UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
Pamet Systems, Inc.
---------------------------------
(Name of Issuer)
Common Stock
---------------------------------
(Title of Class of Securities)
697640 10 0
---------------------------------
(CUSIP Number)
Bruce J. Rogow
Winnie R. Rogow
220 Ocean Avenue
Marblehead, MA 01945
(617) 631-4234
---------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 6, 1998
---------------------------------
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this statement because of Rule 13d-1(b) (3) or (4), check the
following: [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 697640 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce J. Rogow SSN: ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
25,000
8 SHARED VOTING POWER
778,147
9 SOLE DISPOSITIVE POWER
25,000
10 SHARED DISPOSITIVE POWER
778,147
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
803,147
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.7%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 697640 10 0
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Winnie R. Rogow SSN: ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
4,000
8 SHARED VOTING POWER
778,147
9 SOLE DISPOSITIVE POWER
4,000
10 SHARED DISPOSITIVE POWER
778,147
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
782,147
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Amendment No. 3 to Schedule 13D
Pamet Systems, Inc.
This Amendment No. 3 to Schedule 13D amends and supplements the
Statement on Schedule 13D relating to the event date of January 6, 1997 filed
by Bruce J. Rogow and Winnie R. Rogow (collectively, the "Reporting Persons")
relating to the common stock (the "Common Stock") of Pamet Systems, Inc. (the
"Company"). The address of the principal executive office of the Company is
1000 Main Street, Acton, Massachusetts 01720.
Item 3. Source and Amount of Funds.
Item 3 is hereby amended to add the following:
The source of funds used by the Reporting Persons to purchase the
Common Stock referred to In Item 5(c) was personal funds. The amount of
funds used by the Reporting Persons to purchase the Common Stock was paid by
cancellation of promissory notes of the Issuer held by the Reporting Persons
in the aggregate amount of $300,000 together with all accrued and unpaid
interest thereon.
Item 5. Interest in Securities of Issuer.
Item 5 is hereby amended and restated to read in its entirety as
follows:
(a) Mr. Rogow is the beneficial owner of 803,147 shares (27.7%) of
Common Stock.
Mrs. Rogow is the beneficial owner of 782,147 shares (27.0%) of
Common Stock.
The Common Stock beneficially owned by the Reporting Persons includes:
(i) 5,000 shares of Common Stock held by Mr. Rogow's 401(k) account, (ii)
20,000 shares held by Mr. Rogow's retirement money purchase account, (iii)
95,000 shares of Common Stock held jointly, (iv) 4,000 shares held by Mrs.
Rogow as custodian for Mr. and Mrs. Rogow's minor child, (v) 325,000 shares
of Common Stock held by Rogow Opportunity Capital, LLC, a Massachusetts
limited liability company ("Rogow Opportunity") of which Mr. and Mrs. Rogow
are the sole members; (vi) warrants (the "Warrants") held by Rogow
Opportunity exercisable at any time or from time to time prior to March 2,
2003 to purchase up to 31,250 shares of Common Stock at an exercise price of
$4.25 per share; (vii) warrants (the "November 6th Warrants") held by Rogow
Opportunity exercisable at any time or from time to time prior to November 5,
2003 to purchase up to 120,000 shares of Common Stock at an exercise price of
$2.50 per share; and (viii) 11% convertible promissory note (the "Note") held
by Rogow Opportunity convertible at any time or from time to time prior to
June 1, 2001 into up to 206,897 shares of Common Stock at an exercise price
of $1.45 per share.
The number of shares beneficially owned by the Reporting Persons and
the percentage of outstanding shares represented thereby have been computed
in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. There were 2,545,500 shares of Common Stock of the Company
outstanding as of September 30, 1998 as reported to the Reporting Persons by
an officer of the Company.
(b) Mr. Rogow has the sole power (i) to vote or to direct the voting
of and (ii) to dispose and to direct the disposition of the 25,000 shares of
Common Stock held directly in his 401(k) and retirement money purchase
accounts.
Mrs. Rogow has the sole power (i) to vote or to direct the voting of
and (ii) to dispose and to direct the disposition of the 4,000 shares of
Common Stock held by her as custodian.
Mr. and Mrs. Rogow share the power (i) to vote or to direct the
voting of the 95,000 shares of Common Stock held jointly by them and (ii) to
dispose and to direct the disposition of (x) the 95,000 shares of Common
Stock held jointly by them, (y) the 325,000 shares of Common Stock held by
Rogow Opportunity and the Warrants and November 6th Warrants and the shares
issuable upon exercise thereof, and (z) the Note held by Rogow Opportunity
and the shares issuable upon the exercise thereof.
