Exhibit 2.5
PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION ("AGREEMENT"), dated
February 4, 2000, by and between SVG Software Services, Inc., a California
corporation ("SVG") and NHancement Technologies Inc., a Delaware corporation
("NHANCEMENT").
PLAN OF REORGANIZATION
The reorganization (the "REORGANIZATION") will comprise, in general,
the conveyance by SVG to NHancement of substantially all the assets of SVG,
the issuance by NHancement to SVG of shares of NHancement's authorized but
unissued voting common stock (the "COMMON STOCK"), the distribution by SVG
its shareholders of the shares of the Common Stock received by SVG and the
dissolution of SVG, 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(a)(1)(C) of the Internal Revenue Code of 1986, as amended, and Section
24562(a)(3) of the California Revenue and Taxation Code, as amended.
AGREEMENT
In order to consummate the Reorganization, and in consideration of the
representations and undertakings herein set forth, the parties agree as
follows:
1. TRANSFER OF PROPERTIES. Upon and subject to the terms and conditions
herein stated, NHancement shall acquire at the Closing provided in Section 8
below (the "CLOSING") from SVG, and SVG shall transfer, assign, and convey at
the Closing to NHancement, in exchange for shares of the Common Stock, all of
the properties and assets of SVG, including all rights to its intellectual
property and its business as a going concern, its goodwill and the right to
use its corporate name, as more generally described on Schedule 1 attached
hereto, excepting only those assets and properties of SVG described as
excluded on such Schedule 1 (all of the foregoing assets and properties to be
transferred being referred to collectively as the "ASSETS"). Coincident with
such transfer, assignment and conveyance, SVG shall deliver to NHancement
possession of the Assets. All such Assets shall be transferred, assigned and
conveyed by appropriate instruments satisfactory to legal counsel for
NHancement.
2. ISSUANCE AND DELIVERY OF COMMON STOCK. In consideration of and in
exchange for the foregoing transfer, assignment and conveyance of the Assets
by SVG, NHancement shall issue and deliver to SVG at the Closing one stock
certificate registered in the name of SVG for two hundred fifty thousand
(250,000) shares of the Common Stock. NHancement shall thereafter divide
such stock certificates into certificates of such denominations and
registered in such names as SVG shall request, but under no circumstances
shall NHancement be obligated to issue certificates for fractions of a share.
3. ASSUMPTION OF LIABILITIES. NHancement shall not, by instrument or
otherwise, assume or agree to be responsible for or to perform, discharge or
indemnify SVG against any contracts, obligations or
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Plan & Agreement of Reorganization
Page 2
liabilities of SVG of any type whatsoever, whether accrued or contingent, due
or not due or incurred or entered into by SVG before or after the Closing,
except for the contractual obligations which NHancement shall expressly
assume at and as of the Closing as set forth in Schedule 3 attached hereto
(the "ASSUMED CONTRACTS").
4. CONDITION PRECEDENT. This Agreement shall not be effective until
approved by the Board of Directors of NHancement.
5. ASSIGNMENT OF CONTRACTS. SVG shall use its best efforts as reasonably
directed by NHancement to obtain with respect to the Assumed Contracts the
consent of the other party or parties to the assignment of such contracts and
rights to NHancement.
6. DISTRIBUTION OF COMMON STOCK. SVG shall, as promptly as is
practicable after receipt thereof, wind up its business affairs and pay its
outstanding obligations to third parties and thereafter distribute the
remaining shares of the Common Stock received by it to its shareholders in
exchange for and in complete cancellation of their shares of SVG's Capital
Stock.
7. DISSOLUTION OF SVG. SVG shall wind up its affairs, pay its
outstanding obligations to third parties and dissolve as promptly as is
practicable after the Closing and SVG shall not engage in any business after
the Closing without the written consent of NHancement.
8. PLACE OF CLOSING. The Closing of the transaction contemplated by this
Agreement and all deliveries hereunder shall take place at the office of
Xxxxxxxxx Xxxxx Morosoli & Maser LLP, 200 Page Mill Road, Second Floor, Palo
Alto, California 94306 (or at such other place as may be mutually agreed
upon) at the time of Closing set forth in Section 9 below.
