
pursuant to Section 1.2), except for reasonably required travel by the Employee
on the Company's business;
(iv) any material breach by the Company of any provision of
this Agreement, is such material breach has bot been cured within thirty (30)
days following written notice of such breach by the Employee to the Company
setting forth with specificity the nature of the breach or, if the cure cannot
reasonably be effected within such 30-day period, then if the Company does not
commence to cure the breach within such 30-day period and thereafter in good
faith pursue such cure; or
(v) any failure by the Company to obtain the assumption and
performance of this Agreement by any successor (by merger, consolidation or
otherwise) or assign of the Company.
(c) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if:
(i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934), other than a
trustee or other fiduciary
<PAGE>
Employment Agreement/Richard Glover
Page 4
holding securities under an employee benefit plan of the Company is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of more than 51% of the then outstanding voting stock of the
Company; or
(ii) at any time during any period of three consecutive years
(not including any period prior to the date of this Agreement), individuals who
at the beginning of such period constitute the Board (and any new director whose
election by the Board or whose nomination for election by the Company's
stockholders were approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) at least 50% of the combined voting power of the voting
securities or at least 50% of the total value of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
2.7 VOLUNTARY TERMINATION. In the event Sections 2.2, 2.3, 2.4
and 2.6 are not applicable, and the Employee voluntarily terminates his
employment, the Company shall promptly pay all Accrued Compensation to the date
of termination, but no other compensation or reimbursement of any kind,
including, without limitation severance pay.
3. COMPENSATION.
3.1 BASE SALARY. During the term of this Agreement, the
Company agrees to pay the Employee for his services a salary at the initial rate
of $170,000.00 pre annum ("Base Salary") payable in equal semi-monthly
installments. The Base Salary is the minimum Base Salary for the Employee. The
Base Salary for each year during the Term of the Agreement shall be increased,
subject to the approval of the Board of Directors, by the greater of: (a) an
amount equal to the average annual incremental increase applicable to the
Company's senior executive management or (b) an amount equal to the annual
increase in the consumer price index.
3.2 BENEFITS. The Employee's shall be entitled to participate in
any of the company's benefit and deferred compensation plans as are from time to
time available to the Employee's of the Company, including, but not limited to,
profit-sharing, medical, dental, health and annual physical examination plans,
life and disability insurance plans (provided, however, that the Employee's
benefits may be modified or the Employee may be denied participation in any such
plan because of a condition or restriction imposed by law or regulation or
third-party-insurer or other provider relating to participation of Employees).
All other benefits currently provided by Triad Marketing to The Employee will be
maintained by The Company.
<PAGE>
Employment Agreement/Richard Glover
Page 5
3.3 BONUS. The Employee shall be entitled to receive an
annual bonus pursuant to a written bonus plan approved by the Board of
Directors, subject, however, to the Company meeting its goals and financial
performance targets for such period, where failure to meet such goals will
reduce or eliminate Employee's annual bonus.
3.4 OTHER ALLOWANCES AND VACATION. The Employee shall be
entitled to reasonable expense reimbursements upon presentation of supporting
documentation in accordance with Company policies. The Company agrees to
provide Employee with a vehicle allowance in an amount equal $ 750 per month.
Employee shall be entitled to all holidays applicable to all employees of the
Company, four weeks paid vacation per year, and such other benefits appropriate
to the office of President of eRM Software Group and Chief Marketing Officer as
the Board may deem reasonable.
3.5 PROHIBITION AGAINST CERTAIN GOLDEN PARACHUTE PAYMENTS.
Notwithstanding any other provision of the Agreement or of any other agreement,
the Employee shall not be entitled to receive the amount (or portion thereof),
if any, of compensation or severance reimbursement that (a) would be treated as
a "parachute payment" for purposes of Section 280G of the Internal Revenue Code
and (b) would subject the Employee to an excise tax on "excess parachute
payments" under Section 4999 of the Internal Revenue Code such that the Employee
would receive, on an after-tax basis, total compensation, severance and
reimbursement amounts that the Employee otherwise would have received if no
"parachute payment" had been made to the Employee.
4. SEVERANCE AND OTHER PAYMENTS.
4.1 SEVERANCE COMPENSATION
4.1.1 In the event the Employee's employment is terminated
under Sections 2.3 or 2.6. the parties acknowledge that the Employee will
sustain actual damages, the amount of which is indefinite, uncertain and
difficult to exactly ascertain because of the uncertainties of successfully
relocating and seeking a comparable position. In order to avoid dispute as to
the amount of such damages and the mutual expense and inconvenience such dispute
would entail, the Company and the Employee have agreed that the Company shall
pay to the Employee severance compensation determined in the manner below. In
the event the Company terminates the Employees employment at any time prior to
the end of the Term:
(i) if a Termination Without Cause pursuant to
Section 2.3, then the Company shall pay severance compensation in an amount
equal to the Employee's Base Salary (at the rate payable at the time of
termination) for the greater of a period of two (2) years following the date of
termination or the balance of the Term, plus a bonus for each such year (or pro
rate part thereof) equal to the average of the bonus received by the Employee
for each of the two (2) years preceding the year in which termination occurs, in
the manner specified in Section 3.1; or
(ii) if a Termination upon a Change of Control
pursuant to Section 2.6, then the Company shall pay severance compensation in an
amount equal
<PAGE>
Employment Agreement/Richard Glover
Page 6
to two times the sum of (x) the Employee's Base Salary (at the rate payable at
the time of termination) plus a bonus calculated in the manner provided in
clause (I) payable in the manner specified in Section 3.1
In either such event, the Employee shall be entitled to a letter of credit or
other security reasonably acceptable to the Employee to secure payment to him of
the amounts owed. The Company will provide to Employee said letter of credit or
other security at the time of termination. It is agreed that in the event of
such termination by the Company, the Employee shall receive the amounts provided
in this Section 4.1, not as a penalty, but as the Employee's agreed severance
compensation and sole damages for the termination of the Agreement, in lieu of
Employee's proof of his actual damages on that account. All severance
compensation shall be without prejudice to the Employee's right to receive all
Accrued Compensation earned and unpaid up to the time of termination.
