<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 3, 1999
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NHancement Technologies Inc.
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(Exact name of registrant as specified in charter)
Delaware 0-21999 841360852
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(State or other jurisdiction (S.E.C. File Number) (IRS Employer
of Incorporation) Identification No.)
39420 Liberty Street, Suite 250, Fremont, CA 94538
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 744-3333
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<PAGE>
Item 5. OTHER EVENTS.
On February 17, 1999, the Company received written notification
from The Nasdaq Stock Market that the Company's Common Stock would be
delisted from the Nasdaq SmallCap Market, effective with the close of
business on February 24, 1999, due to the Company's non-compliance with the
net tangible assets/market capitalization/net income requirement for
continued listing, as set forth under Marketplace Rule 4310(c)(2).
The Company's subsequent request for an oral hearing with the Nasdaq
Listing Qualifications Panel was granted and the Company attended the hearing
on April 29, 1999.
On June 3, 1999, the Nasdaq Listing Qualifications Panel issued a
positive determination on the Company's request for continued inclusion on
The Nasdaq SmallCap Market pursuant to an exception to the net tangible
assets/market capitalization/net income requirement. The terms of the ruling
include the following exceptions to which the Company must adhere in order to
continue listed status on the Nasdaq SmallCap Market:
1. By June 15, 1999, the Company must complete a $1,750,000 sale of
its Series A Convertible Preferred Stock.
2. On or before June 15, 1999, the Company must make a public filing
with the SEC and Nasdaq detailing a minimum of $2,700,000 in net
tangible assets.
3. The Company must continue to demonstrate compliance with all
requirements for continued listing on the Nasdaq SmallCap Market.
4. Until June 15, 1999, the Company is required to provide prompt
notification to Nasdaq of any significant events that may occur.
5. The Company is required to maintain a minimum closing bid price of
$1.00 per share until June 15, 1999 (the "exception period") and
will be subject to an additional 90-day exception period if the
Company's stock falls below the minimum bid price. The Company
will be required to sustain the minimum closing bid price for a
minimum of 10 consecutive trading days during the additional
exception period.
On June 15, 1999, the Company completed the $1,750,000 tranche of
Series A Convertible Preferred Stock. This transaction was accomplished by
means of an Amendment dated June 11, 1999, to the Securities Purchase
Agreement dated April 13, 1998, and the Certificate of Designations as filed
with the Delaware Secretary of State on April 9, 1998, as amended on April
13, 1998, and as further amended on June 11, 1999.
On June 15, 1999, the Company completed its public filing with the
SEC and Nasdaq of this Form 8-K detailing a minimum of $2,700,000 in net
tangible assets. Until June 15, 1999, the Company had maintained a minimum
closing bid price of $1.00 per share, had no significant events to report to
Nasdaq and demonstrated compliance with all requirements for continued
listing on the Nasdaq SmallCap Market.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NHANCEMENT TECHNOLOGIES INC.
(Registrant)
Dated: June 15, 1999 By: /s/ Douglas S. Zorn
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Douglas S. Zorn, President and
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
3.1 Amended and Restated Certificate of Incorporation, as
filed with the Delaware Secretary of State on January
27, 1997, as amended by Certificate of Designations, as
filed with the Delaware Secretary of State on April 9,
1998, as further amended by Amended Certificate of
Designations as filed with the Delaware Secretary of
State on April 13, 1998, as further amended by Amended
Certificate of Designations, as filed with the Delaware
Secretary of State on June 11, 1999.
10.49 Amendment dated June 11, 1999, to Securities Purchase
Agreement dated April 13, 1998.
99.02 Unaudited Pro forma Consolidated Balance Sheet for
May 31, 1999.
</TABLE>
<PAGE>
EXHIBIT 3.1
Amended and Restated Certificate of Incorporation
Filed With Delaware Secretary of State on January 27, 1997
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
NHANCEMENT TECHNOLOGIES INC.
A DELAWARE CORPORATION
ADOPTED IN ACCORDANCE WITH THE PROVISIONS OF
SECTIONS 242 AND 245 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
NHancement Technologies Inc., (the "Corporation") a corporation duly
existing under and by virtue of a Certificate of Incorporation dated and filed
October 16, 1996 with the Delaware Secretary of State pursuant to the General
Corporation Law of the State of Delaware ("GCL"), DOES HEREBY CERTIFY:
FIRST: The Board of Directors and Stockholders of the Corporation, by
written consent pursuant to a special meeting of the Board of Directors and
Stockholders of the Corporation dated January 7, 1997, have proposed and
adopted the following Amended and Restated Certificate of Incorporation of the
Corporation:
ARTICLE 1
The name of the Corporation is NHancement Technologies Inc.
ARTICLE 2
The address of the Corporation's registered office in the State of
Delaware is The Prentice-Hall Corporation System, Inc., 1013 Centre Road,
Wilmington, Delaware 19805, County of New Castle. The name of its registered
agent at such address is The Prentice-Hall Corporation System, Inc.
ARTICLE 3
The nature of the business of the Corporation and the purposes for
which it is organized are to engage in any business and in any lawful act or
activity for which corporations may be organized under the GCL and to possess
and employ all powers and privileges now or hereafter granted or available
under the laws of the State of Delaware to such corporations.
<PAGE>
ARTICLE 4
4.1 Authorized Shares. The total number of shares which the
Corporation is authorized to issue is twenty two million (22,000,000) shares of
which twenty million (20,000,000) shares shall be common stock, par value $.01
per share, and two million (2,000,000) shares shall be preferred stock, par
value $.01 per share.
4.2 Common Stock. Each holder of common stock shall be entitled
to one vote for each share of common stock held on all matters as to which
holders of common stock shall be entitled to vote. Except for and subject to
those preferences, rights, and privileges expressly granted to the holders of
all classes of stock at the time outstanding having prior rights, and series of
preferred stock which may from time to time come into existence, and except as
may be provided by the laws of the State of Delaware, the holders of common
stock shall have exclusively all other rights of stockholders of the
Corporation, including, but not by way of limitation, (i) the right to receive
dividends when, as and if declared by the board of directors out of assets
lawfully available therefor, and (ii) in the event of any distribution of
assets upon the dissolution and liquidation of the Corporation, the right to
receive ratably and equally all of the assets of the Corporation remaining
after the payment to the holders of preferred stock of the specific amounts, if
any, which they are entitled to receive as may be provided herein or pursuant
hereto.
4.3 Preferred Stock. The preferred stock authorized by this
Certificate of Incorporation may be issued from time to time in one or more
series. The board of directors of the Corporation is authorized, subject to
limitations prescribed by law, to provide by resolution or resolutions for the
issuance of the shares of preferred stock as a class or in series, and, by
filing a certificate of designation, pursuant to the GCL, setting forth a copy
of such resolution or resolutions, to establish from time to time the number of
shares to be included in each such series, and to fix the designation, powers,
preferences, and rights of the shares of the class or of each such series, and
the qualifications, limitations, and restrictions thereof. The authority of
the board of directors with respect to the class or each series shall include,
but not be limited to, determination of the following:
(a) The number of shares constituting any series and the
distinctive designation of that series;
(b) The dividend rate on the shares of the class or of
any series, whether dividends shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if any, of payment of dividends
on shares of the class or of that series;
(c) Whether the class or any series shall have voting
rights, in addition to the voting rights provided by law, and, if so, the terms
of such voting rights;
(d) Whether the class or any series shall have conversion
privileges, and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the board of
directors shall determine;
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<PAGE>
(e) Whether or not the shares of the class or of any
series shall be redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall be
redeemable and the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption dates;
(f) Whether the class or any series shall have a sinking
fund for the redemption or purchase of shares of the class or of that series,
and, if so, the terms and amount of such sinking fund;
(g) The rights of the shares of the class or of any
series in the event of voluntary or involuntary dissolution or winding up of
the corporation, and the relative rights of priority, if any, of payment of
shares of the class or of that series;
(h) Any other powers, preferences, rights,
qualifications, limitations, and restrictions of the class or of any series.
ARTICLE 5
5.1 Number and Election of Directors. The number of directors of
the Corporation shall be fixed from time to time in the manner provided in the
bylaws and may be increased or decreased from time to time in the manner
provided in the bylaws. Election of directors need not be by written ballot
except and to the extent provided in the bylaws of the Corporation. A director
shall hold office until the annual meeting for the year in which his term
expires and until his successor shall be elected and qualified, subject,
however, to such director's prior death, resignation, retirement,
disqualification or removal from office. Any director, or the entire Board of
Directors, may be removed with or without cause by a vote of the holders of a
majority of all classes of stock then entitled to vote.
5.2 Quorum. A quorum of the board of directors for the
transaction of business shall not consist of less than a majority of the total
number of directors, except as may be provided in this Certificate of
Incorporation or in the bylaws with respect to filling vacancies.
