U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-QSB
Mark one
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition period from _________ to _________
Commission File No. 1-10623
Pamet Systems, Inc.
___________________________________________________________________________
(exact name of small business issuer as specified in its charter)
Massachusetts 04-2985838
___________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main Street, Acton, Massachusetts 01720
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (978) 263-2060
________________________
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes____ No_X____
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the close of the period covered by this report:
Title of each class Number of shares outstanding
Common stock 4,437,976
($.01 par value)
Transitional Small Business Disclosure Format
YES________ NO__X___
PAMET SYSTEMS, INC.
FORM 10-QSB TABLE OF CONTENTS
Part I Financial Information
Item 1 Financial Statements
Condensed Balance Sheets
June 30, 2002 and December 31, 2001
Condensed Statements of Operations
for the quarters ended June 30, 2002
and 2001 and six month period ended
June 30, 2002 and 2001
Condensed Statement of Cash Flows
for the six months ended June 30,
2002 and 2001
Item 2 Management's Discussion and Analysis of
Financial Condition or Plan of Operations
Part II Other Information
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
Signature(s)
Certifications
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
PAMET SYSTEMS, INC.
Condensed Balance Sheets June 30, December 31,
2002 2001
--------- ------------
CURRENT ASSETS (unaudited)
Cash $ 34,266 $ 3,537
Accounts receivable, net of allowance
for doubtful accounts $170,000; and
factored receivables of $102,185 and
$33,500, respectively 73,853 442,803
Accounts receivable, factored 2,668 6,700
Inventory, net of reserve of $10,662 38,791 4,079
Prepaid expenses and other current
assets 43,668 128,438
------ -------
TOTAL CURRENT ASSETS 193,246 585,557
PROPERTY AND EQUIPMENT, net 44,874 61,602
DEPOSITS 82,145 82,145
-------- ------
TOTAL ASSETS $ 320,265 $ 729,304
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current portion of long-term debt,
net of discount 1,820,003 823,242
Notes payable to related party 47,500 25,000
Notes payable to factor 242,800 --
Accounts payable, trade 1,093,056 922,042
Accounts payable, related parties 57,231 41,915
Current portion of accrued interest
payable on long-term debt 351,836 235,388
Current portion of deferred gain on
sale of land and building 42,614 42,614
Accrued expenses 882,142 872,884
Deferred software maintenance revenue
and unearned revenue 174,199 677,028
--------- ----------
TOTAL CURRENT LIABILITIES 4,711,381 3,640,113
ACCRUED INTEREST PAYABLE on long-term debt,
net of current portion 20,587 57,735
DERERRED GAIN on sale of land and building,
net of current portion 131,967 153,274
LONG TERM DEBT, net of current portion and
discount 638,712 1,344,163
--------- ---------
TOTAL LIABILITIES 5,502,647 5,195,285
--------- ---------
COMMITTMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred stock, $.01 par value,
1,000,000 shares authorized,
none issued -- --
Common Stock, $.01 par value,
30,000,000 shares authorized;
issued and outstanding 4,437,976
shares at June 30, 2002 and
December 31, 2001 44,380 44,380
Additional paid-in Capital 8,673,496 8,673,496
Accumulated deficit (13,900,258) (13,183,857)
---------- ----------
TOTAL STOCKHOLDERS DEFICIT (5,182,382) (4,465,981)
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS DEFICIT $ 320,265 $ 729,304
========== ==========
See accompanying "Notes to Financial Statements (Unaudited)"
Item 1 - Financial Statements
PAMET SYSTEMS, INC.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
Net sales $348,947 $464,706 $756,311 $707,034
Cost of product 60,882 75,075 115,707 116,379
-------- -------- -------- ---------
288,065 389,631 640,604 590,655
Operating expenses:
Personnel costs 433,295 512,218 915,930 1,032,956
Rent, utilities, telephone 43,953 46,396 91,499 101,222
Travel and entertainment 7,590 21,503 25,670 50,137
Professional fees 36,559 156,692 56,241 205,122
Depreciation & amortization 8,364 28,436 16,728 56,791
Research and development 179 20,854 2,020 105,585
Other operating expenses 37,990 17,894 103,472 65,298
-------- ------- ------- -------
Total operating expenses 567,930 803,993 1,211,560 1,617,111
------- ------- --------- ----------
Income(loss) from operations (279,865) (414,362) (570,956) (1,026,456)
Interest income(expense), net (71,582) (50,258) (145,444) (100,325)
Gain on Sale of Fixed Assets -- 2,402 -- 2,402
Net income(loss) $(351,447) $(462,218) $(716,400) $(1,124,379)
======== ======= ======= =========
Earnings(loss) per weighted
average common share $(.08) $(.11) $(.16) $(.27)
=== === === ===
Weighted average shares used
in computing earnings per
share 4,437,976 4,285,011 4,437,976 4,207,863
See accompanying "Notes to Financial Statements (unaudited)"
Item 1 - Financial Statements
PAMET SYSTEMS, INC.
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30, 2002 June 30, 2001
------------- -------------
Operating Activities:
Net loss $(716,400) $(1,124,379)
Adjustments to reconcile net loss to net
cash used for operating activities:
Deferred gain on sale of land and
building (21,307) (21,307)
Depreciation and amortization 16,728 56,791
Gain on sale of property and equipment -- (2,402)
Amortization of discount on long term
debt 29,426 --
Changes in operating assets and liabilities:
Accounts receivable, trade 368,950 112,542
Accounts receivable, factored 4,032 (3,977)
Inventory (34,712) 6,556
Prepaid expenses and other current
assets 84,770 120,082
Deposits -- 2,540
Due to factor -- (36,199)
Accounts payable, trade 171,014 57,786
Accounts payable, related party 15,316 19,134
Accrued interest payable on long-term
debt 96,183 60,085
Accrued expenses 9,258 211,036
Deferred software maintenance revenue
and unearned revenue (502,829) (398,478)
------- ------
Net cash (used for)
operating activities (479,571) (940,190)
------- -------
Investing activities:
Expenditures for property and equipment -- (2,904)
Proceeds from sale of property and
equipment -- 3,860
------ ------
Net cash provided by/(used for)
investing activities -- 956
------ ------
Item 1 - Financial Statements
PAMET SYSTEMS, INC.
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30, 2002 June 30, 2001
------------- -------------
Financing activities:
Proceeds from note payable-factor 242,800 --
Proceeds from long-term debt-
convertible promissory notes 245,000 684,150
Proceeds from related party notes 47,500 --
Payment of related party notes (25,000) --
Issuance of capital stock -- 256,024
------- -------
Net cash provided by financing
activities 510,300 940,174
------- -------
Net increase in cash 30,729 940
Cash at beginning of period 3,537 1,507
------- -------
Cash at end of period $34,266 $2,447
====== =====
Supplemental disclosure of cash flows
information:
Cash paid for interest: $33,588 $16,284
====== ======
Summary of non-cash financing activities:
Accrued interest - long-term convertible
promissory note converted to long-term
convertible promissory note. $16,884 --
======= =======
Note payable - related party converted to
long-term convertible promissory note -- $385,000
======= =======
See accompanying "Notes to Financial Statements (Unaudited)
PAMET SYSTEMS, INC.
Notes to Condensed Financial Statements
(Unaudited)
Note (1) Statement Presentation
The accompanying unaudited condensed financial statements have been prepared
based upon Securities and Exchange Commission ("SEC") rules that permit reduced
disclosure for interim periods and, in the opinion of management, contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position as of June 30, 2002, the results of
operations for the three and six month periods then ended and cash flows for
the six month period then ended. There were no material unusual charges or
credits to operations during the recently completed fiscal quarter.
The results reported for the six months ended June 30, 2002 are not
necessarily indicative of the results of operations which may be expected
for the entire year.
Note (2) Nature of Operations
Pamet Systems, Inc. (the "Company"), a Massachusetts corporation, was formed in
November 1987 to engage in the business of designing , developing, installing
and servicing computer software systems for the municipal market throughout the
United States, principally in the area of public safety. Credit is granted to
certain customers, most of which are municipalities. The Company generally
does not require collateral.
Management believes that its level of backlog and its anticipated sales, as
well as the funding described below, are adequate to sustain operations
through the end of fiscal year 2002.
However, the ultimate success of the Company is still dependent upon its
ability to secure financing adequate to meet its working capital and ongoing
product development needs. In addition, in order for the Company's operations
to be maintained and/or expanded, the Company will need to successfully market
its Microsoft Windows-based applications. During the six month period ended
June 30, 2002, the Company received $245,000 through the issuance of long-term
convertible promissory notes to three investors with an interest rate of 7%. In
addition, the Company received a $242,800 loan on its new $1,000,000
receivables financing credit facility secured by July 1, 2002 software support
invoices. Finally, the Company entered into a Commercial Services Agreement
with a vendor pursuant to which eight of the Company's employees became
employees of the vendor and were leased back to the Company. Under the
agreement, the vendor will bill the Company quarterly for the employees who are
working exclusively on projects for the Company. The original agreement, which
expires on December 31, 2002, specifies repayment in cash or in the equivalent
value of Company stock, at the discretion of Management. Subsequent to June
30, 2002, the Company received $260,000 through the issuance of additional
senior long-term convertible promissory notes to this vendor with an interest
rate of 7%, renegotiated the Commercial Services Agreement extending its term
to July 31, 2003 and changing repayment options for services provided before
October 1, 2002 to cash or Company stock at the vendor's option and to a senior
convertible note for services provided on or after October 1, 2002, and is
presently negotiating to extend all existing convertible promissory notes due
in 2002 and 2003 to September 30, 2005. The renegotiated Commercial Services
Agreement calls for extending 95% of the Company's existing convertible
promissory notes maturing in 2002 and 2003. The Board members are willing to
seek additional funding, as needed. Management is also seeking to enhance the
Company's financial position by obtaining additional permanent financing. There
can be no assurance, however, that the Company's operations will be sustained
or be profitable in the future, that adequate sources of financing will be
available at all, when needed or on commercially acceptable terms, or that the
Company's marketing efforts will be successful.
Note (3) Mortgage and Subsequent Sale and Lease Back of Corporate Training,
Development and Headquarters Facility
On August 6, 1999 the Company sold its headquarters to Area Realty, LLC for
$1,150,000 and signed a lease back agreement with the buyer for 7 years. As
part of the lease back agreement with the buyer of the facility, the Company
was required to place $80,000 on deposit with the buyer. The sale of the
building resulted in a gain of approximately $298,000 that the Company deferred
and is recognizing as a reduction to rent expense over the term of the lease.
Note (4) Loss Per Common Share
In 2002 and 2001, loss per common share is computed using the weighted average
number of shares of common stock outstanding during the period. Diluted per
share computations are not presented since the effect would be antidilutive.
Note (5) Stock-based compensation
The Company measures compensation expense relative to employee stock-based
compensation plans using the intrinsic value-based method of accounting as
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". However, the Company will disclose, on an annual basis,
the pro forma amounts of net income and earnings per share as though the fair
value-based method of accounting prescribed by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", had
been applied. See the Stockholders' Equity Note for these disclosures in the
Company's annual financial statements included in Form 10-KSB.
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Overview
Pamet Systems, Inc. (the "Company" or "Pamet Systems"), founded in 1987,
designs and implements broad-based information technology solutions for public
safety agencies enabling them to realize cost efficiencies and provide better
service to the public. The foundation of the Company's fully integrated suite
of products is composed of three components: PoliceServer, FireServer, and
CADServer. The Company also offers several companion products including
Imaging, Mobile Access and Advanced Reporting that are integrated with the
police and fire records management and computer-aided dispatch modules. Pamet
Systems total systems approach to public safety software allows the agency to
enter information once and have it available throughout the product suite. The
Company's revenues consist primarily of sales of these software applications,
the associated hardware and systems integration, and support and update service
fees.
Although the Company's revenues for the three month period ended June 30, 2002
decreased 24.9% from the comparable 2001 period, revenues for the six month
period ended June 30, 2002 increased by 7% from the same period in 2001.
Despite the economic factors affecting the Company's sales, revenues in the
first half of 2002 were improved by new systems sales in New York and Minnesota
and continuing customer migrations to the Windows product line. These revenues
helped to offset the slower first half that the Company experienced (as it
typically does) due to the unavailability of municipal funds until July 1,
especially in the Northeast where the Company does the largest amount of its
business. However, the Company continues to feel the effects of the general
economic slowdown which began late in 2000. Management believes that public
safety agencies are being forced to defer decisions to replace aging and/or
inadequate technology infrastructure and application software until economic
conditions stabilize and improve.
The current economic conditions and the more stable state of the Windows
product suite caused the Company to refocus early in 2002. As a result of the
lukewarm reception the Windows product received upon its initial release in
1999 due to a lack of robustness and functionality, the Company invested a
great deal of its resources in 2000 and 2001 on product enhancements and
improvements. In 2002 the product suite finally realized its original promise,
gaining acceptance from the Company's legacy customers as well as new
customers. Recent product releases improve its ease of use and substantially
extend its capabilities. As a result, the Company has received certification
from three states for its police records system's incident-based reporting
(NIBRS) capabilities and certification from the Massachusetts Fire Marshall for
the fire records system's advanced national reporting (NFIRS 5.0) capabilities.
The Company has also developed utilities to convert customer data files from
older systems, which will ease the transition for agencies. This newly
competitive product line has allowed the Company to accelerate the rate of
legacy product migrations which increased revenues and improved Pamet's
reputation in the user community.
While the suite of products wi11 continue to be enhanced and maintained, the
resources required to do so are substantially less than those needed to create
the product initially. In keeping with the general shift from product creation
to product enhancement, sales and marketing, the Company's Board of Directors
decided early in 2002 to bring in a new CEO experienced in growing small
technology companies. The new CEO came on board during the second quarter of
2002 and has initially focused on reducing expenses and increasing revenues,
while realigning resources to support a more aggressive sales and marketing
program. During 2002, the new CEO worked to stabilize the Company's financial
picture, and is currently negotiating to extend and restructure the long-term
debt while improving cash flow with a new $1,000,000 receivables financing
credit facility. Also in the second quarter of 2002, the Company entered into
a Commercial Services Agreement with a vendor under which eight of the
Company's employees became employees of the vendor and are leased back to the
Company. This vendor will invoice the Company quarterly for the cost of the
employees who are working on projects exclusively for the Company. Subsequent
to June 30, 2002, this agreement was renegotiated extending its term from
December 31, 2002 to July 31, 2003. Per terms of the renegotiated agreement,
amounts due on the agreement for the second and third quarters of 2002 will be
repaid, at the vendor's option, in cash or common stock at $.115 per share. The
Company will repay services provided from October 1, 2002 to July 31, 2003 in
senior convertible notes. Terms of the renegotiated commercial services
contract also call for extension of 95% of the Company's existing convertible
promissory notes that mature in 2002 and 2003. The value of the commercial
services contract for October 1, 2002 through July 31, 2003 is limited to an
additional $740,000. In addition, the Company received an additional $260,000
from the vendor in return for additional senior convertible debt of like
principal amount.
At the beginning of the third quarter of 2002, the Company reorganized its
Sales Department to more effectively pursue and close business in states where
it has existing reference accounts. In those states it is putting particular
emphasis on its competitive strengths including joint police/fire dispatch,
multi-position dispatch, and comprehensive reporting. The Company has also
broadened the focus of its sales and marketing efforts to reach new market
segments. Pamet Systems is actively marketing to larger, more technologically
demanding agencies, as well as packaging and aggressively pricing the product
to meet the needs of smaller agencies. Management believes a significant
market opportunity exists for its suite of products and these efforts have
resulted in a growing pipeline of active prospects which includes prospective
customers who have seen a product demonstration, have expressed interest in the
product, and expect to have funding available. No assurance, however, can be
given that such prospective customers will actually purchase the products.
Management believes the Company's product development effort during the past
five years positions the Company to expand its business as more and more
prospective customers retire legacy systems (e.g., ones built on MS-DOS, IBM
AS/400, DEC VAX/Alpha, etc.). Management also believes that it is possible
that grant programs will be announced as Homeland Security funding expands to
encompass the technology needs of first responders. In addition, the
continuing growth in the number of E911 centers, heightened emphasis on crime
in most communities and the awareness by municipalities that computer systems
can improve the efficiency and effectiveness of their public safety resources
support management's belief that the market for the Company's products will
continue to grow. The Company has also seen increased emphasis on the
coordination of public safety systems between neighboring town, county, and
state police organizations. The Company's products are designed and marketed
with the option to be used in this type of regional application.
Nevertheless, there can be no assurance that the Company will benefit from or
be able to take advantage of these benefits.
Despite additional funding, the commercial services contract, and cost cutting
measures, the Company is continuing to face a shortage of working capital.
There are no assurances that the Company will be successful in its future
fundraising program, in light of, among other things, the state of the
financial markets and the Company's historical financial performance. Despite
what the Company believes are numerous growth opportunities, the Company
remains hampered by under capitalization and the fact that its primary market
is the government sector, which is characterized by long lead times.
Three Months Ended June 30, 2002 vs. Three Months Ended June 30, 2001
Net sales for the three month period ended June 30, 2002 (the 2002 period)
declined 24.9% to $348,947 from $464,706 for the three month period ended June
30, 2001 (the 2001 period). The revenues for the 2002 period reflected
increased support revenues offset by decreases in new system and mobile sales.
Support revenues increased 6.7% to $264,293 for the 2002 period from $247,575
for the 2001 period reflecting the increased customer base and the increased
rates billed for support on the Windows product offset by 2001-2002 billing
adjustments to VMS customers delaying their migration. However, the
contribution from support should continue to increase in future periods as new
customers, as well as those existing customers that migrate to the Windows
product, will be charged higher support fees. Annual software support and
update service for the Windows customers is 19% list price, an increase from
the 14% of the system software purchase price that VMS customers have
historically paid.
Cost of product decreased 18.9% or $14,193 to $60,882 for the 2002 period from
$75,075 for the 2001 period. As a result, gross margin decreased slightly from
83.8% in the 2001 period to 82.6% in the 2002 period. Margins can be skewed by
municipal purchasing decisions on computer hardware purchases, but generally
the trend toward software only sales for all products, the use of state bid
list contractors to purchase hardware and the Company's software, and continued
favorable margins on support revenues and customer migrations are sustaining
the high gross margins. Agencies are increasingly purchasing systems through
state bid list contractors. These contractors partner with the Company and
provide off-the-shelf hardware that combined with Pamet Systems software offers
a complete solution for the customer. This arrangement reduces total revenues
for the Company, but significantly increases margins.
Operating expenses reflected a decrease of $236,063 or 29.4% to $567,930 for
the 2002 period from $803,993 for the 2001 period. Significant decreases
occurred in personnel, travel, professional fees and research and development
spending. However, 2002 other operating expenses increased from the 2001
period because 2001 expenses benefited from a reduction in the reserve for
uncollectible accounts. Personnel costs decreased 15.4% or $78,923 to $433,295
for the 2002 period compared to $512,218 for the 2001 period. The decrease in
spending can be attributed to the layoff of four employees late in the first
quarter of 2002, attrition and a decrease in bonus accruals to reflect only
those covered by employment contracts or Board motions. Offsetting these
decreases was the additional compensation of the new chief executive officer
(CEO) during the overlap period with the prior CEO and increases in the costs
of the eight leased employees under the Commercial Services Agreement. Rent,
utilities and telephone decreased 5.3% to $43,953 for the 2002 period from
$46,396 for the 2001 period due to decreased telephone expense as a result of
lower rates. Travel and entertainment expenses decreased 64.7% to $7,590 for
the 2002 period from $21,503 for the 2001 period as a result of a general
spending cutback. Professional fees decreased 76.7% to $36,559 for the 2002
period from $156,692 for the 2001 period primarily due to decreased consulting
and legal expenses being offset by increases in accounting fees. The 2001
period included the cost of a consultant hired to help develop a Company
business plan. Similar expenses were not incurred in 2002. This decrease in
consulting was partially offset by the costs of a part-time chief financial
officer. Depreciation expense decreased from $28,436 for the 2001 to $8,364
for the 2002 period. Capitalized software development costs from the Windows
product development were fully amortized at the end of 2001 resulting in the
decreased expense in 2002.
