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                                  EXHIBIT 4.24

                    CONVERTIBLE DEBENTURE PURCHASE AGREEMENT

                                     BETWEEN

                          NHANCEMENT TECHNOLOGIES INC.

                                       AND

                         THE INVESTORS SIGNATORY HERETO

         CONVERTIBLE DEBENTURE PURCHASE AGREEMENT dated as of May 19, 2000 (the
"Agreement"), between the Investors signatory hereto (each an "Investor" and
together the "Investors"), and NHancement Technologies Inc., a corporation
organized and existing under the laws of the State of Delaware (the "Company").

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase in the aggregate $5,800,000 principal amount of
Convertible Debentures; and

         WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and/or 4(6) of the United States Securities Act
of 1933, as amended (the "Securities Act") and/or Regulation D ("Regulation D")
and the other rules and regulations promulgated thereunder, and/or upon such
other exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments in securities to be
made hereunder.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                               CERTAIN DEFINITIONS

Section 1.1. "CAPITAL SHARES" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.

Section 1.2. "CAPITAL SHARES EQUIVALENTS" shall mean any securities, rights, or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.

Section 1.3. "CLOSING" shall mean the closing of the purchase and sale of the
Convertible Debentures pursuant to Section 2.1.

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Section 1.4. "CLOSING DATE" shall mean the date on which all conditions to the
Closing have been satisfied (as defined in Section 2.1 (b) hereto) and the
Closing shall have occurred.

Section 1.5. "COMMON STOCK" shall mean the Company's common stock, $0.01 par
value per share.

Section 1.6. "CONVERSION SHARES" shall mean the shares of Common Stock issuable
upon conversion of the Convertible Debenture.

Section 1.7. "CONVERTIBLE DEBENTURE(S)" shall mean the $5,800,000 principal
amount of 8% Convertible Debentures due May 30, 2001, in the form of Exhibit A
hereto.

Section 1.8. "DAMAGES" shall mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and reasonable costs and expenses
of expert witnesses and investigation).

Section 1.9. "EFFECTIVE DATE" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in the Registration Rights Agreement.

Section 1.10. "ESCROW AGENT" shall have the meaning set forth in the Escrow
Agreement.

Section 1.11. "ESCROW AGREEMENT" shall mean the Escrow Agreement in
substantially the form of Exhibit C hereto executed and delivered
contemporaneously with this Agreement.

Section 1.12. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and wregulations promulgated thereunder.

Section 1.13. "LEGEND" shall mean the legend set forth in Section 9.1.

Section 1.14. "MARKET PRICE" on any given date shall mean the closing bid price
on the Principal Market (as reported by Bloomberg L.P.) of the Common Stock on
the Trading Day for which the Market Price is to be determined.

Section 1.15. "MATERIAL ADVERSE EFFECT" shall mean any effect on the business,
operations, properties, prospects, stock price or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Escrow Agreement in any material respect.

Section 1.16. "OUTSTANDING" when used with reference to shares of Common Stock
or Capital Shares (collectively the "Shares"), shall mean, at any date as of
which the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
PROVIDED, HOWEVER, that "Outstanding" shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.

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Section 1.17. "PERSON" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

Section 1.18. "PRINCIPAL MARKET" shall mean the American Stock Exchange, the New
York Stock Exchange, the NASDAQ National Market or the NASDAQ Small-Cap Market,
whichever is at the time the principal trading exchange or market for the Common
Stock, based upon share volume.

Section 1.19. "PURCHASE PRICE" shall mean the principal amount of the
Convertible Debenture.

Section 1.20. "REGISTRABLE SECURITIES" shall mean the Conversion Shares until
(i) the Registration Statement has been declared effective by the SEC, and all
Conversion Shares have been disposed of pursuant to the Registration Statement,
(ii) all Conversion Shares have been sold under circumstances under which all of
the applicable conditions of Rule 144 (or any similar provision then in force)
under the Securities Act ("Rule 144") are met, (iii) all Conversion Shares have
been otherwise transferred to holders who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend or (iv) such time as, in the opinion of counsel to the
Company, all Conversion Shares may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect)
under the Securities Act.

Section 1.21. "REGISTRATION RIGHTS AGREEMENT" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investor as of the Closing
Date in the form annexed hereto as Exhibit B.

Section 1.22. "REGISTRATION STATEMENT" shall mean a registration statement on
Form S-3 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale by the Investors
of the Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.

Section 1.23. "REGULATION D" shall have the meaning set forth in the recitals of
this Agreement.

Section 1.24. "SEC" shall mean the Securities and Exchange Commission.

Section 1.25. "SEC DOCUMENTS" means the Company's Form 10-KSB for the year ended
September 30, 1999, the Proxy Statement for the fiscal year ended December 30,
1998 and any 1934 Act filings since that date.

Section 1.26. "SECTION 4(2)" AND "SECTION 4(6)" shall have the meanings set
forth in the recitals of this Agreement.

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Section 1.27. "SECURITIES ACT" shall have the meaning set forth in the recitals
of this Agreement.

Section 1.28. "SHARES" shall have the meaning set forth in Section 1.16.

Section 1.29. "TRADING DAY" shall mean any day during which the Principal Market
shall be open for business.

                                   ARTICLE II

                   PURCHASE AND SALE OF CONVERTIBLE DEBENTURES

Section 2.1.      INVESTMENT.

     (a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Investors, severally and not jointly, agree to
purchase Convertible Debentures with an aggregate principal amount of $5,800,000
in accordance with the commitments set forth on the signature pages hereto, at
the Purchase Price on the Closing Date as follows:

          (i)   Upon execution and delivery of this Agreement, each Investor
                shall deliver to the Escrow Agent immediately available funds in
                their proportionate amount of the Purchase Price as set forth on
                the signature pages hereto, and the Company shall deliver the
                Convertible Debenture certificates to the Escrow Agent, in each
                case to be held by the Escrow Agent pursuant to the Escrow
                Agreement.

          (ii)  Upon satisfaction of the conditions set forth in Section 2.1(b),
                the Closing ("Closing") shall occur at the offices of the Escrow
                Agent at which the Escrow Agent (x) shall release the
                Convertible Debentures to the Investors and (y) shall release
                the Purchase Price (after all fees have been paid as set forth
                in the Escrow Agreement), pursuant to the terms of the Escrow
                Agreement.

     (b) The Closing is subject to the satisfaction or waiver by the party to be
benefited thereby of the following conditions:

          (i)   acceptance and execution by the Company and by the Investors, of
                this Agreement and all Exhibits hereto;

          (ii)  delivery into escrow by each Investor of immediately available
                funds in the amount of the Purchase Price of the Convertible
                Debentures purchased at the Closing, as more fully set forth in
                the Escrow Agreement;

          (iii) all representations and warranties of the Investors contained
                herein shall remain true and correct as of the Closing Date (as
                a condition to the Company's obligations);

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          (iv)  all representations and warranties of the Company contained
                herein shall remain true and correct as of the Closing Date (as
                a condition to the Investors' obligations);

          (v)   the Company shall have obtained all permits and qualifications
                required by any state for the offer and sale of the Convertible
                Debentures, or shall have the availability of exemptions
                therefrom;

          (vi)  the sale and issuance of the Convertible Debentures hereunder,
                and the proposed issuance by the Company to the Investors of the
                Common Stock underlying the Convertible Debentures upon the
                conversion thereof shall be legally permitted by all laws and
                regulations to which the Investors and the Company are subject
                and there shall be no ruling, judgment or writ of any court
                prohibiting the transactions contemplated by this Agreement;

          (vii) delivery of the original fully executed Convertible Debenture
                certificates to the Escrow Agent;

          (viii)delivery to the Escrow Agent of an opinion of Broad and Cassel,
                counsel to the Company, in the form of Exhibit D hereto;

          (ix)  delivery to the Escrow Agent of the Irrevocable Instructions to
                Transfer Agent in the form attached hereto as Exhibit E; and
                delivery to the Escrow Agent of the Registration Rights
                Agreement.

Section 2.2. LIQUIDATED DAMAGES. The parties hereto acknowledge and agree that
the sum payable pursuant to the Registration Rights Agreement for late
registration and the sum payable pursuant to the Convertible Debentures for late
delivery of Common Stock certificates shall constitute liquidated damages and
not penalties. The parties further acknowledge that (a) the amount of loss or
damages likely to be incurred is incapable or is difficult to precisely
estimate, (b) the amount specified in such provisions bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred by the Investor in connection with the failure of the
Company to timely cause the registration of the Registrable Securities or to
deliver stock certificates upon any conversion, and (c) the parties are
sophisticated businesses and have been represented by sophisticated and able
legal and financial counsel and negotiated this Agreement at arm's length.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

Each Investor, severally and not jointly, represents and warrants to the Company
that:

Section 3.1. INTENT. The Investor is entering into this Agreement for its own
account and not with a view to or for sale in connection with any distribution
of the Common Stock. The Investor has no present arrangement (whether or not
legally binding) at any time to sell the Convertible Debenture or any Conversion
Shares to or through any person or entity; provided,

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however, that by making the representations herein, the Investor does not agree
to hold such securities for any minimum or other specific term and reserves the
right to dispose of the Conversion Shares at any time in accordance with federal
and state securities laws applicable to such disposition.

Section 3.2. SOPHISTICATED INVESTOR. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it has the capacity to protect its own
interests in connection with this transaction and is capable of evaluating the
merits and risks of an investment in the Convertible Debenture and the
underlying Common Stock. The Investor has been represented by counsel of its
choice. The Investor acknowledges that an investment in the Convertible
Debenture and the underlying Common Stock is speculative and involves a high
degree of risk.

Section 3.3. AUTHORITY. This Agreement and each agreement attached as an Exhibit
hereto which is required to be executed by Investor has been duly authorized and
validly executed and delivered by the Investor and is a valid and binding
agreement of the Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.

Section 3.4. NOT AN AFFILIATE. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.

Section 3.5. ABSENCE OF CONFLICTS. The execution and delivery of this Agreement
and each agreement which is attached as an Exhibit hereto and executed by the
Investor in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, and compliance with the requirements hereof and
thereof by the Investor, will not violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on Investor or (a) violate
any provision of any indenture, instrument or agreement to which Investor is a
party or is subject, or by which Investor or any of its assets is bound; (b)
conflict with or constitute a material default thereunder; (c) result in the
creation or imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty owed by
Investor to any third party; or (d) require the approval of any third-party
(which has not been obtained) pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which Investor is subject or to
which any of its assets, operations or management may be subject.

Section 3.6. DISCLOSURE; ACCESS TO INFORMATION. The Investor has received all
documents, records, books and other information pertaining to Investor's
investment in the Company that have been requested by the Investor.

Section 3.7. MANNER OF SALE. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising.

                                   ARTICLE IV

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                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investors that, except as set forth
on the SEC Documents or on the Disclosure Schedule prepared by the Company and
attached hereto:

Section 4.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries and does not own more that fifty percent (50%) of or control any
other business entity. The Company is duly qualified and is in good standing as
a foreign corporation to do business in every jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have a
Material Adverse Effect.

Section 4.2. AUTHORITY. (i) The Company has the requisite corporate power and
corporate authority to conduct its business as now conducted, to enter into and
perform its obligations under this Agreement, the Registration Rights Agreement,
the Escrow Agreement, and to issue the Convertible Debentures and the Conversion
Shares pursuant to their respective terms, (ii) the execution, issuance and
delivery of this Agreement, the Registration Rights Agreement, the Escrow
Agreement and the Convertible Debentures by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, and (iii) this
Agreement, the Registration Rights Agreement, the Escrow Agreement and the
Convertible Debentures have been duly executed and delivered by the Company and
at the Closing shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application. The
Company has duly and validly authorized and reserved for issuance shares of
Common Stock sufficient in number for the conversion of the Convertible
Debentures. The Company understands and acknowledges the potentially dilutive
effect to the Common Stock of the issuance of the Conversion Shares. The Company
further acknowledges that its obligation to issue Conversion Shares upon
conversion of the Convertible Debentures in accordance with this Agreement and
the Convertible Debentures is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company and notwithstanding the commencement of any case
under 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"). The Company shall
not seek judicial relief from its obligations hereunder except pursuant to the
Bankruptcy Code. In the event the Company is a debtor under the Bankruptcy Code,
the Company hereby waives to the fullest extent permitted any rights to relief
it may have under 11 U.S.C. Section 362 in respect of the conversion of the
Convertible Debentures. The Company agrees, without cost or expense to the
Investors, to take or consent to any and all action necessary to effectuate
relief under 11 U.S.C. Section 362.

Section 4.3. CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, $0.01 par value per share, of
which 10,717,600 shares are issued and outstanding as of April 30, 2000, and
2,000,000 shares of convertible preferred stock,

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of which none are issued and outstanding as of April 30, 2000, there are no
outstanding Capital Shares Equivalents nor any agreements or understandings
pursuant to which any Capital Shares Equivalents may become outstanding. The
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities. All
of the outstanding shares of Common Stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable and have
been issued pursuant to valid exemptions from registration under the Securities
Act and all applicable state "blue sky" laws.

Section 4.4. COMMON STOCK. The Company has registered its Common Stock pursuant
to Section 12(b) or (g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and the Company is in compliance
with all requirements for the continued listing or quotation of its Common
Stock, and such Common Stock is currently listed or quoted on, the Principal
Market. As of the date hereof, the Principal Market is the Nasdaq SmallCap
Market and the Company has not received any notice regarding, and to its
knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing.