(b) Following a termination under Sections 2.3 or 2.6, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
company within thirty (30) days following such termination, elect to receive
from the company a lump sum severance payment by bank cashier's check equal to
the present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to Section 4.1(a). The present value shall be determined
as of the date of delivery of the notice of election of the Employee and shall
be based on a discount rate equal to the interest rate on 90-day U.S. Treasury
Bills, as reported in the Wall Street Journal (or similar publication) on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Company shall make payment to the Employee
within sixty (60) days following the date on which the Employee notifies the
Company of the Employee's election.
(c) No deduction shall be made by the Company under Section
4.1 for any compensation earned by the Employee from any other employment or for
any other monies otherwise received by the Employee subsequent to termination of
Employee's employment.
(d) In the event or termination under Sections 2.3 or 2.6,
at the Employee's sole discretion, the vesting schedule, if any, for all stock
options previously granted to Employee shall be accelerated and all such options
shall become fully vested as of the date of this termination.
4.2 DISABILITY BENEFITS. In the event of termination of the
Employee's employment by reason of disability pursuant to Section 2.4, the
Company shall pay to the Employee the difference between (I) 75% of the sum of
the Employee's Base Salary at the rate and times payable at the time of
termination and (ii) amounts received by the Employee from long term disability
insurance carried by the Company, during the remaining Term of this Agreement.
5. NON-COMPETITION.
<PAGE>
Employment Agreement/Richard Glover
Page 7
5.1 NO COMPETITION. Employee agrees that, unless terminated
without Cause, he will not, anywhere in the world, without the prior written
approval of the Board of Directors, until the lapse of two (2) years after his
termination pursuant to Sections 2.1, 2.2, 2.4 or 2.7, engage, directly or
indirectly, in a "Competing Business", as defined below, whether as a sole
proprietor, partner, corporate Employee, employee, director, shareholder,
consultant, agent, independent contractor, trustee, or in any other manner by
which Employee holds any beneficial interest in a Competing Business.
"Competing Business" shall bean the design, development, manufacture or
marketing of products in any line of business in which the Company is, or has in
the past been, involved, or is or has planned or considered involvement. The
provisions of this paragraph will not, however, restrict Employee from owning
less than one percent (1%) of the outstanding stock of a publicly traded
corporation engaged in a Competing Business.
5.2 NO SOLICITATION OF CUSTOMERS. Employee will not, directly or
indirectly until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4, or 2.7, without the prior written approval of the Board
of Directors, call upon, cause to be called upon, solicit or assist in the
solicitation of, any customer or potential customer of the Company for the
purpose of diverting any existing or future business of such customers to a
Competing Business.
5.3 NO HIRING EMPLOYEES. Employee will not, directly or
indirectly, until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4 or 2.1, without the prior written approval of the Board
of Directors, employ, engage, or seek to employ or engage, directly or
indirectly, any employee of the Company.
5.4 EQUITABLE REMEDIES. The services to be rendered by
Employee and the information disclosed to Employee prior to and during the Term
of the Agreement are of a unique and special character, and any breach of
Section 5 will cause the Company immediate and irreparable injury and damage,
for which monetary relief would be inadequate or difficult to quantify.
Therefor, the Company will be entitled to, in addition to all other remedies
available to it, injunctive relief and specific performance to prevent a breach
and to secure the enforcement of all provisions of Section 5. Injunctive relief
may be granted immediately upon the commencement of any such action.
6. MISCELLANEOUS.
6.1 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid and
enforceable to the extent possible.
6.2 WITHHOLDINGS. All compensation and benefits to the
Employee shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
6.3 ARBITRATION. The parties agree that any dispute or
controversy arising out of or relating to this Agreement, Employee's employment
or the termination or cancellation
<PAGE>
Employment Agreement/Richard Glover
Page 8
of Employee's employment or this Agreement, including limitation any claim by
Employee under any federal, state or local law or statue regarding
discrimination in employment, shall be settled by arbitration by a panel of
three (3) arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association from time to time in force. The hearing on any
such arbitration shall be held in San Francisco, California. If such Commercial
Arbitration Rules and practices shall conflict with the California Rules of
Civil Procedure or any other provision of California law then in force, such
California rules and provision shall govern. Arbitration of any such dispute or
controversy shall be a condition precedent to any legal action thereon. This
submission and agreement to arbitration shall be specifically enforceable.
Within thirty (30) days of the receipt by one party of a written
notice to arbitrate delivered by the other party, each party shall select one
arbitrator by written notice to the other party. Within thirty (30) days of the
delivery of both notices, the two arbitrators will select a third arbitrator.
If the two cannot agree on such third arbitrator, the selection of a third
arbitrator will be made in accordance with the procedures of the American
Arbitration Association.
