<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NET/TECH INTERNATIONAL, INC.
(Name of Issuer)
Common Stock ( $0.01 par value)
(Title of Class of Securities)
6410771
(CUSIP Number)
Paul W. Enoch, Jr. Copy To: Elizabeth E. Moore
330 Commerce Street Stokes & Bartholomew, P.A.
Nashville, Tennessee 37201 424 Church Street, 28th Floor
615-748-9623 Nashville, Tennessee 37201-2386
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 5, 1997
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13D
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1 (b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
(Continued on following pages)
(Page 1 of 6 Pages)
<PAGE> 2
CUSIP No. 6410771 SCHEDULE 13D Page 2 of 6 Pages
--------------------- -------- --------
(1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Person
PAUL W. ENOCH, JR. (SS####-##-####)
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(2) Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [ ]
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(3) SEC Use Only
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(4) SOURCE OF FUNDS*
PF
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
[ ]
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(6) Citizenship or Place of Organization
USA
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(7) Sole Voting Power
Number of 1,400,000
Shares --------------------------------------------------------
Beneficially (8) Shared Voting Power
Owned by ------
Each --------------------------------------------------------
Reporting (9) Sole Dispositive Power
Person With 1,400,000
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(10) Shared Dispositive Power
------
--------------------------------------------------------
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
1,400,000
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(12) Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares*
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(13) Percent of Class Represented by Amount in Row (11)
18.3%
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(14) Type of Reporting Person*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
NET/TECH INTERNATIONAL, INC.
SCHEDULE 13D
Item 1. Security and Issuer.
This statement (the "Statement") relates to the Common Stock (the "Common
Stock") of Net/Tech International, Inc., a Delaware corporation (the "Issuer"),
which has its principal executive offices at 1 West Front Street, Suite 30, Red
Bank, New Jersey 07701.
Item 2. Identity and Background.
(a) This statement is filed by Paul W. Enoch, Jr. ("Enoch").
(b) Enoch's business address is 330 Commerce Street, Nashville, Tennessee
37201.
(c) Enoch is employed as a securities broker with J.C. Bradford & Co., a
private investment company doing business in Nashville, Tennessee, with an
address of 330 Commerce Street, Nashville, Tennessee 37201.
(d) Enoch has not, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) Enoch has not, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Enoch is a citizen of the United States.
Item 3. Source and Amount of Funds or other Consideration.
The amount of the funds used in purchasing the securities reported as
beneficially owned in Item 5 hereof was $750,000. $500,000 was used for the
purchase of 400,000 shares of the Issuer's Common Stock and $250,000 was used
for the purchase of options to purchase an additional 1,000,000 shares of the
Issuer's Common Stock (the "Options"). In connection with the purchase of the
400,000 shares, Enoch executed a Promissory Note dated August 30, 1997 (the
"Note") in favor of the Issuer and pledged the purchased securities as
collateral for the Note pursuant to a Stock Pledge Agreement of even date
therewith (the "Stock Pledge Agreement"). To date, Enoch has paid $125,000.00
against the Note which is due and payable on or before December 31, 1997. Enoch
used personal funds to purchase the Options and has used and will continue to
use personal funds to pay the Note in full and, accordingly, purchase the
shares.
(Page 3 of 6 Pages)
<PAGE> 4
Item 4. Purpose of Transaction.
Enoch purchased the securities subject to this Schedule 13D as an
investment opportunity.
Item 5. Interest in Securities of the Issuer.
(a) Enoch is the beneficial owner of 1,400,000 shares of Common Stock
(approximately 18.3% of the shares of Common Stock of the Issuer) consisting of
400,000 actual shares of the Issuer's Common Stock and options to purchase an
additional 1,000,000 shares of the Issuer's Common Stock.
(b) Enoch is the beneficial owner of all 1,400,000 shares of Common Stock
to which this Statement relates, and has sole power to vote and dispose of all
such shares, subject only to the provisions of the Stock Pledge Agreement
regarding 400,000 of such shares.
(c) Enoch has effected no transactions in the Issuer's securities in the
past 60 days except as reported herein.
(d) No person other than Enoch has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of the
shares of Common Stock beneficially owned by Enoch.
Item 6. Contracts, Arrangement, Understandings or Relationships
with Respect to the Securities of the Issuer.
Enoch executed the Note in favor of Issuer and has pledged 400,000 shares
of the Issuer's Common Stock as collateral for the Note, all as reported and
described in Item 3 herein and attached hereto as Exhibits 1 and 2. In addition,
Enoch has obtained options for the purchase of up to 1,000,000 shares of the
Issuer's Common Stock, also as reported in Items 3 and 5 herein and attached
hereto as Exhibits 3 and 4 (the "Options"). The Options are exercisable at any
time prior to June 5, 2002 and June 20, 2002, subject only to mandatory
conversion on the Mandatory Conversion Date (as hereinafter defined), at an
exercise price of $2.50/share (the "Purchase Price"). The Issuer may require
Enoch to convert all or a portion of the Options into shares of Common Stock,
if at such time, the Market Price, as defined in the Options, of the Common
Stock has equaled or exceeded three hundred and twenty percent (320%) of the
Purchase Price for 30 consecutive trading days, also as defined in the Options
(the "Mandatory Conversion Date").
Item 7. Material to be filed as Exhibits.
Filed as Exhibits hereto are the following:
Exhibit 1: Promissory Note dated August 30, 1997 in the principal amount
of $500,000.00 from Paul W. Enoch, Jr. as Maker in favor of
Net/Tech International, Inc. with Stock Purchase Agreement
dated May 6, 1997 by and between Paul W. Enoch, Jr. and
Net/Tech International, Inc. attached thereto as Exhibit A.
(Page 4 of 6 Pages)
<PAGE> 5
Exhibit 2: Stock Pledge Agreement dated August 30, 1997 by and between
Paul W. Enoch, Jr. as Pledgor and Net/Tech International, Inc.
Exhibit 3: Stock Purchase Option issued to Paul W. Enoch on June 5,
1997 for the purchase of 200,000 shares of Net/Tech
International Inc.'s common stock.
Exhibit 4: Stock Purchase Option issued to Paul W. Enoch on June 5,
1997 for the purchase of 800,000 shares of Net/Tech
International Inc.'s common stock.
(Page 5 of 6 Pages)
<PAGE> 6
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: November 5, 1997 /s/ Paul W. Enoch, Jr.
---------------------------------
PAUL W. ENOCH, JR.
(Page 6 of 6 Pages)
<PAGE> 1
EXHIBIT 1
PROMISSORY NOTE
$500,000.00 Nashville, Tennessee
August 30, 1997
FOR VALUE RECEIVED, the undersigned, Paul W. Enoch, Jr., an individual
residing in Nashville, Davidson County, Tennessee (hereinafter referred to as
the "Maker"), as satisfaction of the purchase price due under that certain Stock
Purchase Agreement dated May 6, 1997, by and between Paul W. Enoch, Jr, and
Net/Tech International, Inc. and attached hereto as Exhibit A, hereby promises
to pay to the order of Net/Tech International, Inc., a Delaware corporation, its
successors and assigns (hereinafter referred to as "Lender"), at par in lawful
money of the United States of America, at the Lender's principal office or such
other location as the Lender may designate in writing from time to time, the
principal sum of Five Hundred Thousand and NO/100THS Dollars ($500,000.00),
without interest.
The principal balance of this Note shall be due on or before December
31,1997. This Note due hereunder may prepaid, in whole or in part, at any time
or from time to time, without penalty. Payment shall be made by wire transfer or
by certified cashier's check.