External research and development costs during the 2002 period decreased
$20,675 or 99.1% to $179 from $20,854 in the 2001 period. However, gross
expenditures on research and development spending including the costs of
outside resources and the deployment of current staff to product development
and testing decreased only 18.3% to $168,693 in the 2002 period from $206,605
for the 2001 period. In the final stages of the development cycle of the
Windows-based products, the Company discontinued using outside resources to
accomplish product development goals. The Company has been utilizing its
internal team of engineering and support resources to provide product
enhancements and extensions including interfaces to companion products,
utilities to migrate current customers from the VMS-based system to the
Windows-based system, and advanced product functionality.
Other operating expenses increased 112.3% to $37,990 for the 2002 period from
$17,894 for the 2001 period. A 2001 decrease of $46,612 in the reserve for
uncollectible accounts resulting from the payment of several old invoices
resulted in a credit to expenses for that amount and, therefore, lower than
normal expenses in the 2001 period. The 2002 did not have any corresponding
adjustment resulting in higher expenses. Decreases in tax penalties offset the
2002 increase.
Net interest expense for the 2002 period was $71,582 compared to net interest
expense of $50,258 for the 2001 period. The increase of almost $600K in
outstanding convertible notes is responsible for the additional expense.
The net loss for the 2002 period was $(351,447) or $(.08) per share
compared to net loss of $(462,218) or $(.11) per share for the 2001 period.
The loss is due primarily to a shortfall in sales.
Six Months Ended June 30, 2002 vs. Six Months Ended June 30, 2001
Net sales for the six month period ended June 30, 2002 (the 2002 period)
increased $49,277 or 7.0% to $756,311 from $707,034 for the six month period
ended June 30, 2001 (the 2001 period). Increases in software support and
migration revenues were partially offset by decreases in mobile and new systems
sales. During the first 6 months of 2002 the Company continued to feel the
effects of the general economic slowdown and the hesitance in the public safety
market to invest in new infrastructure and software until economic conditions
stabilize and improve. Support revenues increased 12.5% to $538,000 in the
2002 period compared to $478,268 in the 2001 period reflecting the increase in
the customer base and rates. Support revenues accounted for 71.1% of revenues
in the 2002 period as compared to 67.6% in the 2001 period. Cost of product
decreased 1.0% to $115,707 for the 2002 period from the $116,379 for the 2001
period resulting in gross margin increases to 84.7% for the 2002 period from
83.5% for the 2001 period. The improvement in margin can be attributed to
increases in migration revenues and in software only sales, especially in the
mobile sector.
Net operating expenses decreased $405,551 or 25.1% to $1,211,560 for the 2002
period compared to $1,617,111 for the 2001 period. The Company instituted
broad cost-cutting measures to help alleviate the cash flow issues and more
closely align costs with sales forecasts. Personnel expenditures decreased
11.3% to $915,930 in the 2002 period from $1,032,956 in the 2001 period as a
result of attrition and the layoffs in the first quarter of 2002. These
decreases are somewhat offset by the compensation expense of the new chief
executive officer and the higher costs of the leased employees under the
Commercial Services Agreement. Rent, utilities and telephone decreased $9,723
or 9.6% to $91,499 in the 2002 period from $101,222 in the 2001 period. The
decrease can be attributed to the closing of the Company's Florida office and
reduced telephone usage resulting from decreases in headcount. Travel
expenses, most significantly airfares, decreased 48.8% from $50,137 in the 2001
period to $25,670 in the 2002 period due to less customer support and fewer
installations outside the Northeast and due to stricter expense controls.
Professional fees decreased $148,881 or 72.6% to $56,241 in the 2002 period
from $205,122 in the 2001 period. The 2001 period included the cost of a
consultant hired to assist in the preparation of the Company's business plan.
Similar large, one- time expenditures did not occur in 2002. In addition,
legal fees were significantly reduced in 2002 due to reduced usage. The
reduction in depreciation expense of 70.5% to $16,728 for the 2002 period from
$56,791 for the 2001 period is the result of capitalized software development
costs being fully amortized at the end of 2001 and the decline in depreciation
on the Company's aging assets. External research and development expenditures
decreased $103,565 or 98.1% to $2,020 due to the completion of significant
portions of the Windows development and the utilization of internal resources
to provide product enhancements and extensions including interfaces to
companion products, utilities to migrate current customers from the VMS-based
system to the Windows-based system, and advanced product functionality. Other
operating expenses increased 58.5% to $103,472 for the 2002 period from $65,298
for the 2001 period. 2001 decreases in the reserve for doubtful accounts
resulted from the payment of several old invoices and generated an expense
reduction in the 2001 period.
Net interest expense was $145,444 for the 2002 period compared to $100,325 for
the 2001 period. This increase can be attributed to increased convertible debt
outstanding which accrues interest at 11% or 7% and the amortization of
discounts on convertible debt with detachable warrants.
The net loss for the 2002 period was $(716,400) or $(.16) per share compared to
a net loss of $(1,124,379) or $(.27) per share for the 2002 period. The
reduction in the loss for the 2002 period can be attributed to the reduced
expenses.
Liquidity and Capital Resources
The Company had a working capital deficit of $(4,518,135) at June 30, 2002
compared to $(3,054,556) at December 31, 2001. The most significant reason for
this deterioration is the decrease in outstanding receivables, the
reclassification of convertible debt to current as due dates are within one
year, and the increase in loans outstanding. Offsetting these factors was a
decrease in unearned revenue.
During the three month period ended June 30, 2002, the Company received
$245,000 from investors in new long-term debt financing. At June 30, 2002,
$2,496,033 of convertible promissory notes and $372,423 of related accrued
interest remained outstanding as liabilities. However, the long-term debt is
reported net of discounts of $37,318 associated with notes issued with
detachable warrants. In general, $835,000 of the outstanding current
convertible debt at the end of the 2002 period accrues interest at 11%; has a
two year term; carries the option of conversion of the principal to common
stock by the debt holder at conversion prices ranging from $2.19 to $2.50 per
common share, or repayment of principal and accrued interest by the Company;
and has 100% warrant coverage attached that allows for the purchase of
additional shares of common stock at exercise prices ranging from $2.19 to
$2.50 per share. The remaining $1,661,033 of long term convertible debt at the
end of the 2002 period accrues interest at 7%; has a two year term; carries the
option of the conversion of the principal to common stock by the debt holder at
conversion prices ranging from $.20 to $.6825 per share, or the repayment of
the principal and accrued interest by the Company; and has 100% warrant
coverage attached that allows for the purchase of additional shares of common
stock at $1.50 per share. In addition, the Company negotiated a Commercial
Services Agreement with a vendor in April, 2002 under which eight of the
Company's employees became employees of the vendor and are leased back to the
Company. This vendor invoices the Company quarterly for the cost of the
employees who are working on projects exclusively for the Company. The
contract negotiated in April 2002 specifies repayment in cash or Pamet Systems
common stock, at the discretion of Management.
Since the Company was unable to repay the outstanding convertible debt
principal and accrued interest due upon expiration of notes in 2002 and the
availability of funds to repay the notes due in 2003 could not be reasonably
assured, Management is currently in negotiations to extend the terms of all
convertible debt due in 2002 and 2003 to September 30, 2005. The $245,000 of
convertible debt funding received in the current year prior to September 30,
2002 and approximately $201,000 in vendor payables converted to a long-term
convertible note carry terms consistent with the prior round of funding
accruing interest at 7%; having a two year term; carrying the option of the
conversion of the principal to common stock by the debt holder at conversion
price of $.20 per share, or the repayment of the principal and accrued interest
by the Company; and having 100% warrant coverage attached that allows for the
purchase of additional shares of common stock at $1.00 per share.
Cash was $34,266 at June 30, 2002 and $3,537 at December 31, 2001. Accounts
receivable decreased to $73,853 at June 30, 2002 from $442,803 at December 31,
2001. Pamet Systems hired a new President and CEO in April of 2002 and his
primary focus has been to alleviate the urgent cash flow situation which
continued during the first six months of 2002. In addition to beginning
negotiations to extend the convertible notes as discussed above, the Company
renegotiated the length and repayment terms of the original Commercial Services
Agreement dated April, 2002. Under the terms of the renegotiated agreement, the
services provided under the Commercial Service Agreement in Q2 and Q3 of 2002
will be repaid, at the vendors discretion, in either cash or common stock at
$.115 per share. The same vendor has made an additional commitment of up to
$1,000,000 - $260,000 in cash and up to $740,000 under the renegotiated
Commercial Services Agreement from October 1, 2002 through July 31, 2003. For
the $260,000 in cash and for any amounts due after October 1, 2002 for services
rendered under the renegotiated Commercial Service Agreement, the vendor will
receive senior convertible promissory note(s) of like amount(s) maturing
September 30, 2005 with an interest rate of 7%, a conversion price of $.115 per
share, 20% warrant coverage, and a warrant exercise price of $.45 per share
for this investment. Under the terms of the extended Commercial Services
contract, the Company agrees to extend 95% of the Company's existing
convertible promissory notes that expire in 2002 and 2003 to September 30,
2005. Thirdly, the Company signed a new $1,000,000 receivables financing
agreement during the second quarter of 2002. Finally, the Company reduced
headcount by approximately 20% through layoffs in the first quarter of 2002.
The Company continued to reduce personnel subsequent to June 30, 2002 and
realigned remaining employees to focus on sales, product extensions and
enhancements, and legacy customer migrations. Despite these new sources of
funding and the cost reduction plans that have been implemented, the continued
sluggish economy has perpetuated slow sales in the public safety sector and the
Company continues to tightly control expenses and seek additional funding.
There can be no assurances that the Company will be able to generate adequate
cash either through operations or additional financing to continue as a going
concern. There can be no assurance about the Company's ability to repay the
its indebtedness or other obligations as they become due. If the Company's
financial difficulties continue it could have a material adverse effect on the
Company, its creditors and its stockholders.
As of June 30, 2002, the Company had accumulated approximately $13,400,000 of
federal net operating loss carryforwards that expire beginning in the year
2005. In addition, the Company has state net operating losses to carry
forward of $9,600,000 which expire between the years 2002 and 2006. Under the
Internal Revenue Code of 1986, as amended, the rate at which a corporation may
utilize its net operating losses to offset income for federal tax purposes is
subject to specified limitations during periods after the corporation has
undergone an "ownership change". It has been determined that an ownership
change did take place at the time of the Company's initial public offering.
However, the limitations on the loss carryforward exceed the accumulated loss
at the time of the "ownership change". Thus there is no restriction on its
use.
Seasonality
The majority of the Company's installed base has a fiscal year that commences
on July 1 and, therefore, the Company bills its customers for their annual
software support and update service on July 1 of each year. Consequently, cash
flow representing software support revenues has tended to be higher in the
second half of the Company's fiscal year, although software support revenues
are recognized ratably throughout the fiscal year.
Revenue Recognition
Revenues from software license fees are recognized when a contract has been
executed, the product has been delivered, all significant contractual
obligations have been satisfied and collection of the related receivable is
probable. Maintenance revenues, including those bundled with the initial
license fee, are deferred and recognized ratably over the service period.
Consulting and training service revenues are recognized as the services are
performed.
Inflation
Inflation has not had a significant impact on the Company's operations to date.
Forward Looking Statements
This Form 10-QSB contains statements that are not historical facts. These
statements may constitute "forward-looking statements" within the meaning of
the Securities Act of 1933 and the Securities and Exchange Act of 1934 as
amended. Certain, but not necessarily all, of such forward-looking statements
can be identified by the use of such words as "believes", "expects", "may",
"will", "should", or "anticipates" or the negative thereof or other variations
thereon of similar terminology, and/or which include, without limitation,
statements regarding the following: having backlog sales and funding to support
operations through 2002; enhancement and maintenance of the Company's products;
competition and consolidation in the public safety marketplace; market
expectation for the Windows operating environment and customer acceptance of
the Company's Windows products; ability of the Windows product to meet market
needs; market outlook and opportunities; growth potential in the year 2002 and
beyond; law enforcement trends; availability of Homeland Security and other
grant funding for customers; adequacy of funding and corporate infrastructure
to support operations and anticipated growth; increased contribution from
support fees; economic and competitive factors affecting the public safety
market; and discussions of strategies involving risk and uncertainties that
reflect management's current views. These statements are based on many
assumptions and factors and may involve risks and uncertainties. The actual
results of the Company or industry results may be materially different from any
future results expressed or implied by such forward-looking statements because
of factors such as insufficient capital resources to operate the Company;
inability to obtain extensions of the Company's long term debt; inability to
successfully market and sell the Windows product; changes in the marketplace
including variations in the demand for public safety software; and changes in
the economic and competitive environment. These factors and other information
contained in this Form 10-QSB could cause such views, assumptions and factors
and the Company's results of operations to be materially different. We
undertake no obligation to update publicly any forward-looking statements for
any reason even if new information becomes available or other events occur in
the future.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults Upon Senior Securities
The Company failed to pay when due the principal and interest on a $35,000
convertible note due May 9, 2002 issued to West Country Partners. The
accrued and unpaid interest on the note as of the date of the filing of
this 10-Q is approximately $14,682.78. Management has commenced negotiation
with the noteholder to extend the note until September 30, 2005.
The Company failed to pay when due the principal and interest on a $375,000
convertible note due May 13, 2002 issued to BSI SA. The accrued and unpaid
interest on the note as of the date of the filing of this 10-Q is
approximately $156,862.96. Management has commenced negotiation with the
noteholder to extend the note until September 30, 2005.
The Company failed to pay when due the principal and interest on a $350,000
convertible note due May 31, 2002 issued to Sumaria Systems. The accrued
and unpaid interest on the note as of the date of the filing of this 10-Q
is approximately $144,506.79. Management has commenced negotiation with the
noteholder to extend the note until September 30, 2005.
Item 4 - Submission of Matters to a vote of Security Holders
None
Item 5 - Other Information
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits
4.41 Convertible Note issued to Rogow Opportunity Capital LLC
dated April 1, 2002
4.42 Warrant issued to Rogow Opportunity Capital LLC dated April
1, 2002
4.43 Convertible Note issued to Robboy Associates, L.L.C. dated
April 1, 2002
4.44 Warrant issued to Robboy Associates, L.L.C. dated April 1,
2002
4.45 Convertible Note issued to Robboy Associates, L.L.C. dated
April 11, 2002
4.46 Warrant issued to Robboy Associates, L.L.C. dated April 11,
2002
4.47 Convertible Note issued to West Country Partners dated April
16, 2002
4.48 Warrant issued to West Country Partners dated April 16, 2002
10.13 Commercial Services Contract with Sumaria Systems dated April
17, 2002
10.14 Factoring Agreement with Pacific Business Funding dated June
4, 2002
99.1 Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes- Oxley Act of 2002.
99.2 Certification of Principal Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes- Oxley Act of 2002.
b. Reports on form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
Pamet Systems, Inc.
-------------------------
(Registrant)
March 3, 2003 (s) Kirke S. Curtis
_______________________________ ______________________
Date Kirke S. Curtis
President
Chief Executive Officer
CERTIFICATIONS
I, Kirke S. Curtis, as President and CEO of Pamet Systems, Inc. certify that:
1. I have reviewed this quarterly report on Form 10-Q of Pamet Systems, Inc.
(the "Company") for the fiscal quarter ended June 30, 2002 (this "Report");
2. Based on my knowledge, this Report does not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material respects
the financial condition and results of operations and cash flows of the Company
as of, and for, the periods presented in this Report;
March 3, 2003
(s) Kirke S. Curtis
______________________
Kirke S. Curtis
Chief Executive Officer
Pamet Systems, Inc
1000 Main Street
Acton, MA 01720
978-263-2060
CERTIFICATIONS
I, Kirke S. Curtis, as Principal Financial Officer of Pamet Systems, Inc.
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Pamet Systems, Inc.
(the "Company") for the fiscal quarter ended June 30, 2002 (this "Report");
2. Based on my knowledge, this Report does not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material respects
the financial condition and results of operations and cash flows of the Company
as of, and for, the periods presented in this Report;
March 3, 2003
(s) Kirke S. Curtis
______________________
Kirke S. Curtis
Principal Financial Officer
Pamet Systems, Inc
1000 Main Street
Acton, MA 01720
978-263-2060
Exhibit 4.41 Convertible Note issued to Rogow Opportunity Capital LLC dated
April 1, 2002
No. L-035
CONVERTIBLE PROMISSORY NOTE THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE
DISCOUNT." THE NAME AND TELEPHONE NUMBER OF THE REPRESENTATIVE OF THE ISSUER
WHO CAN PROVIDE (i) THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, (ii) THE ISSUE
DATE, AND (iii) THE YIELD TO MATURITY ON THE ISSUE DATE IS RICHARD C. BECKER,
(978)-263-2060.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED OR QUALIFIED THEREUNDER OR
AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
$5,000.00 Acton, Massachusetts
April 1, 2002
FOR VALUE RECEIVED, PAMET SYSTEMS, INC., a Massachusetts corporation (the
"Company"), hereby promises to pay to Rogow Opportunity Capital LLC (the
"Purchaser"), a Massachusetts limited liability company with its principal
office at 220 Ocean Avenue, Marblehead, Massachusetts 01945, the principal sum
of Five Thousand Dollars ($5,000.00), on the dates and in the amounts
hereinafter set forth. This Promissory Note is issued by the Company pursuant
to the Securities Purchase Agreement, dated as of the date hereof, among the
Company and Payee (the "Securities Purchase Agreement"). Capitalized terms
used but not defined shall have the respective meanings ascribed to them in the
Securities Purchase Agreement. This Promissory Note is hereinafter referred to
as this "Note."
Principal and Maturity Date. The principal amount of this Note
outstanding together with all accrued interest hereon shall be due and payable
on March 31, 2004 (the "Maturity Date").
Interest. The outstanding principal amount of this Note shall accrue interest
at the per annum rate of seven percent (7.0%) through the earlier of the date
of repayment or conversion (in each case computed on the basis of a 365 day
year and actual days elapsed). Interest shall be payable in full on the
Maturity Date with respect to the principal amount of the Note then
outstanding. No interest shall be deemed to have accrued or be payable on any
portion of this Note which is Converted on or prior to the Maturity Date.
Prepayment. This Note may be prepaid, in whole or in part, without penalty or
premium upon not less than thirty (30) days prior written notice from the
Company to the Payee, at any time or from time to time. All prepayments made
on this Note shall be applied first to the payment of all unpaid interest
accrued on this Note, and then to the outstanding and unpaid principal amount
of this Note as of the date of the payment. Prepayment, in whole or in part,
shall be noted in the accounting records of the Company.
General Payment Provisions. All payments or prepayments of principal and
interest and other sums due pursuant to this Note shall be made by check
payable to the Payee at the address set forth above or at such other address as
Payee shall have previously designated to the Company in writing not later than
two Business Days (as defined below) prior to the date on which such payment
becomes due.
If the due date of any payment under this Note would otherwise fall on a day
which is not a Business Day, such date will be extended to the immediately
succeeding Business Day and interest shall be payable at the rate set forth
herein for the period of the extension. The term "Business Day" shall mean any
day on which commercial banks in the State of New York are not authorized or
required to close.
Conversion; Prepayment.
Conversion/Prepayment and Conversion Price. The Payee may, subject to the terms
and conditions of this Section 5, at any time, or from time to time, exercise
its right to convert this Note to Common Stock by delivering a duly executed
notice, in the form substantially similar to Exhibit A hereto, of such
intention to the Company (the "Conversion Notice"); provided, however, that if,
and to the extent, this Note or any portion thereof is called for prepayment,
the holder may exercise its right to convert to Common Stock such portion of
this Note as was called for prepayment.
The Payee shall have the right, subject to the terms and conditions of this
Section 5, to, no more frequently than four times per annum in the aggregate,
convert all or any part of the principal amount then outstanding under this
Note (the "Note Amount"), in an amount not less than $5,000 (or such lesser
amount as may then be outstanding), into that number of fully?paid and
nonassessable shares of Common Stock (the "Conversion Shares"), obtained by
dividing the Note Amount or such portion thereof presented for conversion by
the Conversion Price. The "Conversion Price" shall initially be $0.20 per
share of Common Stock.