Awards shall be final and binding on all parties to the extent
and in the manner provided by California law. Each award shall expressly
entitle the prevailing party to recover such party's attorney's fees and costs,
and the award specifically allocate such fees and costs between the parties.
All awards may be filed by either party with the appropriate clerk of one or
more courts, state or federal, having jurisdiction over the party against whom
such an award is rendered or its property, and a judgement entered thereon and
execution issued therefor.
9.4 ENTIRE AGREEMENT MODIFICATIONS. This Agreement represents
the entire agreement between the parties an may be amended, modified, superseded
or cancelled, and any of the terms may be waived, only by a written instrument
executed by each party, or in the case of a waiver, by the party waiving
compliance. The failure of either party at to require performance of any of the
provisions shall not affect the right at a latter time to enforce the same. No
waiver by any party of the breach of any provision in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or of any other
term of this Agreement.
9.5 APPLICABLE LAW. This Agreement shall be construed under and
governed by the laws of the state of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
NHancement Technologies, Inc. Employee
By: /s/ Douglas S. Zorn /s/ Richard Glover
----------------------------------------- ----------------------------------
Douglas S. Zorn Richard Glover
President and Chief Executive Officer
<PAGE>
EXHIBIT 10.57
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of
January 21, 2000, by and between NHancement Technologies Inc., a Delaware
corporation (the "Company"), Greg Darling (the "Employee").
RECITAL
The Employee has been hired by the Company to serve as the General
Manager of Triad Division of the Company.
The Company and the Employee desire to set forth the terms and
conditions of the Employee's employment. This Agreement supersedes and replaces
all existing employment agreements between the parties, oral or written.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained in this Agreement, and intending to be legally bound, the parties
agree as follows:
2. AGREEMENT TO SERVE
1.1 TITLE. The Company shall employ the Employee and the Employee
shall serve in the employ of the Company as General Manager of Triad Division of
NHancement Technologies Inc.
1.2 DUTIES. The Employee shall assume and discharge the
responsibilities of General Manager of Triad Division, as well as such other
duties and responsibilities as may be assigned to him by the Chief Executive
Officer and the Board of Directors of the Company and as are appropriate to the
offices he holds. The Employee shall perform his duties to the best of his
abilities and shall devote most of his business time and attention to the good
faith performance of his duties. The Employee shall not engage in other
businesses or activities for compensation during the term of this Agreement to
the extent such other business or activities would constitute a conflict of
interest with the interests of the Company or would substantially interfere with
the performance of his duties hereunder. The Employee shall perform his
services to the Company at its principal offices in San Diego.
2. TERMS OF EMPLOYMENT
2.1 BASIC TERM. The term of the Employee's employment under this
Agreement (the "Term") shall be for a period of two (2) years from the effective
date of this Agreement (the "Initial Term"), subject to the remaining provisions
of this Section 2. The Term will be extended for successive one-year periods
beginning on the first day after the final day of the Initial Term, except in
the event the Employee or the Company provides written notice to the
<PAGE>
Employment Agreement/Greg Darling
Page 2
other at least 180 days before the beginning of such one-year period, of the
intention not to extend the Term. During the Term, the same terms and conditions
contained in this Agreement (including salary as may be determined under Section
3.1) shall remain in effect during the continuance of the Employee's employment.
2.2 TERMINATION FOR CAUSE. The Company shall have the right to
terminate the Employee for cause and said termination shall be effected by and
upon written notification to Employee. Grounds for termination for cause will
be: (i) the Employee's material breach of any terms of the Agreement, if such
material breach has not been substantially cured within thirty (30) days
following written notice of such breach to the Employee from the Company setting
forth with specificity the nature of the breach or, if cure cannot reasonably be
effected within such 30-day period, if the Employee does not commence to cure
the breach within such 30-day period and thereafter pursue such cure
continuously and with due diligence until cure has been fully effected; (ii) the
Employee's willful dishonesty towards, fraud upon, crime against,
misrepresentation, embezzlement, deliberate or attempted injury or bad faith
action with respect to, or deliberate or attempted injury to, the Company; (iii)
the Employee's gross negligence in the performance of, willful failure or
refusal to perform, the services required of him under this Agreement, or to
carry out proper directions by the Board of Directors of the Company with
respect to the services rendered by him under this Agreement or the manner of
rendering such services, his willful misconduct in the performance of his duties
under this Agreement or the manner of rendering such services, his willful
misconduct in the performance of his duties under this Agreement; (iv) any
unlawful or criminal activity of a serious nature; or (v) the Employee's
conviction for any felony crime (whether in connection with the Company's
affairs or otherwise).
2.3 TERMINATION WITHOUT CAUSE. The Company shall have the
right, upon sixty (60) days written notification to the Employee, to terminate
the Employee's employment without cause (as defined above). Except as otherwise
provided in Section 3.5, upon any termination without cause pursuant to this
Section 2.3, the Employee shall be paid all accrued salary, vested deferred
compensation (other than pension plan or profit-sharing plan benefits, which
will be paid in accordance with the provisions of the applicable plan), any
benefits then due under any plans of the Company in which the Employee is a
participant, accrued vacation pay, sick-leave pay, and any appropriate business
expenses incurred by the Employee in connection with his duties under this
Agreement, all to the effective date of termination ("Accrued Compensation"),
and all severance compensation provided for in Section 4.1.
