<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NHANCEMENT TECHNOLOGIES INC.
--------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
--------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:_______
(2) Aggregate number of securities to which transaction applies:__________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):_______________________________
(4) Proposed maximum aggregate value of transaction:___________________________
(5) Total fee paid:____________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:____________________________________________________
(2) Form, Schedule or Registration Statement No.:______________________________
(3) Filing Party:______________________________________________________________
(4) Date Filed:________________________________________________________________
<PAGE>
[NHANCEMENT TECHNOLOGIES INC. LOGO]
June 28, 2000
Dear Stockholder:
You are cordially invited to attend the NHancement Technologies Inc.
Annual Meeting of Stockholders to be held on July 17, 2000 at 10:00 a.m.,
local time, at AmeriSuites located at 4950 Hacienda Drive, Dublin, California
94568.
At the Annual Meeting, you will be asked to elect four directors, ratify
the appointment of BDO Seidman, LLP as the Company's independent certified
public accountants for the Company's 2000 fiscal year, amend the Company's
Certificate of Incorporation, and amend the Company's Equity Incentive Plan.
We hope you will be able to attend the Annual Meeting on July 17, 2000, for
a report on the status of the Company's business and performance during the
fiscal year ended September 30, 1999. There will also be an opportunity for
stockholders to ask questions. Whether or not you plan to attend the meeting,
please sign and return the enclosed proxy card to ensure your representation at
the meeting.
Very truly yours,
---------------------------------
DOUGLAS S. ZORN,
CEO AND PRESIDENT
NHancement Technologies Inc.
<PAGE>
[NHANCEMENT TECHNOLOGIES INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NHANCEMENT TECHNOLOGIES INC.
June 28, 2000
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
NHancement Technologies Inc., a Delaware corporation (the "Company"), will be
held on July 17, 2000 at 10:00 a.m., local time, at AmeriSuites located at
4950 Hacienda Drive, Dublin, California 94568 for the following purposes:
A. To elect four directors to the Company's Board of Directors to hold
office until the next Annual Meeting of Stockholders, or until their respective
successors shall be duly elected and qualified;
B. To ratify the appointment of BDO Seidman, LLP as the Company's
independent certified public accountants for the Company's 2000 fiscal year;
C. To consider and vote upon a proposal to approve an amendment (the
"Amendment") to the Company's Amended and Restated Certificate of
Incorporation, as amended ("Certificate of Incorporation"), increasing the
authorized common stock, par value $.01 per share ("Common Stock"), of the
Company from 20,000,000 shares of Common Stock to 40,000,000 shares of Common
Stock;
D. To consider and vote upon a proposal to approve an amendment (the
"Equity Plan Amendment") to the Company's Equity Incentive Plan (the "Equity
Plan"), increasing the shares of Common Stock reserved under the Equity Plan
from 1,476,500 shares of Common Stock to 4,000,000 shares of Common Stock; and
E. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on May 31, 2000, as
the record date for determining those Stockholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournment thereof.
By Order of the Board of Directors
__________________________________
DOUGLAS S. ZORN,
CEO and President
Pleasanton, California
June 28, 2000
THE BOARD OF DIRECTORS REQUESTS THAT YOU COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY. YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL
MEETING IN PERSON. THE RETURN OF THE ENCLOSED PROXY CARD WILL NOT AFFECT YOUR
RIGHT TO REVOKE YOUR PROXY OR TO VOTE IN PERSON IF YOU DO ATTEND THE ANNUAL
MEETING.
<PAGE>
NHANCEMENT TECHNOLOGIES INC.
------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 17, 2000
------------------------
PROXY STATEMENT
------------------------
TIME, DATE AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of NHancement Technologies Inc., a Delaware
corporation (the "Company"), of proxies from the holders of the Company's
common stock, par value $.01 per share (the "Common Stock"), for use at the
Annual Meeting of Stockholders of the Company to be held on July 17, 2000 at
10:00 a.m., local time, at AmeriSuites located at 4950 Hacienda Drive,
Dublin, California 94568, and at any adjournments or postponements thereof
(the "Annual Meeting") pursuant to the enclosed Notice of Annual Meeting.
The approximate date this Proxy Statement and the enclosed form of proxy
are first being sent to stockholders is June 30, 2000. Stockholders should
review the information provided herein in conjunction with the Company's
Annual Report to Stockholders which accompanies this Proxy Statement. The
Company's principal executive offices are located at 6663 Owens Drive,
Pleasanton, California 94588 and its telephone number is (925) 251-3200.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Stockholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and the enclosed proxy is to be borne by the Company.
In addition to the use of mail, employees of the Company may solicit proxies
personally and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. The Company may reimburse such
persons for their expenses in so doing.
1
<PAGE>
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's Stockholders will consider and vote
upon the following matters:
A. To elect four directors to the Company's Board of Directors to hold
office until the next Annual Meeting of Stockholders, or until their respective
successors shall be duly elected and qualified;
B. To ratify the appointment of BDO Seidman, LLP as the Company's
independent certified public accountants for the Company's 2000 fiscal year;
C. To consider and vote upon a proposal to approve an amendment (the
"Amendment") to the Company's Amended and Restated Certificate of
Incorporation, as amended ("Certificate of Incorporation"), increasing the
authorized shares of common stock, par value $.01 per share ("Common Stock"),
of the Company from 20,000,000 shares of Common Stock to 40,000,000 shares of
Common Stock;
D. To consider and vote upon a proposal to approve an amendment (the
"Equity Plan Amendment") to the Company's Equity Incentive Plan (the "Equity
Plan"), increasing the shares of Common Stock reserved under the Equity Plan
from 1,476,500 shares of Common Stock to 4,000,000 shares of Common Stock; and
E. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth herein)
will be voted (a) for the election of the respective nominees for director named
below and (b) in favor of all other proposals described in the Notice of Annual
Meeting. In the event a stockholder specifies a different choice by means of the
enclosed proxy, his shares will be voted in accordance with the specification so
made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 31, 2000 as the
record date (the "Record Date") for determining stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
10,831,642 shares of Common Stock were issued and outstanding. Each share has
one vote on all matters. No cumulative voting is permitted. The Company's
By-Laws provide that one-third of all of the shares of Common Stock entitled to
vote, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the meeting. Abstentions and broker
non-votes will be counted in determining the number of shares present for
purposes of establishing a quorum for the transaction of business, but will not
be voted in favor of the proposals and will have the same effect as a vote
against the proposals. For information regarding holders of more than 5% of the
outstanding Common Stock, see "Security Ownership of Certain Beneficial Owners
and Management."
Directors will be elected by a plurality of the votes cast by the shares of
Common Stock represented in person or by proxy at the Annual Meeting. The
affirmative votes of the holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting will be required for
approval of the other proposals covered by this Proxy Statement. If less than
one-third of the outstanding shares of Common Stock are represented at the
Annual Meeting, a majority of the shares of Common Stock so represented may
2
<PAGE>
adjourn the Annual Meeting to another date, time or place, and notice need not
be given of the new date, time or place if the new date, time or place is
announced at the Annual Meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the meeting. Such inspector(s) shall determine the number of
shares of Common Stock represented at the meeting, the existence of a quorum and
the validity and effect of proxies, and shall receive, count and tabulate
ballots and votes and determine the results thereof. Abstentions will be
considered as shares present and entitled to vote at the Annual Meeting and will
be counted as votes cast at the Annual Meeting, but will not be counted as votes
cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in the name
of its nominee, which are beneficially owned by another person and for which it
has not received instructions as to voting from the beneficial owner, may have
discretion to vote the beneficial owner's shares with respect to the election of
directors and other matters addressed at the Annual Meeting. Any such shares
which are not represented at the Annual Meeting either in person or by proxy
will not be considered to have cast votes on any matters addressed at the Annual
Meeting.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person who is known by the Company to beneficially own 5% or more of the
Company's outstanding Common Stock, (ii) the Company's Chief Executive Officer
and each of the other "Named Executive Officers" (as defined below in "Executive
Compensation--Summary Compensation Table"), (iii) each director of the Company,
and (iv) all directors and executive officers of the Company as a group. The
Company is not aware of any beneficial owner of more than 5% of the outstanding
Common Stock other than as set forth in the following table.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------
NAME AND ADDRESS(1) BENEFICIALLY OWNERSHIP
OFFICERS AND DIRECTORS OWNED(2) %(3)
------------------------------------------------------------------------- --------------------------- ------------------------
<S> <C> <C>
Douglas S. Zorn
Chairman of the Board, Chief Executive Officer, President 490,647(4) 4.5%
Ram V. Mani, Director 500,000 4.6%
N. Bruce Walko, Director 71,000(5) *
Robert J. Schmier, Director 75,000(6) *
William M. Stephens, Director(7) 50,000(8) *
Esmond T. Goei (9) 51,000 *
650 Castro Street
Suite 120-203,
Mountain View, CA 94041
James B. Linkous(10) 100,000(11) *
1535 Buena Vista Avenue
Alameda, CA 94501
James Han 139,700 1.3%
Managing Director of Infotel Technologies Pte Ltd (Singapore)
Directors and executive officers as a group (8 persons) 1,477,347 13.6%
5% OR GREATER HOLDERS OF COMMON STOCK
James S. Gillespie 717,065(12) 6.6%
198 Country Club Drive
Incline Village, Nevada 89451
</TABLE>
---------------------------
* Less than 1%.