Upon a partial conversion or prepayment of this Note, the Company shall execute
and deliver to or on the order of the holder hereof, a new Note or Notes of
authorized denominations in principal amount equal to the unconverted or
unredeemed, as the case may be, portion of this Note.
Issuance of Common Stock on Conversion. In order to effect the conversion of
this Note, the Payee shall deliver to the Company at its principal office, this
Note and a duly executed Conversion Notice; provided, however, that if the
Payee desires to convert the Note on the Maturity Date, Payee shall notify the
Company in writing of its intention to convert the Note at least five (5) days
prior to the Maturity Date. The date upon which the Company receives the
Conversion Notice, the Note and any other documentation required under this
Section 5 of this Note or the Conversion Notice shall be referred to herein as
the "Effective Date." Upon the Effective Date, this Note (or portion thereof)
shall be deemed converted into shares of Common Stock in accordance with this
Section 5, at which time the rights of the Payee with respect to this Note and
the amount so converted shall cease and, subject to the following provisions of
this paragraph, the person or persons entitled to receive the shares of Common
Stock upon conversion of this Note (or portion thereof) shall be treated for
all purposes as having become the record holder or holders of such Common
Stock. As promptly as practicable after the Effective Date, the Company shall
deliver or cause to be delivered to the Payee, at the address set forth above
or at such other address as the Payee shall designate in writing, certificates
representing the number of fully paid and nonassessable shares of Common Stock
into which this Note (or portion thereof), shall be converted in accordance
with the provisions of this Section 5. If this Note is called for prepayment
it may be converted as provided herein up to and including the close of
business on the business day preceding the date of prepayment.
No fractional shares of Common Stock shall be issued upon conversion of this
Note (or portion thereof). In lieu of any fractional share of Common Stock
which would otherwise be issuable upon conversion of this Note (or portion
thereof), the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price.
Reserves. The Company covenants that it will at all times reserve and keep
available, free from pre?emptive rights, out of its authorized but unissued
Common Stock, solely for the purpose of issue upon conversion of this Note as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of this Note. The Company covenants that all
shares of Common Stock which shall be so issuable shall, upon issuance, be duly
and validly issued and fully paid and non-assessable. The Company shall from
time to time, in accordance with applicable law, increase the authorized amount
of its Common Stock if at any time the authorized amount of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of this
Note at the time outstanding.
Taxes Upon Conversion. The issuance of certificates for shares of Common Stock
upon the conversion of this Note shall be made without charge to the converting
noteholder for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in such names
as may be directed by, the holder of this Note; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of this Note, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid; and provided, further, that in no event shall the
Company be required to pay or reimburse the holder for any income tax payable
by such holder as a result of such issuance.
Legends. All certificates representing Conversion Shares shall bear a
conspicuous legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED OR QUALIFIED THEREUNDER OR AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE."
The Company shall, upon the request of any holder of a stock certificate
representing Conversion Shares and the surrender of such certificate, issue a
new stock certificate without such legend if (i) the stock evidenced by such
certificate has been effectively registered under the Securities Act and
qualified under any applicable state securities law and sold by the holder
thereof in accordance with such registration and qualification or (ii) such
holder shall have delivered to the Company a legal opinion reasonably
satisfactory to the Company to the effect that the restrictions set forth
herein are no longer required or necessary under the Securities Act or any
applicable state law.
Subordination. The Company irrevocably covenants and agrees, and the Holder of
this Note, by its acceptance thereof, irrevocably covenants and agrees, that
the payment of the principal of and interest on this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment and/or cancellation (as shall be appropriate) in full of all
Senior Indebtedness (as defined herein). The provisions of this Section 6 are
made for the benefit of the holders of Senior Indebtedness, and such holders
shall, at any time, be entitled to enforce such provisions against the Company
or Noteholder. No holder of any Senior Indebtedness shall be deemed to owe any
fiduciary duty or any other obligation to any Holder of this Note now or at any
time hereafter. Notwithstanding anything herein contained to the contrary, all
the provisions of this Note shall, except as otherwise provided herein, be
subject to the provisions of this Section 6, so far as the same may be
applicable thereto.
For purposes of this Section 6 (and subject to Section 2.06 of the Securities
Purchase Agreement), "Senior Indebtedness" shall mean any indebtedness,
liability or obligation, contingent or otherwise, other than that arising
pursuant to this Note, of the Company (any such indebtedness, liability or
obligation being hereinafter in this definition referred to as an "Obligation")
(i) which is created, assumed or incurred by the Company after the date of this
Note and which, when created, assumed or incurred, is specifically designated
by the Company as Senior Indebtedness for the purposes hereof in the instrument
creating or evidencing the Company's liability with respect to such Obligations
or (ii) any increases, guarantees, refundings, renewals, rearrangements or
extensions of and amendments, modifications and supplements to any
indebtedness, liability or obligation described in clause (i) above.
No Assignment. This Note may not be assigned by the Payee without the prior
written consent of the Company.
Governing Law. This Note shall be construed in accordance with, and governed
by, the laws of the Commonwealth of Massachusetts as applied to contracts made
and to be performed entirely in the Commonwealth of Massachusetts without
regard to principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of any
court of the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts for purposes of any suit, action or other
proceeding arising out of this Note (and agrees not to commence any action,
suit or proceedings relating hereto except in such courts). Each of the
parties hereto agrees that service of any process, summons, notice or document
by U.S. registered mail at its address set forth herein shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Note, which is brought by or against it, in the courts of
the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Adjustment of Interest Rate. No provision of this Note shall require the
payment of interest to the extent that receipt of any such payment by the
Company would be contrary to the provisions of law applicable to the Company
limiting the maximum amount of interest that may be charged to or collected
from the Company, and if any sum in excess of such maximum rate of interest is
paid or charged, the excess will be deemed to have been a prepayment of
principal of this Note when paid, without premium or penalty, and all payments
made thereafter will be appropriately applied to interest and principal to give
effect to such maximum rate, and after such application any excess shall be
immediately refunded to the Company.
PAMET SYSTEMS, INC.
By:
Name: Kirke S. Curtis
Title: President & CEO
Attested:
By:_________________________
Name: Richard C. Becker
Title: Vice President
EXHIBIT A TO PROMISSORY NOTE
[Form of Conversion Notice]
To Pamet Systems, Inc.:
The undersigned registered holder (the "Payee") of the Note in the principal
amount indicated below and bearing the certificate number indicated below (the
"Note"), hereby irrevocably exercises its right to convert the principal amount
of the Note indicated herein into shares of common stock, par value $.01 per
share, of Pamet Systems, Inc. (the "Company"), in accordance with the terms of
the Note, and directs that the shares issuable and deliverable upon such
conversion together with a check in payment for fractional shares, be issued
and delivered to the Payee unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the Payee (such
person being referred to as the "Transferee"), the Note must be duly endorsed
by, or accompanied by instruments of transfer in form satisfactory to the
Company and duly executed by the undersigned, and the undersigned will pay all
transfer taxes payable with respect thereto. In addition, the Transferee must
sign this notice. All capitalized terms used in this notice and not otherwise
defined shall have the respective meanings ascribed to them in the Note.
The Payee, or in the event a Transferee shall receive the Conversion Shares
issued upon conversion of this Note, the Transferee, hereby represents and
warrants to the Company that (i) he has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of an investment in the Company, (ii) he is acquiring the Conversion Shares for
its own account for investment and not with a view to, or for distribution or
sale in connection with any public offering in violation of the Securities Act
of 1933, as amended (the "Securities Act"), (iii) he understands that (x) the
Conversion Shares will not have been registered for sale under the Securities
Act or qualified under applicable state securities laws and may not be resold
without registration under the Securities Act and qualification under any
applicable state securities law, (y) such Conversion Shares will be issued to
him pursuant to one or more exemptions from the registration or qualification
requirements of the Securities Act and that the representations and warranties
contained herein are given with the intention that the Company may rely thereon
for purposes of claiming such exemptions and (z) the Conversion Shares shall
contain a legend substantially as set forth in Section 5(e) of the Note, (iv)
he is an "accredited investor" as defined in Section 501 of Regulation D
promulgated under the Securities Act, (v) he understands he must bear the
economic risk of Conversion Shares issued upon conversion of the Note for an
indefinite period of time as the Conversion Shares cannot be sold unless
registered under the Securities Act and any other applicable state securities
laws or sold in a transaction exempt from such registration thereunder and (vi)
representatives of the Company have (x) fully and satisfactorily answered any
questions which he deemed to ask concerning the Company and (y) furnished him
with such additional information and documents regarding the Company as he has
reasonably requested.
Principal amount of Note to be converted: $________________
Certificate Number of Note: __
Print name, address (including zip code) and social security or other taxpayer
identification number of the person in whose name the Common Stock will be
issued:
_________________________________
_________________________________
_________________________________
(Zip Code)
_________________________________
Social Security or other
Taxpayer Identification
Number
Dated:___________________________
Signature of Noteholder
Dated:___________________________
Signature of Transferee
Exhibit 4.42 Warrant issued to Rogow Opportunity Capital LLC dated April 1,
2002
LW - 035 WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD) THAT SUCH
REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on March 31, 2007.
WARRANT TO PURCHASE COMMON STOCK
OF
PAMET SYSTEMS, INC.
FOR VALUE RECEIVED, PAMET SYSTEMS, INC. (the "Company"), a Massachusetts
corporation, hereby certifies that Rogow Opportunity Capital LLC (the
"Purchaser"), a Massachusetts limited liability company with its principal
office at 220 Ocean Avenue, Marblehead, Massachusetts 01945, or his permitted
assigns, is entitled to purchase from the Company, at any time or from time to
time commencing April 1, 2002, and prior to 5:00 P.M., Eastern Standard Time,
on March 30, 2007, a total of Twenty Five Thousand (25,000) fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the Company
for an aggregate purchase price of Twenty Five Thousand Dollars ($25,000)
(computed on the basis of $1.00 per share). (Hereinafter, (i) said Common
Stock, together with any other equity securities which may be issued by the
Company with respect thereto or in substitution therefor, is referred to as the
"Common Stock," (ii) the shares of the Common Stock purchasable hereunder are
referred to as the "Warrant Shares," (iii) the aggregate purchase price payable
hereunder for the Warrant Shares is referred to as the "Aggregate Warrant
Price," (iv) the price payable hereunder for each of the Warrant Shares is
referred to as the "Per Share Warrant Price," (v) this Warrant, and all
warrants hereafter issued in exchange or substitution for this Warrant are
referred to as the "Warrant" and (vi) the holder of this Warrant is referred to
as the "Holder.") The number of Warrant Shares for which this Warrant is
exercisable is subject to adjustment as hereinafter provided.
This Warrant is issued by the Company pursuant to the Securities Purchase
Agreement, dated as of the date hereof, among the Company and Rogow Opportunity
Capital (the "Securities Purchase Agreement"). Capitalized terms used but not
defined shall have the respective meanings ascribed to them in the Securities
Purchase Agreement.
Exercise of Warrant.
This Warrant may be exercised, in whole at any time or in part from time to
time, commencing April 1, 2002, and prior to 5:00 P.M., Eastern Standard Time,
on March 31, 2007, by the Holder of this Warrant by the surrender of this
Warrant (with the subscription form at the end hereof duly executed) at the
address set forth in Subsection 9(a) hereof, together with proper payment of
the Aggregate Warrant Price, or the proportionate part thereof if this Warrant
is exercised in part.
The Aggregate Warrant Price or Per Share Warrant Price shall be paid in cash by
certified or official bank check payable to the order of the Company.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business on the day on which the Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (an "Exercise
Date"). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such certificates.
If this Warrant is exercised in part, the Holder shall be entitled to receive a
new Warrant covering the number of Warrant Shares in respect of which this
Warrant has not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in
the name of the Holder for the shares of the Common Stock to which the Holder
shall be entitled, and (b) deliver the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of the Warrant.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the fair value of a share.
Reservation of Warrant Shares. The Company agrees that, prior
to the expiration of this Warrant, the Company will at all times have
authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock as
from time to time shall be receivable upon the exercise of this Warrant.
Adjustments. In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the number of Warrant Shares for which this Warrant may
be exercised shall be adjusted so that if the Holder surrendered this Warrant
for exercise after such action the Holder would be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have been entitled to receive had such Warrant been exercised immediately
prior to such action. An adjustment made pursuant to this subsection (a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this subsection (a), the Holder of this Warrant
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of this Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock.
In case of any consolidation or merger to which the Company is a party other
than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company), the holder shall have the right thereafter to
exercise this Warrant for the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
such Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of this Warrant. The above
provisions of this subsection (b) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
In the event of any adjustment to the number of Warrant Shares issuable upon
exercise of this Warrant, the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price in effect immediately prior to such
adjustment by a fraction the numerator of which is the aggregate number of
Warrant Shares for which this Warrant may be exercised immediately prior to
such adjustment and the denominator of which is the aggregate number of Warrant
Shares for which this Warrant may be exercised immediately after such
adjustment.
Whenever the Per Share Warrant Price is adjusted as provided in this Warrant
and upon any modification of the rights of the Holder of this Warrant in
accordance with this Section 3, the Company shall promptly prepare a
certificate of an officer of the Company, setting forth the Per Share Warrant
Price and the number of Warrant Shares after such adjustment or modification, a
brief statement of the facts requiring such adjustment or modification and the
manner of computing the same and cause a copy of such certificate to be mailed
to the Holder.
Fully Paid Stock; Taxes. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the proper exercise of this Warrant shall, at the time of such delivery, be
validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of
the Common Stock is at all times equal to or less than the then Per Share
Warrant Price. Subject to Section 5(e) hereof, the Company further covenants
and agrees that it will pay, when due and payable, any and all Federal and
state stamp, original issue or similar taxes that may be payable in respect of
the issuance of any Warrant Shares or certificates therefor. The Holder
covenants and agrees that it shall pay, when due and payable, any and all
federal, state and local income or similar taxes that may be payable in respect
of the issuance of any Warrant Shares or certificates therefor.
Transfer
Securities Laws. Neither this Warrant nor the Warrant Shares issuable upon the
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or under any state securities laws and unless
so registered may not be transferred, sold, pledged, hypothecated or otherwise
disposed of unless an exemption from such registration is available. In the
event the Holder desires to transfer this Warrant or any of the Warrant Shares
issued, the Holder must give the Company prior written notice of such proposed
transfer including the name and address of the proposed transferee. Such
transfer may be made only either (i) upon publication by the Securities and
Exchange Commission (the "Commission") of a ruling, interpretation, opinion or
"no action letter" based upon facts presented to said Commission, or (ii) upon
receipt by the Company of an opinion of counsel acceptable to the Company to
the effect that the proposed transfer will not violate the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations promulgated under either such act, or to
the effect that the Warrant or Warrant Shares to be sold or transferred have
been registered under the Securities Act of 1933, as amended, and that there is
in effect a current prospectus meeting the requirements of Subsection 11(a) of
the Securities Act, which is being or will be delivered to the purchaser or
transferee at or prior to the time of delivery of the certificates evidencing
the Warrant or Warrant Shares to be sold or transferred.
Conditions to Transfer. Prior to any such proposed transfer (including,
without limitation, a transfer by will or pursuant to the laws of descent and
distribution), and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities Act, the
Holder will, if requested by the Company, deliver to the Company (i) an
investment covenant, in form and substance equivalent to that signed by the
original Holder of this Warrant, signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth
herein on the certificate or certificates representing the securities acquired
by such transferee, (iii) an agreement by such transferee that the Company may
place a "stop transfer order" with its transfer agent or registrar, and (iv) an
agreement by the transferee to indemnify the Company to the same extent as set
forth in the next succeeding paragraph.
Indemnity. The Holder acknowledges that the Holder understands the meaning and
legal consequences of this Section 5, and the Holder hereby agrees to indemnify
and hold harmless the Company, its representatives and each officer and
director thereof from and against any and all loss, damage or liability
(including all attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any representation or
the breach of any warranty of the Holder contained in, or any other breach by
the Holder of, this Warrant, (b) any transfer of the Warrant or (c) any untrue
statement or omission to state any material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
Transfer. Upon surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with assignment documentation duly executed
and funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment,
and this Warrant shall promptly be canceled. Any assignment, transfer, pledge,
hypothecation or other disposition of this Warrant attempted contrary to the
provisions of this Warrant, or any levy of execution, attachment or other
process attempted upon the Warrant, shall be null and void and without effect.
Legend and Stop Transfer Orders. Unless the Warrant Shares have been
registered under the Securities Act, upon exercise of any part of the Warrant
and the issuance of any of the Warrant Shares, the Company shall instruct its
transfer agent to enter stop transfer orders with respect to such shares, and
all certificates representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with Massachusetts
law:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of unless
registered pursuant to the provisions of that Act or an opinion of counsel to
the Company is obtained stating that such disposition is in compliance with an
available exemption from such registration."
Loss, etc. of Warrant. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
Warrant Holder Not Shareholder. Except as otherwise provided herein, this
Warrant does not confer upon the Holder any right to vote or to consent to or
receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
Communication. No notice or other communication under this Warrant shall be
effective unless the same is in writing and is mailed by first-class mail,
postage prepaid, addressed to: the Company at 1000 Main Street, Acton,
Massachusetts 01720, or such other address as the Company has designated in
writing to the Holder, or the Holder at the address contained in the first
paragraph of this Warrant, or such other address as the Holder has designated
in writing to the Company.
Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
Applicable Law. This Warrant shall be governed by and construed in accordance
with the law of the Commonwealth of Massachusetts without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, PAMET SYSTEMS, INC., has caused this Warrant to be signed
by a duly authorized officer as of this 1st day of April, 2002.
ATTEST: PAMET SYSTEMS, INC.
By:_______________________ By:___________________________________
Name: Richard C. Becker Name: Kirke S. Curtis
Title: VP, Finance and Administration Title: President & CEO
SUBSCRIPTION
The undersigned, __________________________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________________________ shares of the Common Stock of PAMET
SYSTEMS, INC. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.
Dated __________________ Signature__________________________
Address____________________________
____________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
PAMET SYSTEMS, INC.
Dated __________________ Signature_________________________
Address___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and transfers unto
_________________________ the right to purchase _________________________
shares of the Common Stock of PAMET SYSTEMS, INC. by the foregoing Warrant, and
a proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of said Warrant on the books of PAMET SYSTEMS, INC.
Dated ___________________ Signature__________________________
Address____________________________
____________________________
Exhibit 4.43 Convertible Note issued to Robboy Associates, L.L.C. dated April
1, 2002
No. L-036
CONVERTIBLE PROMISSORY NOTE THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE
DISCOUNT." THE NAME AND TELEPHONE NUMBER OF THE REPRESENTATIVE OF THE ISSUER
WHO CAN PROVIDE (i) THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, (ii) THE ISSUE
DATE, AND (iii) THE YIELD TO MATURITY ON THE ISSUE DATE IS RICHARD C. BECKER,
(978)-263-2060.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED OR QUALIFIED THEREUNDER OR
AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
$20,000.00 Acton, Massachusetts
April 1, 2002
FOR VALUE RECEIVED, PAMET SYSTEMS, INC., a Massachusetts corporation (the
"Company"), hereby promises to pay to Robboy Associates, L.L.C. (the
"Purchaser"), an entity with its principal office at 104 Donegal Drive, Chapel
Hill, NC 27415, the principal sum of Twenty Thousand Dollars ($20,000.00), on
the dates and in the amounts hereinafter set forth. This Promissory Note is
issued by the Company pursuant to the Securities Purchase Agreement, dated as
of the date hereof, among the Company and Payee (the "Securities Purchase
Agreement"). Capitalized terms used but not defined shall have the respective
meanings ascribed to them in the Securities Purchase Agreement. This
Promissory Note is hereinafter referred to as this "Note."
Principal and Maturity Date. The principal amount of this Note outstanding
together with all accrued interest hereon shall be due and payable on March 31,
2004 (the "Maturity Date").