2.4 DISABILITY. If, during the Term of this Agreement, the
Employee, in the reasonable judgement of the Board of Directors of the Company,
has failed to perform his duties under this Agreement on the account of illness
or physical or mental disability, which condition renders the Employee incapable
of performing the duties of his office (disability as defined by a disability
insurance policy purchased by Company on the Employee), and such condition
continues for a total of six months during any 12-month (or shorter) period, the
Company shall have the right to terminate the Employee's employment upon written
notification to the Employee (which may also be considered notice not to extend
the Term pursuant to Section 2.1) and payment to the Employee of all Accrued
Compensation to the date of termination, and disability benefits as provided in
Section 4.2, severance and all other reimbursement accrued by the Employee.
<PAGE>
Employment Agreement/Greg Darling
Page 3
2.5 DEATH. In the event of the Employee's death during the Term
of this Agreement, the Employee's employment shall be deemed to have terminated
as of the last day of the month during which his death occurs, and the Company
shall pay to his estate all Accrued Compensation to the date of termination,
severance and all other reimbursement accrued by the Employee.
2.6 TERMINATION UPON CHANGE IN CONTROL.
(a) In the event of a Termination Upon change in Control, the
Employee shall immediately be paid all Accrued Compensation and the severance
compensation provided for in Section 4.1. "Termination Upon a Change in
Control" shall mean a termination by the Company without cause, or by the
Employee for "Good Reason", of the Employee's employment with the Company
following a "Change in Control", as defined below.
(b) For the purpose of this Agreement. "Good Reason" shall
include but not be limited to, any of the following (without the Employee's
express written consent):
(i) within the first 12 months after the Change in
Control, the assignment to the Employee by the Company of duties inconsistent
with, or a substantial alteration in the nature or status of, the Employee's
responsibilities immediately prior to a Change in Control;
(ii) within the first 12 months after the Change in
Control, a reduction by the Company in the Employee's compensation or benefits
as in effect on the date of the Change in Control;
(iii) the Company's relocation of the Employee to any
place other than the principal offices of the Company in San Diego (or such
other location as the Board of Director has agreed the Employee may be located
pursuant to Section 1.2), except for reasonably required travel by the Employee
on the Company's business;
(iv) any material breach by the Company of any provision
of this Agreement, is such material breach has bot been cured within thirty (30)
days following written notice of such breach by the Employee to the Company
setting forth with specificity the nature of the breach or, if the cure cannot
reasonably be effected within such 30-day period, then if the Company does not
commence to cure the breach within such 30-day period and thereafter in good
faith pursue such cure; or
(v) any failure by the Company to obtain the assumption
and performance of this Agreement by any successor (by merger, consolidation or
otherwise) or assign of the Company.
(c) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if:
(i) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities and Exchange Act of 1934), other
than a trustee or other fiduciary
<PAGE>
Employment Agreement/Greg Darling
Page 4
holding securities under an employee benefit plan of the Company is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of more than 51% of the then outstanding voting stock of the
Company; or
(ii) at any time during any period of three consecutive
years (not including any period prior to the date of this Agreement),
individuals who at the beginning of such period constitute the Board (and any
new director whose election by the Board or whose nomination for election by the
Company's stockholders were approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to the merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) at least 50% of the combined voting power of the voting
securities or at least 50% of the total value of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.
2.7 VOLUNTARY TERMINATION. In the event Sections 2.2, 2.3, 2.4
and 2.6 are not applicable, and the Employee voluntarily terminates his
employment, the Company shall promptly pay all Accrued Compensation to the date
of termination, but no other compensation or reimbursement of any kind,
including, without limitation severance pay.
3. COMPENSATION.
3.1 BASE SALARY. During the term of this Agreement, the
Company agrees to pay the Employee for his services a salary at the initial rate
of $170,000.00 pre annum ("Base Salary") payable in equal semi-monthly
installments. The Base Salary is the minimum Base Salary for the Employee. The
Base Salary for each year during the Term of the Agreement shall be increased,
subject to the approval of the Board of Directors, by the greater of: (a) an
amount equal to the average annual incremental increase applicable to the
Company's senior executive management or (b) an amount equal to the annual
increase in the consumer price index.
3.2 BENEFITS. The Employee's shall be entitled to participate
in any of the company's benefit and deferred compensation plans as are from time
to time available to the Employee's of the Company, including, but not limited
to, profit-sharing, medical, dental, health and annual physical examination
plans, life and disability insurance plans (provided, however, that the
Employee's benefits may be modified or the Employee may be denied participation
in any such plan because of a condition or restriction imposed by law or
regulation or third-party-insurer or other provider relating to participation of
Employees). All other benefits currently provided by Triad Marketing to The
Employee will be maintained by The Company.
<PAGE>
Employment Agreement/Greg Darling
Page 5
3.3 BONUS. The Employee shall be entitled to receive an
annual bonus pursuant to a written bonus plan approved by the Board of
Directors, subject, however, to the Company meeting its goals and financial
performance targets for such period, where failure to meet such goals will
reduce or eliminate Employee's annual bonus.
3.4 OTHER ALLOWANCES AND VACATION. The Employee shall be
entitled to reasonable expense reimbursements upon presentation of supporting
documentation in accordance with Company policies. The Company agrees to
provide Employee with a vehicle allowance in an amount equal $ 750 per month.
Employee shall be entitled to all holidays applicable to all employees of the
Company, four weeks paid vacation per year, and such other benefits appropriate
to the office of General Manager of Triad Division as the Board may deem
reasonable.
