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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 22, 1998
Date of Report (Date of earliest event reported)
NHANCEMENT TECHNOLOGIES INC.
----------------------------
(Exact name of registrant as specified in its charter)
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<CAPTION>
Delaware 0-21999 84-1360852
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<S> <C> <C>
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification
of Incorporation) No.)
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39420 Liberty Street
Suite 250
Fremont, CA 94538
-----------------
(Address of principal executive offices, including zip code)
(510) 744-3333
--------------
(Registrant's telephone number, including area code)
This current report on Form 8-K dated June 22, 1998 (the "Report"), relates to
the Registrant's completion of the acquisition (the "Acquisition") of one
hundred percent (100%) of all the issued and fully paid up shares of Infotel
Technologies (Pte) Ltd, a corporation organized and existing under the laws of
Singapore ("Infotel"). As a result of the Acquisition, Infotel became a
wholly-owned subsidiary of the Registrant on June 22, 1998, the effective date
of the Acquisition.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) Pursuant to an Agreement for the Sale of Shares in Infotel Technologies
(Pte) Ltd ("Infotel") between NHancement Technologies Inc., a Delaware
corporation ("NHancement" or the "Company"), and the five individuals ("Infotel
Shareholders") who owned one hundred percent (100%) of all of the issued and
fully paid up shares of Infotel, dated as of January 19, 1998 (the "Original
Agreement"), as amended by three Supplemental Agreements, dated as of April 2,
1998, April 22, 1998 and June 22, 1998, respectively (individually "Supplement
No. 1," "Supplement No. 2" and "Supplement No. 3," and collectively with the
Original Agreement referred to as the "Agreement"), NHancement purchased one
hundred percent (100%) of the shares of Infotel (the "Acquisition").
Consummation of the Acquisition, pursuant to the Agreement, occurred on June 22,
1998. As a result of the Acquisition, Infotel has become a wholly-owned
subsidiary of NHancement. Infotel is a provider and integrator of infrastructure
communications equipment products, providing radar system integration, turnkey
project management services and test instrumentation, as well as a portfolio of
communication equipment in Asia.
The consideration paid to the Infotel Shareholders in connection with
the Acquisition consisted of cash in the amount of S$3,750,000 (US$2,325,000 at
a translation rate of 1.62) and 432,500 shares of Common Stock of NHancement
("NHancement Shares"), paid to each Infotel Shareholder pro rata proportional to
his Infotel share ownership. Additionally, the Infotel Shareholders have the
opportunity to receive up to a maximum of S$3,200,000 (approximately US$
1,844,000 at current rates) in additional cash payments if Infotel exceeds
certain minimum profit levels for its next two fiscal years ending June 30, 1998
and 1999. All NHancement Shares distributed to the Infotel Shareholders pursuant
to the Agreement were issued by NHancement in reliance upon Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"), and are subject to
restrictions on transferability under the 1933 Act. In addition, the NHancement
Shares are subject to a lock-up provision prohibiting transfer of fifty percent
(50%) of the shares for one year following the effective date of the Original
Agreement, and prohibiting transfer of the remaining fifty percent (50%) until
the second anniversary of the effective date of the Original Agreement.
Pursuant to the Agreement, the transaction was to have been consummated
on or before March 16, 1998 (the "Completion Date"), or such later date as
agreed to by the parties. Based upon the exchange rate in effect on the initial
March Completion Date of 1.65 Singapore Dollars to the United States Dollar, the
cash consideration initially payable to the Infotel Shareholders under the
Agreement was approximately US$2,273,000 (the "Initial Cash Consideration"). The
Company was unable to raise the Initial Cash Consideration by the Completion
Date. Pursuant to Supplement No. 1 between the Company and the Infotel
Shareholders, the Infotel Shareholders agreed to defer the Completion Date to
April 13, 1998. As consideration for such deferral, the Company agreed to pay to
each of the Infotel Shareholders' interest on the Initial Cash Consideration for
the period from March 16 through April 13, 1998, at the rate of 2% above the
prime lending rate of the Development Bank of Singapore Ltd. (the "prime rate").
In addition, the Company agreed that the liability of the Infotel Shareholders
for breach of their warranties under the Agreement would be limited to the
period prior to March 16, 1998.
The Company was also unable to raise the Initial Cash Consideration by
April 13, 1998. Pursuant to Supplement No. 2 between the Company and the Infotel
Shareholders, the Infotel Shareholders again agreed to defer the Completion
Date, this time to and including June 24, 1998. As consideration for such
deferral, the Company agreed to pay to each of the Infotel Shareholders interest
on the Initial Cash Consideration at the rate of three percent (3%) above the
prime rate, for the period from April 14 through June 24, 1998. In addition,
among other things, the Company agreed to further limitations on the Infotel
Shareholders' liability for breach of their warranties for the period from April
14 to June 24, 1998.
The Infotel Shareholders also required that the Company deposit
S$1,500,000 in an attorneys' interest-bearing account. If for any reason the
Company had not been able to complete the Acquisition by June 24, 1998, then
S$500,000, plus accrued interest thereon, from the deposit would have been paid
to the Infotel Shareholders as a non-refundable break-up fee, with the balance
being returned to the Company. Additionally, the Agreement would have terminated
and the Vendors would not have been responsible for any of their obligations
under the
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Agreement. However, as a result of the Company's having raised by June 22, 1998
the additional cash necessary to pay the Initial Cash Consideration, the entire
S$1,500,000, exclusive of accrued interest, was paid to the Infotel Shareholders
as a partial payment of the Initial Cash Consideration, with the balance coming
from other funds of the Company, including the bridge loan funds described
below. The accrued interest was paid to the Infotel Shareholders as additional
consideration.
The 432,500 shares of Common Stock issued to the Infotel Shareholders
are subject to a possible upward adjustment if the Company's Common Stock is
trading on the Nasdaq SmallCap Market System, or any other public exchange, at
below US$5.00 per share on either of the first or second anniversary dates of
the June Completion Date. The Infotel Shareholders may also receive additional
cash performance payments of up to a maximum of S$3,200,000 (approximately
US$1,844,000 at current rates) if Infotel meets certain after tax profit goals
for its fiscal years ending June 30, 1998 and 1999. Additionally, the Company
has agreed to provide up to S$300,000 (approximately US$181,800) as incentive
bonuses payable to Infotel's key employees if Infotel meets certain profit
targets for its fiscal years ending June 30, 1998, 1999 and 2000.
In connection with the closing of the Acquisition, the Company entered
into Supplement No. 3 to the Agreement, pursuant to the terms of which the
Company agreed to pay to certain of the Infotel Shareholders cash in the
aggregate amount of S$500,000 (approximately US$300,000 at current rates) in the
event that the Company is unable to secure the release of certain personal
guarantees of existing Infotel loan obligations made by such Infotel
Shareholders. The Company is obligated to make such payments if the guarantees
are not discharged by July 22, 1998. Additionally, the Company agreed that
during the pendency of such personal guarantees, no dividends will be declared
or paid by Infotel and Infotel's moneys will not be lent to or be applied
towards the working capital needs of Nhancement (and additionally will not be
used in contravention of any Singapore regulatory restrictions affecting same).
The funds used to acquire Infotel were derived from working capital and
the proceeds of a bridge loan financing that closed in separate closings held on
June 12, 1998 and June 15, 1998. Under the terms of the bridge loan made by the
holders of Series A Convertible Preferred Stock (the "Preferred Stockholders")
and certain members of management, NHancement borrowed funds in the aggregate
amount of $1,400,000.
