Netsol Shareholders Group LLC, et al. – ‘SC 13D/A’ on 5/14/01 re: Netsol Technologies Inc – EX-3

On:  Monday, 5/14/01, at 8:03am ET   ·   Accession #:  950148-1-500642   ·   File #:  5-56913

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Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Schedule 13D Amendment                                15     47K 
 2: EX-3        Articles of Incorporation/Organization or By-Laws      8     34K 

EX-3   —   Articles of Incorporation/Organization or By-Laws
Exhibit Table of Contents

EX-3
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                                                                       EXHIBIT 3

STOCK OPTION AGREEMENT

   THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of April 25,
2001, among NETGATEWAY, INC., a Delaware corporation ("NetGateway"), and certain
stockholders of NetSol International, Inc. ("NetSol") executing this Agreement  
(each a "Stockholder" and collectively, the "Stockholders").                    

 W I T N E S S E T H :

     WHEREAS, the Stockholders have agreed to grant to NetGateway an irrevocable
option (the "NetGateway Option") with respect to certain shares of common stock 
of NetSol (the "NetSol Stock") , owned by the Stockholders, upon the terms and  
subject to the conditions hereafter set forth;                                  

 WHEREAS, NetGateway has agreed to grant to the Stockholders irrevocable
warrants (the "Stockholders Warrants") with respect to certain shares of common 
stock, $0.001 par value per share of NetGateway (the "NetGateway Stock"), upon  
the terms and subject to the conditions hereafter set forth;                    

NOW, THEREFORE, in consideration of the foregoing premises and of the 
mutual covenants and agreements set forth herein, and for other good and        
valuable consideration, the receipt and sufficiency of which are hereby         
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:                                                                        

  1. Grant of NetGateway Option. Each of the Stockholders hereby grants to
NetGateway an irrevocable option with an exercise price of three dollars and    
eighty cents ($3.80) per share (the "NetGateway Option") to purchase up to that 
number of shares of NetSol Stock which are owned of record and beneficially by  
the Stockholders in the amounts set forth opposite their respective names on    
EXHIBIT A annexed hereto; it being understood and agreed that a maximum of Three
Hundred Thousand (300,000) shares of NetSol Stock are subject to the NetGateway 
Option.                                                                         

 The NetGateway Option may be exercised by NetGateway or any assignee of
NetGateway, in whole or in part, at any time and from time to time within       
forty-five (45) days from the date of this Agreement. On each occasion that     
NetGateway or any assignee of NetGateway shall elect to exercise the NetGateway 
Option it shall do so on a pro-rata basis as to each Stockholder listed on      
EXHIBIT A annexed hereto. For avoidance of doubt, if, for example, NetGateway or
any assignee of NetGateway Option shall elect to exercise the NetGateway Option 
as to 100,000 shares (or 33-1/3% of the total number of shares of NetSol Stock  
which may be purchased upon such partial exercise of the NetGateway Option), it 
shall purchase from each Stockholder thirty-three and 1/3 (33-1/3%) percent of  
the shares of NetSol Stock set forth opposite his, her or its name on EXHIBIT A 
hereto.                                                                         

   Notwithstanding the foregoing, the NetGateway Option may not be exercised
by NetGateway if, at the time of intended exercise, NetGateway is in material   
breach of any of its representations, warranties, covenants or agreements       
contained in this Agreement, in which event the NetGateway Option shall         
terminate and shall be of no further force or effect.                           

   If and on each occasion that NetGateway elects to exercise the NetGateway
Option, NetGateway shall deliver to the Stockholders a written notice (an       
"Exercise Notice") specifying the total number of shares of NetSol Stock it     
elects to purchase. Each closing of a purchase of shares of NetSol Stock shall  
occur at a place, on a date and at a time designated by NetGateway in an        
Exercise Notice, but in no event later than three business days following the   
date of the Exercise Notice. The exercise price shall be payable in cash or by  
wire transfer of immediately available funds.                                   

2. Grant of Stockholders' Warrants. NetGateway hereby grants to the   
Stockholders irrevocable warrants with an exercise price of thirty-five and     
six-tenths cents ($0.356) per share (collectively the "Stockholders Warrants")  
to purchase up to Three Hundred Thousand (300,000) shares of                    

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NetGateway Stock; which Stockholders Warrants shall be granted to each of the   
Stockholders in the amounts set forth opposite their respective names on EXHIBIT
B annexed hereto.                                                               

The Stockholders Warrants may be exercised by any Stockholder or any  
assignee of a Stockholder, in whole or in part, at any time and from time to    
time within forty-five (45) days from the date of this Agreement.               