(c) The only transaction in the last 60 days by the Reporting Persons
in the Common Stock was the purchase by Rogow Opportunity from the Company in
a privately negotiated purchase on November 6, 1998 of a convertible
promissory note in the aggregate principal amount of Three Hundred Thousand
Dollars ($300,000) convertible at any time or from time to time prior to June
1, 2001 into up to 206,897 shares of Common Stock at an exercise price of
$1.45 per share and (ii) warrants exercisable at any time and from time to
time prior to November 5, 2003 to purchase up to 120,000 shares of Common
Stock at an exercise price of $2.50 per share in consideration of canceled
promissory notes of the Issuer held by the Reporting Persons in the aggregate
amount of Three Hundred Thousand Dollars ($300,000) together with all accrued
and unpaid interest thereon pursuant to a Securities Purchase Agreement
dated as of November 6, 1998 (the "Securities Purchase Agreement").
(d) Not applicable.
(e) Not applicable.
Item 7. Material to be Filed as Exhibits.
Exhibit A. Securities Purchase Agreement
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: December ___, 1998
________________________________
Winnie R. Rogow
attorney-in-fact for Bruce Rogow
________________________________
Winnie R. Rogow
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of November 6, 1998 by and between PAMET SYSTEMS, INC., a
Massachusetts corporation whose principal place of business is 1000 Main
Street, Acton, Massachusetts 01720 (the "Company"), and Rogow Opportunity
Capital LLC (the "Purchaser"), a Massachusetts limited liability company with
its principal office at 220 Ocean Avenue, Marblehead, Massachusetts 01945.
WHEREAS, the Company is desirous of selling, and the Purchaser is
desirous of acquiring, (i) a convertible promissory note in substantially the
form attached hereto as Exhibit A in the aggregate principal amount of Three
Hundred Thousand Dollars ($300,000) (the "Note") and (ii) a five-year warrant
(the "Warrant") in substantially the form attached hereto as Exhibit B to
purchase up to an aggregate of one hundred twenty thousand (120,000) shares
("Warrant Shares") of the common stock, par value $.01 per share (the "Common
Stock"), of the Company (the Note and the Warrant together sometimes
hereinafter are referred to as the "Securities"), on the terms and subject to
the conditions hereinafter set forth.
WHEREAS, the Purchaser is the holder of two promissory notes issued by
the Company in the aggregate principal amount of Three Hundred Thousand
Dollars ($300,000) (the "Prior Notes") which the Purchaser desires to have
canceled in payment for the Securities pursuant to Section 2 of the Prior
Notes.
NOW, THEREFORE, in consideration of the promises and of the mutual
obligations hereinafter set forth, and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and the Purchaser hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE NOTE AND WARRANT; CLOSING
Section 1.01 Purchase and Sale of the Note and Warrant.
Subject to the terms and conditions set forth in this
Agreement, the Company agrees to issue and sell to the Purchaser at the
Closing, and the Purchaser agrees to purchase from the Company at the
Closing, the Note and the Warrant in exchange for cancellation of the Prior
Notes (the "Purchase Price").
Section 1.02 Closing. The sale of the Securities by the Company to
the Purchaser shall take place on the date hereof at the offices of the
Company or at such other place and time as may be agreed upon by the
Purchaser and the Company (the "Closing"). At the Closing, the Company shall
deliver to the Purchaser certificates evidencing the Securities against
payment of the Purchase Price by cancellation of the Prior Notes by the
Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and agrees with, the
Purchaser, as of the date hereof and as of the date of the Closing, as
follows:
Section 2.01 Incorporation and Corporate Existence. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts and has all necessary corporate
power and authority to own, operate or lease the properties and assets now
owned, operated or leased by the Company and to carry on the business of the
Company, as it is now being conducted.
Section 2.02 Authority. The Company has all necessary corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The Company has taken all necessary
corporate action to authorize the execution, delivery and performance by it
of this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, and
assuming due execution and delivery of the Agreement by the Purchaser, this
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency (including,
without limitation, all laws relating to fraudulent transfers), moratorium or
similar laws affecting creditors' rights and remedies generally, subject, as
to enforceability, to the effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and subject to the effect of applicable securities laws as to rights to
indemnification. The Company is not now, and has not been since inception
(x) in bankruptcy or reorganization, (y) subject to moratorium or similar
laws affecting creditors' rights and remedies generally or (z) to the best
knowledge of the Company, a party to any fraudulent transfer.