Interest is payable on the promissory notes evidencing this debt at a
rate of 10% per annum. Funds loaned to the Company by the Preferred Stockholders
totaled $750,000. The notes payable to the Preferred Stockholders provide for
repayment on the earlier of the closing of the next tranche of the Company's
Series A Convertible Preferred Stock in accordance with the terms of the
Securities Purchase Agreement dated April 13, 1998 or 90 days from the date of
the loan. The principal amount of the promissory notes payable to the Preferred
Stockholders may be applied against the purchase price of the additional Series
A Convertible Preferred Stock available for purchase under the Securities
Purchase Agreement entered into between the Company and the Preferred
Stockholders, subject to receipt of certain approvals by the stockholders of the
Company with respect to the issuance of shares of the Common Stock of the
Company into which the shares of Series A Convertible Preferred Stock are
convertible.
Funds loaned to the Company by members of management totaled $650,000.
Of this amount, $125,000, $225,000 and $300,000 were loaned to NHancement by
Esmond T. Goei, Chairman of the Board and Chief Executive Officer of the
Company, Douglas S. Zorn, Executive Vice President and Chief Financial Officer
of the Company, and James S. Gillespie, formerly the President of Voice Plus,
Inc. and currently a member of the Board of Directors of the Company,
respectively. The notes payable to management provide for repayment within 90
days from the date of the loan. In the event of any partial repayment, partial
repayments are to be apportioned as follows: (i) the first $75,000 of any
partial repayment is to be paid first to Mr. Gillespie, (ii) the next $200,000
of any partial repayment is to be paid equally to Mr. Gillespie and Mr. Zorn and
(iii) the remaining payments are to be pro rated equally among all three members
of management until these loans have been repaid in full.
(b) Not applicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Exhibit 99.1 hereto incorporates by reference from the Company's
Registration Statement on Form S-3 (Commission File No.
333-52709) the audited and unaudited financial statements of
Infotel Technologies (Pte) Ltd required to be filed for the
periods specified in Rule 3-05 of Regulation S-X.
(b) PRO FORMA FINANCIAL INFORMATION.
Exhibit 99.2 hereto incorporates by reference from the Company's
Registration Statement on Form S-3 (Commission File No.
333-52709) the pro forma financial information required to be
filed pursuant to Article 11 of Regulation S-X.
(c) Exhibits
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Exhibit
Number Description
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2.1 Agreement relating to the sale and purchase of 500,000 ordinary
shares in the capital of Infotel Technologies (Pte) Ltd
("Infotel"), dated as of January 19, 1998, by and between the
Company and the stockholders of Infotel (the "Sale Agreement"),
incorporated by reference to the document bearing the same
exhibit number as contained in the Company's Registration
Statement on Form S-3 (Commission File No. 333-52709), as
initially filed with the Securities and Exchange Commission on
May 14, 1998.
2.2 Letter agreement amending the Sale Agreement, dated as of April
2, 1998, by and between the Company and the stockholders of
Infotel ("Supplement No. 1"), incorporated by reference to the
document bearing the same exhibit number as contained in the
Company's Registration Statement on Form S-3 (Commission File No.
333-52709), as initially filed with the Securities and Exchange
Commission on May 14, 1998.
2.3 Form of letter agreement amending the Sale Agreement, as amended
by Supplement No. 1, dated as of April 22, 1998, by and between
the Company and the stockholders of Infotel ("Supplement No. 2"),
incorporated by reference to the document bearing the same
exhibit number as contained in the Company's Registration
Statement on Form S-3 (Commission File No. 333-52709), as
initially filed with the Securities and Exchange Commission on
May 14, 1998.
2.4 Letter agreement amending the Sale Agreement, as amended by
Supplement No. 1 and Supplement No. 2, dated as of June 22, 1998,
by and between the Company and the stockholders of Infotel.
4.1 Form of certificate evidencing Common Stock, $.01 par value, of
the Company, incorporated by reference to the document bearing
the same exhibit number as contained in Registrant's Registration
Statement on Form SB-2 (Commission File No. 333-15563), as filed
with the Securities and Exchange Commission on November 5, 1996.
10.1 Promissory Note, dated as of June 15, 1998, in the original
principal amount of $375,000, payable by the Company to AMRO
INTERNATIONAL S.A. ("Amro").
10.2 Promissory Note, dated as of June 15, 1998, in the original
principal amount of $375,000, payable by the Company to Endeavour
Capital Fund S.A. ("Endeavour").
10.3 Letter agreement, dated as of June 15, 1998, amending Securities
Purchase Agreement, dated as of April 13, 1998, by and among the
Company, Amro and Endeavour.
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10.4 Letter agreement, dated as of June 12, 1998, by and among the
Company, Esmond T. Goei, Douglas S. Zorn and James S. Gillespie.
10.5 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $125,000, payable by the Company to Esmond T.
Goei.
10.6 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $225,000, payable by the Company to Douglas
S. Zorn.
10.7 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $300,000, payable by the Company to James S.
Gillespie.
99.1 Infotel Technologies (Pte) Ltd Audited Financial Statements for
the Years Ended June 30, 1996 and 1997 (with unaudited
information as of March 31, 1998 and for the three and nine
months ended March 31, 1997 and 1998), is incorporated by
reference to pages F-1 to F-20 of pre-effective Amendment No. 1
to the Company's Registration Statement on Form S-3 (Commission
File No. 333-52709), as filed with the Securities and Exchange
Commission on June 1, 1998.
99.2 Pro Forma Combined Condensed Financial Statements (unaudited) of
Infotel Technologies (Pte) Ltd and NHancement Technologies Inc.
as of March 31, 1998, for the nine months ended March 31, 1998
and for the year ended December 31, 1997, incorporated by
reference to pages PF-1 to PF-8 of pre-effective Amendment No. 1
to the Company's Registration Statement on Form S-3 (Commission
File No. 333-52709), as filed with the Securities and Exchange
Commission on June 1, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NHancement Technologies Inc.
Date: July 6, 1998 By: /s/ Douglas S. Zorn
-----------------------------------------
Douglas S. Zorn, Executive Vice President
and Chief Financial Officer
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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2.1 Agreement relating to the sale and purchase of 500,000 ordinary
shares in the capital of Infotel Technologies (Pte) Ltd
("Infotel"), dated as of January 19, 1998, by and between the
Company and the stockholders of Infotel (the "Sale Agreement"),
incorporated by reference to the document bearing the same
exhibit number as contained in the Company's Registration
Statement on Form S-3 (Commission File No. 333-52709), as
initially filed with the Securities and Exchange Commission on
May 14, 1998.
2.2 Letter agreement amending the Sale Agreement, dated as of April
2, 1998, by and between the Company and the stockholders of
Infotel ("Supplement No. 1"), incorporated by reference to the
document bearing the same exhibit number as contained in the
Company's Registration Statement on Form S-3 (Commission File No.
333-52709), as initially filed with the Securities and Exchange
Commission on May 14, 1998.
2.3 Form of letter agreement amending the Sale Agreement, as amended
by Supplement No. 1, dated as of April 22, 1998, by and between
the Company and the stockholders of Infotel ("Supplement No. 2"),
incorporated by reference to the document bearing the same
exhibit number as contained in the Company's Registration
Statement on Form S-3 (Commission File No. 333-52709), as
initially filed with the Securities and Exchange Commission on
May 14, 1998.
2.4 Letter agreement amending the Sale Agreement, as amended by
Supplement No. 1 and Supplement No. 2, dated as of June 22, 1998,
by and between the Company and the stockholders of Infotel.