If and on each occasion that a Stockholder elects to exercise the     
NetGateway Option, such Stockholder shall deliver to NetGateway an Exercise     
Notice specifying the total number of shares of NetGateway Stock such           
Stockholder elects to purchase. Each closing of a purchase of shares of         
NetGateway Stock shall occur at a place, on a date and at a time designated by  
such Stockholder in an Exercise Notice, but in no event later than three        
business days following the date of the Exercise Notice. The exercise price     
shall be payable in cash or by wire transfer of immediately available funds.    

    3. Representations and Warranties of NetGateway. NetGateway represents and
warrants to each Stockholder that (a) NetGateway is a corporation duly          
organized, validly existing and in good standing under the laws of the State of 
Delaware and has all requisite power and authority to enter into this Agreement 
and to perform its obligations hereunder, (b) the execution and delivery of this
Agreement by NetGateway and the consummation by NetGateway of the transactions  
contemplated hereby have been duly authorized by all necessary corporate action 
on the part of NetGateway , (c) this Agreement has been duly executed and       
delivered by NetGateway and constitutes a valid and binding obligation of       
NetGateway and is enforceable against NetGateway in accordance with its terms,  
(d) NetGateway has taken all necessary corporate action to authorize and reserve
for issuance and to permit it to issue, upon exercise of the NetGateway Option, 
and at all times from the date hereof through the expiration of the NetGateway  
Option shall have so reserved, 300,000 unissued shares of NetGateway Stock, all 
of which, upon their issuance and delivery in accordance with the terms of this 
Agreement, shall be duly authorized, validly issued, fully paid and             
nonassessable, (e) upon delivery of such shares of NetGateway Stock to the      
Stockholders upon exercise of the Stockholders Warrants, the Stockholders shall 
acquire good and valid title to all of such shares, free and clear of any and   
all Liens of any nature whatsoever, (f) the execution and delivery of this      
Agreement by NetGateway does not, and the performance of this Agreement by      
NetGateway will not result in a violation of (1) the certificate of             
incorporation or bylaws of NetGateway presently in effect, (2) any statute,     
rule, regulation, ordinance, order, judgment, writ or decree applicable to      
NetGateway or by which it or any of its assets or properties is bound or        
affected, or (3) or give rise to any rights of termination, amendment,          
acceleration or cancellation of, or result in the creation or imposition of any 
lien on any of the property or assets of NetGateway pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license or other instrument or 
obligation to which NetGateway or any of its subsidiaries is a party or by which
NetGateway or any of its assets or properties is bound or affected (except, in  
the case of clauses (2) or (3) above, for violations which individually or in   
the aggregate would not have a material adverse effect on NetGateway and its    
subsidiaries taken as a whole), and (g) the execution and delivery of this      
Agreement by NetGateway does not, and the performance of this Agreement by      
NetGateway will not, require any consent, approval, authorization or permit of, 
or filing with or notification to, any governmental authority.                  

4. Representations and Warranties of Stockholders . Each Stockholder  
severally represents and warrants to NetGateway that (a) such Stockholder has   
all requisite power and authority to enter into this Agreement and to perform   
his, her or its obligations hereunder, (b) the execution and delivery of this   
Agreement by Stockholder and the consummation by Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on the    
part of Stockholder (c) this Agreement has been duly executed and delivered by  
Stockholder and constitutes a valid and binding obligation of Stockholder and is
enforceable against Stockholder in accordance with its terms, (d) the execution 
and delivery of this Agreement by NetGateway does not, and the performance of   
this Agreement by Stockholder will not, require any consent, approval,          
authorization or permit of, or filing with or notification to, any governmental 
authority and (f) such Stockholder owns of record and beneficially all of the   
shares of NetSol Stock set forth on EXHIBIT A hereto and has the requisite power
and authority to transfer such shares to NetGateway upon exercise of            
NetGateway's Option, free and clear of all liens, claims, security interests or 
rights of others.                                                               

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  5. Demand Registration Rights. If a Stockholder elects to offer and sell
any shares of NetGateway Stock purchased pursuant to the Stockholders Warrants  
within two years after such purchase and upon the advice of outside U.S. counsel
to such Stockholder that such offer and sale requires registration under the    
Securities Act, such Stockholder, by written notice (the "Registration Notice") 
to NetGateway (for purposes of this Section 5, the "Registrant"), may request   
the Registrant to register under the Securities Act the offer and sale by       
NetGateway of all or any portion of the shares purchased pursuant to the        
Stockholders Warrants ("Restricted Shares") and beneficially owned by NetGateway
(the "Registrable Securities") pursuant to a Form S-3 registration statement or 
other applicable form of registration of NetGateway's Common Stock.             