5.3 Newly Created Directorships and Vacancies. Except as
otherwise fixed relative to the rights of the holders of any class or series of
stock having a preference over the common stock as to dividends or upon
liquidation to elect directors under specified circumstances, newly created
directorships resulting from any increase in the number of directors and any
vacancies on the board of directors resulting from death, resignation,
disqualification, removal or other cause shall be filled solely by the
affirmative vote of a majority of the remaining directors then in office, or by
a sole remaining director, even though less than a quorum of the board of
directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the new directorship
which was created or in which the vacancy occurred and until such director's
successor shall have been elected and qualified. No decrease in the number of
directors constituting the board of directors shall shorten the term of any
incumbent director.
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ARTICLE 6
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the board
of directors is expressly authorized to adopt, repeal, alter, amend and rescind
any or all of the bylaws of the Corporation, but such authorization shall not
divest the stockholders of the power, nor limit their power to adopt, amend or
repeal bylaws.
ARTICLE 7
7.1 Stockholder Actions. Any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of such stockholders and may not be effected by any
consent in writing by such stockholders.
7.2 Meetings. Meetings of stockholders may be held within or
without the State of Delaware, as the bylaws may provide. Except as otherwise
required by law and subject to the rights of the holders of any class or series
of stock having a preference over the common stock, special meetings of the
stockholders may be called only by the chairman of the board, the chief
executive officer, the president, the executive vice president, the holders of
at least ten percent (10%) of the outstanding shares of all classes of stock
then entitled to vote at such special meeting or the board of directors
pursuant to a resolution approved by a majority of the entire board of
directors, or as may be designated in the bylaws of the Corporation.
7.3 Corporate Books. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation.
ARTICLE 8
The board of directors of the Corporation, when evaluating any offer
of another party to (a) make a tender or exchange offer for any equity security
of the Corporation, (b) merge or consolidate the Corporation with another
corporation, or (c) purchase or otherwise acquire all or substantially all of
the properties and assets of the Corporation, shall in connection with the
exercise of its judgment in determining what is in the best interests of the
Corporation and its stockholders, give due consideration to (i) all relevant
factors including, without limitation, the social, legal, environmental and
economic effects on the employees, customers, suppliers and other affected
persons, firms and corporations and on the communities and geographical areas
in which the Corporation and its subsidiaries operate or are located and on any
of the businesses and properties of the Corporation or any of its subsidiaries,
as well as such other factors as the directors deem relevant, and (ii) not only
the consideration being offered, in relation to the then current market price
for the Corporation's outstanding shares of capital stock, but also in relation
to the then current value of the Corporation in a freely negotiated
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<PAGE>
transaction and in relation to the board of directors' estimate of the future
value of the Corporation (including the unrealized value of its properties and
assets) as an independent going concern.
ARTICLE 9
Notwithstanding any other provisions of the Certificate of
Incorporation of the Corporation or of the bylaws of the Corporation (and
notwithstanding the fact that a lessor percentage may be specified by law, the
Certificate of Incorporation or the bylaws), the affirmative vote of the
holders of not less than sixty six and two-thirds percent (66-2/3%) of the
outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class), shall be required to amend or repeal or adopt any provisions
inconsistent with Articles 7, 8 and 9 of this Certificate of Incorporation.
ARTICLE 10
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability for (i) any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) violations of Section 174 of the GCL, or (iv) any
transaction from which the director derived any improper personal benefit. If
the GCL hereafter is amended to eliminate or limit further the liability of a
director in addition to the elimination and limitation of liability provided by
the preceding sentence, the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the GCL as so amended.
Any repeal or modification of the foregoing provisions of this Article 10 by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation under this Article 10, as in effect
immediately prior to such repeal or modification, with respect to any liability
that would have accrued, but for this Article 10, prior to such repeal or
modification.
ARTICLE 11
The Corporation shall indemnify, to the fullest extent permitted by
applicable law as in effect from time to time, any person against all liability
and expense (including attorneys' fees) incurred by reason of the fact that he
is or was a director or officer of the Corporation or any of its subsidiaries,
or while serving as a director or officer of the Corporation or any of its
subsidiaries, he is or was serving at the request of the Corporation or any of
its subsidiaries as a director, officer, partner or trustee of, or in any
similar managerial or fiduciary position of, or as an employee or agent of,
another corporation, partnership, joint venture, trust, association, or other
entity (an "Agent"). Expenses (including attorneys' fees) incurred in defending
an action, suit, or proceeding may be paid by the Corporation in advance of the
final disposition
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<PAGE>
of such action, suit, or proceeding, to the fullest extent permitted by
Delaware law, upon receipt of an undertaking to repay the amount of expenses so
advanced if it shall be determined that the Agent is not entitled to be
indemnified. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary, or agent of
the Corporation or any of its subsidiaries against any liability asserted
against and incurred by such person in any such capacity or arising out of such
person's position, whether or not the Corporation would have the power to
indemnify against such liability under the provisions of this Article 11. The
indemnification provided by this Article 11 shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under this
Certificate of Incorporation, any bylaw, agreement, vote of stockholders or
disinterested directors, statute, or otherwise, and shall inure to the benefit
of their heirs, executors, and administrators. The provisions of this Article
11 shall not be deemed to preclude the Corporation from indemnifying other
persons from similar or other expenses and liabilities as the board of
directors or the stockholders may determine in a specific instance or by
resolution of general application.
ARTICLE 12
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ARTICLE 13
The names and mailing addresses of the persons who are to serve as
directors of the Corporation until the first annual meeting of stockholders or
until their successors are elected and qualified or until their earlier
resignations or removal are:
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<PAGE>
<TABLE>
<CAPTION>
Name Address
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<S> <C>
Esmond T. Goei 1746 Cole Boulevard, Suite 265
Golden, Colorado 80401
Douglas S. Zorn 1746 Cole Boulevard, Suite 265
Golden, Colorado 80401
James S. Gillespie 39899 Balentine Drive
Newark, California 94560
</TABLE>
SECOND: That the aforesaid Amended and Restated Certificate of
Incorporation was adopted in accordance with the applicable provisions of
Section 242 of the GCL.
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by Esmond T. Goei, President
of the Corporation this 7th day of January, 1997.
/s/ Esmond T. Goei
------------------------------------
By: Esmond T. Goei
Title: President
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<PAGE>
Certificate of Designations Filed with Delaware Secretary of State on
April 9, 1998
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
SERIES A PREFERRED STOCK
OF
NHANCEMENT TECHNOLOGIES INC.
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
NHANCEMENT TECHNOLOGIES INC., a Delaware corporation (the
"CORPORATION"), certifies that pursuant to the authority contained in Article
FOUR of its Amended and Restated Certificate of Incorporation (the "CERTIFICATE
OF INCORPORATION") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the
Corporation by a special meeting held on April 9, 1998 adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED, that there is hereby established a series of authorized
preferred stock having a par value of $0.01 per share, which series shall be
designated as "SERIES A CONVERTIBLE PREFERRED STOCK", shall consist of Thirty
Thousand (30,000) shares and shall have the following voting powers, preferences
and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions as follows:
1. DEFINITIONS. For purposes of this resolution, the following
terms shall have the following definitions:
1.1 "BOARD" shall mean the Board of Directors of the
Corporation.
1.2 "COMMON STOCK" shall mean the Common Stock of the
Corporation.
1.3 "CONVERSION PRICE" shall mean the lesser of the
Fixed Conversion Price or the Market Conversion Price on the date the Conversion
Rights are exercised.
1.4 "CONVERSION RIGHTS" shall have the meaning set
forth in Section 4.
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 2
1.5 "CORPORATION" shall mean this corporation.
1.6 "FIXED CONVERSION PRICE" shall mean the average
closing bid price of the Common Stock for the five (5) trading days ending on
the trading day immediately before the Original Issue Date, as reported by
Bloomberg, LP or, if not so reported, as reported on the over-the-counter
market, as adjusted herein.
1.7 "INITIAL PURCHASE PRICE" shall mean One Hundred
Dollars ($100) paid for purchase of each share of Preferred Stock.
1.8 "MARKET CONVERSION PRICE" shall mean the
Seventy-Five percent (75%) of the Market Price calculated through the last
trading day immediately before the date the Conversion Rights are exercised in
accordance with Section 4.3.1.
1.9 "MARKET PRICE" shall mean the average closing bid
price of the Common Stock for the five (5) trading days ending on the trading
day immediately before the date indicated in the relevant provision hereof (i)
as reported by Bloomberg, LP or, if not so reported, as reported over on the
over-the-counter market or (ii) if the Common Stock is listed on a stock
exchange, the closing price on such exchange as reported in The Wall Street
Journal.
1.10 "ORIGINAL ISSUE DATE" means the date the first
share of Preferred Stock is issued.
1.11 "PREFERRED STOCK" shall refer to the Series A
Convertible Preferred Stock of the Corporation.