3.5 PROHIBITION AGAINST CERTAIN GOLDEN PARACHUTE PAYMENTS.
Notwithstanding any other provision of the Agreement or of any other agreement,
the Employee shall not be entitled to receive the amount (or portion thereof),
if any, of compensation or severance reimbursement that (a) would be treated as
a "parachute payment" for purposes of Section 280G of the Internal Revenue Code
and (b) would subject the Employee to an excise tax on "excess parachute
payments" under Section 4999 of the Internal Revenue Code such that the Employee
would receive, on an after-tax basis, total compensation, severance and
reimbursement amounts that the Employee otherwise would have received if no
"parachute payment" had been made to the Employee.
7. SEVERANCE AND OTHER PAYMENTS.
7.1 SEVERANCE COMPENSATION
7.1.1 In the event the Employee's employment is terminated
under Sections 2.3 or 2.6. the parties acknowledge that the Employee will
sustain actual damages, the amount of which is indefinite, uncertain and
difficult to exactly ascertain because of the uncertainties of successfully
relocating and seeking a comparable position. In order to avoid dispute as to
the amount of such damages and the mutual expense and inconvenience such dispute
would entail, the Company and the Employee have agreed that the Company shall
pay to the Employee severance compensation determined in the manner below. In
the event the Company terminates the Employees employment at any time prior to
the end of the Term:
(i) if a Termination Without Cause pursuant to Section
2.3, then the Company shall pay severance compensation in an amount equal to the
Employee's Base Salary (at the rate payable at the time of termination) for the
greater of a period of two (2) years following the date of termination or the
balance of the Term, plus a bonus for each such year (or pro rate part thereof)
equal to the average of the bonus received by the Employee for each of the two
(2) years preceding the year in which termination occurs, in the manner
specified in Section 3.1; or
(ii) if a Termination upon a Change of Control pursuant
to Section 2.6, then the Company shall pay severance compensation in an amount
equal
<PAGE>
Employment Agreement/Greg Darling
Page 6
to two times the sum of (x) the Employee's Base Salary (at the rate payable at
the time of termination) plus a bonus calculated in the manner provided in
clause (I) payable in the manner specified in Section 3.1
In either such event, the Employee shall be entitled to a letter of credit or
other security reasonably acceptable to the Employee to secure payment to him of
the amounts owed. The Company will provide to Employee said letter of credit or
other security at the time of termination. It is agreed that in the event of
such termination by the Company, the Employee shall receive the amounts provided
in this Section 4.1, not as a penalty, but as the Employee's agreed severance
compensation and sole damages for the termination of the Agreement, in lieu of
Employee's proof of his actual damages on that account. All severance
compensation shall be without prejudice to the Employee's right to receive all
Accrued Compensation earned and unpaid up to the time of termination.
(b) Following a termination under Sections 2.3 or 2.6, the
Employee may in the Employee's sole discretion, by delivery of a notice to the
company within thirty (30) days following such termination, elect to receive
from the company a lump sum severance payment by bank cashier's check equal to
the present value of the flow of cash payments that would otherwise be paid to
the Employee pursuant to Section 4.1(a). The present value shall be determined
as of the date of delivery of the notice of election of the Employee and shall
be based on a discount rate equal to the interest rate on 90-day U.S. Treasury
Bills, as reported in the Wall Street Journal (or similar publication) on the
date of delivery of the election notice. If the Employee elects to receive a
lump sum severance payment, the Company shall make payment to the Employee
within sixty (60) days following the date on which the Employee notifies the
Company of the Employee's election.
(c) No deduction shall be made by the Company under
Section 4.1 for any compensation earned by the Employee from any other
employment or for any other monies otherwise received by the Employee subsequent
to termination of Employee's employment.
(d) In the event or termination under Sections 2.3 or 2.6,
at the Employee's sole discretion, the vesting schedule, if any, for all stock
options previously granted to Employee shall be accelerated and all such options
shall become fully vested as of the date of this termination.
4.2 DISABILITY BENEFITS. In the event of termination of the
Employee's employment by reason of disability pursuant to Section 2.4, the
Company shall pay to the Employee the difference between (I) 75% of the sum of
the Employee's Base Salary at the rate and times payable at the time of
termination and (ii) amounts received by the Employee from long term disability
insurance carried by the Company, during the remaining Term of this Agreement.
8. NON-COMPETITION.
<PAGE>
Employment Agreement/Greg Darling
Page 7
8.1 NO COMPETITION. Employee agrees that, unless terminated
without Cause, he will not, anywhere in the world, without the prior written
approval of the Board of Directors, until the lapse of two (2) years after his
termination pursuant to Sections 2.1, 2.2, 2.4 or 2.7, engage, directly or
indirectly, in a "Competing Business", as defined below, whether as a sole
proprietor, partner, corporate Employee, employee, director, shareholder,
consultant, agent, independent contractor, trustee, or in any other manner by
which Employee holds any beneficial interest in a Competing Business.
"Competing Business" shall bean the design, development, manufacture or
marketing of products in any line of business in which the Company is, or has in
the past been, involved, or is or has planned or considered involvement. The
provisions of this paragraph will not, however, restrict Employee from owning
less than one percent (1%) of the outstanding stock of a publicly traded
corporation engaged in a Competing Business.
8.2 NO SOLICITATION OF CUSTOMERS. Employee will not, directly or
indirectly until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4, or 2.7, without the prior written approval of the Board
of Directors, call upon, cause to be called upon, solicit or assist in the
solicitation of, any customer or potential customer of the Company for the
purpose of diverting any existing or future business of such customers to a
Competing Business.