(1) Each beneficial owner for which an address is not listed has an address c/o
NHancement Technologies, Inc., 6663 Owens Drive, Pleasanton, California
94588.
4
<PAGE>
(2) Represents shares beneficially owned by the named individual, including
shares of Common Stock that the person has the right to acquire within 60
days of the Record Date. Unless otherwise noted, all persons listed have
sole voting and sole investment power.
(3) Based on 10,831,642 shares of Common Stock issued and outstanding as of May
31, 2000.
(4) Represents 139,437 shares of Common Stock, warrants to purchase 100,000
shares of Common Stock and options to purchase 251,210 shares of Common
Stock.
(5) Represents options to purchase 21,000 shares of Common Stock and warrants
to purchase 50,000 shares of Common Stock.
(6) Represents options to purchase 25,000 shares of Common Stock and warrants
to purchase 50,000 shares of Common Stock.
(7) Mr. Stephens resigned from the position of Director on June 23, 2000.
(8) Represents warrants to purchase 50,000 shares of Common Stock. These
warrants were cancelled on June 23, 2000.
(9) Mr. Goei resigned from the positions of Chief Executive Officer and
President in January, 1999.
(10) Mr. Linkous resigned from the position of Vice President of Sales in April,
2000.
(11) Represents options to purchase 100,000 shares of Common Stock.
(12) Represents 517,065 shares of Common Stock and warrants to purchase 200,000
shares of Common Stock.
5
<PAGE>
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
At the Annual Meeting, four directors are to be elected to hold office
until the Annual Meeting of Stockholders to be held in 2001 and until their
successors have been elected and qualified. The four nominees for election as
directors are listed below. Each nominee is currently a member of the Board of
Directors. The persons named in the enclosed proxy card have advised that,
unless otherwise directed on the proxy card, they intend to vote FOR the
election of the nominees. Should any nominee become unable or unwilling to
accept nomination or election for any reason, persons named in the enclosed
proxy card may vote for a substitute nominee designated by the Board of
Directors. The Company has no reason to believe the nominees named will be
unable or unwilling to serve if elected.
NOMINEES
The persons nominated as directors are as follows:
<TABLE>
<CAPTION>
NOMINEES AGE PRINCIPAL OCCUPATION
----------------------------------------------- ----------------- ------------------------------------------------------------
<S> <C> <C>
Douglas S. Zorn 51 Chairman of the Board, Chief Executive Officer, President
Ram V. Mani 51 Director
Robert J. Schmier 50 Director
N. Bruce Walko 58 Director
</TABLE>
DOUGLAS S. ZORN. Mr. Zorn is our Chairman of the Board, Chief Executive
Officer and President. Mr. Zorn has served as Executive Vice President, Chief
Financial Officer, Secretary and a Director of the Company since its
incorporation in October 1996. Mr. Zorn served as Executive Vice President,
Secretary and Treasurer and Chief Financial and Operating Officer of BioFactors,
Inc. from December 1993 until February 1997, and as a Director from June 1994
until February 1997. BioFactors, Inc., a private company, was the developer and
marketer of a system to assess performance readiness, called the FACTOR 1000
system.
RAM V. MANI. Mr. Mani joined the Company in June 1999 as its Chief
Technology Officer and President of the NHancement Technologies Software Group.
Mr. Mani has been a Director of the Company since February, 2000. Prior to
joining the Company, Mr. Mani has been an independent software consultant for
more than ten years for such companies as Voicemail International Inc., Atari
Corp., Verbatim Corp., National Semiconductors Inc. and other high technology
companies. From 1983 to 1999, Mr. Mani was the President of Eastern Systems
Technology, Inc., a private company engaged in the business of software
development, including the software program known as "Infofast."
6
<PAGE>
ROBERT J. SCHMIER. Mr. Schmier has been a Director of the Company since
January 1999. Since 1981, Mr. Schmier has been the President of Schmier &
Feurring Properties, Inc., an owner, developer and property manager of shopping
centers and office buildings in Palm Beach County, Florida.
N. BRUCE WALKO. Mr. Walko has been a Director of the Company since January
1999. Mr. Walko has been the President of Cyberfast Systems, Inc., a company
involved in international voice over internet protocol, since November
1999. Previously, Mr. Walko served as Southeast Regional General Manager for
NextWave Telecom Inc. from 1994-1997. Mr. Walko was instrumental in the
development of new technology telecommunication for NextWave and also for McCaw
Cellular Inc. (now AT&T Wireless).
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% percent
of the Company's Common Stock to file reports of beneficial ownership and
changes in ownership of the Company's Common Stock with the Securities and
Exchange Commission. Such persons are required to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms received by the
Company, or oral or written representations from certain reporting persons
that no Forms 5 were required for those persons, the Company believes that,
with respect to the fiscal year ended September 30, 1999, the Company's
directors, executive officers and greater than 10% percent beneficial owners
complied with all filing requirements.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of 15 formal meetings
during the fiscal year ended September 30, 1999 and took action by written
consent 3 times. During the fiscal year ended September 30, 1999, no director
attended fewer than 75% of the number of meetings of the Board of Directors and
each Committee of the Board of Directors of which he was a member held during
the period he served on the Board of Directors.
The only committees of the Board of Directors are the Audit Committee and
the Compensation Committee. The Board of Directors does not have a nominating or
similar committee.
The Audit Committee of the Board of Directors consisted of Messrs. Schmier
and Walko. The duties and responsibilities of the Audit Committee include (a)
recommending to the Board of Directors the appointment of the Company's
independent certified public accountants and any termination of engagement, (b)
reviewing the plan and scope of independent audits, (c) reviewing the Company's
significant accounting policies and internal controls, (d) having general
responsibility for all related auditing matters, and (e) reporting its
recommendations and findings to the full Board of Directors. The Audit Committee
met on one occasion during the fiscal year ended September 30, 1999.
7
<PAGE>
The Compensation Committee of the Board of Directors consisted of
Messrs. Gillespie and Walko. The Compensation Committee reviews and approves
the compensation of the Company's executive officers and administers the
Company's Equity Incentive Plan. The Compensation Committee met on one
occasion during the fiscal year ended September 30, 1999.
EXECUTIVE COMPENSATION
The following compensation table, and the accompanying explanatory
footnotes, include annual and long-term compensation information for services
rendered in all capacities during the fiscal years ended December 31, 1997,
September 30, 1998 and September 30, 1999 by (i) the Company's Chief Executive
Officer and (ii) the other highly compensated executive officers of the Company
(or its subsidiaries) at September 30, 1999, who received compensation of at
least $100,000 during the fiscal year ended September 30, 1999 (collectively,
the "Named Executive Officers"). Mr. Goei is included in the table since he
served as Chief Executive Officer of the Company until his departure on January
6, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- AWARDS
------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING
NAME AND POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) OPTIONS
------------------------------ --------- -------------- ------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Douglas S. Zorn 1999 $178,327 $ -- $ -- $-- 325,000(2)
Chairman of the Board, 1998(1) 112,500 -- $ -- -- --
President and Chief Executive 1997 150,000 -- 86,000(3) -- 100,000(4)
Officer
James B. Linkous 1999 $150,000 $ -- $ 78,353(5) $-- 75,000(2)
Vice President of Sales and 1998(6) 65,400 36,000 13,650(7) -- 100,000(8)
President of NHAN NA
James Han 1999 $142,500(9) $62,236(9) $ -- $-- --
Managing Director of Infotel
Subsidiary
Esmond T. Goei 1999 $ 70,000 $ -- $131,336(10) $-- --
Former Chairman of the 1998(1) 157,500 -- $ -- -- --
Board, President and Chief 1997 163,750 -- 38,000(11) -- 100,000(4)
Executive Officer
</TABLE>
(1) Represents the nine-month period ended September 30, 1998.