1.12 "REDEMPTION EVENT" shall have the meaning set
forth in Section 7.1.
1.13 "REDEMPTION NOTICE" shall have the meaning set
forth in Section 7.3.
1.14 "REDEMPTION PRICE" shall mean One Hundred Eighteen
Dollars ($118.00) plus all unpaid dividends.
1.15 "SUBSIDIARY" shall mean any corporation at least
fifty percent (50%) of whose outstanding voting stock shall at the time be
owned, directly or indirectly, by the Corporation or by one or more such
Subsidiaries.
2. DIVIDENDS AND DISTRIBUTIONS.
2.1 The holders of the outstanding shares of Preferred
Stock shall be entitled to receive, when and as declared by the Board, out of
any funds legally available therefor, dividends at the rate of Five Dollars
($5.00) per share, per annum, but prorated for any partial year (subject to
appropriate adjustments for stock splits, stock dividends, combinations or other
recapitalizations). Such dividends shall be payable, at the
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 3
option of the Board, in cash to the extent permitted by law, in shares of Common
Stock valued at the Conversion Price then in effect plus cash in lieu of any
fractional share or a combination of cash and shares of Common Stock. Such
dividends shall be cumulative and shall be payable within sixty (60) days
following the end of each fiscal year of the Corporation.
2.2 Unless full dividends on the Preferred Stock for
the then current fiscal year shall have been paid or declared and a sum
sufficient for the payment thereof set apart: (i) no dividend whatsoever (other
than a dividend payable solely in Common Stock) shall be paid or declared, and
no distribution shall be made, on the Common Stock or pursuant to Section 2.3
below, and (ii) no shares of Common Stock or Preferred Stock shall be purchased,
redeemed or acquired by the Corporation and no moneys shall be paid into or set
aside, or made available for a sinking fund, for the purchase, redemption or
acquisition thereof; provided, however, that this restriction shall not apply to
the repurchase of shares of Common Stock from directors, officers, employees or
consultants of the Corporation or of any Subsidiary pursuant to agreements under
which the Corporation has the option, but not the obligation, to repurchase such
shares upon the occurrence of certain events, including the termination of
employment or to the redemption of shares of Preferred Stock pursuant to Section
7.
2.3 The holders of the outstanding shares of Common
Stock and Preferred Stock shall at all times be treated as a single class with
respect to dividends and distributions (excluding dividends in or distributions
of shares of Common Stock, but including dividends or distributions of other
securities of the Corporation), other than those set forth in Sections 2.1 and
2.2 hereof, and, provided the conditions in Section 2.2 hereof are satisfied,
such single class, in addition to the dividends payable to the Preferred Stock
pursuant to Section 2.1, shall be entitled to dividends when, as and if declared
by the Board, out of any funds legally available therefor; provided, however,
that (i) each share of Preferred Stock shall be entitled to dividends and
distributions equal to the aggregate amount of such dividends and distributions
which the holder of that number of shares of Common Stock into which such shares
of the Preferred Stock may be converted (on the record date fixed for
determining payment of such dividend or distribution) shall be entitled to
receive, and (ii) in any fiscal year the amount of dividends to which the
Preferred Stock shall be entitled under this Section 2.3 shall be reduced by the
amount of dividends declared and paid pursuant to Section 2.1.
3. LIQUIDATION.
3.1 In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, before any
payment or declaration and setting apart for payment of any amount shall be made
in respect of the Common Stock, the holder of each share of Preferred Stock then
outstanding shall be entitled to be paid, out of the assets of the Corporation
available for distribution to its stockholders, whether such assets are capital,
surplus or earnings, an amount equal to One Hundred Dollars ($100.00) for each
share of Preferred Stock (subject to appropriate adjustments for stock splits,
combinations or other recapitalizations of the Preferred Stock), plus an amount
equal to all unpaid dividends, to and including the date full payment shall be
tendered to the holders of Preferred Stock with respect to such liquidation,
dissolution or winding up. If the assets to be distributed to the holders of the
Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, shall be insufficient to permit
the payment to such stockholders of the full preferential amounts as set forth
above, then all of the assets of the Corporation to be distributed shall be
distributed first to the holders of the Preferred Stock pro rata, based on the
number of shares of such stock outstanding.
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 4
3.2 After the payment or distribution to the holders
of the Preferred Stock of the full preferential amounts as set forth in Section
3.1, the holders of the Common Stock then outstanding shall be entitled pro
rata, based on the number of shares of such stock outstanding, to all the
remaining assets of the Corporation.
4 CONVERSION. The holders of the Preferred Stock shall have the
conversion rights (the "CONVERSION RIGHTS") set forth in this Section 4. In the
event of a call for redemption of any shares of Preferred Stock pursuant to
Section 7 hereof, the Conversion Rights of the Preferred Stock contained in this
Section 4 shall terminate as to the shares designated for redemption unless
default is made in the payment of the Redemption Price.
4.1 RIGHT TO CONVERT. Each share of the Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, into that number of fully paid and
nonassessable shares of Common Stock (or other securities or property pursuant
to Section 4.6 or 4.7 below) which shall result from dividing the Initial
Purchase Price for the Preferred Stock in effect at the time of conversion into
the Conversion Price.
4.2 AUTOMATIC CONVERSION.
4.2.1 Each share of Preferred Stock shall not be
automatically convertible into Common Stock.
4.3 MECHANICS OF VOLUNTARY CONVERSION. The Corporation
will permit any holder of Preferred Stock to exercise its right to convert the
Preferred Stock by telecopying or delivering an executed and completed notice of
conversion to the Corporation and delivering, within five (5) business days
thereafter, the original Preferred Stock certificate being converted to the
Corporation by express courier with a copy to the Corporation's transfer agent.
The term "Conversion Date" means, with respect to any conversion elected by the
holder of the Preferred Stock, the date specified in the notice of conversion,
provided the copy of the notice of conversion is telecopied to or otherwise
delivered to the Corporation in accordance with the provisions hereof so that it
is received by the Corporation on or before such specified date. The Corporation
shall, at its expense, take all actions and use all means necessary and diligent
to cause its transfer agent to transmit the certificates representing the Common
Stock issuable upon conversion of any Preferred Stock (together with Preferred
Stock not being so converted) to the holder thereof via express courier, by
electronic transfer or otherwise, within three (3) business days after (i) the
business day on which the Corporation has received both the notice of conversion
(by facsimile or other delivery) and the original Preferred Stock certificate
being converted (and if the same are not delivered to the Corporation on the
same date, the date of delivery of the second of such items) or (ii) the date a
dividend payment on the Preferred Stock, which the Corporation has elected to
pay by the issuance of Common Stock, as contemplated hereunder, was due.
4.4 DIVIDEND PAYMENT UPON CONVERSION. Upon any
conversion of shares of Preferred Stock into shares of Common Stock, the
Corporation shall pay all unpaid dividends on the shares of Preferred Stock
being converted; provided, however, that if the Corporation shall be prohibited
by law from making all such payments in cash, the Corporation shall, in lieu of
making a full cash payment of all such accrued and unpaid dividends, make
payment thereof in cash to the extent permitted by law and shall pay the balance
in
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 5
whole shares of Common Stock, valued at the Conversion Price then in effect,
plus cash in lieu of any fractional share.
4.5 ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If
the Corporation shall at any time effect a subdivision of the outstanding shares
of Common Stock (or other securities into which the Preferred Stock may be
converted), then, and in each such case, the Fixed Conversion Price as in effect
immediately before such subdivision shall be proportionately decreased and,
conversely, if the Corporation shall at any time combine the outstanding shares
of Common Stock (or other securities into which the Preferred Stock may be
converted), then, and in each such case, the Fixed Conversion Price as in effect
immediately before such combination shall be proportionately increased.
4.6 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. If the Common Stock (or other securities into which the Preferred
Stock may be converted) shall at any time be reclassified or otherwise changed,
whether by reorganization, spin off, reclassification or otherwise (other than
by a merger, consolidation or sale of assets described in Section 4.7), then,
and in each such event, each share of Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock and other securities or
property which the holder of that number of shares of Common Stock (or other
securities) into which such share of Preferred Stock shall be convertible
immediately prior to such event would be entitled to receive upon the occurrence
of such event.
4.7 MERGER, CONSOLIDATION AND SALE OF ASSETS. If the
Corporation shall at any time merge or consolidate with or into another
corporation (other than where the Corporation is the surviving corporation and
there is no reclassification or change in the Common Stock or other securities
into which the Preferred Stock may be converted) or shall sell all or
substantially all of its properties and assets to any other person, then, as a
part of such merger, consolidation or sale, provision shall be made to assure
that the holders of Preferred Stock shall thereafter be entitled to receive,
upon conversion of the Preferred Stock, the kind and amount of shares of stock
and other securities or property of the Corporation, or of the successor
corporation resulting from such merger, consolidation or sale, that the holders
of that number of shares of Common Stock (or other securities) into which the
Preferred Stock shall be convertible immediately prior to such merger,
consolidation or sale would be entitled to receive on such merger, consolidation
or sale. In every such case, appropriate adjustment shall be made in application
of the provisions of this Section 4 with respect to the rights of the holders of
Preferred Stock after the merger, consolidation or sale to the end that the
provisions of this Section 4 (including adjustment of the Fixed Conversion Price
then in effect and the kind and amount of shares or other property into which
the Preferred Stock may be converted) shall be applicable after that event, as
nearly equivalent as may be practicable.