This Note is secured by 400,000 shares of common stock, $0.01 par value
per share, of the Lender pursuant to that certain Stock Pledge Agreement of even
date herewith by and between Maker and Lender, to which reference is hereby made
for a more complete description.
In the Maker makes a general assignment for the benefit of creditors;
or, files a voluntary petition in bankruptcy; or, a petition for reorganization
under the bankruptcy laws; or if a petition in bankruptcy is filed against the
Maker; then, in any such case the remaining unpaid principal sum evidenced by
this Note, shall, at the option of the Lender, without notice, become due and
payable forthwith. Failure of the Lender to exercise this right of accelerating
the maturity of the debt, or indulgence granted from time to time, shall in no
event be considered as a waiver of said right of acceleration or prevent the
Lender from exercising said right. Notwithstanding anything herein to the
contrary, the Maker shall have a period of thirty (30) days from the date of
receipt of notice of a default hereunder to cure any such default.
Time is of the essence in respect of this Note, and in case this Note
is collected by law or through an attorney-at-law, or under advice therefrom
whether or not suit is brought, Maker agrees to pay all costs of collection,
including reasonable attorneys' fees.
This Note is intended as a contract and an obligation under the laws of
the State of Tennessee and shall be construed and enforceable in accordance with
the local laws of said State.
The Maker, endorsers, and all parties to this Note and all who may
become liable for same, jointly and severally waive presentment for payment,
protest, notice of protest, notice of nonpayment
<PAGE> 2
of this Note, demand and all legal diligence in enforcing collection, and hereby
expressly agree that the lawful owner or holder of this Note may defer or
postpone collection of the whole or any part hereof, or may extend or renew the
whole or any part hereof, or may accept additional collateral or security for
the payment of this Note, or may release the whole or any part of any
collateral, security and/or liens given to secure the payment of this Note, or
may release from liability on account of this Note any one or more of the Maker,
endorsers, and/or other parties hereto, all without notice to them or any of
them; and such deferment, postponement, renewal, extension, acceptance of
additional collateral or security and/or release shall not in any way affect or
change the obligation of any such maker, endorser, or other party to this Note,
or of any other party who may become liable for the payment hereof.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date, month and year first above written.
MAKER:
/s/ Paul W. Enoch, Jr.
----------------------------------
PAUL W. ENOCH, JR.
ACKNOWLEDGED BY :
LENDER:
NET/TECH INTERNATIONAL, INC.
BY: /s/ Glenn Cohen
-------------------------------
ITS: President and COO
------------------------------
<PAGE> 3
EXHIBIT A
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of May 6, 1997, by and between Paul W. Enoch, Jr., a resident of
Nashville, Tennessee ("Enoch") and Net/Tech International, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Enoch desires to purchase and the Company desires to sell four
hundred thousand(400,000) shares of Common Stock, $0.01 par value, of the
Company (the "Common Stock");
WHEREAS, Enoch and the Company have agreed that Enoch will purchase the
Shares, as hereinafter defined, pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises contained herein and other good and valuable consideration set forth
hereafter, the receipt and sufficiency of which are hereby acknowledged, Enoch
and the Company hereby agree as follows:
1. Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement and in reliance on the representations and warranties contained
herein, the Company hereby agrees to sell, transfer, assign, and convey to
Enoch, and Enoch hereby agrees to acquire and purchase from the Company four
hundred thousand (400,000) shares (individually, a "Share" and, collectively,
the "Shares") of Common Stock of the Company.
2. Purchase Price and Payment. The aggregate purchase price of the
Shares is Five Hundred Thousand and No/100ths Dollars ($500,000.00). Payment of
the purchase price shall be made by Enoch at the Closing, as hereinafter
defined, by wire transfer or certified cashier's check.
3. The Closing. The closing ("Closing") with respect to the purchase
and sale of the Shares is to take place on or before June 20, 1997, unless such
date is extended by the mutual agreement of the parties hereto. The Company
shall deliver or cause to be delivered to Enoch at the Closing a certificate or
certificates evidencing the number of Shares purchased hereunder, with said
Shares bearing a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
<PAGE> 4
4. Representations and Warranties of Enoch. Recognizing that the
Company will be relying on the information and on the representations and
warranties set forth herein, Enoch hereby acknowledges, represents, and warrants
to the Company as follows:
(a) Authority. Enoch is an individual and is over 21 years of
age. Enoch has full power and authority to execute, deliver, enter into, and
perform this Agreement and all agreements, instruments, and documents
contemplated hereby and to carry out the transactions contemplated hereby. This
Agreement is a valid and binding obligation of Enoch, enforceable against him in
accordance with its terms, subject to the limitations imposed by bankruptcy,
insolvency, moratorium, or similar laws or provisions of general application,
and to the availability of equitable remedies.
(b) Purchase for Investment. Enoch is the sole party in
interest in purchasing the Shares and is acquiring the Shares solely for his own
investment and not with a view to the resale or distribution thereof. Enoch has
no present or contemplated agreement, understanding, intent, arrangement, or
commitment providing for or which is likely to compel the transfer, pledge,
sale, or disposition of the Shares. He will not attempt to sell, transfer,
convey, or otherwise dispose of all or any part of the Shares except in
accordance with applicable law, including applicable state and federal
securities laws.
(c) Accredited Investor. Enoch is an "accredited investor," as
defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission.
(d) Suitability of Investment. Enoch has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of his purchase of the Shares, is able to bear the
substantial economic risks of an investment in the shares, and can afford the
complete loss of his investment.
(e) Non-Contravention. Neither the execution and delivery of
this Agreement nor the carrying out of any of the transactions contemplated
hereby, will in any material respect contravene, violate, or result in the
breach of, any agreement or instrument to which Enoch is a party or by which he
is bound, or of any law or governmental order, rule, or regulation which is
applicable to Enoch or will result in the creation or imposition of any security
interest, mortgage, lien, encumbrance, or charge upon any of the properties or
assets of Enoch. No consents or approvals of any persons or entities,
governmental or otherwise, are required which have not been obtained in respect
of the execution and delivery of this Agreement and the carrying out of the
transactions contemplated hereby on the part of Enoch.
(f) Restricted Securities. Enoch understands that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any State, and may be required to
be held indefinitely unless they are subsequently registered under the
Securities Act and the securities laws of any applicable state, or an exemption
from such registration is available. He also understands that the Company is
under no obligation to register the Shares.
(g) Survival. The representations, warranties, and agreements
of Enoch contained herein shall survive the execution and delivery of this
Agreement and the purchase of the Shares.
<PAGE> 5
5. Representations and Warranties of the Company. Recognizing that
Enoch will be relying on the information and on the representations and
warranties set forth herein, the Company hereby acknowledges, represents, and
warrants to Enoch as follows:
(a) Organization, Corporate Power and Qualifications. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, has the corporate power and authority
to own all of its properties and assets and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each jurisdiction in which it owns a material amount of property or
conducts a material amount of business.
(b) Authorization and Validity. The Company has the corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution and delivery of this
Agreement and the consummation by the Company of such transactions have been
duly authorized by its Board of Directors; and this Agreement has been duly
executed and delivered by and constitute valid and binding agreements of the
Company.
(c) Capitalization. The authorized capital stock of the
Company consists of twenty million (20,000,000) shares of Common Stock, $0.01
par value. Prior to the sale of the Shares contemplated hereby, there are
approximately five million six hundred thousand (5,600,000) shares of the
Company's Common Stock issued and outstanding. All of the issued and outstanding
shares of the Company's Common Stock have been duly authorized, validly issued,
and are fully paid and nonassessable.