9. TIME OF CLOSING. The time of Closing shall be 1:00 p.m., Pacific Time
(or such other time as may be mutually agreed upon) on February 4, 2000 (or
such other time and date as may be mutually agreed upon but no later than
February 15, 2000).
10. REPRESENTATIONS AND WARRANTIES OF SVG. SVG hereby represents and
warrants to NHancement that all of the statements made below in this Section
10 are true and correct in all respects. These representations and
warranties are subject to the exceptions set forth on Schedule 10 (the
"SCHEDULE OF EXCEPTIONS") furnished to NHancement, specifically identifying
the relevant Section hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder.
10.1 ORGANIZATION AND STANDING. SVG 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. SVG is not required to be
qualified as a foreign corporation in any jurisdiction in the U.S.A.;
provided, however, that SVG 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.
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10.2 RESERVED.
10.3 SUBSIDIARIES. SVG 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.
10.4 CORPORATE AUTHORITY AND AUTHORIZATION. SVG has the corporate
right and authority to assign, convey and transfer the Assets to NHancement.
All corporate action on the part of SVG, its officers and directors necessary
for the authorization, execution, delivery and performance of this Agreement
by SVG and the performance of all of SVG's obligations hereunder has been
taken. This Agreement constitutes a valid and binding obligation of SVG,
enforceable against SVG in accordance with its terms, except as the
indemnification provisions of Section 14.7 hereof may be limited by
principles of public policy and subject to the laws of general application
relating to the bankruptcy, insolvency and the relief of debtors and rules of
law governing specific performance, injunctive relief or other equitable
remedies.
10.5 GOVERNMENTAL CONSENT. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of SVG is required in connection with the valid execution and delivery
of this Agreement, or the consummation of any other transaction contemplated
hereby.
10.6 INTELLECTUAL PROPERTY.
10.6.1 SVG 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 10.6 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 SVG.
SVG (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 of or other claimant
to any patent, trademark, service xxxx, trade name, copyright, license or
other right with respect to the use thereof in connection with the conduct of
its business or otherwise. SVG 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 SVG, free
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Page 4
and clear of any rights, liens or claims of others, including, without
limitation, former employers of all employees of SVG. All of the foregoing
rights to Intellectual Property are freely transferable to NHancement
hereunder without the consent or approval of any third party and following
such assignment and transfer NHancement will possess and enjoy all of such
rights to Intellectual Property as SVG did immediately prior to such transfer
and assignment.
10.6.2 Set forth in Schedule 10.6 is a complete listing of all
software related in any fashion or manner whatsoever to the business of SVG
as now conducted or has proposed to be conducted (the "SOFTWARE") and its
ownership to which SVG had proprietary rights, whether sole or shared, as of
the Closing, describing therein any such sharing. All copies of the Software
were, as of the Closing, in SVG's possession and control. 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.
10.7 MANUFACTURING RIGHTS. SVG has not granted rights to
manufacture or assemble its products to any other person or entity.
10.8 OFFICERS, DIRECTORS AND EMPLOYEES.
10.8.1 To the best knowledge of SVG, no present or former
officer, director or employee of SVG 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 SVG or SVG's ability to conduct its
business. SVG has established appropriate policies and procedures to ensure
no officer, director or other employee of SVG misuses confidential
information or trade secrets of others in the course of their employment or
other relationship with SVG. SVG is not a party to any labor agreements,
employment contracts, consulting agreements or any other instruments which
limit the rights of SVG to terminate the employment or other relationship
with a particular individual at will. SVG 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 SVG.
10.8.2 SVG: (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 SVG, sought to represent any of
the employees, representatives or agents of SVG, (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
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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 SVG or any trade or business (whether or not incorporated)
which, together with SVG, would be deemed to be a "single employer" within
the meaning of such Section 4001. SVG 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.
10.9 CERTAIN TRANSACTIONS. SVG is not indebted, directly or
indirectly, to any of its officers or directors 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 or directors or any of their affiliates or members of their
immediate families, are indebted to SVG or have any direct or indirect
ownership interest in any firm or corporation with which SVG is affiliated or
with which SVG has a business relationship, or any firm or corporation which
competes with SVG (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 SVG.