Section 4.5. SEC DOCUMENTS. The Company has made available to the Investors true
and complete copies of the SEC Documents. The Company has not provided to the
Investors any information that, according to applicable law, rule or regulation,
should have been disclosed publicly prior to the date hereof by the Company, but
which has not been so disclosed. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act, and
rules and regulations of the SEC promulgated thereunder and the SEC Documents
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.

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Section 4.6. EXEMPTION FROM REGISTRATION; VALID ISSUANCES. Subject to the
accuracy of the Investors' representations in Article III, the sale of the
Convertible Debentures and the Conversion Shares will not require registration
under the Securities Act and/or any applicable state securities law. When
validly converted in accordance with the terms of the Convertible Debentures,
the Conversion Shares will be duly and validly issued, fully paid, and
non-assessable. Neither the sales of the Convertible Debentures or the
Conversion Shares pursuant to, nor the Company's performance of its obligations
under, this Agreement, the Registration Rights Agreement, the Escrow Agreement
or the Convertible Debentures will (i) result in the creation or imposition by
the Company of any liens, charges, claims or other encumbrances upon the
Convertible Debentures or the Conversion Shares or, except as contemplated
herein, any of the assets of the Company, or (ii) entitle the holders of
Outstanding Capital Shares to preemptive or other rights to subscribe for or
acquire the Capital Shares or other securities of the Company. The Convertible
Debentures and the Conversion Shares, shall not subject the Investors to
personal liability to the Company or its creditors by reason of the possession
thereof.

Section 4.7. NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor, to the knowledge
of the Company, any person acting on its or their behalf (i) has conducted or
will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to the sale of the Convertible
Debentures, or (ii) made any offers or sales of any security or solicited any
offers to buy any security under any circumstances that would require
registration of the Convertible Debentures or the Conversion Shares, under the
Securities Act.

Section 4.8. NO CONFLICTS. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby, including without limitation the issuance of and payment of
interest upon the Convertible Debentures and the Conversion Shares, do not and
will not (i) result in a violation of the Company's Certificate of Incorporation
or By-Laws or (ii) conflict with, or constitute a material default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, indenture or instrument, or any "lock-up" or similar
provision of any underwriting or similar agreement to which the Company is a
party, or (iii) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any material
property or asset of the Company is bound or affected, nor is the Company
otherwise in violation of, conflict with or default under any of the foregoing
(except in each case for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not have, individually or
in the aggregate, a Material Adverse Effect). The business of the Company is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either singly or in the
aggregate would not have a Material Adverse Effect. The Company is not required
under any Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Convertible Debentures or
the Warrants in accordance with the terms hereof (other than any SEC or state
securities filings that may be required to be made by the Company subsequent to
Closing, any registration statement that may be filed pursuant hereto); provided
that, for purposes of the representation made in this sentence,

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the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investors herein.

Section 4.9. NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, no Material
Adverse Effect has occurred or exists with respect to the Company. No material
supplier has given notice, oral or written, that it intends to cease or reduce
the volume of its business with the Company from historical levels.

Section 4.10. NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since December 31, 1999,
no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial condition, that,
under any applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in writing to the Investors.

Section 4.11. NO INTEGRATED OFFERING. Other than pursuant to an effective
registration statement under the Securities Act, or pursuant to the issuance or
exercise of employee stock options or in connection with certain acquisitions,
or pursuant to its discussion with the Investors in connection with the
transactions contemplated hereby, the Company has not issued, offered or sold
the Convertible Debentures or any shares of Common Stock (including for this
purpose any securities of the same or a similar class as the Convertible
Debentures or Common Stock, or any securities convertible into a exchangeable or
exercisable for the Convertible Debentures or Common Stock or any such other
securities) within the six-month period next preceding the date hereof, and the
Company shall not permit any of its directors, officers or affiliates directly
or indirectly to take, any action (including, without limitation, any offering
or sale to any Person of the Convertible Debentures or shares of Common Stock),
so as to make unavailable the exemption from Securities Act registration being
relied upon by the Company for the offer and sale to Investors of the
Convertible Debentures (and the Conversion Shares) as contemplated by this
Agreement.

Section 4.12. LITIGATION AND OTHER PROCEEDINGS. There are no lawsuits or
proceedings pending or, to the knowledge of the Company, threatened, against the
Company or any subsidiary, nor has the Company received any written or oral
notice of any such action, suit, proceeding or investigation, which could
reasonably be expected to have a Material Adverse Effect. No judgment, order,
writ, injunction or decree or award has been issued by or, to the knowledge of
the Company, requested of any court, arbitrator or governmental agency which
could result in a Material Adverse Effect.

Section 4.13. NO MISLEADING OR UNTRUE COMMUNICATION. The Company and, to the
knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Convertible Debentures in connection with
the transaction contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.14. MATERIAL NON-PUBLIC INFORMATION. The Company has not disclosed to
the Investors any material non-public information that (i) if disclosed, would
reasonably be expected

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to have a material effect on the price of the Common Stock or (ii) according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company prior to the date hereof but which has not been so disclosed.

Section 4.15. INSURANCE. The Company and each subsidiary maintains property and
casualty, general liability, workers' compensation, environmental hazard,
personal injury and other similar types of insurance with financially sound and
reputable insurers that is adequate, consistent with industry standards and the
Company's historical claims experience. The Company has not received notice
from, and has no knowledge of any threat by, any insurer (that has issued any
insurance policy to the Company) that such insurer intends to deny coverage
under or cancel, discontinue or not renew any insurance policy presently in
force.

Section 4.16. TAX MATTERS.

     (a) The Company and each subsidiary has filed all Tax Returns which it is
required to file under applicable laws; all such Tax Returns are true and
accurate and have been prepared in compliance with all applicable laws; the
Company has paid all Taxes due and owing by it or any subsidiary (whether or not
such Taxes are required to be shown on a Tax Return) and have withheld and paid
over to the appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder, creditor or
other third parties; and since December 31, 1999, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions for
deferred income taxes) reflected on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.

     (b) No claim has been made by a taxing authority in a jurisdiction where
the Company does not file tax returns that the Company or any subsidiary is or
may be subject to taxation by that jurisdiction. There are no foreign, federal,
state or local tax audits or administrative or judicial proceedings pending or
being conducted with respect to the Company or any subsidiary; no information
related to Tax matters has been requested by any foreign, federal, state or
local taxing authority; and, except as disclosed above, no written notice
indicating an intent to open an audit or other review has been received by the
Company or any subsidiary from any foreign, federal, state or local taxing
authority. There are no material unresolved questions or claims concerning the
Company's Tax liability. The Company (A) has not executed or entered into a
closing agreement pursuant to Section 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state, local or
foreign law; or (B) has not agreed to or is required to make any adjustments
pursuant to Section 481 (a) of the Internal Revenue Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or any of its subsidiaries or has any knowledge
that the IRS has proposed any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or operations of
the Company. The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal Revenue Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Internal Revenue Code.

     (c) The Company has not made an election under Section 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the

                                       11
<PAGE>

Company under (A) Treas. Reg. Section 1.1502-6 (or comparable provisions of
state, local or foreign law), (B) as a transferee or successor, (C) by contract
or indemnity or (D) otherwise. The Company is not a party to any tax sharing
agreement. The Company has not made any payments, is not obligated to make
payments nor is it a party to an agreement that could obligate it to make any
payments that would not be deductible under Section 280G of the Internal Revenue
Code.

     (d) For purposes of this Section 4.16:

          "IRS" means the United States Internal Revenue Service.

          "TAX" or "TAXES" means federal, state, county, local, foreign, or
          other income, gross receipts, ad valorem, franchise, profits, sales or
          use, transfer, registration, excise, utility, environmental,
          communications, real or personal property, capital stock, license,
          payroll, wage or other withholding, employment, social security,
          severance, stamp, occupation, alternative or add-on minimum, estimated
          and other taxes of any kind whatsoever (including, without limitation,
          deficiencies, penalties, additions to tax, and interest attributable
          thereto) whether disputed or not.

          "TAX RETURN" means any return, information report or filing with
          respect to Taxes, including any schedules attached thereto and
          including any amendment thereof.

Section 4.17. PROPERTY. Neither the Company nor any of its subsidiaries owns any
real property. Each of the Company and its subsidiaries has good and marketable
title to all personal property owned by it, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company; and to the Company's knowledge any real
property and buildings held under lease by the Company as tenant are held by it
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and intended to be made of such
property and buildings by the Company. The Company's present facilities are
adequate for the Company's reasonably foreseeable needs.

Section 4.18. INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted. To the Company's knowledge, neither the Company
nor any of its subsidiaries is infringing upon or in conflict with any right of
any other person with respect to any Intangibles. No adverse claims have been
asserted by any person to the ownership or use of any Intangibles and the
Company has no knowledge of any basis for such claim.

Section 4.19. INTERNAL CONTROLS AND PROCEDURES. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company or any subsidiary is a party or by
which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets

                                       12
<PAGE>

is compared with existing assets at regular intervals; (iii) access to the
Company's consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.

Section 4.20. PAYMENTS AND CONTRIBUTIONS. Neither the Company, any subsidiary,
nor any of its directors, officers or, to its knowledge, other employees has (i)
used any Company funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment of Company funds to any foreign or
domestic government official or employee; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other similar
payment to any person with respect to Company matters.

Section 4.21. RELATED PARTY TRANSACTIONS. The Company is not a party to any
agreement or transaction with any of its officers, directors, greater than 5%
shareholders or any Affiliate (as defined in SEC Rule 405) of any of said
persons that would require disclosure under Item 404 of Regulation S-K that is
not disclosed in the SEC Documents.

Section 4.22. PERMITS AND LICENSES. The Company holds all necessary permits and
licenses to conduct its business as presently conducted. All of such permits and
licenses are in full force and effect and the Company is not in material
violation of any thereof.

Section 4.23. NO MISREPRESENTATION. The representations and warranties of the
Company contained in this Agreement, any schedule, annex or exhibit hereto and
any agreement, instrument or certificate furnished by the Company to the
Investors pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

                                   ARTICLE V

                           COVENANTS OF THE INVESTORS

         Each Investor, severally and not jointly, covenants with the Company
that:

Section 5.1. COMPLIANCE WITH LAW. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.

Section 5.2. NO SHORT SALES. Prior to the Effective Date and during the term
hereof, neither the Investor or any of its affiliates will be in a net short
position with regard to the Common Stock in any accounts directly or indirectly
controlled by the Investor.

                                       13
<PAGE>

                                   ARTICLE VI

                            COVENANTS OF THE COMPANY

Section 6.1. REGISTRATION RIGHTS. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.

Section 6.2. RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Conversion Shares pursuant to any conversion
of the Convertible Debentures.

Section 6.3. LISTING OF COMMON STOCK. The Company hereby agrees to maintain the
listing of the Common Stock on a Principal Market, and as soon as reasonably
practicable following the Closing to list the Conversion Shares on the Principal
Market. The Company further agrees, if the Company applies to have the Common
Stock traded on any other Principal Market, it will include in such application
the Conversion Shares, and will take such other action as is necessary or
desirable in the opinion of the Investors to cause the Conversion Shares to be
listed on such other Principal Market as promptly as possible. The Company will
take all action to continue the listing and trading of its Common Stock on a
Principal Market (including, without limitation, maintaining sufficient net
tangible assets) and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market
and shall provide Investors with copies of any correspondence to or from such
Principal Market which questions or threatens delisting of the Common Stock,
within three (3) Trading Days of the Company's receipt thereof, until the
Investors have disposed of all of their Registrable Securities.

Section 6.4. EXCHANGE ACT REGISTRATION. The Company will cause its Common Stock
to continue to be registered under Section 12(b) or (g) of the Exchange Act,
will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Act until the Investors have
disposed of all of their Registrable Securities.

Section 6.5. LEGENDS. The certificates evidencing the Registrable Securities
shall be free of legends, except as set forth in Article IX. Notwithstanding the
fact that the Transfer Agent is entitled to rely on an opinion from the
Investor's counsel and even if the Transfer Agent receives an opinion from the
Investor's counsel, if the Transfer Agent requires an opinion of counsel from
the Company's counsel pursuant to the Instructions to Transfer Agent attached
hereto as EXHIBIT F to issue new certificates as set forth above, and Company's
counsel fails to deliver such

                                       14
<PAGE>

opinion within five (5) days from such a request, then the Company will pay the
applicable Investor (pro rated on a daily basis), as liquidated damages for such
failure and not as a penalty, ten percent (10%) of the market value of shares of
Common Stock purchased from the Company (including the Exchange Shares which
would be issuable upon conversion of the Convertible Debenture on any date of
determination) and surrendered by the Investor to the Transfer Agent for each
week until such opinion is provided.

Section 6.6. CORPORATE EXISTENCE; CONFLICTING AGREEMENTS. The Company will take
all steps necessary to preserve and continue the corporate existence of the
Company. The Company shall not enter into any agreement, the terms of which
agreement would restrict or impair the right or ability of the Company to
perform any of its obligations under this Agreement or any of the other
agreements attached as exhibits hereto.

Section 6.7. CONSOLIDATION; MERGER. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligation to deliver to the Investors such shares of stock and/or
securities as the Investors are entitled to receive pursuant to this Agreement
and the Convertible Debentures.

Section 6.8. ISSUANCE OF CONVERTIBLE DEBENTURES. The sale of the Convertible
Debentures and the issuance of the Conversion Shares upon conversion of the
Convertible Debentures shall be made in accordance with the provisions and
requirements of Section 4(2), 4(6) or Regulation D and any applicable state
securities law. The Company shall make any necessary SEC and "blue sky" filings
as may be required to be made by the Company in connection with the sale of the
Securities to the Investors, and shall provide a copy thereof to the Investors
promptly after such filing.