(d) Non-Contravention. Neither the execution nor delivery of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will violate any provision of any applicable
law or of the Certificate of Incorporation or Bylaws of the Company or violate,
or result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any of the property of the Company pursuant
to any provision of, any mortgage, lien, lease, agreement, deed of trust or
other instrument to which the Company is a party or to which it is subject, or
constitute an event permitting termination of any mortgage, lien, lease,
agreement, deed of trust or other instrument to which the Company is a party.
(e) Litigation. There is no action, suit, proceeding or claim,
or investigation or review by any governmental agency, pending or threatened, or
any state of facts which would lead to such, against or affecting the Company or
any of its properties, business or goodwill; and there is no outstanding order,
rule, judgment, writ, injunction or decree of any court, government or
governmental agency or arbitrator against or affecting the Company or its
assets, business or goodwill.
(f) Compliance with Laws. The Company has complied in all
material respects with the laws and regulations of federal, state, local and
other governmental authorities (including agencies thereof) which are applicable
to the business or properties of the Company (including, without limitation, all
laws and regulations relating to environmental protection, safety and health of
employees and work environs, and employment discrimination), a violation of
which would have
<PAGE> 6
a material adverse effect on the business, operations, condition (financial or
otherwise) or properties of the Company.
(g) Survival. The representations, warranties, and agreements
of the Company contained herein shall survive the execution and delivery of this
Agreement and the purchase of the Shares by Enoch.
6. Conditions to Closing. (a) The obligations of the Company to
consummate the transactions contemplated by this Agreement are subject to the
conditions that the representations and warranties set forth in Section 4 are
true and correct on and as of the date hereof and shall be true and correct on
and as of the date of Closing, and Enoch shall have complied with all covenants
and agreements and satisfied all conditions on his part to be performed or
satisfied prior to Closing and the Company may request a certificate to that
effect signed by Enoch at Closing.
(b) The obligations of Enoch to consummate the transactions
contemplated by this Agreement are subject to the conditions that the
representations and warranties set forth in Section 5 are true and correct on
and as of the date hereof and shall be true and correct on and as of the date of
Closing, and that the Company shall have complied with all covenants and
agreements and satisfied all conditions on its part to be performed or satisfied
prior to Closing and Enoch may request a certificate to that effect signed by
the President of the Company at Closing.
7. Miscellaneous. (a) Each notice and other communication hereunder
shall be in writing and shall be delivered or mailed by registered mail, return
receipt requested, and shall be deemed to have been given on the date of its
delivery, if delivered, and on the third (3rd) full business day following the
date of the mailing, if mailed, to each of the parties thereto at the following
respective addresses or such other address as may be specified in any notice
delivered or mailed as above provided:
(i) If to Enoch, to:
Paul W. Enoch, Jr.
330 Commerce Street
Nashville, Tennessee 37201
With a copy to:
Elizabeth E. Moore, Esq.
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
<PAGE> 7
(ii) If to the Company, to:
Net/Tech International, Inc.
Attention: Glenn E. Cohen, President & Chief
Operating Officer
1 West Front Street, Suite 30
Red Bank, New Jersey 07701
(b) This Agreement, including the exhibits and schedules
hereto, contains the entire agreement and understanding of the parties, and
neither this Agreement nor any term or provision hereof may be changed, waived,
discharged, or terminated orally, or in any manner other than by an instrument
in writing signed by the party against which the enforcement of the change,
waiver, discharge, or termination is sought.
(c) This Agreement shall be binding upon and shall inure to
the benefit of the respective parties hereto and their successors,
representatives, executors, and permitted assigns, except as otherwise expressly
provided herein. None of the parties hereto may assign any of his rights,
duties, or obligations under this Agreement without the prior written consent of
the other parties hereto, except as otherwise expressly provided herein.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(f) The Section headings are for reference only and shall not
limit or control the meaning of any provision of this Agreement.
(g) No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement; however, any of the terms or conditions of
this Agreement which may be waived, may be waived in writing at any time by any
party hereto which is entitled to the benefit thereof.
(h) The parties hereto agree that the provisions of this
Agreement and the performance of each party hereunder may be enforced by any
right or remedy available at law or in equity, including, but not limited to,
the remedy of specific performance.
(i) Time is of the essence in the performance of this
Agreement.
(j) Company and Enoch shall each bear their own expenses in
connection with the Agreement, except as may be provided herein.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ Paul W. Enoch, Jr.
------------------------------------
Paul W. Enoch, Jr.
NET\TECH INTERNATIONAL, INC.
By: /s/ Glenn Cohen
--------------------------------
Title: President and COO
-----------------------------
<PAGE> 1
EXHIBIT 2
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT, dated as of August 30, 1997, by and
between PAUL W. ENOCH, JR., a resident of Nashville, Tennessee (the "Pledgor"),
and NET\TECH INTERNATIONAL, INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Pledgor has purchased from the Company four hundred
thousand (400,000) shares of common stock, $.01 par value per share (the
"Shares"), of the Company, at a price per share of $1.25, pursuant to terms of
that certain Stock Purchase Agreement dated May 6, 1997, by and between the
Company and the Pledgor (the "Stock Purchase Agreement"); and
WHEREAS, the purchase price of the Shares is evidenced by a promissory
note of even date herewith (the "Note"), in the principal amount of Five Hundred
Thousand and No/100ths Dollars ($500,000.00), payable to the order of the
Company.
NOW, THEREFORE, in order to pledge all right, title, and interest of
the Pledgor in and to the Shares, and in exchange for good and valuable
consideration, and the mutual covenants and promises herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Pledge. As collateral security for the full payment by the Pledgor
of the Note, and all principal thereon, when and as due, together with all
renewals, extensions, and modifications thereof, and all notes given in part or
full payment of amounts due thereunder, and all costs, including reasonable
attorneys' fees, incurred by the Company in the collection or administration of
same (all the foregoing, including the Note, being collectively referred to as
"Secured Obligations"), the Pledgor individually hereby assigns, pledges, and
delivers to the Company all of his right, title, and interest in and to the
Shares. The Pledgor hereby authorizes the Company to keep and preserve the
certificates evidencing the Shares in its possession until the Secured
Obligations have been paid and performed in accordance with the terms of the
Note and in accordance with Section 2 hereof.
2. Release of Shares Pledged as Collateral Security. The Note provides
that the principal balance of the Note shall be due on or before December
31,1997, provided, however, that Pledgor may prepay, in whole or in part, at any
time or from time to time, without penalty, the principal balance before the due
date. The Company and Pledgor hereby agree that upon receipt by the Company of
the full amount due under the Note, the Company shall release in full the Shares
pledged hereunder. If Pledgor makes a payment or payments of an amount or
amounts less than the full amount due under the Note, the Company shall release
in full the number of Shares that correspond to the payment made based upon the
purchase price per share of stock under the Stock Purchase Agreement. Upon
payment of amounts due under the Note, in full or in part, the obligation of
Pledgor evidenced by this Pledge Agreement and the Note relating to the Shares
or the number
<PAGE> 2
of Shares corresponding to the payment, shall, without the necessity of any
further action, be fully and automatically released; the Company shall, by the
acceptance of such payment or payments, relinquish any and all claims to or
rights in and to the number of released Shares, and shall release, remise, and
forever discharge the Pledgor from any and all claims or demands of whatsoever
kind relating to such released Shares arising from, under, or by reason of this
Pledge Agreement. Shares shall not for any purpose whatsoever be deemed shares
pledged under this agreement once the same are released hereunder. The Company
agrees promptly to execute and deliver to the Pledgor such instruments or
documents, satisfactory to counsel for the Pledgor, evidencing the release of
Shares pursuant to this Agreement, including but not limited to the delivery of
certificates evidencing the Shares to Pledgor.