Section 2.03 Consents and Approvals; No Conflict. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not (i) require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not prevent the Company from performing any of its
material obligations under this Agreement and would not have a material
adverse effect on the Company; (ii) conflict with or violate the charter or
by-laws of the Company; or (iii) conflict with or violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Company, except as would not prevent the Company from
performing any of its material obligations under this Agreement and would not
have a material adverse effect on the Company.
Section 2.04 Absence of Litigation. No claim, action, proceeding or
investigation is pending, or to the best knowledge of the Company,
threatened, which seeks to delay or prevent the consummation of the
transactions contemplated hereby or which would be reasonably likely to
adversely affect or restrict the Company's ability to consummate the
transactions contemplated hereby.
Section 2.05 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
Section 2.06 Senior Debt. The Company does not currently expect
during the next 24 months to issue promissory notes or incur debt obligations
senior in right of payment to the Note in an aggregate principal amount in
excess of Two Million Dollars ($2,000,000).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to, and agrees with, the
Company, as of the date hereof and as of the Closing, as follows:
Section 3.01 Authority. The Purchaser has all necessary power and
authority to execute and deliver this Agreement, to purchase the Securities
from the Company and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Purchaser and, and
assuming due authorization, execution and delivery of the Agreement by the
Company, this Agreement constitutes a legal, valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), moratorium or similar laws affecting creditors' rights and
remedies generally, subject, as to enforceability, to the effect of general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and subject to the effect of applicable
securities laws as to rights to indemnification.
Section 3.02 Consents and Approvals; No Conflict. The execution and
delivery of this Agreement by the Purchaser do not, and the performance of
this Agreement by the Purchaser will not (i) require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority, except where the failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not prevent the Purchaser from performing any of its
material obligations under this Agreement; or (ii) except as would not
prevent the Purchaser from performing any of its material obligations under
this Agreement, conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to the
Purchaser.
Section 3.03 Absence of Litigation. No claim, action, proceeding or
investigation is pending, or to the best knowledge of the Purchaser,
threatened, which seeks to delay or prevent the consummation of the
transactions contemplated hereby or which would be reasonably likely to
adversely affect or restrict the Purchaser's ability to consummate the
transactions contemplated hereby.
Section 3.04 Investment Purpose; Legend; Private Placement.
(a) The Purchaser is acquiring the Securities solely for the
purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof.
(b) The Purchaser acknowledges that neither the Securities nor the
Warrant Shares are registered under the Securities Act and that none of the
Securities or the Warrant Shares may be transferred or sold except pursuant
to the registration provisions of the Securities Act or pursuant to an
applicable exemption therefrom and subject to state securities laws and
regulations, as applicable. The Purchaser acknowledges that the certificates
evidencing the Securities and the Warrant Shares shall contain a legend
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND SUCH SECURITIES MAY NOT 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.
(c) The Purchaser acknowledges that the Securities involve a great
deal of risk and that there is a limited or no market for the Securities and
the Warrant Shares. The Purchaser is able to (i) bear the economic risk of
the investment in the Company, (ii) afford a complete loss of such
investment, and (iii) hold indefinitely the Securities. In reaching an
informed decision to invest in the Company, the Purchaser, one of whose
principals is a director of the Company, has sufficient information to
evaluate the merits and risks of an investment in the Securities of the
Company. In that connection, (x) the Purchaser has received (A) the
Company's proxy statement, dated May 14, 1998, for the Company's 1998 annual
meeting of stockholders, (B) the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997, as amended to date, and (C) the Company's
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 1998 and
June 30, 1998 and (y) representatives of the Company have (A) fully and
satisfactorily answered any questions which duly authorized representatives
of the Purchaser desired to ask concerning the Company, and (B) furnished the
Purchaser with any additional information or documents requested to verify
the accuracy of or supplement any information previously delivered to or
discussed with duly authorized representatives of the Purchaser.
(d) The principal office of the Purchaser set forth on page 1 of
this Agreement is the true and correct principal office of the Purchaser and
the Purchaser has no present intention of becoming a resident or domiciliary
of any other state or jurisdiction.
Section 3.05 Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under
the Securities Act because (please check as appropriate):
[ ] (a) the Purchaser is an individual whose net
worth, either individually or with
his spouse, exceeds $1,000,000 on the date hereof;
[ ] (b) the Purchaser is an individual whose
individual income exceeded $200,000
in each of the two previous years or whose
joint income with his spouse exceeded
$300,000 in each of the three previous years,
and has a reasonable expectation of reaching
the same income level in the current year;
[ ] (c) the Purchaser is a corporation,
partnership or Massachusetts or similar
business trust, not formed for the specific
purpose of acquiring the Securities, with
total assets in excess of $5,000,000; or
[ ] (d) the investor hereby certifies that it is
an accredited investor because it is an
entity in which each of the equity owners
qualifies as an accredited investor under
items (a), (b) or (c) above.