Section 6.9. LIMITATION ON FUTURE FINANCING. The Company agrees that it will not
enter into any sale of its securities or any Capital Shares Equivalents at a
discount to the then-current bid price until the earlier of (i) 180 days after
the effective date of the Registration Statement and (ii) three (3) years from
the date hereof. The foregoing shall not prevent or limit the Company from
engaging in any sale of securities (i) pursuant to the exercise of options
granted or to be granted under an employee benefit plan, (ii) pursuant to any
compensatory plan for a full-time employee or key consultant, (iii) in
connection with a strategic partnership or other business transaction, the
principal purpose of which is not simply to raise money, (iv) pursuant to an
equity line of credit agreement arranged through Grady, Hatch & Company or (v)
in a registered public offering by the Company which is underwritten by one or
more established investment banks.

                                  ARTICLE VII

                            SURVIVAL; INDEMNIFICATION

Section 7.1. SURVIVAL. The representations, warranties and covenants made by
each of the Company and each Investor in this Agreement, the annexes, schedules
and exhibits hereto and in

                                       15

<PAGE>

each instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement, shall survive the Closing and the consummation of
the transactions contemplated hereby. In the event of a breach or violation of
any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement, irrespective of any investigation made by or on behalf of
such party on or prior to the Closing Date, unless such party had actual
knowledge of such breach or violation prior to the Closing Date.

Section 7.2. INDEMNITY. (a) The Company hereby agrees to indemnify and hold
harmless the Investors, their respective Affiliates and their respective
officers, directors, partners and members (collectively, the "Investor
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Investor Indemnitees for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), except that, as to actions by
the Investors directly against the Company, the Company shall be liable to the
Investors only if either the Debenture has not been satisfied or the Investor
holds any of the Conversion Shares at the time any action is brought, in each
case promptly as incurred by the Investor Indemnitees and to the extent arising
out of or in connection with:

          (i) any material misrepresentation, omission of fact or breach of any
     of the Company's representations or warranties contained in this Agreement,
     the annexes, schedules or exhibits hereto or any instrument, agreement or
     certificate entered into or delivered by the Company pursuant to this
     Agreement; or

          (ii) any failure by the Company to perform in any material respect any
     of its material covenants, agreements, undertakings or obligations set
     forth in this Agreement, the annexes, schedules or exhibits hereto or any
     instrument, agreement or certificate entered into or delivered by the
     Company pursuant to this Agreement; or

          (iii) any action instituted against the Investors, or any of them or
     their respective Affiliates, by any stockholder of the Company who is not
     an Affiliate of an Investor, with respect to any of the transactions
     contemplated by this Agreement.

     (b) Each Investor, severally and not jointly, hereby agrees to indemnify
and hold harmless the Company, its Affiliates and their respective officers,
directors, partners and members (collectively, the "Company Indemnitees"), from
and against any and all Damages, and agrees to reimburse the Company Indemnitees
for all reasonable out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by the Company
Indemnitees and to the extent arising out of or in connection with any
misrepresentation, omission of fact, or breach of any of the Investor's
representations or warranties contained in this Agreement, the annexes,
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Investor pursuant to this Agreement.

Section 7.3. NOTICE. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim,

                                       16
<PAGE>

proceeding or other action in respect of which indemnification is being sought
(each, a "Claim"), the Indemnified Party promptly shall notify the party from
whom indemnification pursuant to Section 7.2 is being sought (the "Indemnifying
Party") of the commencement thereof; but the omission to so notify the
Indemnifying Party shall not relieve it from any liability that it otherwise may
have to the Indemnified Party, except to the extent that the Indemnifying Party
is actually prejudiced by such omission or delay. In connection with any Claim
as to which both the Indemnifying Party and the Indemnified Party are parties,
the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party reasonably shall have concluded that
representation of the Indemnified Party and the Indemnifying Party by the same
legal counsel would not be appropriate due to actual or, as reasonably
determined by legal counsel to the Indemnified Party, potentially differing
interests between such parties in the conduct of the defense of such Claim, or
if there may be legal defenses available to the Indemnified Party that are in
addition to or disparate from those available to the Indemnifying Party, or (z)
the Indemnifying Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable period of time after
notice of the commencement of such Claim. If the Indemnified Party employs
separate legal counsel in circumstances other than as described in clauses (x),
(y) or (z) above, the fees, costs and expenses of such legal counsel shall be
borne exclusively by the Indemnified Party. Except as provided above, the
Indemnifying Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one firm of legal
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.

Section 7.4. DIRECT CLAIMS. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.

                                  ARTICLE VIII

                              DUE DILIGENCE REVIEW

Section 8.1. DUE DILIGENCE REVIEW. Subject to Section 8.2, the Company shall
make available for inspection and review by the Investors, advisors to and
representatives of the Investors (who

                                       17
<PAGE>

may or may not be affiliated with the Investors and who are reasonably
acceptable to the Company), any underwriter participating in any disposition of
the Registrable Securities on behalf of the Investors pursuant to the
Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, Nasdaq or other filing, all proposed filings
with the SEC, and all other corporate documents and properties of the Company as
may be reasonably necessary for the purpose of such review, and cause the
Company's officers, directors and employees to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.

Section 8.2.      NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

     (a) From and after the filing of the Registration Statement, the Company
shall not disclose material non-public information to the Investors, advisors to
or representatives of the Investors unless prior to disclosure of such
information the Company identifies such information as being non-public
information and provides the Investors, such advisors and representatives with
the opportunity to accept or refuse to accept such non-public information for
review. Other than disclosure of any comment letters received from the SEC staff
with respect to the Registration Statement, the Company may, as a condition to
disclosing any non-public information hereunder, require the Investors' advisors
and representatives to enter into a confidentiality agreement in form and
content reasonably satisfactory to the Company and the Investors.

     (b) The Company will promptly notify the advisors and representatives of
the Investors and, if any, underwriters, of any event or the existence of any
circumstance of which it becomes aware, constituting material information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement, would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein in light
of the circumstances in which they were made, not misleading.

                                   ARTICLE IX

                      LEGENDS; TRANSFER AGENT INSTRUCTIONS

Section 9.1. LEGENDS. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or equivalent
(the "Legend"):

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE

                                       18
<PAGE>

"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED
IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM SUCH REGISTRATION.

Section 9.2. TRANSFER AGENT INSTRUCTIONS. Upon the execution and delivery
hereof, the Company is issuing to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent)
instructions substantially in the form of Exhibit E hereto. Such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be.

Section 9.3. NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend other
than the one specified in Section 9.1 has been or shall be placed on the share
certificates representing the Registrable Securities and no instructions or
"stop transfer orders," "stock transfer restrictions," or other restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article IX.

Section 9.4. INVESTORS' COMPLIANCE. Nothing in this Article shall affect in
any way each Investor's obligations to comply with all applicable securities
laws upon resale of the Common Stock.

                                   ARTICLE X

                           CHOICE OF LAW; ARBITRATION

Section 10.1. GOVERNING LAW/ARBITRATION. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
shall be submitted to arbitration under the American Arbitration Association
(the "AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York unless the matter at issue is the corporation
law of the company's state of incorporation, in which event the corporation law
of such

                                       19
<PAGE>

jurisdiction shall govern such issue. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. Any decision made by the Board of Arbitration (either
prior to or after the expiration of such thirty (30) calendar day period) shall
be final, binding and conclusive on the parties to the dispute, and entitled to
be enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized and is
hereby directed to enter a default judgment against any party failing to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules. The non-prevailing party to any arbitration (as determined by the
Board of Arbitration) shall pay the expenses of the prevailing party, including
reasonable attorney's fees, in connection with such arbitration. Any party shall
be entitled to obtain injunctive relief from a court in any case where such
relief is available, and the prevailing party in such injunctive action shall be
entitled to its reasonable attorneys' fees in connection therewith.

                                   ARTICLE XI

                                   ASSIGNMENT

Section 11.1. ASSIGNMENT. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Convertible Debentures purchased or acquired by any Investor hereunder with
respect to the Convertible Debentures held by such person, and (b) upon the
prior written consent of the Company, which consent shall not unreasonably be
withheld or delayed, each Investor's interest in this Agreement may be assigned
at any time, in whole or in part, to any other person or entity (including any
Affiliate of the Investor) who agrees to make the representations and warranties
contained in Article III and who agrees to be bound by the terms of this
Agreement.

                                  ARTICLE XII

                                     NOTICES

Section 12.1. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours

                                       20
<PAGE>

where such notice is to be received) or (b) on the first business day following
the date of sending by reputable courier service, fully prepaid, addressed to
such address, or (c) upon actual receipt of such mailing, if mailed. The
addresses for such communications shall be:

If to the Company:                       NHancement Technologies Inc.
                                         6663 Owens Drive
                                         Pleasanton, CA 94588
                                         Attention: Douglas Zorn
                                         Telephone: 925-251-3200
                                         Facsimile: 925-251-3203

with a copy to (shall not constitute     Leonard H. Bloom, Esq.
                                         Broad and Cassel
                                         201 South Biscayne Blvd. Suite 3000
                                         Miami, Florida 33131
                                         Telephone: 305-373-9400
                                         Facsimile: 305-995-6428

if to the Investors:                     As set forth on the signature pages
                                         hereto

with a copy to:                          Robert Charron, Esq.
(shall not constitute notice)            Epstein Becker & Green, P.C.
                                         250 Park Avenue
                                         New York, New York
                                         Telephone: (212) 351-4500
                                         Facsimile: (212) 661-0989

Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.

                                  ARTICLE XIII

                                  MISCELLANEOUS

Section 13.1. COUNTERPARTS/ FACSIMILE/ AMENDMENTS. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.

                                       21
<PAGE>

Section 13.2. ENTIRE AGREEMENT. This Agreement, the agreements attached as
Exhibits hereto, which include, but are not limited to the Convertible
Debentures, the Escrow Agreement, and the Registration Rights Agreement, set
forth the entire agreement and understanding of the parties relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written
relating to the subject matter hereof. The terms and conditions of all Exhibits
to this Agreement are incorporated herein by this reference and shall constitute
part of this Agreement as is fully set forth herein.

Section 13.3. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.

Section 13.4. HEADINGS. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.

Section 13.5. NUMBER AND GENDER. There may be one or more Investors parties to
this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if there
is only one Investor, and all references to an Investor as "it" shall apply
equally to a natural person.

Section 13.6. REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement shall be
Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investors and the Company shall be required to employ any other reporting
entity.

Section 13.7. REPLACEMENT OF CERTIFICATES. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Convertible Debentures or any
Conversion Shares and (ii) in the case of any such loss, theft or destruction of
such certificate, upon delivery of an indemnity agreement or security reasonably
satisfactory in form to the Company or as may be required by the Company's
Transfer Agent or (iii) in the case of any such mutilation, on surrender and
cancellation of such certificate, the Company at its expense will execute and
deliver, in lieu thereof, a new certificate of like tenor.

Section 13.8. FEES AND EXPENSES. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder,
except that the Company shall pay the fees, expenses and disbursements of
Epstein Becker & Green, P.C., counsel to the Investors, in an amount equal to
$15,000, all as set forth in the Escrow Agreement.

Section 13.9. BROKERAGE. Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker who
will demand payment of any fee or commission from the other party except for
Grady, Hatch & Company, whose fee shall be paid by the Company. The Company on
the one hand, and the Investors, on the other hand, agree to indemnify the other
against and hold the other harmless from any and all liabilities to any person
claiming brokerage commissions or finder's fees on account of services purported
to have

                                       22
<PAGE>

been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.

Section 13.10. PUBLICITY. The Company agrees that it will not issue any press
release or other public announcement, except as required by law, of the
transactions contemplated by this Agreement without the prior consent of the
Investors, which shall not be unreasonably withheld nor delayed by more than two
(2) Trading Days from their receipt of such proposed release. No release shall
name the Investors without their express consent.

                                       23
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as this
__ day of May, 2000.

                                         NHANCEMENT TECHNOLOGIES, INC.

                                         By: _____________________________
                                             Douglas S. Zorn, President

                                         INVESTORS:

Address:  c/o Utra Finance
          Grossmunster Platz 26          AMRO INTERNATIONAL, S.A.
          Zurich CH 8022
          Switzerland
                                         By: _____________________________
Fax:      011-411-262-5515                   H.U. Bachofen, Director

          Total Purchase Price:

                                         CELESTE TRUST REG
Address:  c/o Trevisa-Trevland-Anstalt
          Landstrasse 8
          Furstentums 9496               By: _____________________________
          Balzers, Liechtenstein             Thomas Hackl, Authorized Signatory
Fax:      011-431-534-532-895

          Total Purchase Price:

                                         ESQUIRE TRADE & FINANCE INC.
Address:
P.O. Box 2154
Baar, CH-6342 Switzerland                By: _____________________________
Fax:  011-411-760-1031                       Roland Winiger
Total Purchase Price: $                      Authorized Signatory

                                       24
<PAGE>

                       [NHAN PURCHASE AGREEMENT-DEBENTURE]

Address:                                       _________________________________
1421 E. Wayzata Blvd. Suite 219                Edward B. Silberman
Watzata, MN  55391-1939
Total Purchase Price:
$50,000

Address:                                       _________________________________
30050 MN World Trade Center                    Allen Jacobson
30 E. 7th Street
Saint Paul, MN  55101-4914
Total Purchase Price:
$100,000

Address:                                       _________________________________
55 Shaw Road                                   Wayne Saker
Chestnut Hill, MA  02147
Total Purchase Price:
$100,000

Address:                                       _________________________________
175 Sheridan Road                              Lucian T. Baldwin
Winnetka, IL  60093
Total Purchase Price:
$500,000

Address:                                       _________________________________
113 35th Place, Unit B                         Bartlett Hackley
Manhattan Beach, CA  90266-3322
Total Purchase Price:
$100,000

                                       25

<PAGE>

                                       26<PAGE>

                                    EXHIBIT 4.25

                         COMMON STOCK PURCHASE AGREEMENT

                  This COMMON STOCK PURCHASE AGREEMENT (this "Agreement') is
         dated as of May 24, 2000 by and between NHancement Technologies Inc., a
         Delaware corporation (the "Company") and Kedrick Investments Limited
         (the "Purchaser").