3. Default. In the event of (a) the failure of Pledgor to make payment
of amounts due under the Note secured hereby, when such shall be due and payable
under the terms of the Note and such default continues for more than thirty (30)
days after its due date, or (b) a general assignment for the benefit of
creditors by the Pledgor, or (c) any order, judgment, or decree is entered
adjudicating the Pledgor bankrupt or insolvent, or (d) the sale or transfer of
the Shares pledged under this Agreement but not yet released without the prior
consent of the Company, the Company is hereby vested with authority to use,
transfer, hypothecate, or sell the remaining Shares secured by this Pledge
Agreement, or any part thereof, or to cause the same to be done at public or
private sale, upon fifteen (15) days' written notice, at such place and on such
terms as the Company may deem advisable in its sole discretion, and the Company
is authorized to purchase the remaining Shares when sold for its own protection;
and the proceeds of such sale, transfer, or hypothecation shall be applied to
the payment of the Secured Obligations in the order prescribed by the Company in
his sole discretion, together with all damages, interests, costs, and charges
incurred by reason of Pledgor's nonpayment of the Secured Obligations when due;
provided, however, that the Company shall not convey, transfer, assign,
hypothecate, encumber, pledge, or sell the remaining Shares, or any part
thereof, or any interest therein, or cause, or permit, the same to be done until
such remaining Shares have been registered under the Securities Act of 1933, as
amended, and under any applicable state securities law, or until the Corporation
has received an opinion of legal counsel satisfactory to it that such remaining
Shares may be legally sold or transferred without such registration. The
surplus, if any, after payment of the Secured Obligations, shall be paid to the
Pledgor.
4. Warranties and Voting of Pledged Shares. The Pledgor hereby warrants
and represents that the Pledgor has the exclusive right, title, and interest in
and to the Pledged Shares and that the same are unencumbered by any interest of
any kind of any other person or party. So long as the Pledgor is not in default
as provided in Section 3 above, the Pledgor shall have full power to vote the
Shares, provided that such right to vote the Pledged Shares shall automatically
terminate and cease immediately upon default by the Pledgor in any of his duties
or obligations under this Pledge Agreement or by the Pledgor in his payment and
performance of any of the Secured Obligations.
5. Governing Law; Modification, etc, This Agreement and the right and
obligations of The Company and Pledgor hereunder shall be construed under and in
accordance with and shall be governed by the local laws of the State of
Tennessee, and not the conflicts of laws of such state, cannot be changed
orally, and shall bind and inure to the benefit of Pledgor and the Company and
their respective personal representatives, heirs, successors and assigns.
<PAGE> 3
6. Severability. If any term of provision or this Agreement is held to
be invalid, illegal or unenforceable, the validity of the other terms and
provisions shall not be affected thereby.
7. Notices. All notices, offers, or any other communication provided
for herein shall be given in writing, and shall be deemed to have been duly
given if delivered in person, or within five (5) days after being sent by
registered or certified United States mail, postage prepaid, or as otherwise
actually delivered to the Company or the Pledgor, respectively, at the following
addresses:
If to the Company, to:
Net\Tech International, Inc.
Attn: Glenn E. Cohen, President and Chief Operating Officer
1 West Front Street
Red Bank, New Jersey 07701
If to the Pledgor, to:
Paul W. Enoch, Jr.
330 Commerce Street
Nashville, Tennessee 37201
with a copy to:
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Attention: Elizabeth E. Moore
Any party hereto may change the address at which he or it receives
written notices by so notifying the other parties hereto in writing.
8. Successors and Assigns. The Pledge Agreement shall be binding upon,
and shall inure to the benefit of, the respective parties hereto and their
successors, representatives, executors, and permitted assigns.
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and date first above written.
PLEDGOR:
/s/ Paul W. Enoch, Jr.
---------------------------------
PAUL W. ENOCH, JR.
COMPANY:
NET\TECH INTERNATIONAL, INC.
By: /s/ Glenn Cohen
-----------------------------
Its: President and COO
----------------------------
<PAGE> 1
EXHIBIT 3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
NET/TECH INTERNATIONAL, INC.
STOCK PURCHASE OPTION
COMMON STOCK
Common Stock 200,000 Shares
This certifies that, for value received,
Paul W. Enoch, Jr.
his heirs or assigns, are entitled, subject to the terms and conditions
hereinafter set forth, at any time, and at or before the Expiration Date (as
defined herein), but not thereafter, to purchase 200,000 shares of Common Stock,
$0.01 par value, of Net/Tech International, Inc., a Delaware corporation
(hereinafter called the "Corporation"). The purchase price per share payable
upon the exercise of this Option shall be $2.50 (the "Purchase Price"). Such
number of shares purchasable and price per share are subject to adjustment as
herein provided. Upon exercise or conversion, the holder shall receive a
certificate or certificates for the Common Shares (as hereinafter defined) so
purchased, upon presentation and surrender of this Option to the Corporation
with the form of subscription duly executed, and accompanied by payment of the
Purchase Price of each share purchased as hereinafter provided. Payment of the
Purchase Price shall be made by certified check or upon conversion by the holder
hereof.
This Option is subject to the following terms and conditions:
Section 1. Certain Definitions. For all purposes of this Option, unless
the context otherwise requires:
A. "Claim" shall mean any loss, claim demand, damage, or liability,
whether joint or several, including without limitation any judgment, order,
decree, award, or agreement in settlement or compromise of any such claim.
B. "Common Stock" shall mean and include any and all of the
Corporation's common stock, par value $0.01 per share.
<PAGE> 2
C. "Corporation" shall mean Net/Tech International, Inc., a Delaware
corporation, and it successors.
D. "Exercise Date" shall mean, the date on which any Holder shall
exercise its right to purchase Common Shares hereunder.
E. "Expiration Date" shall mean June 20, 2002.
F. "Market Price" shall mean the average of the daily closing prices
per share of Common Stock or such other securities for the most recent 20
trading days prior to such date. The closing price for each day shall be the
last quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock or such other securities selected in good faith by the Board
of Directors of the Corporation. If the Common Stock is listed or admitted to
trading on a national securities exchange, the closing price shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Stock or such other securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading. If the Common Stock or such
other securities are not publicly held or so listed or publicly traded, "Market
Price" shall mean the fair market value per share of Common Stock or of such
other securities as determined in good faith by the Board of Directors of the
Corporation based on an opinion of an independent investment banking firm with
an established national reputation as a valuer of securities, which opinion may
be based on such assumptions as such firm shall in good faith deem to be
necessary and appropriate.
G. "Outstanding" when used with reference to Common Stock shall mean,
at any date as of which the number thereof is to be determined, all issued
shares of Common Stock (including, but without duplication, shares deemed issued
pursuant to Section 5 hereof) except the shares then held in the treasury of the
Corporation.
H. "Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization and any government, and any political subdivision,
instrumentality and agency thereof.
I. "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
<PAGE> 3
J. "Purchase Price" shall mean the exercise price for each share of
Common Stock to be purchased under the terms of this Option, which shall be
$2.50 subject to adjustment as provided in Section 5 hereof.
K. "Option Stock" shall mean the shares of Common Stock purchasable or
purchased by the holder of Options upon the exercise or conversion thereof
pursuant to Section 2 or Section 3, respectively.