10.10 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. SVG
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. SVG 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 SVG, 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
SVG; and there is no such term or provision which adversely affects SVG, its
operations or financial condition as presently conducted or as contemplated
to be conducted. SVG and, to the best knowledge of SVG, 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.
10.11 MATERIAL CONTRACTS AND OBLIGATIONS.
10.11.1 Included in the Schedule 10.11 is a list of all
agreements, contracts and other obligations to which SVG 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 SVG in excess
of Ten Thousand Dollars ($10,000), (ii) obligate SVG to share, license or
develop any product or technology, (iii) appoint distributors, dealers or
sublicensees of SVG's products, which agreements cannot be terminated on
thirty (30) days' notice or less or (iv) involve transactions or proposed
transactions between SVG and its officers, directors, affiliates or any
affiliate thereof. Copies of such agreements
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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 SVG and any of
the clients or customers of SVG, or any other person having a business
relationship with SVG, which dispute or disagreement, if resolved unfavorably
to SVG, would have a materially adverse effect on SVG's operations or
financial condition. No client or customer of SVG, or any other person
having a business relationship with SVG, has indicated that it presently
contemplates terminating its business relationship with SVG.
10.11.2 All open orders, licenses and contracts for SVG's
products and services can be fulfilled by SVG 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
NHancement.
10.12 HAZARDOUS WASTE DISPOSAL. To the best knowledge of SVG, after
reasonable investigation, SVG 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 SVG, including, but not limited to:
10.12.1 Comprehensive Environmental Response, Compensation and
Liability Act, 42 USC Sections 9601, et seq.;
10.12.2 Resource Conservation and Recovery Act, 42 USC
Sections 6901, et seq.;
10.12.3 Toxic Substances Control Act, 15 USC Sections 2601, et
seq.;
10.12.4 California Hazardous Substances Information and
Training Act, California Labor Code Sections 6360, et seq.;
10.12.5 California Hazardous Waste Act, California Health &
Safety Code Sections 25100, et seq.;
10.12.6 California Hazardous Substances Act, California Health
& Safety Code Sections 28740, et seq.; and
10.12.7 California Safe Drinking Water and Toxic Enforcement
Act of 1986, California Health & Safety Code Sections 25249.5, et seq.
10.13 LICENSES AND PERMITS. Included in Schedule 10.13 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 SVG. SVG 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
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licenses, permits, authorizations and franchises constitute all of the
licenses, permits, authorizations and franchises required to permit SVG to
conduct its business in the manner in which it is now being conducted, and
SVG is not in violation or breach of any of the terms, requirements or
conditions of any of said licenses, permits, authorizations or franchises.
10.14 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against SVG or, to the best knowledge of SVG, any of
its officers, directors or employees or its properties, before any court or
governmental agency (nor, to the best knowledge of SVG, 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 SVG, or in any material impairment of the right or
ability of SVG to carry on its business as now conducted or as proposed to be
conducted or in any material liability on the part of SVG, or any change in
the current equity ownership of SVG, 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 SVG) involving the prior
employment of any of SVG's employees, their use in connection with SVG's
business of any information or techniques allegedly proprietary to any of
their former employers or their obligations under any agreements with prior
employers.
10.15 CRIMINAL INVESTIGATIONS AND ACTIVITIES. SVG, its past and
present officers and directors: (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 SVG, its officers and
directors. SVG has fully complied with the provisions of the United States
Export Administration Act and all rules and regulations promulgated
thereunder.
10.16 MATERIAL LIABILITIES. SVG has no liabilities which are,
individually or in the aggregate, material to the financial condition or
operating results of SVG which have not been disclosed on Schedule 10.16.
10.17 TAXES. SVG has prepared and filed all federal, state and local
income, withholding, sales, real property, personal property and other tax
returns that are required to be filed by it and has paid or made provision
for the payment of all taxes that have become due pursuant to such returns.
None of such returns has been audited by any state or federal agency. No
deficiency assessment or proposed adjustment of SVG's federal, state and or
local taxes is pending, and SVG has no knowledge of any proposed liability
for any tax to be imposed upon SVG for which there is not an adequate reserve
reflected in SVG's Financial Statements.