4.8 TIME OF ADJUSTMENTS TO CONVERSION PRICE. All
adjustments to the Fixed Conversion Price, unless otherwise specified herein,
shall be effective as of the earlier of:
4.8.1 the date of issue of the security causing
the adjustment;
4.8.2 the effective date of a division or
combination of shares; or
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 6
4.8.3 the record date of any action of holders
of the Corporation's capital stock of any class taken for the purpose of
dividing or combining shares or entitling stockholders to receive a distribution
or dividends payable in Common Stock.
4.9 NOTICE OF ADJUSTMENTS. In each case of an
adjustment of the Fixed Conversion Price, the Corporation, at its expense, shall
cause the Chief Financial Officer of the Corporation to compute such adjustment
and prepare a certificate setting forth such adjustment and showing in detail
the facts upon which such adjustment is based. The Corporation shall promptly
mail a copy of each such certificate to each holder of Preferred Stock affected
by such adjustment.
4.10 DURATION OF ADJUSTED CONVERSION PRICE. Following
each adjustment of the Fixed Conversion Price, such adjusted Fixed Conversion
Price shall remain in effect until a further adjustment of such Fixed Conversion
Price hereunder.
4.11 MINIMUM ADJUSTMENT. No adjustment of the Fixed
Conversion Price shall be made in an amount less than One Cent ($0.01) per share
(subject to appropriate adjustments for stock splits and stock dividends, and
provided that at such time as events causing adjustments accumulating One Cent
($0.01) or more have occurred adjustments to the Fixed Conversion Price shall be
made), and no adjustment of the Fixed Conversion Price shall have the effect of
increasing the Fixed Conversion Price above such Fixed Conversion Price in
effect immediately prior to such adjustment (except for the upward adjustments
provided in Section 4.5).
4.12 NOTICES OF RECORD DATE. In the event of any
reclassification of or other change in the capital stock of the Corporation or
any merger or consolidation of the Corporation, transfer of all or substantially
all of the assets of the Corporation to any other person or voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of shares of Preferred Stock, at least
thirty (30) days prior to the record date of such event, a notice specifying the
date on which such event is expected to become effective and the time, if any,
that is to be fixed as to when the holders of record of shares of Common Stock
(or other securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable upon such
event.
4.13 FRACTIONAL SHARES. No fractional shares of Common
Stock shall be issued upon conversion of shares of Preferred Stock. The number
of shares of Common Stock to which a holder of shares of Preferred Stock shall
be entitled shall be based on the aggregate number of shares of Preferred Stock
then being converted by such holder. In lieu of any fractional share to which
such holder would otherwise be entitled, the Corporation shall pay cash equal to
the fair market value of such fraction based on the Market Price on the date of
conversion.
4.14 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock (or other securities into which the
Preferred Stock may be converted), solely for the purpose of effecting the
conversion of the Preferred Stock, such number of its shares of Common Stock (or
other securities) as shall, from time to time, be sufficient to effect the
conversion of all outstanding shares of Preferred Stock. If at any time the
number of authorized but unissued shares of Common Stock (or other securities)
shall not be sufficient to effect the conversion of all the Preferred Stock then
outstanding, the Corporation will take such corporate action as may,
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 7
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock (or other securities) to such number of shares
as shall be sufficient for such purpose. If any shares of Common Stock reserved
for the purpose of conversion of shares of Preferred Stock require registration,
qualification or listing with, or approval of, any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, the Corporation will, in good faith, at its own expense and as
expeditiously as possible, endeavor to secure such registration, qualification,
listing or approval, as the case may be.
4.15 NOTICES. Any notice required by the provisions of
this Section 4 to be given to the holder of shares of Preferred Stock shall be
deemed given five (5) business days after the same has been deposited in the
United States mail, certified or registered, postage prepaid and addressed to
each holder of record at such holder's address appearing on the stock record
books of the Corporation.
4.16 PAYMENT OF TAXES. The Corporation will pay all
taxes and other governmental charges (other than taxes based on income) that may
be imposed in respect of the issue or delivery of shares of Common Stock (or
other securities or property) upon conversion of Preferred Stock. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established to the satisfaction of the
Corporation that such tax has been paid.
4.17 STATUS OF CONVERTED STOCK. In case any shares of
Preferred Stock shall be converted pursuant hereto or redeemed pursuant to
Section 7, the shares so converted or redeemed shall be canceled and the
authorized number of shares of Preferred Stock shall be reduced accordingly.
5. RESTRICTIONS AND LIMITATIONS.
5.1 RESTRICTIONS. At all times that any shares of
Preferred Stock are outstanding, the Corporation shall not, and shall not permit
any Subsidiary to, without the approval by vote or written consent of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the Preferred
Stock then outstanding, voting as a single, separate class:
5.1.1 Purchase, redeem or otherwise
acquire (or pay into, or set aside for, a sinking fund for such purpose) any
Common Stock or any other equity security; provided, however, that this
restriction shall not apply to the redemption of Preferred Stock pursuant to
Section 7 or to the repurchase of shares of Common Stock from directors,
officers, employees or consultants of the Corporation, or of any Subsidiary,
pursuant to agreements under which the Corporation has the option, but not the
obligation, to repurchase such shares upon the occurrence of certain events,
including termination of employment; or
5.1.2 Authorize or issue, or obligate
itself to issue, any equity security senior to the Preferred Stock as to
dividend or liquidation preferences (but this shall not apply to equity
securities with dividend or liquidation preferences equal or subordinate to the
Preferred Stock).
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 8
5.2 AMENDMENTS TO CERTIFICATE. The Corporation shall
not amend its Certificate of Incorporation without the approval by vote or
written consent of the holders of sixty-six and two-thirds percent (66-2/3%) of
the Preferred Stock then outstanding if such amendment would:
5.2.1 Reduce the dividend rate on such
Preferred Stock or change the relative seniority rights of the holders of such
Preferred Stock as to the payment of dividends in relation to the holders of any
other Preferred Stock or Common Stock of the Corporation;
5.2.2 Reduce the amount payable to the
holders of the Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, or change the relative seniority
of the liquidation preferences of the holders of such Preferred Stock to the
rights upon liquidation of the holders of any other Preferred Stock or Common
Stock of the Corporation; or
5.2.3 Cancel or modify the Conversion
Rights provided in Section 4 hereof.
6. VOTING RIGHTS. Except as otherwise expressly provided herein or
as required by law, the holders of the Preferred Stock and Common Stock shall be
entitled to vote on all matters. Each share of Common Stock shall be entitled to
one vote and each share of Preferred Stock shall be entitled to that number of
votes equal to the largest number of whole shares of Common Stock into which
such share of Preferred Stock may be converted as of the close of business on
the record date fixed for any meeting of the stockholders of the Corporation or
the effective date of any written consent of the stockholders of the Corporation
(with any fractional share determined on an aggregate basis for each holder
being rounded up to the next whole share). Except as otherwise expressly
provided herein or as required by law, the holders of Preferred Stock and Common
Stock shall vote together as a single class and not as separate classes.
7. REDEMPTION OF PREFERRED STOCK.
7.1 REDEMPTION PRICE. At any time after the Original
Issue Date and prior to the conversion of a share of Preferred Stock pursuant to
the exercise of Conversion Rights, if the Market Price at any time or from time
to time is less than Two Dollars ($2.00) per share (a "REDEMPTION EVENT"), then
the Corporation, at the option of the Board, may, at any time it may lawfully do
so, redeem in whole or in part the outstanding shares of Preferred Stock by
paying cash therefor in the amount of the Redemption Price, which option shall
be exercisable upon and by the Corporation's providing written notice to the
holders of Preferred Stock (a) within ten (10) days following any Redemption
Event or (b) in the event a holder elects to exercise Conversion Rights within
such ten (10)-day period, within two (2) days following a holder's satisfaction
of the mechanics of voluntary conversion set forth in Section 4.3.1. In the
event the Corporation timely elects to redeem any shares of Preferred Stock
pursuant to the foregoing, the Conversion Rights (including the Conversion
Rights exercised by holder pursuant to subpart (b) of the preceding sentence)
shall immediately cease and terminate without exercise as to the shares
designated by the Corporation for redemption unless default is made in the
payment of the Redemption Price. Any such redemption shall be consummated within
five (5) days following the delivery of the Corporation's written notice of
redemption hereunder (the "REDEMPTION DATE").