Section 2. Exercise of Option. (a) The holder of this Option may, at
any time, but not later than the Expiration Date, exercise this Option at the
times and for the number of shares indicated, less the number of shares as to
which this Option has been previously exercised, at the Purchase Price, as
adjusted, if necessary, pursuant to Section 5 hereof. In order to exercise this
Option in whole or in part, the holder hereof shall deliver to the Corporation
(1) (i) a written notice of such holder's election to exercise this Option,
which notice shall be in substantially the form of the Subscription Notice
attached hereto and shall specify the number of shares of Common Stock to be
purchased, (ii) a certified check or checks payable to the Corporation in an
amount equal to the aggregate purchase price of the number of shares of Common
Stock being purchased, and (iii) this Option. The Corporation shall, as promptly
as practicable, and in any event within twenty (20) days thereafter, execute and
deliver or cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in such denominations as may be specified in said notice and
shall be registered in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date said notice and payment is received by the
Corporation as stated above. If this Option shall have been exercised only in
part, the Corporation shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Option evidencing the rights of such
holder to purchase the shares comprising the remaining shares of Common Stock
called for by this Option, which new Option shall in all other respects be
identical with this Option, or, at the request of such holder, appropriate
notation may be made on this Option and the same returned to such holder. The
Corporation shall pay all expenses, taxes and other charges payable in
connection with the preparation, issue and delivery of stock certificates and
new Options under this Section, except that, in case such stock certificates
shall be registered in a name or names other than the name of the holder of this
Option, funds sufficient to pay all stock transfer taxes which shall be payable
upon the issuance of such stock certificate or certificates shall be paid by the
holder hereof at the time of delivering the notice of exercise mentioned above.
(b) Fractional Shares. The Corporation shall not be required upon any
exercise of this Option to issue a certificate representing any fraction of a
share of Common Stock. If any fraction of a share would be issuable upon
exchange of all or a portion of this Option, the Corporation shall purchase such
fraction for an amount in cash based upon the current market price on the date
of exercise of the Option.
<PAGE> 4
Section 3. Mandatory Conversion. (a) The Corporation may require the
holder hereof to convert all of a portion of the Option into shares of Common
Stock if, at such time, the Market Price of the Common Stock has equaled or
exceeded three hundred twenty percent (320%) of the Purchase Price (as it may
from time to time be adjusted) for thirty (30) consecutive trading days (the
"Mandatory Conversion Date"). To exercise such right, the Corporation must
deliver a Mandatory Conversion Notice in substantially the form attached to this
Option (the "Mandatory Conversion Notice") of the exercise of such right to the
holder within thirty (30) days of the last day of such thirty (30) day period,
such Mandatory Conversion Notice must be given at least ten (10) business days,
but not more than fifteen (15) business days prior to the proposed Mandatory
Conversion Date, and such Mandatory Conversion Notice must specify the proposed
Mandatory Conversion Date and the number of shares of Common Stock underlying
this Option to be converted into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date; provided, however, that in order to be able to convert, the
Market Price on the Mandatory Conversion Date must equal or exceed three hundred
twenty percent (320%) of the Purchase Price in effect on the Mandatory
Conversion Date. If the Market Price on the Mandatory Conversion Date does not
equal or exceed three hundred twenty percent (320%) of the Purchase Price in
effect on the Mandatory Conversion Date, the Corporation's election to require
conversion will be deemed void and no conversion will be effected pursuant to
such notice. Such event will not be deemed, however, to alter or restrict the
Corporation's right to again require conversion at such time as the Market Price
equals or exceeds three hundred twenty percent (320%) of the then current
Purchase Price for forty-five (45) consecutive trading days prior to such time.
(c) Conversions of the Option effected by the exercise of the
Corporation's right to require conversion will be deemed effective as of the
close of business on the Mandatory Conversion Date without any action by the
holder and the holder will, as of such time, be a stockholder of the Corporation
with respect to the number of shares of Common Stock that shall have been
converted. The holder agrees promptly to surrender this Option for cancellation
following mandatory conversion and to deliver to the Corporation a certified
check payable to the Corporation in an amount equal to the aggregate purchase
price of the number of shares of Common Stock being converted. Certificates
representing the shares of Common Stock issuable by the Corporation as a result
of the mandatory conversion of the Option and all dividends and other
distributions payable with respect to such shares and all accrued but unpaid
interest payable pursuant to the immediately preceding paragraph will be
retained by the Corporation pending surrender of this Option for cancellation
and receipt of payment by holder. As promptly as practicable, and in any event
within five (5) business days after the surrender of this Option, the
Corporation shall deliver or cause to be delivered, either by personal delivery
or by certified or registered mail or by a recognized overnight courier service,
in any such case, properly insured, to the holder in accordance with the written
instructions of the holder (i) certificates representing the number of Option
Shares to which the holder shall be entitled, and (ii) if less than the entire
number of shares evidenced by this Option is being converted, a new Option, in
the form of this Option, for the balance of the shares that are not being so
converted.
<PAGE> 5
Section 4. Legend on Common Stock Certificates; Exercise Subject to
Compliance with Laws; Registration of Option Stock.
(a) Legend. The holder understands that each certificate representing
shares of Option Stock issued upon exercise of all or part of this Option shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
(b) Compliance with Laws. The holder acknowledges and agrees that the
exercise of this Option is subject to compliance with all federal and state
securities laws applicable to such exercise. The holder by acceptance hereof
agrees not to transfer the Option or the related Option Stock in any manner
which would result in violation of the registration provisions of the Securities
Act or any state securities laws, and the Corporation shall not be required to
take any action hereunder which would result in a violation of such provisions.
Notwithstanding any provision herein to the contrary, the holder of this Option
may not exercise, sell, transfer otherwise assign this Option unless the
Corporation is provided with an opinion of counsel reasonably satisfactory in
form and substance to the Corporation, or such other assurances as it may
reasonably require, to the effect that such exercise, sale, transfer, or
assignment does not violate the Securities Act or applicable state securities
laws.
Section 5. Anti-dilution Provisions.
(a) Treatment of Stock Dividends, Stock Splits, Etc. In case the
Corporation shall (1) pay a dividend or make a distribution in shares of its
Common Stock or securities convertible into or exercisable for shares of Common
Stock (2) subdivide its outstanding shares of Common Stock into a greater number
of shares, (3) combine its outstanding shares of Common Stock into a smaller
number of shares, or (4) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Corporation (other than a change in par
value, or from par value to no par value, or from no par value to par value),
the Purchase Price in effect immediately prior thereto shall be adjusted by
multiplying the Purchase Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding immediately before such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding (on a fully-diluted basis) immediately following such
transaction. An adjustment made pursuant to this Section shall become effective
immediately after the record date in the case of a dividend of distribution in
shares of the Corporation's Common Stock and shall become effective immediately
after the effective date in the case of a subdivision, combination, or
reclassification.
<PAGE> 6
(b) Number of Adjusted Shares. Upon each adjustment of the Purchase
Price pursuant to this Section 5, the total number of shares of Common Stock
purchasable upon the exercise of this Option shall be such number of shares
(calculated to the nearest tenth) purchasable at the Purchase Price immediately
prior to such adjustment multiplied by a fraction, the numerator of which shall
be the Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Purchase Price in effect immediately after
such adjustment.