Interest. The outstanding principal amount of this Note shall accrue interest
at the per annum rate of seven percent (7.0%) through the earlier of the date
of repayment or conversion (in each case computed on the basis of a 365 day
year and actual days elapsed). Interest shall be payable in full on the
Maturity Date with respect to the principal amount of the Note then
outstanding. No interest shall be deemed to have accrued or be payable on any
portion of this Note which is Converted on or prior to the Maturity Date.
Prepayment. This Note may be prepaid, in whole or in part, without penalty or
premium upon not less than thirty (30) days prior written notice from the
Company to the Payee, at any time or from time to time. All prepayments made
on this Note shall be applied first to the payment of all unpaid interest
accrued on this Note, and then to the outstanding and unpaid principal amount
of this Note as of the date of the payment. Prepayment, in whole or in part,
shall be noted in the accounting records of the Company.
General Payment Provisions. All payments or prepayments of principal and
interest and other sums due pursuant to this Note shall be made by check
payable to the Payee at the address set forth above or at such other address as
Payee shall have previously designated to the Company in writing not later than
two Business Days (as defined below) prior to the date on which such payment
becomes due.
If the due date of any payment under this Note would otherwise fall on a day
which is not a Business Day, such date will be extended to the immediately
succeeding Business Day and interest shall be payable at the rate set forth
herein for the period of the extension. The term "Business Day" shall mean any
day on which commercial banks in the State of New York are not authorized or
required to close.
Conversion; Prepayment.
Conversion/Prepayment and Conversion Price. The Payee may, subject to the terms
and conditions of this Section 5, at any time, or from time to time, exercise
its right to convert this Note to Common Stock by delivering a duly executed
notice, in the form substantially similar to Exhibit A hereto, of such
intention to the Company (the "Conversion Notice"); provided, however, that if,
and to the extent, this Note or any portion thereof is called for prepayment,
the holder may exercise its right to convert to Common Stock such portion of
this Note as was called for prepayment.
The Payee shall have the right, subject to the terms and conditions of this
Section 5, to, no more frequently than four times per annum in the aggregate,
convert all or any part of the principal amount then outstanding under this
Note (the "Note Amount"), in an amount not less than $50,000 (or such lesser
amount as may then be outstanding), into that number of fully?paid and
nonassessable shares of Common Stock (the "Conversion Shares"), obtained by
dividing the Note Amount or such portion thereof presented for conversion by
the Conversion Price. The "Conversion Price" shall initially be $0.20 per
share of Common Stock.
Upon a partial conversion or prepayment of this Note, the Company shall execute
and deliver to or on the order of the holder hereof, a new Note or Notes of
authorized denominations in principal amount equal to the unconverted or
unredeemed, as the case may be, portion of this Note.
Issuance of Common Stock on Conversion. In order to effect the conversion of
this Note, the Payee shall deliver to the Company at its principal office, this
Note and a duly executed Conversion Notice; provided, however, that if the
Payee desires to convert the Note on the Maturity Date, Payee shall notify the
Company in writing of its intention to convert the Note at least five (5) days
prior to the Maturity Date. The date upon which the Company receives the
Conversion Notice, the Note and any other documentation required under this
Section 5 of this Note or the Conversion Notice shall be referred to herein as
the "Effective Date." Upon the Effective Date, this Note (or portion thereof)
shall be deemed converted into shares of Common Stock in accordance with this
Section 5, at which time the rights of the Payee with respect to this Note and
the amount so converted shall cease and, subject to the following provisions of
this paragraph, the person or persons entitled to receive the shares of Common
Stock upon conversion of this Note (or portion thereof) shall be treated for
all purposes as having become the record holder or holders of such Common
Stock. As promptly as practicable after the Effective Date, the Company shall
deliver or cause to be delivered to the Payee, at the address set forth above
or at such other address as the Payee shall designate in writing, certificates
representing the number of fully paid and nonassessable shares of Common Stock
into which this Note (or portion thereof), shall be converted in accordance
with the provisions of this Section 5. If this Note is called for prepayment
it may be converted as provided herein up to and including the close of
business on the business day preceding the date of prepayment.
No fractional shares of Common Stock shall be issued upon conversion of this
Note (or portion thereof). In lieu of any fractional share of Common Stock
which would otherwise be issuable upon conversion of this Note (or portion
thereof), the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price.
Reserves. The Company covenants that it will at all times reserve and keep
available, free from pre?emptive rights, out of its authorized but unissued
Common Stock, solely for the purpose of issue upon conversion of this Note as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of this Note. The Company covenants that all
shares of Common Stock which shall be so issuable shall, upon issuance, be duly
and validly issued and fully paid and non-assessable. The Company shall from
time to time, in accordance with applicable law, increase the authorized amount
of its Common Stock if at any time the authorized amount of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of this
Note at the time outstanding.
Taxes Upon Conversion. The issuance of certificates for shares of Common Stock
upon the conversion of this Note shall be made without charge to the converting
noteholder for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in such names
as may be directed by, the holder of this Note; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of this Note, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid; and provided, further, that in no event shall the
Company be required to pay or reimburse the holder for any income tax payable
by such holder as a result of such issuance.
Legends. All certificates representing Conversion Shares shall bear a
conspicuous legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED OR QUALIFIED THEREUNDER OR AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE."
The Company shall, upon the request of any holder of a stock certificate
representing Conversion Shares and the surrender of such certificate, issue a
new stock certificate without such legend if (i) the stock evidenced by such
certificate has been effectively registered under the Securities Act and
qualified under any applicable state securities law and sold by the holder
thereof in accordance with such registration and qualification or (ii) such
holder shall have delivered to the Company a legal opinion reasonably
satisfactory to the Company to the effect that the restrictions set forth
herein are no longer required or necessary under the Securities Act or any
applicable state law.
Subordination. The Company irrevocably covenants and agrees, and the Holder of
this Note, by its acceptance thereof, irrevocably covenants and agrees, that
the payment of the principal of and interest on this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment and/or cancellation (as shall be appropriate) in full of all
Senior Indebtedness (as defined herein). The provisions of this Section 6 are
made for the benefit of the holders of Senior Indebtedness, and such holders
shall, at any time, be entitled to enforce such provisions against the Company
or Noteholder. No holder of any Senior Indebtedness shall be deemed to owe any
fiduciary duty or any other obligation to any Holder of this Note now or at any
time hereafter. Notwithstanding anything herein contained to the contrary, all
the provisions of this Note shall, except as otherwise provided herein, be
subject to the provisions of this Section 6, so far as the same may be
applicable thereto.
For purposes of this Section 6 (and subject to Section 2.06 of the Securities
Purchase Agreement), "Senior Indebtedness" shall mean any indebtedness,
liability or obligation, contingent or otherwise, other than that arising
pursuant to this Note, of the Company (any such indebtedness, liability or
obligation being hereinafter in this definition referred to as an "Obligation")
(i) which is created, assumed or incurred by the Company after the date of this
Note and which, when created, assumed or incurred, is specifically designated
by the Company as Senior Indebtedness for the purposes hereof in the instrument
creating or evidencing the Company's liability with respect to such Obligations
or (ii) any increases, guarantees, refundings, renewals, rearrangements or
extensions of and amendments, modifications and supplements to any
indebtedness, liability or obligation described in clause (i) above.
No Assignment. This Note may not be assigned by the Payee without the prior
written consent of the Company.
Governing Law. This Note shall be construed in accordance with, and governed
by, the laws of the Commonwealth of Massachusetts as applied to contracts made
and to be performed entirely in the Commonwealth of Massachusetts without
regard to principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of any
court of the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts for purposes of any suit, action or other
proceeding arising out of this Note (and agrees not to commence any action,
suit or proceedings relating hereto except in such courts). Each of the
parties hereto agrees that service of any process, summons, notice or document
by U.S. registered mail at its address set forth herein shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Note, which is brought by or against it, in the courts of
the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Adjustment of Interest Rate. No provision of this Note shall require the
payment of interest to the extent that receipt of any such payment by the
Company would be contrary to the provisions of law applicable to the Company
limiting the maximum amount of interest that may be charged to or collected
from the Company, and if any sum in excess of such maximum rate of interest is
paid or charged, the excess will be deemed to have been a prepayment of
principal of this Note when paid, without premium or penalty, and all payments
made thereafter will be appropriately applied to interest and principal to give
effect to such maximum rate, and after such application any excess shall be
immediately refunded to the Company.
PAMET SYSTEMS, INC.
By:
Name: Kirke S. Curtis
Title: President & CEO
Attested:
By:_________________________
Name: Richard C. Becker
Title: Vice President
EXHIBIT A TO PROMISSORY NOTE
[Form of Conversion Notice]
To Pamet Systems, Inc.:
The undersigned registered holder (the "Payee") of the Note in the principal
amount indicated below and bearing the certificate number indicated below (the
"Note"), hereby irrevocably exercises its right to convert the principal amount
of the Note indicated herein into shares of common stock, par value $.01 per
share, of Pamet Systems, Inc. (the "Company"), in accordance with the terms of
the Note, and directs that the shares issuable and deliverable upon such
conversion together with a check in payment for fractional shares, be issued
and delivered to the Payee unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the Payee (such
person being referred to as the "Transferee"), the Note must be duly endorsed
by, or accompanied by instruments of transfer in form satisfactory to the
Company and duly executed by the undersigned, and the undersigned will pay all
transfer taxes payable with respect thereto. In addition, the Transferee must
sign this notice. All capitalized terms used in this notice and not otherwise
defined shall have the respective meanings ascribed to them in the Note.
The Payee, or in the event a Transferee shall receive the Conversion Shares
issued upon conversion of this Note, the Transferee, hereby represents and
warrants to the Company that (i) he has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of an investment in the Company, (ii) he is acquiring the Conversion Shares for
its own account for investment and not with a view to, or for distribution or
sale in connection with any public offering in violation of the Securities Act
of 1933, as amended (the "Securities Act"), (iii) he understands that (x) the
Conversion Shares will not have been registered for sale under the Securities
Act or qualified under applicable state securities laws and may not be resold
without registration under the Securities Act and qualification under any
applicable state securities law, (y) such Conversion Shares will be issued to
him pursuant to one or more exemptions from the registration or qualification
requirements of the Securities Act and that the representations and warranties
contained herein are given with the intention that the Company may rely thereon
for purposes of claiming such exemptions and (z) the Conversion Shares shall
contain a legend substantially as set forth in Section 5(e) of the Note, (iv)
he is an "accredited investor" as defined in Section 501 of Regulation D
promulgated under the Securities Act, (v) he understands he must bear the
economic risk of Conversion Shares issued upon conversion of the Note for an
indefinite period of time as the Conversion Shares cannot be sold unless
registered under the Securities Act and any other applicable state securities
laws or sold in a transaction exempt from such registration thereunder and (vi)
representatives of the Company have (x) fully and satisfactorily answered any
questions which he deemed to ask concerning the Company and (y) furnished him
with such additional information and documents regarding the Company as he has
reasonably requested.
Principal amount of Note to be converted: $________________
Certificate Number of Note: __
Print name, address (including zip code) and social security or other taxpayer
identification number of the person in whose name the Common Stock will be
issued:
_________________________________
_________________________________
_________________________________
(Zip Code)
_________________________________
Social Security or other
Taxpayer Identification
Number
Dated:___________________________ Signature of Noteholder
Dated:___________________________ Signature of Transferee
Exhibit 4.44 Warrant issued to Robboy Associates, L.L.C. dated April 1, 2002
LW - 036
WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD) THAT SUCH
REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on March 31, 2007.
WARRANT TO PURCHASE COMMON STOCK
OF
PAMET SYSTEMS, INC.
FOR VALUE RECEIVED, PAMET SYSTEMS, INC. (the "Company"), a Massachusetts
corporation, hereby certifies that Robboy Associates, L.L.C. (the "Purchaser"),
an entity with its principal office at 104 Donegal Drive, Chapel Hill, NC
27415, or his permitted assigns, is entitled to purchase from the Company, at
any time or from time to time commencing April 1, 2002, and prior to 5:00 P.M.,
Eastern Standard Time, on March 31, 2007, a total of One Hundred Thousand
(100,000) fully paid and nonassessable shares of Common Stock, par value $.01
per share, of the Company for an aggregate purchase price of One Hundred
Thousand Dollars ($100,000) (computed on the basis of $1.00 per share).
(Hereinafter, (i) said Common Stock, together with any other equity securities
which may be issued by the Company with respect thereto or in substitution
therefor, is referred to as the "Common Stock," (ii) the shares of the Common
Stock purchasable hereunder are referred to as the "Warrant Shares," (iii) the
aggregate purchase price payable hereunder for the Warrant Shares is referred
to as the "Aggregate Warrant Price," (iv) the price payable hereunder for each
of the Warrant Shares is referred to as the "Per Share Warrant Price," (v) this
Warrant, and all warrants hereafter issued in exchange or substitution for this
Warrant are referred to as the "Warrant" and (vi) the holder of this Warrant is
referred to as the "Holder.") The number of Warrant Shares for which this
Warrant is exercisable is subject to adjustment as hereinafter provided.
This Warrant is issued by the Company pursuant to the Securities Purchase
Agreement, dated as of the date hereof, among the Company and Robboy
Assoaciated, LLC. (the "Securities Purchase Agreement"). Capitalized terms
used but not defined shall have the respective meanings ascribed to them in the
Securities Purchase Agreement.
Exercise of Warrant. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing April 1, 2002, and prior to 5:00 P.M.,
Eastern Standard Time, on March 31, 2007, by the Holder of this Warrant by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in Subsection 9(a) hereof, together with
proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part.
The Aggregate Warrant Price or Per Share Warrant Price shall be paid in cash by
certified or official bank check payable to the order of the Company.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business on the day on which the Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (an "Exercise
Date"). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such certificates.
If this Warrant is exercised in part, the Holder shall be entitled to receive a
new Warrant covering the number of Warrant Shares in respect of which this
Warrant has not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in
the name of the Holder for the shares of the Common Stock to which the Holder
shall be entitled, and (b) deliver the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of the Warrant.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the fair value of a share.
Reservation of Warrant Shares. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and
in reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock as from time to time
shall be receivable upon the exercise of this Warrant.
Adjustments. In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the number of Warrant Shares for which this Warrant may
be exercised shall be adjusted so that if the Holder surrendered this Warrant
for exercise after such action the Holder would be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have been entitled to receive had such Warrant been exercised immediately
prior to such action. An adjustment made pursuant to this subsection (a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this subsection (a), the Holder of this Warrant
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of this Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock.
In case of any consolidation or merger to which the Company is a party other
than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company), the holder shall have the right thereafter to
exercise this Warrant for the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
such Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of this Warrant. The above
provisions of this subsection (b) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
In the event of any adjustment to the number of Warrant Shares issuable upon
exercise of this Warrant, the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price in effect immediately prior to such
adjustment by a fraction the numerator of which is the aggregate number of
Warrant Shares for which this Warrant may be exercised immediately prior to
such adjustment and the denominator of which is the aggregate number of Warrant
Shares for which this Warrant may be exercised immediately after such
adjustment.
Whenever the Per Share Warrant Price is adjusted as provided in this Warrant
and upon any modification of the rights of the Holder of this Warrant in
accordance with this Section 3, the Company shall promptly prepare a
certificate of an officer of the Company, setting forth the Per Share Warrant
Price and the number of Warrant Shares after such adjustment or modification, a
brief statement of the facts requiring such adjustment or modification and the
manner of computing the same and cause a copy of such certificate to be mailed
to the Holder.
Fully Paid Stock; Taxes. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the proper exercise of this Warrant shall, at the time of such delivery, be
validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of
the Common Stock is at all times equal to or less than the then Per Share
Warrant Price. Subject to Section 5(e) hereof, the Company further covenants
and agrees that it will pay, when due and payable, any and all Federal and
state stamp, original issue or similar taxes that may be payable in respect of
the issuance of any Warrant Shares or certificates therefor. The Holder
covenants and agrees that it shall pay, when due and payable, any and all
federal, state and local income or similar taxes that may be payable in respect
of the issuance of any Warrant Shares or certificates therefor.
Transfer Securities Laws. Neither this Warrant nor the Warrant Shares issuable
upon the exercise hereof have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws and
unless so registered may not be transferred, sold, pledged, hypothecated or
otherwise disposed of unless an exemption from such registration is available.
In the event the Holder desires to transfer this Warrant or any of the Warrant
Shares issued, the Holder must give the Company prior written notice of such
proposed transfer including the name and address of the proposed transferee.
Such transfer may be made only either (i) upon publication by the Securities
and Exchange Commission (the "Commission") of a ruling, interpretation, opinion
or "no action letter" based upon facts presented to said Commission, or (ii)
upon receipt by the Company of an opinion of counsel acceptable to the Company
to the effect that the proposed transfer will not violate the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations promulgated under either such act, or to
the effect that the Warrant or Warrant Shares to be sold or transferred have
been registered under the Securities Act of 1933, as amended, and that there is
in effect a current prospectus meeting the requirements of Subsection 11(a) of
the Securities Act, which is being or will be delivered to the purchaser or
transferee at or prior to the time of delivery of the certificates evidencing
the Warrant or Warrant Shares to be sold or transferred.
Conditions to Transfer. Prior to any such proposed transfer (including,
without limitation, a transfer by will or pursuant to the laws of descent and
distribution), and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities Act, the
Holder will, if requested by the Company, deliver to the Company (i) an
investment covenant, in form and substance equivalent to that signed by the
original Holder of this Warrant, signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth
herein on the certificate or certificates representing the securities acquired
by such transferee, (iii) an agreement by such transferee that the Company may
place a "stop transfer order" with its transfer agent or registrar, and (iv) an
agreement by the transferee to indemnify the Company to the same extent as set
forth in the next succeeding paragraph.
Indemnity. The Holder acknowledges that the Holder understands the meaning and
legal consequences of this Section 5, and the Holder hereby agrees to indemnify
and hold harmless the Company, its representatives and each officer and
director thereof from and against any and all loss, damage or liability
(including all attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any representation or
the breach of any warranty of the Holder contained in, or any other breach by
the Holder of, this Warrant, (b) any transfer of the Warrant or (c) any untrue
statement or omission to state any material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
Transfer. Upon surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with assignment documentation duly executed
and funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment,
and this Warrant shall promptly be canceled. Any assignment, transfer, pledge,
hypothecation or other disposition of this Warrant attempted contrary to the
provisions of this Warrant, or any levy of execution, attachment or other
process attempted upon the Warrant, shall be null and void and without effect.
Legend and Stop Transfer Orders. Unless the Warrant Shares have been
registered under the Securities Act, upon exercise of any part of the Warrant
and the issuance of any of the Warrant Shares, the Company shall instruct its
transfer agent to enter stop transfer orders with respect to such shares, and
all certificates representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with Massachusetts
law:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of unless
registered pursuant to the provisions of that Act or an opinion of counsel to
the Company is obtained stating that such disposition is in compliance with an
available exemption from such registration."
Loss, etc. of Warrant. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
Warrant Holder Not Shareholder. Except as otherwise provided herein, this
Warrant does not confer upon the Holder any right to vote or to consent to or
receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
Communication. No notice or other communication under this Warrant shall be
effective unless the same is in writing and is mailed by first-class mail,
postage prepaid, addressed to: the Company at 1000 Main Street, Acton,
Massachusetts 01720, or such other address as the Company has designated in
writing to the Holder, or the Holder at the address contained in the first
paragraph of this Warrant, or such other address as the Holder has designated
in writing to the Company.
Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
Applicable Law. This Warrant shall be governed by and construed in accordance
with the law of the Commonwealth of Massachusetts without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, PAMET SYSTEMS, INC., has caused this Warrant to be signed
by a duly authorized officer as of this 1st day of April, 2002.
ATTEST: PAMET SYSTEMS, INC.
By:_______________________ By:__________________________________
Name: Richard C. Becker Name: Kirke S. Curtis
Title: VP, Finance and Administration Title: President&CEO
SUBSCRIPTION
The undersigned, __________________________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________________________ shares of the Common Stock of PAMET
SYSTEMS, INC. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.