                  The parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.1       CERTAIN DEFINITIONS.

                  (a) "AVERAGE DAILY PRICE" shall be the price based on the VWAP
         of the Company on the Nasdaq SmallCap Market or, if the Nasdaq SmallCap
         Market is not the Principal Market, on the Principal Market.

                  (b) "DRAW DOWN" shall have the meaning assigned to such term
         in Section 6.1(a) hereof.

                  (c) "DRAW DOWN EXERCISE DATE" shall have the meaning assigned
         to such term in Section 6.1(b) hereof.

                  (d) "DRAW DOWN PRICING PERIOD" shall mean a period of eighteen
         (18) consecutive Trading Days preceding a Draw Down Exercise Date.

                  (e) "EFFECTIVE DATE" shall mean the date the Registration
         Statement of the Company covering the Shares being subscribed for
         hereby is declared effective.

                  (f) "MATERIAL ADVERSE EFFECT" shall mean any adverse effect on
         the business, operations, properties or financial condition of the
         Company that is material and adverse to the Company and its
         subsidiaries and affiliates, taken as a whole and/or any condition,
         circumstance, or situation that would prohibit or otherwise materially
         interfere with the ability of the Company to perform any of its
         material obligations under this Agreement or the Registration Rights
         Agreement or to perform its obligations under any other material
         agreement.

                  (g) "PRINCIPAL MARKET" shall mean initially the Nasdaq
         SmallCap Market, and shall include the Nasdaq National Market, the
         American Stock Exchange or the New York Stock Exchange if the Company
         is listed and trades on such market or exchange. Principal Market shall
         not include the OTC Bulletin Board without the express written consent
         of the Purchaser.

                                       1
<PAGE>

                  (h) "REGISTRATION STATEMENT" shall mean the registration
         statement under the Securities Act of 1933, as amended, to be filed
         with the Securities and Exchange Commission for the registration of the
         Shares pursuant to the Registration Rights Agreement attached hereto as
         EXHIBIT A.

                  (i) "SEC DOCUMENTS" shall mean the Company's latest Form 10-K
         or 10-KSB as of the time in question, all Forms 10-Q or 10-QSB and 8-K
         filed thereafter, and the Proxy Statement for its latest fiscal year as
         of the time in question until such time as the Company no longer has an
         obligation to maintain the effectiveness of a Registration Statement as
         set forth in the Registration Rights Agreement.

                  (j) "SHARES" shall mean, collectively, the shares of Common
         Stock of the Company being subscribed for hereunder and those shares of
         Common Stock issuable to the Purchaser upon exercise of the Warrants.

                  (k) "THRESHOLD PRICE" is the lowest Average Daily Price at
         which the Company will sell its Common Stock with respect to this
         Agreement.

                  (l) "TRADING DAY" shall mean any day on which the Principal
         Market is open for business.

                  (m) "VWAP" shall mean the daily volume weighted average price
         of the Company's Common Stock on the Nasdaq SmallCap Market or on any
         Principal Market as reported by Bloomberg Financial using the AQR
         function.

                                   ARTICLE II

                        PURCHASE AND SALE OF COMMON STOCK

                  Section 2.1 PURCHASE AND SALE OF STOCK. Subject to the terms
and conditions of this Agreement, the Company may issue and sell to the
Purchaser and the Purchaser shall purchase from the Company up to Fifty Million
Dollars ($50,000,000) of the Company's Common Stock, $0.01 par value per share
(the "Common Stock"), based on up to twelve (12) Draw Downs of up to Four
Million Dollars ($4,000,000), subject to adjustment pursuant to Section 6.1(c)
herein, per Draw Down.

                  Section 2.2 THE SHARES. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of its Common Stock to cover the Shares to be
issued in connection with all Draw Downs requested under this Agreement.
Anything in this Agreement to the contrary notwithstanding, (i) at no time will
the Company request a Draw Down which would result in the issuance of a number
of shares of Common Stock pursuant to this Agreement which exceeds 19.9% of the
number of shares of Common Stock issued and outstanding on the Closing Date
without obtaining stockholder approval of such excess issuance, and (ii) at no
time shall the Purchaser be required to accept a

                                       2
<PAGE>

Draw Down to the extent that, after such purchase by the Purchaser, the sum of
the number of shares of Common Stock beneficially owned by the Purchaser and its
affiliates would result in beneficial ownership by the Purchaser and its
affiliates of more than 9.9% of the then outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities and Exchange Act
of 1934, as amended.

                  Section 2.3 PURCHASE PRICE AND CLOSING. The Company agrees to
issue and sell to the Purchaser and, in consideration of and in express reliance
upon the representation, warranties, covenants, terms and conditions of this
Agreement, the Purchaser agrees to purchase that number of the Shares to be
issued in connection with each Draw Down. The closing under this Agreement shall
take place at the offices of Epstein Becker & Green, P.C., 250 Park Avenue, New
York, New York 10177 (the "Closing") within fifteen (15) days from the date
hereof or (ii) such other time and place or on such date as the Purchaser and
the Company may agree upon (the "Closing Date"). Each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Section 3.1 REPRESENTATION AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Purchaser, that, except as set forth in
the SEC Documents, as of their respective dates:

                  (a) ORGANIZATION, GOOD STANDING AND POWER. The Company is a
         corporation duly incorporated validly existing and in good standing
         under the laws of the State of Delaware and has all requisite corporate
         authority to own, lease and operate its properties and assets and to
         carry on its business as now being conducted. The Company does not have
         any subsidiaries and does not own more that fifty percent (50%) of or
         control any other business entity except as set forth in the SEC
         Documents. The Company is duly qualified and is in good standing as a
         foreign corporation to do business in every jurisdiction in which the
         nature of the business conducted or property owned by it makes such
         qualification necessary, other than those in which the failure so to
         qualify would not have a Material Adverse Effect on the Company's
         financial condition.

                  (b) AUTHORIZATION, ENFORCEMENT. (i) The Company has the
         requisite corporate power and corporate authority to enter into and
         perform its obligations under this Agreement, the Registration Rights
         Agreement, the Escrow Agreement and to issue the Draw Down Shares
         pursuant to their respective terms, (ii) the execution, issuance and
         delivery of this Agreement, the Registration Rights Agreement and the
         Escrow Agreement by the Company and the consummation by it

                                       3
<PAGE>

         of the transactions contemplated hereby have been duly authorized by
         all necessary corporate action and no further consent or authorization
         of the Company or its Board of Directors or stockholders is required,
         and (iii) this Agreement, the Registration Rights Agreement and the
         Escrow Agreement have been duly executed and delivered by the Company
         and at the initial Closing shall constitute valid and binding
         obligations of the Company enforceable against the Company in
         accordance with their terms, except as such enforceability may be
         limited by applicable bankruptcy, insolvency, reorganization,
         moratorium, liquidation, conservatorship, receivership or similar laws
         relating to, or affecting generally the enforcement of, creditors'
         rights and remedies or by other equitable principles of general
         application. The Company has duly and validly authorized and reserved
         for issuance shares of Common Stock sufficient in number for the
         issuance of the Draw Down Shares.

                  (c) CAPITALIZATION. As of April 30, 2000, the authorized
         capital stock of the company consists of 20,000,000 shares of Common
         Stock, $0.01 par value per share, of which 10,717,610 shares are issued
         and outstanding and 2,000,000 shares of preferred stock, $0.01 par
         value per share, of which none are issued and none are outstanding. All
         of the outstanding shares of the Company's Common Stock have been duly
         and validly authorized and are fully-paid and non-assessable. Except as
         set forth in this Agreement and the Registration Rights Agreement, no
         shares of Common Stock are entitled to preemptive rights or
         registration rights and there are no outstanding options, warrants,
         scrip, rights to subscribe to, calls or commitments of any character
         whatsoever relating to, or securities or rights convertible into, any
         shares of capital stock of the Company. Furthermore, except as set
         forth in this Agreement, there are no contracts, commitments,
         understandings, or arrangements by which the Company is or may become
         bound to issue additional shares of the capital stock of the Company or
         options, securities or rights convertible into shares of capital stock
         of the Company. The Company is not a party to any agreement granting
         registration rights to any person with respect to any of its equity or
         debt securities. The Company is not a party to, and it has no knowledge
         of, any agreement restricting the voting or transfer of any shares of
         the capital stock of the Company. The offer and sale of all capital
         stock, convertible securities, rights, warrants, or options of the
         Company issued prior to the Closing complied with all applicable
         federal and state securities laws, and no stockholder has a right of
         rescission or damages with respect thereto which would have a Material
         Adverse Effect on the Company's financial condition or operating
         results. The Company has made available to the Purchaser true and
         correct copies of the Company's Certificate of Incorporation as in
         effect on the date hereof (the "Certificate"), and the Company's Bylaws
         as in effect on the date hereof (the "Bylaws"). The Principal Market
         for the Common Stock in the United States is the Nasdaq SmallCap
         Market, and the Company has not received any notice from such market
         questioning or threatening the continued inclusion of the Common Stock
         on such market.

                  (d) ISSUANCE OF SHARES. The Shares to be issued under this
         Agreement have been duly authorized by all necessary corporate action
         and, when paid for or

                                       4
<PAGE>

         issued in accordance with the terms hereof, the Shares shall be validly
         issued and outstanding, fully paid and non-assessable, and the
         Purchaser shall be entitled to all rights accorded to a holder of
         Common Stock.

                  (e) NO CONFLICTS. The execution, delivery and performance of
         this Agreement by the Company and the consummation by the Company of
         the transactions contemplated herein do not and will not (i) violate
         any provision of the Company's Certificate or Bylaws, (ii) conflict
         with, or constitute a default (or an event which with notice or lapse
         of time or both would become a default) under, or give to others any
         rights of termination, amendment, acceleration or cancellation of, any
         agreement, mortgage, deed of trust, indenture, note, bond, license,
         lease agreement, instrument or obligation to which the Company is a
         party, (iii) create or impose a lien, charge or encumbrance on any
         property of the Company under any agreement or any commitment to which
         the Company is a party or by which the Company is bound or by which any
         of its respective properties or assets are bound, or (iv) result in a
         violation of any federal, state, local or other foreign statute, rule,
         regulation, order, judgment or decree (including any federal and state
         or securities laws and regulations) applicable to the Company or any of
         its subsidiaries or by which any property or asset of the Company or
         any of its subsidiaries are bound or affected, except, in all cases,
         for such conflicts, defaults, termination, amendments, accelerations,
         cancellations and violations as would not, individually or in the
         aggregate, have a Material Adverse Effect. The business of the Company
         and its subsidiaries is not being conducted in violation of any laws,
         ordinances or regulations of any governmental entity, except for
         possible violations which singularly or in the aggregate do not and
         will not have a Material Adverse Effect. The Company is not required
         under any federal, state or local law, rule or regulation to obtain any
         consent, authorization or order of, or make any filing or registration
         with, any court or governmental agency in order for it to execute,
         deliver or perform any of its obligations under this Agreement, or
         issue and sell the Shares in accordance with the terms hereof (other
         than any filings which may be required to be made by the Company with
         the Securities and Exchange Commission (the "Commission") or state
         securities administrators subsequent to the Closing and any
         registration statement which may be filed pursuant hereto); provided
         that, for purpose of the representation made in this sentence, the
         Company is assuming and relying upon the accuracy of the relevant
         representations and agreements of the Purchaser herein.

                  (f) COMMISSION DOCUMENTS, FINANCIAL STATEMENTS. The Common
         Stock of the Company is registered pursuant to Section 12(g) of the
         Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
         the Company has timely filed all reports, schedules, forms, statements
         and other documents required to be filed by it with the Commission
         pursuant to the reporting requirements of the Exchange Act, including
         material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
         (all of the foregoing including filings incorporated by reference
         therein being referred to herein as the "Commission Documents"). The
         Company has delivered or made

                                       5
<PAGE>

         available to the Purchaser true and complete copies of the Commission
         Documents filed with the Commission since December 31, 1998. The
         Company has not provided to the Purchaser any information which,
         according to applicable law, rule or regulation, should have been
         disclosed publicly by the Company but which has not been so disclosed,
         other than with respect to the transactions contemplated by this
         Agreement. As of their respective dates, the SEC Documents complied in
         all material respects with the requirements of the Exchange Act and the
         rules and regulations of the Commission promulgated thereunder
         applicable to such documents, and, as of their respective dates, none
         of the SEC Documents contained any untrue statement of a material fact
         or omitted to state a material fact required to be stated therein or
         necessary in order to make the statements therein, in light of the
         circumstances under which they were made, not misleading. The financial
         statements of the Company included in the Commission Documents comply
         as to form in all material respects with applicable accounting
         requirements and the published rules and regulations of the Commission
         or other applicable rules and regulations with respect thereto. Such
         financial statements have been prepared in accordance with generally
         accepted accounting principles ("GAAP") applied on a consistent basis
         during the periods involved (except (i) as may be otherwise indicated
         in such financial statements or the notes thereto or (ii) in the case
         of unaudited interim statements, to the extent they may not include
         footnotes or may be condensed or summary statements), and fairly
         present in all material respects the financial position of the Company
         and its subsidiaries as of the dates thereof and the results of
         operations and cash flows for the periods then ended (subject, in the
         case of unaudited statements, to normal year-end audit adjustments).