4.1 Form of certificate evidencing Common Stock, $.01 par value, of
the Company, incorporated by reference to the document bearing
the same exhibit number as contained in Registrant's Registration
Statement on Form SB-2 (Commission File No. 333-15563), as filed
with the Securities and Exchange Commission on November 5, 1996.
10.1 Promissory Note, dated as of June 15, 1998, in the original
principal amount of $375,000, payable by the Company to AMRO
INTERNATIONAL S.A. ("Amro").
10.2 Promissory Note, dated as of June 15, 1998, in the original
principal amount of $375,000, payable by the Company to Endeavour
Capital Fund S.A. ("Endeavour").
10.3 Letter agreement, dated as of June 15, 1998, amending Securities
Purchase Agreement, dated as of April 13, 1998, by and among the
Company, Amro and Endeavour.
10.4 Letter agreement, dated as of June 12, 1998, by and among the
Company, Esmond T. Goei, Douglas S. Zorn and James S. Gillespie.
10.5 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $125,000, payable by the Company to Esmond T.
Goei.
10.6 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $225,000, payable by the Company to Douglas
S. Zorn.
10.7 Promissory Note, dated as of June 12, 1998, in the original
principal amount of $300,000, payable by the Company to James S.
Gillespie.
99.1 Infotel Technologies (Pte) Ltd Audited Financial Statements for
the Years Ended June 30, 1996 and 1997 (with unaudited
information as of March 31, 1998 and for the three and nine
months ended March 31, 1997 and 1998), is incorporated by
reference to pages F-1 to F-20 of pre-effective Amendment No. 1
to the Company's Registration Statement on Form S-3 (Commission
File No. 333-52709), as filed with the Securities and Exchange
Commission on June 1, 1998.
</TABLE>
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99.2 Pro Forma Combined Condensed Financial Statements (unaudited) of
Infotel Technologies (Pte) Ltd and NHancement Technologies Inc.
as of March 31, 1998, for the nine months ended March 31, 1998
and for the year ended December 31, 1997, incorporated by
reference to pages PF-1 to PF-8 of pre-effective Amendment No. 1
to the Company's Registration Statement on Form S-3 (Commission
File No. 333-52709), as filed with the Securities and Exchange
Commission on June 1, 1998.
Page 7
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EXHIBIT 2.4
22nd June 1998
To: (1) Gerard Foo Loke Kiean
10 Persiaran Canton Victoria Park
30250 Ipoh, Perak
Malaysia
(2) James Han Kim Guan
15 Mimosa Walk
Singapore 807862
(3) Leong Sau Pan
27B Fernhill Road
Singapore 259089
(4) Foo Khoon Wong
7 Jalan Belfield
Ipoh, Perak,
Malaysia
(5) Sae Foo Kitipongse @ Foo Loke Khee
869/243 Muang Thong 4
Sukumvit 101, Bangkok 10250
Thailand
Dear Sirs,
INFOTEL TECHNOLOGIES PTE LTD (the "Company")
1. We refer to:-
(a) the Sale and Purchase Agreement (the "Agreement") dated 19th
January 1998 entered into by yourselves (together, the
"Vendors"), as vendors, and ourselves (the "Purchaser"), as
purchaser, relating to the sale and purchase of 500,000
ordinary shares of $1.00 each in the capital of the Company;
(b) the Supplemental Letter dated 2nd April 1998 addressed by
ourselves to yourselves and duly countersigned by yourselves,
being an agreement supplemental to the Agreement; and
(c) the Supplemental Letter dated 22nd April 1998 addressed by
ourselves to yourselves and duly countersigned by yourselves,
being an agreement supplemental to the Agreement.
The capitalised terms used in this letter shall have the same meanings
ascribed to them in the Agreement.
2. In connection with clause 6(C)(iv) of the Agreement, we hereby agree
that we shall on or before 22nd July 1998:-
<PAGE> 2
(a) procure the discharge of Leong Sau Pan and Foo Khoon Wong from
the joint and several guarantee (the "IBS Guarantee") executed
in favour of International Bank of Singapore Limited ("IBS")
as security for the $2,350,000 banking facilities granted by
IBS to the Company, and we shall indemnify and keep
indemnified Leong Sau Pan and Foo Khoon Wong respectively in
respect of all sums payable under such guarantee with effect
from the date hereof up to the discharge of the IBS Guarantee;
and
(b) procure the discharge of Leong Sau Pan and Foo Khoon Wong from
the joint and several guarantee (the "UOB Guarantee") executed
in favour of United Overseas Bank Limited ("UOB") as security
for the $2,000,000 banking facilities granted by UOB to the
Company, and we shall indemnify and keep indemnified Leong Sau
Pan and Foo Khoon Wong respectively in respect of all sums
payable under such guarantee with effect from the date hereof
up to the discharge of the UOB Guarantee.
3. Until the IBS Guarantee and the UOB Guarantee are discharged, we hereby
undertake to you that:-
(a) no dividends shall be declared or paid by the Company; and
(b) the Company's moneys will not be lent to or be applied towards
the working capital needs of NHancement Technologies Inc. and
the Company's moneys and assets will not be used in
contravention of Section 76 of the Companies Act, Chapter 50
of Singapore.
4. If the IBS Guarantee and the UOB Guarantee are not discharged on or
before 22nd July 1998, we shall thereafter forthwith pay to Leong Sau
Pan and Foo Khoon Wong in equal shares, the aggregate sum of
$500,000.00.
Kindly signify your agreement to the foregoing by signing below.
Yours faithfully,
/s/ Esmond T. Goei
- -----------------------------------
Signed by ESMOND T. GOEI
as President and CEO of and
for and on behalf of
NHANCEMENT TECHNOLOGIES INC.
-----------------------------------
ACKNOWLEDGEMENT
---------------
We hereby agree to the foregoing:-
/s/ Gerard Foo Loke Kiean /s/ James Han Kim Guan
- ----------------------------------- -----------------------------------
Gerard Foo Loke Kiean James Han Kim Guan
/s/ Leong Sau Pan /s/ Foo Khoon Wong
- ----------------------------------- -----------------------------------
Leong Sau Pan Foo Khoon Wong
/s/ Sae Foo Kitipongse
- ----------------------------------- -----------------------------------
Sae Foo Kitipongse
@ Foo Loke Khee
<PAGE> 1
EXHIBIT 10.1
PROMISSORY NOTE
$ 375,000 ISSUED AS OF THE 15TH DAY OF JUNE, 1998
- --------------- ----
FREMONT, CALIFORNIA
FOR VALUE RECEIVED, NHANCEMENT TECHNOLOGIES INC., A DELAWARE
CORPORATION ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of AMRO INTERNATIONAL S.A. ("LENDER"), at such
other place as Lender or a future holder hereof (Lender or such other holder
being sometimes referenced herein as "HOLDER") may from time to time designate
in writing, the principal sum of Three Hundred Seventy-Five Thousand Dollars
($375,000) together with interest on the unpaid principal balance hereof, all as
specified below. All payments made hereon shall be applied first to the payment
of all unpaid accrued interest (at the rates specified herein) to the date of
payment and the balance, if any, (after deduction of any other charges due from
Debtor) shall be applied to the payment of principal. Interest shall thereupon
cease on the principal so credited. All interest accruing at the annual
percentage rates specified herein shall be calculated on the basis of a Three
Hundred Sixty-Five (365) day year and actual days elapsed and any such accrued
interest which is not paid when due shall be added to unpaid principal and shall
thereafter bear interest in the same manner as the unpaid principal balance
hereof. Additionally, notwithstanding any provision of this Note, it is the
intent and agreement of the Lender in the event any interest specified herein is
found to violate any applicable law or regulation, that this Note shall be
construed or deemed amended so that the interest is reduced to the extent
necessary to comply with such applicable law or regulation.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 PAYMENTS. During the term hereof, the principal amount hereof, from
time to time outstanding, shall bear interest at the rate of Ten percent (10%)
per annum (the "STANDARD RATE"). Principal and all interest shall be all due and
payable on earlier of the closing of the First Additional Tranche as defined in
that certain Securities Purchase Agreement dated April 13, 1998, as amended
between Debtor and Lender (the "AGREEMENT") or ninety (90) days from the issue
date hereof ("MATURITY DATE"), and shall include any of the following that
apply: (1) all accrued interest at the Standard Rate which has not been paid
when due, (2) all principal remaining unpaid and (3) any unpaid late charges and
other amounts chargeable against Debtor pursuant to the terms hereof (as defined
below).