NetGateway shall use its best efforts, as promptly as practicable, to 
effect the registration under the Securities Act of the offer and sale by       
Stockholders of the unpurchased Registrable Securities; provided, however, that 
(i) Stockholders shall not be entitled to request more than two demand          
registrations pursuant to this Section 5 and (ii) the Registrant shall not be   
required to file any registration statement during any period of time (not to   
exceed 60 days after such request in the case of clause (B) below or 120 days in
the case of clause (A) below) when (A) the Registrant is in possession of       
material and non-public information, the disclosure of which at such time, with 
the advice of outside counsel, it reasonably believes it would be detrimental to
the Registrant and, in the judgment of the Board of Directors of the Registrant,
such information would have to be disclosed if a registration statement were    
filed at that time under the Securities Act; or (B) the Registrant is required  
under the Securities Act to include audited financial statements for any period 
in such registration statement and such financial statements are not yet        
available for inclusion therein. If consummation of the offer and sale of any   
Registrable Securities pursuant to a demand registration pursuant to this       
Section 5 does not occur within 90 days after the filing with the SEC of the    
initial registration statement with respect thereto, the provisions of this     
Section 5 again shall be applicable to any proposed demand registration;        
provided, however, that NetGateway shall not be entitled to request more than   
two demand registrations pursuant to this Section 5 in any 12-month period. The 
Registrant shall use its best efforts to cause all Registrable Securities       
included in a registration statement pursuant to this Section 5 to be qualified 
for sale under the securities or "blue-sky" laws of such jurisdictions as       
NetGateway reasonably may request and shall continue such registration or       
qualification in effect in such jurisdiction; provided, however, that the       
Registrant shall not be required to qualify to do business, or consent to       
general service of process, in any jurisdiction solely by reason of this        
provision.                                                                      

   The demand registration rights set forth in this Section 5 are subject to
the condition that NetGateway shall provide the Registrant with such information
with respect to NetGateway's Registrable Securities, the plans for the          
distribution thereof, and such other information with respect to NetGateway as, 
in the reasonable judgment of outside counsel for the Registrant, is necessary  
to enable Registrant to include in such registration statement all material     
facts required to be disclosed with respect to a registration hereunder         
(including, without limitation, all such information required pursuant to Rules 
507 and 508 of Regulation S-K under the Securities Act).                        

     A demand registration effected pursuant to this Section 5 shall be effected
exclusively at the Registrant's expense, except for underwriting discounts and  
broker-dealer allowances, concessions and commissions, and the Registrant shall 
provide to the underwriters such documentation (including certificates, opinions
of counsel and "comfort" letters from independent auditors) as are customary in 
connection with underwritten public offerings and as such underwriters otherwise
reasonably may require.                                                         

  6. Restrictive Legends. Each certificate evidencing shares of NetGateway
Stock issued to a Stockholder hereunder upon the full or partial exercise of    
such Stockholders Warrants initially shall be endorsed with a legend in         
substantially the following form:                                               

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
   UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER SUCH SECURITIES
   (NOR ANY INTEREST THEREIN) MAY BE OFFERED, SOLD OR TRANSFERRED, UNLESS IF
SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND FROM      
QUALIFICATION UNDER APPLICABLE STATE                                  

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SECURITIES (OR "BLUE SKY") LAWS IS AVAILABLE. SUCH SECURITIES ALSO ARE
  SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN A CERTAIN
STOCK OPTION AGREEMENT, DATED APRIL 25, 2001, A COPY OF WHICH MAY BE  
OBTAINED FROM THE ISSUER HEREOF.                                      

 7. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and  
(to the extent permitted as set forth in the next sentence) assigns. The        
NetGateway Option and the Stockholders Warrants are freely assignable by any    
party possessing the same, with the prior written consent of any other party.   
Nothing contained in this Agreement, express or implied, is intended to confer  
upon any person (other than the parties hereto and their respective permitted   
assigns) any rights or remedies of any nature whatsoever by reason of this      
Agreement. Any Restricted Shares sold by a party in compliance with the         
provisions of Section 5 shall, upon consummation of such sale, be free of the   
restrictions imposed with respect to such shares by this Agreement.             

  8. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance  
with their specific terms or are otherwise violated or breached, immediate and  
irreparable harm or injury would be caused for which money damages would not be 
an adequate remedy. Accordingly, each party agrees that in addition to other    
remedies the other party shall be entitled to an injunction restraining any     
violation or threatened violation of the provisions of this Agreement. If any   
action should be brought in equity to enforce the provisions of the Agreement,  
neither party will allege, and each party hereby waives the defense, that there 
is an adequate remedy at law.                                                   

    9. Entire Agreement. This Agreement and its exhibits constitute the entire
agreement among the parties with respect to the subject matter hereof and       
supersede all other prior agreements and understandings, both written and oral, 
among the parties or any of them with respect to such subject matter.           

10. Further Assurances. Each party shall execute and deliver all such 
further documents and instruments and take all such further action as may be    
necessary to consummate the transactions contemplated hereby.                   