10.18 TITLE. SVG has good and marketable title to the Assets. Such
Assets are not subject to any material liens, mortgages, pledges,
encumbrances or charges of any kind.
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10.19 DISCLOSURE. SVG 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 Financial
Statements, 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.
11. REPRESENTATIONS AND WARRANTIES OF NHANCEMENT. NHancement represents
and warrants to SVG that:
11.1 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 (defined in
Section 11.4 below).
11.2 CORPORATE AUTHORITY AND AUTHORIZATION. NHancement has the
corporate right and authority to issue and deliver the securities required to
be issued hereunder to SVG; and such shares when delivered at or after the
Closing will be fully paid and nonassessable. All corporate action on the
part of NHancement, its officers, directors and shareholder 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 as the indemnification provisions of Section 14.7 hereof may be
limited by principles of public policy and subject to the laws of general
application relating to the bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies.
11.3 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
(including as set forth in Section 14.3.1, the consummation of a registration
on Form S-3, which, until December 29, 2000, shall require a waiver from the
Commission of NHancement's technical violation of the 1934 Act's periodic
filing requirements).
11.4 1934 ACT DOCUMENTS. NHancement has delivered to SVG a copy of
its Form 10K for the fiscal year ending September 30, 1999 and its Form 10Q
for the quarter ending December 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.
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES; INDEMNITY. The respective
representations and warranties given by NHancement and SVG contained herein
shall remain effective against their
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respective successors, heirs and assigns and shall survive the Closing.
NHancement shall indemnify and hold SVG 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 NHancement. SVG shall 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 SVG.
13. 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 Common Stock under
Section 2, SVG represents and warrants that it:
13.1 Is aware that such Common Stock is highly speculative and that
there can be no assurance as to what return, if any, there may be.
13.2 Is 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 Common Stock.
13.3 Is acquiring such Common Stock for investment FOR ITS, 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 Common Stock may be resold pursuant to and on the
effectiveness of the S-3 Registration Statement referred to in Section 14
below).
13.4 Except for shares of Common Stock registered under the S-3,
understands that such Common Stock has 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 SVG's
investment intent as expressed herein. In this connection, SVG understands
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.
13.5 Except for shares of Common Stock registered under the S-3
further understands that such Common Stock 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 14 below, NHancement is under no
obligation to effect such registration or qualification or to assure the
availability of any such exemption.
13.6 Is aware of Rule 144 promulgated under the Act which permits
limited public resale of the Common Stock if it is acquired in a non-public
offering subject to the satisfaction of certain
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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 Common
Stock 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 Common Stock 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 Common Stock to be sold
have been beneficially owned by such person for at least three (3) 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 SVG wishes to sell the Common Stock; and thus, they
may be precluded from selling the Common Stock under Rule 144 even though the
minimum holding period may have been satisfied.
13.7 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
Common Stock; and that, although Rule 144 is not exclusive, the Securities
and Exchange Commission (the "COMMISSION") has expressed its opinion that
persons proposing to sell private placement Common Stock 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.
13.8 Except for shares of Common Stock registered under the S-3
understand that the certificates evidencing the Common Stock 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 NHANCEMENT'S 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."
14. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION RIGHTS;
COMPLIANCE WITH SECURITIES ACT.
14.1 RESTRICTIONS ON TRANSFERABILITY. The Securities shall not be
sold, assigned, transferred or pledged except upon the conditions specified in
this Section 14.
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14.2 CERTAIN DEFINITIONS. As used in this Section 14, the following
terms shall have the following respective meanings:
14.2.1 "REGISTRABLE SECURITIES" shall mean up to one hundred
thousand (100,000) shares of Common Stock.
14.2.2 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.
14.2.3 "REGISTRATION EXPENSES" shall mean all expenses incurred
by SVG in complying with Section 14.3, including, without limitation, all
registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for NHancement.
14.2.4 "SELLING EXPENSES" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities.
14.2.5 "HOLDER" shall mean any shareholder so long as such
shareholder holds outstanding Registrable Securities.