(2) These options were granted on February 2, 1999 under the Equity Plan.
(3) Mr. Zorn was reimbursed by the Company in fiscal 1997 for $55,000 in moving
expenses and $25,000 for the previous years' vacation accrued but not taken
and automobile expenses.
(4) These options were granted on March 18, 1997 under the Equity Plan.
(5) Includes sales commissions of $71,228.
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<PAGE>
(6) Represents the period from Mr. Linkous' hire date of April 18, 1998 through
September 30, 1998.
(7) Represents commissions of $10,900 and automobile allowance of $2,750.
(8) These options were granted on July 2, 1998 under the Equity Plan.
(9) Represents Singapore dollar payments converted at a translation rate of
SD$1.7 to US$1.00.
(10) Includes $124,336 in severance.
(11) Mr. Goei was reimbursed $25,000 by the Company in fiscal 1997 for previous
years vacation accrued but not taken and automobile expenses.
OPTION GRANTS IN FISCAL 1999
The following option grants were made to the Named Executive Officers
during the fiscal year ended September 30, 1999:
OPTION GRANTS IN FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES IN PRICE
NAME GRANTED FISCAL YEAR ($/SHR)(1) EXPIRATION DATE
-------------------------------------------------- ---------------- --------------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Douglas S. Zorn, Chairman, 325,000 (2) 26.2% $1.125/share 2/2/2009
Chief Executive Officer and President
James B. Linkous, Vice President 75,000 (3) 6.0% $1.125/share 2/2/2009
of Sales and President of NHAN NA
</TABLE>
(1) The exercise price was deemed to be equal to 100% of the fair market value
on the date immediately preceding the date of the grant, as determined by the
closing price as reported on the Nasdaq SmallCap Market.
(2) These options were granted on February 2, 1999 under the Equity Plan. The
options become exercisable immediately as to 225,000 shares and the remaining
options vest in seven years subject to acceleration if performance targets are
met.
(3) These options were granted on February 2, 1999 under the Equity Plan. The
options become exercisable in seven years subject to acceleration if performance
targets are met.
EXERCISE OF OPTIONS IN FISCAL YEAR
The following table sets forth certain information regarding option
exercises during fiscal year 1999 and the number of shares covered by both
exercisable and unexercisable stock options as of September 30, 1999 for each of
the Named Executive Officers:
9
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999(1)
--------------------------------- ----------------------------------
SHARES
ACQUIRED
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ------------ ----------- ------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Douglas S. Zorn -- -- 275,000 (2) 50,000 $103,125 $18,750
James B. Linkous -- -- 77,083 (3) 97,917 $ 14,063 $14,063
</TABLE>
(1) Based on a closing price on September 30, 1999 of $1.50 per share.
(2) Represents the vested portion of options granted to Mr. Zorn on September
30, 1999 under the Equity Plan.
(3) Represents the vested portion of options granted to Mr. Linkous on
September 30, 1999 under the Equity Plan.
COMPENSATION OF DIRECTORS
Directors are not separately compensated for serving on the Board of
Directors. Directors are reimbursed for reasonable travel-related expenses for
attendance at meetings.
On February 2, 1999, the Company granted to N. Bruce Walko, Robert J.
Schmier and James S. Gillespie, in connection with their appointment to the
Board of Directors of the Company, non-qualified stock options to each purchase
25,000 shares of Common Stock at an exercise price per share of $1.125, such
options having fully vested as of February 2, 2000.
EMPLOYMENT AGREEMENTS
The Company has a three-year employment agreement with Douglas S. Zorn, as
Chairman of the Board of Directors, President and Chief Executive Officer of the
Company, and a two-year employment agreement with Ram V. Mani, as Chief
Technology Officer of the Company, which will expire in January 2002 and
August 2001 respectively.
Messrs. Zorn's and Mani's base salary may be adjusted from time to time by
mutual agreement between each such officer and the Board of Directors. The base
salaries for the calendar year 1999 of Messrs. Zorn and Mani were $180,000 and
$150,000 respectively. The base salaries for the calendar year 2000 for
Messrs. Zorn and Mani are $180,000 and $150,000, respectively.
The employment agreements provide, subject to their terms, for an annual
bonus to be paid to Messrs. Zorn and Mani pursuant to a written bonus plan to be
approved by the Board of Directors. The employment agreements provide that
Messrs. Zorn and Mani are entitled to reasonable expense reimbursements, four
weeks paid vacation per year and participation in any of the Company's benefit
and deferred compensation plans.
The employment agreements also provide for payments in the event of
termination prior to the end of the term, as follows: if Mr. Zorn is terminated
without cause, then base salary will be paid for the greater of two years or the
balance of the term plus a bonus for each such year equal to the average bonus
for the two preceding years, and if Mr. Mani is terminated for without cause, he
will receive his base salary for six months; if Messrs. Zorn and Mani are
terminated upon a change of control, then compensation equal to two times the
sum of the base salary plus average bonus will be paid to each of them for one
year. In the event of termination (except termination without cause), of Messrs.
Zorn and Mani are subject to a two-year non-competition agreement.
10
<PAGE>
On January 7, 1999, Mr. Goei resigned his position as President and Chief
Executive Officer of the Company pursuant to a Separation Agreement, which
modified his employment agreement, and provided to him 6 1/2 months' severance
pay, payment for all accrued vacation time and provided for benefits coverage
for the first three months following his departure from the Company. In
addition, Mr. Goei received warrants to purchase 50,000 shares of the Company's
Common Stock at a per share exercise price of $1.00.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was or is an officer or employee of
the Company.
CERTAIN TRANSACTIONS
Mr. Gillespie agreed to convert $116,636 representing a loan to the
Company in 1998 with accrued interest, into 116,565 shares of the Company's
Common Stock in a transaction in which he also received warrants to purchase
50,000 shares of the Company's Common Stock at an exercise price of $2.368
per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ALL OF THE NOMINEES FOR
ELECTION AS DIRECTORS.
11
<PAGE>
PROPOSAL TWO
APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors recommends that BDO Seidman, LLP, independent
certified public accountants be appointed to serve as independent auditors of
the Company for the ensuing fiscal year. BDO Seidman, LLP was the independent
certified public accountants for the Company for the fiscal year ended September
30, 1999.
A representative of BDO Seidman, LLP is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF ITS
APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
PROPOSAL THREE
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF COMMON STOCK FROM
20,000,000 SHARES TO 40,000,000 SHARES
The Board of Directors of the Company has approved and recommends that the
stockholders of the Company approve a proposal to increase the number of its
authorized shares of Common Stock from 20,000,000 shares to 40,000,000 shares.
The Amendment will be accomplished by amending the Company's Certificate of
Incorporation.
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, $0.01 par value, of which 10,831,642 shares were
issued and outstanding as of May 31, 2000 and 2,000,000 shares of preferred
stock, $0.01 par value, none of which are issued and outstanding as of May
31, 2000. In addition, 4,000,000 shares are reserved for issuance under the
Equity Plan, as amended herein, and as of May 31, 2000, 2,565,000 shares are
subject to outstanding warrants. Accordingly, the Company has only 2,603,358
shares of Common Stock available for issuance. Insomuch as the Company
anticipates raising additional funds through equity sales and engaging in
acquisitions including the exchange of equity, additional shares are needed.
The Company's stockholders do not have preemptive rights to subscribe for
or purchase any of the additional shares of Common Stock to be authorized. The
future issuance of additional shares of Common Stock on other than a pro rata
basis may dilute the ownership of the current stockholders, as well as their
proportionate voting rights.
If the proposed Amendment to the Company's Certificate of Incorporation is
adopted, no further approval of the stockholders would be required for the
issuance of shares of Common Stock as authorized by the amendment and, absent
any legal or Nasdaq requirements, it is not contemplated that further approval
of the stockholders would be sought for issuance of any shares authorized by the
Amendment. Except as set forth herein, the Company presently has no other plans
to issue any shares of Common Stock which would be authorized hereby.
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The approval of the proposed Amendment could make it more difficult to
acquire control of the Company and thereby discourage attempts to do so, even
though the Company's stockholders may deem such an acquisition desirable.