    11. No Remedy in Certain Circumstances. Each party agrees that, should any
court of competent jurisdiction or competent Governmental Authority hold any    
provision of this Agreement or part hereof to be null, void or unenforceable, or
order any party to take any action inconsistent herewith or not to take an      
action consistent herewith or required hereby, the validity, legality and       
enforceability of the remaining provisions and obligations contained or set     
forth herein shall not in any way be affected or impaired thereby, unless the   
foregoing inconsistent action or the failure to take an action constitutes a    
material breach of this Agreement or makes the Agreement absolutely impossible  
(without regard to commercial impracticability) to perform, in which case this  
Agreement shall terminate. Except as otherwise contemplated by this Agreement,  
to the extent that a party hereto takes an action inconsistent herewith or fails
to take action consistent herewith or required hereby pursuant to an order or   
judgment of a court of competent jurisdiction or competent Governmental         
Authority, such party shall incur no liability or obligation unless such party  
did not in good faith seek to resist or object to the imposition or entering of 
such order or judgment.                                                         

  12. Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, by recognized national     
delivery service or sent by certified or registered mail, postage prepaid, and  
shall be deemed to be delivered upon receipt at the following address, or to    
such other address or addresses as such person subsequently may designate by    
notice delivered hereunder:                                                     

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If to NetGateway to:                                          
--------------------                                          

NetGateway, Inc.                                              
754 East Technology Avenue                                    
Orem, Utah 84097                                              
Attn:  Donald Danks                                           

If to the Stockholders, to:                                   
--------------------------                                    
NetSol Shareholders Group, LLC                                
Attn: Jonathan D. Iseson                                      
c/o BlueWater Partners, LLC                                   
6 Chanticlaire Road                                           
Manhasset, New York 11030                                     

 13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of State of Delaware, applicable to instruments made   
and performed entirely within such jurisdiction, and without regard to the      
conflicts of law provisions of such state.                                      

    14. Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect   
the meaning or interpretation of this Agreement.                                

   15. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute but one and the same instrument.                                     

    16. Expenses. Except as otherwise expressly provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this      
Agreement shall be paid by the party incurring such expenses.                   

     17. Amendments; Waiver. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in      
writing signed on behalf of                                                     

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each of the parties hereto, or, in the case of a waiver, by an instrument signed
on behalf of the party waiving compliance.                                      

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective duly authorized officers as of the   
date first above written.                                                       

              NETGATEWAY, INC.

                  By: /s/ DONALD DANKS
                                          ------------------------------------
                  Donald Danks
                                  Its: Chief Executive Officer

           STOCKHOLDERS:

BLUE WATER MASTER FUND, L.P.           BLUE WATER PARTNERS II, L.P.             

By:  Blue Water Partners, LLC          By:  Blue Water Partners, LLC            
Its: General Partner                   Its: General Partner                     

By:  JDI Management Corp.              By:  JDI Management Corp.    
Its: Principal                         Its: Principal               

       By: /s/ JONATHAN D. ISESON             By: /s/ JONATHAN D. ISESON
               ----------------------                 --------------------------
       Jonathan D. Iseson                     Jonathan D. Iseson
   Its: Principal                         Its: Principal

PSM INTERNATIONAL LTD.                                                          

By:                                                                             
----------------------                                                    
Name:                                                                           
Its:                                                                            

------------------------                                                        
Robert J. Harman                                                                

------------------------                                                        
Susan P. Harman                                                                 

/s/ DR. HENRY VOGEL                                                             
------------------------                                                        
Dr. Henry Vogel                                                                 

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 EXHIBIT A

 NETGATEWAY OPTION

                                                                [Download Table]


-----------------------------------------------------------------------
                                      Shares of NetSol Stock Subject to
       Stockholder                             NetGateway Option       
-----------------------------------------------------------------------
                                                                       
Blue Water Master Fund, L.P.                        210,243            
Blue Water Partners II, L.P.                         26,812            
PSM International Limited                             9,665            
Robert and Susan Harman                               8,506            
Dr. Henry Vogel                                      44,774            
-----------------------------------------------------------------------
Total Shares                                        300,000            
-----------------------------------------------------------------------


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 EXHIBIT B

 STOCKHOLDER WARRANT

                                                                [Download Table]


-----------------------------------------------------------------------
                                  Shares of NetGateway Stock Subject to
         Stockholder                     Stockholders Warrants         
-----------------------------------------------------------------------
                                                                       
Blue Water Master Fund, L.P.                    210,243                
Blue Water Partners II, L.P.                     26,812                
PSM International Limited                         9,665                
Robert and Susan Harman                           8,506                
Dr. Henry Vogel                                  44,774                
-----------------------------------------------------------------------
Total Shares                                    300,000                
-----------------------------------------------------------------------

Dates Referenced Herein

				Referenced-On Page
This ‘SC 13D/A’ Filing		Date		First		Last			Other Filings
Filed on:		5/14/01							None on these Dates
		4/25/01		1		4
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