                  (g) SUBSIDIARIES. The SEC Documents or the Disclosure Schedule
         hereto sets forth each subsidiary of the Company, showing the
         jurisdiction of its incorporation or organization and showing the
         percentage of each person's ownership of the outstanding stock or other
         interests of such subsidiary. For the purposes of this Agreement,
         "subsidiary" shall mean any corporation or other entity of which at
         least a majority of the securities or other ownership interests having
         ordinary voting power (absolutely or contingently) for the election of
         directors or other persons performing similar functions are at the time
         owned directly or indirectly by the Company and/or any of its other
         subsidiaries. All of the outstanding shares of capital stock of each
         subsidiary have been duly authorized and validly issued, and are fully
         paid and non-assessable. There are no outstanding preemptive,
         conversion or other rights, options, warrants or agreements granted or
         issued by or binding upon any subsidiary for the purchase or
         acquisition of any shares of capital stock of any subsidiary or any
         other securities convertible into, exchangeable for or evidencing the
         rights to subscribe for any shares of such capital stock. Neither the
         Company nor any subsidiary is subject to any obligation (contingent or
         otherwise) to repurchase or otherwise acquire or retire any shares of
         the capital stock of any subsidiary or any convertible securities,
         rights, warrants or options of the type described in the preceding
         sentence. Neither the Company nor

                                       6
<PAGE>

         any subsidiary is a party to, nor has any knowledge of, any agreement
         restricting the voting or transfer of any shares of the capital stock
         of any subsidiary.

                  (h) NO MATERIAL ADVERSE EFFECT. Since December 31, 1999, no
         Material Adverse Effect has occurred or exists with respect to the
         Company, except as disclosed in the SEC Documents or on the Disclosure
         Schedule hereof.

                  (i) NO UNDISCLOSED LIABILITIES. Neither the Company nor any of
         its subsidiaries has any liabilities, obligations, claims or losses
         (whether liquidated or unliquidated, secured or unsecured, absolute,
         accrued, contingent or otherwise) that would be required to be
         disclosed on a balance sheet of the Company or any subsidiary
         (including the notes thereto) in conformity with GAAP which are not
         disclosed in the SEC Documents, other than those incurred in the
         ordinary course of the Company's or its subsidiaries respective
         businesses since such date(s) and which, individually or in the
         aggregate, do not or would not have a Material Adverse Effect on the
         Company or its subsidiaries.

                  (j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since December 31,
         1999, no event or circumstance has occurred or exists with respect to
         the Company or its businesses, properties, prospects, operations or
         financial condition, that, under applicable law, rule or regulation,
         requires public disclosure or announcement prior to the date hereof by
         the Company but which has not been so publicly announced or disclosed
         in the SEC Documents.

                  (k) INDEBTEDNESS. There is no outstanding secured and
         unsecured Indebtedness of the Company or any subsidiary, or for which
         the Company or any subsidiary has commitments, other than which has
         been incurred in the ordinary course of business. For the purposes of
         this Agreement, "Indebtedness" shall mean (a) any liabilities for
         borrowed money or amounts owed in excess of $250,000 (other than trade
         accounts payable incurred in the ordinary course of business), (b) all
         guaranties, endorsements and contingent obligations in respect of
         Indebtedness of others, whether or not the same are or should be
         reflected in the Company's balance sheet (or the notes thereto), except
         guaranties by endorsement of negotiable instruments for deposit or
         collection or similar transactions in the ordinary course of business;
         and (c) the present value of any lease payments in excess of $250,000
         due under leases required to be capitalized in accordance with GAAP.
         Neither the Company nor any subsidiary is in default with respect to
         any Indebtedness.

                  (l) TITLE TO ASSETS. Each of the Company and the subsidiaries
         has good and marketable title to all of its real and personal property
         reflected in the SEC Documents, free of any mortgages, pledges,
         charges, liens, security interests or other encumbrances, except for
         those indicated in the SEC Documents or on the Disclosure Schedule
         hereto or such that do not cause a Material Adverse Effect on the
         Company's financial condition or operating results. All said leases of
         the Company and each of its subsidiaries are valid and subsisting and
         in full force and effect.

                                       7
<PAGE>

                  (m) ACTIONS PENDING. There is no action, suit, claim,
         investigation or proceeding pending or, to the knowledge of the
         Company, threatened against the Company or any subsidiary which
         questions the validity of this Agreement or the transactions
         contemplated hereby or any action taken or to be taken pursuant hereto
         or thereto. There is no action, suit, claim, investigation or
         proceeding pending or, to the knowledge of the Company, threatened,
         against or involving the Company, any subsidiary or any of their
         respective properties or assets which could have a Material Adverse
         Effect. There are no outstanding orders, judgments, injunctions, awards
         or decrees of any court, arbitrator or governmental or regulatory body
         against the Company or any subsidiary.

                  (n) COMPLIANCE WITH LAW. The business of the Company and the
         subsidiaries has been and is presently being conducted in accordance
         with all applicable federal, state and local governmental laws, rules,
         regulations and ordinances or such that do not cause a Material Adverse
         Effect. The Company and each of its subsidiaries have all franchises,
         permits, licenses, consents and other governmental or regulatory
         authorizations and approvals necessary for the conduct of their
         respective businesses as now being conducted by them unless the failure
         to possess such franchises, permits, licenses, consents and other
         governmental or regulatory authorizations and approvals, individually
         or in the aggregate, could not reasonably be expected to have a
         Material Adverse Effect.

                  (o) TAXES. The Company and each subsidiary has filed all Tax
         Returns which it is required to file under applicable laws; all such
         Tax Returns are true and accurate and have prepared in compliance with
         all applicable laws; the Company has paid all Taxes due and owing by it
         or any subsidiary (whether or not such Taxes are required to be shown
         on a Tax Return) and have withheld and paid over to the appropriate
         taxing authorities all Taxes which it is required to withhold from
         amounts paid or owing to any employee, stockholder, creditor or other
         third parties; and since December 31, 1999, the charges, accruals and
         reserves for Taxes with respect to the Company (including any
         provisions for deferred income taxes) reflected on the books of the
         Company are adequate to cover any Tax liabilities of the Company if its
         current tax year were treated as ending on the date hereof.

                                    No claim has been made by a taxing authority
         in a jurisdiction where the Company does not file tax returns that the
         Company or any subsidiary is or may be subject to taxation by that
         jurisdiction. There are no foreign, federal, state or local tax audits
         or administrative or judicial proceedings pending or being conducted
         with respect to the Company or any subsidiary; no information related
         to Tax matters has been requested by any foreign, federal, state or
         local taxing authority; and, except as disclosed above, no written
         notice indicating an intent to open an audit or other review has been
         received by the Company or any subsidiary from any foreign, federal,
         state or local taxing authority. There are no material unresolved
         questions or claims concerning the Company's Tax liability. The Company
         (A) has not executed or entered into a closing agreement pursuant to
         Section 7121 of the Internal Revenue Code or any predecessor provision

                                       8
<PAGE>

         thereof or any similar provision of state, local or foreign law; and
         (B) has not agreed to or is required to make any adjustments pursuant
         to Section 481 (a) of the Internal Revenue Code or any similar
         provision of state, local or foreign law by reason of a change in
         accounting method initiated by the Company or any of its subsidiaries
         or has any knowledge that the IRS has proposed any such adjustment or
         change in accounting method, or has any application pending with any
         taxing authority requesting permission for any changes in accounting
         methods that relate to the business or operations of the Company. The
         Company has not been a United States real property holding corporation
         within the meaning of Section 897(c)(2) of the Internal Revenue Code
         during the applicable period specified in Section 897(c)(1)(A)(ii) of
         the Internal Revenue Code.

                                    The Company has not made an election under
         Section 341(f) of the Internal Revenue Code. The Company is not liable
         for the Taxes of another person that is not a subsidiary of the Company
         under (A) Treas. Reg. Section 1.1502-6 (or comparable provisions of
         state, local or foreign law), (B) as a transferee or successor, (C) by
         contract or indemnity or (D) otherwise. The Company is not a party to
         any tax sharing agreement. The Company has not made any payments, is
         not obligated to make payments nor is it a party to an agreement that
         could obligate it to make any payments that would not be deductible
         under Section 280G of the Internal Revenue Code.

                                    For purposes of this Section 3.1(o):

                           "IRS" means the United States Internal Revenue
         Service.

                           "TAX" or "TAXES" means federal, state, county, local,
         foreign, or other income, gross receipts, ad valorem, franchise,
         profits, sales or use, transfer, registration, excise, utility,
         environmental, communications, real or personal property, capital
         stock, license, payroll, wage or other withholding, employment, social
         security, severance, stamp, occupation, alternative or add-on minimum,
         estimated and other taxes of any kind whatsoever (including, without
         limitation, deficiencies, penalties, additions to tax, and interest
         attributable thereto) whether disputed or not.

                           "TAX RETURN" means any return, information report or
         filing with respect to Taxes, including any schedules attached thereto
         and including any amendment thereof.

                  (p) CERTAIN FEES. No brokers, finders or financial advisory
         fees or commissions will be payable by the Company or any subsidiary
         with respect to the transactions contemplated by this Agreement.

                  (q) DISCLOSURE. To the best of the Company's knowledge,
         neither this Agreement or the Schedules hereto nor any other documents,
         certificates or instruments furnished to the Purchaser by or on behalf
         of the Company or any subsidiary in connection with the transactions
         contemplated by this Agreement contain any untrue statement of a
         material fact or omits to state a material fact necessary in order to
         make the statements made herein or therein, in the light of the
         circumstances under which they were made herein or therein, not
         misleading.

                                       9
<PAGE>

                  (r) OPERATION OF BUSINESS. The Company and each of the
         subsidiaries owns or possesses all patents, trademarks, service marks,
         trade names, copyrights, licenses and authorizations as set forth in
         the SEC Documents and on the Disclosure Schedule hereto, and all rights
         with respect to the foregoing, which are necessary for the conduct of
         its business as now conducted without any conflict with the rights of
         others.

                  (s) REGULATORY COMPLIANCE. The Company has all necessary
         licenses, registrations and permits to conduct its business as now
         being conducted in all states where the Company conducts its business.

                  (t) BOOKS AND RECORDS. The records and documents of the
         Company and its subsidiaries accurately reflect in all material
         respects the information relating to the business of the Company and
         the subsidiaries, the location and collection of their assets, and the
         nature of all transactions giving rise to the obligations or accounts
         receivable of the Company or any subsidiary.

                  (u) MATERIAL AGREEMENTS. Neither the Company nor any
         subsidiary is a party to any written or oral contract, instrument,
         agreement, commitment, obligation, plan or arrangement, a copy of which
         would be required to be filed with the Commission as an exhibit to a
         registration statement on Form S-1 or other applicable form
         (collectively, "Material Agreements") if the Company or any subsidiary
         were registering securities under the Securities Act of 1933, as
         amended (the "Securities Act"). The Company and each of its
         subsidiaries has in all material respects performed all the obligations
         required to be performed by them to date under the foregoing
         agreements, have received no notice of default and, to the best of the
         Company's knowledge are not in default under any Material Agreement now
         in effect, the result of which could cause a Material Adverse Effect.
         No written or oral contract, instruments, agreement, commitment,
         obligation, plan or arrangement of the Company or of any subsidiary
         limits or shall limit the payment of dividends on the Company's Common
         Stock.

                  (v) TRANSACTIONS WITH AFFILIATES. There are no loans, leases,
         agreements, contracts, royalty agreements, management contracts or
         arrangements or other continuing transactions exceeding $100,000
         between (a) the Company or any subsidiary and (b) to our knowledge, any
         officer, executive or director of the Company or any person owning in
         excess of 5% of the common stock of the Company or any member of the
         immediately family of such officer, director or stockholder or any
         corporation or other entity controlled by such officer, director or
         stockholder, or a member of the immediate family of such officer,
         director or stockholder.

                  (w) SECURITIES ACT OF 1933. The Company has complied and will
         comply with all applicable federal and state securities laws in
         connection with the offer,

                                       10
<PAGE>

         issuance and sale of the Shares hereunder. Neither the Company nor
         anyone acting on its behalf, directly or indirectly, has or will sell,
         offer to sell or solicit offers to buy the Shares or similar securities
         to, or solicit offers with respect thereto from any person (other than
         the Purchaser), so as to bring the issuance and sale of the Shares
         and/or Warrants under the registration provisions of the Securities Act
         and applicable state securities laws. Neither the Company nor any of
         its affiliates, nor any person acting on its or their behalf, has
         engaged in any form of general solicitation or general advertising
         (within the meaning of Regulation D under the Securities Act) in
         connection with the offer or sale of the Shares.

                  (x) GOVERNMENTAL APPROVALS. Except for the filing of any
         notice prior or subsequent to the Closing that may be required under
         applicable federal or state securities laws (which if required, shall
         be filed on a timely basis), including the filing of a registration
         statement or statements pursuant to this Agreement, no authorization,
         consent, approval, license, exemption of, filing or registration with
         any court or governmental department, commission, board, bureau, agency
         or instrumentality, domestic or foreign, is or will be necessary for,
         or in connection with, the execution or delivery of the Shares, or for
         the performance by the Company of its obligations under this Agreement.