Issuance of the additional shares of Common Stock could dilute the ownership
interest and voting power of the Company's stockholders who may seek control of
the Company. The shares of Common Stock could be issued in a private placement
to one or more organizations sympathetic to the Company and opposed to any
take-over bid, or under other circumstances that could make it more difficult
and thereby discourage attempts to acquire control of the Company. To the extent
that it impedes any such attempts, the Amendment may serve to perpetuate the
Company's management.
Although the Company has from time to time considered the issuance of
additional Common Stock in connection with a strategic alliance or
acquisition, except as described herein, the Company has no present plans,
agreements or arrangements for the issuance of the additional shares of
Common Stock in excess of the number of such shares presently authorized in
connection with any particular transaction. The Company does not anticipate
soliciting the vote of its stockholders to authorize the issuance of the
additional shares of the Common Stock unless otherwise required under the
Delaware General Corporation Law, the Company's Certificate of Incorporation
or its By-Laws or Nasdaq rules.
DESCRIPTION OF THE COMMON STOCK
The terms of the Common Stock are set forth in full in Article Four of the
Certificate of Amendment to the Certificate of Incorporation attached to this
Proxy Statement as Exhibit A.
A general summary of the terms of the Common Stock are as follows:
(a) VOTING. Each share of Common Stock is entitled to one vote per share.
Except as required by applicable law, holders of Common Stock will vote
together, with each other, and not as separate classes, on all matters submitted
to a vote of the stockholders. The Common Stock has no cumulative voting rights.
(b) DIVIDENDS AND DISTRIBUTIONS. Subject to the rights of the holders of
the Company's preferred stock, if any, the holders of Common Stock are entitled
to receive when, as and if declared by the Board of Directors of the Company,
out of funds legally available therefor, dividends and other distributions
payable in cash, property, stock (including shares of any class or series of the
Company, whether or not shares of such class or series are already outstanding)
or otherwise.
(c) CONVERTIBILITY. The Common Stock is not convertible into another class
of securities of the Company.
(d) LIQUIDATION. In the event of liquidation, after payment of the debts
and other liabilities of the Company and after making provision for the holders
of preferred stock, if any, the remaining assets of the Company will be
distributable among the holders of the Common Stock.
(e) PREEMPTIVE RIGHTS. The Common Stock does not have any preemptive
rights enabling a holder to subscribe for or receive shares of the Company of
any class or any other securities convertible into any class of the Company's
stock.
(f) STOCKHOLDER INFORMATION. The Company delivers to the holders of Common
Stock the same proxy statements, annual reports and other information reports.
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DISSENTERS RIGHTS
There are no dissenters rights under Delaware General Corporation Law
when a Company increases its authorized shares of common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL FOUR
AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED UNDER THE EQUITY INCENTIVE PLAN FROM
1,476,500 SHARES TO 4,000,000 SHARES
The Board of Directors of the Company has amended, subject to stockholder
approval, the Equity Incentive Plan (the "Equity Plan") for the purpose of
increasing the number of shares of Common Stock reserved for issuance under the
Equity Plan from 1,476,500 shares to 4,000,000 shares of Common Stock.
DESCRIPTION OF THE EQUITY PLAN
The Equity Plan is administered by the Company's Compensation Committee.
Options granted pursuant to the Equity Plan may be either incentive stock
options, as defined in the Internal Revenue Code, or non-qualified stock
options. The stock options are exercisable over a period determined by the
Board of Directors, but no longer than ten years after the date of grant. The
vesting schedule for incentive stock options usually covers a two to seven
year period. The incentive stock options may also be subject to acceleration
provided that certain performance goals are met. Vesting for non-qualified
stock options is determined on a grant-by-grant basis. Incentive stock
options must have an exercise price of not less than fair market value of the
Common Stock on the date of grant (or, for incentive stock options granted to
a person holding more than 10% of the voting power of the Company, options
must have an exercise price equal to 110% of the fair market value, and be
exercisable only for a period of five years). The aggregate fair value of the
Common Stock subject to incentive stock options granted to an optionee that
are exercisable for the first time by an optionee during any calendar year
may not exceed $100,000. Options generally expire three months following
termination of employment.
The Company's stockholders do not have preemptive rights to subscribe for
or purchase any of the additional shares of Common Stock to be reserved under
the Equity Plan. The future issuance of additional shares of Common Stock on
other than a pro rata basis may dilute the ownership of the current
stockholders, as well as their proportionate voting rights.
The amendment to the Equity Plan makes the following change: Increases
the Shares reserved for issuance to 4,000,000 shares. The terms of the Equity
Plan, as amended, are set forth in full in Amended Equity Incentive Plan
attached to this Proxy Statement as Exhibit B.
The maximum number of shares of Common Stock authorized for issuance
under the Equity Incentive Plan is 1,476,500 shares. There are presently
issued and outstanding options to purchase 1,476,500 shares of Common Stock
issued pursuant to the Equity Plan and 120,000 options have been exercised.
Options for an additional 1,000,000 shares have been granted to employees,
including executive officers, since September 30, 1999, subject to
stockholder approval. Accordingly, the increase in shares of Common Stock
reserved under the Equity Plan is insufficient to cover the options granted.
Further, the Company is aggressively expanding its personnel and believes
that in order to attract skilled and qualified employees in the current
marketplace, it must offer equity
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in the form of stock options as part of its compensation package. The
Company anticipates granting additional options to existing employees to
properly compensate and incentivize them in the current year, and in future
years.
The Board of Directors of the Company believes that the amendment to the
Equity Plan, increasing the shares of Common Stock reserved under the Equity
Plan to 4,000,000, reserves sufficient additional shares to satisfy
outstanding grants and provide for grants to new and existing employees, as
well as to directors and other eligible recipients.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE EQUITY PLAN.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares at the
direction of the Board of Directors.
It is important that your stock be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope which has been enclosed, at your
earliest convenience.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Stockholder proposals that are to be considered for inclusion in the proxy
materials of the Company for its Annual Meeting of Stockholders in 2001 must be
received by the Company in writing by January 8, 2001. Such proposals must
comply with the requirements as to the form and substance established by
applicable law and regulations in order to be included in the Proxy statement.
FOR THE BOARD OF DIRECTORS
_____________________________________
DOUGLAS S. ZORN,
Chief Executive Officer and President
NHANCEMENT TECHNOLOGIES INC.
Dated: June 28, 2000
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EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NHANCEMENT TECHNOLOGIES INC.
NHancement Technologies, Inc., a Delaware corporation (the
"Corporation"), pursuant to Section 242 of the Delaware General Corporation Law,
hereby files this Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation (hereinafter called the "Corporation")
is NHANCEMENT TECHNOLOGIES INC.
2. The Certificate of Incorporation of the Corporation is hereby
amended by deleting Article Fourth and restating it as follows:
ARTICLE 4
4.1 AUTHORIZED SHARES. The total number of shares which the Corporation is
authorized to issue is forty million (42,000,000) shares of which forty million
(40,000,000) shares shall be common stock, par value $.01 per share, and two
million (2,000,000) shares shall be preferred stock, par value $.01 per share.
4.2 COMMON STOCK. Each holder of common stock shall be entitled to one
vote for each share of common stock held on all matters as to which holders of
common stock shall be entitled to vote. Except for and subject to those
preferences, rights, and privileges expressly granted to the holders of all
classes of stock at the time outstanding having prior rights, and series of
preferred stock which may from time to time come into existence, and except as
may be provided by the laws of the State of Delaware, the holders of common
stock shall have exclusively all other rights of stockholders of the
Corporation, including, but not by way of limitation, (i) the right to receive
dividends when, as and if declared by the board of directors out of assets
lawfully available therefor, and (ii) in the event of any distribution of assets
upon the dissolution and liquidation of the Corporation, the right to receive
ratably and equally all of the assets of the Corporation remaining after the
payment to the holders of preferred stock of the specific amounts, if any, which
they are entitled to receive as may be provided herein or pursuant hereto.