8.3 NO HIRING EMPLOYEES. Employee will not, directly or
indirectly, until the lapse of two (2) years after termination pursuant to
Sections 2.1, 2.2, 2.4 or 2.1, without the prior written approval of the Board
of Directors, employ, engage, or seek to employ or engage, directly or
indirectly, any employee of the Company.
8.4 EQUITABLE REMEDIES. The services to be rendered by
Employee and the information disclosed to Employee prior to and during the Term
of the Agreement are of a unique and special character, and any breach of
Section 5 will cause the Company immediate and irreparable injury and damage,
for which monetary relief would be inadequate or difficult to quantify.
Therefor, the Company will be entitled to, in addition to all other remedies
available to it, injunctive relief and specific performance to prevent a breach
and to secure the enforcement of all provisions of Section 5. Injunctive relief
may be granted immediately upon the commencement of any such action.
9. MISCELLANEOUS.
9.1 SEVERABILITY. Should a court or other body of competent
jurisdiction determine that any provision of this Agreement is excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and all other provisions of the Agreement shall be deemed valid and
enforceable to the extent possible.
9.2 WITHHOLDINGS. All compensation and benefits to the
Employee shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
9.3 ARBITRATION. The parties agree that any dispute or
controversy arising out of or relating to this Agreement, Employee's employment
or the termination or cancellation
<PAGE>
Employment Agreement/Greg Darling
Page 8
of Employee's employment or this Agreement, including limitation any claim by
Employee under any federal, state or local law or statue regarding
discrimination in employment, shall be settled by arbitration by a panel of
three (3) arbitrators in accordance with the Commercial Arbitration Rules of the
American Arbitration Association from time to time in force. The hearing on any
such arbitration shall be held in San Francisco, California. If such Commercial
Arbitration Rules and practices shall conflict with the California Rules of
Civil Procedure or any other provision of California law then in force, such
California rules and provision shall govern. Arbitration of any such dispute or
controversy shall be a condition precedent to any legal action thereon. This
submission and agreement to arbitration shall be specifically enforceable.
Within thirty (30) days of the receipt by one party of a written
notice to arbitrate delivered by the other party, each party shall select one
arbitrator by written notice to the other party. Within thirty (30) days of the
delivery of both notices, the two arbitrators will select a third arbitrator.
If the two cannot agree on such third arbitrator, the selection of a third
arbitrator will be made in accordance with the procedures of the American
Arbitration Association.
Awards shall be final and binding on all parties to the extent and
in the manner provided by California law. Each award shall expressly entitle
the prevailing party to recover such party's attorney's fees and costs, and the
award specifically allocate such fees and costs between the parties. All awards
may be filed by either party with the appropriate clerk of one or more courts,
state or federal, having jurisdiction over the party against whom such an award
is rendered or its property, and a judgement entered thereon and execution
issued therefor.
9.4 ENTIRE AGREEMENT MODIFICATIONS. This Agreement represents
the entire agreement between the parties an may be amended, modified, superseded
or cancelled, and any of the terms may be waived, only by a written instrument
executed by each party, or in the case of a waiver, by the party waiving
compliance. The failure of either party at to require performance of any of the
provisions shall not affect the right at a latter time to enforce the same. No
waiver by any party of the breach of any provision in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or of any other
term of this Agreement.
9.5 APPLICABLE LAW. This Agreement shall be construed under and
governed by the laws of the state of California.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
NHancement Technologies, Inc. Employee
By: /s/ Douglas S. Zorn /s/ Greg Darling
-------------------------------------- ---------------------------------
Douglas S. Zorn Greg Darling
President and Chief Executive Officer
<PAGE>
EXHIBIT 10.58
NON-COMPETE
AND
TECHNOLOGY TRANSFER AGREEMENT
This Non-Compete and Technology Transfer Agreement ("AGREEMENT") is by and
among NHancement Technologies Inc., a Delaware corporation ("NHANCEMENT"),
NHancement Acquisition Corp., a California corporation ("NAC"), and
______________________ (the "SHAREHOLDER") and is dated this 21st day of January
21, 2000.
R E C I T A L S
A. The terms used in these Recitals have the definitions set forth in
Section 1.
B. Shareholder is a former shareholder of Trimark Incorporated, a
California corporation ("TRIMARK"), and pursuant to the Reorganization
Agreement, Shareholder agreed with Trimark, and the other parties to the
Reorganization Agreement, to the merger of Trimark into NAC, with NAC being the
surviving corporation, and to the cancellation of the shares of Trimark Common
Stock in exchange for shares of NHancement Common Stock.
C. Trimark and/or Shareholder have developed or obtained certain
inventions, innovations, formulas, processes and know-how relating to software
and technology described in the Reorganization Agreement.
D. Shareholder is individually familiar with such inventions,
innovations, formulas, processes and know-how and stands individually to benefit
by the Reorganization Agreement.
NOW, THEREFORE, in reliance on the foregoing recitals and in consideration
for the Reorganization Agreement and for the mutual covenants and agreements
contained herein and therein, the parties agree as follows:
A G R E E M E N T
1. DEFINITIONS.
1.1 "REORGANIZATION AGREEMENT" means that certain Plan and Agreement
of Reorganization dated an even date herewith among NHancement, Shareholder,
Trimark and others.