1.2 PREPAYMENT. With the prior consent of Lender, the indebtedness
hereunder may be prepaid in whole or in part at any time, without penalty or
premium and in principal amounts of $5,000 or more (together with interest on
the principal amount being prepaid).
1.3 SET OFF. In the event that the Lender becomes obligated under the
Agreement to purchase the First Additional Tranche, Lender shall set off the
principal amount due Lender hereunder in satisfaction of the purchase price for
such First Additional Tranche and, in such event, Debtor shall pay Lender all
accrued interest due on such principal amount through the date of set off. Upon
such setoff, the principal amount hereof shall be deemed paid off by Debtor.
2. EVENTS OF DEFAULT.
The occurrence of the failure to cure any default in payment of
principal or interest due pursuant to the terms hereof within five (5) days
after Holder gives notice of such default shall be deemed to be an event of
default ("EVENT OF DEFAULT").
3. ACCELERATION AND LATE CHARGE.
3.1 ACCELERATION. Upon the occurrence of Event of Default, the entire
payoff balance then applicable (an amount equal to the sum of unpaid principal,
accrued and unpaid interest at the annual rates specified herein) shall become
immediately due and payable.
<PAGE> 2
Promissory Note
NHancement Technologies Inc.
Page 2
3.2 LATE CHARGES. In the event any installment of principal or interest
shall become overdue for a period in excess of five (5) calendar days after the
due date, the Holder may, at its option, charge a "late charge" of five cents
for each dollar so overdue. In connection therewith, Debtor, by its issuance of
this Note, and Lender, by its acceptance of this Note, agree as follows: (1)
such late payment will cause Holder to incur administrative costs, collection
costs, loss of interest, and other direct and indirect costs in uncertain
amounts, (2) it would be impractical or extremely difficult to fix the exact
amount of such costs in such event, (3) the late charge is a reasonable estimate
of such costs and is fair compensation to Holder for its anticipated losses and
additional risks resulting from such late payment, and (4) without limiting its
rights to recover such installment and to exercise all other rights under this
Note, Lender agrees to accept such late charge in lieu of its right to recover
its actual damages resulting from such late payment. The payment by Debtor of
any such late charges shall not affect the right of the Holder hereof to collect
all payments of principal and interest when and as the same become due
hereunder.
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the Holder shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees and
other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE WHOLLY
PERFORMED IN SUCH STATE AND WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
REGARDING THE CONFLICT OF LAWS. EACH OF THE PARTIES CONSENTS TO THE JURISDICTION
OF THE FEDERAL COURTS WHOSE DISTRICTS ENCOMPASS ANY PART OF THE CITY OF NEW YORK
OR THE STATE COURTS OF THE STATE OF NEW YORK SITTING IN THE CITY OF NEW YORK IN
CONNECTION WITH ANY DISPUTE ARISING UNDER THIS NOTE AND HEREBY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION BASED ON
FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH
JURISDICTIONS.
4.3 WAIVER OF TRIAL BY JURY. LENDER AND DEBTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR ANY OTHER DEBT
INSTRUMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND DEBTOR.
4.4 OBLIGATION UNCONDITIONAL. No provision of this Note shall alter,
impair or render conditional the payment obligations of Debtor, which are
absolute and unconditional, to pay the principal and interest on this Note at
the place and at the respective times herein prescribed. Debtor shall in all
events remain absolutely and unconditionally liable for the payment and
performance of all its obligations under the Note to fully satisfy all amounts
due Holder pursuant to the Note in the case of Event of Default by Debtor.
4.5 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor (and all guarantors, endorsers and other parties now or hereafter
becoming liable for the payment of this Note) hereby waives diligence,
presentment, protest, demand of payment, notice of protest, dishonor and
nonpayment, and waives the legal effect of Holder's failure to give all notices
not expressly provided for herein. Debtor expressly agrees that, without in any
way affecting the liability of Debtor hereunder, the Holder may extend the
Maturity Date or the time for payment of any amount due hereunder, accept
additional security, release any party liable hereunder, and release any
security now or hereafter securing this Note. Debtor further waives, to the full
extent permitted by law, the right to plead any and all statutes of limitation
as a defense to any demand on this Note, or on any agreement now or hereafter
securing this Note.
4.6 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.7 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
<PAGE> 3
Promissory Note
NHancement Technologies Inc.
Page 3
4.8 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note shall operate as a
waiver of such right or of any other right of the Holder hereunder.
4.9 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Esmond T. Goei
-------------------------------
Esmond T. Goei
Chief Executive Officer
<PAGE> 1
Promissory Note
NHancement Technologies Inc.
Page 1
EXHIBIT 10.2
PROMISSORY NOTE
$ 375,000 ISSUED AS OF THE 15TH DAY OF JUNE, 1998
- -------------- ----
FREMONT, CALIFORNIA
FOR VALUE RECEIVED, NHANCEMENT TECHNOLOGIES INC., A DELAWARE
CORPORATION ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of THE ENDEAVOUR CAPITAL FUND S.A. ("LENDER"),
at such other place as Lender or a future holder hereof (Lender or such other
holder being sometimes referenced herein as "HOLDER") may from time to time
designate in writing, the principal sum of Three Hundred Seventy-Five Thousand
Dollars ($375,000) together with interest on the unpaid principal balance
hereof, all as specified below. All payments made hereon shall be applied first
to the payment of all unpaid accrued interest (at the rates specified herein) to
the date of payment and the balance, if any, (after deduction of any other
charges due from Debtor) shall be applied to the payment of principal. Interest
shall thereupon cease on the principal so credited. All interest accruing at the
annual percentage rates specified herein shall be calculated on the basis of a
Three Hundred Sixty-Five (365) day year and actual days elapsed and any such
accrued interest which is not paid when due shall be added to unpaid principal
and shall thereafter bear interest in the same manner as the unpaid principal
balance hereof. Additionally, notwithstanding any provision of this Note, it is
the intent and agreement of the Lender in the event any interest specified
herein is found to violate any applicable law or regulation, that this Note
shall be construed or deemed amended so that the interest is reduced to the
extent necessary to comply with such applicable law or regulation.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 PAYMENTS. During the term hereof, the principal amount hereof, from
time to time outstanding, shall bear interest at the rate of Ten percent (10%)
per annum (the "STANDARD RATE"). Principal and all interest shall be all due and
payable on earlier of the closing of the First Additional Tranche as defined in
that certain Securities Purchase Agreement dated April 13, 1998, as amended
between Debtor and Lender (the "AGREEMENT") or ninety (90) days from the issue
date hereof ("MATURITY DATE"), and shall include any of the following that
apply: (1) all accrued interest at the Standard Rate which has not been paid
when due, (2) all principal remaining unpaid and (3) any unpaid late charges and
other amounts chargeable against Debtor pursuant to the terms hereof (as defined
below).