Dated __________________ Signature__________________________
Address____________________________
____________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
PAMET SYSTEMS, INC.
Dated __________________ Signature_________________________
Address___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and transfers unto
_________________________ the right to purchase _________________________
shares of the Common Stock of PAMET SYSTEMS, INC. by the foregoing Warrant, and
a proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of said Warrant on the books of PAMET SYSTEMS, INC.
Dated ___________________ Signature__________________________
Address____________________________
____________________________
Exhibit 4.45 Convertible Note issued to Robboy Associates, L.L.C. dated
April 11, 2002
No. L-038
CONVERTIBLE PROMISSORY NOTE THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE
DISCOUNT." THE NAME AND TELEPHONE NUMBER OF THE REPRESENTATIVE OF THE ISSUER
WHO CAN PROVIDE (i) THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, (ii) THE ISSUE
DATE, AND (iii) THE YIELD TO MATURITY ON THE ISSUE DATE IS RICHARD C. BECKER,
(978)-263-2060.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED OR QUALIFIED THEREUNDER OR
AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
$20,000.00 Acton, Massachusetts
April 11, 2002
FOR VALUE RECEIVED, PAMET SYSTEMS, INC., a Massachusetts corporation (the
"Company"), hereby promises to pay to Robboy Associates, L.L.C. (the
"Purchaser"), an entity with its principal office at 104 Donegal Drive, Chapel
Hill, NC 27415, the principal sum of Twenty Thousand Dollars ($20,000.00), on
the dates and in the amounts hereinafter set forth. This Promissory Note is
issued by the Company pursuant to the Securities Purchase Agreement, dated as
of the date hereof, among the Company and Payee (the "Securities Purchase
Agreement"). Capitalized terms used but not defined shall have the respective
meanings ascribed to them in the Securities Purchase Agreement. This
Promissory Note is hereinafter referred to as this "Note."
Principal and Maturity Date. The principal amount of this Note outstanding
together with all accrued interest hereon shall be due and payable on April 10,
2004 (the "Maturity Date").
Interest. The outstanding principal amount of this Note shall accrue interest
at the per annum rate of seven percent (7.0%) through the earlier of the date
of repayment or conversion (in each case computed on the basis of a 365 day
year and actual days elapsed). Interest shall be payable in full on the
Maturity Date with respect to the principal amount of the Note then
outstanding. No interest shall be deemed to have accrued or be payable on any
portion of this Note which is Converted on or prior to the Maturity Date. _
Prepayment. This Note may be prepaid, in whole or in part, without penalty or
premium upon not less than thirty (30) days prior written notice from the
Company to the Payee, at any time or from time to time. All prepayments made
on this Note shall be applied first to the payment of all unpaid interest
accrued on this Note, and then to the outstanding and unpaid principal amount
of this Note as of the date of the payment. Prepayment, in whole or in part,
shall be noted in the accounting records of the Company.
General Payment Provisions. All payments or prepayments of principal and
interest and other sums due pursuant to this Note shall be made by check
payable to the Payee at the address set forth above or at such other address as
Payee shall have previously designated to the Company in writing not later than
two Business Days (as defined below) prior to the date on which such payment
becomes due.
If the due date of any payment under this Note would otherwise fall on a day
which is not a Business Day, such date will be extended to the immediately
succeeding Business Day and interest shall be payable at the rate set forth
herein for the period of the extension. The term "Business Day" shall mean any
day on which commercial banks in the State of New York are not authorized or
required to close.
Conversion; Prepayment. Conversion/Prepayment and Conversion Price. The Payee
may, subject to the terms and conditions of this Section 5, at any time, or
from time to time, exercise its right to convert this Note to Common Stock by
delivering a duly executed notice, in the form substantially similar to Exhibit
A hereto, of such intention to the Company (the "Conversion Notice"); provided,
however, that if, and to the extent, this Note or any portion thereof is called
for prepayment, the holder may exercise its right to convert to Common Stock
such portion of this Note as was called for prepayment.
The Payee shall have the right, subject to the terms and conditions of this
Section 5, to, no more frequently than four times per annum in the aggregate,
convert all or any part of the principal amount then outstanding under this
Note (the "Note Amount"), in an amount not less than $50,000 (or such lesser
amount as may then be outstanding), into that number of fully?paid and
nonassessable shares of Common Stock (the "Conversion Shares"), obtained by
dividing the Note Amount or such portion thereof presented for conversion by
the Conversion Price. The "Conversion Price" shall initially be $0.20 per
share of Common Stock.
Upon a partial conversion or prepayment of this Note, the Company shall execute
and deliver to or on the order of the holder hereof, a new Note or Notes of
authorized denominations in principal amount equal to the unconverted or
unredeemed, as the case may be, portion of this Note.
Issuance of Common Stock on Conversion. In order to effect the conversion of
this Note, the Payee shall deliver to the Company at its principal office, this
Note and a duly executed Conversion Notice; provided, however, that if the
Payee desires to convert the Note on the Maturity Date, Payee shall notify the
Company in writing of its intention to convert the Note at least five (5) days
prior to the Maturity Date. The date upon which the Company receives the
Conversion Notice, the Note and any other documentation required under this
Section 5 of this Note or the Conversion Notice shall be referred to herein as
the "Effective Date." Upon the Effective Date, this Note (or portion thereof)
shall be deemed converted into shares of Common Stock in accordance with this
Section 5, at which time the rights of the Payee with respect to this Note and
the amount so converted shall cease and, subject to the following provisions of
this paragraph, the person or persons entitled to receive the shares of Common
Stock upon conversion of this Note (or portion thereof) shall be treated for
all purposes as having become the record holder or holders of such Common
Stock. As promptly as practicable after the Effective Date, the Company shall
deliver or cause to be delivered to the Payee, at the address set forth above
or at such other address as the Payee shall designate in writing, certificates
representing the number of fully paid and nonassessable shares of Common Stock
into which this Note (or portion thereof), shall be converted in accordance
with the provisions of this Section 5. If this Note is called for prepayment
it may be converted as provided herein up to and including the close of
business on the business day preceding the date of prepayment.
No fractional shares of Common Stock shall be issued upon conversion of this
Note (or portion thereof). In lieu of any fractional share of Common Stock
which would otherwise be issuable upon conversion of this Note (or portion
thereof), the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price.
Reserves. The Company covenants that it will at all times reserve and keep
available, free from pre?emptive rights, out of its authorized but unissued
Common Stock, solely for the purpose of issue upon conversion of this Note as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of this Note. The Company covenants that all
shares of Common Stock which shall be so issuable shall, upon issuance, be duly
and validly issued and fully paid and non-assessable. The Company shall from
time to time, in accordance with applicable law, increase the authorized amount
of its Common Stock if at any time the authorized amount of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of this
Note at the time outstanding.
Taxes Upon Conversion. The issuance of certificates for shares of Common Stock
upon the conversion of this Note shall be made without charge to the converting
noteholder for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in such names
as may be directed by, the holder of this Note; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of this Note, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid; and provided, further, that in no event shall the
Company be required to pay or reimburse the holder for any income tax payable
by such holder as a result of such issuance.
Legends. All certificates representing Conversion Shares shall bear a
conspicuous legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED OR QUALIFIED THEREUNDER OR AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE."
The Company shall, upon the request of any holder of a stock certificate
representing Conversion Shares and the surrender of such certificate, issue a
new stock certificate without such legend if (i) the stock evidenced by such
certificate has been effectively registered under the Securities Act and
qualified under any applicable state securities law and sold by the holder
thereof in accordance with such registration and qualification or (ii) such
holder shall have delivered to the Company a legal opinion reasonably
satisfactory to the Company to the effect that the restrictions set forth
herein are no longer required or necessary under the Securities Act or any
applicable state law.
Subordination. The Company irrevocably covenants and agrees, and the Holder of
this Note, by its acceptance thereof, irrevocably covenants and agrees, that
the payment of the principal of and interest on this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment and/or cancellation (as shall be appropriate) in full of all
Senior Indebtedness (as defined herein). The provisions of this Section 6 are
made for the benefit of the holders of Senior Indebtedness, and such holders
shall, at any time, be entitled to enforce such provisions against the Company
or Noteholder. No holder of any Senior Indebtedness shall be deemed to owe any
fiduciary duty or any other obligation to any Holder of this Note now or at any
time hereafter. Notwithstanding anything herein contained to the contrary, all
the provisions of this Note shall, except as otherwise provided herein, be
subject to the provisions of this Section 6, so far as the same may be
applicable thereto.
For purposes of this Section 6 (and subject to Section 2.06 of the Securities
Purchase Agreement), "Senior Indebtedness" shall mean any indebtedness,
liability or obligation, contingent or otherwise, other than that arising
pursuant to this Note, of the Company (any such indebtedness, liability or
obligation being hereinafter in this definition referred to as an "Obligation")
(i) which is created, assumed or incurred by the Company after the date of this
Note and which, when created, assumed or incurred, is specifically designated
by the Company as Senior Indebtedness for the purposes hereof in the instrument
creating or evidencing the Company's liability with respect to such Obligations
or (ii) any increases, guarantees, refundings, renewals, rearrangements or
extensions of and amendments, modifications and supplements to any
indebtedness, liability or obligation described in clause (i) above.
No Assignment. This Note may not be assigned by the Payee without the prior
written consent of the Company.
Governing Law. This Note shall be construed in accordance with, and governed
by, the laws of the Commonwealth of Massachusetts as applied to contracts made
and to be performed entirely in the Commonwealth of Massachusetts without
regard to principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of any
court of the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts for purposes of any suit, action or other
proceeding arising out of this Note (and agrees not to commence any action,
suit or proceedings relating hereto except in such courts). Each of the
parties hereto agrees that service of any process, summons, notice or document
by U.S. registered mail at its address set forth herein shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Note, which is brought by or against it, in the courts of
the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Adjustment of Interest Rate. No provision of this Note shall require the
payment of interest to the extent that receipt of any such payment by the
Company would be contrary to the provisions of law applicable to the Company
limiting the maximum amount of interest that may be charged to or collected
from the Company, and if any sum in excess of such maximum rate of interest is
paid or charged, the excess will be deemed to have been a prepayment of
principal of this Note when paid, without premium or penalty, and all payments
made thereafter will be appropriately applied to interest and principal to give
effect to such maximum rate, and after such application any excess shall be
immediately refunded to the Company.
PAMET SYSTEMS, INC.
By:
Name: Kirke S. Curtis
Title: President & CEO
Attested:
By:_________________________
Name: Richard C. Becker
Title: Vice President
EXHIBIT A TO PROMISSORY NOTE
[Form of Conversion Notice]
To Pamet Systems, Inc.:
The undersigned registered holder (the "Payee") of the Note in the principal
amount indicated below and bearing the certificate number indicated below (the
"Note"), hereby irrevocably exercises its right to convert the principal amount
of the Note indicated herein into shares of common stock, par value $.01 per
share, of Pamet Systems, Inc. (the "Company"), in accordance with the terms of
the Note, and directs that the shares issuable and deliverable upon such
conversion together with a check in payment for fractional shares, be issued
and delivered to the Payee unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the Payee (such
person being referred to as the "Transferee"), the Note must be duly endorsed
by, or accompanied by instruments of transfer in form satisfactory to the
Company and duly executed by the undersigned, and the undersigned will pay all
transfer taxes payable with respect thereto. In addition, the Transferee must
sign this notice. All capitalized terms used in this notice and not otherwise
defined shall have the respective meanings ascribed to them in the Note.
The Payee, or in the event a Transferee shall receive the Conversion Shares
issued upon conversion of this Note, the Transferee, hereby represents and
warrants to the Company that (i) he has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of an investment in the Company, (ii) he is acquiring the Conversion Shares for
its own account for investment and not with a view to, or for distribution or
sale in connection with any public offering in violation of the Securities Act
of 1933, as amended (the "Securities Act"), (iii) he understands that (x) the
Conversion Shares will not have been registered for sale under the Securities
Act or qualified under applicable state securities laws and may not be resold
without registration under the Securities Act and qualification under any
applicable state securities law, (y) such Conversion Shares will be issued to
him pursuant to one or more exemptions from the registration or qualification
requirements of the Securities Act and that the representations and warranties
contained herein are given with the intention that the Company may rely thereon
for purposes of claiming such exemptions and (z) the Conversion Shares shall
contain a legend substantially as set forth in Section 5(e) of the Note, (iv)
he is an "accredited investor" as defined in Section 501 of Regulation D
promulgated under the Securities Act, (v) he understands he must bear the
economic risk of Conversion Shares issued upon conversion of the Note for an
indefinite period of time as the Conversion Shares cannot be sold unless
registered under the Securities Act and any other applicable state securities
laws or sold in a transaction exempt from such registration thereunder and (vi)
representatives of the Company have (x) fully and satisfactorily answered any
questions which he deemed to ask concerning the Company and (y) furnished him
with such additional information and documents regarding the Company as he has
reasonably requested.
Principal amount of Note to be converted: $________________
Certificate Number of Note: __
Print name, address (including zip code) and social security or other taxpayer
identification number of the person in whose name the Common Stock will be
issued:
_________________________________
_________________________________
_________________________________
(Zip Code)
_________________________________
Social Security or other
Taxpayer Identification
Number
Dated:___________________________ Signature of Noteholder
Dated:___________________________ Signature of Transferee
Exhibit 4.46 Warrant issued to Robboy Associates, L.L.C. dated April 11, 2002
LW - 038
WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD) THAT SUCH
REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on April 10, 2007.
WARRANT TO PURCHASE COMMON STOCK
OF
PAMET SYSTEMS, INC.
FOR VALUE RECEIVED, PAMET SYSTEMS, INC. (the "Company"), a Massachusetts
corporation, hereby certifies that Robboy Associates, L.L.C. (the "Purchaser"),
an entity with its principal office at 104 Donegal Drive, Chapel Hill, NC
27415, or his permitted assigns, is entitled to purchase from the Company, at
any time or from time to time commencing April 11, 2002, and prior to 5:00
P.M., Eastern Standard Time, on April 10, 2007, a total of One Hundred Thousand
(100,000) fully paid and nonassessable shares of Common Stock, par value $.01
per share, of the Company for an aggregate purchase price of One Hundred
Thousand Dollars ($100,000) (computed on the basis of $1.00 per share).
(Hereinafter, (i) said Common Stock, together with any other equity securities
which may be issued by the Company with respect thereto or in substitution
therefor, is referred to as the "Common Stock," (ii) the shares of the Common
Stock purchasable hereunder are referred to as the "Warrant Shares," (iii) the
aggregate purchase price payable hereunder for the Warrant Shares is referred
to as the "Aggregate Warrant Price," (iv) the price payable hereunder for each
of the Warrant Shares is referred to as the "Per Share Warrant Price," (v) this
Warrant, and all warrants hereafter issued in exchange or substitution for this
Warrant are referred to as the "Warrant" and (vi) the holder of this Warrant is
referred to as the "Holder.") The number of Warrant Shares for which this
Warrant is exercisable is subject to adjustment as hereinafter provided.
This Warrant is issued by the Company pursuant to the Securities Purchase
Agreement, dated as of the date hereof, among the Company and Robboy
Assoaciated, LLC. (the "Securities Purchase Agreement"). Capitalized terms
used but not defined shall have the respective meanings ascribed to them in the
Securities Purchase Agreement.
Exercise of Warrant. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing April 11, 2002, and prior to 5:00 P.M.,
Eastern Standard Time, on April 10, 2007, by the Holder of this Warrant by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in Subsection 9(a) hereof, together with
proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part.
The Aggregate Warrant Price or Per Share Warrant Price shall be paid in cash by
certified or official bank check payable to the order of the Company.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business on the day on which the Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (an "Exercise
Date"). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such certificates.
If this Warrant is exercised in part, the Holder shall be entitled to receive a
new Warrant covering the number of Warrant Shares in respect of which this
Warrant has not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in
the name of the Holder for the shares of the Common Stock to which the Holder
shall be entitled, and (b) deliver the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of the Warrant.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the fair value of a share.
Reservation of Warrant Shares. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and
in reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock as from time to time
shall be receivable upon the exercise of this Warrant.
Adjustments. In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the number of Warrant Shares for which this Warrant may
be exercised shall be adjusted so that if the Holder surrendered this Warrant
for exercise after such action the Holder would be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have been entitled to receive had such Warrant been exercised immediately
prior to such action. An adjustment made pursuant to this subsection (a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this subsection (a), the Holder of this Warrant
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of this Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock.
In case of any consolidation or merger to which the Company is a party other
than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company), the holder shall have the right thereafter to
exercise this Warrant for the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
such Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of this Warrant. The above
provisions of this subsection (b) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
In the event of any adjustment to the number of Warrant Shares issuable upon
exercise of this Warrant, the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price in effect immediately prior to such
adjustment by a fraction the numerator of which is the aggregate number of
Warrant Shares for which this Warrant may be exercised immediately prior to
such adjustment and the denominator of which is the aggregate number of Warrant
Shares for which this Warrant may be exercised immediately after such
adjustment.
Whenever the Per Share Warrant Price is adjusted as provided in this Warrant
and upon any modification of the rights of the Holder of this Warrant in
accordance with this Section 3, the Company shall promptly prepare a
certificate of an officer of the Company, setting forth the Per Share Warrant
Price and the number of Warrant Shares after such adjustment or modification, a
brief statement of the facts requiring such adjustment or modification and the
manner of computing the same and cause a copy of such certificate to be mailed
to the Holder.
Fully Paid Stock; Taxes. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the proper exercise of this Warrant shall, at the time of such delivery, be
validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of
the Common Stock is at all times equal to or less than the then Per Share
Warrant Price. Subject to Section 5(e) hereof, the Company further covenants
and agrees that it will pay, when due and payable, any and all Federal and
state stamp, original issue or similar taxes that may be payable in respect of
the issuance of any Warrant Shares or certificates therefor. The Holder
covenants and agrees that it shall pay, when due and payable, any and all
federal, state and local income or similar taxes that may be payable in respect
of the issuance of any Warrant Shares or certificates therefor.
Transfer Securities Laws. Neither this Warrant nor the Warrant Shares issuable
upon the exercise hereof have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws and
unless so registered may not be transferred, sold, pledged, hypothecated or
otherwise disposed of unless an exemption from such registration is available.
In the event the Holder desires to transfer this Warrant or any of the Warrant
Shares issued, the Holder must give the Company prior written notice of such
proposed transfer including the name and address of the proposed transferee.
Such transfer may be made only either (i) upon publication by the Securities
and Exchange Commission (the "Commission") of a ruling, interpretation, opinion
or "no action letter" based upon facts presented to said Commission, or (ii)
upon receipt by the Company of an opinion of counsel acceptable to the Company
to the effect that the proposed transfer will not violate the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations promulgated under either such act, or to
the effect that the Warrant or Warrant Shares to be sold or transferred have
been registered under the Securities Act of 1933, as amended, and that there is
in effect a current prospectus meeting the requirements of Subsection 11(a) of
the Securities Act, which is being or will be delivered to the purchaser or
transferee at or prior to the time of delivery of the certificates evidencing
the Warrant or Warrant Shares to be sold or transferred.
Conditions to Transfer. Prior to any such proposed transfer (including,
without limitation, a transfer by will or pursuant to the laws of descent and
distribution), and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities Act, the
Holder will, if requested by the Company, deliver to the Company (i) an
investment covenant, in form and substance equivalent to that signed by the
original Holder of this Warrant, signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth
herein on the certificate or certificates representing the securities acquired
by such transferee, (iii) an agreement by such transferee that the Company may
place a "stop transfer order" with its transfer agent or registrar, and (iv) an
agreement by the transferee to indemnify the Company to the same extent as set
forth in the next succeeding paragraph.