(c) Changes in Capital Stock. In case at any time the Corporation shall
be a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Corporation's assets,
liquidation or recapitalization of the capital stock) in which the previously
outstanding capital stock shall be changed into or exchanged for different
securities of the Corporation or common stock or other securities of another
corporation or interest in a non-corporate entity or other property (including
cash) or any combination of any of the foregoing or in which the Common Stock,
if then so listed or traded, ceases to be a publicly traded security either
listed on the New York Stock Exchange or the American Stock Exchange or quoted
by the Nasdaq National Market or any successor thereto or comparable system
(each such transaction being herein called the "Transaction," the date of
consummation of the Transaction being herein called the "Consummation Date"),
then, as a condition of the consummation of the Transaction, lawful and adequate
provisions shall be made so that each holder of Options, upon the exercise
thereof at any time on or after the Consummation Date, shall be entitled to
receive, and such Options shall thereafter represent the right to receive, in
lieu of the Common Stock issuable upon such exercise prior to the Consummation
Date, the highest amount of securities or other property to which such holder
would actually have been entitled as a shareholder upon the consummation of the
Transaction if such holder had exercised such Options immediately prior thereto
(subject to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustment provided for in this Section 5).
(d) Prohibited Transactions. Notwithstanding anything contained herein
to the contrary, the Corporation shall not effect any Transaction unless prior
to the consummation thereof each corporation or entity (other than the
Corporation) which may be required to deliver any securities or other property
upon the exercise of the Option, the surrender of Options or the satisfaction of
exercise rights as provided herein shall assume, by written instrument delivered
to the holder of the Options, the obligation to deliver to such holder such
securities or other property to which, in accordance with the foregoing
provisions, such holder may be entitled, and such corporation or entity shall
have similarly delivered to the holder of the Option appropriate notice of the
changes made in the rights attaching to the Options as a result of such
Transaction, including, without limitation, the exercise provisions applicable
thereto, if any, which shall thereafter continue in full force and effect and
shall be enforceable against such corporation or entity in accordance with the
terms hereof and thereof, together with such other matters as such holder may
reasonably request.
(e) Notice of Adjustment. Upon the occurrence of any event requiring an
adjustment of the Purchase Price, then and in each such case the Corporation
shall promptly deliver to each holder of the Options an Officer's Certificate
stating the Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock issuable
<PAGE> 7
upon exercise of the Options, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Section 6. Option Holders Not Deemed Stockholders. No holder of Options
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Options for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Options, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights, until such holder shall have exercised such Options and
been issued shares of Common Stock in accordance with the provisions hereof.
Section 7. Reservation of Shares; Validly Issued Shares.
(a) Reservation of Shares. The Corporation covenants that it will at
all times reserve and hold available out of its authorized Common Stock, solely
for the purpose of issue upon exercise of the Options, such number of shares of
Common Stock as shall then be issuable upon the exercise of all outstanding
Options.
(b) Validly Issued Shares. The Corporation covenants that all shares of
Common Stock, which shall be issuable upon exercise of the Options, shall, at
the time of delivery, be duly authorized, validly issued, fully paid,
nonassessable, and free from all taxes, liens, and charges with respect to the
issue thereof (other than those which the Corporation shall promptly pay or
discharge). The Corporation shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Options.
Section 8. Notices.
Any notice or other document required or permitted to be given or
delivered to the holder of record of the Option shall be (i) delivered
personally; (ii) mailed first-class postage prepaid, or (iii) sent by overnight
courier, next day delivery, to such holder at the last address shown on the
books of the Corporation maintained for the registry and transfer of the Option.
Any notice or other document required or permitted to be given or delivered to
the holder of record of the Option Stock shall be (i) delivered personally; (ii)
mailed first-class postage prepaid; or (iii) sent by overnight courier, next day
delivery, to such holder at such holder's address as the same appears on the
stock records of the Corporation. Any notice or other document required or
permitted to be given or delivered to the Corporation shall be (i) delivered
personally; (ii) mailed first-class postage prepaid or (iii) sent by overnight
courier, next day delivery, to the principal office of the Corporation at 1 West
Front Street, Suite 30, Red Bank, New Jersey 07701, or delivered to such other
address within the United States of America as shall have been furnished by the
Corporation to the holder of record of the Option and the holders of record of
Option Stock.
<PAGE> 8
Section 9. Governing Law. This Option shall be governed by and
construed under the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Option to be signed
in its name.
Dated: As of June 5, 1997.
NET/TECH INTERNATIONAL, INC.
By: /s/ Glenn Cohen
----------------------------------
Its: President and COO
---------------------------------
Attest:
By:
---------------------------------
Its:
--------------------------------
<PAGE> 9
SUBSCRIPTION NOTICE
Net/Tech International, Inc.:
The undersigned, the holder of the foregoing Option, hereby elects to
exercise purchase rights represented by said Option for, and to purchase
thereunder, ________________ shares of the Common Stock covered by said Option
and herewith makes payable in full therefor of $___________, and requests that
certificates for such shares (and any securities or other property issuable upon
such exercise) be issued in the name of and delivered to __________, whose
address is_______________; and if such shares shall not include all of the
shares issuable as provided in said Option, that a new Option of like tenor and
date for the balance of the shares issuable thereunder be delivered to the
undersigned.
___________________________
<PAGE> 10
FORM OF MANDATORY CONVERSION NOTICE
Paul W. Enoch. Jr.
330 Commerce Street
Nashville, Tennessee 37201
Notice is hereby given that, in accordance with the terms and
conditions of that certain Stock Purchase Option granted by Net/Tech
International, Inc. (the "Corporation") to Paul W. Enoch, Jr. for the purchase
of 200,000 shares of the Corporation's Common Stock, dated June 5, 1997, the
Corporation hereby elects to require conversion of the Option into shares
Common Stock of the Corporation. The Option to be converted and the number of
shares to be converted are as follows:
Number of Shares Number of Shares Number of
Option Entitled to be Shares to
Conversion Converted Be Delivered
- -------------------------------------------------------------------------------
The Mandatory Conversion Date will be _________________.
Net/Tech International, Inc.
By: ________________________________
Name:_______________________________
Title:______________________________
<PAGE> 1
EXHIBIT 4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
NET/TECH INTERNATIONAL, INC.
STOCK PURCHASE OPTION
COMMON STOCK
Common Stock 800,000 Shares
This certifies that, for value received,
Paul W. Enoch, Jr.
his heirs or assigns, are entitled, subject to the terms and conditions
hereinafter set forth, at any time, and at or before the Expiration Date (as
defined herein), but not thereafter, to purchase 800,000 shares of Common Stock,
$0.01 par value, of Net/Tech International, Inc., a Delaware corporation
(hereinafter called the "Corporation"). The purchase price per share payable
upon the exercise of this Option shall be $2.50 (the "Purchase Price"). Such
number of shares purchasable and price per share are subject to adjustment as
herein provided. Upon exercise or conversion, the holder shall receive a
certificate or certificates for the Common Shares (as hereinafter defined) so
purchased, upon presentation and surrender of this Option to the Corporation
with the form of subscription duly executed, and accompanied by payment of the
Purchase Price of each share purchased as hereinafter provided. Payment of the
Purchase Price shall be made by certified check or upon conversion by the holder
hereof.
This Option is subject to the following terms and conditions:
Section 1. Certain Definitions. For all purposes of this Option, unless
the context otherwise requires:
L. "Claim" shall mean any loss, claim demand, damage, or liability,
whether joint or several, including without limitation any judgment, order,
decree, award, or agreement in settlement or compromise of any such claim.
M. "Common Stock" shall mean and include any and all of the
Corporation's common stock, par value $0.01 per share.
<PAGE> 2
N. "Corporation" shall mean Net/Tech International, Inc., a Delaware
corporation, and it successors.
O. "Exercise Date" shall mean, the date on which any Holder shall
exercise its right to purchase Common Shares hereunder.