1.2 PREPAYMENT. With the prior consent of Lender, the indebtedness
hereunder may be prepaid in whole or in part at any time, without penalty or
premium and in principal amounts of $5,000 or more (together with interest on
the principal amount being prepaid).
1.3 SET OFF. In the event that the Lender becomes obligated under the
Agreement to purchase the First Additional Tranche, Lender shall set off the
principal amount due Lender hereunder in satisfaction of the purchase price for
such First Additional Tranche and, in such event, Debtor shall pay Lender all
accrued interest due on such principal amount through the date of set off. Upon
such setoff, the principal amount hereof shall be deemed paid off by Debtor.
2. EVENTS OF DEFAULT.
The occurrence of the failure to cure any default in payment of
principal or interest due pursuant to the terms hereof within five (5) days
after Holder gives notice of such default shall be deemed to be an event of
default ("EVENT OF DEFAULT").
3. ACCELERATION AND LATE CHARGE.
3.1 ACCELERATION. Upon the occurrence of Event of Default, the entire
payoff balance then applicable (an amount equal to the sum of unpaid principal,
accrued and unpaid interest at the annual rates specified herein) shall become
immediately due and payable.
<PAGE> 2
Promissory Note
NHancement Technologies Inc.
Page 2
3.2 LATE CHARGES. In the event any installment of principal or interest
shall become overdue for a period in excess of five (5) calendar days after the
due date, the Holder may, at its option, charge a "late charge" of five cents
for each dollar so overdue. In connection therewith, Debtor, by its issuance of
this Note, and Lender, by its acceptance of this Note, agree as follows: (1)
such late payment will cause Holder to incur administrative costs, collection
costs, loss of interest, and other direct and indirect costs in uncertain
amounts, (2) it would be impractical or extremely difficult to fix the exact
amount of such costs in such event, (3) the late charge is a reasonable estimate
of such costs and is fair compensation to Holder for its anticipated losses and
additional risks resulting from such late payment, and (4) without limiting its
rights to recover such installment and to exercise all other rights under this
Note, Lender agrees to accept such late charge in lieu of its right to recover
its actual damages resulting from such late payment. The payment by Debtor of
any such late charges shall not affect the right of the Holder hereof to collect
all payments of principal and interest when and as the same become due
hereunder.
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the Holder shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees and
other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE WHOLLY
PERFORMED IN SUCH STATE AND WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
REGARDING THE CONFLICT OF LAWS. EACH OF THE PARTIES CONSENTS TO THE JURISDICTION
OF THE FEDERAL COURTS WHOSE DISTRICTS ENCOMPASS ANY PART OF THE CITY OF NEW YORK
OR THE STATE COURTS OF THE STATE OF NEW YORK SITTING IN THE CITY OF NEW YORK IN
CONNECTION WITH ANY DISPUTE ARISING UNDER THIS NOTE AND HEREBY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION BASED ON
FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH PROCEEDING IN SUCH
JURISDICTIONS.
4.3 WAIVER OF TRIAL BY JURY. LENDER AND DEBTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR ANY OTHER DEBT
INSTRUMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND DEBTOR.
4.4 OBLIGATION UNCONDITIONAL. No provision of this Note shall alter,
impair or render conditional the payment obligations of Debtor, which are
absolute and unconditional, to pay the principal and interest on this Note at
the place and at the respective times herein prescribed. Debtor shall in all
events remain absolutely and unconditionally liable for the payment and
performance of all its obligations under the Note to fully satisfy all amounts
due Holder pursuant to the Note in the case of Event of Default by Debtor.
4.5 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor (and all guarantors, endorsers and other parties now or hereafter
becoming liable for the payment of this Note) hereby waives diligence,
presentment, protest, demand of payment, notice of protest, dishonor and
nonpayment, and waives the legal effect of Holder's failure to give all notices
not expressly provided for herein. Debtor expressly agrees that, without in any
way affecting the liability of Debtor hereunder, the Holder may extend the
Maturity Date or the time for payment of any amount due hereunder, accept
additional security, release any party liable hereunder, and release any
security now or hereafter securing this Note. Debtor further waives, to the full
extent permitted by law, the right to plead any and all statutes of limitation
as a defense to any demand on this Note, or on any agreement now or hereafter
securing this Note.
4.6 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.7 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
<PAGE> 3
Promissory Note
NHancement Technologies Inc.
Page 3
4.8 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note shall operate as a
waiver of such right or of any other right of the Holder hereunder.
4.9 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Esmond T. Goei
--------------------------------
Esmond T. Goei
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.3
[NHANCEMENT LETTERHEAD]
June 15, 1998
LETTER AGREEMENT
AMRO INTERNATIONAL S.A. The Endeavour Capital Fund S.A.
c/o Ultra Finance 14/14 Divrei Chaim Street
Grossmunster Platz 26 Jerusalem 94479
Zurich LH 8022 Israel
Switzerland Attn: Mr. Shmuli Margulies
Attn: Mr. H. U. Bachofen
Re: Amendment to Securities Purchase Agreement
Gentlemen:
This letter agreement confirms our agreement that the following
provisions stated herein shall constitute an amendment to that certain
Securities Purchase Agreement dated as of April 13, 1998 (the "Agreement") and
entered into by and among AMRO INTERNATIONAL S.A. and The Endeavour Capital Fund
S.A. (each, "BUYER" and collectively, "BUYERS"), and NHancement Technologies
Inc. (the "COMPANY") in accordance with Section 10.j. of the Agreement.
Unless otherwise defined herein, the defined terms shall have the same
meaning as set forth in the Agreement. The Company and Buyers hereby acknowledge
and agree as follows:
1. The First Additional Tranche shall be increased from Five Hundred
Thousand Dollars ($500,000) to Seven Hundred Fifty Thousand Dollars ($750,000).
2. The Third Additional Tranche shall be decreased from Seven Hundred
Fifty Thousand Dollars ($750,000) to Five Hundred Thousand Dollars ($500,000).
3. The First Additional Closing Date shall occur on or two (2) business
days after the date the Company obtains the stockholder approval to the effect
that the Cap Regulations, as specified in Section 4.j of the Agreement, will not
restrict the Company's issuance of the shares of Common Stock to any Buyer in
connection with such Buyer's conversion of the Initial Preferred Stock or any
Additional Preferred Stock, as of such First Additional Closing Date, provided
that all other conditions to the closing of the First Additional Tranche shall
have been satisfied by the Company or waived by the Buyers. The Company agrees
to use its best efforts to satisfy all such conditions as soon as possible. The
Company further represents and warrants that a proposal to such effect will be
duly and properly submitted for the stockholder approval at the special
stockholder meeting expected to be held on or about July 6, 1998.
<PAGE> 2
NHancement Technologies Inc.
Letter Agreement
Page 2
IN WITNESS WHEREOF, this letter agreement has been executed by the
undersigned this 15th day of June, 1998.
THE COMPANY:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Douglas S. Zorn
---------------------------------
Its: Chief Financial Officer
--------------------------------
Acknowledged and Agreed:
AMRO INTERNATIONAL S.A.
By: /s/ H.U. Bachefen
---------------------------------
Its: Director
--------------------------------
THE ENDEAVOUR CAPITAL FUND S.A.