                  (y) EMPLOYEES. Neither the Company nor any subsidiary has any
         collective bargaining arrangements or agreements covering any of its
         employees. Neither the Company nor any subsidiary is in breach of any
         employment contract, agreement regarding proprietary information,
         noncompetition agreement, nonsolicitation agreement, confidentiality
         agreement, or any other similar contract or restrictive covenant,
         relating to the right of any officer, employee or consultant to be
         employed or engaged by the Company or such subsidiary. Since the date
         of the September 30, 1999, Form 10-KSB, no officer, consultant or key
         employee of the Company or any subsidiary whose termination, either
         individually or in the aggregate, could have a Material Adverse Effect,
         has terminated or, to the knowledge of the Company, has any present
         intention of terminating his or her employment or engagement with the
         Company or any subsidiary.

                  (z) ABSENCE OF CERTAIN DEVELOPMENTS. Since December 31, 1999,
         the Company (including each subsidiary, if such a development would
         materially effect the Company and the other subsidiaries taken as a
         whole), has not:

                  (i) issued any stock, bonds or other corporate securities or
         any rights, options or warrants with respect thereto;

                  (ii) borrowed any amount or incurred or become subject to any
         liabilities (absolute or contingent) except current liabilities
         incurred in the ordinary course of business which are comparable in
         nature and amount to the current liabilities incurred in the ordinary
         course of business during the comparable portion of its prior fiscal
         year, as adjusted to reflect the current nature and volume of the
         Company's or such subsidiary's business;

                                       11
<PAGE>

                  (iii) discharged or satisfied any lien or encumbrance or paid
         any obligation or liability (absolute or contingent), other than
         current liabilities paid in the ordinary course of business;

                  (iv) declared or made any payment or distribution of cash or
         other property to stockholders with respect to its stock, or purchased
         or redeemed, or made any agreements so to purchase or redeem, any
         shares of its capital stock;

                  (v) sold, assigned or transferred any other tangible assets,
         or canceled any debts or claims, except in the ordinary course of
         business;

                  (vi) sold, assigned or transferred any patent rights,
         trademarks, trade names, copyrights, trade secrets or other intangible
         assets or intellectual property rights, or disclosed any proprietary
         confidential information to any person except to customers in the
         ordinary course of business or to the Purchaser or its representatives;

                  (vii) suffered any substantial losses or waived any rights of
         material value, whether or not in the ordinary course of business, or
         suffered the loss of any material amount of prospective business;

                  (viii) made any changes in employee compensation except in the
         ordinary course of business and consistent with past practices;

                  (ix) made capital expenditures or commitments therefor that
         aggregate in excess of $500,000;

                  (x) entered into any other material transaction, whether or
         not in the ordinary course of business;

                  (xi) suffered any material damage, destruction or casualty
         loss, whether or not covered by insurance;

                  (xii) experienced any material problems with labor or
         management in connection with the terms and conditions of their
         employment; or

                  (xiii) effected any two or more events of the foregoing kind
         which in the aggregate would be material to the Company or its
         subsidiaries, taken as a whole.

                  (bb) USE OF PROCEEDS. The proceeds from the sale of the Shares
         will be used by the Company and its subsidiaries for general corporate
         purposes.

                  (cc) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES.
         Company acknowledges and agrees that Purchaser is acting solely in the
         capacity of arm's length purchaser with respect to this Agreement and
         the transactions contemplated hereunder. The Company further
         acknowledges that the Purchaser is

                                       12
<PAGE>

         not acting as a financial advisor or fiduciary of the Company (or in
         any similar capacity) with respect to this Agreement and the
         transactions contemplated hereunder and any advice given by the
         Purchaser or any of its representatives or agents in connection with
         this Agreement and the transactions contemplated hereunder is merely
         incidental to the Purchaser's purchase of the Shares. The Company
         further represents to the Purchaser that the Company's decision to
         enter into this Agreement has been based solely on the independent
         evaluation by the Company and its own representatives and counsel.

                  Section 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
         The Purchaser hereby makes the following representations and warranties
         to the Company:

                  (a) ORGANIZATION AND STANDING OF THE PURCHASER. The Purchaser
         is a corporation duly incorporated, validly existing and in good
         standing under the laws of British Virgin Islands.

                  (b) AUTHORIZATION AND POWER. The Purchaser has the requisite
         power and authority to enter into and perform this Agreement and to
         purchase the Shares being sold to it hereunder. The execution, delivery
         and performance of this Agreement by Purchaser and the consummation by
         it of the transactions contemplated hereby have been duly authorized by
         all necessary corporate action. This Agreement, the Registration Rights
         Agreement and the Escrow Agreement have been duly executed and
         delivered by the Purchaser and at the initial Closing shall constitute
         valid and binding obligations of the Purchaser enforceable against the
         Purchaser in accordance with their terms, except as such enforceability
         may be limited by applicable bankruptcy, insolvency, reorganization,
         moratorium, liquidation, conservatorship, receivership or similar laws
         relating to, or affecting generally the enforcement of, creditors'
         rights and remedies or by other equitable principles of general
         application.

                  (c) NO CONFLICTS. The execution, delivery and performance of
         this Agreement and the consummation by the Purchaser of the
         transactions contemplated hereby or relating hereto do not and will not
         (i) result in a violation of such Purchaser's charter documents or
         bylaws or (ii) conflict with, or constitute a default (or an event
         which with notice or lapse of time or both would become a default)
         under, or give to others any rights of termination, amendment,
         acceleration or cancellation of any agreement, indenture or instrument
         to which the Purchaser is a party, or result in a violation of any law,
         rule, or regulation, or any order, judgment or decree of any court or
         governmental agency applicable to the Purchaser or its properties
         (except for such conflicts, defaults and violations as would not,
         individually or in the aggregate, have a Material Adverse Effect on
         Purchaser). The Purchaser is not required to obtain any consent,
         authorization or order of, or make any filing or registration with, any
         court or governmental agency in order for it to execute, deliver or
         perform any of its obligations under this Agreement or to purchase the
         Shares in accordance with the terms hereof, provided that for purposes
         of the representation made in this sentence, the Purchaser is assuming
         and relying

                                       13
<PAGE>

         upon the accuracy of the relevant representations and agreements of the
         Company herein.

                  (d) FINANCIAL RISKS. The Purchaser acknowledges that it is
         able to bear the financial risks associated with an investment in the
         Shares and that it has been given full access to such records of the
         Company and the subsidiaries and to the officers of the Company and the
         subsidiaries as it has deemed necessary or appropriate to conduct its
         due diligence investigation. The Purchaser is capable of evaluating the
         risks and merits of an investment in the Shares by virtue of its
         experience as an investor and its knowledge, experience, and
         sophistication in financial and business matters and the Purchaser is
         capable of bearing the entire loss of its investment in the Shares.

                  (e) ACCREDITED INVESTOR. The Purchaser is an "accredited
         investor" as defined in Regulation D promulgated under the Securities
         Act.

                  (f) COMPLIANCE WITH LAW. The Purchaser's trading and
         distribution activities with respect to the Shares will be in
         compliance with all applicable state and federal securities laws, rules
         and regulations and the rules and regulations of the Principal Market.

                  (g) GENERAL. The Purchaser understands that the Company is
         relying upon the truth and accuracy of the representations, warranties,
         agreements, acknowledgments and understandings of the Purchaser set
         forth herein in order to determine the suitability of the Purchaser to
         acquire the Shares.

                  (h) COMPANY COMMON STOCK. Neither the Purchaser nor any of its
         affiliates is in the beneficial owner of the Common Stock or has the
         right to purchase Common Stock other than pursuant to this Agreement.

                                   ARTICLE IV

                                    COVENANTS

                  The Company covenants with the Purchaser as follows:

                  Section 4.1 SECURITIES COMPLIANCE. The Company shall notify
         The Nasdaq Stock Market, Inc., in accordance with their rules and
         regulations, of the transactions contemplated by this Agreement, and
         shall take all other necessary action and proceedings as may be
         required and permitted by applicable law, rule and regulation, for the
         legal and valid issuance of the Shares and the Warrants to the
         Purchaser or subsequent holders.

                  Section 4.2 REGISTRATION AND LISTING. The Company will cause
         its Common Stock to continue to be registered under Sections 12(b) or
         12(g) of the Exchange Act, will comply in all respects with its
         reporting and filing obligations

                                       14
<PAGE>

         under the Exchange Act, will comply with all requirements related to
         any registration statement filed pursuant to this Agreement, and will
         not take any action or file any document (whether or not permitted by
         the Securities Act or the rules promulgated thereunder) to terminate or
         suspend such registration or to terminate or suspend its reporting and
         filing obligations under the Exchange Act or Securities Act, except as
         permitted herein. The Company will take all action necessary to
         continue the listing or trading of its Common Stock on the Nasdaq
         SmallCap Market or another Principal Market and will comply in all
         respects with the Company's reporting, filing and other obligations
         under the bylaws or rules of the NASD and the Nasdaq Stock Market.

                  Section 4.3 REGISTRATION STATEMENT. The Company shall cause to
         be filed the Registration Statement, which Registration Statement shall
         provide for the sale of the Shares to the Purchaser and resale by the
         Purchaser to the public in accordance with this Agreement. The Company
         shall cause such Registration Statement to be declared effective by the
         Commission as expeditiously as practicable. Before the Purchaser shall
         be obligated to accept a Draw Down request from the Company, the
         Company shall have caused a sufficient number of shares of Common Stock
         to be registered to cover the Shares to be issued in connection with
         such Draw Down.

                  Section 4.4 ESCROW ARRANGEMENT. The Company and the Purchaser
         shall enter into an escrow arrangement with Epstein Becker & Green,
         P.C. (the "Escrow Agent") in the Form of EXHIBIT B hereto respecting
         payment against delivery of the Shares.

                  Section 4.5 COMPLIANCE WITH LAWS. The Company shall comply,
         and cause each subsidiary to comply, with all applicable laws, rules,
         regulations and orders, noncompliance with which could have a Material
         Adverse Effect.

                  Section 4.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The
         Company shall keep and cause each subsidiary to keep adequate records
         and books of account, in which complete entries will be made in
         accordance with GAAP consistently applied, reflecting all financial
         transactions of the Company and its subsidiaries, and in which, for
         each fiscal year, all proper reserves for depreciation, depletion,
         obsolescence, amortization, taxes, bad debts and other purposes in
         connection with its business shall be made.

                  Section 4.7 AMENDMENTS. The Company shall not amend or waive
         any provision the Certificate of Incorporation, Bylaws of the Company
         in any way that would adversely affect the dividend rights or voting
         rights of the holders of the Shares.

                  Section 4.8 OTHER AGREEMENTS. The Company shall not enter into
         any agreement the terms of which such agreement would restrict or
         impair the right to perform of the Company or any subsidiary under this
         Agreement or the Certificate of Incorporation of the Company.

                                       15
<PAGE>

                  Section 4.9 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
         SUSPENSION OF RIGHT TO REQUEST A DRAW DOWN. The Company will
         immediately notify the Purchaser upon the occurrence of any of the
         following events in respect of the Registration Statement or related
         prospectus in respect of the Shares: (i) receipt of any request for
         additional information from the Commission or any other federal or
         state governmental authority during the period of effectiveness of the
         Registration Statement the response to which would require any
         amendments or supplements to the Registration Statement or related
         prospectus; (ii) the issuance by the Commission or any other federal or
         state governmental authority of any stop order suspending the
         effectiveness of the Registration Statement or the initiation of any
         proceedings for that purpose; (iii) receipt of any notification with
         respect to the suspension of the qualification or exemption from
         qualification of any of the Shares for sale in any jurisdiction or the
         initiation or threatening of any proceeding for such purpose; (iv) the
         happening of any event that makes any material statement made in the
         Registration Statement or related prospectus or any document
         incorporated or deemed to be incorporated therein by reference untrue
         in any material respect or that requires the making of any changes in
         the Registration Statement, related prospectus or documents so that, in
         the case of the Registration Statement, it will not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, and that in the case of the related prospectus,
         it will not contain any untrue statement of a material fact or omit to
         state any material fact required to be stated therein or necessary to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading; and (v) the Company's reasonable
         determination that a post-effective amendment to the Registration
         Statement would be appropriate; and the Company will promptly make
         available to the Purchaser any such supplement or amendment to the
         related prospectus. The Company shall not deliver to the Purchaser any
         Draw Down Notice during the continuation of any of the foregoing
         events.

                  Section 4.10 CONSOLIDATION; MERGER. The Company shall not, at
         any time after the date hereof, effect any merger or consolidation of
         the Company with or into, or a transfer of all or substantially all of
         the assets of the Company to, another entity (a "Consolidation Event")
         unless the resulting successor or acquiring entity (if not the Company)
         assumes by written instrument or by operation of law the obligation to
         deliver to the Purchaser such shares of stock and/or securities as the
         Purchaser is entitled to receive pursuant to any Draw Down issued by
         the Company under this Agreement.

                  Section 4.11 LIMITATION ON FUTURE FINANCING. The Company
         agrees that, except as set forth below, it will not enter into any sale
         of its securities for cash at a discount to the current market price
         until the earlier of (i) fourteen (14) months from the effective date
         of the Registration Statement, (ii) sixty (60) days after the entire
         $48,000,000 of Shares has been purchased by Purchaser or (iii) three
         (3) years from the date hereof. The foregoing shall not prevent or
         limit the Company from engaging

                                       16
<PAGE>

         in any sale of securities (i) in a registered public offering by the
         Company which is underwritten by one or more established investment
         banks, (ii) pursuant to any presently existing or future employee
         benefit plan which plan has been or is approved by the Company's
         stockholders, (iii) pursuant to any compensatory plan for a full-time
         employee or key consultant, (iv) in connection with a strategic
         partnership or other business transaction, the principal purpose of
         which is not simply to raise money, or (v) to which Purchaser gives its
         written approval.