Indemnity. The Holder acknowledges that the Holder understands the meaning and
legal consequences of this Section 5, and the Holder hereby agrees to indemnify
and hold harmless the Company, its representatives and each officer and
director thereof from and against any and all loss, damage or liability
(including all attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any representation or
the breach of any warranty of the Holder contained in, or any other breach by
the Holder of, this Warrant, (b) any transfer of the Warrant or (c) any untrue
statement or omission to state any material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
Transfer. Upon surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with assignment documentation duly executed
and funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment,
and this Warrant shall promptly be canceled. Any assignment, transfer, pledge,
hypothecation or other disposition of this Warrant attempted contrary to the
provisions of this Warrant, or any levy of execution, attachment or other
process attempted upon the Warrant, shall be null and void and without effect.
Legend and Stop Transfer Orders. Unless the Warrant Shares have been
registered under the Securities Act, upon exercise of any part of the Warrant
and the issuance of any of the Warrant Shares, the Company shall instruct its
transfer agent to enter stop transfer orders with respect to such shares, and
all certificates representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with Massachusetts
law:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of unless
registered pursuant to the provisions of that Act or an opinion of counsel to
the Company is obtained stating that such disposition is in compliance with an
available exemption from such registration."
Loss, etc. of Warrant. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
Warrant Holder Not Shareholder. Except as otherwise provided herein, this
Warrant does not confer upon the Holder any right to vote or to consent to or
receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
Communication. No notice or other communication under this Warrant shall be
effective unless the same is in writing and is mailed by first-class mail,
postage prepaid, addressed to: the Company at 1000 Main Street, Acton,
Massachusetts 01720, or such other address as the Company has designated in
writing to the Holder, or the Holder at the address contained in the
first paragraph of this Warrant, or such other address as the Holder has
designated in writing to the Company.
Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof.
Applicable Law. This Warrant shall be governed by and construed in accordance
with the law of the Commonwealth of Massachusetts without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, PAMET SYSTEMS, INC., has caused this Warrant to be signed
by a duly authorized officer as of this 11th day of April, 2002.
ATTEST: PAMET SYSTEMS, INC.
By:_______________________ By:___________________________________
Name: Richard C. Becker Name: Kirke S. Curtis
Title: VP, Finance and Administration Title: President & CEO
SUBSCRIPTION
The undersigned, __________________________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________________________ shares of the Common Stock of PAMET
SYSTEMS, INC. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.
Dated __________________ Signature__________________________
Address____________________________
____________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
PAMET SYSTEMS, INC.
Dated __________________ Signature_________________________
Address___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and transfers unto
_________________________ the right to purchase _________________________
shares of the Common Stock of PAMET SYSTEMS, INC. by the foregoing Warrant, and
a proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of said Warrant on the books of PAMET SYSTEMS, INC.
Dated ___________________ Signature__________________________
Address____________________________
____________________________
Exhibit 4.47 Convertible Note issued to West Country Partners dated April 16,
2002
No. L-037
CONVERTIBLE PROMISSORY NOTE THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE
DISCOUNT." THE NAME AND TELEPHONE NUMBER OF THE REPRESENTATIVE OF THE ISSUER
WHO CAN PROVIDE (i) THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT, (ii) THE ISSUE
DATE, AND (iii) THE YIELD TO MATURITY ON THE ISSUE DATE IS RICHARD C. BECKER,
(978)-263-2060.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED OR QUALIFIED THEREUNDER OR
AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
$200,000 Acton, Massachusetts
April 16, 2002
FOR VALUE RECEIVED, PAMET SYSTEMS, INC., a Massachusetts corporation (the
"Company"), hereby promises to pay to West Country Partners, a California
Limited Partnership of which James S. Schmitt is the General Partner ("Payee"),
with its address at 1917 Brittany Park, Camarillo, CA 93012, the principal sum
of Two Hundred Thousand Dollars ($200,000), on the dates and in the amounts
hereinafter set forth. This Promissory Note is issued by the Company pursuant
to the Securities Purchase Agreement, dated as of the date hereof, among the
Company and Payee (the "Securities Purchase Agreement"). Capitalized terms
used but not defined shall have the respective meanings ascribed to them in the
Securities Purchase Agreement. This Promissory Note is hereinafter referred to
as this "Note."
Principal and Maturity Date. The principal amount of this Note outstanding
together with all accrued interest hereon shall be due and payable on April 15,
2004 (the "Maturity Date").
Interest. The outstanding principal amount of this Note shall accrue interest
at the per annum rate of seven percent (7.0%) through the earlier of the date
of repayment or conversion (in each case computed on the basis of a 365 day
year and actual days elapsed). Interest shall be payable in full on the
Maturity Date with respect to the principal amount of the Note then
outstanding. No interest shall be deemed to have accrued or be payable on any
portion of this Note which is Converted on or prior to the Maturity Date.
Prepayment. This Note may be prepaid, in whole or in part, without penalty or
premium upon not less than thirty (30) days prior written notice from the
Company to the Payee, at any time or from time to time. All prepayments made
on this Note shall be applied first to the payment of all unpaid interest
accrued on this Note, and then to the outstanding and unpaid principal amount
of this Note as of the date of the payment. Prepayment, in whole or in part,
shall be noted in the accounting records of the Company.
General Payment Provisions. All payments or prepayments of principal and
interest and other sums due pursuant to this Note shall be made by check
payable to the Payee at the address set forth above or at such other address as
Payee shall have previously designated to the Company in writing not later than
two Business Days (as defined below) prior to the date on which such payment
becomes due.
If the due date of any payment under this Note would otherwise fall on a day
which is not a Business Day, such date will be extended to the immediately
succeeding Business Day and interest shall be payable at the rate set forth
herein for the period of the extension. The term "Business Day" shall mean any
day on which commercial banks in the State of New York are not authorized or
required to close.
Conversion; Prepayment. Conversion/Prepayment and Conversion Price. The Payee
may, subject to the terms and conditions of this Section 5, at any time, or
from time to time, exercise its right to convert this Note to Common Stock by
delivering a duly executed notice, in the form substantially similar to Exhibit
A hereto, of such intention to the Company (the "Conversion Notice"); provided,
however, that if, and to the extent, this Note or any portion thereof is called
for prepayment, the holder may exercise its right to convert to Common Stock
such portion of this Note as was called for prepayment.
The Payee shall have the right, subject to the terms and conditions of this
Section 5, to, no more frequently than four times per annum in the aggregate,
convert all or any part of the principal amount then outstanding under this
Note (the "Note Amount"), in an amount not less than $50,000 (or such lesser
amount as may then be outstanding), into that number of fully?paid and
nonassessable shares of Common Stock (the "Conversion Shares"), obtained by
dividing the Note Amount or such portion thereof presented for conversion by
the Conversion Price. The "Conversion Price" shall initially be $0.20 per
share of Common Stock.
Upon a partial conversion or prepayment of this Note, the Company shall execute
and deliver to or on the order of the holder hereof, a new Note or Notes of
authorized denominations in principal amount equal to the unconverted or
unredeemed, as the case may be, portion of this Note.
Issuance of Common Stock on Conversion. In order to effect the conversion of
this Note, the Payee shall deliver to the Company at its principal office, this
Note and a duly executed Conversion Notice; provided, however, that if the
Payee desires to convert the Note on the Maturity Date, Payee shall notify the
Company in writing of its intention to convert the Note at least five (5) days
prior to the Maturity Date. The date upon which the Company receives the
Conversion Notice, the Note and any other documentation required under this
Section 5 of this Note or the Conversion Notice shall be referred to herein as
the "Effective Date." Upon the Effective Date, this Note (or portion thereof)
shall be deemed converted into shares of Common Stock in accordance with this
Section 5, at which time the rights of the Payee with respect to this Note and
the amount so converted shall cease and, subject to the following provisions of
this paragraph, the person or persons entitled to receive the shares of Common
Stock upon conversion of this Note (or portion thereof) shall be treated for
all purposes as having become the record holder or holders of such Common
Stock. As promptly as practicable after the Effective Date, the Company shall
deliver or cause to be delivered to the Payee, at the address set forth above
or at such other address as the Payee shall designate in writing, certificates
representing the number of fully paid and nonassessable shares of Common Stock
into which this Note (or portion thereof), shall be converted in accordance
with the provisions of this Section 5. If this Note is called for prepayment
it may be converted as provided herein up to and including the close of
business on the business day preceding the date of prepayment.
No fractional shares of Common Stock shall be issued upon conversion of this
Note (or portion thereof). In lieu of any fractional share of Common Stock
which would otherwise be issuable upon conversion of this Note (or portion
thereof), the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to such fraction multiplied by the Conversion Price.
Reserves. The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of its authorized but unissued
Common Stock, solely for the purpose of issue upon conversion of this Note as
herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of this Note. The Company covenants that all
shares of Common Stock which shall be so issuable shall, upon issuance, be duly
and validly issued and fully paid and non-assessable. The Company shall from
time to time, in accordance with applicable law, increase the authorized amount
of its Common Stock if at any time the authorized amount of its Common Stock
remaining unissued shall not be sufficient to permit the conversion of this
Note at the time outstanding.
Taxes Upon Conversion. The issuance of certificates for shares of Common Stock
upon the conversion of this Note shall be made without charge to the converting
noteholder for any tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in such names
as may be directed by, the holder of this Note; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of this Note, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid; and provided, further, that in no event shall the
Company be required to pay or reimburse the holder for any income tax payable
by such holder as a result of such issuance.
Legends. All certificates representing Conversion Shares shall bear a
conspicuous legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED UNDER
ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED OR QUALIFIED THEREUNDER OR AN EXEMPTION FROM
REGISTRATION OR QUALIFICATION IS AVAILABLE."
The Company shall, upon the request of any holder of a stock certificate
representing Conversion Shares and the surrender of such certificate, issue a
new stock certificate without such legend if (i) the stock evidenced by such
certificate has been effectively registered under the Securities Act and
qualified under any applicable state securities law and sold by the holder
thereof in accordance with such registration and qualification or (ii) such
holder shall have delivered to the Company a legal opinion reasonably
satisfactory to the Company to the effect that the restrictions set forth
herein are no longer required or necessary under the Securities Act or any
applicable state law.
Subordination. The Company irrevocably covenants and agrees, and the Holder of
this Note, by its acceptance thereof, irrevocably covenants and agrees, that
the payment of the principal of and interest on this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment and/or cancellation (as shall be appropriate) in full of all
Senior Indebtedness (as defined herein). The provisions of this Section 6 are
made for the benefit of the holders of Senior Indebtedness, and such holders
shall, at any time, be entitled to enforce such provisions against the Company
or Noteholder. No holder of any Senior Indebtedness shall be deemed to owe any
fiduciary duty or any other obligation to any Holder of this Note now or at any
time hereafter. Notwithstanding anything herein contained to the contrary, all
the provisions of this Note shall, except as otherwise provided herein, be
subject to the provisions of this Section 6, so far as the same may be
applicable thereto.
For purposes of this Section 6 (and subject to Section 2.06 of the Securities
Purchase Agreement), "Senior Indebtedness" shall mean any indebtedness,
liability or obligation, contingent or otherwise, other than that arising
pursuant to this Note, of the Company (any such indebtedness, liability or
obligation being hereinafter in this definition referred to as an "Obligation")
(i) which is created, assumed or incurred by the Company after the date of this
Note and which, when created, assumed or incurred, is specifically designated
by the Company as Senior Indebtedness for the purposes hereof in the instrument
creating or evidencing the Company's liability with respect to such Obligations
or (ii) any increases, guarantees, refundings, renewals, rearrangements or
extensions of and amendments, modifications and supplements to any
indebtedness, liability or obligation described in clause (i) above.
No Assignment. This Note may not be assigned by the Payee without the prior
written consent of the Company.
Governing Law. This Note shall be construed in accordance with, and governed
by, the laws of the Commonwealth of Massachusetts as applied to contracts made
and to be performed entirely in the Commonwealth of Massachusetts without
regard to principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of any
court of the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts for purposes of any suit, action or other
proceeding arising out of this Note (and agrees not to commence any action,
suit or proceedings relating hereto except in such courts). Each of the
parties hereto agrees that service of any process, summons, notice or document
by U.S. registered mail at its address set forth herein shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Note, which is brought by or against it, in the courts of
the Commonwealth of Massachusetts or any federal court sitting in the
Commonwealth of Massachusetts and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Adjustment of Interest Rate. No provision of this Note shall require the
payment of interest to the extent that receipt of any such payment by the
Company would be contrary to the provisions of law applicable to the Company
limiting the maximum amount of interest that may be charged to or collected
from the Company, and if any sum in excess of such maximum rate of interest is
paid or charged, the excess will be deemed to have been a prepayment of
principal of this Note when paid, without premium or penalty, and all payments
made thereafter will be appropriately applied to interest and principal to give
effect to such maximum rate, and after such application any excess shall be
immediately refunded to the Company.
PAMET SYSTEMS, INC.
By:
Name: Kirke S. Curtis
Title: President & CEO
Attested:
By:_________________________
Name: Richard C. Becker
Title: Vice President
EXHIBIT A TO PROMISSORY NOTE
[Form of Conversion Notice]
To Pamet Systems, Inc.:
The undersigned registered holder (the "Payee") of the Note in the principal
amount indicated below and bearing the certificate number indicated below (the
"Note"), hereby irrevocably exercises its right to convert the principal amount
of the Note indicated herein into shares of common stock, par value $.01 per
share, of Pamet Systems, Inc. (the "Company"), in accordance with the terms of
the Note, and directs that the shares issuable and deliverable upon such
conversion together with a check in payment for fractional shares, be issued
and delivered to the Payee unless a different name has been indicated below.
If shares are to be issued in the name of a person other than the Payee (such
person being referred to as the "Transferee"), the Note must be duly endorsed
by, or accompanied by instruments of transfer in form satisfactory to the
Company and duly executed by the undersigned, and the undersigned will pay all
transfer taxes payable with respect thereto. In addition, the Transferee must
sign this notice. All capitalized terms used in this notice and not otherwise
defined shall have the respective meanings ascribed to them in the Note.
The Payee, or in the event a Transferee shall receive the Conversion Shares
issued upon conversion of this Note, the Transferee, hereby represents and
warrants to the Company that (i) he has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of an investment in the Company, (ii) he is acquiring the Conversion Shares for
its own account for investment and not with a view to, or for distribution or
sale in connection with any public offering in violation of the Securities Act
of 1933, as amended (the "Securities Act"), (iii) he understands that (x) the
Conversion Shares will not have been registered for sale under the Securities
Act or qualified under applicable state securities laws and may not be resold
without registration under the Securities Act and qualification under any
applicable state securities law, (y) such Conversion Shares will be issued to
him pursuant to one or more exemptions from the registration or qualification
requirements of the Securities Act and that the representations and warranties
contained herein are given with the intention that the Company may rely thereon
for purposes of claiming such exemptions and (z) the Conversion Shares shall
contain a legend substantially as set forth in Section 5(e) of the Note, (iv)
he is an "accredited investor" as defined in Section 501 of Regulation D
promulgated under the Securities Act, (v) he understands he must bear the
economic risk of Conversion Shares issued upon conversion of the Note for an
indefinite period of time as the Conversion Shares cannot be sold unless
registered under the Securities Act and any other applicable state securities
laws or sold in a transaction exempt from such registration thereunder and (vi)
representatives of the Company have (x) fully and satisfactorily answered any
questions which he deemed to ask concerning the Company and (y) furnished him
with such additional information and documents regarding the Company as he has
reasonably requested.
Principal amount of Note to be converted: $________________
Certificate Number of Note: __
Print name, address (including zip code) and social security or other taxpayer
identification number of the person in whose name the Common Stock will be
issued:
_________________________________
_________________________________
_________________________________
(Zip Code)
_________________________________
Social Security or other
Taxpayer Identification
Number
Dated:___________________________ Signature of Noteholder
Dated:___________________________ Signature of Transferee
Exhibit 4.48 Warrant issued to West Country Partners dated April 16, 2002
LW - 037
WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND NEITHER
THIS WARRANT NOR SUCH SHARES MAY BE SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE
APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY (WHICH ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD) THAT SUCH
REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on April 15, 2007.
WARRANT TO PURCHASE COMMON STOCK
OF
PAMET SYSTEMS, INC.
FOR VALUE RECEIVED, PAMET SYSTEMS, INC. (the "Company"), a Massachusetts
corporation, hereby certifies that West Country Partners, a California Limited
Partnership of which James S. Schmitt is the General Partner, with its address
at 1917 Brittany Park, Camarillo, CA 93012, or his permitted assigns, is
entitled to purchase from the Company, at any time or from time to time
commencing April 16, 2002, and prior to 5:00 P.M., Eastern Standard Time, on
April 15, 2007, a total of One Million (1,000,000) fully paid and nonassessable
shares of Common Stock, par value $.01 per share, of the Company for an
aggregate purchase price of One Million Dollars ($1,000,000) (computed on the
basis of $1.00 per share). (Hereinafter, (i) said Common Stock, together with
any other equity securities which may be issued by the Company with respect
thereto or in substitution therefor, is referred to as the "Common Stock," (ii)
the shares of the Common Stock purchasable hereunder are referred to as the
"Warrant Shares," (iii) the aggregate purchase price payable hereunder for the
Warrant Shares is referred to as the "Aggregate Warrant Price," (iv) the price
payable hereunder for each of the Warrant Shares is referred to as the "Per
Share Warrant Price," (v) this Warrant, and all warrants hereafter issued in
exchange or substitution for this Warrant are referred to as the "Warrant" and
(vi) the holder of this Warrant is referred to as the "Holder.") The number of
Warrant Shares for which this Warrant is exercisable is subject to adjustment
as hereinafter provided.
This Warrant is issued by the Company pursuant to the Securities Purchase
Agreement, dated as of the date hereof, among the Company and West Country
Partners (the "Securities Purchase Agreement"). Capitalized terms used but not
defined shall have the respective meanings ascribed to them in the Securities
Purchase Agreement.
Exercise of Warrant. This Warrant may be exercised, in whole at any time or in
part from time to time, commencing April 16, 2002, and prior to 5:00 P.M.,
Eastern Standard Time, on April 15, 2007, by the Holder of this Warrant by the
surrender of this Warrant (with the subscription form at the end hereof duly
executed) at the address set forth in Subsection 9(a) hereof, together with
proper payment of the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part.
The Aggregate Warrant Price or Per Share Warrant Price shall be paid in cash by
certified or official bank check payable to the order of the Company.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business on the day on which the Warrant shall have been
surrendered to the Company as provided in subsection 1(a) above (an "Exercise
Date"). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as
provided in subsection 1(d) below shall be deemed to have become the holder or
holders of record of the Warrant Shares represented by such certificates.
If this Warrant is exercised in part, the Holder shall be entitled to receive a
new Warrant covering the number of Warrant Shares in respect of which this
Warrant has not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender
of this Warrant, the Company will (a) issue a certificate or certificates in
the name of the Holder for the shares of the Common Stock to which the Holder
shall be entitled, and (b) deliver the proportionate part thereof if this
Warrant is exercised in part, pursuant to the provisions of the Warrant.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to any fraction of a share
called for upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the fair value of a share.
Reservation of Warrant Shares. The Company agrees that, prior to the
expiration of this Warrant, the Company will at all times have authorized and
in reserve, and will keep available, solely for issuance or delivery upon the
exercise of this Warrant, the shares of the Common Stock as from time to time
shall be receivable upon the exercise of this Warrant.
Adjustments. In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company, the number of Warrant Shares for which this Warrant may
be exercised shall be adjusted so that if the Holder surrendered this Warrant
for exercise after such action the Holder would be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have been entitled to receive had such Warrant been exercised immediately
prior to such action. An adjustment made pursuant to this subsection (a) shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification. If, as a result of
an adjustment made pursuant to this subsection (a), the Holder of this Warrant
shall become entitled to receive shares of two or more classes of capital stock
or shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of this Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares of such classes of capital stock or shares of Common Stock and
other capital stock.