By: /s/ S. Margulies
---------------------------------
Its: Fund Manager
--------------------------------
<PAGE> 1
EXHIBIT 10.4
[NHANCEMENT LETTERHEAD]
June 12, 1998
LETTER AGREEMENT
Mr. Esmond T. Goei
Mr. Douglas S. Zorn
Mr. James S. Gillespie
NHancement Technologies Inc.
39420 Liberty Street, Suite 250
Fremont, CA 94538
Gentlemen:
Re: Loans to NHancement Technologies Inc.
In connection with and in consideration of loans in the amounts of
Three Hundred Thousand Dollars ($300,000) ("LOAN 1") made to NHancement
Technologies Inc. ("DEBTOR") by James S. Gillespie ("LENDER"), Two Hundred
Twenty-Five Thousand Dollars ($225,000) ("LOAN 2") made to Debtor by Douglas S.
Zorn ("LENDER 2") and One Hundred Twenty-Five Thousand ($125,000) ("LOAN 3")
made to Debtor by Esmond T. Goei ("LENDER 3"; all of the foregoing collectively,
"LENDERS") as evidenced by those certain Promissory Notes dated on even date
herewith and made payable to order of each of Lenders by Debtor, Lenders and
Debtor hereby agree and acknowledge that Debtor shall repay Lenders in
accordance with the following priority in repayment schedules:
1. Debtor shall first repay Lender, an amount equal to all accrued
interest on and principal of Seventy-Five Thousand Dollars ($75,000) of Loan 1,
in priority over Lender 2 and Lender 3, from any legally available funds of
Debtor.
2. After the repayment of all accrued interest on and principal of
Seventy-Five Thousand Dollars ($75,000) of Loan 1, Debtor shall repay each of
Lender and Lender 2, an amount equal to all accrued interest on and principal of
One Hundred Thousand Dollars ($100,000) each of Loan 1 and Loan 2, respectively,
in priority over Lender 3, with any partial payments to be made in equal amounts
from any legally available funds of Debtor.
3. After the repayment of all accrued interest on and principal of One
Hundred Thousand Dollars ($100,000) each of Loan 1 and Loan 2, Debtor shall
repay each of Lenders an amount equal to all accrued interest on and principal
of One Hundred Twenty-Five Thousand Dollars ($125,000) each of Loan 1, Loan 2
and Loan 3, with any partial payments to be made in equal amounts on pro rata
basis from any legally available funds of Debtor.
<PAGE> 2
NHancement Technologies Inc.
Letter Agreement
Page 2
IN WITNESS WHEREOF, this letter agreement has been executed by the
undersigned this 12th day of June, 1998.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Esmond T. Goei
---------------------------------------
Its: President and Chief Executive Officer
--------------------------------------
Acknowledged and Agreed:
/s/ James S. Gillespie
- ----------------------------------
James S. Gillespie
/s/ Douglas S. Zorn
- ----------------------------------
Douglas S. Zorn
/s/ Esmond T. Goei
- ----------------------------------
Esmond T. Goei
<PAGE> 1
EXHIBIT 10.5
PROMISSORY NOTE
$125,000.00 ISSUED AS OF THE 12 DAY OF JUNE, 1998 FREMONT, CALIFORNIA
FOR VALUE RECEIVED, NHANCEMENT TECHNOLOGIES INC., A DELAWARE
CORPORATION ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of ESMOND T. GOEI ("LENDER"), at such other
place as Lender or a future holder hereof (Lender or such other holder being
sometimes referenced herein as "HOLDER") may from time to time designate in
writing, the principal sum of ONE HUNDRED AND TWENTY-FIVE THOUSAND ($125,000.00)
together with interest on the unpaid principal balance hereof, all as specified
below. All payments made hereon shall be applied first to the payment of all
unpaid accrued interest (at the rates specified herein) to the date of payment
and the balance, if any, (after deduction of any other charges due from Debtor)
shall be applied to the payment of principal. Interest shall thereupon cease on
the principal so credited. All interest accruing at the annual percentage rates
specified herein shall be calculated on the basis of a Three Hundred Sixty-Five
(365) day year and actual days elapsed and any such accrued interest which is
not paid when due shall be added to unpaid principal and shall thereafter bear
interest in the same manner as the unpaid principal balance hereof.
Additionally, notwithstanding any provision of this Note, it is the intent and
agreement of the Lender in the event any interest specified herein is found to
violate any applicable law or regulation, that this Note shall be construed or
deemed amended so that the interest is reduced to the extent necessary to comply
with such applicable law or regulation.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 PAYMENTS. During the term hereof, the principal amount hereof, from
time to time outstanding, shall bear interest at the rate of Ten percent (10%)
per annum (the "STANDARD RATE"). Principal and all interest shall be all due and
payable ninety (90) days from the issue date hereof ("MATURITY DATE"), and shall
include any of the following that apply: (1) all accrued interest at the
Standard Rate which has not been paid when due, (2) all principal remaining
unpaid and (3) any unpaid late charges and other amounts chargeable against
Debtor pursuant to the terms hereof (as defined below).
1.2 PREPAYMENT. The indebtedness hereunder may be prepaid in whole or
in part at any time, without penalty or premium and in principal amounts of
$5,000 or more, all at the election of Debtor.
2. EVENTS OF DEFAULT.
The occurrence of the failure to cure any default in payment of
principal or interest due pursuant to the terms hereof within five (5) days
after Holder gives notice of such default shall be deemed to be an event of
default ("EVENT OF DEFAULT").
3. ACCELERATION AND LATE CHARGE.
3.1 ACCELERATION. Upon the occurrence of Event of Default, the entire
payoff balance then applicable (an amount equal to the sum of unpaid principal,
accrued and unpaid interest at the annual rates specified herein) shall become
immediately due and payable.
3.2 LATE CHARGES. In the event any installment of principal or interest
shall become overdue for a period in excess of five (5) calendar days after the
due date, the Holder may, at its option, charge a "late charge" of five cents
for each dollar so overdue. In connection therewith, Debtor and Lender, by its
acceptance of this Note, agree as follows: (1) such late payment will cause
Holder to incur administrative costs, collection costs, loss of interest, and
other direct and indirect costs in uncertain amounts, (2) it would be
impractical or extremely difficult to fix the exact amount of such costs in such
event, (3) the late charge is a reasonable estimate of such costs and is fair
compensation to Holder for its anticipated losses and additional risks resulting
from such late payment, and (4) without limiting its rights to recover such
installment and to exercise all other rights under this Note, Lender agrees to
accept such late charge in lieu of its right to recover its actual damages
resulting from such late payment.
<PAGE> 2
Promissory Note
NHancement Technologies Inc.
Page 2
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the Holder shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees and
other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES. EXCEPT AS SET FORTH BELOW, HOLDER
AND DEBTOR HEREBY AGREE THAT ANY SUIT TO ENFORCE ANY PROVISION OF, OR TO
COLLECT, THIS NOTE SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA. EXCEPT AS SET FORTH BELOW, EACH PARTY HEREBY
AGREES THAT SUCH COURT SHALL HAVE EXCLUSIVE IN PERSONAM JURISDICTION AND VENUE
WITH RESPECT TO SUCH PARTY, AND EACH PARTY HEREBY SUBMITS TO THE EXCLUSIVE IN
PERSONAM JURISDICTION AND VENUE OF SUCH COURT.
4.3 WAIVER OF TRIAL BY JURY. LENDER AND DEBTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR ANY OTHER DEBT
INSTRUMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND DEBTOR.