                  The Purchaser covenants with the Company as follows:

                  4.12 NO SHORT SALES. Prior to the Effective Date and during
         the term hereof, neither the Purchaser or any of its affiliates will be
         in a net short position with regard to the Common Stock in any accounts
         directly or indirectly controlled by the Purchaser. Notwithstanding
         anything to the contrary herein, the sale of Shares on or after the
         date of a Draw Down Notice shall not constitute a short position.

                  4.13 FUTURE PURCHASES. During the term of this Agreement and
         other than pursuant to this Agreement, the Purchaser will not purchase
         Common Stock of the Company without the prior written consent of the
         Company.

                                    ARTICLE V

                      CONDITIONS TO CLOSING AND DRAW DOWNS

                  Section 5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
         COMPANY TO SELL THE SHARES. The obligation hereunder of the Company to
         issue and sell the Shares to the Purchaser is subject to the
         satisfaction or waiver, at or before the Closing, of each of the
         conditions set forth below. These conditions are for the Company's sole
         benefit and may be waived by the Company at any time in its sole
         discretion.

                  (a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
         WARRANTIES. The representations and warranties of the Purchaser shall
         be true and correct in all material respects as of the date when made
         and as of the Closing and as of each Draw Down Exercise Date as though
         made at that time, except for representations and warranties that speak
         as of a particular date.

                  (b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
         performed, satisfied and complied in all material respects with all
         material covenants, agreements and conditions required by this
         Agreement to be performed, satisfied or complied with by the Purchaser
         at or prior to the Closing and as of each Draw Down Exercise Date.

                  (c) NO INJUNCTION. No statute, rule, regulation, executive
         order, decree, ruling or injunction shall have been enacted, entered,
         promulgated or endorsed by

                                       17
<PAGE>

         any court or governmental authority of competent jurisdiction which
         prohibits the consummation of any of the transactions contemplated by
         this Agreement.

                  Section 5.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
         PURCHASER TO CLOSE. The obligation hereunder of the Purchaser to enter
         this Agreement is subject to the satisfaction or waiver, at or before
         the Closing, of each of the conditions set forth below. These
         conditions are for the Purchaser's sole benefit and may be waived by
         the Purchaser at any time in its sole discretion.

                  (a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
         Each of the representations and warranties of the Company shall be true
         and correct in all material respects as of the date when made and as of
         the Closing as though made at that time (except for representations and
         warranties that speak as of a particular date).

                  (b) PERFORMANCE BY THE COMPANY. The Company shall have
         performed, satisfied and complied in all respects with all covenants,
         agreements and conditions required by this Agreement to be performed,
         satisfied or complied with by the Company at or prior to the Closing.

                  (c) NO INJUNCTION. No statute, rule, regulation, executive
         order, decree, ruling or injunction shall have been enacted, entered,
         promulgated or endorsed by any court or governmental authority of
         competent jurisdiction which prohibits the consummation of any of the
         transactions contemplated by this Agreement.

                  (d) NO PROCEEDINGS OR LITIGATION. No action, suit or
         proceeding before any arbitrator or any governmental authority shall
         have been commenced, and no investigation by any governmental authority
         shall have been threatened, against the Purchaser or the Company or any
         subsidiary, or any of the officers, directors or affiliates of the
         Company or any subsidiary seeking to restrain, prevent or change the
         transactions contemplated by this Agreement, or seeking damages in
         connection with such transactions.

                  (e) OPINION OF COUNSEL, ETC. At the Closing, the Purchaser
         shall have received an opinion of counsel to the Company, dated the
         date of Closing, in the form of EXHIBIT C hereto, and such other
         certificates and documents as the Purchaser or its counsel shall
         reasonably require incident to the Closing.

                  (f) WARRANTS. In lieu of a minimum Draw Down commitment by the
         Company, the Purchaser shall receive a warrant certificate to purchase
         up to 120,000 shares of Common Stock (the "Warrant"). The Warrant will
         have a three (3) year term from its date of issuance. The Strike Price
         of the Warrant shall be 120% of the closing bid price of the Common
         Stock on the Trading Day immediately prior to the Closing Date. The
         Common Stock underlying the Warrant will be registered in the
         Registration Statement referred to in Section 4.3 hereof. The Warrant
         shall be in the form of EXHIBIT E hereto.

                                       18
<PAGE>

                  Section 5.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
         PURCHASER TO ACCEPT A DRAW DOWN AND PURCHASE THE SHARES. The obligation
         hereunder of the Purchaser to accept a Draw Down request and to acquire
         and pay for the Shares is subject to the satisfaction or waiver, at or
         before each Draw Down Exercise Date, of each of the conditions set
         forth below. The conditions are for the Purchaser's sole benefit and
         may be waived by the Purchaser at any time in its sole discretion.

                  (a) SATISFACTION OF CONDITIONS TO CLOSING. The Company shall
         have satisfied, or the Purchaser shall have waived, the conditions set
         forth in Section 5.2 hereof

                  (b) EFFECTIVE REGISTRATION STATEMENT. The Registration
         Statement registering the Shares shall have been declared effective by
         the Commission and shall remain effective on each Draw Down Exercise
         Date.

                  (c) NO SUSPENSION. Trading in the Company's Common Stock shall
         not have been suspended by the Commission or the Nasdaq SmallCap Market
         (except for any suspension of trading of limited duration agreed to by
         the Company, which suspension shall be terminated prior to each Draw
         Down request), and, at any time prior to such request, trading in
         securities generally as reported on the Nasdaq SmallCap Market shall
         not have been suspended or limited, or minimum prices shall not have
         been established on securities whose trades are reported on the Nasdaq
         SmallCap Market.

                  (d) MATERIAL ADVERSE EFFECT. No Material Adverse Effect and no
         Consolidation Event shall have occurred.

                  (e) OPINION OF COUNSEL The Purchaser shall have received a
         "down-to-date" letter from the Company's counsel, confirming that there
         is no change from the counsel's previously delivered opinion, or else
         specifying with particularity the reason for any change.

                  (f) TRADING CUSHION. Five (5) Trading Days shall have elapsed
         since the last date of Settlement (as defined in Section 6.1(f)
         herein).

                                   ARTICLE VI

                                 DRAW DOWN TERMS

                  Section 6.1 DRAW DOWN TERMS. Subject to the satisfaction of
         the conditions set forth in this Agreement, the parties agree as
         follows:

                  (a) The Company, may, in its sole discretion, issue and
         exercise a draw down (a "Draw Down") during each Draw Down Pricing
         Period, which Draw Down the Purchaser will be obligated to accept.

                                       19
<PAGE>

                  (b) Only one Draw Down shall be allowed in each Draw Down
         Pricing Period. The price per share paid by the Purchaser shall be
         based on the Average Daily Price on each separate Trading Day during
         the Draw Down Pricing Period. The number of shares of Common Stock
         purchased by the Purchaser with respect to each Draw Down shall be
         determined on a daily basis during each Draw Down Pricing Period and
         settled at the election of the Purchaser on a weekly basis or on the
         Draw Down Exercise Date, which shall be the first Trading Day following
         the end of the Draw Down Pricing Period. In connection with each Draw
         Down Pricing Period, the Company may set an Average Daily Price below
         which the Company will not sell any Shares (the "Threshold Price"). If
         the Average Daily Price on any day within the Draw Down Pricing Period
         is less than the Threshold Price, the Company shall not sell and the
         Purchaser shall not be obligated to purchase the Shares otherwise to be
         purchased for such day.

                  (c) There shall be a maximum of twelve (12) Draw Downs during
         the term of this Agreement. Subject to the limitations set forth
         immediately below, the Company shall have the right to issue and
         exercise a Draw Down of up to $4,000,000 of the Company's Common Stock
         per Draw Down ("Maximum Draw Down Amount"); PROVIDED, HOWEVER, the
         Maximum Draw Down Amount shall be increased by $500,000 for every $2.00
         increase in the Threshold Price over $14.00. The minimum Draw Down
         shall be $250,000, unless otherwise agreed by Purchaser.

                  (d) The maximum dollar amount of each Draw Down during any
         Draw Down Pricing Period shall be limited pursuant to the following
         formula: Average Stock Price: Average of the Average Daily Prices for
         the 18 Trading Days prior to the Draw Down Notice date. Average Trading
         Volume: Average daily trading volume for the 45 Trading Days prior to
         the Draw Down Notice date. Maximum dollar amount of each Draw Down: 20%
         of (Average Stock Price x (Average Trading Volume x 18)) the number of
         Shares of Common Stock to be issued in connection with each Draw Down
         shall be equal to the sum of the quotients (for each trading day within
         the Draw Down Pricing Period) of (x) 1/18th of the Draw Down amount and
         (y) 92% of the Average Daily Price of the Common Stock on each Trading
         Day within the Draw Down Pricing Period (the "Discount Price");
         PROVIDED, HOWEVER, the Discount Price shall be increased by 0.1% for
         every $4.00 increase in the Threshold Price over $14.00 until the
         Discount Price equals 94.5% except that the Discount Price shall be
         increased to 94.5% if the Company's market capitalization is equal to
         or exceeds One Billion Dollars. The Company's market capitalization
         shall be calculated as the product of (i) the number of shares of
         Common Stock outstanding as reported by Bloomberg Financial using the
         DES function and (ii) the closing bid price of the Common Stock on the
         Trading Day Prior to the applicable Draw Down Pricing Period. If the
         Average Daily Price on a given Trading Day is less than the Threshold
         Price, then the Purchaser's Draw Down will be reduced by 1/18th and
         that day shall be withdrawn from the Draw Down Pricing Period.

                                       20
<PAGE>

                  (e) The Company must inform the Purchaser by delivering a Draw
         Down Notice, in the form of EXHIBIT D hereto, via facsimile
         transmission as to the amount of the Draw Down the Company wishes to
         exercise before the first day of the Draw Down Pricing Period (the
         "Draw Down Notice"). The Company may set the Threshold Price, if any,
         prior to each Draw Down request. At no time shall the Purchaser be
         required to purchase more than the scheduled Draw Down amount for a
         given Draw Down Pricing Period so that if the Company chooses not to
         exercise the maximum permitted Draw Down in a given Draw Down Pricing
         Period the Purchaser is not obligated to purchase more than the
         scheduled maximum amount in a subsequent Draw Down Pricing Period.

                  (f) On or before three (3) Trading Days after each Settlement
         Period, the Shares purchased by the Purchaser shall be delivered to The
         Depository Trust Company ("DTC") on the Purchaser's behalf. The Shares
         shall be credited by the Company to the DTC account designated by the
         Purchaser upon receipt by the Escrow Agent of payment for the Draw Down
         into the Escrow Agent's trust account as provided in the Escrow
         Agreement. In the event the Shares so purchased are not delivered to
         the DTC by the Company within ten (10) Trading Days after a Draw Down
         Exercise Date, the Company will pay the Purchaser (pro-rated on a daily
         basis), as liquidated damages for such failure to deliver and not as a
         penalty, two percent (2%) of the applicable Draw Down during each
         thirty (30) day period following such failure in cash or restricted
         shares of Common Stock, at the Purchaser's option, until such Shares
         have been delivered. The Escrow Agent shall be directed to pay 98% of
         the purchase price to the Company, net of One Thousand Five Hundred
         Dollars ($1,500) as escrow expenses to the Escrow Agent, and 2% to the
         placement agent upon the delivery of the Shares into the Purchaser's
         DTC account in exchange for payment which shall be referred to herein
         as "Settlement".

                  (g) Annexed hereto as a schedule is an example of the draw
         down procedure and the stock purchases. Notwithstanding the example, in
         the event of a conflict between the example and the terms of this
         Article VI, the terms of this Article VI shall control.

                                   ARTICLE VII

                                   TERMINATION

                  Section 7.1 TERMINATION BY MUTUAL CONSENT. The term of this
         Agreement shall be fourteen (14) months from the Effective Date. This
         Agreement may be terminated at any time by mutual consent of the
         parties.

                  Section 7.2 OTHER TERMINATION.(a) The Purchaser may terminate
         this Agreement upon one (1) Trading Day's notice if (i) an event
         resulting in a Material Adverse Effect has occurred, (ii) the Common
         Stock is de-listed from the Nasdaq SmallCap Market unless such
         de-listing is in connection with the listing of the

                                       21
<PAGE>

         Common Stock on the Nasdaq National Market, American Stock Exchange, or
         the New York Stock Exchange, (iii) the Company files for protection
         from creditors under any applicable law, (iv) the Company completes any
         financing prohibited by Section 4.11 or (v) the Registration Statement
         is not effective by August 31, 2000.

                  (b) The Company may terminate this Agreement upon one (1)
         Trading Day's notice if the Purchaser shall fail to fund more than one
         properly noticed Draw Down within three (3) Trading Days of the date
         payment for such Draw Down is due.

                  Section 7.3 EFFECT OF TERMINATION. In the event of termination
         by the Company or the Purchaser, written notice thereof shall forthwith
         be given to the other party and the transactions contemplated by this
         Agreement shall be terminated without further action by either party.
         If this Agreement is terminated as provided in Section 7.1 or 7.2
         herein, this Agreement shall become void and of no further force and
         effect, except for Sections 9.1 and 9.2, and Article VIII herein.
         Nothing in this Section 7.3 shall be deemed to release the Company or
         the Purchaser from any liability for any breach under this Agreement,
         or to impair the rights to the Company and the Purchaser to compel
         specific performance by the other party of its obligations under this
         Agreement.