1.2 "CONFIDENTIAL INFORMATION" shall mean proprietary techniques,
trade secrets and confidential information which Trimark or Shareholder have
developed, acquired or compiled related in any fashion or manner to the
businesses, products or technologies of Trimark. "Confidential Information" is
to be broadly construed and includes all information developed, acquired or
compiled by
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 2
Trimark or Shareholder related in any fashion or manner to businesses, products
or technologies of Trimark, which has or could have commercial value or other
utility in the business in which Trimark is engaged or contemplates engaging or
the unauthorized disclosure of which could be detrimental to the interests of
Trimark or NHancement whether or not such information is identified as
confidential information by Trimark or NHancement. By example, and without
limitation, Confidential Information includes any and all information compiled,
acquired or developed by Trimark or Shareholder concerning processes, formulas,
trade secrets, inventions, discoveries, improvements, techniques, research or
development and test results, specifications, data, know-how, formats, marketing
plans, business plans, strategies, forecasts, unpublished financial statements
budgets, projections, personnel information, and customer and supplier
identities, characteristics and agreements related in any fashion or manner to
businesses, products or technologies of Trimark.
1.3 "CONFLICTING ORGANIZATION" means any person or organization or
any person or organization controlled by, controlling or under common control,
with such person or organization, who or which is engaged in, or is about to
become engaged in, research on, or development, production, marketing, licensing
or selling of, a Conflicting Product.
1.4 "CONFLICTING PRODUCT" means any software or technology which
directly or indirectly incorporates an Innovation, which is similar to or
competitive, directly or indirectly, with an Innovation, or which in its use or
manufacture employs an Innovation.
1.5 "INNOVATIONS" shall mean products, discoveries, developments,
designs, innovations, improvements, inventions, formulas, processes, software
techniques, know-how and data (whether or not patentable, and whether or not at
a commercial stage, or registrable under copyright or similar statutes) made,
conceived, reduced to practice or learned by Shareholder (either alone or
jointly with others) that are related to in any fashion or manner to the
businesses, products or technologies of Trimark.
2. NON-COMPETITION.
2.1 NON-COMPETE AGREEMENT. Shareholder agrees that he will not at
any time within the two (2) year period immediately following the date of this
Agreement, directly or indirectly engage in, or have any interest in any
Conflicting Organization or any other entity (whether as an employee, officer,
director, agent, security holder, partner, creditor, consultant, licensor,
licensee, or otherwise) that engages in, or is preparing to engage in, any
activity in any county or city in the United States of America in which Trimark,
has carried on business, which activity is the same as, similar to, or
competitive with any business now carried on by Trimark or which manufactures,
distributes, licenses or markets a Conflicting Product, in any of such counties
or cities, as long as NHancement or Trimark (or any successor or successors
thereto) shall carry on such business in such county or city.
2.2 CONSTRUCTION. The parties intend that the covenant contained in
Section 2.1 shall be construed as a series of separate covenants, one for each
county and city. Except for geographic coverage, each such separate covenant
shall be deemed identical in terms to the covenant contained in
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 3
the preceding paragraph. If, in any judicial proceeding, a court shall refuse
to enforce any of the separate covenants included in this paragraph, then the
unenforceable covenant shall be deemed eliminated (or modified as set forth
below) from these provisions for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants to be enforced. If a court
determines that any covenant is unenforceable because it is unconscionable or
for any other reason, then the court may modify such covenant to make it
enforceable.
2.3 INJUNCTIVE RELIEF. The remedy at law for breach of this
non-compete covenant being inadequate, Shareholder understands, acknowledges and
agrees that NHancement shall be entitled, in addition to such other remedies it
may have, to temporary and permanent injunctive relief for any breach or
threatened breach of this non-compete covenant without proof of any actual
damages that have been or may be caused to it by such breach.
3. ASSIGNMENT OF INNOVATIONS. Shareholder hereby assigns and agrees to
assign his or her full right, title and interest to the Innovations to Trimark.
In connection therewith, Shareholder shall, at the time of execution of this
Agreement, furnish to NHancement a written description of all Innovations known
to Shareholder and not previously furnished to NHancement, as well as all
written documents related thereto, and a written description of all other
Confidential Information or know-how related thereto. If in the future
Shareholder becomes aware of an Innovation he has not previously reported to
NHancement, Shareholder will promptly report such Innovation to NHancement in
the manner set forth herein. Shareholder agrees, at no charge to NHancement,
but at NHancement's expense: (a) to sign and deliver to NHancement such other
documents as NHancement considers desirable to evidence the assignment of all
rights of Shareholder, if any, to the Innovations to Trimark and Trimark's
ownership of such Innovations and (b) to cooperate with Trimark in performing
any lawful act or signing any document which NHancement in its sole judgment
considers necessary to apply for, prosecute, obtain or enforce any patent,
copyright, or other right or protection relating to any Innovation. In the
event NHancement is unable to secure Shareholder's signature on any such
document, whether due to mental or physical incapacity or any other case,
Shareholder hereby irrevocably designates and appoints each of NHancement and
its duly authorized agents as his or her agent and attorney-in-fact, to act for
and in his or her behalf and stead, for the limited purpose of executing and
filing any such document and doing all other lawfully permitted acts to further
the prosecution, issuance and enforcement of patents, copyrights, or other
protections with the same force and effect as if executed and delivered by the
Shareholder. This power of attorney shall not be affected by subsequent
incapacity of the principal.