4.4 OBLIGATION UNCONDITIONAL. No provision of this Note shall alter,
impair or render conditional the payment obligations of Debtor, which are
absolute and unconditional, to pay the principal and interest on this Note at
the place and at the respective times herein prescribed. Debtor shall in all
events remain absolutely and unconditionally liable for the payment and
performance of all its obligations under the Note to fully satisfy all amounts
due Holder pursuant to the Note in the case of Event of Default by Debtor.
4.5 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor (and all guarantors, endorsers and other parties now or hereafter
becoming liable for the payment of this Note) hereby waives diligence,
presentment, protest, demand of payment, notice of protest, dishonor and
nonpayment, and waives the legal effect of Holder's failure to give all notices
not expressly provided for herein. Debtor expressly agrees that, without in any
way affecting the liability of Debtor hereunder, the Holder may extend the
Maturity Date or the time for payment of any amount due hereunder, accept
additional security, release any party liable hereunder, and release any
security now or hereafter securing this Note. Debtor further waives, to the full
extent permitted by law, the right to plead any and all statutes of limitation
as a defense to any demand on this Note, or on any agreement now or hereafter
securing this Note.
4.6 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.7 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
4.8 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note shall operate as a
waiver of such right or of any other right of the Holder hereunder.
<PAGE> 3
Promissory Note
NHancement Technologies Inc.
Page 3
4.9 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Douglas S. Zorn
---------------------------
Douglas S. Zorn
Chief Financial Officer
<PAGE> 1
EXHIBIT 10.6
PROMISSORY NOTE
$225,000.00 ISSUED AS OF THE 12 DAY OF JUNE, 1998 FREMONT, CALIFORNIA
FOR VALUE RECEIVED, NHANCEMENT TECHNOLOGIES INC., A DELAWARE
CORPORATION ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of DOUGLAS S. ZORN ("LENDER"), at such other
place as Lender or a future holder hereof (Lender or such other holder being
sometimes referenced herein as "HOLDER") may from time to time designate in
writing, the principal sum of TWO HUNDRED AND TWENTY-FIVE THOUSAND ($225,000.00)
together with interest on the unpaid principal balance hereof, all as specified
below. All payments made hereon shall be applied first to the payment of all
unpaid accrued interest (at the rates specified herein) to the date of payment
and the balance, if any, (after deduction of any other charges due from Debtor)
shall be applied to the payment of principal. Interest shall thereupon cease on
the principal so credited. All interest accruing at the annual percentage rates
specified herein shall be calculated on the basis of a Three Hundred Sixty-Five
(365) day year and actual days elapsed and any such accrued interest which is
not paid when due shall be added to unpaid principal and shall thereafter bear
interest in the same manner as the unpaid principal balance hereof.
Additionally, notwithstanding any provision of this Note, it is the intent and
agreement of the Lender in the event any interest specified herein is found to
violate any applicable law or regulation, that this Note shall be construed or
deemed amended so that the interest is reduced to the extent necessary to comply
with such applicable law or regulation.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 PAYMENTS. During the term hereof, the principal amount hereof, from
time to time outstanding, shall bear interest at the rate of Ten percent (10%)
per annum (the "STANDARD RATE"). Principal and all interest shall be all due and
payable ninety (90) days from the issue date hereof ("MATURITY DATE"), and shall
include any of the following that apply: (1) all accrued interest at the
Standard Rate which has not been paid when due, (2) all principal remaining
unpaid and (3) any unpaid late charges and other amounts chargeable against
Debtor pursuant to the terms hereof (as defined below).
1.2 PREPAYMENT. The indebtedness hereunder may be prepaid in whole or
in part at any time, without penalty or premium and in principal amounts of
$5,000 or more, all at the election of Debtor.
2. EVENTS OF DEFAULT.
The occurrence of the failure to cure any default in payment of
principal or interest due pursuant to the terms hereof within five (5) days
after Holder gives notice of such default shall be deemed to be an event of
default ("EVENT OF DEFAULT").
3. ACCELERATION AND LATE CHARGE.
3.1 ACCELERATION. Upon the occurrence of Event of Default, the entire
payoff balance then applicable (an amount equal to the sum of unpaid principal,
accrued and unpaid interest at the annual rates specified herein) shall become
immediately due and payable.
3.2 LATE CHARGES. In the event any installment of principal or interest
shall become overdue for a period in excess of five (5) calendar days after the
due date, the Holder may, at its option, charge a "late charge" of five cents
for each dollar so overdue. In connection therewith, Debtor and Lender, by its
acceptance of this Note, agree as follows: (1) such late payment will cause
Holder to incur administrative costs, collection costs, loss of interest, and
other direct and indirect costs in uncertain amounts, (2) it would be
impractical or extremely difficult to fix the exact amount of such costs in such
event, (3) the late charge is a reasonable estimate of such costs and is fair
compensation to Holder for its anticipated losses and additional risks resulting
from such late payment, and (4) without limiting its rights to recover such
installment and to exercise all other rights under this Note, Lender agrees to
accept such late charge in lieu of its right to recover its actual damages
resulting from such late payment.
<PAGE> 2
Promissory Note
NHancement Technologies Inc.
Page 2
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the Holder shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees and
other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES. EXCEPT AS SET FORTH BELOW, HOLDER
AND DEBTOR HEREBY AGREE THAT ANY SUIT TO ENFORCE ANY PROVISION OF, OR TO
COLLECT, THIS NOTE SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA. EXCEPT AS SET FORTH BELOW, EACH PARTY HEREBY
AGREES THAT SUCH COURT SHALL HAVE EXCLUSIVE IN PERSONAM JURISDICTION AND VENUE
WITH RESPECT TO SUCH PARTY, AND EACH PARTY HEREBY SUBMITS TO THE EXCLUSIVE IN
PERSONAM JURISDICTION AND VENUE OF SUCH COURT.
4.3 WAIVER OF TRIAL BY JURY. LENDER AND DEBTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR ANY OTHER DEBT
INSTRUMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND DEBTOR.
4.4 OBLIGATION UNCONDITIONAL. No provision of this Note shall alter,
impair or render conditional the payment obligations of Debtor, which are
absolute and unconditional, to pay the principal and interest on this Note at
the place and at the respective times herein prescribed. Debtor shall in all
events remain absolutely and unconditionally liable for the payment and
performance of all its obligations under the Note to fully satisfy all amounts
due Holder pursuant to the Note in the case of Event of Default by Debtor.
4.5 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor (and all guarantors, endorsers and other parties now or hereafter
becoming liable for the payment of this Note) hereby waives diligence,
presentment, protest, demand of payment, notice of protest, dishonor and
nonpayment, and waives the legal effect of Holder's failure to give all notices
not expressly provided for herein. Debtor expressly agrees that, without in any
way affecting the liability of Debtor hereunder, the Holder may extend the
Maturity Date or the time for payment of any amount due hereunder, accept
additional security, release any party liable hereunder, and release any
security now or hereafter securing this Note. Debtor further waives, to the full
extent permitted by law, the right to plead any and all statutes of limitation
as a defense to any demand on this Note, or on any agreement now or hereafter
securing this Note.
4.6 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.7 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
4.8 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note shall operate as a
waiver of such right or of any other right of the Holder hereunder.
<PAGE> 3
Promissory Note
NHancement Technologies Inc.