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 9
7.2 PARTIAL REDEMPTION. In the event of any
redemption of only a part of the outstanding Preferred Stock, the Corporation
shall effect such redemption pro rata among all the holders of the then
outstanding Preferred Stock based on the number of shares of such stock held by
each holder.
7.3 REDEMPTION PROCEDURE. At least two (2) days prior
to the Redemption Date, written notice shall be mailed, via next day delivery,
postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of Preferred Stock
to be redeemed at such holder's address appearing on the stock record books of
the Corporation, notifying such holder of the redemption to be effected,
specifying the number of shares to be redeemed from such holder, the Redemption
Date, the Redemption Price, the place at which payment may be obtained and that
such holders' Conversion Rights (as set forth in Section 5 hereof) as to such
shares have terminated and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, such holder's
certificate or certificates representing the shares to be redeemed (such notice
is hereinafter referenced as the "REDEMPTION NOTICE"). On or after the
Redemption Date, each holder of shares of Preferred Stock to be redeemed shall
surrender such holder's certificate or certificates representing such shares to
the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the Redemption Price of such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the record owner thereof and each surrendered certificate shall be canceled.
In the event less than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
From and after the Redemption Date, unless there shall have been a default in
payment of the Redemption Price, all rights of the holders of such shares as
holders of Preferred Stock of the Corporation (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates) shall cease and terminate with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever. If the funds of the
Corporation legally available for redemption of shares of Preferred Stock on any
Redemption Date are insufficient to redeem the total number of shares of
Preferred Stock to be redeemed on such date, those funds which are legally
available will be used to redeem the maximum possible number of such shares pro
rata among the holders of such shares to be redeemed. The shares of Preferred
Stock not redeemed shall remain outstanding and entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of
this Corporation are legally available for the redemption of shares of Preferred
Stock, such funds will immediately be used to redeem the balance of the shares
which the Corporation has become obligated to redeem on any Redemption Date but
which it has not redeemed.
7.4 PAYMENT. One (1) day prior to the Redemption Date, the
Corporation shall deposit the Redemption Price of all outstanding shares of
Preferred Stock designated for redemption in the Redemption Notice with a bank
or trust company having aggregate capital and surplus in excess of One Hundred
Million Dollars ($100,000,000) as a trust fund for the benefit of the respective
holders of the shares designated for redemption and not yet redeemed.
Simultaneously, the Corporation shall deposit irrevocable instructions and
authority to such bank or trust company to immediately confirm the receipt of
such deposit to the holders of the Preferred Stock being redeemed hereunder and
pay (by wire transfer or otherwise as such holders shall direct), on and after
the date fixed for redemption or prior thereto, the Redemption Price of the
Preferred Stock to the holders thereof upon surrender of their certificates. In
the event the Corporation fails to comply with the provisions of this Section 7,
the Corporation's redemption shall be cancelled and any further right to redeem
the Preferred Stock hereunder shall immediately cease and terminate and be of no
further force or effect. Any monies deposited by the Corporation pursuant to
this Section 7.4 remaining unclaimed the expiration of two (2)
<PAGE>
NHancement Technologies Inc.
Certificate of Designations
Page 10
years following the Redemption Date shall thereafter be returned to the
Corporation, provided that the stockholder to whom such monies would be payable
shall be entitled, upon proof of his ownership of the Preferred Stock and
payment of any bonds requested by the Corporation, to receive such monies but
without interest from the Redemption Date.
8. CONSTRUCTION. A reference in this resolution to any Section
shall include a reference to every Section the number of which begins with the
number of the Section to which reference is specifically made (e.g., a reference
to Section 4.8 shall include a reference to Sections 4.8.1 and 4.8.2).
9. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required
by law, the shares of Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this resolution (as such resolution may be
amended from time to time) and in the Certificate of Incorporation.
10. SEVERABILITY OF PROVISIONS. If any voting powers, preferences and
relative, participating, optional and other special rights of the Preferred
Stock and qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) are invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of the Preferred Stock and qualifications,
limitations and restrictions thereof set forth in this resolution (as so
amended) which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of the Preferred Stock and qualifications, limitations
and restrictions thereof shall, nevertheless, remain in full force and effect,
and no voting powers, preferences and relative, participating, optional or other
special rights of the Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of the Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by William E. Zisko, its Assistant Secretary this 9th day of
April, 1998.
/s/ William E. Zisko
------------------------------------
William E. Zisko,
Assistant Secretary
<PAGE>
Amended Certificate of Designations, as filed with the Delaware Secretary of
State on April 13, 1998
AMENDED
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
OF
NHANCEMENT TECHNOLOGIES INC.
NHANCEMENT TECHNOLOGIES INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "CORPORATION"), DOES HEREBY CERTIFY:
FIRST: The Corporation has not issued any shares of Series A
Preferred Stock.
SECOND: The amendment to the Corporation's Certificate of
Designations of Series A Preferred Stock, as filed on April 9, 1998, sets forth
in the following resolution approved by a majority of the Corporation's Board
of Directors was duly adopted in accordance with the provisions of Section 151
of the Delaware General Corporation Law:
"RESOLVED, that the Certificate of Designations of the
corporation be amended by striking Section 1.8 in its entirety
and replacing it with the following: '1.8 "MARKET CONVERSION
PRICE" shall mean the Seventy-Five percent (75%) of the Market
Price calculated through the last trading day immediately
before the date the Conversion Rights are exercised in
accordance with Section 4.3.'".
"RESOLVED FURTHER, that the Certificate of Designations of the
corporation be amended by striking Section 7.1 in its entirety
and replacing it with the following: '7.1 REDEMPTION PRICE.
At any time after the Original Issue Date and prior to the
conversion of a share of Preferred Stock pursuant to the
exercise of Conversion Rights, if the Market Price at any time
or from time to time is less than Two Dollars ($2.00) per
share (a "REDEMPTION EVENT"), then within ten (10) days from
any Redemption Event, the Corporation, at the option of the
Board, may, at any time it may lawfully do so, redeem in whole
or in part, the outstanding shares of Preferred Stock by
paying cash therefor in the amount of the Redemption Price,
which option shall be exercisable upon and by the Corporation
providing a written notice to the holders of Preferred Stock.
In the event a holder timely elects to exercise the Conversion
Rights prior to delivery by the Corporation of its notice of
redemption, the Corporation's option to redeem any outstanding
shares of Preferred Stock pursuant to the foregoing shall
immediately cease and terminate with respect to any shares so
tendered for conversion, unless the holder does not satisfy
the mechanics of voluntary conversion set forth in Section
4.3. In the event that the Corporation timely elects to
redeem any shares of Preferred Stock pursuant
<PAGE>
NHancement Technologies Inc.
Amended Certificate of Designations
Page 2
to the foregoing, the Conversion Rights shall immediately
cease and terminate as to the shares properly so designated by
the Corporation for redemption, unless default is made in the
payment of Redemption Price. Any such redemption shall be
consummated within five (5) days following the delivery of the
Corporation's written notice of redemption hereunder (the
"REDEMPTION DATE")'".
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by Douglas Zorn its Secretary this 13th day of April, 1998.
/s/ Douglas S. Zorn
--------------------------------
Douglas S. Zorn,
Secretary
<PAGE>
CERTIFICATE OF
SECOND AMENDMENT TO
CERTIFICATE OF DESIGNATIONS OF
SERIES A PREFERRED STOCK OF
NHANCEMENT TECHNOLOGIES INC.
NHancement Technologies Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"CORPORATION"), DOES HEREBY CERTIFY:
FIRST: The second amendment to the Corporation's Certificate of
Designations of Series A Preferred Stock, as filed on April 9, 1998 and as
amended by an amendment thereto, as filed on April 13, 1998 (the "CERTIFICATE OF
DESIGNATIONS"), set forth below was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware and has been consented to in writing by the holders of the Series A
Preferred Stock of the Corporation in accordance with Section 228 of the General
Corporation Law of the State of Delaware.
SECOND: The second amendment to the Corporation's Certificate of
Designations, as duly approved by the Board of Directors of the Corporation and
the holders of the Series A Preferred Stock of the Corporation, is amended as
reflected in the following resolution:
"RESOLVED, that the Certificate of Designations of the Corporation be
amended by striking Section 1.3 in its entirety and replacing it with
the following: '1.3 "Conversion Price" shall mean the lesser of the
Fixed Conversion Price or the Market Conversion Price on the date the
Conversion Rights are exercised, provided that in no event shall the
Conversion Price be less than Sixty Cents ($0.60) per share; provided,
however, that the provisions of Section 4.5 through 4.11, inclusive,
hereof shall not apply to such minimum Conversion Price in the event
of a reverse stock split or similar adjustment reducing the number of
Common Shares outstanding.'"