P. "Expiration Date" shall mean June 5, 2002.
Q. "Market Price" shall mean the average of the daily closing prices
per share of Common Stock or such other securities for the most recent 20
trading days prior to such date. The closing price for each day shall be the
last quoted sale price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock or such other securities selected in good faith by the Board
of Directors of the Corporation. If the Common Stock is listed or admitted to
trading on a national securities exchange, the closing price shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Stock or such other securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading. If the Common Stock or such
other securities are not publicly held or so listed or publicly traded, "Market
Price" shall mean the fair market value per share of Common Stock or of such
other securities as determined in good faith by the Board of Directors of the
Corporation based on an opinion of an independent investment banking firm with
an established national reputation as a valuer of securities, which opinion may
be based on such assumptions as such firm shall in good faith deem to be
necessary and appropriate.
R. "Outstanding" when used with reference to Common Stock shall mean,
at any date as of which the number thereof is to be determined, all issued
shares of Common Stock (including, but without duplication, shares deemed issued
pursuant to Section 5 hereof) except the shares then held in the treasury of the
Corporation.
S. "Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization and any government, and any political subdivision,
instrumentality and agency thereof.
T. "Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
<PAGE> 3
U. "Purchase Price" shall mean the exercise price for each share of
Common Stock to be purchased under the terms of this Option, which shall be
$2.50 subject to adjustment as provided in Section 5 hereof.
V. "Option Stock" shall mean the shares of Common Stock purchasable or
purchased by the holder of Options upon the exercise or conversion thereof
pursuant to Section 2 or Section 3, respectively.
Section 2. Exercise of Option. (a) The holder of this Option may, at
any time, but not later than the Expiration Date, exercise this Option at the
times and for the number of shares indicated, less the number of shares as to
which this Option has been previously exercised, at the Purchase Price, as
adjusted, if necessary, pursuant to Section 5 hereof. In order to exercise this
Option in whole or in part, the holder hereof shall deliver to the Corporation
(1) (i) a written notice of such holder's election to exercise this Option,
which notice shall be in substantially the form of the Subscription Notice
attached hereto and shall specify the number of shares of Common Stock to be
purchased, (ii) a certified check or checks payable to the Corporation in an
amount equal to the aggregate purchase price of the number of shares of Common
Stock being purchased, and (iii) this Option. The Corporation shall, as promptly
as practicable, and in any event within twenty (20) days thereafter, execute and
deliver or cause to be executed and delivered, in accordance with said notice, a
certificate or certificates representing the aggregate number of shares of
Common Stock specified in said notice. The stock certificate or certificates so
delivered shall be in such denominations as may be specified in said notice and
shall be registered in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be deemed to
have been issued and such holder or any other person designated to be named
therein shall be deemed for all purposes to have become a holder of record of
such shares as of the date said notice and payment is received by the
Corporation as stated above. If this Option shall have been exercised only in
part, the Corporation shall, at the time of delivery of said certificate or
certificates, deliver to such holder a new Option evidencing the rights of such
holder to purchase the shares comprising the remaining shares of Common Stock
called for by this Option, which new Option shall in all other respects be
identical with this Option, or, at the request of such holder, appropriate
notation may be made on this Option and the same returned to such holder. The
Corporation shall pay all expenses, taxes and other charges payable in
connection with the preparation, issue and delivery of stock certificates and
new Options under this Section, except that, in case such stock certificates
shall be registered in a name or names other than the name of the holder of this
Option, funds sufficient to pay all stock transfer taxes which shall be payable
upon the issuance of such stock certificate or certificates shall be paid by the
holder hereof at the time of delivering the notice of exercise mentioned above.
(b) Fractional Shares. The Corporation shall not be required upon any
exercise of this Option to issue a certificate representing any fraction of a
share of Common Stock. If any fraction of a share would be issuable upon
exchange of all or a portion of this Option, the Corporation shall purchase such
fraction for an amount in cash based upon the current market price on the date
of exercise of the Option.
<PAGE> 4
Section 3. Mandatory Conversion. (a) The Corporation may require the
holder hereof to convert all of a portion of the Option into shares of Common
Stock if, at such time, the Market Price of the Common Stock has equaled or
exceeded three hundred twenty percent (320%) of the Purchase Price (as it may
from time to time be adjusted) for thirty (30) consecutive trading days (the
"Mandatory Conversion Date"). To exercise such right, the Corporation must
deliver a Mandatory Conversion Notice in substantially the form attached to this
Option (the "Mandatory Conversion Notice") of the exercise of such right to the
holder within thirty (30) days of the last day of such thirty (30) day period,
such Mandatory Conversion Notice must be given at least ten (10) business days,
but not more than fifteen (15) business days prior to the proposed Mandatory
Conversion Date, and such Mandatory Conversion Notice must specify the proposed
Mandatory Conversion Date and the number of shares of Common Stock underlying
this Option to be converted into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date; provided, however, that in order to be able to convert, the
Market Price on the Mandatory Conversion Date must equal or exceed three hundred
twenty percent (320%) of the Purchase Price in effect on the Mandatory
Conversion Date. If the Market Price on the Mandatory Conversion Date does not
equal or exceed three hundred twenty percent (320%) of the Purchase Price in
effect on the Mandatory Conversion Date, the Corporation's election to require
conversion will be deemed void and no conversion will be effected pursuant to
such notice. Such event will not be deemed, however, to alter or restrict the
Corporation's right to again require conversion at such time as the Market Price
equals or exceeds three hundred twenty percent (320%) of the then current
Purchase Price for forty-five (45) consecutive trading days prior to such time.
(c) Conversions of the Option effected by the exercise of the
Corporation's right to require conversion will be deemed effective as of the
close of business on the Mandatory Conversion Date without any action by the
holder and the holder will, as of such time, be a stockholder of the Corporation
with respect to the number of shares of Common Stock that shall have been
converted. The holder agrees promptly to surrender this Option for cancellation
following mandatory conversion and to deliver to the Corporation a certified
check payable to the Corporation in an amount equal to the aggregate purchase
price of the number of shares of Common Stock being converted. Certificates
representing the shares of Common Stock issuable by the Corporation as a result
of the mandatory conversion of the Option and all dividends and other
distributions payable with respect to such shares and all accrued but unpaid
interest payable pursuant to the immediately preceding paragraph will be
retained by the Corporation pending surrender of this Option for cancellation
and receipt of payment by holder. As promptly as practicable, and in any event
within five (5) business days after the surrender of this Option, the
Corporation shall deliver or cause to be delivered, either by personal delivery
or by certified or registered mail or by a recognized overnight courier service,
in any such case, properly insured, to the holder in accordance with the written
instructions of the holder (i) certificates representing the number of Option
Shares to which the holder shall be entitled, and (ii) if less than the entire
number of shares evidenced by this Option is being converted, a new Option, in
the form of this Option, for the balance of the shares that are not being so
converted.
<PAGE> 5
Section 4. Legend on Common Stock Certificates; Exercise Subject to
Compliance with Laws; Registration of Option Stock.
(a) Legend. The holder understands that each certificate representing
shares of Option Stock issued upon exercise of all or part of this Option shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
(b) Compliance with Laws. The holder acknowledges and agrees that the
exercise of this Option is subject to compliance with all federal and state
securities laws applicable to such exercise. The holder by acceptance hereof
agrees not to transfer the Option or the related Option Stock in any manner
which would result in violation of the registration provisions of the Securities
Act or any state securities laws, and the Corporation shall not be required to
take any action hereunder which would result in a violation of such provisions.
Notwithstanding any provision herein to the contrary, the holder of this Option
may not exercise, sell, transfer otherwise assign this Option unless the
Corporation is provided with an opinion of counsel reasonably satisfactory in
form and substance to the Corporation, or such other assurances as it may
reasonably require, to the effect that such exercise, sale, transfer, or
assignment does not violate the Securities Act or applicable state securities
laws.