4.3 PREFERRED STOCK. The preferred stock authorized by this Certificate of
Incorporation may be issued from time to time in one or more series. The board
of directors of the Corporation is authorized, subject to limitations prescribed
by law, to provide by resolution or resolutions for the issuance of the shares
of preferred stock as a class or in series, and, by filing a certificate of
designation, pursuant to the GCL, setting forth a copy of such resolution or
resolutions, to establish from time to time the number of shares to be included
in each such series, and to fix the designation, powers, preferences, and rights
of the shares of the class or of each such series, and the qualifications,
limitations, and restrictions thereof. The authority of the board of directors
with respect to the class or each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting any series and the distinctive
designation of that series;
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(b) The dividend rate on the shares of the class or of any series,
whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of
the class or of that series;
(c) Whether the class or any series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether the class or any series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the board of directors shall
determine;
(e) Whether or not the shares of the class or of any series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether the class or any series shall have a sinking fund for the
redemption or purchase of shares of the class or of that series, and, if so, the
terms and amount of such sinking fund;
(g) The rights of the shares of the class or of any series in the
event of voluntary or involuntary dissolution or winding up of the corporation,
and the relative rights of priority, if any, of payment of shares of the class
or of that series;
(h) Any other powers, preferences, rights, qualifications,
limitations, and restrictions of the class or of any series.
3. The foregoing amendment to the Certificate of Incorporation has
been duly adopted by the stockholders in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
4. The foregoing amendment to the Certificate of Incorporation shall
be effective on July 17, 2000.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment on the 17th day of July, 2000.
___________________________________________
Douglas S. Zorn
Chief Executive Officer and President
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EXHIBIT B
NHANCEMENT TECHNOLOGIES INC.
EQUITY INCENTIVE PLAN
ARTICLE I.
PURPOSE
The purpose of the NHancement Technologies Inc. Equity Incentive Plan (the
"Plan") is to attract and retain directors, officers, other employees and
consultants of NHancement Technologies Inc. and its Subsidiaries and to provide
such persons with incentives to continue in the long-term service of the Company
and to create in such persons a more direct interest in the future success of
the operations of the Company by relating incentive compensation to increases in
stockholder value.
ARTICLE II.
STRUCTURE OF THE PLAN
The Plan is divided into four separate programs:
A. The Discretionary Stock Option Grant Program under which eligible persons
may, at the discretion of the Committee or the Board, be granted Stock Options;
B. The Automatic Stock Option Grant Program under which eligible non-employee
Board members shall automatically receive an annual grant of 2,400 Stock.
Options;
C. The Restricted Stock Program under which eligible persons may, at the
discretion of the Committee or the Board, be granted rights to receive shares of
Common Stock, subject to certain restrictions; and
D. The Supplemental Bonus Program under which eligible persons may, at the
discretion of the Committee or the Board, be granted a right to receive payment,
in cash, shares of Common Stock, or a combination thereof, of a specified
amount.
ARTICLE III.
DEFINITIONS
As used in this Plan:
"10% Stockholder" shall mean the owner of stock (as determined under Section
424(d) of the Code) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Subsidiary.
"Award" shall mean a grant made under this Plan in the form of Stock Options,
Restricted Stock or Supplemental Bonuses.
<PAGE>
"Board" shall mean the Company's Board of Directors.
"Change in Control" shall mean a change in ownership or control of the
Company effected through any of the following transactions:
(i) the acquisition, directly or indirectly by any person or group (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) other than a
trustee or other fiduciary holding securities under an employee benefit plan
of the Company, of beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act) of securities possessing more than thirty percent (30%) of
the total combined voting power of the Company's outstanding securities;
(ii) a change in the composition of the Board over a period of eighteen
(18) consecutive months or less such that fifty percent (50 %) or more of the
Board members cease to be directors who either (A) have been directors
continuously since the beginning of such period or (B) have been unanimously
elected or nominated by the Board for election as directors during such
period;
(iii) a stockholder-approved merger or consolidation to which the Company
is a parry and in which (A) the Company is nor the surviving entity or (B)
securities possessing more than thirty percent (30%) of the total combined
voting power of the Company's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or
(iv) the sale, transfer or other disposition of all or substantially all
of the Company's assets in complete liquidation or dissolution of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Employee Committee and/or the Incentive Plan
Committee, as applicable.
"Common Stock" shall mean the Company's common stock, $.01 par value.
"Company" shall mean NHancement Technologies Inc.
"Date of Grant" shall mean the date specified by the Committee on which a
grant of an Award shall become effective, which shall not be earlier than the
date an which the Committee takes action with respect thereto.
"Employee" shall mean an individual who is in the employ of the Company or
any Subsidiary.
"Employee Committee" shall mean a committee composed of at least one member
of the Board of Directors who may, but need not, be a Non-Employee Director. The
Employee Committee is empowered hereunder to grant Awards to Eligible Employees
who are not directors or officers" of the Company as that term is defined in
Rule 16a-1(f) of the Exchange Act nor "covered employees" under Section 162(m)
of the Code, and to establish the terms of
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such Awards at the time of grant, but shall have no other authority with respect
to the Plan or outstanding Awards except as expressly granted by the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of a share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in questions, as such
price is reported on the Nasdaq National Market or any successor system. If
there is not closing selling price for the Common Stock on the date in
question, then the Fair market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any stock exchange, then
the Fair Market Value shall be deemed equal to the closing selling price per
share of Common Stock on the date in question on the stock exchange
determined by the Compensation Committee to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in questions, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such quotation
exists.
(iii) In the event the Common Stock is not traded publicly, the Fair
Market Value of a share of Common Stock shall be determined, in good faith,
by the Committee after such consultation with outside legal, accounting and
other experts as the Committee may deem advisable, and the Committee shall
maintain a written record of its method of determining such value.
"Incentive Plan Committee" shall mean a committee consisting entirely of
Non-Employee Directors of the Board, who are empowered hereunder to take all
action required in the administration of the Plan and the grant and
administration of Awards hereunder. The Incentive Plan Committee shall be so
constituted at all times as to permit the Plan to comply with Rule 16b-3 or any
successor rule promulgated under the Exchange Act. Members of the Incentive Plan
Committee shall be appointed from time to time by the Board, shall serve at the
pleasure of the Board and may resign at any time upon written notice to the
Board.
"Incentive Stock Option" shall mean a Stock Option that (i) qualifies as an
"incentive stock option" under Section 422 of the Code or any successor
provision and (ii) is intended to be an incentive stock option.
"Non-Employee Director" shall mean a director of the Company who meets the
definition of (i) a "non-employee director" set forth in Rule 16b-3 under the
Exchange Act, as amended, or any successor rule arid (E) an "outside director"
set forth in Treasury Regulation 1.162-27, as amended, or any successor rule.
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"Non-Statutory Option" shall mean a Stock Option that (i) does not qualify as
an "incentive stock option" under Section 422 of the Code or any successor
provision or (ii) is not intended to be an incentive stock option.
"Optionee" shall mean the person so designated in an agreement evidencing an
outstanding Stock Option.
"Option Price" shall mean the purchase price payable by a Participant upon
the exercise of a Stock Option.
"Participant" shall mean a person who is selected by the Committee to receive
benefits under this Plan and (i) is at that time a director, officer or other
Employee of the Company or any Subsidiary, (ii) is at that time a consultant or
other independent advisor who provides services to the Company or a Subsidiary,
or (iii) has agreed to commence serving in any capacity set forth in (i) or (ii)
of this definition.
"Plan" shall mean the Company's Equity Incentive Plan as set forth herein.
"Plan Effective Date" shall mean January 7, 1997, the date on which this Plan
was approved by the Company's Board.
"Redemption Value" shall mean the amount, if any, by which the Fair Market
Value of one share of Common Stock on the date on which the Stock Option is
exercised exceeds the Option Price for such share.
"Restricted Stock" shall mean shares of Common Stock granted under Article IX
that are subject to restrictions imposed pursuant to said Article.
"SEC" shall mean the U.S. Securities and Exchange Commission and any
successor thereto.
"Stock Option" shall mean a right granted under the Plan to a Participant to
purchase Common Stock at a stated price for a specified period of time.
"Subsidiary" shall mean a corporation, partnership, joint venture,
unincorporated association or other entity in which the Company has a direct or
indirect ownership or other equity interest; provided, however, for purposes of
determining whether any person may be a Participant for purposes of any grant of
Incentive Stock Options, "Subsidiary" means any subsidiary corporation of the
Company as defined in Section 424(f) of the Code.
"Supplemental Bonus" shall mean the right to receive payment in cash of an
amount determined pursuant to Article X of this Plan.
"Term" shall mean the length of time during which a Stock Option may be
exercised.
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ARTICLE IV.
ADMINISTRATION OF THE PLAN
A. DELEGATION TO THE COMMITTEE. This Plan shall be administered by the
Incentive Plan Committee. References herein to the "Committee" shall mean the
Employee Committee and/or the Incentive Plan Committee, as applicable.