In case of any consolidation or merger to which the Company is a party other
than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another corporation
(including any exchange effected in connection with a merger of a third
corporation into the Company), the holder shall have the right thereafter to
exercise this Warrant for the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
such Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the conversion of this Warrant. The above
provisions of this subsection (b) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 30 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
In the event of any adjustment to the number of Warrant Shares issuable upon
exercise of this Warrant, the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price in effect immediately prior to such
adjustment by a fraction the numerator of which is the aggregate number of
Warrant Shares for which this Warrant may be exercised immediately prior to
such adjustment and the denominator of which is the aggregate number of Warrant
Shares for which this Warrant may be exercised immediately after such
adjustment.
Whenever the Per Share Warrant Price is adjusted as provided in this Warrant
and upon any modification of the rights of the Holder of this Warrant in
accordance with this Section 3, the Company shall promptly prepare a
certificate of an officer of the Company, setting forth the Per Share Warrant
Price and the number of Warrant Shares after such adjustment or modification, a
brief statement of the facts requiring such adjustment or modification and the
manner of computing the same and cause a copy of such certificate to be mailed
to the Holder.
Fully Paid Stock; Taxes. The Company agrees that the shares of the Common
Stock represented by each and every certificate for Warrant Shares delivered on
the proper exercise of this Warrant shall, at the time of such delivery, be
validly issued and outstanding, fully paid and nonassessable, and not subject
to preemptive rights, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of
the Common Stock is at all times equal to or less than the then Per Share
Warrant Price. Subject to Section 5(e) hereof, the Company further covenants
and agrees that it will pay, when due and payable, any and all Federal and
state stamp, original issue or similar taxes that may be payable in respect of
the issuance of any Warrant Shares or certificates therefor. The Holder
covenants and agrees that it shall pay, when due and payable, any and all
federal, state and local income or similar taxes that may be payable in respect
of the issuance of any Warrant Shares or certificates therefor.
Transfer Securities Laws. Neither this Warrant nor the Warrant Shares issuable
upon the exercise hereof have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), or under any state securities laws and
unless so registered may not be transferred, sold, pledged, hypothecated or
otherwise disposed of unless an exemption from such registration is available.
In the event the Holder desires to transfer this Warrant or any of the Warrant
Shares issued, the Holder must give the Company prior written notice of such
proposed transfer including the name and address of the proposed transferee.
Such transfer may be made only either (i) upon publication by the Securities
and Exchange Commission (the "Commission") of a ruling, interpretation, opinion
or "no action letter" based upon facts presented to said Commission, or (ii)
upon receipt by the Company of an opinion of counsel acceptable to the Company
to the effect that the proposed transfer will not violate the provisions of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations promulgated under either such act, or to
the effect that the Warrant or Warrant Shares to be sold or transferred have
been registered under the Securities Act of 1933, as amended, and that there is
in effect a current prospectus meeting the requirements of Subsection 11(a) of
the Securities Act, which is being or will be delivered to the purchaser or
transferee at or prior to the time of delivery of the certificates evidencing
the Warrant or Warrant Shares to be sold or transferred.
Conditions to Transfer. Prior to any such proposed transfer (including,
without limitation, a transfer by will or pursuant to the laws of descent and
distribution), and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities Act, the
Holder will, if requested by the Company, deliver to the Company (i) an
investment covenant, in form and substance equivalent to that signed by the
original Holder of this Warrant, signed by the proposed transferee, (ii) an
agreement by such transferee to the restrictive investment legend set forth
herein on the certificate or certificates representing the securities acquired
by such transferee, (iii) an agreement by such transferee that the Company may
place a "stop transfer order" with its transfer agent or registrar, and (iv) an
agreement by the transferee to indemnify the Company to the same extent as set
forth in the next succeeding paragraph.
Indemnity. The Holder acknowledges that the Holder understands the meaning and
legal consequences of this Section 5, and the Holder hereby agrees to indemnify
and hold harmless the Company, its representatives and each officer and
director thereof from and against any and all loss, damage or liability
(including all attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any representation or
the breach of any warranty of the Holder contained in, or any other breach by
the Holder of, this Warrant, (b) any transfer of the Warrant or (c) any untrue
statement or omission to state any material fact in connection with the
investment representations or with respect to the facts and representations
supplied by the Holder to counsel to the Company upon which its opinion as to a
proposed transfer shall have been based.
Transfer. Upon surrender of this Warrant to the Company or at the office of
its stock transfer agent, if any, with assignment documentation duly executed
and funds sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment,
and this Warrant shall promptly be canceled. Any assignment, transfer, pledge,
hypothecation or other disposition of this Warrant attempted contrary to the
provisions of this Warrant, or any levy of execution, attachment or other
process attempted upon the Warrant, shall be null and void and without effect.
Legend and Stop Transfer Orders. Unless the Warrant Shares have been
registered under the Securities Act, upon exercise of any part of the Warrant
and the issuance of any of the Warrant Shares, the Company shall instruct its
transfer agent to enter stop transfer orders with respect to such shares, and
all certificates representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with Massachusetts
law:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be sold,
offered for sale, assigned, transferred or otherwise disposed of unless
registered pursuant to the provisions of that Act or an opinion of counsel to
the Company is obtained stating that such disposition is in compliance with an
available exemption from such registration."
Loss, etc. of Warrant. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen or destroyed, and upon
surrender and cancellation of this Warrant if mutilated, the Company shall
execute and deliver to the Holder a new Warrant of like date, tenor and
denomination.
Warrant Holder Not Shareholder. Except as otherwise provided herein, this
Warrant does not confer upon the Holder any right to vote or to consent to or
receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
Communication. No notice or other communication under this Warrant shall be
effective unless the same is in writing and is mailed by first-class mail,
postage prepaid, addressed to: the Company at 1000 Main Street, Acton,
Massachusetts 01720, or such other address as the Company has designated in
writing to the Holder, or the Holder at the address contained in the first
paragraph of this Warrant, or such other address as the Holder has designated
in writing to the Company.
Headings. The headings of this Warrant have been inserted as a matter of
convenience and shall not affect the construction hereof. _ _
Applicable Law. This Warrant shall be governed by and construed in accordance
with the law of the Commonwealth of Massachusetts without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, PAMET SYSTEMS, INC., has caused this Warrant to be signed
by a duly authorized officer as of this 16th day of April, 2002.
ATTEST: PAMET SYSTEMS, INC.
By:_______________________ By:___________________________________
Name: Richard C. Becker Name: Kirke S. Curtis
Title: VP, Finance and Administration Title: President & CEO
SUBSCRIPTION
The undersigned, __________________________________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for the
purchase of _________________________ shares of the Common Stock of PAMET
SYSTEMS, INC. covered by said Warrant, and makes payment therefor in full at
the price per share provided by said Warrant.
Dated __________________ Signature__________________________
Address____________________________
____________________________
ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _________________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
PAMET SYSTEMS, INC.
Dated __________________ Signature_________________________
Address___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby assigns and transfers unto
_________________________ the right to purchase _________________________
shares of the Common Stock of PAMET SYSTEMS, INC. by the foregoing Warrant, and
a proportionate part of said Warrant and the rights evidenced hereby, and does
irrevocably constitute and appoint _________________________, attorney, to
transfer that part of said Warrant on the books of PAMET SYSTEMS, INC.
Dated ___________________ Signature__________________________
Address____________________________
____________________________
Exhibit 10.13 Commercial Services Contract with Sumaria Systems dates April 17,
2002
COMMERCIAL SERVICES CONTRACT
This Commercial Services Contract is made this 17th day of April, 2002 by and
between Sumaria Systems, Inc. a Massachusetts corporation with a principal
place of business at 99 Rosewood Drive, Suite 140, Danvers, MA 01923
(Hereinafter "Sumaria") and Pamet Systems, Inc. a Massachusetts Corporation
with a principal place of business at 1000 Main Street, Acton, MA 01720
(Hereinafter "Pamet").
WITNESSETH:
WHEREAS, Pamet and Sumaria desire to pursue business opportunities in public
safety and municipal markets through a combination of synergies, business
growth and acquisitions,
WHEREAS, Pamet owns and controls public safety software applications, technical
knowledge and other technical and marketing knowledge and/or information and
has developed a business in the municipal marketplace based on such
applications and technology,
WHEREAS, Sumaria possesses extensive resources, experience, knowledge, and
expertise in providing Information Technology ("IT") infrastructure, consulting
and services to government and municipal entities,
NOW THEREFORE, in consideration of the premises and mutual covenants agreements
hereinafter contained, both parties hereby agree as follows:
I. TERM
This Agreement shall be effective from this 22nd day of April, 2002 through
December 31, 2002.
II. SERVICES
A. Pamet and Sumaria agree to develop a marketing and sales plan that allows
Pamet to market Sumaria's IT services, infrastructure and consulting to Pamet's
current client base and in the municipal marketplace in general.
B. Pamet agrees to grant Sumaria a Right of First Refusal in Massachusetts on
all Sumaria services described in A.
C. Sumaria rates would be used in all proposals and bids described in A, above.
In the event a proposal or bid may be submitted jointly Sumaria will be given
the right to submit a bid or proposal and receive a direct contract.
D. Sumaria will hire the necessary number of Pamet employees for the term of
this Agreement to support forms development, coding and installations for
Pamet's current and future customers. Sumaria and Pamet will mutually
determine the necessary number of Pamet employees to perform these functions.
Sumaria will invoice Pamet only for work performed on behalf of Pamet.
E. During the term of this Agreement, these employees will receive the
equivalent pay and not less than similar benefits from Sumaria as they
currently receive from Pamet.
E. (Continued)
Pamet will provide Sumaria with job descriptions and/or statements of work for
these employees to provide guidance as to their responsibilities
Pamet reserves the right to re-hire these individuals at termination of this
Agreement.
III. CONSIDERATION
A. Commission
1. Pamet will receive a commission on sales of Sumaria services by Pamet. The
specific percentage of that commission will be determined at a later date and
addended to this contract.
2. Sumaria will receive a commission on sales of Pamet software and services.
The specific percentage of that commission will be determined at a later date
and addended to this contract.
B. Equity or Cash
1. Pamet agrees to reimburse Sumaria on a time and materials basis in cash or
the equivalent value in Pamet common stock for the cost of the services
described in Section II., D and E above. Costs are defined as salaries, fringe
benefits, all payroll related taxes, and 12% General and Administrative charge.
2. The conversion price of Pamet common stock for each quarter will be based on
the trailing 30-day average closing price of the stock as measured from the
last day of the previous quarter.
IV. TERMS
A. Sumaria shall invoice Pamet quarterly for the services in Section II.D and E
above from the period beginning April 22, 2002. The first invoice shall cover
the period beginning April 22, 2002 and ending June 30, 2002. Sumaria will
issue quarterly invoices to Pamet thereafter.
B. Over the term of this Agreement, Sumaria will adjust the quarterly invoice
to Pamet as the cost of the services increases or decreases.
C. Terms of payment are net 30 days from receipt of invoice.
V. MISCELLANEOUS
A. As part of this Agreement, Pamet offers Sumaria a seat on Pamet's Board of
Directors. Sumaria has the sole and exclusive option to accept or decline this
seat at any time during the course of this Agreement.
B. Sumaria and Pamet agree to cooperate in a public announcement of this
Agreement. Pamet and Sumaria may represent each other as their business
partners in this commercial venture only.
VI. PROPRIETARY AND CONFIDENTIAL INFORMATION
A. During the course of this Agreement, Pamet and Sumaria may disclose to each
other Proprietary and Confidential Information, including, but not limited to,
trade secrets, technical, financial, marketing and business information, plans
and/or data. Neither Sumaria nor Pamet, will, without the prior written
consent of the disclosing party, disclose to any third party any proprietary or
confidential information developed or obtained in the performance of this
Agreement.
These obligations shall survive the termination of this Agreement.
VII. MUTUAL INDEMNIFICATION
A. Each party (Pamet and Sumaria) agrees to mutually indemnify and hold the
other party harmless from and against any and all liabilities claims, demands,
suits, losses damages, cost and expenses incurred by either party as a result
of the negligent act or omissions on the part of either party, it's employees,
agents or representatives. Each party shall further indemnify and hold the
other party harmless from and against any and all liabilities, claims, demands,
suits, losses, damages, costs and expenses for bodily injury to or death of any
person or damage to or destruction of any property caused by any negligent act
or omission on any part of either party, it's employees, agents or
representatives.
VIII TERMINATION
Either Sumaria or Pamet may terminate this Agreement under the following
conditions:
A. With 90 (Ninety) days advance written notice.
B. With 30 (Thirty) days advance written notice in the event either party is in
breach of its obligations hereunder and such breach is not corrected within 30
(Thirty) days of receipt of written notice by the non-breaching party.
all Within 30 (thirty) days of the date of termination, each party will pay the
other commissions earned, expenses accrued and invoices outstanding.
IX. RELATONSHIP OF THE PARTIES
A. It is expressly agreed Sumaria and Pamet's relationship is that of
independent contractors. Neither party, it's employees, agents and
representatives have any authority to act for or on behalf of the other party
to bind the other party to any obligation or in any other manner except for
those matters expressly contracted for herein.
X. GENERAL PROVISIONS
A. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
B. This Agreement represents the entire understanding of the parties hereto and
supersedes all other Agreements; oral or written, prior to, or contemporaneous
with, express or implied, between the parties hereto with respect to the
subject matter hereof.
C. No change alternation, modification or addition to this Agreement shall be
effective unless in writing and duly executed by the parties hereto.
D. Except as otherwise expressly provided herein, neither this Agreement nor
any of the rights, interest or obligations hereunder shall be assigned or
otherwise transferred by either party hereto without prior written consent of
the other party.
E. Failure by a party to this Agreement to asset its rights under this
Agreement shall not be deemed a waiver of any future rights under this
Agreement.
F. If any provision(s) of this Agreement is determined to be illegal, invalid
or unenforceable under any applicable statute or rule of law, it is to that
extent omitted from this Agreement. The remainder of this Agreement shall
remain in full force in effect to the maximum extent possible.
IN WITNESS WHEREOF:
PAMET SYSTEMS INC. SUMARIA SYSTEMS, INC.
By: (s) Kirke S. Curtis By: _(s) Venilal Sumaria_
Title: _CEO_______________ Title: __President_________
Date: _4/18/02___________ Date: __4/17/02____________
Exhibit 10.14 Factoring Agreement with Pacific Business Funding dated June 4,
2002
Pacific Business Funding
20195 Stevens Creek Boulevard, Suite #220
Cupertino, California 95014
Tel. (408) 255-9300 " Fax (408) 255-9313
FACTORING AGREEMENT
This Factoring Agreement (the "Agreement"), dated as of June 4, 2002 , is
entered into by and between Pamet Systems, Inc. a [ 0 corporation, 0
partnership, 0 sole proprietorship] ("Seller") having its principal place of
business and chief executive office at the address set forth below Seller's
signature, and Pacific Business Funding, a division of Cupertino National Bank
("Purchaser") having an office at the address identified above.
Capitalized terms used in this Agreement shall have the meanings assigned to
them in Section 13, Definitions.
1. Purchase of Accounts
1.1 Schedule of Accounts. Seller may, at any time, request that Purchaser
purchase Accounts. Any such request by Seller shall be made by delivering to
Purchaser a Schedule of Accounts (the "Schedule of Accounts") which describes
in detail the Accounts Seller is requesting Purchaser to purchase, including,
(a) the name and address of the Account Debtor of each such Account, (b) the
amount owed by the Account Debtor of each such Account, and (c) the date and
number of the invoice evidencing each such Account. Each Schedule of Accounts
shall have attached to it an invoice for each Account described on the Schedule
of Accounts, and shall be signed by an authorized representative of Seller.
1.2 Discretionary Approval of Accounts. Purchaser may, in its
sole discretion, purchase any Account included in a Schedule of Accounts, but
is under no obligation to purchase any such Account. Purchaser may exercise
its sole discretion in approving each Account and the credit of each Account
Debtor before purchasing any Account.
1.3 Payment of Advances; Creation of a Book Reserve. Upon approval, in
Purchaser's sole discretion, of any of the Accounts described on a Schedule of
Accounts, Purchaser shall pay to Seller as the purchase price for any approved
Account EIGHTY percent ( 80 % ) of the face amount of such approved Account
(the "Advance"). Purchaser may, time to time, in its discretion, upon notice
to Seller, change the percentage of the Advance. Upon payment of the Advance
to Seller, Purchaser shall also create a reserve on Purchaser's book and
records with respect to each Purchased Account in an amount equal to the face
amount of the Purchased Account minus the Advance for such Purchased Account
(the "Reserve"). Notwithstanding the foregoing, in no event shall the Reserve
with respect to all Purchased Accounts outstanding at any time be less than
TWENTY percent ( 20 % ) of the Account Balance. Purchaser, may in its
discretion, upon notice to Seller, increase the percentage of the reserve at
any time.
1.4 Transfer of Accounts. At the time Purchaser pay the Advance with
respect to any Account such Account shall constitute a Purchased Account, and
Seller hereby absolutely sells, transfers and assigns to Purchaser, all of
Seller's right, title and interest in and to each Purchased Account. Seller
also hereby sells, transfer and assigns to Purchaser all of the goods
represented by each Purchased Account, all of Seller's rights and remedies as
an unpaid seller under the California Commercial Code and other applicable law,
including the rights of stoppage in transit, replevin, reclamation, and claim
and delivery, and all Seller's rights in and to all security for each such
Purchased Account and guaranties thereof, and all rights against third parties
with respect thereto. Any goods recovered or received by Seller shall be set
aside marked with Purchaser's name, and held for Purchaser's account as owner.
1.5 Collection of Accounts. Each Purchased Account shall be collected
directly by the Purchaser. At the request of Purchaser, Seller and Purchaser
shall jointly notify each Account Debtor by letter that Purchased Accounts owed
by such Account Debtor have been assigned and are payable to Purchaser. Such
notification shall be in form and substance satisfactory to Purchaser. Seller
shall not take or permit any action to change or revoke any notification
without Purchaser's prior written consent and shall not request any Account
Debtor to pay any Purchased Account to Seller. Notwithstanding the foregoing,
in the event Seller received any payments of any Purchased Accounts. Seller
shall (A) immediately notify Purchaser of such payment, (B) hold such payment
in trust and safekeeping for Purchaser, and (C) immediately turn over to
Purchaser the identical checks, monies or any other forms of payment received,
with any necessary endorsement or assignment. Purchaser shall have the right
to endorse Seller's name on all payments received in connection with each
Purchased Account and on any other proceeds of Collateral. If Purchaser
receives a check or item which is payment for both a Purchased Account and a
non-Purchased Account, the funds shall first be applied to the Purchased
Account and, and so long as there does not then exist an Event of Default or an
event that with notice or lapse of time would constitute an Event of Default,
the excess shall be remitted to Seller. In the event Purchaser receives any
other payments of non-Purchased Accounts, Purchaser shall remit to Seller the
collections of such non-Purchased Accounts; provided, that if any Event of
Default or event that with notice or lapse of time or otherwise would
constitute an Event of Default then exists, Purchaser shall have no duty to
remit any such collections, which collections constitute Collateral, and may
apply such collections to reduce Obligations.
1.6 Full Recource. The purchase by Purchaser of Purchased Accounts from
Seller shall be with full recource against Seller. Seller shall be liable for
any deficiency in the event the Obligations exceed the amount of Purchased
Accounts and the other Collateral.
2. Fees and Customer Payments.
2.1 Finance Fees. Seller shall pay to Purchaser on each Settlement Date, a
finance fee in an amount equal to EIGHT TENTHS percent ( .8 %) per month of
the average daily Account Balance outstanding during the Settlement Period
ending on such Settlement Date (the "Finance Fees"). Such accrued Finance Fees
shall be netted against the Reserve as described in Section 3.3,
2.2 Administrative Fees. Seller shall pay to Purchaser on each Settlement
Date, an Administrative Fee equal to ONE HALF percent ( .5 % ) of the face
amount of each Account purchased by Purchaser during the Settlement Period
ending on such Settlement Date (the "Administrative Fee"). All Administrative
Fees shall be netted against the Reserve as described in Section 3.3.
2.3 Maximum Lawful Rate. In no event shall any charges that may constitute
interest hereunder exceed the highest rate permitted under applicable law. In
the event that a court of competent jurisdiction makes a final determination
that Purchaser has received interest hereunder in excess of the maximum lawful
rate, then such excess shall be deemed a payment of principal and the interest
payable hereunder deemed amended to the amount payable under the maximum lawful
rate.