Section 5. Anti-dilution Provisions.
(a) Treatment of Stock Dividends, Stock Splits, Etc. In case the
Corporation shall (1) pay a dividend or make a distribution in shares of its
Common Stock or securities convertible into or exercisable for shares of Common
Stock (2) subdivide its outstanding shares of Common Stock into a greater number
of shares, (3) combine its outstanding shares of Common Stock into a smaller
number of shares, or (4) issue by reclassification of its shares of Common Stock
any shares of capital stock of the Corporation (other than a change in par
value, or from par value to no par value, or from no par value to par value),
the Purchase Price in effect immediately prior thereto shall be adjusted by
multiplying the Purchase Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding immediately before such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding (on a fully-diluted basis) immediately following such
transaction. An adjustment made pursuant to this Section shall become effective
immediately after the record date in the case of a dividend of distribution in
shares of the Corporation's Common Stock and shall become effective immediately
after the effective date in the case of a subdivision, combination, or
reclassification.
<PAGE> 6
(b) Number of Adjusted Shares. Upon each adjustment of the Purchase
Price pursuant to this Section 5, the total number of shares of Common Stock
purchasable upon the exercise of this Option shall be such number of shares
(calculated to the nearest tenth) purchasable at the Purchase Price immediately
prior to such adjustment multiplied by a fraction, the numerator of which shall
be the Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Purchase Price in effect immediately after
such adjustment.
(c) Changes in Capital Stock. In case at any time the Corporation shall
be a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Corporation's assets,
liquidation or recapitalization of the capital stock) in which the previously
outstanding capital stock shall be changed into or exchanged for different
securities of the Corporation or common stock or other securities of another
corporation or interest in a non-corporate entity or other property (including
cash) or any combination of any of the foregoing or in which the Common Stock,
if then so listed or traded, ceases to be a publicly traded security either
listed on the New York Stock Exchange or the American Stock Exchange or quoted
by the Nasdaq National Market or any successor thereto or comparable system
(each such transaction being herein called the "Transaction," the date of
consummation of the Transaction being herein called the "Consummation Date"),
then, as a condition of the consummation of the Transaction, lawful and adequate
provisions shall be made so that each holder of Options, upon the exercise
thereof at any time on or after the Consummation Date, shall be entitled to
receive, and such Options shall thereafter represent the right to receive, in
lieu of the Common Stock issuable upon such exercise prior to the Consummation
Date, the highest amount of securities or other property to which such holder
would actually have been entitled as a shareholder upon the consummation of the
Transaction if such holder had exercised such Options immediately prior thereto
(subject to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustment provided for in this Section 5).
(d) Prohibited Transactions. Notwithstanding anything contained herein
to the contrary, the Corporation shall not effect any Transaction unless prior
to the consummation thereof each corporation or entity (other than the
Corporation) which may be required to deliver any securities or other property
upon the exercise of the Option, the surrender of Options or the satisfaction of
exercise rights as provided herein shall assume, by written instrument delivered
to the holder of the Options, the obligation to deliver to such holder such
securities or other property to which, in accordance with the foregoing
provisions, such holder may be entitled, and such corporation or entity shall
have similarly delivered to the holder of the Option appropriate notice of the
changes made in the rights attaching to the Options as a result of such
Transaction, including, without limitation, the exercise provisions applicable
thereto, if any, which shall thereafter continue in full force and effect and
shall be enforceable against such corporation or entity in accordance with the
terms hereof and thereof, together with such other matters as such holder may
reasonably request.
(e) Notice of Adjustment. Upon the occurrence of any event requiring an
adjustment of the Purchase Price, then and in each such case the Corporation
shall promptly deliver to each holder of the Options an Officer's Certificate
stating the Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares of Common Stock issuable
<PAGE> 7
upon exercise of the Options, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Section 6. Option Holders Not Deemed Stockholders. No holder of Options
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Options for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Options, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights, until such holder shall have exercised such Options and
been issued shares of Common Stock in accordance with the provisions hereof.
Section 7. Reservation of Shares; Validly Issued Shares.
(a) Reservation of Shares. The Corporation covenants that it will at
all times reserve and hold available out of its authorized Common Stock, solely
for the purpose of issue upon exercise of the Options, such number of shares of
Common Stock as shall then be issuable upon the exercise of all outstanding
Options.
(b) Validly Issued Shares. The Corporation covenants that all shares of
Common Stock, which shall be issuable upon exercise of the Options, shall, at
the time of delivery, be duly authorized, validly issued, fully paid,
nonassessable, and free from all taxes, liens, and charges with respect to the
issue thereof (other than those which the Corporation shall promptly pay or
discharge). The Corporation shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Options.
Section 8. Notices.
Any notice or other document required or permitted to be given or
delivered to the holder of record of the Option shall be (i) delivered
personally; (ii) mailed first-class postage prepaid, or (iii) sent by overnight
courier, next day delivery, to such holder at the last address shown on the
books of the Corporation maintained for the registry and transfer of the Option.
Any notice or other document required or permitted to be given or delivered to
the holder of record of the Option Stock shall be (i) delivered personally; (ii)
mailed first-class postage prepaid; or (iii) sent by overnight courier, next day
delivery, to such holder at such holder's address as the same appears on the
stock records of the Corporation. Any notice or other document required or
permitted to be given or delivered to the Corporation shall be (i) delivered
personally; (ii) mailed first-class postage prepaid or (iii) sent by overnight
courier, next day delivery, to the principal office of the Corporation at 1 West
Front Street, Suite 30, Red Bank, New Jersey 07701, or delivered to such other
address within the United States of America as shall have been furnished by the
Corporation to the holder of record of the Option and the holders of record of
Option Stock.
<PAGE> 8
Section 9. Governing Law. This Option shall be governed by and
construed under the internal laws of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Option to be signed
in its name.
Dated: As of June 5, 1997.
NET/TECH INTERNATIONAL, INC.
By: /s/ Glenn Cohen
------------------------------
Its: President and COO
-----------------------------
Attest:
By:__________________________________
Its:_________________________________
<PAGE> 9
SUBSCRIPTION NOTICE
Net/Tech International, Inc.:
The undersigned, the holder of the foregoing Option, hereby elects to
exercise purchase rights represented by said Option for, and to purchase
thereunder, _____________ shares of the Common Stock covered by said Option and
herewith makes payable in full therefor of $___________, and requests that
certificates for such shares (and any securities or other property issuable upon
such exercise) be issued in the name of and delivered to ______________, whose
address is ______________________; and if such shares shall not include all of
the shares issuable as provided in said Option, that a new Option of like
tenor and date for the balance of the shares issuable thereunder be delivered
to the undersigned.
__________________________
<PAGE> 10
FORM OF MANDATORY CONVERSION NOTICE
Paul W. Enoch. Jr.
330 Commerce Street
Nashville, Tennessee 37201
Notice is hereby given that, in accordance with the terms and
conditions of that certain Stock Purchase Option granted by Net/Tech
International, Inc. (the "Corporation") to Paul W. Enoch, Jr. for the purchase
of 800,000 shares of the Corporation's Common Stock, dated June 5, 1997, the
Corporation hereby elects to require conversion of the Option into shares
Common Stock of the Corporation. The Option to be converted and the number of
shares to be converted are as follows:
Number of Shares Number of Shares to Number of
Option Entitled to be Shares to
Conversion Converted Be Delivered
- -------------------------------------------------------------------------------
The Mandatory Conversion Date will be _________________.
Net/Tech International, Inc.
By: _______________________________
Name:______________________________
Title:_____________________________