14.3 REGISTRATION ON FORM S-3.
14.3.1 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 upon written request by the Holders of the Registrable Shares to
effect such registration. Notwithstanding the foregoing, SVG acknowledges
that NHancement may not utilize registration on Form S-3 until December 29,
2000 unless, prior to such time, the Commission grants NHancement a waiver of
it's failure to file a Form 8-K on a timely basis and consents to its use of
Form S-3 to effect a registration.
14.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 14.3 shall be borne by NHancement. All Selling Expenses related to
securities registered by the Holders shall be borne by the Holders.
14.5 REGISTRATION PROCEDURES. In the case of the registration
effected by NHancement pursuant to this Section14, NHancement will keep each
Holder advised in writing as to the initiation of
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 12
such registration, qualification and compliance and as to the completion
thereof. At its expense NHancement shall:
14.5.1 Keep such registration effective for a period of ninety
(90) days, or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever shall
occur first; and
14.5.2 Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request.
14.6 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 14.
14.7 INDEMNIFICATION. In the event any Registrable Securities shall
be included in a registration statement pursuant to this Section 14:
14.7.1 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 14.7.2 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, 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.
14.7.2 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
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 13
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 14.7.2 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 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.
14.7.3 Promptly after receipt by an indemnified party under
this Section 14.7 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 indemnifying party of any
liability that such indemnifying party may have to any indemnified party
otherwise than under this Section.
14.8 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:
14.8.1 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
14.8.2 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, a copy of the most recent annual or quarterly report of
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 14
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.
14.9 LOCKUP AGREEMENT. In consideration for NHancement's agreeing
to its obligations under this Agreement, SVG 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 Common Stock that are not Registrable
Securities for a one (1) year period following the Closing and (ii) one-half
(1/2) of such shares of the Common Stock that are not Registrable Securities
for an additional one (1) year period following the first anniversary date of
the Closing. All subsequent transferees or assignees of the shares of Common
Stock must agree in writing to the provisions set forth in this Section 14 as
a precondition to any such transfer or assignment.
14.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights hereby granted
to the Holders to cause NHancement to register securities under Section 14.3
above may not be assigned, in whole or in part, to any transferee or assignee
of [Registrable Securities].
15. 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.
16. 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.
17. 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.
18. 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.
19. FINDER'S FEES. The parties hereto each represent to every other party
that such party neither is, nor will be, obligated for any finder's or
broker's fee or commission in connection with the transactions
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 15
contemplated herein. 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 finder's or broker's fee (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.
20. 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.
21. 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.
22. 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.
23. 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.
24. 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).
25. 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 SVG: SVG Software Services, Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxxxxx 00000
If to SVG with a Xxxxxxx Gulechchha
copy to: 0000 Xxxxxxxxx Xxxx
Xxx. 00
Xxxxx Xxxxx, XX 00000
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 16
If to NHancement: NHancement Technologies Inc.
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
If to NHancement Xxxxxxx X. Xxxxx, Esq.
with a copy to: Xxxxxxxxx Xxxxx Morosoli & Maser LLP
000 Xxxx Xxxx Xxxx, Xxxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
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.
26. TIME. Time is of the essence of this Agreement.
27. 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.
28. 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 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.
29. 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.
30. 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.
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
Page 17
31. EXECUTION OF DOCUMENTS. At any time and from time to time after the
Closing, SVG will execute and deliver to NHancement such further conveyances,
assignments and other written assurances as NHancement shall reasonably
request in order to vest and confirm in NHancement title to the Assets.
32. 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.
33. 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.
34. 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.
35. 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 contemporaneous agreements other than those signed by
the parties mentioned above. This Agreement constitutes the final, complete
and exclusive embodiment of the parties' agreement.
36. 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.
SVG Software Services, Inc. / NHancement Technologies Inc.
Plan & Agreement of Reorganization
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
NHANCEMENT: SVG:
NHANCEMENT TECHNOLOGIES INC. SVG SOFTWARE SERVICES, INC.
By: /s/ XXXXXXX X. XXXX By: /s/ RAM V. MANI
------------------------------------- ---------------------------------
Xxxxxxx X. Xxxx, Ram V. Mani
President and Chief Executive Officer President