2.4 Crediting Customer Payments. Upon Purchaser's receipt of payment of a
Purchase Account, Purchaser shall promptly credit such customer payment (the
Customer Payments") to the amount outstanding with respect to such Purchased
Account. Notwithstanding the foregoing, if any Customer Payment is
subsequently dishonored or Purchaser does not receive good funds for any
reason, the amount of such uncollected Customer Payment shall be included in
the Account Balance as if such Customer Payment had not been received, and
Finance Fees shall accrue thereon, and the credit to the specific Purchased
Account shall be reversed. Notwithstanding the foregoing, upon the occurrence
of an Event of Default, Purchaser shall apply all Customer Payments to Seller's
Obligations under this Agreement in such order and manner as Purchaser shall,
in its sole discretion, determine.
2.5 Accounting. Purchaser shall deliver to Seller after each Settlement
Date, a statement of Seller's account which shall include and accounting of the
transactions of the Settlement Period, including the amount of all Finance
Fees, Administrative Fees, Adjustments, Chargeback Amounts, Customer Payments
and Purchased Accounts. The accounting shall constitute an account stated and
shall be binding on Seller and deemed correct unless Seller delivers to
Purchaser a written objection within thirty (30) days after such accounting is
mailed to Seller.
3. Adjustments, Chargebacks and Remittances.
3.1 Adjustments. In the event any Account Debtor asserts any offsets,
defense, counterclaim, dispute, discount, allowance, right of return, right of
recoupment, or warranty claim with respect to a Purchased Accounts, or pays
less than the face amount of such Purchased Accounts (each, an "Adjustment"),
Purchaser may, in its sole discretion, either (A) deduct the amount of the
Adjustment in calculating the Remittance, or (B) chargeback to Seller the
Purchased Account with respect to which the Adjustment is asserted. Seller
shall advise Purchaser immediately upon learning of any Adjustment asserted by
any Account Debtor.
3.2 Chargebacks. Purchaser shall have the right to chargeback to Seller
any Purchased Account:
(A)which remains unpaid ninety (90) calendar days after the invoice dated;
(B)with respect to which there has been a breach of any warranty,
representation, covenant or agreement set forth in this Agreement;
(C)with respect to which the Account Debtor asserts any Adjustment; or
(D)which is owned by an Account Debtor who has filed, or has had filed
against it, any bankruptcy case, insolvency proceeding, assignment of the
benefit of creditors, receivership or insolvency proceeding, or who has
become insolvent (as defined in the United States of Bankruptcy Code) or
who is generally not paying its debts become due. Upon demand by Purchaser,
Seller shall pay to Purchaser the full face amount of any Purchased Account
which has been charge back to Seller pursuant to this Section 3.2, or the
extent partial payment has been made, the amount by which the face amount
of such Purchased Account exceeds such partial payment, together with any
attorneys' fees and cost incurred by Purchaser in connection with
collecting such Purchased Account (collectively, the "Chargeback Amount").
Purchaser shall advise Seller regarding how to Chargeback Amount shall be
paid, which may be by any one or a combination of the following, in
Purchaser's sole discretion: (1) payment in cash immediately upon demand;
(2) deduction from or offset against any Remittance that would otherwise
be payable to Seller; (3) payment from any Advances that may otherwise be
made to Seller; (4) adjustment to the Reserve pursuant to Section 1.3
hereof; or (5) delivery or substitute Accounts and Schedule of Accounts
acceptable to Purchaser, which Accounts shall constitute Purchased
Accounts.
3.3 Remittance. Purchaser shall remit to Seller after the Settlement Date,
the amount, if any, which Purchaser owes to Seller at the end of the Settlement
Period based on the following calculations set forth below (the "Remittance");
provided, that if there then exists any Event of Default or any event or
condition that with notice or lapse of time would constitute an Event of
Default, Purchaser shall not be obligated to remit any payment to Seller. If
the amount resulting from the following calculation is a positive number, such
amount is the amount of the Remittance for such Settlement Period. If the
resulting amount is a negative number, such amount is the amount owed by
Seller to Purchaser.
The calculations to be used are as follows:
(A)The sum of the following:
(1)The Reserve as of the beginning of the subject Settlement Period,
plus
(2)The Reserve created for each Account purchased during the subject
Settlement Period;
MINUS
(B) The sum of the following:
(1)Finance Fees accrued during the subject Settlement Period; plus
(2)Administrative Fees accrued during the subject Settlement Period;
plus
(3)Adjustments during the subject Settlement Period; plus
(4) Chargeback Amounts, to the extent Purchaser has agreed to accept
payment of any such Chargeback Amount by deduction from the
Remittances; plus
(5) All professional fees and expenses as set forth in the Section 10
for which oral or written demand has been made by Purchaser during the
subject Settlement Period; plus
(6) The Reserve for the Account Balance as of the first day of the
following Settlement Period in the minimum percentage set forth in
Section 1.3 hereof.
In the foregoing calculations result in a Remittance payable to Seller,
Purchaser shall make such payment by check, subject to Purchaser's rights
of offset and recoupment, and its right to deduct any Chargeback Amount as
set forth in Section 3.2. If the foregoing calculations result in an
amount due to Purchaser from Seller, Seller shall make such payment by any
one or a combination of the methods set forth in Section 3.2 hereof for
chagebacks, as determined by Purchaser in its discretion.
4. Power of Attorney. Seller hereby appoints Purchaser and its designees
as Seller's true and lawful attorney in fact, to exercise in Purchaser's
discretion, and regardless of whether an Event of Default is then existing, all
of the following powers, such powers being coupled with an interest: (A) to
notify all Account Debtors with respect to the Purchased Accounts to make
payment directly to Purchaser; (B) to receive, deposit, and endorse Seller's
name on all checks, drafts, money orders and other forms of payment relating to
the Purchased Accounts; (C) to demand, collect, receive, sue and give releases
to any Account Debtor for the monies due or which may become due on or in
connection with the Purchased Accounts; (D) to compromise, prosecute, or
defend any action, claim, case, or proceeding relating to the Purchased
Accounts, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Purchaser's name or Seller's name, as Purchaser may
elect; (E) to sell, assign, transfer, pledge, compromise, or discharge any
Purchased Accounts; (F) to receive, open, redirect and dispose of all mail
addressed to Seller for the purpose of collecting the Purchased Accounts and to
take all the actions permitted in subsection (B) above with respect to any
payment in any such mail; (G) to execute in the name of Seller and files
against Seller in favor of Purchaser such financing statements and other
agreements as Purchaser deems necessary to evidence or perfect is security
interest in the Purchased Accounts and the other Collateral; and (H) to do all
acts and things necessary or expedient, in furtherance of any such purposes.
Upon the occurrence of an Event of Default, all of the power of attorney rights
granted by Seller to Purchaser hereunder shall be applicable with respect to
all Collateral.
5. Continuing Representation, Warranties and Covenants. To induce Purchaser to
enter into this Agreement and purchase Accounts, and with full knowledge that
Purchaser is relying on the truth accuracy of the following in determining
whether to purchase any Account, Seller represents, warrants, covenants and
agrees as follows, which representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement:
(A) The information contained in each Schedule of Accounts is true and
correct;
(B) Each Schedule of Accounts is signed by an authorized representative of
Seller, and Purchaser shall have the right to rely on such signature as an
authorized signature of Seller;
(C) Seller is the sole and absolute owner of each Account described in each
Schedule of Accounts and has the legal rights to sell, transfer, and assign
such Account to Purchaser;
(D) Seller has performed all obligations required by the Account Debtor in
connection with each Account described in each Schedule of Accounts and
payment of each such Account is not contingent upon the fulfillment of any
obligation or contract, past or future;
(E) Each Account described on each Schedule of Accounts is correctly stated
therein, is not in dispute, is presently and unconditionally owing at the
time stated in the invoice evidencing such Account as attached to the
Schedule of Accounts, is not past due or in default, represent a bona fide
indebtedness arising from the actual sale of goods or performance of
service to an Account Debtor in the ordinary course of Seller's business
which has been received and finally accepted by the Account Debtor;
(F) Each Account set forth on each Schedule of Accounts is not subject to
any offset, defense or counterclaim of any kind, whether bona fide or
otherwise, and no agreement has been made under which the Account Debtor my
claim any deduction or discount except as otherwise stated in the Schedule
of Accounts;
(G) Each Account Debtor identified on each Schedule of Accounts is liable
for the amount set forth on such Schedule of Accounts and will not be
object to payment for, or the quality or the quantity of the goods or
services to which any Account described on such Schedule of Accounts
relates;
(H) Seller, and the Seller's best knowledge, each Account Debtor set forth
in each Schedule of Accounts, is and shall remain in that the present
saleable value of such entity's assets exceeds the total of such entity's
liabilities;
(I) Seller has not, as of the time Seller accepts an Advance from
Purchaser, filed or had filed against it a petition for relief under the
United States Bankruptcy Code;
(J) Each Account and all other Collateral are free and clear of any and all
liens, security interest and encumbrances of any kind, other than those in
favor of Purchaser and Seller will not assign, transfer, or grant any lien
or security interest in any Accounts or other Collateral to any other
party, without Purchaser's prior written consent;
(K) Seller has not sold, assigned, transferred, pledged or otherwise
conveyed any Purchased Accounts to any party other than Purchaser, and
Seller shall not sell, assign, transfer, pledge or otherwise convey any
Collateral without Purchaser's prior consent, except for the of Accounts to
Purchaser and the sale of finished inventory in Seller's normal course of
business;
(L) Seller's name and form of organization are as set forth at the
beginning of this Agreement, and Seller's chief executive office, place of
business and place where Collateral and records concerning Accounts and
other Collateral are kept are as set forth below Seller's signature, and
Seller will give Purchaser at least thirty (30) days prior written notice
if such name, organization, place of business, location of Collateral or
records concerning Collateral is to be changed or added and shall execute
any documents necessary to perfect Purchaser's interest in the Purchased
Accounts and the other Collateral; and
(M) Seller shall pay all of its normal gross payroll for employees, and all
federal and state taxes, as and when due, including all payroll and
withholding taxes and state sales taxes.
6. Grant of Security Interest. To secure the prompt payment and performance of
all of Seller's Obligations to Purchaser, Seller hereby grants to Purchaser a
continuing lien upon and security interest in, and right of set off with
respect to, all of Seller's right, title and interest in, to and under the
following, whether now owned by or owing to, or hereafter acquired by or
arising in favor of, Seller, and regardless of where located (collectively the
"Collateral"):
(A) All accounts, accounts receivable, chattel paper, contract rights,
documents, instruments, letter of credit, banker's acceptances, drafts,
securities and general intangibles, including all claims, causes of action,
deposit accounts, rights to receive tax refunds, rights in and claims under
insurance policies (including rights to unearned premiums), customer lists,
copyrights, patents, trademarks, license agreements, goodwill associated
with trademarks and trademark licenses, and other intellectual property of
every kind and other rights to payment;
(B) All inventory;
(C) All monies, remittances, and other amounts due under this Agreement and
any other agreement between Purchaser and Seller;
(D) All equipment, machinery, motor vehicles, furniture, fixtures, tools
and supplies;
(E) All investment securities;
(F) All farm products, crops, timber, minerals and like (including oil and
gas);
(G) All books and records relating to the foregoing, including all computer
programs, printed output and computer readable data;
(H) All accessions to, and substitutions and replacements for, all of the
foregoing; and
(I) All proceeds and products of the foregoing, whether due to voluntary or
involuntary disposition, including insurance proceeds. Seller shall sign
and deliver to Purchaser UCC financing statements, in form acceptable to
Purchaser. Seller agrees to deliver to Purchaser the originals of all
instruments. chattel paper and documents evidencing or related to Purchased
Accounts and other Collateral.
7. Default. The occurrence of any one or more of the following shall
constitute an event of default under this Agreement (each, an "Event of
Default"):
(A) Seller fails to pay any amount owed to Purchaser an and when due under
this Agreement or fails to pay any other Obligations as and when due;
(B) Any warranty or representation by Seller to Purchaser under this
Agreement is incorrect or untrue when made or thereafter becomes untrue or
incorrect;
(C) Seller fails to perform or breaches any covenant or agreement set forth
in this Agreement or any other agreement between Purchaser and Seller;
(D) There shall be commenced by or against Seller any voluntary or
involuntary case under the United States Bankruptcy Code, or any assignment
for the benefit of creditors, or appointment of a receiver or custodian for
any of Seller's assets;
(E) Seller shall become insolvent in that its debts are greater than the
fair value of its assets, or Seller is generally not paying its debts as
they become due or is left with unreasonably small capital;
(F) Any involuntary lien, garnishment, attachment or the like is issued
against or attaches to the Purchased Accounts or the other Collateral;
(G) An event of default shall occur under any guaranty executed by any
guarantor of the Obligations, or any material provision of any such
guaranty shall for any reason cease to be valid or enforceable or any such
guaranty shall be repudiated or terminated, including by operation of law;
or
(H) A default or event of default shall occur under any agreement between
Seller and any creditor or Seller who has entered into a subordination
agreement with Purchaser.
8. Remedies Upon Default. Upon the Occurrence of an Event of Default,
Purchaser may, without notice, (A) without implying any obligation to by
Accounts, cease buying Accounts; (B) accelerate the payment of all Obligations
by requiring Seller to purchase all or any portion of the Purchased Accounts
then outstanding for cash in an amount equal to the Advance made for each
Purchased Account and all accrued Finance Fees, Administrative Fees, attorneys'
fees and other Obligations then outstanding, which Obligations shall be due and
payable in full without demand; (C) exercise all the rights and remedies under
this Agreement and under applicable law, including the rights and remedies of a
secured party under the California Commercial Code. Without limiting the
generality of the foregoing, Purchaser may (1) exercise all of the power of
attorney rights described in Section 4 with respect to all Collateral, and (2)
collect, dispose of, sell, lease, use, and realize upon all Purchased Accounts
and other Collateral in any commercially reasonable manner. Seller and
Purchaser agree that any notice of sale required to be given to Seller shall be
deemed to be reasonable if given five (5) days prior to the date on or after
which any sale may be held. All remedies set forth herein shall be cumulative
and none exclusive.
9. Accrual of Interest. If any amount owed by Seller hereunder is not paid
when is due, including any amounts due under Section 3.3, Chargeback Amounts,
professional fees and expenses under Section 10 and any other Obligations, such
amounts shall bear interest at a per annum rate equal to the rate used to
calculate the Finance Fees, annualized, until Payment in good funds in the full
of all such obligations.
10. Attorneys' Fees. Seller shall pay to Purchaser immediately upon demand,
all costs and expenses, including reasonable fees and expenses of attorneys and
other professionals, that Purchaser incurs in connection with any and all of
the following: (A) preparing, amending, supplementing, negotiating and
enforcing this Agreement, or any other agreement executed in connection
herewith; (B) perfecting, protecting or enforcing Purchaser's interest in the
Purchased Accounts and the other Collateral; (C) Collecting the Purchased
Accounts and the Obligations; (D) defending or in any way addressing claims
made or litigation initiated by or against Purchaser as a result of Purchaser's
relationship with Seller or any guarantor; and (E) representing Purchaser in
connection with any bankruptcy case or insolvency proceeding involving Seller,
any Purchased Account, any other Collateral or Account Debtor. Any Attorneys'
fees and expense may, at Purchaser's option. be netted against the reserve as
set forth in Section 3.3.
11. Term and Termination. The term of this Agreement shall be for one (1) year
from the dated hereof, and from year to year thereafter unless terminated in
writing by Purchaser or Seller. Seller and Purchaser shall each have the right
to terminated this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Purchaser's security interest in
the Collateral and Purchaser's ownership of the Purchased Accounts, and this
Agreement shall continue to be effective, and Purchaser's rights and remedies
hereunder shall survive such termination, until all transactions entered into
and Obligations incurred hereunder or in connection herewith have been
completed and satisfied in full.
12. Miscellaneous.
12.1 Severability. In the event that any provision of this Agreement is held
to be invalid or unenforceable, this Agreement will be construed as no
containing such provision and the remainder of the Agreement shall remain in
force and effect.
12.2 Choice of Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of law.
12.3 Notices. All notices shall be given to Purchaser and Seller at the
addresses set forth in this Agreement and shall be deemed to have been
delivered and received: (A) if mailed, three (3) calendar days after deposited
in the United States mail, first class, postage prepaid; (B) one (1) calendar
day after deposit with an overnight mail or messenger service; or (C) on the
same date of transmission if sent by delivery, telecopy, telefax, or telex.
12.4 Titles and Section Headings. The titles and section headings used herein
are for convenience only and shall not be used in interpreting this Agreement.
13. Definitions. All terms used herein which are defined in the California
Uniform Commercial Code shall have the meaning given therein unless otherwise
defined in this Agreement. The term "including" is not limiting or exclusive.
When used herein, the following terms shall have the following meanings.
13.1 "Account" shall mean all accounts, accounts receivable, chattel paper,
contract rights, documents, general intangibles, instruments, letters of
credit, banker's acceptances, and other rights to payment, and proceeds
thereof.
13.2 "Account Balance" shall mean, on any given day, the gross face amount of
all Purchased Accounts unpaid on that day.
13.3 "Account Debtor" shall have the meaning set forth in the California
Commercial Code and shall include any person liable on any Purchased Account,
including any guarantor of the Purchased Account and any issuer of a letter of
credit or banker's acceptance.
13.4 "Adjustment(s)" shall have the meaning set in Section 3.1.
13.5 "Administrative Fee" shall have the meaning as set forth in Section 2.2.
13.6 "Advance" shall have the meaning set forth in Section 1.3.
13.7 "Chargeback Amount" shall have the meaning set forth in Section 3.2.
13.8 "Collateral" shall have the meaning set forth in Section 6.
13.9 "Customer Payments" shall have the meaning set forth in Section 2.4.
13.10 "Event of Default" shall have the meaning set forth in Section 7.
13.11 "Finance Fees" shall have the meaning set forth in Section 2.1.
13.12 "Schedule of Accounts" shall have the meaning set forth in Section 1.1.
13.13 "Obligations" shall mean all advances, obligations, indebtedness and
duties owing by Seller to Purchaser of any kind or nature, present or future
arising under or in connection with this Agreement entered into between
Purchaser and Seller, weather direct or indirect, including all Advances,
Finance Fees, Administrative Fees, Chargeback Amounts, attorneys' fees and
expenses.
13.14 "Purchased Accounts" shall mean all Accounts identified on any Schedule
of Accounts delivered by Seller to Purchaser with Purchaser elects to purchase
and for which Purchaser makes an Advance, and all monies due or to become due
thereunder.
13.15 "Remittance" shall have the meaning set forth in Section 3.3.
13.16 "Reserve" shall have the meaning set forth in Section 1.3.
13.17 "Settlement Date" shall mean the last calendar day of each Settlement
Period.
13.18 "Settlement Period" shall mean each calendar month of each year.
IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement on the
day and year written above.
"PURCHASER' "SELLER"
PACIFIC BUSINESS FUNDING, a division of Cupertino National Bank By
By Title
Title
Address of Seller, Chief Executive Office and Location of Collateral
Street:
Other Locations of Collateral, if any, in Addition to Above:
City:
State:
Zip Code:
Telephone No.: ( )
Facsimile No.: ( )
Exhibit 99.1 Certification of Chief Executive Officer
PAMET SYSTEMS, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pamet Systems, Inc. (the "Company")
on Form 10-QSB for the period ended June 30, 2002, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), the undersigned
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
- the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
- the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
March 3, 2003
(s) Kirke S. Curtis
______________________
Kirke S. Curtis
Chief Executive Officer
Exhibit 99.1 Certification of Principal Financial Officer
PAMET SYSTEMS, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pamet Systems, Inc. (the "Company")
on Form 10-QSB for the period ended June 30, 2002, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), the undersigned
hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
- the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
- the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
March 3, 2003
(s) Kirke S. Curtis
______________________
Kirke S. Curtis
Principal Financial Officer