                                  ARTICLE VIII

                                 INDEMNIFICATION

                  Section 8.1 GENERAL INDEMNITY. The Company agrees to indemnify
         and hold harmless the Purchaser (and its directors, officers,
         affiliates, agents, successors and assigns) from and against any and
         all losses, liabilities, deficiencies, costs, damages and expenses
         (including, without limitation, reasonable attorney's fees, charges and
         disbursements) incurred by the Purchaser as a result of any inaccuracy
         in or breach of the representations, warranties or covenants made by
         the Company herein, except that, as to actions by the Purchaser
         directly against the Company, the Company shall be liable to the
         Purchaser only if the Purchaser holds any of the Registrable Securities
         at the time any action is brought for any such inaccuracy or breach.
         The Purchaser agrees to indemnify and hold harmless the Company and its
         directors, officers, affiliates, agents, successors and assigns from
         and against any and all losses, liabilities, deficiencies, costs,
         damages and expenses (including, without limitation, reasonable
         attorneys fees, charges and disbursements) incurred by the Company as
         result of any inaccuracy in or breach of the representations,
         warranties or covenants made by the Purchaser herein. Notwithstanding
         anything to the contrary herein, the Purchaser shall be liable under
         this Section 8.1 for only that amount as does not exceed the net
         proceeds to such Purchaser as a result of the sale of Shares pursuant
         to the Registration Statement.

                                       22
<PAGE>

                  Section 8.2 INDEMNIFICATION PROCEDURE. Any party entitled to
         indemnification under this Article VIII (an "indemnified party") will
         give written notice to the indemnifying party of any matters giving
         rise to a claim for indemnification; provided, that the failure of any
         party entitled to indemnification hereunder to give notice as provided
         herein shall not relieve the indemnifying party of its obligations
         under this Article VIII except to the extent that the indemnifying
         party is actually prejudiced by such failure to give notice. In case
         any action, proceeding or claim is brought against an indemnified party
         in respect of which indemnification is sought hereunder, the
         indemnifying party shall be entitled to participate in and, unless in
         the reasonable judgment of counsel to the indemnified party a conflict
         of interest between it and the indemnifying party may exist with
         respect of such action, proceeding or claim, to assume the defense
         thereof with counsel reasonably satisfactory to the indemnified party.
         In the event that the indemnifying party advises an indemnified party
         that it will contest such a claim for indemnification hereunder, or
         fails, within thirty (30) days of receipt of any indemnification notice
         to notify, in writing, such person of its election to defend, settle or
         compromise, at its sole cost and expense, any action, proceeding or
         claim (or discontinues its defense at any time after it commences such
         defense), then the indemnified party may, at its option, defend, settle
         or otherwise compromise or pay such action or claim. In any event,
         unless and until the indemnifying party elects in writing to assume and
         does so assume the defense of any such claim, proceeding or action, the
         indemnified party's costs and expenses arising out of the defense,
         settlement or compromise of any such action, claim or proceeding shall
         be losses subject to indemnification hereunder. The indemnified party
         shall cooperate fully with the indemnifying party in connection with
         any settlement negotiations or defense of any such action or claim by
         the indemnifying party and shall furnish to the indemnifying party all
         information reasonably available to the indemnified party which relates
         to such action or claim. The indemnifying party shall keep the
         indemnified party fully apprised at all times as to the status of the
         defense or any settlement negotiations with respect thereto. If the
         indemnifying party elects to defend any such action or claim, then the
         indemnified party shall be entitled to participate in such defense with
         counsel of its choice at its sole cost and expense. The indemnifying
         party shall not be liable for any settlement of any action, claim or
         proceeding effected without its prior written consent. Notwithstanding
         anything in this Article VIII to the contrary, the indemnifying party
         shall not, without the indemnified party's prior written consent,
         settle or compromise any claim or consent to entry of any judgment in
         respect thereof which imposes any future obligation on the indemnified
         party or which does not include, as an unconditional term thereof, the
         giving by the claimant or the plaintiff to the indemnified party of a
         release from all liability in respect of such claim. The
         indemnification required by this Article VIII shall be made by periodic
         payments of the amount thereof during the course of investigation or
         defense, as and when bills are received or expense, loss, damage or
         liability is incurred, within ten (10) Trading Days of written notice
         thereof to the indemnifying party so long as the indemnified party
         irrevocably agrees to refund such moneys if it is ultimately determined
         by a court of competent jurisdiction that

                                       23
<PAGE>

         such party was not entitled to indemnification. The indemnity
         agreements contained herein shall be in addition to (a) any cause of
         action or similar rights of the indemnified party against the
         indemnifying party or others, and (b) any liabilities the indemnifying
         party may be subject to.

                                   ARTICLE IX

                                  MISCELLANEOUS

                  Section 9.1 FEES AND EXPENSES. The Company shall pay all fees
         and expenses related to the transactions contemplated by this
         Agreement; provided, that the Company shall pay, at the Closing, all
         attorneys and escrow fees and expenses (exclusive of disbursements and
         out-of-pocket expenses) incurred by the Purchaser of $40,000 in
         connection with the preparation, negotiation, execution and delivery of
         this Agreement and the transactions contemplated hereunder. In
         addition, the Company shall pay all reasonable fees and expenses
         incurred by the Purchaser in connection with any amendments,
         modifications or waivers by the Company of this Agreement or the
         Registration Rights Agreement or incurred in connection with the
         enforcement of this Agreement and the Registration Rights Agreement,
         including, without limitation, all reasonable attorneys fees and
         expenses. The Company shall pay all stamp or other similar taxes and
         duties levied in connection with issuance of the Shares pursuant
         hereto.

                  Section 9.2 SPECIFIC ENFORCEMENT. The Company and the
         Purchaser acknowledge and agree that irreparable damage would occur in
         the event that any of the provisions of this Agreement were not
         performed in accordance with their specific terms or were otherwise
         breached. It is accordingly agreed that the parties shall be entitled
         to an injunction or injunctions to prevent or cure breaches of the
         provisions of this Agreement and to enforce specifically the terms and
         provisions hereof or thereof, this being in addition to any other
         remedy to which any of them may be entitled by law or equity.

                  Section 9.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement,
         together with the Registration Rights Agreement and the Escrow
         Agreement contains the entire understanding of the parties with respect
         to the matters covered hereby and, except as specifically set forth
         herein, neither the Company nor the Purchaser makes any
         representations, warranty, covenant or undertaking with respect to such
         matters. No provision of this Agreement may be waived or amended other
         than by a written instrument signed by the party against whom
         enforcement of any such amendment or waiver is sought.

                  Section 9.4 NOTICES. Any notice, demand, request, waiver or
         other communication required or permitted to be given hereunder shall
         be in writing and

                                       24
<PAGE>

         shall be effective (a) upon hand delivery or facsimile at the address
         or number designated below (if delivered on a business day during
         normal business hours where such notice is to be received), or the
         first business day following such delivery (if delivered other than on
         a business day during normal business hours where such notice is to be
         received) or (b) on the second business day following the date of
         mailing by express courier service, fully prepaid, addressed to such
         address, or upon actual receipt of such mailing, whichever shall first
         occur. The addresses for such communications shall be:

                  If to the Company:        NHancement Technologies Inc.
                                            6663 Owens Drive
                                            Pleasanton, CA 94588
                                            Telephone Number:  (925) 251-3200
                                            Fax:  (925) 847-3806
                                            Attention:  Douglas S. Zorn

                  With copies to:           Broad and Cassel
                                            201 South Biscayne Blvd, Suite 3000
                                            Miami, Florida 33131
                                            Telephone: (305) 373-9400
                                            Fax: (305) 985-6428
                                            Attention: Leonard H. Bloom, Esq.

                  If to Purchaser:          c/o Dr. Dr. Batliner & Partner
                                            Aeulestrase 74
                                            FL-9490 Vaduz, Liechtenstein
                                            Fax: 011-075-236-0405
                                            Attention:  Hans Gassner

                  with copies to:           Epstein Becker & Green, P.C.
                                            250 Park Avenue
                                            New York, New York 10177
                                            Telephone Number:  (212) 351-3771
                                            Fax:  (212) 661-0989
                                            Attention: Robert F. Charron

                  Any party hereto may from time to time change its address for
         notices by giving written notice of such changed address to the other
         party hereto in accordance herewith.

                  Section 9.5 WAIVERS. No waiver by either party of any default
         with respect to any provision, condition or requirement of this
         Agreement shall be deemed to be a continuing waiver in the future or a
         waiver of any other provisions, condition or requirement hereof, nor
         shall any delay or omission of any party to exercise any right
         hereunder in any manner impair the exercise of any such right accruing
         to it thereafter.

                                       25
<PAGE>

                  Section 9.6 HEADINGS. The article, section and subsection
         headings in this Agreement are for convenience only and shall not
         constitute a part of this Agreement for any other purpose and shall not
         be deemed to limit or affect any of the provisions hereof.

                  Section 9.7 SUCCESSORS AND ASSIGNS. This Agreement shall be
         binding upon and inure to the benefit of the parties and their
         successors and assigns. The parties hereto may not amend this Agreement
         or any rights or obligations hereunder without the prior written
         consent of the Company and each Purchaser to be affected by the
         amendment. After Closing, the assignment by a party to this Agreement
         of any rights hereunder shall not affect the obligations of such party
         under this Agreement.

                  Section 9.8 NO THIRD PARTY BENEFICIARIES. This Agreement is
         intended for the benefit of the parties hereto and their respective
         permitted successors and assigns and is not for the benefit of, nor may
         any provision hereof be enforced by, any other person.

                  Section 9.9 GOVERNING LAW/ARBITRATION. This Agreement shall be
         governed by and construed in accordance with the internal laws of the
         State of New York, without giving effect to the choice of law
         provisions. Any dispute under this Agreement or any Exhibit attached
         hereto shall be submitted to arbitration under the American Arbitration
         Association (the "AAA") in New York City, New York, and shall be
         finally and conclusively determined by the decision of a board of
         arbitration consisting of three (3) members (hereinafter referred to as
         the "Board of Arbitration") selected as according to the rules
         governing the AAA. The Board of Arbitration shall meet on consecutive
         business days in New York City, New York, and shall reach and render a
         decision in writing (concurred in by a majority of the members of the
         Board of Arbitration) with respect to the amount, if any, which the
         losing party is required to pay to the other party in respect of a
         claim filed. In connection with rendering its decisions, the Board of
         Arbitration shall adopt and follow the laws of the State of New York.
         To the extent practical, decisions of the Board of Arbitration shall be
         rendered no more than thirty (30) calendar days following commencement
         of proceedings with respect thereto. The Board of Arbitration shall
         cause its written decision to be delivered to all parties involved in
         the dispute. The Board of Arbitration shall be authorized and is
         directed to enter a default judgment against any party refusing to
         participate in the arbitration proceeding within thirty days of any
         deadline for such participation. Any decision made by the Board of
         Arbitration (either prior to or after the expiration of such thirty
         (30) calendar day period) shall be final, binding and conclusive on the
         parties to the dispute, and entitled to be enforced to the fullest
         extent permitted by law and entered in any court of competent
         jurisdiction. The prevailing party shall be awarded its costs,
         including attorneys' fees, from the non-prevailing party as part of the
         arbitration award. Any party shall have the right to seek injunctive
         relief from any court of competent jurisdiction in any case where such
         relief is available. The prevailing party in such injunctive action
         shall be awarded its costs, including attorney's fees, from the
         non-prevailing party.

                                       26
<PAGE>

                  Section 9.10 COUNTERPARTS. This Agreement may be executed in
         any number of counterparts, all of which taken together shall
         constitute one and the same instrument and shall become effective when
         counterparts have been signed by each party and delivered to the other
         parties hereto, it being understood that all parties need not sign the
         same counterpart. Execution may be made by delivery by facsimile.

                  Section 9.11 PUBLICITY. Prior to the Closing, neither the
         Company nor the Purchaser shall issue any press release or otherwise
         make any public statement or announcement with respect to this
         Agreement or the transactions contemplated hereby or the existence of
         this Agreement. After the Closing, the Company may issue a press
         release or otherwise make a public statement or announcement with
         respect to this Agreement or the transactions contemplated hereby or
         the existence of this Agreement; provided, that prior to issuing any
         such press release, making any such public statement or announcement,
         the Company obtains the prior consent of the Purchaser, which consent
         shall not be unreasonably withheld or delayed.

                  Section 9.12 SEVERABILITY. The provisions of this Agreement
         are severable and, in the event that any court of competent
         jurisdiction shall determine that any one or more of the provisions or
         part of the provisions contained in this Agreement shall, for any
         reason, be held to be invalid, illegal or unenforceable in any respect,
         such invalidity, illegality or unenforceability shall not affect any
         other provision or part of a provision of this Agreement and this
         Agreement shall be reformed and construed as if such invalid or illegal
         or unenforceable provision, or part of such provision, had never been
         contained herein, so that such provisions would be valid, legal and
         enforceable to the maximum extent possible.

                  Section 9.13 FURTHER ASSURANCES. From and after the date of
         this Agreement, upon the request of the Purchaser or the Company, each
         of the Company and the Purchaser shall execute and deliver such
         instruments, documents and other writings as may be reasonably
         necessary or desirable to confirm and carry out and to effectuate fully
         the intent and purposes of this Agreement.

                  Section 9.14 EFFECTIVENESS OF AGREEMENT. This Agreement shall
         become effective only upon satisfaction of the conditions precedent to
         the initial closing in Article I of the Escrow Agreement.

                                       27
<PAGE>

                         IN WITNESS WHEREOF, the parties hereto have caused this
         Agreement to be duly executed by their respective authorize officer as
         this __ day of May, 2000.

                                   NHANCEMENT TECHNOLOGIES INC.

                                   By:
                                            ------------------------------------
                                            Douglas S. Zorn, President & CEO

                                   KEDRICK INVESTMENTS LIMITED

                                   By:
                                            ------------------------------------
                                            Hans Gassner, Authorized Signatory

                                       28

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