Section 3.06 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
Section 3.07 No General Solicitation. The Securities were not offered
or sold by any form of general solicitation or general advertising.
ARTICLE IV
MISCELLANEOUS
Section 4.01 Expenses. The Purchaser hereby agrees that all fees and
expenses incurred by the Purchaser in connection with this Agreement shall be
borne by the Purchaser, and the Company hereby agrees that all fees and
expenses incurred by the Company shall be borne by the Company, in each case
including without limitation all fees and expenses of such party's counsel
and accountants.
Section 4.02 Public Announcements. Except as required by law, neither
the Company nor the Purchaser shall make any public announcements in respect
of this Agreement or the transactions contemplated herein or otherwise
communicate with any news media without prior notification to the other
party.
Section 4.03 Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the execution
and delivery of this Agreement, the Closing and any investigation at any time
made by or on behalf of either party hereto.
Section 4.04 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes any prior oral or written agreement between the
parties.
Section 4.05 No Third-Party Beneficiaries; Assignment. This Agreement
is for the sole benefit of and binding upon the parties hereto and their
permitted successors and assigns and nothing herein, express or implied, is
intended to or shall confer upon any other person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns, and shall inure to the
benefit of and be enforceable by the parties hereof and their respective
successors and assigns.
Section 4.06 Amendment. This Agreement may be amended or modified
only by an instrument in writing signed by the Company and the Purchaser.
Section 4.07 Counterparts. This Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
Section 4.08 Gender and Number; Headings. Whenever used in this
Agreement, the singular number shall include the plural, the plural the
singular, and the use of any gender shall be applicable to all genders. The
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement
Section 4.09 Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the Commonwealth
of Massachusetts without giving effect to the principles of conflicts of laws
thereof. The Company and the Purchaser hereby consent to the jurisdiction of
the state and federal courts of the Commonwealth of Massachusetts for all
disputes arising under this Agreement.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above.
PAMET SYSTEMS, INC.
Attest:__________________________ By:_____________________________
Name: Name: David T. McKay
Title: Title: President & CEO
Corporate Seal
ROGOW OPPORTUNITY CAPITAL LLC
By:_____________________________
Name:
Title:
<PAGE>
No. L-002
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
$300,000 Acton, Massachusetts
November 6, 1998
FOR VALUE RECEIVED, PAMET SYSTEMS, INC., a Massachusetts corporation (the
"Company"), hereby promises to pay to Rogow Opportunity Capital LLC
("Payee"), 220 Ocean Avenue, Marblehead, Massachusetts 01945, the principal
sum of Three Hundred Thousand Dollars ($300,000), 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."
1. Principal and Maturity Date. The principal amount of this
Note outstanding together with all accrued interest hereon shall be due and
payable on June 1, 2001 (the "Maturity Date").
2. Interest. The outstanding principal amount of this Note shall
accrue interest at the per annum rate of eleven percent (11.0%) 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.
3. 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.
4. 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.
5. Conversion; Repayment.
(a) Conversion/Repayment 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 $25,000 (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 $1.45 per share of Common Stock and shall be subject to
adjustment as provided in Section 6 below.
Upon a partial conversion or repayment 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.
(b) 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.
(c) 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
nonassessable. 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.
(d) 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.
(e) 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.
6. Conversion Price Adjustment. In the event of a stock split,
reverse stock split or stock dividend, the Board of Directors of the Company
shall adjust the Conversion Price to appropriately reflect such event.
7. Subordination.
(a) 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 7 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 7, so far as the same may be applicable thereto.
(b) For purposes of this Section 7, "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.
9. No Assignment. This Note may not be assigned by the Payee
without the prior written consent of the Company.
10. 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.
11. 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: David McKay
Title: President & CEO
Attested:
By:_________________________
Name:
Title:
<PAGE>
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
<PAGE>
No. LW-002
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 November 5, 2003.