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by Linda V. Moore, its Secretary, this 11th day of June, 1999.
By: /s/ LINDA V. MOORE
-------------------------------------------
Linda V. Moore
Secretary of NHancement Technologies Inc.
<PAGE>
Exhibit 10.49
AMENDMENT TO
SECURITIES PURCHASE AGREEMENT
THIS AMENDMENT, dated as of June 11, 1999 (the "AGREEMENT"), to
Securities Purchase Agreement, dated as of April 13, 1998 (the "PURCHASE
AGREEMENT"), is entered into by and between NHancement Technologies Inc., a
Delaware corporation (the "COMPANY"), with its headquarters located at 39420
Liberty Street, Suite 250, Fremont, California 94538, and each entity named
on the signature pages hereto (each a "BUYER" and collectively, the "BUYERS").
R E C I T A L S
WHEREAS, the Company, together with AMRO International S.A. and The
Endeavour Capital Fund S.A. (the "INITIAL SUBSCRIBERS"), previously entered
into the Purchase Agreement, pursuant to the terms of which a total of
$3,000,000 of Series A Convertible Preferred Stock, $0.01 par value per
share, of the Company (the "CONVERTIBLE PREFERRED STOCK") was offered for
sale to the Initial Subscribers.
WHEREAS, a total of $1,250,000 of the Convertible Preferred Stock was
acquired by the Initial Subscribers pursuant to the Purchase Agreement.
WHEREAS, the Company and the Initial Subscribers agreed pursuant to the
terms of that certain Payment and Termination Agreement, dated September 24,
1998, to terminate the obligation of the Initial Subscribers to purchase the
remaining $1,750,000 of Convertible Preferred Stock (hereinafter referred to
as the "ADDITIONAL PREFERRED STOCK") and to terminate the operation of
certain other provisions of the Purchase Agreement.
WHEREAS, the Company and the Initial Subscribers wish to reinstate the
provisions of the Purchase Agreement, subject to the provisions of this
Agreement, to provide for the sale to the Buyers of the Additional Preferred
Stock, which will be convertible into shares of Common Stock, $0.01 par value
per share, of the Company, upon the terms and subject to the conditions of
such Convertible Preferred Stock.
WHEREAS, each of the Initial Subscribers wishes to assign to the Buyers
other than the Initial Subscribers (each, an "ASSIGNEE"), the Assigned
Interests (as defined in Section 1.2 below), and each of the Assignees is
willing to assume a portion of the Initial Subscribers' obligations with
respect to the Assigned Interests, all on the terms and conditions
hereinafter set forth.
WHEREAS, the Company and the Buyers are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from
securities registration afforded, INTER ALIA, by Rule 506 under Regulation D
as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 ACT"), and/or
Section 4(2) of the 1933 Act.
WHEREAS, the stockholders of the Company have approved of the sale of a
total of $3,000,000 of Convertible Preferred Stock and the issuance of all
shares of Common Stock issuable upon conversion thereof at a special meeting
of the stockholders held on April 12, 1999.
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 2
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the respective meanings assigned to such terms in the Purchase Agreement.
A G R E E M E N T
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. REINSTATEMENT OF PURCHASE AGREEMENT; ASSIGNMENT.
1.1 REINSTATEMENT OF PURCHASE AGREEMENT. The terms and
provisions of the Purchase Agreement are hereby reinstated, subject to the
provisions contained in this Agreement.
1.2 ASSIGNMENT.
1.2.1 Each of the Initial Subscribers hereby assigns to the
Assignees (allocated as provided below) such Initial Subscriber's rights to
acquire the Additional Preferred Stock in excess of the Additional Preferred
Stock specified on such Initial Subscriber's signature page hereto and the
related rights of the Initial Subscriber under the Transaction Agreements (as
defined in the Purchase Agreement). The rights assigned pursuant to the
immediately preceding sentence are referred to as the "Assigned Interests."
The portion of the Assigned Interests allocated to each of the Assignees is
based on the shares of the Additional Preferred Stock specified on such
Assignee's signature page hereto.
1.2.2 In consideration of the aforesaid assignments by the
Initial Subscribers, each of the Assignees is assuming the obligations to
purchase the portion of the Additional Preferred Stock equal to the
Additional Preferred Stock specified on such Assignee's signature page hereto
and the related obligations under the Transaction Agreements.
1.2.3 The Company, by its execution of this Agreement,
hereby consents to the assignment of the rights of the Initial Subscribers to
the Assignees and the assumption by the Assignees of the obligations of the
Initial Subscribers with respect to the Assigned Interests. In furtherance
of the foregoing provisions of this Section 1.2, and not in limitation
thereof, the Company acknowledges and agrees that (x) the Company will not
look to either of the Initial Subscribers with respect to any obligations to
purchase the Assigned Interests; and (y) all terms of the Transaction
Agreements as may be relevant to the Additional Preferred Stock acquired by
the Assignees pursuant to this Agreement, including, but not necessarily
limited to, the provisions of Sections 5, 9, 10, 11 and 12 of the Purchase
Agreement, shall be enforceable by each of the Assignees, to the extent of
the interest assigned to and assumed by such Assignees as if they were Buyers
named therein.
2. PURCHASE AND SALE OF CONVERTIBLE PREFERRED STOCK. Each
undersigned Buyer agrees to purchase from the Company the number of shares of
Additional Preferred Stock, having the terms and conditions set forth in the
Company's Certificate of Designations, as amended (the "CERTIFICATE OF
DESIGNATIONS"). The purchase price per share for the Additional Preferred
Stock shall be $100.00 and shall be payable in United States Dollars (the
"PURCHASE PRICE").
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 3
3. CLOSING. The closing of the purchase and sale of the Additional
Preferred Stock shall occur no later than June 14, 1999 (the "ADDITIONAL
CLOSING DATE"). On or prior to such date, each Buyer shall deliver to the
Escrow Agent, in immediately available good funds in United States Dollars,
the Purchase Price per share for the Additional Preferred Stock. The Escrow
Agent shall wire transfer to the Company, by no later than 3:00 p.m. eastern
daylight time on the Additional Closing Date, the aggregate Purchase Price
for the shares of Additional Preferred Stock, net of the fees described in
this Section 3. On or prior to the Additional Closing Date, the Company
shall deliver to the Escrow Agent certificates representing the shares of
Additional Preferred Stock, which certificates shall be delivered by the
Escrow Agent to the Buyers upon payment to the Company of the Purchase Price.
The obligations of the Escrow Agent hereunder shall be governed by the Joint
Escrow Instructions (the "JOINT ESCROW INSTRUCTIONS") attached to the
Purchase Agreement as Annex II; provided that paragraph (a)(i) of such Joint
Escrow Instructions is hereby amended and restated to read as follows:
"$150,000 in the aggregate, $25,000 of which shall be payable to David
Diamond as a placement fee and the balance of which shall be payable to the
placement agent(s) designated by the Company"; provided further that
paragraph (b) is hereby deleted in its entirety. If the transaction fails to
close by 2:00 p.m. eastern daylight time, on June 15, 1999, the Escrow Agent
shall return the escrowed property to the persons delivering such property
into escrow.
4. AMENDMENT OF CERTIFICATE OF DESIGNATIONS. The Certificate of
Designations shall be amended to incorporate the provisions described in
Annex I to this Agreement.
5. ISSUANCE OF WARRANTS. Promptly following the Additional Closing
Date, for each $100,000 of Additional Preferred Stock purchased by a Buyer,
the Company shall issue to such Buyer warrants ("WARRANTS") to purchase
10,000 shares of the Common Stock of the Company. The maximum aggregate
number of shares Common Stock covered by the Warrants shall be 175,000
shares. The exercise price of a Warrant share shall be equal to 110% of the
average closing bid price of the Common Stock of the Company for the five (5)
trading days ending on the trading day immediately before the Additional
Closing Date. The Warrants shall be exercisable until the third anniversary
of the Additional Closing Date.
6. REGISTRATION OF COMMON STOCK. The Company shall prepare and file
with the SEC as soon as possible after the Additional Closing Date but no
later than 45 days following the Additional Closing Date (the "REQUIRED
FILING DATE"), either a Registration Statement on Form S-3 or an amendment to
its existing Registration Statement on Form S-3, in either event registering
for resale by the Buyers a sufficient number of shares of Common Stock for
the Buyers to sell the shares of Common Stock received upon conversion of the
shares of Additional Preferred Stock and in payment of dividends on the
Additional Preferred Stock. Such Registration Statement will also include for
resale shares of the Common Stock of the Company issuable upon exercise of
the Warrants and the Additional Warrants (as such term is defined in Section
12 below). The shares of Common Stock issuable to the Buyers upon conversion
of the Additional Preferred Stock or upon exercise of the Warrants shall be
deemed to be "Registrable Securities" as such term is defined in the
Registration Rights Agreement, dated as of April 13, 1998 (the "REGISTRATION
RIGHTS AGREEMENT"). The Company shall use its best efforts to cause such
Registration Statement to become effective with the SEC within the earlier of
(i) five (5) days after notice by the SEC that it may be declared effective
or (ii) one hundred five (105) days following the Additional Closing Date
(the "REQUIRED EFFECTIVE DATE"). If the Registration Statement covering the
Registrable Securities is not filed with the SEC by the Required Filing Date
or is not declared effective
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 4
by the SEC by the Required Effective Date, then the Company shall pay to the
Buyers the Periodic Amount(s) (as such term is defined in the Registration
Rights Agreement) set forth in Section 2(b) of the Registration Rights
Agreement, and for such purposes, the Purchase Price shall be deemed to be
the Purchase Price of the Additional Preferred Stock contemplated by this
Agreement.