References herein to the Incentive Plan Committee refer solely to the Incentive
Plan Committee.
Members of the Incentive Plan Committee and the Employee Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The action of a majority of the members of the Incentive
Plan Committee and the Employee Committee present at any meeting, or acts
unanimously approved in writing, shall be the acts of the Incentive Plan
Committee and the Employee Committee, respectively.
B. POWERS OF THE COMMITTEE. The Incentive Plan Committee shall have full
power and authority, subject to the provisions of this Plan, to establish such
rules and regulations as it may deem appropriate for proper administration of
this Plan and to make such determinations under, and issue interpretations of,
the provisions of this Plan and any outstanding Awards as it may deem necessary
or advisable. In addition, the Incentive Plan Committee shall have full power
and authority to administer and interpret the Plan and make modifications as it
may deem appropriate to conform the Plan and all actions pursuant to the Plan to
any regulation or to any change in any law or regulation applicable to this
Plan. The Incentive Plan Committee and the Employee Committee shall be
responsible for the granting of stock options under this plan subject to
ratification by the Board.
C. ACTIONS OF THE COMMITTEE. All actions taken and all interpretations and
determinations made by the Committee in good faith (including determinations of
Fair Market Value) shall be final and binding upon all Participants, the Company
and all other interested persons. No director or member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, and all directors and members of the
Committee shall, in addition to their rights as directors, be fully protected by
the Company with respect to any such action, determination or interpretation.
D. AWARDS TO OFFICERS AND DIRECTORS.
1. All awards to officers shall be determined by the Incentive Plan
Committee. The Incentive Plan Committee shall be composed entirely of
two or more Non-Employee Directors; provided, however, that if the
Incentive Plan Committee is not composed as such, the Board shall have
the right to take such action with respect to any Award to an officer
as it deems necessary or advisable to comply with Rule 16b-3 of the
Exchange Act and any related rules, including but not limited to
seeking stockholder ratification of such Award or restricting the sale
of the Award or any shares of Common Stock underlying the Award for a
period of six-months.
2. Discretionary awards to Non-Employee Directors, if any, shall be
determined by the Board.
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ARTICLE V.
ELIGIBILITY
A. DISCRETIONARY STOCK OPTION GRANT PROGRAM. RESTRICTED STOCK PROGRAM AND
SUPPLEMENTAL BONUS PROGRAM. The persons eligible to participate in the
Discretionary Stock Option Grant Program, the Restricted Stock Program and the
Supplemental Bonus Program are as follows:
1. Employees of the Company or a Subsidiary;
2. Members of the Board; and
3. Consultants and other independent advisors who provide services to the
Company or a Subsidiary.
B. AUTOMATIC STOCK OPTION GRANT PROGRAM. Only Non-Employee Directors are
eligible for the Automatic Stock Option Grant Program.
C. SELECTION OF PARTICIPANTS. The Committee shall from time to time determine
the Participants to whom Awards shall be granted pursuant to the Discretionary
Stock Option Grant Program, the Restricted Stock Program and the Supplemental
Bonus Program.
ARTICLE VI.
SHARES AVAILABLE UNDER THE PLAN
A. MAXIMUM NUMBER. The number of shares of Common Stock issued or transferred
and covered by outstanding awards granted under this Plan shall not in the
aggregate exceed 4,000,000 shares of Common Stock, which may be Common Stock of
original issuance or Common Stock held in treasury, or a combination thereof.
This authorization shall be increased automatically on each succeeding annual
anniversary of the Plan Effective Date by an amount equal to that number of
shares equal to one-half of one percent of the Company's then issued and
outstanding shares of Common Stock. The shares may be divided among the various
Plan components as the Incentive Plan Committee shall determine, except that no
more than 976,500 Shares shall be issued in connection with the exercise of
Incentive Stock Options under the Plan. Any portion of the shares added on each
succeeding anniversary of the Plan Effective Date which are unused during the
Plan year beginning on such anniversary date shall be carried forward and be
available for a and issuance in subsequent grant Plan years, while up to 100% of
the shares to be added in the next succeeding Plan year (calculated on the basis
of the current Plan year's allocation) may be borrowed for use in the current
Plan year. Shares of Common Stock that may be issued upon the exercise of Stock
Options shall be applied to reduce the maximum number of shares rein-lining
available for use under the Plan. The Company shall at ail times during the term
of the Plan and while any Stock Options are outstanding retain as authorized and
unissued Common Stock, or as treasury Common Stock, at least the number of
shares of Common Stock required under the provisions of this Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.
B. UNUSED AND FORFEITED STOCK. The following shares of Common Stock shall
automatically become available for use under the Plan: (i) any shares of Common
Stock that are
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<PAGE>
subject to an Award under this Plan that are not used because the terms and
conditions of the Award are not met, including any shares of Common Stock that
are subject to a Stock Option that expires or is terminated for any reason, (ii)
any shares of Common Stock with respect to which a Stock Option is exercised
that are used for full or partial payment of the Option Price, and (iii) any
shares of Common Stock withheld by the Company in satisfaction of the
withholding taxes incurred in connection with the exercise of a Non-Statutory
Option.
C. CAPITAL CHANGES. If any change is made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Company's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (d) the number and/or class of securities for which any one
person may be granted Awards under this Plan per calendar year, (iii) the number
and/or class of securities for, which grants are subsequently to be made
pursuant to Article VI of this Plan, and (iv) the number and/or class of
securities and the Option Price per share in effect under each outstanding
option under this Plan. Such adjustments to the outstanding options are to be
effected in a manner that shall preclude the enlargement or dilution of rights
and benefits under such options. The adjustments determined by the Committee
shall be final, binding and conclusive.
ARTICLE VII.
DISCRETIONARY STOCK OPTION GRANT PROGRAM
A. DISCRETIONARY GRANT OF STOCK OPTIONS TO PARTICIPANTS. The Committee may
from time to time authorize grants to Participants of options to purchase shares
of Common Stock upon such terms and conditions as the Committee may determine in
accordance with the following provisions (in connection with any grants under
this paragraph 11I.A to Non-Employee Directors, "Committee" shall mean the
entire Board of Directors):
1. Each grant shall specify the number of shares of Common Stock to which
it pertains;
2. Each grant shall specify the Option Price per share;
3. Each grant shall specify the form. of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or
check or other cash equivalent acceptable to the Company, (ii) shares
of Common Stock that are already owned by the Optionee and have a Fair
Market Value at the time of exercise that is equal to the Option
Price, (iii) shares of Common Stock with respect to which a Stock
Option is exercised, (iv) a recourse promissory note in favor of the
Company, (v) any other legal consideration that the Committee may deem
appropriate and (vi) any combination of the foregoing;
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4. Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker of some or all of the shares of
Common Stock to which the exercise relates;
5. Any grant may provide that shares of Common Stock issuable upon the
exercise of a Stock Option shall be subject to restrictions whereby
the Company has the right or obligation to repurchase all or a portion
of such shares if the Participant's service to the Company is
terminated before a specified time, or if certain other events occur
or conditions are not met;
6. Successive grants may be made to the same Participant regardless of
whether any Stock Options previously granted to the Participant remain
unexercised;
7. Each grant shall specify the period or periods of continuous service
by the Optionee to the Company or any Subsidiary that are necessary
before the Stock Option or installments thereof shall become
exercisable;
8. All Stock Options that meet the requirements of the Code for incentive
stock, options shall be Incentive Stock Options unless (i) the option
agreement clearly designates the Stock Options granted thereunder, or
a specified portion thereof, as a Non-Statutory Option, or (ii) a
grant of Incentive Stock Options to the Participant would be
prohibited under the Code or other applicable law;
9. Each grant shall specify the Term of the Stock Option, which Term
shall not be greater than 10 years from the Date of Grant; and
10. Each grant shall be evidenced by an agreement, which shall be executed
on behalf of the Company by- any officer thereof and delivered to and
accepted by the Optionee and shall contain such terms and provisions
as the Committee may determine consistent with this Plan.
B. SPECIAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. The following
additional terms shall be applicable to all Incentive Stock Options granted
pursuant to this Plan. Stock Options that are specifically designated as
Non-Statutory Options shall not be subject to the terms of this paragraph VII.B.