WARNING: California Civil Code Section 2400 requires that Shareholder be
given the following warning:
WARNING TO PERSON EXECUTING THIS DOCUMENT.
THIS IS AN IMPORTANT LEGAL DOCUMENT. IT CREATES A DURABLE POWER OF
ATTORNEY, BEFORE EXECUTING THIS DOCUMENT, YOU SHOULD KNOW THESE
IMPORTANT FACTS: 1. THIS DOCUMENT MAY PROVIDE THE PERSON YOU
DESIGNATE AS YOUR ATTORNEY-IN-FACT
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 4
WITH BROAD POWERS TO DISPOSE, SELL, CONVEY AND ENCUMBER YOUR REAL AND
PERSON PROPERTY. 2. THESE POWERS WILL EXIST FOR AN INDEFINITE PERIOD OF
TIME UNLESS YOU LIMIT THEIR DURATION IN THIS DOCUMENT. THESE POWERS WILL
CONTINUE TO EXIST NOTWITHSTANDING YOUR SUBSEQUENT DISABILITY OR INCAPACITY.
3. YOU HAVE THE RIGHT TO REVOKE OR TERMINATE THIS DURABLE POWER OF ATTORNEY
AT ANY TIME.
This power of attorney is coupled with an interest and the revocation
thereof is a breach of this Agreement.
4. LABOR CODE SECTION 2870. Shareholder acknowledges receipt of a copy
of Section 2870 of the California Labor Code. Shareholder acknowledges that it
is Shareholder's intent to assign all of his or her rights to Innovations as a
beneficiary of the Reorganization Agreement and, as a consequence, Shareholder
assigns to Trimark all Innovations to which such Section 2870 might otherwise
apply.
5. PROTECTION OF CONFIDENTIAL INFORMATION. Shareholder agrees that he
will hold in trust, keep confidential and not divulge, communicate, use to the
detriment of NHancement or Trimark or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information. Shareholder
acknowledges and agrees that any Confidential Information he or she has acquired
was received in confidence and as a fiduciary of NHancement and Trimark.
6. MISCELLANEOUS.
6.1 GOVERNING LAWS. It is the intention of the parties hereto that
the internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto.
6.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and unless
otherwise provided in, this Agreement, each and all of the covenants, terms,
provisions, and agreements contained herein shall be binding upon, and inure to
the benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
6.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
6.4 ENTIRE AGREEMENT. This Agreement, the exhibits hereto, the
documents referenced herein, and the exhibits thereto, constitute the entire
understanding and agreement of the
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 5
parties hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or understanding, inducements
or conditions, express or implied, written or oral, between the parties with
respect hereto and thereto. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof.
6.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
6.6 OTHER REMEDIES. Any and all remedies herein expressly conferred
upon a party shall be deemed cumulative with and not exclusive of any other
remedy conferred hereby or by law on such party, and the exercise of any one
remedy shall not preclude the exercise of any other.
6.7 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount due
hereunder or default in the performance hereof shall not be deemed to constitute
a waiver of any other default or any succeeding breach or default.
6.8 NO WAIVER. the failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
6.9 ATTORNEYS' FEES. Should suit be brought to enforce or interpret
any part of this Agreement, the prevailing party shall be entitled to recover,
as a n element of the costs of suit and not as damages, reasonable attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal).
6.10 NOTICES. Whenever any party hereto desires or is required to
give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
If to NAC: Triad Marketing
4725 Mercury Street, Suite 210
San Diego, CA 92111-2125
With a copy to:
------------------------------
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 6
If to NHancement: NHancement Technologies Inc.
39420 Liberty Street, Suite 250
Fremont, California 94538
With a copy to: William E. Zisko, Esq.
Tomlinson Zisko Morosoli & Maser LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306
Shareholder: To the address set forth on the signature page hereof
Such communications shall be effective when they are received by the
addressee thereof; but if sent by certified mail in the manner set forth above,
they shall be effective five (5) years after being deposited in the United
States mail. Any party may change its address for such communications by given
notice thereof to the other party in conformity with this Section.
6.11 CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof shall
not be construed for or against any party. The titles and headings herein are
for reference purposes only and shall not in any manner limit the construction
of this Agreement, which shall be considered as a whole.
6.12 PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
6.13 FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party, to better evidence and reflect the transactions
described herein and contemplated hereby, and to carry into effect the intents
and purposes of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first hereinabove written.
SHAREHOLDER'S ADDRESS: SHAREHOLDER:
------------------------------------
NHANCEMENT ACQUISITION CORP.:
By:
----------------------------------------
Douglas S. Zorn,
President
NHANCEMENT TECHNOLOGIES, INC.:
By:
----------------------------------------
Douglas S. Zorn,
President and Chief Executive Officer
<PAGE>
NHancement / Trimark /
--------------
Non-Compete and Technology Transfer Agreement
Page 8
EXHIBIT "A"
SECTION 2870 OF THE CALIFORNIA LABOR CODE
"Any provision in an employment agreement which provides that an employee
shall assign or offer to assign any of his or her rights in an invention to his
or her employer shall not apply to an invention for which no equipment,
supplies, facility, or trade secret information of the employer was used and
which was developed entirely on the employee's own time, and (a) which does not
relate (1) to the business of the employer or (2) to the employer's actual and
demonstrably anticipated research or development, or (b) which does not result
from any work performed by the employee for the employer. Any provision which
purports to apply to such an invention is to the extent against the public
policy of this state and is to that extent void and unenforceable."