7. COMPANY REPRESENTATIONS. Except as set forth in Annex II to this
Agreement, the Company hereby confirms as of the date hereof the truth and
accuracy of the representations and warranties of the Company set forth in
Section 3 of the Purchase Agreement and, to the extent applicable, makes the
same representations and warranties with respect to this Agreement.
8. BUYERS' REPRESENTATIONS.
8.1 INITIAL SUBSCRIBERS. Each Initial Subscriber hereby confirms
as of the date hereof the truth and accuracy of its representations and
warranties as set forth in Section 2 of the Purchase Agreement and agrees to
its covenants and acknowledgements contained in Section 4 of the Purchase
Agreement. Without limiting the generality of the foregoing, each Initial
Subscriber acknowledges that it has had the opportunity to obtain and to
review the Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1998, the Company's Quarterly Reports on Form 10-QSB for the
quarters ended December 31, 1998 and March 31, 1999, the Company's Reports on
Form 8-K since September 30, 1998, and the Company's Proxy Statement relating
to its Special Meeting of Stockholders held on April 12, 1999 (collectively,
the "SEC FILINGS").
8.2 ASSIGNEES. Each Assignee represents and warrants to and
covenants and agrees with the Initial Subscribers and the Company (which,
upon its consent to the transactions contemplated by this Agreement, as
evidenced by its signature to this Agreement, shall be a third party
beneficiary of this Agreement), each of the representations, warranties,
covenants and agreements set forth in Sections 2 and 4 of the Purchase
Agreement, as if such representations, warranties, covenants and agreements
were set forth herein in full and as if such Buyer were a Buyer named
therein. In addition, and not in lieu thereof, each Buyer hereby further
represents and warrants that such Buyer (x) has reviewed this Agreement, the
Purchase Agreement, the Registration Rights Agreement, the Joint Escrow
Instructions, the Certificate of Designations and the charter documents of
the Company (collectively, the "TRANSACTION DOCUMENTS") and the SEC Filings,
(y) is not relying on any oral or written representations of either or both
of the Initial Subscribers in connection with the transactions contemplated
by the Purchase Agreement or this Agreement and (y) will look solely to the
Company for the performance of the terms of the Transaction Documents.
9. AGREEMENTS OF COMPANY. The Company hereby covenants and agrees
with Buyers to effect a reverse stock split of the capital stock of the
Company, resulting in a price per share of Common Stock of at least $1.50, in
the event that the minimum bid price of the Company's Common Stock on the
Nasdaq SmallCap Market System shall be less than $1.00 per share for a period
of thirty (30) consecutive business days. The Company hereby further
covenants and agrees with Buyers that if and only in the event that the
Company's Common Stock is delisted from the Nasdaq SmallCap Market System,
then during any period in which the shares of the Company's Common Stock are
delisted the Conversion Price shall mean the lesser of the Fixed Conversion
Price or the Market Conversion Price on the date the Conversion Rights are
exercised, and the Conversion Price shall not be subject to a floor of $0.60.
Capitalized terms used in the immediately preceding sentence shall have the
respective meanings
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 5
assigned to such terms in the Certificate of Designations. The Company shall
file with the Secretary of State of the State of Delaware any amendments to
its Certificate of Designations required to implement the provisions set
forth in the immediately preceding sentence.
10. AGREEMENT OF BUYERS. Buyers acknowledge and agree that,
notwithstanding anything to the contrary contained in Section 4.f. of the
Purchase Agreement, the Company may use the proceeds from the sale of the
Additional Preferred Stock to make payments to Infotel Technologies Pte Ltd,
a wholly-owned subsidiary of the Company incorporated in Singapore
("INFOTEL"), or to the former shareholders of Infotel.
11. TERMINATION OF CERTAIN COVENANTS. The parties hereto agree that
Section 4.h. of the Purchase Agreement shall be deleted in its entirety and
of no further force and effect. In addition, the parties hereto agree that,
notwithstanding anything to the contrary contained in Section 4.j. of the
Purchase Agreement, the sole remedy of Buyers thereunder shall be to require
the Company to redeem any share of Unconverted Preferred Stock in an amount
calculated in accordance with clause (y) thereof.
12. REDEMPTION OF SHARES. Promptly following the Additional Closing
Date, for each $87,500 of the Additional Preferred Stock purchased by a
Buyer, the Company shall issue to such Buyer warrants (the "ADDITIONAL
WARRANTS") to purchase 10,000 shares of the Common Stock of the Company. The
Additional Warrants shall be exercisable only in the event of a redemption of
shares of the Additional Preferred Stock held by such Buyer, pursuant to
Section 7 of the Certificate of Designations, which redemption shall be
solely at the option of the Company. The maximum aggregate number of shares
of Common Stock issuable upon exercise of the Additional Warrants shall be
200,000 in the event of a redemption of all shares of Additional Preferred
Stock issued to the Buyers pursuant to this Agreement; in the event of a
redemption of a lesser number of shares of Additional Preferred Stock, the
number of shares exercisable under the Additional Warrants shall be reduced
accordingly. The exercise price of an Additional Warrant share shall be
equal to 110% of the average closing bid price of the Common Stock of the
Company for the five (5) trading days ending on the trading day immediately
before the Additional Closing Date. Such shares will be deemed to be
"Registrable Securities" for purposes of the Registration Rights Agreement.
The Additional Warrants shall be exercisable for a period commencing on the
relevant redemption date and continuing through the third anniversary of such
relevant redemption date.
13. CONDITIONS TO CLOSING; DELIVERY OF LEGAL OPINION. The parties
hereto acknowledge and agree that, notwithstanding anything to the contrary
contained in the Purchase Agreement, their respective obligations under this
Agreement are conditioned solely upon filing with the Delaware Secretary of
State of the amendment to the Company's Certificate of Designations described
in Annex II hereto. Tomlinson Zisko Morosoli & Maser LLP shall deliver to
the Buyers, in care of the Escrow Agent, an opinion of counsel substantially
in the form of its opinion letter dated April 13, 1998, dated the Additional
Closing Date, which opinion shall also state that such filing has been
accepted.
14. JOINDER OF PARTIES TO TRANSACTION DOCUMENTS. By its signature
hereon, each Buyer who is not an Initial Subscriber shall be deemed to become
and be added as a party to the Purchase Agreement and the Registration Rights
Agreement and shall be entitled to the benefits and subject to the
obligations set forth in such agreements, as amended by this Agreement, as if
such Buyer were a party named therein.
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 6
15. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware 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 Agreement 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.
16. COUNTERPARTS; DELIVERY. This Agreement may be signed in one or
more counterparts, each of which shall be deemed an original. A facsimile
transmission of this signed Agreement shall be legal and binding on all
parties hereto.
17. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of:
(a) the date delivered, if delivered by personal delivery as against
written receipt therefor or by confirmed facsimile transmission,
(b) the seventh business day after deposit, postage prepaid, in the
United States Postal Service by registered or certified mail, or
(c) the third business day after mailing by international express
courier, with delivery costs and fees prepaid,
in each case, addressed to each of the other parties thereunto entitled at
the following addresses (or at such other addresses as such party may
designate by ten (10) days' advance written notice similarly given to each of
the other parties hereto):
Company: NHancement Technologies Inc.
39420 Liberty Street, Suite 250
Fremont, CA 94538
Attn: Chief Executive Officer
Telephone No.: (510) 744-3333
Telecopier No.: (510) 744-4003
with a copy to: Tomlinson Zisko Morosoli & Maser LLP
200 Page Mill Road, 2nd Floor
Palo Alto, CA 94306
Attn: Cynthia M. Loe, Esq.
Telephone No.: (650) 325-8666
Telecopier No.: (650) 324-1808
<PAGE>
NHancement Technologies Inc.