1. Incentive Stock Options shall be granted only to Employees of the
Company or a Subsidiary;
2. The Option Price per share shall not be less than the Fair Market
Value per share of Common Stock on the Date of Grant;
3. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective Date(s) of Grant) with respect to
which Incentive Stock Options granted to any Employee under the Plan
(or any other plan of the Company or a Subsidiary) are exercisable for
the first
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time during any one calendar year shall not exceed the sum
of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two (2) or more such Stock Options that become exercisable for
the first time in the same calendar year, the foregoing limitation on
the treatment of such Stock Options as Incentive Stock Options shall
be applied on the basis of the order in which such Stock Options are
granted; and
If any Employee to whom an Incentive Stock Option is granted is a 107a
Stockholder, then the Option Price per share shall not be less than one hundred
ten percent (110%) of the Fair Market Value per share of Common Stock on the
Date of Grant, and the option Term shall not exceed five (5) years measured from
the Date of Grant.
ARTICLE VIII.
AUTOMATIC STOCK OPTION GRANT PROGRAM
A. Automatic Grant of Stock Options to Certain Directors. Each director of
the Company who is not an Employee and serves as a director for a full fiscal
year shall be granted in consideration for such director's service for that year
a Non-Statutory Option to purchase 2,400 shares of Common Stock. Each such
Non-Statutory Option shall be granted upon such terms and conditions as the
Incentive Plan Committee may determine in accordance with the following
provisions:
1. Each Stock Option granted pursuant to this Article shall be granted
within thirty (30) days following the date of the annual meeting of
the Company's stockholders for the relevant fiscal year.
2. Each grant shall specify the Option Price per share, which Option
Price shall be the Fair Market Value per share of Common Stock on the
Date of Grant;
3. Each grant shall specify the form of consideration to be paid in
satisfaction of the Option Price and the manner of payment of such
consideration, which may include (i) cash in the form of currency or
check or other cash equivalent acceptable to the Company, (ii)
nonforfeitable shares of Common Stock, which are already owned by the
Optionee- and have a Fair Market Value at the dine of exercise that is
equal to the Option Price, (iii) a recourse promissory Note in favor
of the Company, (iv) any other legal consideration that the Committee
may deem appropriate and (v) any combination of the foregoing;
4. Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker of some or all of the shares of
Common Stock to which the exercise relates;
5. Successive grants shall be made to the same director regardless of
whether any Stock Options previously granted to the director remain
unexercised;
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6. Each Stock Option granted pursuant to this Article shall vest as
follows: (i) one-third on the first anniversary of the date of grant,
(ii) one-third on the second anniversary of the date of grant, (iii)
one-third on the third anniversary of the date of grant;
7. No Stock Option granted pursuant to this Article may be exercised more
than 10 years from the Date of Grant; and
8. Each grant shall be evidenced by an agreement, which shall be executed
on behalf of the Company by any officer thereof and delivered to and
accepted by the Optionee and shall contain such terms and provisions
as the Committee may determine consistent with this Plan.
ARTICLE IX.
RESTRICTED STOCK PROGRAM
A. AWARDS GRANTED. Coincident with or following designation for participation
in the Plan, a Participant may be granted one or more Restricted Stock Awards
consisting of shares of common Stock. The number of shares granted as a
Restricted Stock Award shall be determined by the Committee.
B. RESTRICTIONS. A Participant's right to retain a Restricted Stock Award
granted to such Participant under Article IMA shall be subject to such
restrictions, including but not limited to his or her continuous employment by
the Company for a restriction period specified by the Committee or the
attainment of specified performance goals and objectives, as may be established
by the Committee with respect to such award. The Committee may in its sole
discretion require different periods of employment or different performance
goals and objectives with respect to different Participants, to different
Restricted Stock Awards or to separate, designated portions of the shares
constituting a Restricted Stock Award.
C. PRIVILEGES OF A STOCKHOLDER, TRANSFERABILITY. A Participant shall have all
voting, dividend, liquidation and other rights with respect to shares of Common
Stock in accordance with its terms received by him or her as a Restricted Stock
Award under this Article IX upon his or her becoming the holder of record of
such shares; provided, however, that the Participant's right to sell, encumber
or otherwise transfer such shares shall be subject to the Limitations of Article
XII hereof.
D. ENFORCEMENT OF RESTRICTIONS. The Committee may in its sole discretion
require the placing of a legend on the stock certificates referring to the
restrictions to enforce the restrictions referred to in paragraphs IX.A and
IX.B.
ARTICLE X.
SUPPLEMENTAL BONUS PROGRAM
A. NON-STATUTORY STOCK OPTIONS. The Committee, at the time of grant or at any
time prior to exercise of any Non-Statutory Option, may provide for a
Supplemental Bonus from the Company or a Subsidiary in connection with a
specified number of shares of Common Stock then purchasable, or which may become
purchasable, under such Non-Statutory Option. Such
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Supplemental Bonus shall be payable in cash upon the exercise of the
Non-Statutory Option with regard to which such Supplemental Bonus was granted. A
Supplemental Bonus shall not exceed the amount necessary to reimburse the
Participant for the income tax liability incurred by him or her upon the
exercise of the Non-Statutory Option, calculated using the maximum combined
federal and applicable state income tax rates then in effect and taking into
account the tax liability arising from the Participant's receipt of the
Supplemental Bonus.
B. RESTRICTED STOCK AWARDS. The Committee, either at such time as the
restrictions with respect to a Restricted Stock Award lapse or a Section 33(b)
election is made under the Code by the Participant with respect to shares issued
in connection with a Restricted Stock Award, may provide for a Supplemental
Bonus from the Company or a Subsidiary. Such Supplemental Bonus shall be payable
in cash and shall not exceed the amount necessary to reimburse the Participant
for the income tax liability incurred by him or her with respect to shares
issued in connection with a Restricted Stock Award, calculated using the maximum
combined federal and applicable state income tax rates then in effect and taking
into account the tax liability arising from the Participant's receipt of the
Supplemental Bonus.
ARTICLE XI.
TERMINATION OF SERVICE
A. INCENTIVE STOCK OPTIONS. The following provisions shall govern the
exercise of any Incentive Stock Options held by any Employee whose employment is
terminated:
1. If the Optionee's employment with the Company is terminated for any
reason other than such Optionee-'s death or disability, all Incentive
Stock Options held by the Optionee shall be exercisable, to the extent
that such Stock Options were exercisable on the date the Optionee's
employment terminated, for a period of three (3) months following such
termination of employment.
2. If the Optionee's employment with the Company is terminated because of
such Optionee's death or disability within the meaning of Section
22(e)(3) of the Code, all Incentive Stock Options held by the Optionee
shall become immediately exercisable and shall be exercisable for a
period of twelve (12) months following such termination of employment.
3. In no event may any Incentive Stock Option remain exercisable after
the expiration of the Term of the Stock Option. Upon the expiration of
any three (35 or twelve (12) month exercise period, as applicable, or,
if earlier, upon the expiration of the Term of the Stock Option, the
Stock Option shall terminate and shall cease to be outstanding for any
shares for which the Stock Option has not been exercised.
B. NON-STATUTORY OPTIONS. The following provisions shall govern the exercise
of any Non-Statutory Options:
1. If the Optionee's employment, service on the Board or consultancy is
terminated for any reason other than such Optionee's death or
disability,
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all Non-Statutory Options held by the Optionee shall be exercisable,
to the extent such Stock Options were exercisable on the date of such
termination, for a period of three (3) months following such
termination.
2. If the Optionee's employment, service on the Board or consultancy is
terminated because of such Optionee's death or disability, all
Non-Statutory Options held by the Optionee shall become immediately
exercisable and shall be exercisable for a period of twelve (12)
months following such termination.
3. In no event may any Non-Statutory Option remain exercisable after the
expiration of the Term of the Stock Option. Upon the expiration of any
three (3) or twelve (12) month exercise period, as applicable, or, if
earlier, upon the expiration of the Term of the Stock Option, the
Stock Option shall terminate and shall cease to be outstanding for any
shares for which the Stock Option has not been exercised.
C. RESTRICTED STOCK AWARDS. In the event of the death or disability (within
the meaning, of Section 22(e) of the Internal Revenue Code) or retirement of a
Participant, all employment period and other restrictions applicable to
Restricted Stock Awards then held by him or her shall lapse, and such awards
shall become fully nonforfeitable. Subject to Articles M and XV, in the event of
a Participant's termination of employment for any other reason, any Restricted
Stock Awards as to which the employment period or other restrictions have not
been satisfied shall be forfeited.
ARTICLE XII.