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, a Massachusetts limited liability company with its principal office at
220 Ocean Avenue, Marblehead, Massachusetts 01945, or its permitted assigns,
is entitled to purchase from the Company, at any time or from time to time
commencing November 6, 1998, and prior to 5:00 P.M., Eastern Standard Time,
on November 5, 2003, a total of one hundred twenty thousand (120,000) fully
paid and nonassessable shares of Common Stock, par value $.01 per share, of
the Company for an aggregate purchase price of Three Hundred Thousand Dollars
($300,000) (computed on the basis of $2.50 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 LLC (the "Securities Purchase Agreement"). Capitalized
terms used but not defined shall have the respective meanings ascribed to
them in the Securities Purchase Agreement.
1. Exercise of Warrant.
(a) This Warrant may be exercised, in whole at any time or in part
from time to time, commencing November 6, 1998, and prior to 5:00 P.M.,
Eastern Standard Time, on November 5, 2003, 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
2. 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.
3. Adjustments.
(a) 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.
(b) 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.
(c) 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.
(d) 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.
4. Per Share Warrant Price Protection.
(a) Subject to adjustment in accordance with Section 3, if at any
time, beginning April 1, 1999, the average of the Closing Prices (as defined
herein) of the Common Stock for any 60 consecutive Trading Days (as defined
herein) after April 1, 1999 (the "Average Closing Price") is less than $2.50
per share, then, so long as the Average Closing Price remains below $2.50 per
share (a "Price Protection Period"), upon the exercise of all or any part of
this Warrant, the Per Share Warrant Price shall be reduced to the Average
Closing Price of the Common Stock for the 60 consecutive Trading Days
immediately preceding the date of exercise. Notwithstanding any reduction of
the Per Share Warrant Price pursuant to this Section 4(a), a Price Protection
Period shall end if the Average Closing Price is equal to or greater than
$2.50 (subject to adjustment in accordance with Section 3) and the Per Share
Warrant Price shall return to $2.50. Notwithstanding the foregoing, the Per
Share Warrant Price shall not be reduced below $1.50 (subject to adjustment
in accordance with Section 3).
(b) In the event of any adjustment to the Per Share Warrant Price,
the number of Warrant Shares issuable upon exercise of this Warrant during
the relevant Price Protection Period shall be adjusted by multiplying the
aggregate number of Warrant Shares for which this Warrant may be exercised
immediately prior to such adjustment by a fraction the numerator of which is
the Per Share Warrant Price immediately prior to such adjustment and the
denominator of which is the Per Share Warrant Price immediately after such
adjustment.
(c) As used in this Section 4, Trading Day means, in the event
that the Common Stock is listed or admitted to trading on the New York Stock
Exchange (or any successor to such exchange), a day on which the New York
Stock Exchange (or such successor) is open for the transaction of business,
or, if the Common Stock is not listed or admitted to trading on such
exchange, a day on which the principal national securities exchange on which
the Common Stock is listed is open for the transaction of business, or, if
the Common Stock is not listed or admitted to trading on any national
securities exchange, a day on which any New York Stock Exchange member firm
is open for the transaction of business.
(d) As used in this Section 4, the Closing Price of the Company's
Common Stock shall be the last reported sale price as shown on the Composite
Tape of the New York Stock Exchange, or, in case no such reported sale price
is quoted on such day, the average of the reported closing bid and asked
prices on the New York Stock Exchange, or, if the Common Stock is not listed
or admitted to trading on such exchange, the last reported sales price, or in
case no such reported sales price is quoted on such day, the average of the
reported closing bid and asked prices, on the principal national securities
exchange (including, for purposes hereof, the National Association of
Securities Dealers, Inc. National Market System) on which the Common Stock is
listed or admitted to trading, or, if it is not listed or admitted to trading
on any national securities exchange, the average of the high closing bid
price and the low closing asked price as reported on an inter-dealer
quotation system. In the absence of any available public quotations for the
Common Stock, the Board of Directors of the Company shall determine in good
faith the fair value of the Common Stock, which determination shall be set
forth in a certificate by the Secretary of the Company.
5. 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 6(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.
6. Transfer
(a) 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.
(b) 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.
(c) Indemnity. The Holder acknowledges that the Holder
understands the meaning and legal consequences of this Section 6, 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.
(d) 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.
(e) 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."
7. 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.
8. 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.
9. 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:
(a) the Company at 1000 Main Street, Acton, Massachusetts 01720,
or such other address as the Company has designated in writing to the Holder,
or
(b) the Holder at 220 Ocean Avenue, Marblehead, Massachusetts
01945, or such other address as the Holder has designated in writing to the
Company.
10. Headings. The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction hereof.
11. 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 6th day of November, 1998.
ATTEST: PAMET SYSTEMS, INC.
_______________________ By:___________________________________
Name: David T. McKay
Title: President
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____________________________
____________________________