Page 3
4.9 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Esmond T. Goei
-------------------------------------
Esmond T. Goei
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 10.7
PROMISSORY NOTE
$300,000.00 ISSUED AS OF THE 12 DAY OF JUNE, 1998 FREMONT, CALIFORNIA
FOR VALUE RECEIVED, NHANCEMENT TECHNOLOGIES INC., A DELAWARE
CORPORATION ("DEBTOR"), hereby promises to pay (in lawful money of the United
States of America) to the order of JAMES S. GILLESPIE ("LENDER"), at such other
place as Lender or a future holder hereof (Lender or such other holder being
sometimes referenced herein as "HOLDER") may from time to time designate in
writing, the principal sum of THREE HUNDRED THOUSAND ($300,000.00) together with
interest on the unpaid principal balance hereof, all as specified below. All
payments made hereon shall be applied first to the payment of all unpaid accrued
interest (at the rates specified herein) to the date of payment and the balance,
if any, (after deduction of any other charges due from Debtor) shall be applied
to the payment of principal. Interest shall thereupon cease on the principal so
credited. All interest accruing at the annual percentage rates specified herein
shall be calculated on the basis of a Three Hundred Sixty-Five (365) day year
and actual days elapsed and any such accrued interest which is not paid when due
shall be added to unpaid principal and shall thereafter bear interest in the
same manner as the unpaid principal balance hereof. Additionally,
notwithstanding any provision of this Note, it is the intent and agreement of
the Lender in the event any interest specified herein is found to violate any
applicable law or regulation, that this Note shall be construed or deemed
amended so that the interest is reduced to the extent necessary to comply with
such applicable law or regulation.
1. PAYMENTS OF PRINCIPAL AND INTEREST.
1.1 PAYMENTS. During the term hereof, the principal amount hereof, from
time to time outstanding, shall bear interest at the rate of Ten percent (10%)
per annum (the "STANDARD RATE"). Principal and all interest shall be all due and
payable ninety (90) days from the issue date hereof ("MATURITY DATE"), and shall
include any of the following that apply: (1) all accrued interest at the
Standard Rate which has not been paid when due, (2) all principal remaining
unpaid and (3) any unpaid late charges and other amounts chargeable against
Debtor pursuant to the terms hereof (as defined below).
1.2 PREPAYMENT. The indebtedness hereunder may be prepaid in whole or
in part at any time, without penalty or premium and in principal amounts of
$5,000 or more, all at the election of Debtor.
2. EVENTS OF DEFAULT.
The occurrence of the failure to cure any default in payment of
principal or interest due pursuant to the terms hereof within five (5) days
after Holder gives notice of such default shall be deemed to be an event of
default ("EVENT OF DEFAULT").
3. ACCELERATION AND LATE CHARGE.
3.1 ACCELERATION. Upon the occurrence of Event of Default, the entire
payoff balance then applicable (an amount equal to the sum of unpaid principal,
accrued and unpaid interest at the annual rates specified herein) shall become
immediately due and payable.
3.2 LATE CHARGES. In the event any installment of principal or interest
shall become overdue for a period in excess of five (5) calendar days after the
due date, the Holder may, at its option, charge a "late charge" of five cents
for each dollar so overdue. In connection therewith, Debtor and Lender, by its
acceptance of this Note, agree as follows: (1) such late payment will cause
Holder to incur administrative costs, collection costs, loss of interest, and
other direct and indirect costs in uncertain amounts, (2) it would be
impractical or extremely difficult to fix the exact amount of such costs in such
event, (3) the late charge is a reasonable estimate of such costs and is fair
compensation to Holder for its anticipated losses and additional risks resulting
from such late payment, and (4) without limiting its rights to recover such
installment and to exercise all other rights under this Note, Lender agrees to
accept such late charge in lieu of its right to recover its actual damages
resulting from such late payment.
<PAGE> 2
Promissory Note
NHancement Technologies Inc.
Page 2
4. MISCELLANEOUS PROVISIONS.
4.1 ATTORNEYS' FEES. Should suit be brought to enforce, interpret or
collect any part of this Note, the Holder shall be entitled to recover, as an
element of the costs of suit and not as damages, reasonable attorneys' fees and
other costs of enforcement and collection.
4.2 JURISDICTION. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A.
(IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES. EXCEPT AS SET FORTH BELOW, HOLDER
AND DEBTOR HEREBY AGREE THAT ANY SUIT TO ENFORCE ANY PROVISION OF, OR TO
COLLECT, THIS NOTE SHALL BE BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA. EXCEPT AS SET FORTH BELOW, EACH PARTY HEREBY
AGREES THAT SUCH COURT SHALL HAVE EXCLUSIVE IN PERSONAM JURISDICTION AND VENUE
WITH RESPECT TO SUCH PARTY, AND EACH PARTY HEREBY SUBMITS TO THE EXCLUSIVE IN
PERSONAM JURISDICTION AND VENUE OF SUCH COURT.
4.3 WAIVER OF TRIAL BY JURY. LENDER AND DEBTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS NOTE OR ANY OTHER DEBT
INSTRUMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN LENDER AND DEBTOR.
4.4 OBLIGATION UNCONDITIONAL. No provision of this Note shall alter,
impair or render conditional the payment obligations of Debtor, which are
absolute and unconditional, to pay the principal and interest on this Note at
the place and at the respective times herein prescribed. Debtor shall in all
events remain absolutely and unconditionally liable for the payment and
performance of all its obligations under the Note to fully satisfy all amounts
due Holder pursuant to the Note in the case of Event of Default by Debtor.
4.5 DEBTOR'S WAIVERS. Except as expressly provided to the contrary
herein, Debtor (and all guarantors, endorsers and other parties now or hereafter
becoming liable for the payment of this Note) hereby waives diligence,
presentment, protest, demand of payment, notice of protest, dishonor and
nonpayment, and waives the legal effect of Holder's failure to give all notices
not expressly provided for herein. Debtor expressly agrees that, without in any
way affecting the liability of Debtor hereunder, the Holder may extend the
Maturity Date or the time for payment of any amount due hereunder, accept
additional security, release any party liable hereunder, and release any
security now or hereafter securing this Note. Debtor further waives, to the full
extent permitted by law, the right to plead any and all statutes of limitation
as a defense to any demand on this Note, or on any agreement now or hereafter
securing this Note.
4.6 LOSS OR DESTRUCTION. Upon receipt of evidence reasonably
satisfactory to Debtor of the loss or mutilation of this Note, Debtor will
execute and deliver, in substitution hereof, a replacement note.
4.7 SEVERANCE. Every provision of this Note is intended to be
severable. In the event any term or provision hereof is declared to be illegal
or invalid for any reason by a court of competent jurisdiction, such illegality
or invalidity shall not affect the balance of the terms and provisions hereof,
which terms and provisions shall remain binding and enforceable. Lender and
Debtor further agree to replace any such void or unenforceable provision of this
Note with valid and enforceable provisions which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.
4.8 WAIVERS AND DELAYS BY HOLDER TO BE STRICTLY LIMITED. Any waiver,
express or implied, of any breach or default hereunder shall not be considered a
waiver of any subsequent or different breach or default. No delay or omission on
the part of Holder in exercising any right under this Note shall operate as a
waiver of such right or of any other right of the Holder hereunder.
<PAGE> 3
Promissory Note
NHancement Technologies Inc.
Page 3
4.9 MODIFICATION. No provision of this Note may be waived, modified or
discharged other than by an express writing signed by the party against whom
enforcement of such waiver, modification or discharge is sought.
DEBTOR:
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Douglas S. Zorn
------------------------------
Douglas S. Zorn
Chief Financial Officer