TRANSFERABILITY OF STOCK OPTIONS
During the lifetime of the Optionee, Incentive Stock Options shall be
exercisable only by the Optionee and shall not be assignable or transferable. In
the event of the Optionee's death prior to the end of the Term, any Stock Option
may be exercised by the personal representative of the Optionee's estate, or by
the person(s) to whom the option is transferred pursuant to the Optionee's will
or in accordance with the laws of descent and distribution. Upon the prior
written consent of the Board and subject to any conditions associated with such
consent, a Non-Statutory Option may be assigned in whole or in part during the
Optionee's lifetime to one or more members of the Optionee's immediate family
(as that term is defined in Rule 16a-1(e) of the Exchange Act) or to a trust
established exclusively for one or more such family members. In addition, the
Board, in its sole discretion, may allow a Non-Statutory Option to be assigned
in other circumstances deemed appropriate. The terms applicable to the assigned
portion shall be the same as those in effect for the Stock Option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Committee may deem appropriate. Notwithstanding any assignment
or transfer of a Stock Option, in no event may any Stock Option remain
exercisable after the expiration of the Term of the Stock Option.
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ARTICLE XIII.
STOCKHOLDER RIGHTS
The holder of a Stock Option shall have no stockholder rights with respect to
the shares subject to the Stock Option until such person shall have exercised
the Stock Option, paid the Option Price and become a holder of record of the
purchased shares of Common Stock.
ARTICLE XIV.
ACCELERATION OF VESTING
The Committee may, at any time in its sole discretion, accelerate the vesting
of any Award made pursuant to this Plan by giving written notice to the
Participant. Upon receipt of such notice, the Participant and the Company shall
amend the agreement relating to the Award to reflect the new vesting schedule.
The acceleration of the exercise period of an Award shall not affect the
expiration date of such Award.
ARTICLE XV.
CHANGE IN CONTROL
In the event of a Change in Control of the Company, all Awards outstanding
under the Plan as of the day before the consummation of such Change in Control
shall automatically accelerate for all purposes under this Plan so that each
Stock Option shall become fully exercisable with respect to the total number of
shares subject to such Stock Option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock as of such date, without regard to
the conditions expressed in the agreements relating to such Stock Option, and
the. restrictions on each Restricted Stock Award shall lapse and such shares of
Restricted Stock shall no longer be subject to forfeiture.
ARTICLE XVI.
CANLCELLATION AND REGRANT OF OPTIONS
The Committee shall have the authority to effect, at any and from time to
time, with the consent of the affected Optionees, the cancellation of any or all
outstanding Stock Options and/or any Restricted Stock Awards and grant in
substitution new Stock Options and/or Restricted Stock Awards covering the same
or different number of shares of Common Stock with an Option Price set, in
accordance with Article VII, on the new Date of Grant.
ARTICLE XVII.
FINANCING
The Committee may, in its sole discretion, authorize the Company to make a
loan to a Participant in connection with the exercise of a Stock Option, and may
authorize the Company to arrange or guaranty loans to a Participant by a third
parry in connection with the exercise of a Stock Option.
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ARTICLE XVIII.
TAX WITHHOLDING
A. TAX WITHHOLDING. The Company's obligation to deliver shares Of Common
Stock upon the exercise of Stock Options under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
B. SURRENDER OF SHARES. The Commit tee- may, in its discretion, provide any
or all holders of Non-Statutory Options under the Discretionary Stock Option
Grant Program with the right to use shares of Common Stock in satisfaction of
all or part of the taxes incurred by such holders in connection with the
exercise of such Stock Options. Such right may be provided to any such holder in
either or both of the following formats:
1. The election to have the Company withhold, from the shares of Common
Stock otherwise issuable upon the exercise of such Non-Statutory
Option, a portion of those shares with an aggregate Fair Market Value
less than or equal to the amount of taxes due as designated by such
holder; or
2. The election to deliver to the Company, at the time the Non-Statutory
option is exercised, one or more shares of Common Stock previously
acquired by such holder with an aggregate Fair Market Value less than
or equal to the amount of taxes due as designated by such holder.
ARTICLE XIX.
EFFECTIVE DATE AND TERM OF THE PLAN
This Plan shall become effective on the Plan Effective Date. This Plan shall
terminate upon the earliest of (i) ten (10) years after the Plan Effective Date
or (ii) the termination of all outstanding Awards in connection with a Change in
Control. Upon such plan termination, all outstanding Awards shall thereafter
continue to have force and effect in accordance with the provisions of the
documents evidencing such Awards.
ARTICLE XX.
AMENDMENT OF THE PLAN
A. The Incentive Plan Committee shall have complete and exclusive power and
authority to amend or modify the Plan in any- or all respects, unless
stockholder approval of such amendments or modifications is required under
applicable law. No such amendment or modification shall adversely affect the
rights and obligations with respect to Awards outstanding under the Plan at the
time of such amendment or modification, unless the Participant consents to such
amendment or modification.
B. Stock Options in excess of the number of shares of Common Stock then
available for issuance may be granted under this Plan, provided any excess
shares actually issued under this Plan shall be held in escrow until such
further action, necessary to approve a sufficient increase in the number of
shares available for issuance under the Plan, is taken. If such further action
is not obtained within 12 months after the date the first such excess issuances
are made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and
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cease to be outstanding, and (ii) the Company shall promptly refund to the
Optionees the exercise price paid for any excess shares issued under the Plan
and held in escrow, together with interest for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding. If stockholder approval of a sufficient increase in the
number of shares subject to the Plan does not occur within 12 months of the
grant of any Stock Option intended to be an Incentive Stock Option which is
granted pursuant to this Article XX.B, such Stock Option shall be deemed to be a
Non-Statutory Option.
ARTICLE XXI.
REGULATORY APPROVALS
The implementation of the Plan, the granting of any Award under the Plan and
the issuance of any shares of Common Stock under any Award shall be subject to
the Company's procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Awards granted pursuant to
the Plan and the shares of Common Stock issued pursuant to any Award under the
Plan. No Stock Option shall be exercisable, no shares of Common Stock or other
assets shall be issued or delivered under the Plan, and no transfer of any
Non-Statutory Option shall be approved by the Committee, unless and until there
shall have been compliance with (i) all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of a registration
statement an Form S-8 under the Securities Act of 1933, as amended, covering the
shares of Common Stock issuable under the Plan, and (ii) all applicable listing
requirements of the Nasdaq SmallCap Market or the Nasdaq National Market, as
applicable.
ARTICLE XXII.
NO EMPLOYMENT/SERVICE RIGHTS
Nothing in this Plan shall confer upon any Participant any right to continue
in service for any period or specific duration or interfere with or otherwise
restrict in any way the rights of the Company (or any Subsidiary employing or
retaining such person) or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person's service at any time for any reason,
with or without Cause.
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NHANCEMENT TECHNOLOGIES INC.
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF NHANCEMENT TECHNOLOGIES INC.
The undersigned hereby appoints Douglas S. Zorn and John R. Zavoli to act
jointly or alone, as Proxies, with full power to appoint a substitute, to
represent and to vote, with all the powers the undersigned would have if
personally present, all the shares of Common Stock, $0.01 par value per share,
of NHancement Technologies, Inc. (the "Company") held of record by the
undersigned on May 31, 2000 at the Annual Meeting of Stockholders to be held on
July 17, 2000 or any adjournment or adjournments thereof.
PROPOSAL 1.
<TABLE>
<S> <C> <C> <C>
/ / FOR ALL THE NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
Douglas S. Zorn Ram V. Mani
Robert J. Schmier N. Bruce Walko
<S> <C>
/ / (except as marked to the
contrary below) to vote for
</TABLE>
(INSTRUCTIONS: To withhold authority for any individual nominees, write that
nominee's name in the space below.)
PROPOSAL 2. Approval of proposal to ratify the appointment of BDO Seidman,
LLP, as the Company's independent certified public accountants for the Company's
2000 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3. Approval of proposal to amend the Amended and Restated
Certificate of Incorporation.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
PROPOSAL 4. Approval of proposal to amend the Equity Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the Proxies are authorized to vote upon other business
as may come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2, 3 and 4.
Date: _______________________________ , 2000
____________________________________________
(Signature)
____________________________________________
(Signature)
PLEASE SIGN HERE
Please date this proxy and sign your name
exactly as it appears hereon.
Where there is more than one owner, each
should sign. When signing as an agent,
attorney, administrator, executor, guardian,
or trustee, please add your title as such.
If executed by a corporation, the proxy
should be signed by a duly authorized
officer who should indicate his office.
PLEASE DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