Amendment to Securities Purchase Agreement
Page 7
Buyers: At the addresses set forth on the signature pages to
this Agreement.
with a copy to: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, NY 10016
Telephone No.: (212) 689-3322
Telecopier No.: (212) 213-2077
Escrow Agent: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, NY 10016
Telephone No.: (212) 689-3322
Telecopier No.: (212) 213-2077
18. EFFECT OF THIS AGREEMENT. From and after the date hereof, each of
the terms used in the Transaction Documents which refers to a document
amended by the terms of this Agreement, including but not limited to the
Purchase Agreement, the Registration Rights Agreement and the Certificate of
Designations, shall be deemed to refer to such document as amended hereby or
as contemplated herein. Except to the extent (and limited to the extent)
specifically amended hereby, all terms of the Transaction Documents are
deemed to be in full force and effect and incorporated herein by reference as
if set forth herein in full.
19. COOPERATION OF BUYERS. Each Buyer agrees to cooperate fully with
the Company in executing and delivering any consent or other instrument
required to complete the transactions contemplated by this Agreement,
including any consent required in connection with the filing of the amendment
to the Company's Certificate of Designations described in Annex II hereto.
20. DUE AUTHORIZATION. Each party hereto acknowledges and agrees that
this Amendment has been duly and validly authorized, executed and delivered
on behalf of such party and is a valid and binding agreement of such party
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors' rights generally.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
by one of its officers thereunto duly authorized as of the date set forth
below.
NUMBER OF SHARES OF
ADDITIONAL PREFERRED STOCK
TO BE PURCHASED 7,000
----------
AGGREGATE PURCHASE PRICE OF
SUCH ADDITIONAL PREFERRED STOCK $700,000
----------
SIGNATURE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Agreement to be duly
executed on its behalf this 14th day of June, 1999.
c/o Endeavour Management Inc.
14/14 Divrei Chaim St.
Jerusalem, 94479
Israel The Endeavour Capital Fund S.A.
- ---------------------------------- ----------------------------------
Address Printed Name of Subscriber
Telecopier No. 972-2-582 4443 By: /s/ Shmuli Margulies
-------------------------------
(Signature of Authorized Person)
B.V.I. Shmuli Margulies-Director
- ---------------------------------- ----------------------------------
Jurisdiction of Incorporation Printed Name and Title
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Agreement to be duly executed on its behalf.
NHANCEMENT TECHNOLOGIES INC.
By: /s/ Douglas S. Zorn
-------------------------------
Title: President & CEO
----------------------------
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF
ADDITIONAL PREFERRED STOCK
TO BE PURCHASED 4,375
----------
AGGREGATE PURCHASE PRICE OF
SUCH ADDITIONAL PREFERRED STOCK $437,500
----------
SIGNATURE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Agreement to be duly
executed on its behalf this 14th day of June, 1999.
So Ultra Finance
Gross Munster Platz 26
Zurich Ch 8022
Switzerland Amro International S.A.
- ---------------------------------- ------------------------------------
Address Printed Name of Subscriber
Telecopier No. 011 411 2625515 By: /s/ Hans V. Bachofen
---------------------------------
(Signature of Authorized Person)
Panama Hans V. Bachofen, Director-President
- ---------------------------------- ------------------------------------
Jurisdiction of Incorporation Printed Name and Title
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Agreement to be duly executed on its behalf.
NHANCEMENT TECHNOLOGIES, INC.
By: /s/ Douglas S. Zorn
-------------------------------
Title: President & CEO
----------------------------
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF
ADDITIONAL PREFERRED STOCK
TO BE PURCHASED 1,750
----------
AGGREGATE PURCHASE PRICE OF
SUCH ADDITIONAL PREFERRED STOCK $175,000
----------
SIGNATURE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Agreement to be duly
executed on its behalf this 14th day of June, 1999.
660 Madison Avenue
15th Floor
New York
NY 10021 Olympia Partners LLC
- ---------------------------------- ----------------------------------
Address Printed Name of Subscriber
Telecopier No. By: /s/ Seth Fireman
212-542-8212 ----------------------------------
(Signature of Authorized Person)
Seth Fireman, Partner
- ---------------------------------- ----------------------------------
Jurisdiction of Incorporation Printed Name and Title
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Agreement to be duly executed on its behalf.
NHANCEMENT TECHNOLOGIES, INC.
By: /s/ Douglas S. Zorn
-------------------------------
Title: President & CEO
----------------------------
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF
ADDITIONAL PREFERRED STOCK
TO BE PURCHASED 2,375
----------
AGGREGATE PURCHASE PRICE OF
SUCH ADDITIONAL PREFERRED STOCK $237,500
----------
SIGNATURE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Agreement to be duly
executed on its behalf this 14th day of June, 1999.
Trident Chambers
Road Town
Tortola
British Virgin Islands Balmore Funds S.A.
- ---------------------------------- ----------------------------------
Address Printed Name of Subscriber
Telecopier No. 011 411 201 4800 By: /s/ Francois Morax
----------------------------------
(Signature of Authorized Person)
BVI Francois Morax, Director
- ---------------------------------- ----------------------------------
Jurisdiction of Incorporation Printed Name and Title
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Agreement to be duly executed on its behalf.
NHANCEMENT TECHNOLOGIES, INC.
By: /s/ Douglas S. Zorn
-------------------------------
Title: President & CEO
----------------------------
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.
NUMBER OF SHARES OF
ADDITIONAL PREFERRED STOCK
TO BE PURCHASED 2,000
----------
AGGREGATE PURCHASE PRICE OF
SUCH ADDITIONAL PREFERRED STOCK $200,000
----------
SIGNATURE FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Agreement to be duly
executed on its behalf this 14th day of June, 1999.
Landstrasse 163
9494 Furstentums
Vaduz
Liechtenstein Austost Anstalt Schaan
- ---------------------------------- ----------------------------------
Address Printed Name of Subscriber
Telecopier No. 011 431 534 532 895 By: /s/ Thomas Hackl
----------------------------------
(Signature of Authorized Person)
Liechtenstein Thomas Hackl, Director
- ---------------------------------- ----------------------------------
Jurisdiction of Incorporation Printed Name and Title
or Organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Agreement to be duly executed on its behalf.
NHANCEMENT TECHNOLOGIES, INC.
By: /s/ Douglas S. Zorn
-------------------------------
Title: President & CEO
----------------------------
<PAGE>
NHANCEMENT TECHNOLOGIES INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MAY 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(1) (2) (3) AS
PREFERRED DEBT INFOTEL ADJUSTED
ACTUAL FINANCING CONVERSION CONVERSION PRO FORMA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 2,431,100 $1,550,000 $(1,250,000) $ 2,731,100
Accounts receivable, less allowance for
doubtful accounts of $244,400 4,519,500 4,519,500
Notes receivable from stockholders 149,500 149,500
Inventory 1,277,200 1,277,200
Prepaid expenses and other 266,100 266,100
Income tax receivable 11,600 11,600
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 8,655,000 8,955,000
- ------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT 2,031,100 2,031,100
Less accumulated depreciation (851,600) (851,600)
- ------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, net 1,179,500 1,179,500
- ------------------------------------------------------------------------------------------------------------------------
Excess of cost over net assets acquired of
Voice Plus, Inc., net of accumulated
amortization of $166,700 583,300 (133,300) 450,000
Excess of cost over net assets acquired of
Infotel, net of accumulated amortization
of $175,900 1,752,100 495,300 2,247,400
Long-term portion of notes receivable from
stockholders 174,400 174,400
Other assets 25,300 25,300
- ------------------------------------------------------------------------------------------------------------------------
$ 12,369,600 $ 13,031,600
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Lines of credit $ 1,283,200 $ 1,283,200
Accounts payable 2,688,600 2,688,600
Accrued liabilities 1,783,900 (133,300) 1,650,600
Payable to affiliates 1,534,200 (116,700) (1,390,400) 27,100
Deferred revenue 1,646,200 1,646,200
Current portion of long-term debt 98,200 98,200
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 9,034,300 7,393,900
LONG-TERM DEBT, net of current portion 80,400 80,400
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 9,114,700 7,474,300
- ------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value,
2,000,000 shares authorized, 1,308
shares issued and outstanding 103,200 1,550,000 1,653,200
Common stock, $0.01 par value,
20,000,000 shares authorized,
6,103,400 shares issued and
outstanding 61,100 900 5,600 67,600
Additional paid-in capital 21,213,500 115,800 630,100 21,959,400
Accumulated deficit (17,865,100) (17,865,100)
Cumulative translation adjustment (257,800) (257,800)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 3,254,900 5,557,300
- ------------------------------------------------------------------------------------------------------------------------
$ 12,369,600 $ 13,031,600
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TANGIBLE NET WORTH $ 919,500 $ 2,859,900
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOOTNOTES:
- ----------
(1) Preferred Stock financing of $1.75 million less estimated fees and
expenses of $200,000.
(2) Forgiveness of $133,300 in debt and conversion of $116,700 of notes into
Common Stock by shareholder.
(3) Payment of $1.25 million of notes due the former Infotel shareholders and
conversion of $635,700 into shares of Common Stock.
